-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, F1sOwndeLlVJSKO906uxwgcZ0hISXxLzHJqio6DstsPHdUv4WFILwUZH/VVf3VAq 2FKXS9i/I55LOELyyVP55g== 0000836375-96-000019.txt : 19961104 0000836375-96-000019.hdr.sgml : 19961104 ACCESSION NUMBER: 0000836375-96-000019 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961101 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVERGREEN MUNICIPAL TRUST CENTRAL INDEX KEY: 0000836375 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: NY FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05579 FILM NUMBER: 96652716 BUSINESS ADDRESS: STREET 1: 2500 WESTCHESTER AVE CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9146942020 MAIL ADDRESS: STREET 1: 2500 WESTCHESTER AVENUE CITY: PURCHASE STATE: NY ZIP: 10577 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVERGREEN INVESTMENT TRUST CENTRAL INDEX KEY: 0000757440 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046599663 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04154 FILM NUMBER: 96652717 BUSINESS ADDRESS: STREET 1: 2500 WESTCHESTER AVE CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9146412305 MAIL ADDRESS: STREET 1: 2500 WESTCHESTER AVE CITY: PURCHASE STATE: NY ZIP: 10577 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION FUNDS/ DATE OF NAME CHANGE: 19940628 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION HIGH GRADE TAX FREE PORT DATE OF NAME CHANGE: 19940519 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION FUNDS DATE OF NAME CHANGE: 19921230 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVERGREEN TAX FREE TRUST /MA CENTRAL INDEX KEY: 0000784975 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04507 FILM NUMBER: 96652718 BUSINESS ADDRESS: STREET 1: C/O EVERGREEN ASSET MANAGEMENT STREET 2: 2500 WESTCHESTER AVE CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9146412234 MAIL ADDRESS: STREET 1: 2500 WESTCHESTER AVE CITY: PURCHASE STATE: NY ZIP: 10577 FORMER COMPANY: FORMER CONFORMED NAME: FFB FUNDS TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FFB MONEY TRUST DATE OF NAME CHANGE: 19870701 FORMER COMPANY: FORMER CONFORMED NAME: BLB TAX FREE TRUST DATE OF NAME CHANGE: 19860324 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVERGREEN MONEY MARKET TRUST CENTRAL INDEX KEY: 0000820636 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 136892172 STATE OF INCORPORATION: NY FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05300 FILM NUMBER: 96652719 BUSINESS ADDRESS: STREET 1: 2500 WESTCHESTER AVE CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9146942020 MAIL ADDRESS: STREET 1: 2500 WESTCHESTER AVENUE CITY: PURCHASE STATE: NY ZIP: 10577 N-30D 1 EVERGREEN MONEY MARKET FUNDS EVERGREEN MONEY MARKET FUNDS (Photos of money, a building, coins and an eagle appear here) (Photo of trees and river) 1996 ANNUAL REPORT (Evergreen tree logo) Evergreen(SM) Funds EVERGREEN MONEY MARKET FUNDS TABLE OF CONTENTS (Photo of money) A Review of the Past Year and Prospects for the Future.................... 1 MONEY MARKET A Report From Your Portfolio Manager...................................... 3 FUND Statement of Investments.................................................. 4 Statement of Assets and Liabilities....................................... 9 Statement of Operations................................................... 10 Statement of Changes in Net Assets........................................ 11 Financial Highlights...................................................... 12 (Photo of building) PENNSYLVANIA A Report From Your Portfolio Manager...................................... 14 TAX-FREE MONEY Statement of Investments.................................................. 15 MARKET FUND Statement of Assets and Liabilities....................................... 18 Statement of Operations................................................... 19 Statement of Changes in Net Assets........................................ 20 Financial Highlights...................................................... 21 (Photo of coins) TAX EXEMPT A Report From Your Portfolio Manager...................................... 22 MONEY MARKET FUND Statement of Investments.................................................. 23 Statement of Assets and Liabilities....................................... 35 Statement of Operations................................................... 36 Statement of Changes in Net Assets........................................ 37 Financial Highlights...................................................... 38 (Photo of an eagle) TREASURY A Report From Your Portfolio Manager...................................... 39 MONEY MARKET FUND Statement of Investments.................................................. 40 Statement of Assets and Liabilities....................................... 41 Statement of Operations................................................... 42 Statement of Changes in Net Assets........................................ 43 Financial Highlights...................................................... 44 Combined Notes to Financial Statements.................................... 46 Report of Independent Accountants -- Price Waterhouse LLP................. 53 Independent Auditors' Report -- KPMG Peat Marwick LLP..................... 54 Trustees and Officers...................................... Inside Back Cover
EVERGREEN(SM) is a Service Mark of Evergreen Asset Management Corp. Copyright 1995, Evergreen Asset Management Corp. EVERGREEN MONEY MARKET FUNDS A REVIEW OF THE PAST YEAR AND PROSPECTS FOR THE FUTURE BY STEPHEN A. LIEBER The continued expansion of the United States (Photo of Stephen A. economy and the persistence of inflation at 3% or Lieber) less, has evidently sent mixed signals to the investment markets. The equity market this year has gone from new high to new high. The willingness of American savers to put money into the hands of equity mutual funds to buy stocks in the United States and abroad is unprecedented. Even foreign investors, who have long been skeptical of the rising prices of U.S. equities and the recent relatively higher valuations than in many other industrial countries, have begun to move heavily into U.S. equities. Only the bond market has suffered negative trends this year. But, it showed no further losses when measured from the end of the second calendar quarter to the end of the third. In contrast, it yielded modest gains early in the third quarter. Evidence of slowed final demand in many sectors of the economy has begun to reduce the fears of many investors over inflationary pressures. While confidence increases that both producer and consumer price indexes will remain in a narrow range, around 3%, apprehensions of possibly renewed inflation are now focused on the trend of hourly wages. Hourly wages have moved up slightly in the last two months. The apparent consensus among business economists currently is to expect a 2% growth rate for the U.S. economy in the second half of 1996, with a similar level to continue into 1997. These views are, in part, based on historical trends, in which the late cycle characteristics of the U.S. economy typically show economic deceleration. Such a deceleration is not widely feared, in view of the fact that real income growth is likely to be sustained by a 2% to 2 1/2% employment growth, plus a 3% to 3 1/2% earnings growth, before a 3% inflation. The appearance of such decelerating trends and their continuation would likely bring bond yields down, as the inflation premium would be removed from bond market expectations. Many who dissent from the consensus view that the economy will slow, argue that the European economies and Japan's economy are likely to revive in 1997, which will create more export demand for U.S. products and, therefore, increase our growth rate. More pessimistic observers of the American economy believe that the American consumer has overspent, as evidenced by the rising rate of credit card delinquencies, and by the "wealth effect" of a stock market achieving record highs. For the bond market, we expect that fairly stable, rather than rising, inflation, and a somewhat declining overall business rate of growth, together with a narrow range currency market, should enable a gradual decline in interest rates. Tax-exempt fixed income investment in 1996 has had comparatively better returns than taxable bond investment. Much of this difference is due to the fact that the flat tax, or sharply 1 EVERGREEN MONEY MARKET FUNDS A REVIEW OF THE PAST YEAR AND PROSPECTS FOR THE FUTURE -- (CONTINUED) reduced income tax, advocacies of presidential candidates earlier in the year, were eliminated as concerns for tax-exempt investors. Therefore, tax-exempt bonds have risen to a normal level of relationship to taxable bonds. Further improving valuations has been the lack of major concerns over credit quality issues. Orange County California's default has fallen into memory and its credit is in the process of restoration. Other credit problems regarding certain public power facilities and the rental of municipal buildings have also been overcome. Correspondingly, the supply of new tax-exempt issues declined, especially as interest rate increases cut down the number of new issues replacing refunded bonds. The credit quality overall has been enhanced by further record gains for the use of bond insurance, while the insurers themselves have had their credit quality improved by record accumulations of earnings. In summary, the tax-exempt securities market toward the end of 1996 appears to be in a healthy condition. 2 EVERGREEN MONEY MARKET FUND (Photo of money) A REPORT FROM YOUR PORTFOLIO MANAGER ETHEL SUTTON With the unemployment rate down to 5.1% in August, its lowest (Photo of level in seven years, economists are asking whether unemployment Ethel can decline further without sparking inflation in the broad Sutton) wholesale and retail price indexes. While the Federal Reserve adopted a monetary policy directive with a bias toward higher interest rates at its July meeting, reflecting concern over the economy's robust rate of growth during the second quarter, it held rates steady at both its August and September meetings. The two key questions that the Federal Reserve will need to address this fall are how quickly the economy slows and whether the good news on the inflation front will continue. If the Federal Reserve does decide to implement its tightening bias and raise the overnight funds rate by 25 basis points, we think it unlikely that the Fed would do so before the November elections to avoid the appearance of politicizing the nation's monetary policy. After dropping sharply in the wake of the Federal Reserve's interest rate cut in January, which was viewed as anti-recession insurance, money market yields started trending upward again in April in response to evidence of unexpectedly higher second quarter growth. While the quarter ended on a softer note, there was spotty evidence over the summer that the economy might be continuing to pick up, and this perception pushed rates higher over the period. The ambiguity of the economic data suggested to us, however, that the Fed would be willing to hold rates steady until third quarter Gross Domestic Product (GDP) figures were released the last week in October. Consequently, we have been comfortable with maturities that are appreciably longer than the average for first tier money market funds reported by IBC's Money Fund Report. The Fund's weighted average maturity at its fiscal year-end on August 31, 1996, was 71 days, as compared with 55 days for the 268 first tier money market funds in the IBC Average at that time. We shall continue to monitor economic data, particularly as it relates to inflation, and lengthen or shorten maturities accordingly. The total net assets for Evergreen Money Market Fund at its fiscal year-end on August 31, 1996, were $2.4 billion. The Fund's seven-day current and effective yields at that time are illustrated in the table below.
7-DAY CURRENT YIELD 7-DAY EFFECTIVE YIELD Class Y Shares 5.12% 5.25% Class A Shares 4.83% 4.95% Class B Shares 4.12% 4.20%
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS *SOURCE; IBC FINANCIAL DATA, INC., AN INDEPENDENT MONEY MARKET MUTUAL FUNDS PERFORMANCE MONITOR. DURING THE PERIOD UNDER REVIEW, THE ADVISER CONTINUED TO VOLUNTARILY WAIVE A PORTION OF ITS ADVISORY FEE. HAD FEE NOT BEEN WAIVED, YIELDS WOULD HAVE BEEN LOWER. FEE WAIVER MAY BE REVISED AT ANY TIME. THE FUND MAY INCUR 12B-1 EXPENSES, UP TO AN ANNUAL MAXIMUM OF .35 OF 1% OF ITS AVERAGE DAILY NET ASSETS OF ITS CLASS A SHARES. FOR THE FORSEEABLE FUTURE, HOWEVER, MANAGEMENT INTENDS TO LIMIT SUCH PAYMENTS TO .30 OF 1% OF THE FUNDS DAILY NET ASSETS OF ITS CLASS A SHARES. AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1 PER SHARE. YIELDS FLUCTUATE. 3 EVERGREEN MONEY MARKET FUND (Photo of money) STATEMENT OF INVESTMENTS AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE BANKERS' ACCEPTANCES* -- 3.0% $28,400 Bank of Tokyo-Mitsubishi Ltd., 5.53%, 11/25/96.................... $ 28,029,183 CoreStates Bank, 2,000 5.57%, 12/23/96.................... 1,965,033 2,544 5.57%, 12/26/96.................... 2,498,390 8,700 Dai-Ichi Kangyo Bank Ltd., 5.52%, 10/22/96.................... 8,631,966 14,000 Fuji Bank Ltd., 5.50%, 9/26/96..................... 13,946,528 6,000 Republic National Bank of New York, 5.39%, 1/27/97..................... 5,867,047 Sumitomo Bank Ltd., 3,000 5.50%, 9/20/96..................... 2,991,291 5,350 5.53%, 11/7/96..................... 5,294,938 5,000 5.61%, 11/25/96.................... 4,933,771 TOTAL BANKERS' ACCEPTANCES (COST $74,158,147)............ 74,158,147 CERTIFICATES OF DEPOSIT -- 10.7% 25,000 Australia & New Zealand Banking Group Ltd. 5.51%, 12/31/96.................... 25,000,812 25,000 Bayerische Vereinsbank AG, 5.53%, 1/22/97..................... 25,000,000 Canadian Imperial Bank of Commerce, 20,000 5.50%, 1/9/97...................... 20,000,000 25,000 5.70%, 3/21/97..................... 25,000,000 25,000 5.77%, 5/2/97...................... 25,000,000 50,000 Deutsche Bank AG, 5.70%, 5/1/97...................... 50,000,000 Societe Generale, 20,000 5.50%, 1/9/97...................... 20,000,000 20,000 5.21%, 2/24/97..................... 20,000,000 25,000 5.70%, 3/14/97..................... 25,000,000 25,000 5.75%, 4/1/97...................... 25,000,000 TOTAL CERTIFICATES OF DEPOSIT (COST $260,000,812)........... 260,000,812 COMMERCIAL PAPER* -- 82.6% BANK HOLDING COMPANIES -- 11.3% 5,000 B.B.V. Finance (DE), Inc., 5.44%, 2/18/97..................... 4,871,556 Banca CRT Financial Corp., 11,000 5.40%, 9/17/96..................... 10,973,600 9,700 5.48%, 9/26/96..................... 9,663,086 PRINCIPAL AMOUNT (000) VALUE COMMERCIAL PAPER* -- CONTINUED BANK HOLDING COMPANIES -- CONTINUED $10,000 BankAmerica Corp., 5.50%, 1/13/97..................... $ 9,795,278 Bankers Trust New York Corp., 25,000 5.53%, 12/19/96.................... 24,581,410 25,000 5.59%, 12/30/96.................... 24,534,166 11,700 BIL North America, Inc., 5.45%, 10/16/96.................... 11,620,294 BTM Capital Corp., 19,697 5.53%, 10/15/96.................... 19,563,870 10,000 5.40%, 11/26/96.................... 9,871,000 33,000 Chase Manhattan Corp., 5.66%, 1/6/97...................... 32,341,082 24,000 HSBC Americas, Inc., 5.38%, 12/4/96..................... 23,662,853 4,200 IMI Funding Corp. (USA), 5.52%, 11/4/96..................... 4,158,784 6,000 Korea Development Bank, 5.30%, 9/12/96..................... 5,990,283 7,186 MPS U.S. Commercial Paper Corp., 5.45%, 9/19/96..................... 7,166,418 Royal Bank Canada New York Branch, 20,000 5.54%, 12/31/96.................... 19,627,589 14,750 5.41%, 1/17/97..................... 14,444,110 11,000 Sumitomo Bank Capital Markets, Inc., 5.38%, 11/15/96.................... 10,876,708 25,000 Svenska Handelsbanken, Inc., 5.42%, 9/9/96...................... 24,969,889 Unifunding, Inc., 2,000 5.30%, 10/8/96..................... 1,989,106 5,000 5.45%, 2/11/97..................... 4,876,618 275,577,700 BUILDING & CONSTRUCTION -- .1% 1,600 Guardian Industries Corp., 5.31%, 10/21/96.................... 1,588,200 CHEMICALS -- 4.7% Akzo Nobel, Inc., 15,000 5.30%, 11/19/96.................... 14,825,542 10,700 5.49%, 11/19/96.................... 10,571,092 9,000 5.55%, 11/19/96.................... 8,890,387
4 EVERGREEN MONEY MARKET FUND (Photo of money) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE COMMERCIAL PAPER* -- CONTINUED CHEMICALS -- CONTINUED $13,500 Burmah Castrol Finance PLC, 5.40%, 1/21/97..................... $ 13,212,450 14,000 Cosmair, Inc., 5.35%, 10/4/96..................... 13,931,342 Hercules, Inc., 13,300 5.32%, 10/4/96..................... 13,235,140 11,600 5.34%, 12/2/96..................... 11,441,699 WMX Technologies, Inc., 19,700 5.43%, 1/22/97..................... 19,275,087 10,000 5.77%, 3/25/97..................... 9,671,431 115,054,170 CONTAINERS & PACKAGES -- .5% 12,000 Sonoco Products Co., 5.42%, 9/10/96..................... 11,983,740 DIVERSIFIED -- 10.7% 1,200 American Home Products Corp., 5.35%, 10/1/96..................... 1,194,650 5,981 Arena Funding Corp., (LOC: Bank of Tokyo-Mitsubishi Ltd.) 5.40%, 10/15/96.................... 5,941,525 16,600 B.I. Funding, Inc., 5.38%, 9/27/96..................... 16,535,500 Daewoo International (America) Corp., (LOC: Korea Development Bank) 20,000 5.38%, 11/22/96.................... 19,754,911 30,000 5.66%, 12/13/96.................... 29,514,183 3,000 Eaton Corp., 5.53%, 1/8/97...................... 2,940,553 Finova Capital Corp., 29,625 5.40%, 9/10/96..................... 29,585,006 27,800 5.51%, 10/3/96..................... 27,663,842 15,200 5.41%, 10/31/96.................... 15,062,947 20,000 5.40%, 11/14/96.................... 19,778,000 20,000 5.38%, 11/20/96.................... 19,760,889 20,000 Mitsui & Co. (USA), Inc., 5.50%, 11/13/96.................... 19,776,945 7,700 Newell Co., 5.32%, 9/9/96...................... 7,690,897 6,200 Progress Funding Corp. (LOC: Fuji Bank Ltd.) 5.50%, 11/6/96..................... 6,137,483 PRINCIPAL AMOUNT (000) VALUE DIVERSIFIED -- CONTINUED REXAM PLC, $16,500 5.40%, 9/5/96...................... $ 16,490,100 10,000 5.42%, 10/23/96.................... 9,921,711 12,500 Rubbermaid, Inc., 5.29%, 9/12/96..................... 12,479,795 260,228,937 ELECTRICAL POWER -- 4.9% Electricite de France, 25,000 5.44%, 12/23/96.................... 24,573,111 16,000 5.55%, 12/27/96.................... 15,711,400 FP Funding Corp., (LOC: Sumitomo Bank Ltd.) 11,566 5.41%, 9/24/96..................... 11,526,023 23,404 5.41%, 9/25/96..................... 23,319,590 20,000 5.52%, 10/21/96.................... 19,846,667 21,500 IES Utilities, Inc., 5.31%, 9/24/96..................... 21,427,061 3,200 Pacificorp, 5.26%, 10/3/96..................... 3,185,038 119,588,890 ELECTRONICS -- 2.7% 8,000 Hitachi Credit America Corp., 5.32%, 11/21/96.................... 7,904,240 5,000 Orix America, Inc., 5.52%, 9/3/96...................... 4,998,467 10,000 Seiko Corp. of America, (LOC: Dai-Ichi Kangyo Bank Ltd.) 5.40%, 10/24/96.................... 9,920,500 Sharp Electronics Corp., 8,300 5.31%, 12/20/96.................... 8,165,332 12,330 5.35%, 12/20/96.................... 12,128,439 23,000 Toshiba America, Inc., 5.42%, 9/3/96...................... 22,993,074 66,110,052 FINANCE -- 21.3% Aristar, Inc., 7,000 5.38%, 9/24/96..................... 6,975,939 6,400 5.38%, 9/25/96..................... 6,377,045 34,665 5.35%, 11/15/96.................... 34,278,630 18,965 5.35%, 11/21/96.................... 18,736,709 Astro Capital Corp., 24,589 5.45%, 10/1/96..................... 24,477,325 9,268 5.50%, 10/11/96.................... 9,211,362
5 EVERGREEN MONEY MARKET FUND (Photo of money) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE COMMERCIAL PAPER* -- CONTINUED FINANCE -- CONTINUED $ 3,400 Avco Financial Services, Inc., 5.42%, 10/21/96.................... $ 3,374,406 Dynamic Funding Corp., (LOC: Fuji Bank Ltd.) 1,416 5.40%, 9/5/96...................... 1,415,150 10,944 5.60%, 10/31/96.................... 10,841,856 29,363 5.45%, 11/15/96.................... 29,029,608 26,000 Eiger Capital Corp., (LOC: Union Bank of Switzerland) 5.28%, 9/11/96..................... 25,961,867 20,000 Heller International Corp., (LOC: Fuji Bank Ltd.) 5.50%, 10/18/96.................... 19,856,389 Island Finance Puerto Rico, Inc., (LOC: Norwest Corp.) 17,600 5.42%, 9/12/96..................... 17,570,853 20,000 5.31%, 10/15/96.................... 19,870,200 Jet Funding Corp., 10,377 5.42%, 9/3/96...................... 10,373,875 16,650 5.45%, 9/30/96..................... 16,576,902 18,640 5.52%, 9/30/96..................... 18,557,114 26,528 Premium Funding, Inc., (LOC: Citibank) 5.33%, 10/15/96.................... 26,355,185 Receivables Capital Corp., 8,473 5.41%, 9/25/96..................... 8,442,441 22,977 5.37%, 9/30/96..................... 22,877,605 Sanwa Business Credit Corp., (LOC: Sanwa Bank Ltd.) 20,000 5.40%, 9/20/96..................... 19,943,000 20,000 5.37%, 10/2/96..................... 19,907,517 30,000 5.38%, 10/7/96..................... 29,838,600 20,000 5.34%, 10/23/96.................... 19,845,733 Stanford University, 3,500 5.42%, 10/21/96.................... 3,473,653 5,000 5.50%, 11/21/96.................... 4,938,125 3,785 5.46%, 12/2/96..................... 3,732,186 20,000 Stellar Capital Corp., (LOC: Bank of Tokyo- Mitsubishi Ltd.) 5.40%, 10/24/96.................... 19,841,000 PRINCIPAL AMOUNT (000) VALUE FINANCE -- CONTINUED $ 7,121 Strategic Asset Funding Corp., (LOC: Sanwa Bank Ltd.) 5.53%, 9/30/96..................... $ 7,089,278 7,000 Transamerica Corp., 5.29%, 9/12/96..................... 6,988,685 4,400 Transamerica Finance Corp., 5.29%, 10/1/96..................... 4,380,603 Tri-Lateral Capital (USA), Inc., (LOC: Industrial Bank of Japan Ltd.) 30,300 5.50%, 9/19/96..................... 30,216,675 10,649 5.43%, 11/19/96.................... 10,522,108 6,538 Working Capital Management Co. L.P., (LOC: Industrial Bank of Japan Ltd.) 5.55%, 9/9/96...................... 6,529,937 518,407,561 FOOD & BEVERAGE -- .4% 10,000 COFCO Capital Corp., (LOC: Credit Suisse) 5.40%, 9/13/96..................... 9,982,000 INSURANCE -- 1.4% 15,000 Aetna Life & Casualty Co., 5.50%, 10/15/96.................... 14,899,167 Allianz of America Finance Corp., 5,000 5.42%, 9/11/96..................... 4,992,472 15,100 5.34%, 11/26/96.................... 14,907,374 34,799,013 LEASING -- 1.1% 14,700 Amada Leasing Corp., (LOC: Dai Ichi Kangyo Bank Ltd.) 5.34%, 9/13/96..................... 14,673,834 Fleet Funding Corp., 4,100 5.30%, 9/10/96..................... 4,094,567 7,878 5.30%, 9/17/96..................... 7,859,443 26,627,844 MACHINERY, EQUIPMENT & AUTOS -- 11.0% American Honda Finance Corp., 13,840 5.40%, 9/16/96..................... 13,808,860
6 EVERGREEN MONEY MARKET FUND (Photo of money) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE COMMERCIAL PAPER* -- CONTINUED MACHINERY, EQUIPMENT & AUTOS -- CONTINUED $20,000 5.53%, 10/1/96..................... $ 19,907,833 BTR Dunlop Finance, Inc., 7,200 5.44%, 9/9/96...................... 7,191,296 25,000 5.36%, 9/20/96..................... 24,929,278 30,000 5.42%, 9/25/96..................... 29,891,600 Daimler-Benz North America Corp., 11,400 5.49%, 11/7/96..................... 11,283,520 18,000 5.45%, 1/6/97...................... 17,653,925 General Motors Acceptance Corp., 25,000 5.47%, 2/10/97..................... 24,384,625 25,000 5.45%, 2/14/97..................... 24,371,736 25,000 5.50%, 5/16/97..................... 24,018,403 16,000 Mitsubishi Motors Credit of America, Inc., (LOC: Norinchukin Bank) 5.37%, 10/3/96..................... 15,923,627 Whirlpool Corp., 17,000 5.33%, 9/3/96...................... 16,994,966 7,200 5.43%, 9/27/96..................... 7,171,764 Whirlpool Financial Corp., 8,400 5.40%, 9/23/96..................... 8,372,280 16,300 5.46%, 9/23/96..................... 16,245,612 5,000 5.34%, 9/26/96..................... 4,981,459 267,130,784 OIL -- .4% 9,200 Tonen Energy International Corp., (LOC: Industrial Bank of Japan Ltd.) 5.43%, 9/16/96..................... 9,179,185 PHARMACEUTICALS & HEALTH CARE -- 4.4% A.H. Robins Co., Inc., 26,768 5.39%, 9/27/96..................... 26,663,798 19,000 5.305%, 10/23/96................... 18,854,407 20,000 Holy Cross Health System Corp., 5.34%, 11/25/96.................... 19,747,833 Massachusetts College of Pharmacy and Allied Health Services, 8,951 5.35%, 11/8/96..................... 8,860,545 10,470 5.33%, 11/21/96.................... 10,344,439 4,100 5.35%, 11/21/96.................... 4,050,646 PRINCIPAL AMOUNT (000) VALUE PHARMACEUTICALS & HEALTH CARE -- CONTINUED $ 9,500 5.40%, 12/5/96..................... $ 9,364,625 10,000 Metrocrest Hospital Authority, (LOC: Bank of New York) 5.3932%, 9/3/96.................... 9,997,004 107,883,297 REAL ESTATE -- 1.8% 11,100 Embarcadero Center Associates (Five), (LOC: Dai-Ichi Kangyo Bank Ltd.) 5.42%, 10/2/96..................... 11,048,194 10,000 Embarcadero Center Venture (One), (LOC: Dai-Ichi Kangyo Bank Ltd.) 5.38%, 9/4/96...................... 9,995,517 24,000 SRD Finance, Inc., (LOC: Bank of Tokyo- Mitsuibishi Ltd.) 5.37%, 9/26/96..................... 23,910,500 44,954,211 RETAIL -- 2.4% Avon Capital Corp., 8,000 5.53%, 9/9/96...................... 7,990,169 9,000 5.44%, 9/26/96..................... 8,966,000 8,250 5.44%, 9/27/96..................... 8,217,587 12,000 5.50%, 10/10/96.................... 11,928,500 11,000 5.50%, 10/22/96.................... 10,914,291 10,000 Southland Corp., 5.42%, 9/25/96..................... 9,963,867 57,980,414 TELECOMMUNICATIONS -- 2.4% 50,000 GTE Corp., 5.40%, 9/12/96..................... 49,917,500 10,000 U.S. West Capital Funding, Inc., 5.50%, 10/16/96.................... 9,931,250 59,848,750 TRANSPORTATION -- 1.1% 26,000 BMW U.S. Capital Corp., 5.31%, 10/24/96.................... 25,796,745 TOTAL COMMERCIAL PAPER (COST $2,012,721,493)......... 2,012,721,493
7 EVERGREEN MONEY MARKET FUND (Photo of money) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE CORPORATE NOTES -- 3.9% Federal Home Loan Bank, $ 4,000 5.35%, 3/14/97..................... $ 4,000,000 25,000 6.105%, 6/20/97.................... 25,000,000 25,000 Federal National Mortgage Association, 5.245%, 4/11/97, (VR).............. 24,993,413 25,000 Merrill Lynch & Co., Inc., 5.38%, 9/16/96, (VR)............... 25,000,000 15,000 PNC Bank NA Pittsburgh Pa., 5.29%, 10/4/96, (VR)............... 14,999,248 TOTAL CORPORATE NOTES (COST $93,992,661)............ 93,992,661 TAXABLE MUNICIPALS -- .7% 6,100 Brittany Acres, 5.875%, 4/1/97..................... 6,100,000 10,000 Oakland Alameda County, (LOC: Canadian Imperial Bank of Commerce) 5.42%, 9/30/96..................... 10,000,000 TOTAL TAXABLE MUNICIPALS (COST $16,100,000)............ 16,100,000
SHARES (000) VALUE MUTUAL FUND SHARES -- .0%+ 947 Lehman Prime Value Money Market Fund Series A (at net asset value) (COST $947,166)............ $ 947,166 TOTAL INVESTMENTS -- (COST $2,457,920,279)...... 100.9% 2,457,920,279 OTHER ASSETS AND LIABILITIES -- NET.... (.9) (21,250,912) NET ASSETS --............ 100.0% $2,436,669,367
LOC -- Letter of Credit VR -- Variable-rate issue. Rate shown is the rate in effect at August 31, 1996. * -- These securities held by the Fund at August 31, 1996 are traded on a discount basis; the interest rate shown is the discount rate to be earned at the time of purchase by the Fund. + -- Less than one-tenth of one percent See accompanying notes to financial statements. 8 EVERGREEN MONEY MARKET FUND (Photo of money) STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996
ASSETS: Investments at value (amortized cost $2,457,920,279)........................................................ $2,457,920,279 Cash........................................................................................................ 2,266,305 Interest receivable......................................................................................... 7,428,535 Receivable for Fund shares sold............................................................................. 4,027,732 Other assets................................................................................................ 95,519 Total assets.......................................................................................... 2,471,738,370 LIABILITIES: Payable for investment securities purchased................................................................. 25,000,812 Dividend payable............................................................................................ 6,420,957 Payable for Fund shares repurchased......................................................................... 1,054,860 Accrued expenses............................................................................................ 982,896 Distribution fee payable.................................................................................... 885,236 Accrued advisory fee........................................................................................ 724,242 Total liabilities..................................................................................... 35,069,003 NET ASSETS..................................................................................................... $2,436,669,367 NET ASSETS CONSIST OF: Paid-in capital............................................................................................. $2,437,220,220 Accumulated net realized loss on investment transactions.................................................... (550,853) Net assets............................................................................................ $2,436,669,367 CALCULATION OF NET ASSET VALUE PER SHARE: Class A Shares ($1,755,266,532(division sign)1,755,274,268 shares of beneficial interest outstanding).....................$1.00 Class B Shares ($10,218,109(division sign)10,218,090 shares of beneficial interest outstanding)...........................$1.00 Class Y Shares ($671,184,726(division sign)671,723,771 shares of beneficial interest outstanding).........................$1.00
See accompanying notes to financial statements. 9
EVERGREEN MONEY MARKET FUND (Photo of money) STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1996 INVESTMENT INCOME: Interest....................................................................................... $97,756,500 EXPENSES: Advisory fee................................................................................... $8,346,173 Distribution fee -- Class A Shares............................................................. 3,910,297 Distribution fee -- Class B Shares............................................................. 68,566 Shareholder services fee -- Class B Shares..................................................... 22,855 Transfer agent fee............................................................................. 632,040 Registration and filing fees................................................................... 513,593 Custodian fee.................................................................................. 397,865 Reports and notices to shareholders............................................................ 232,570 Professional fees.............................................................................. 45,588 Insurance...................................................................................... 25,263 Trustees' fees and expenses.................................................................... 24,855 Miscellaneous.................................................................................. 14,367 14,234,032 Less advisory fee waiver....................................................................... (2,427,423) Net expenses............................................................................. 11,806,609 Net investment income............................................................................. 85,949,891 Net realized loss on investment transactions...................................................... (26,141) NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............................................. $85,923,750
See accompanying notes to financial statements. 10 EVERGREEN MONEY MARKET FUND (Photo of money) STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31, 1996 1995 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income................................................................ $ 85,949,891 $ 19,245,941 Net realized gain (loss) on investment transactions.................................. (26,141) 19,987 Net increase in net assets resulting from operations.............................. 85,923,750 19,265,928 DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A Shares....................................................................... (63,327,347) (4,909,735) Class B Shares....................................................................... (382,116) (56,561) Class Y Shares....................................................................... (22,240,428) (14,279,645) Total distributions to shareholders............................................... (85,949,891) (19,245,941) FUND SHARE TRANSACTIONS: Proceeds from shares sold............................................................ 6,275,701,649 1,749,914,977 Proceeds from shares issued from acquisition of FFB Cash Management Fund....................................................... 592,358,361 -- Proceeds from shares issued from acquisition of FFB Lexicon Cash Management Fund............................................... 95,834,929 -- Proceeds from shares issued from acquisition of First Union Money Market Portfolio................................................ -- 642,287,528 Proceeds from reinvestment of distributions.......................................... 28,242,023 14,341,469 Payments for shares redeemed......................................................... (5,531,191,681) (1,703,929,225) Net increase resulting from Fund share transactions............................... 1,460,945,281 702,614,749 Net increase in net assets........................................................ 1,460,919,140 702,634,736 NET ASSETS: Beginning of year.................................................................... 975,750,227 273,115,491 End of year.......................................................................... $2,436,669,367 $ 975,750,227
See accompanying notes to financial statements. 11 EVERGREEN MONEY MARKET FUND -- CLASS A AND B SHARES (Photo of money) FINANCIAL HIGHLIGHTS
CLASS A SHARES CLASS B SHARES JANUARY 4, JANUARY 26, 1995* 1995* YEAR ENDED THROUGH YEAR ENDED THROUGH AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, 1996 1995 1996 1995 PER SHARE DATA: Net asset value, beginning of period............................ $1.00 $1.00 $1.00 $1.00 Net investment income........................................... .05 .03 .04 .03 Less distributions to shareholders from net investment income... (.05) (.03) (.04) (.03) Net asset value, end of period.................................. $1.00 $1.00 $1.00 $1.00 TOTAL RETURN+................................................... 5.0% 3.5% 4.3% 2.8% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)....................... $1,755,267 $685,155 $10,218 $7,927 Ratios to average net assets: Expenses**................................................... .75% .81%++ 1.45% 1.51%++ Net investment income**...................................... 4.86% 5.26%++ 4.18% 4.54%++
* Commencement of class operations. + Total return is calculated on net asset value for the periods indicated and is not annualized. Contingent deferred sales charge is not reflected. ++ Annualized. ** Net of expense waivers and reimbursements. If the Fund had borne all expenses that were reimbursed or waived by the investment adviser, the annualized ratios of expenses and net investment income to average net assets would have been the following:
CLASS A SHARES CLASS B SHARES JANUARY 4, JANUARY 26, 1995* 1995* YEAR ENDED THROUGH YEAR ENDED THROUGH AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, 1996 1995 1996 1995 Expenses........................................................ .89% 1.02%++ 1.59% 2.39%++ Net investment income........................................... 4.72% 5.05%++ 4.04% 3.66%++
See accompanying notes to financial statements. 12 EVERGREEN MONEY MARKET FUND -- CLASS Y SHARES (Photo of money) FINANCIAL HIGHLIGHTS
TEN MONTHS YEAR ENDED AUGUST ENDED YEAR ENDED OCTOBER 31, AUGUST 31, 31, 1996 1995 1994# 1993 1992 PER SHARE DATA: Net asset value, beginning of period...................... $1.00 $1.00 $1.00 $1.00 $1.00 Net investment income..................................... .05 .05 .03 .03 .04 Less distributions to shareholders from net investment income................................................. (.05) (.05) (.03) (.03) (.04) Net asset value, end of period............................ $1.00 $1.00 $1.00 $1.00 $1.00 TOTAL RETURN+............................................. 5.3% 5.4% 2.9% 3.2% 4.2% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)........................................ $671,185 $282,668 $273,115 $299,418 $357,917 Ratios to average net assets: Expenses**............................................. .45% .53% .32%* .39% .36% Net investment income**................................ 5.16% 5.26% 3.46%* 3.19% 4.18%
# The Fund changed its fiscal year end from October 31 to August 31. + Total return is calculated for the periods indicated and is not annualized. * Annualized. ** Net of expense waivers and reimbursements. If the Fund had borne all expenses that were reimbursed or waived by the investment adviser, the annualized ratios of expenses and net investment income to average net assets would have been the following:
TEN MONTHS YEAR ENDED AUGUST ENDED YEAR ENDED OCTOBER 31, AUGUST 31, 31, 1996 1995 1994# 1993 1992 Expenses.................................................. .59% .73% .71%* .71% .72% Net investment income..................................... 5.02% 5.06% 3.07%* 2.87% 3.82%
See accompanying notes to financial statements. 13 EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND (Photo of building) A REPORT FROM YOUR PORTFOLIO MANAGER RICHARD K. MARRONE We are pleased to bring you the 1996 Annual Report for (Photo of Evergreen Pennsylvania Tax-Free Money Market Fund. The Fund's Richard K. fiscal year-end was changed from February 28, to August 31, to Marrone) coincide with Evergreen's other money market funds. In the first half of 1996, a continued stream of strong economic data re-ignited fears about future inflation and caused a reversal in fortunes in the bond market from the positive returns experienced in 1995. The underpinnings of economic growth in 1996 have been in the strength of the housing market, consumer spending, and job creation. With second quarter Gross Domestic Product (GDP) coming in at 4.8%, there were concerns in the market about inflation rearing its ugly head. Although the Federal Reserve Board did not raise rates at the September 24 Federal Open Market Committee meeting, many investors remain prepared for Fed tightening any time. With elections approaching, the Fed seems in no hurry to change course, believing that, despite the upticks in economic reports, underlying inflation is still in check and the economy is not yet overheating. The market has taken some of the onus from the Fed by pricing a 25 to 50 basis point rate increase into the yield curve in response to the economic data. The beginning of the second quarter saw money market funds feeling the crunch of April 15 income tax payments, as monies flowed out and cash was in scant supply. Variable rate demand notes saw a spike in rates to 4.11%, the first reset over 4.00% for 1996. These higher rates did attract some crossover corporate buyers. In May, short-term rates remained in a tight range due to lack of supply. Money market funds saw inflows after the May 1 coupon payment, and cash flowed back into the short-term arena to escape the volatility in other markets, especially equity markets. Market rates reacted to technical factors since the Fed remained in a holding pattern on policy moves. Rates increased about 10 basis points as new notes deals hit the market in the last week of May, signaling the beginning of the one-year note season. Variable rates fell 100 basis points in the first week of July as cash poured in from the July 1 bond redemptions. Once the influx was absorbed, the market readied itself for the $2.9 billion Texas Tax Revenue Anticipation Notes (TRANs) sale on August 27, one of the last large note deals of the year. (A $1.0 billion New York City Revenue Anticipation Notes (RANs) deal is due in October.) During this period, notes traded at 68% of taxables, with yields of 3.85%, up from 63% of taxables and yields of 3.30% at the beginning of the Fund's fiscal year. The Fund experienced large outflows in March and April for tax payments causing the Fund's net assets to drop from $88 million at the end of February to $71 million at the end of August. The Fund's weighted average maturity ranged from 43 to 58 days during that time. At fiscal year-end, it stood at 47 days. At August 31, the Fund held 11% of net assets in cash, 54% in variable demand notes, and the remainder in fixed rate securities. Since we believe Fed pressure to raise rates seems likely before year-end, we plan to keep the Fund's weighted average maturity short to capture expected increased yields. Purchases are currently concentrated in fixed rate securities in the 3- to 6-month maturity range. There has been very little Pennsylvania supply in the market, though the Fund was able to participate in the Philadelphia TRANs 4.50% due 6/30/97 that priced to yield 3.95%. It was one of the few liquid deals available in Pennsylvania, but our participation was limited due to diversification requirements. It is more difficult in a state specific fund to make timely changes in average maturity and asset allocation due to lack of supply and liquidity. Evergreen Pennsylvania Tax-Free Money Market Fund's seven-day current, effective and tax-equivalent yields are illustrated in the table below.
7-DAY CURRENT YIELD 7-DAY EFFECTIVE YIELD TAX-EQUIVALENT YIELD* Class Y Shares 3.15% 3.20% 5.14% Class A Shares 3.07% 3.12% 5.02%
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS *TAX-EQUIVALENT YIELD ASSUMES A 36% FEDERAL TAX BRACKET, AND 2.8% PENNSYLVANIA STATE TAX BRACKET. TAX-EQUIVALENT YIELD WOULD BE LOWER FOR INVESTORS IN LOWER TAX BRACKETS AND HIGHER FOR INVESTORS IN HIGHER TAX BRACKETS. YIELDS FLUCTUATE. DURING THE PERIOD UNDER REVIEW, THE ADVISER CONTINUED TO VOLUNTARILY WAIVE A PORTION OF ITS ADVISORY FEE, AND ABSORBED A PORTION OF THE FUND'S 12B-1 EXPENSES ON ITS CLASS A SHARES. HAD FEE NOT BEEN WAIVED OR EXPENSE ABSORBED, YIELDS WOULD HAVE BEEN LOWER. FEE WAIVER AND EXPENSE ABSORPTION MAY BE REVISED AT ANY TIME. THE FUND MAY INCUR 12B-1 EXPENSES, UP TO AN ANNUAL MAXIMUM OF .35 OF 1% OF ITS AVERAGE DAILY NET ASSETS OF ITS CLASS A SHARES. FOR THE FORSEEABLE FUTURE, HOWEVER, MANAGEMENT INTENDS TO LIMIT SUCH PAYMENTS TO .30 OF 1% OF THE FUNDS DAILY NET ASSETS OF ITS CLASS A SHARES. AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1 PER SHARE. 14 EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND (Photo of building) STATEMENT OF INVESTMENTS AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- 100.2% PENNSYLVANIA -- 99.0% $ 1,000 Allegheny Cnty. Hosp. Dev. Auth. RB (Allegheny Gen. Hosp.), Ser. 1995B, 3.40% -- VRDN (LOC: Morgan Gty. Tr. Co. of NY)...... $ 1,000,000 Allegheny Cnty. Hosp. Dev. Auth. RB (Allegheny Health Ed. & Resh. Corp.), ACES, 3.40% -- VRDN (LOC: PNC Bk., Pittsburgh) 1,200 Ser. A.............................. 1,200,000 1,100 Ser. C.............................. 1,100,000 1,000 Allegheny Cnty. Hosp. Dev. Auth. RB (Presbyterian Univ. Hosp.), Ser. 1988B3, 3.50% -- VRDN (LOC: PNC Bk., Pittsburgh)............ 1,000,000 Allegheny Cnty. IDA Envir. RRB (US Steel Corp.) -- TECP (LOC: The Long-Term Cr. Bk. of Japan) 2,000 Ser. 1985, 3.55%, 10/8/96........... 2,000,000 1,500 Ser. 1985, 3.55%, 11/6/96........... 1,500,000 1,000 Ser. 1986, 3.50%, 10/3/96........... 1,000,000 500 Beaver Cnty. IDA-PCRR (Duquesne Light Co.) -- TECP 3.45%, 9/6/96 (LOC: Swiss Bk.)........ 500,000 300 Beaver Cnty. IDA-PCRR (Duquesne Light Co., Beaver Vly.), Ser. A, 3.45% -- VRDN (LOC: Barclays Bk. PLC)............... 300,000 2,000 Beaver Cnty. IDA-PCRR (The Toledo Edison Co. Mansfield), Ser. 1992E -- TECP, 3.65%, 12/10/96 (LOC: Toronto Dominion Bk.)........... 2,000,000 1,000 Bedford Cnty. IDA-RB (Sepa Inc. Facility), 3.90% -- VRDN (LOC: Banque Paribas)................. 1,000,000 200 Bethlehem Authority RB (Northampton and Lehigh Cnty), Ser. A, 4.20%, 11/15/96 (MBIA)........ 200,210 240 Big Spring School Dist. Cumberland Cnty. GO Bds., Ser 1992, 4.35%, 3/1/97 (FGIC)........ 240,515 250 Brandywine Heights Area Dist. GO Bds., 4.40%, 4/1/97 (MBIA)......... 250,300 100 Bucks Cnty. IDA-RRB (SHV Real Estate, Inc.), Ser. 1984, 3.30% -- VRDN (LOC: ABN-AMRO Bk.)................... 100,000 PRINCIPAL AMOUNT (000) VALUE $1,000 Bucks Cnty. IDA Environmental Impt,. RB (USX Corp.), 3.55% -- ARB, 10/1/96 (LOC: Wachovia Bk. N.C.).............. $ 1,000,000 250 City of Meadville GO Bds., Ser 1995B, 3.70%, 10/1/96 (AMBAC)....................... 250,000 3,500 City of Philadelphia TRANS Ser. 1996-1997 A, 4.50%, 6/30/97...... 3,517,036 500 Claysburg-Kimmel School Dist. Bedford and Blair Cnty. GO Bds., Ser. 1989 Prerefunded @ 100 7.00%, 1/15/97........................ 505,613 250 Cnty. of Chester GO Bds., Ser. 1993A, 3.75%, 12/15/96........... 250,000 1,000 Cnty. of Chester Hlth. & Ed. Fac. Auth. RB (Barclays Friends), Ser. A, 3.50% -- VRDN (LOC: Bk. of Ireland)................. 1,000,000 1,000 Cnty. of Delaware GO Bds., Ser. 1992, 4.45%, 11/15/96............ 1,001,636 500 Cnty. of Montgomery GO Bds., Ser. 1992, Prerefunded @ 100 4.10%, 10/15/96....................... 500,380 1,185 Colonial School Dist. GO Bds., 5.00%, 9/1/96 (MBIA)............ 1,185,000 1,000 Dauphin County GO Bds., Prerefunded @ 100 7.70%, 10/15/96....................... 1,004,644 2000 Delaware Cnty. IDA -- PCRR (BP Oil Inc.), 3.75% -- VRDN (LOC: Morgan Gty. Tr. Co. of NY)...... 2,000,000 Delaware Cnty. IDA-PCRR (Philadelphia Electric Co.), TECP (SPA: FGIC Secs. Purch.), 1,000 3.60%, 9/9/96....................... 1,000,000 3,000 3.45%, 10/7/96...................... 3,000,000 500 Delaware Cnty. IDA -- RRB (Res. Recovery) Ser. 1993G, 4.25%, 12/1/96 (LOC: Gen. Elec. Capital Corp.)....... 501,152 Delaware Cnty. IDA Solid Waste RB (Scott Paper Co.), 1984, 3.45% -- VRDN, 700 Ser. C.............................. 700,000 400 Ser. D.............................. 400,000
15 EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND (Photo of building) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED PENNSYLVANIA -- CONTINUED $1,000 Delaware Vly. Regl. Fin. Auth. Local Govt. RB. Ser. 1985A, 3.50% -- VRDN (LOC: Midland Bk. PLC)................ $ 1,000,000 250 Delaware Vly. Regl. Fin. Auth. Local Govt. RB Ser. 1986A, 3.80%, 4/15/97 (AMBAC)................ 250,000 500 Downingtown School Dist. GO Bds., Ser. 1986A, 4.00%, 3/1/97......................... 500,712 Emmaus Gen. Auth. Local Govt. RB (Bd. Pool Pgm.), Ser. 1989, 3.60% -- VRDN (LOC: Midland Bk. PLC) 4,300 Subsrs. B-12........................ 4,300,000 2,000 Subsrs. C-8......................... 2,000,000 1,400 Subsrs. D-11........................ 1,400,000 425 Subsrs. E-9......................... 425,000 2,000 Subsrs. F-5......................... 2,000,000 400 Emmaus Gen. Auth. Local Govt. RB (Bd. Pool Pgm.), Ser. 1989, Subser. E-8, 3.55% -- VRDN (LOC: Canadian Imperial Bk. of Commerce)............. 400,000 300 Geisinger Auth. Health Sys. RB (Montour Cnty.) 7.10%, 7/1/97......... 307,252 Health Care Facs. Auth. of Sayre RB (VHA of PA, Inc., Capital Asset Fin. Prog.), 3.35% -- VRDN (SPA: Mellon Bk. PLC) 400 Ser. A.............................. 400,000 400 Ser. M.............................. 400,000 475 Lancaster Higher Ed. Auth College RB (Franklin & Marshall College), Ser. 1995, 3.70% -- VRDN.............. 475,000 520 Lehigh Cnty. Auth. Wtr. RB Ser. 1984, 3.35% -- VRDN (SPA: ABN-AMRO Bk.)................... 520,000 200 Lehigh Cnty. IDA -- PCR (Allegheny Elec. Coop., Inc.) Ser. 1985A, 3.30% -- VRDN (LOC: Rabobank Nederland)............. 200,000 1,335 Lycoming Cnty. Auth. Hosp. RB (Williamsport Hosp. Obligated Group), Ser. 1995, 3.90%, 11/15/96 (Connie Lee Insurance Co.)............ 1,335,000 PRINCIPAL AMOUNT (000) VALUE $ 1,000 Montgomery Cnty. IDA -- PCRR (PECO Energy Co.), Ser. 1994A, TECP, 3.50%, 11/7/96 (LOC: Deutsche Bk. AG, NY)............ $ 1,000,000 2,000 New Castle Area Hosp. Auth. RB (Jameson Mem. Hosp.), 3.50% -- VRDN (SPA: PNC Bk.)........................ 2,000,000 100 New Castle Area School Dist. GO Bds., Ser. 1993, 4.00%, 9/1/96 (Asset Gty. Insurance Co.)............ 100,000 1,000 Northeastern Hosp. & Ed. Auth. Rev. (Health Care Rev. Wyoming Vly.), Ser. A, 3.45% -- VRDN (LOC: Industrial Bk. of Japan Ltd., NY)....................... 1,000,000 930 Northern Tioga School Dist. GO Bds., Ser. 1996, 3.50%, 9/1/96 (AMBAC)................. 930,000 565 Pennsylvania Higher Ed. Facs. Auth. RB (LaSalle Univ.), Ser. 1996, 4.00%, 5/1/97 (MBIA).................. 566,084 500 Pennsylvania Higher Ed. Facs. Auth. RB (The Univ. of Pennsylvania Health Svs.) Ser. 1994B, ACES, 3.45% -- VRDN................... 500,000 2,000 Pennsylvania Higher Ed. Facs. Auth. RB (The Univ. of Pennsylvania Health Svs.), 3.45% -- VRDN (SPA: Credit Suisse, NY).............. 2,000,000 2,000 Pennsylvania Higher Ed. Facs. Auth. RB (Allegheny College) 3.50% -- VRDN (LOC: Mellon Bk. PLC)................. 2,000,000 251 Pennsylvania State GO Bds. Second Ser. A, 6.00%, 11/1/96, (MBIA)................ 250,981 2,200 Pennsylvania Tpk. Commn. Tpk. Rev. Ser. A, Prerefunded @102, 7.875%, 12/1/96....................... 2,268,501 1,000 Pennsylvania Tpk. Comm. RB, Ser. O 1992, 4.25%,12/1/96 (FGIC).................. 1,001,566 700 Philadelphia Municipal Auth. Municipal Svs. Building Lease Rental Bds. Ser. 1990, 6.80%, 3/15/97 (FSA).................. 711,112
16 EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND (Photo of building) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED PENNSYLVANIA -- CONTINUED $4,200 Schuykill Cnty. IDA Res. Recovery RB (Gilberton Pwr.), 3.50% -- VRDN (LOC: Mellon Bk. PLC)................. $ 4,200,000 1,900 Schuykill Cnty. IDA Res. Recovery RB (Northeastern Pwr. Co.), Ser. 1985, 3.85% -- VRDN (LOC: Sumitomo Bk., Ltd.)............. 1,900,000 290 Township of Lower Merion GO Bds., Ser. 1996B, 3.20%, 12/1/96........................ 290,000 1,700 Washington Cnty. Auth. Lease RB (Higher Ed. Pooled Equip. Leasing Prob.), Ser. 1985A, 3.55% -- VRDN (LOC: Sanwa Bk., Ltd.)................ 1,700,000 250 Westmoreland Cnty. GO Bds., Ser. A, 3.65%, 10/15/96......... 250,000 69,787,694 PUERTO RICO -- 1.2% 876 Puerto Rico Indl., Med. & Environmental Pollution Control Facs. Fin. Auth. RB (Merck & Co., Inc.), Ser. 1983A, 4.00% -- ARB, 12/1/96................. 875,826 TOTAL SHORT-TERM MUNICIPAL SECURITIES (COST $70,663,520).................... $70,663,520
SHARES (000) MUTUAL FUND SHARES -- .9% 616 Pennsylvania Municipal Cash Trust Institutional Service Shares (at net asset value) (COST $616,000)....................... 616,000
TOTAL INVESTMENTS (COST $71,279,520)............. 101.1 % 71,279,520 OTHER ASSETS AND LIABILITIES -- NET............. (1.1) (764,102) NET ASSETS..................... 100.0 % $70,515,418
Summary of Abbreviations: ACES -- Adjustable Convertible Extendable Securities AMBAC -- American Municipal Bond Assurance Corp. ARB -- Adjustable Rate Bonds FGIC -- Financial Guaranty Insurance Co. FSA -- Financial Security Assurance Inc. GO -- General Obligations IDA -- Industrial Development Authority LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance Corp. PCR -- Pollution Control Revenue PCRR -- Pollution Control Revenue Refunding Bonds RB -- Revenue Bonds RRB -- Refunding Revenue Bonds SPA -- Standby Purchase Agreement TECP -- Tax Exempt Commercial Paper TRANS -- Tax Revenue Anticipation Notes VRDN -- Variable Rate Demand Notes Adjustable Rate Bonds are putable back to the issuer or other parties not affiliated with the issuer at par on the interest reset dates. Interest rates are determined and set by the issuer quarterly, semi-annually or annually depending upon the terms of the security. Interest rates presented for these securities are those in effect at August 31, 1996. These securities represent 3% of total investments at August 31, 1996. Variable Rate Demand Notes are payable on demand on no more than seven calendar days notice given by the Fund to the issuer or other parties not affiliated with the issuer. Interest rates are determined and reset by the issuer daily, weekly or monthly depending upon the terms of the security. Interest rates presented for these securities are those in effect at August 31, 1996. These securities represent 54% of total investments at August 31, 1996. Certain obligations held in the portfolio have credit enhancements or liquidity features that may, under certain circumstances, provide for repayment of principal and interest on the obligation upon demand date, interest date reset date or final maturity. These enhancements include: letters of credit; liquidity guarantees; standby bond purchase agreements; tender option purchase agreements; and third party insurance (I.E. AMBAC, FGIC and MBIA) Adjustable rate bonds and variable rate demand notes held in the portfolio may be considered derivative securities. Management has determined that these securities comply with the standards imposed by the Securities and Exchange Commission under Rule 2a-7 which were designed to minimize both credit and market risk. See accompanying notes to financial statements. 17 EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND (Photo of building) STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996
ASSETS: Investments at value (amortized cost $71,279,520).............................................................. $71,279,520 Cash........................................................................................................... 385 Interest receivable............................................................................................ 442,565 Receivable for Fund shares sold................................................................................ 1,200 Total assets............................................................................................. 71,723,670 LIABILITIES: Payable for investment securities purchased.................................................................... 1,000,000 Dividend payable............................................................................................... 114,151 Accrued expenses............................................................................................... 73,851 Accrued advisory fee........................................................................................... 14,700 Payable for Fund shares repurchased............................................................................ 5,550 Total liabilities........................................................................................ 1,208,252 NET ASSETS........................................................................................................ $70,515,418 NET ASSETS CONSIST OF: Paid-in capital................................................................................................ $70,521,835 Undistributed net investment income............................................................................ 3,800 Accumulated net realized loss on investment transactions....................................................... (10,217) Net assets............................................................................................... $70,515,418 CALCULATION OF NET ASSET VALUE PER SHARE: Class A Shares ($22,196,093(division sign)22,196,184 shares of beneficial interest outstanding).............................$1.00 Class Y Shares ($48,319,325(division sign)48,325,651 shares of beneficial interest outstanding).............................$1.00
See accompanying notes to financial statements. 18 EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND (Photo of building) STATEMENT OF OPERATIONS SIX MONTHS ENDED AUGUST 31, 1996* INVESTMENT INCOME: Interest........................................................................................ $1,280,733 EXPENSES: Advisory fee.................................................................................... $ 148,591 Administration fee.............................................................................. 18,066 Distribution fee -- Class A Shares.............................................................. 24,476 Professional fees............................................................................... 20,458 Transfer agent fee.............................................................................. 19,393 Custodian fee................................................................................... 17,900 Reports and notices to shareholders............................................................. 11,720 Insurance....................................................................................... 4,398 Registration and filing fees.................................................................... 3,160 Trustees' fees and expenses..................................................................... 311 Miscellaneous................................................................................... 889 269,362 Less fee waivers................................................................................ (79,856) Net expenses.............................................................................. 189,506 Net investment income.............................................................................. 1,091,227 Net realized loss on investments................................................................... (378) NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................... $1,090,849
* The Fund changed its fiscal year end from February 28 to August 31, resulting in a six-month period. See accompanying notes to financial statements. 19 EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND (Photo of building) STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR ENDED AUGUST 31, FEBRUARY 29, 1996 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income.................................................................... $ 1,091,227 $ 2,665,986 Net realized loss on investment transactions............................................. (378) (189) Net increase in net assets resulting from operations.................................. 1,090,849 2,665,797 DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A Shares........................................................................... (242,309) (9,466) Class Y Shares........................................................................... (848,918) (2,656,520) Total distributions to shareholders................................................... (1,091,227) (2,665,986) FUND SHARE TRANSACTIONS: Proceeds from shares sold................................................................ 61,460,030 179,632,522 Proceeds from reinvestment of distributions.............................................. 621,908 1,766,790 Payments for shares redeemed............................................................. (79,296,671) (137,207,686) Net increase (decrease) resulting from Fund share transactions........................ (17,214,733) 44,191,626 Net increase (decrease) in net assets................................................. (17,215,111) 44,191,437 NET ASSETS: Beginning of period...................................................................... 87,730,529 43,539,092 End of period (including undistributed net investment income of $3,800 at August 31, 1996 and February 29, 1996, respectively)................................................... $ 70,515,418 $ 87,730,529
See accompanying notes to financial statements. 20 EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND (Photo of building) FINANCIAL HIGHLIGHTS
CLASS A SHARES CLASS Y SHARES MARCH 1, AUGUST 22, MARCH 1, 1996 1995* 1996 THROUGH THROUGH THROUGH YEAR ENDED AUGUST 31, FEBRUARY 29, AUGUST 31, FEBRUARY 29, FEBRUARY 28, 1996# 1996 1996# 1996 1995 PER SHARE DATA: Net asset value, beginning of period.............. $1.00 $1.00 $1.00 $1.00 $1.00 Net investment income............................. .01 .02 .01 .03 .03 Less distributions to shareholders from net investment income............................... (.01) (.02) (.01) (.03) (.03) Net asset value, end of period.................... $1.00 $1.00 $1.00 $1.00 $1.00 TOTAL RETURN+..................................... 1.5% 1.7% 1.5% 3.5% 2.8% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)......... $22,196 $4,333 $48,319 $83,398 $43,539 Ratios to average net assets: Expenses**...................................... .55%++ .47%++ .50%++ .37% .33% Net investment income**......................... 2.97%++ 3.14%++ 2.92%++ 3.42% 3.09% FEBRUARY 28, FEBRUARY 28, 1994 1993 PER SHARE DATA: Net asset value, beginning of period.............. $1.00 $1.00 Net investment income............................. .02 .03 Less distributions to shareholders from net investment income............................... (.02) (.03) Net asset value, end of period.................... $1.00 $1.00 TOTAL RETURN+..................................... 2.1% 2.7% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)......... $14,383 $15,999 Ratios to average net assets: Expenses**...................................... .47% .35% Net investment income**......................... 2.10% 2.62%
# The Fund changed its fiscal year end from February 28 to August 31. + Total return is calculated for the periods indicated and is not annualized. ++ Annualized. * Commencement of class operations ** Net of expense waivers and reimbursements. If the Fund had borne all expenses that were reimbursed or waived by the adviser, the annualized ratios of expenses and net investment income to average net assets would have been the following:
CLASS A SHARES CLASS Y SHARES MARCH 1, AUGUST 22, MARCH 1, 1996 1995* 1996 THROUGH THROUGH THROUGH YEAR ENDED AUGUST 31, FEBRUARY 29, AUGUST 31, FEBRUARY 29, FEBRUARY 28, 1996# 1996 1996# 1996 1995 Expenses.......................................... .96%++ 1.08%++ .66%++ .73% 1.05% Net investment income............................. 2.56%++ 2.53%++ 2.76%++ 3.06% 2.37% FEBRUARY 28, FEBRUARY 28, 1994 1993 Expenses.......................................... 1.26% 1.07% Net investment income............................. 1.31% 1.90%
See accompanying notes to financial statements. 21 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) A REPORT FROM YOUR PORTFOLIO MANAGER STEVEN C. SHACHAT We are pleased to bring you the 1996 Annual Report for (Photo of Evergreen Tax Exempt Money Market Fund. This report covers the Steven C. fiscal year ended August 31, 1996. Shachat) The markets both elated and frustrated investors during the last six months of our fiscal year. At the start of 1996, bond prices drifted lower in reaction to mixed economic signals despite the fact that the U.S. economy seemed to be following a slow growth pattern; one generally beneficial for bonds. Beginning in March, statistics indicating strong job growth and consumer's continued willingness to spend to their debt limits and beyond, propelled the bond market on a state of heightened alert for a resurgence of inflation and a new round of interest rate increases by the Federal Reserve. Throughout the last half of the Fund's fiscal year, however, inflation remained restrained and the Fed chose not to raise or lower interest rates. As a consequence of this uncertainty over the economy's direction, yields for both municipal and treasury bonds rose during the second half of the Fund's fiscal year, and prices declined. Long-term government bond yields have gyrated wildly in response to the shifting tone of incoming statistics but in the end, they've remained in a fairly narrow 6 3/4% to 7 1/4% range. Municipals, aided by a declining supply of tax-free bonds and steady demand from retail buyers, outperformed treasuries. The short-term municipal market is influenced by any Federal Reserve Board decision to alter interest rates; however, market technicals (i.e. supply/demand) were the overriding factor affecting the yields that prevailed throughout this period. One example of these seasonal adjustments occurred in late June and early July as demand exceeded supply, and short-term yields dropped accordingly. Apart from seasonal considerations, monthly technicals can occur also, which result in temporary drops in yield. Available supply evaporates quickly as interest payments and proceeds of bond maturities flow into money market funds the first days of each month. Primarily for those reasons, municipal money market yields tend to seesaw during these time periods. In yet another example of seasonal influences, the coming weeks may provide a window of buying opportunity, as year-end technicals are expected to soften short-term rates temporarily. Evergreen Tax Exempt Money Market Fund maintained a weighted average maturity in the 20-day range, a posture we believed was appropriate in view of a rather flat yield curve during most of this period. We structured the Fund's investments to maintain share price stability while at the same time allowing flexibility to take advantage of the imminent supply of tax-free issues over the summer. The commercial paper and one-year note markets provided the primary means for us to extend the Fund's maturity, while working to maintain a competitive yield. However, our success in achieving the desired average maturity was limited due to a scarcity of attractively priced issues from which to choose. As a result, the current weighted average maturity of the Fund's portfolio still leaves room to extend should a change in market or supply conditions warrant. The economy is at a crossroads where growth is concerned. Going forward, we anticipate continued market volatility until the future of economic growth is made more clear. We shall continue to search for attractive value by weighing the maturity characteristics, credit quality, and income potential of each bond we consider for purchase. At its fiscal year-end on August 31, 1996, Evergreen Tax Exempt Money Market Fund's total net assets were $1.3 billion. The Fund's seven-day current, effective and tax-equivalent yields at that time are illustrated in the table below.
7-DAY CURRENT YIELD 7-DAY EFFECTIVE YIELD TAX-EQUIVALENT YIELD* Class Y Shares 3.33% 3.38% 5.29% Class A Shares 3.03% 3.08% 4.81%
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS *TAX-EQUIVALENT YIELD ASSUMES A 36% FEDERAL TAX BRACKET. TAX-EQUIVALENT YIELD WOULD BE LOWER FOR INVESTORS IN LOWER TAX BRACKETS AND HIGHER FOR INVESTORS IN HIGHER TAX BRACKETS. YIELDS FLUCTUATE. DURING THE PERIOD UNDER REVIEW, THE ADVISER CONTINUED TO VOLUNTARILY WAIVE A PORTION OF ITS ADVISORY FEE. HAD FEE NOT BEEN WAIVED, YIELDS WOULD HAVE BEEN LOWER. FEE WAIVER MAY BE REVISED AT ANY TIME. THE FUND'S INCOME MAY BE SUBJECT TO STATE AND LOCAL TAXES. SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX FOR CERTAIN INVESTORS. THE FUND MAY INCUR 12B-1 EXPENSES, UP TO AN ANNUAL MAXIMUM OF .35 OF 1% OF ITS AVERAGE DAILY NET ASSETS OF ITS CLASS A SHARES. FOR THE FORSEEABLE FUTURE, HOWEVER, MANAGEMENT INTENDS TO LIMIT SUCH PAYMENTS TO .30 OF 1% OF THE FUNDS DAILY NET ASSETS OF ITS CLASS A SHARES. AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1 PER SHARE. 22 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- 100.7% ALABAMA -- 3.4% $ 3,170 Alabama Hsg. Fin. Auth. MHRB (Westshore Landing Apts.), Ser. 1995H, 3.70% -- VRDN (LOC: Southtrust Bk. of Alabama, N.A.)... $ 3,170,000 2,420 Alabama IDA-IDRB (Air-Dro Cylinders, Inc.), 3.89% -- VRDN (LOC: Southtrust Bk. of Alabama, N.A.).............................. 2,420,000 3,700 Alabama IDA-IDRB (Automation Technologies Ind. Inc.), 3.80% -- VRDN (LOC: Columbus Bk. & Tr. Co.)............................... 3,700,000 5,775 City of Northport Multifamily Hsg. Ref. Rev. Wt. (Northbrook I), Ser. 1993A, 3.60% -- VRDN (LOC: Southtrust Bk. of Alabama, N.A.)... 5,775,000 2,265 City of Northport Multifamily Hsg. RRB Wt. (River Run Apt.) Ser. 1995A, 3.70% -- VRDN (LOC: Amsouth Bk., N.A.)......................... 2,265,000 Coml. Dev. Auth. of the City of Birmingham RB, 3.80% -- VRDN (LOC: Amsouth Bk., N.A.) 1,185 (Avondale Comm. Park, Phase II).............................. 1,185,000 685 (Southside Business Ctr.)........ 685,000 7,115 Ed. Bldg. Auth. of the City of Homewood RB (Samford Univ.), Ser. 1990, 3.60% -- VRDN (LOC: Amsouth Bk., N.A.)......................... 7,115,000 3,235 IDB of Mobile Cnty. RB (Sherman Intl. Corp.), Ser. 1994A, 3.80% -- VRDN (LOC: Columbus Bk. & Tr. Co.)........................... 3,235,000 2,475 IDB of the City of Foley RB (Vulcan, Inc.), 3.60% -- VRDN (LOC: Amsouth Bk., N.A.)................. 2,475,000 1,100 IDB of the City of Livingston IDRB (Toin Corp. U.S.A.), Ser. 1987, 4.15% -- VRDN (LOC: Indl. Bk. of Japan, Ltd., NY)................... 1,100,000 2,000 IDB of the City of Montgomery RB (Feldmeier/Alabama Equip., Inc.), Ser. 1996, 3.75% -- VRDN (LOC: Southtrust Bk. of Alabama, N.A.)... 2,000,000 PRINCIPAL AMOUNT (000) VALUE ALABAMA -- CONTINUED $ 2,300 IDB of the City of Pell IDRB (Reh Kinder/Gorbel), 3.85% -- VRDN (LOC: Key Bk. of NY)..................... $ 2,300,000 3,000 IDB of the City of Prattville IDRB (Kuhnash Ppty./Arkay Plastics), 3.80% -- VRDN (LOC: PNC Bk.)..................... 3,000,000 3,390 Public Park & Rec. Brd. of the City of Birmingham RRB (Y.M.C.A.), Ser. 1996, 3.55% -- VRDN (LOC: Amsouth Bk., N.A.)........... 3,390,000 43,815,000 ARIZONA -- 4.2% 6,900 IDA of the City of Glendale, RB (Thunderbird Gardens), 4.00% -- VRDN (LOC: Sumitomo Trust & Bk. Co. Ltd., NY)*......................... 6,900,000 9,000 IDA of the City of Phoenix, RB (Amer. West Airlines, Inc.), Ser. 1986, 3.85% -- VRDN (LOC: Indl. Bk. of Japan, Ltd.).................... 9,000,000 200 IDA of the Cnty. of Maricopa (McLane Co., Inc.), Ser. 1984, 3.90% -- VRDN (LOC: Vly. Natl. Bk.).............. 200,000 Maricopa Cnty. PCRB 3.60% -- VRDN (El Paso Electric Co. Palo Verde), 24,800 Ser. 1985A (LOC: Westpac Bkg. Co.).......... 24,800,000 12,235 Ser. 1994A (LOC: Citibank, N.A.)............ 12,235,000 53,135,000 ARKANSAS -- .1% City of Jonesboro Residential Housing & Health Care Fac. Brd. Hosp. RRB (St. Bernards Regnl. Medical Ctr.), 4.10%, 7/1/97 (Ins. by AMBAC) 425 Ser. 1996A....................... 425,000 605 Ser. 1996B....................... 605,000 1,030,000 CALIFORNIA -- 8.2% 4,800 Agoura Hills MHRB (Oakridge Apts.), 3.65% -- VRDN (Surety Bond: Contl. Cas. Corp.)........................ 4,800,000
23 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED CALIFORNIA -- CONTINUED $ 6,000 California Higher Ed. Loan Auth. Inc. Ser. A-1, 3.95%, 7/1/97 (Gtd. by Sallie Mae)..................... $ 6,000,000 1,400 City of Barstow MHRB (Mercury Svgs. & Ln. Assn./Rimrock Vlg. Apts.), Ser. 1988A, 3.85% -- VRDN (LOC: Mercury Svgs. & Ln., Coll: U.S. Treas. Bills)...................... 1,400,000 3,355 City of Hanford Sewer Sys. RRB Ser. 1996A, 3.85% -- VRDN (LOC: Union Bk. of California)................. 3,355,000 102 Cnty of Orange Irvine Coast Assmt. Dist. No. 88-1 Ltd. Oblig. Impt. Bds., 3.65% -- VRDN (LOC: Kreditbank, NV).................... 102,000 5,500 Cnty. of San Bernardino MHRB (Rolling Ridge), 4.25% -- VRDN (LOC: Mercury Svgs. & Ln.)......... 5,500,000 1,900 Glenn Cnty. IDA RB (Land O'Lakes, Inc.), Ser. 1995, 4.10% -- VRDN (LOC: Sanwa Bk., Ltd.)............. 1,900,000 4,250 Hsg. Auth. of the City of Paramount MHRB (Century Place Apt.), Ser. 1989A, 4.22% -- VRDN (LOC: Heller Finl. Inc.)**...................... 4,250,000 5,000 Hsg. Auth. of the City of Santa Ana MHRB (Villa Verde Apt.), Ser. 1985B, 3.90% -- VRDN (LOC: Mercury Svgs. & Ln., Coll: U.S. Treas. Bills)............................. 5,000,000 2,600 IDA of the City of Simi Vly. IDRB (Wambold Furniture), Ser. 1984, 3.85% -- VRDN (LOC: Wells Fargo Bk., N.A.)......................... 2,600,000 8,500 Lancaster Redev. Agy. MHRB (Far West Svgs. & Ln. Assn./20th St. Apts.), Ser. 1985R, 3.90% -- VRDN (LOC: Far West Svgs. & Ln. Assn., Coll: U.S. Treas. Bills)........... 8,500,000 4,200 North Cnty. School Fin. Auth. 1996 TRANS (Orange Cnty.), 4.75%, 7/1/97............................. 4,220,068 1,100 Orange Cnty. Mun. Wtr. Dist. 3.70%, 9/12/96 -- TECP (LOC: Union Bk. of Switzerland).... 1,100,000 23,538 Pitney Bowes Cr. Corp. Leasetops Trs. (Bart Telesystem Lease), 3.90% -- VRDN (LOC: ABN-Amro Bk., N.V.)**............................ 23,538,000 PRINCIPAL AMOUNT (000) VALUE CALIFORNIA -- CONTINUED $ 3,600 Regional Airports Impt. Corp. Fac. Sublease RB, Issue 1985 Lax Two Corp. (Los Angeles Intl. Arpt.), 3.70% -- VRDN (LOC: Societe Generale, NY)........ $ 3,600,000 15,375 San Bernadino Cnty. COP Ser. 1995, 3.75% -- VRDN (Ins. by MBIA)**................... 15,375,000 4,000 Santa Paula Pub. Fin. Auth. RB (Wtr. Sys. Acquisition), Ser. 1996, 3.85% -- VRDN (LOC: Bk. of California & Sumitomo Bk.)......... 4,000,000 4,500 South Coast Local Ed. Agy. Pooled TRANS Prog., Ser. 1996A, 4.75%, 6/30/97............................ 4,524,297 5,000 Stanislaus Cnty. Office of Ed. 1996 TRANS, 4.50%, 6/30/97.............. 5,019,871 104,784,236 COLORADO -- 1.5% 5,000 Adams Cnty. IDRB (Yellow Fght. Sys., Inc.), Ser. 1983, 3.80% -- VRDN (LOC: Union Bk. of Switzerland)................ 5,000,000 5,000 Arapahoe Cnty. MHRB Ref. (Stratford Sta.), Ser. 1994, 4.15% -- VRDN (LOC: Heller Finl., Inc.).......... 5,000,000 550 Boulder Cnty. Dev. RB (The Geological Society of Amer., Inc.), Ser. 1992 -- ARB, 4.25%, 12/1/96 (LOC: Banc One Boulder)............ 550,000 5,500 Colorado Hsg. Fin. Auth. RB MERLOTS Ser. C, 4.125% -- ARB, 2/1/97 (LIQ: Meridian Bk.)**.................... 5,500,000 2,680 Parkview Met. Dist. Arapahoe Cnty. GO Bds., Ser. 1993, 3.75% -- VRDN (LOC: Cent. Bk./Bk. Western, N.A.).............................. 2,680,000 18,730,000 DELAWARE -- .8% 3,000 Delaware EDA-IDRB (Arlon, Inc.), Ser. 1989, 4.00% -- VRDN (LOC: Bk. of Amer., IL)...................... 3,000,000 4,060 Delaware Hsg. Auth. RB MERLOTS, Ser. G, 4.125% -- ARB, 12/1/96 (Ins. by FGIC)**................... 4,060,000
24 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED DELAWARE -- CONTINUED $ 2,480 New Castle Cnty., EDRB (Toys R Us), 3.55% -- VRDN (LOC: Bankers Tr. Co., NY)......... $ 2,480,000 9,540,000 DISTRICT OF COLUMBIA -- 1.7% 1,600 Dist. of Columbia GO Gen. Fd. Recovery Bd., Ser. B, 3.95% -- VRDN (LOC: Union Bk. of Switzerland).... 1,600,000 5,120 Dist. of Columbia GO RB (Puttable Floating Opt. Tax-Exmp. Rcpt., Ser. PA-64), Ser. 1993C, 3.90% -- VRDN (LIQ: Merrill Lynch Cap. Svs., Inc.)**............................ 5,120,000 Dist. of Columbia GO RFB, 3.95% -- VRDN 1,200 Ser. 1992A-1 (LOC: Natl. Westminster Bk.)..... 1,200,000 5,100 Ser. 1992A-2 (LOC: Bk. of Nova Scotia)........ 5,100,000 3,700 Ser. 1992A-4 (LOC: Toronto Dominion Bk.)...... 3,700,000 4,700 Ser. 1992A-5 (LOC: Bk. of Nova Scotia)........ 4,700,000 21,420,000 FLORIDA -- 2.4% 5,155 Florida Hsg. Fin. Auth. Long Option Mode Ser. 2-CR-25C 3.80% -- ARB, 12/15/96 (Ins. by FGIC)..................... 5,155,000 5,100 Jacksonville Elec. Auth. St. Johns River Pwr. Park Sys. RB Issue One, Ser. 3, 3.65%, 10/7/96 -- TECP (LOC: Morgan Gty., NY)............. 5,100,000 10,900 Orange Cnty., Hlth. Fac. Auth. RRB (Pooled Hosp. Ln. Prg.), ACES Ser. 1985, 3.70% -- VRDN (LIQ: Banque Paribas & Ins. by MBIA)............ 10,900,000 2,800 Orange Cnty. Hsg. Fin. Auth. MHRB Ser. E, (Oakwood), 4.20% -- ARB, 10/1/96 (LOC: Fleet Bk. N.A.).............. 2,800,000 1,005 Palm Beach Cnty. Hsg. RB (Meridian Hsg.), Ser. 1985, 4.2925% -- VRDN (LOC: Bk. of California, N.A.)..... 1,005,000 PRINCIPAL AMOUNT (000) VALUE FLORIDA -- CONTINUED $ 5,875 Palm Beach Cnty. School Brd. (MSTR Ser. 1996B), 4.00% -- VRDN (LIQ: Norwest Bk., MN & Ins. by AMBAC)**........................... $ 5,875,000 30,835,000 GEORGIA -- 2.6% 1,000 Albany Dougherty Cnty. Hosp. RB Ser. 1984A, 3.90% -- VRDN (Gtd. by Merck & Co.)....................... 1,000,000 5,000 Albany Dougherty Payroll, 3.90% -- VRDN (Gtd. by Merck & Co.).............. 5,000,000 2,550 Clayton Cnty. Hsg. Auth. RB (Oxford Townhomes), 3.60% -- VRDN (LOC: Amsouth Bk., N.A.)........... 2,550,000 1,800 Dev. Auth. of Burke Cnty. PCRB (Georgia Pwr. Co. Plant Vogtle), Second Ser. 1995, 3.75% -- VRDN (Gtd. by Georgia Pwr. Co.)......... 1,800,000 6,000 Dev. Auth. of Polk Cnty. RB (Kimoto Tech. Inc.), Ser. 1985, 3.90% -- VRDN (LOC: Indl. Bk. of Japan, Ltd.).... 6,000,000 10,600 Hsg. Auth. of Cobb Cnty., MHRB Ref. (Terrell Mill II Assoc., Ltd.), Ser. 1993, 3.70% -- VRDN (LOC: Mellon Bk., N.A.).................. 10,600,000 2,200 Hsg. Auth. of Columbus MHRB Ref. (Quail Ridge), Ser. 1988, 3.90% -- VRDN (LOC: Columbus Bk. & Tr. Co.)...... 2,200,000 1,000 Hsg. Auth. of Marietta MHRB (Falls at Bells Ferry), 3.55% -- ARB, 1/15/97 (LOC: Guardian Svgs. & Ln., Houston)........................... 1,000,000 3,375 Jackson Cnty., IDA RB (Buhler Quality Yarns Corp.), Ser. 1996, 3.61% -- VRDN (LOC: Union Bk. of Switzerland)**..................... 3,375,000 33,525,000 ILLINOIS -- 12.1% 9,740 City of Aurora MHRB (Fox Vly Vlg. Apts.), Ser. 1993, 4.00% -- VRDN (LOC: Sumitomo Bk., Ltd.).......... 9,740,000
25 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED ILLINOIS -- CONTINUED $ 4,200 City of Chicago, Cook Cnty. IDRB (Fed. Marine Term.), 3.80% -- VRDN (LOC: Royal Bk. of Canada)......... $ 4,200,000 1,000 City of Chicago, Cook Cnty. RB (CSX Beckett Aviation), Ser. 1984, 3.72% -- VRDN (LOC: Barclay's Bk. PLC)........... 1,000,000 2,900 City of Chicago GO Bds. (MSTR SAK-13), Ser. 1995A-2, 3.60% -- VRDN (LIQ: Societe Generale & Ins. by AMBAC)**........................ 2,900,000 6,680 City of Chicago (MSTR 1995 SGA-8) GO Bds., Ser. 1993B, 3.60 -- VRDN (LIQ: Societe Generale & Ins. by AMBAC)**........................... 6,680,000 2,640 City of Jacksonville Indl. RB (AGI, Inc.), Ser. 1995, 3.80% -- VRDN (LOC: Bk. of Amer., IL)............ 2,640,000 15,000 City of Oakbrook Terrace Multifamily Hsg. Mtg. RB (Renaissance), Ser. 1985A Subser. III, 4.45% -- ARB, 11/1/96 (LOC: Bayerische Landesbank, Girozentrale)...................... 15,000,000 4,000 City of Peoria Solid Waste Disposal RB (PMP Fermentation Products, Inc.), Ser. 1996, 3.90% -- VRDN (LOC: Sanwa Bk., Ltd.)............. 4,000,000 5,900 City of West Chicago IDRB (Acme Printing Inc.), Ser. 1989 3.925% -- VRDN (LOC: Bk. of Tokyo, Ltd.).......... 5,900,000 1,000 Cnty. of Dupage MHRB (Myerstown, L.L.C.), Ser. 1996B, 3.95% -- VRDN (LOC: First of Amer. Bk., N.A., IL)................................ 1,000,000 3,400 Illinois Dev. Fin. Auth. EDRB (MTI Corp.), 4.15% -- VRDN (LOC: Indl. Bk. of Japan, Ltd.)................ 3,400,000 Illinois Dev. Fin. Auth. IDRB -- VRDN (LOC: Amer. Natl. Bk. & Tr., Chicago) 2,500 (Icon Metalcraft, Inc.), Ser. 1995, 3.65%...................... 2,500,000 3,040 (Uhlich Children's Home), 3.85%**.......................... 3,040,000 PRINCIPAL AMOUNT (000) VALUE ILLINOIS -- CONTINUED $10,000 Illinois Dev. Fin. Auth. MHRB (Garden Glen Apts.), 3.75% -- VRDN (Surety Bond: Contl. Cas. Corp.)... $ 10,000,000 6,800 Illinois Dev. Fin. Auth. RB (Gen. Accident Ins. Co.), Ser. 1985 -- ARB (Gtd. by Gen. Accident Ins. Co. of Amer.) 3.25%, 9/1/96............ 6,800,000 6,000 Illinois Health. Fac. Auth. RB (Central DuPage Hosp. Assn.), Ser. 1990, 3.85% -- VRDN (LOC: Robobank Nederland)......................... 6,000,000 8,145 Illinois Hsg. Dev. Auth. RB (Illinois Ctr. Apts.), 3.70% -- VRDN (Gtd. by Met. Life Ins. Co.)....... 8,145,000 11,162 LaSalle Natl. Bk. Leasetops Trs. Ser. 1995A, 3.90% -- VRDN (LOC: LaSalle Natl. Bk.)**............... 11,162,512 3,000 Vlg. of Carol Stream IDRB (MI Enterprises, Inc.), 3.65% -- VRDN (LOC: Amer. Natl. Bk. & Tr., Chicago)........................... 3,000,000 16,640 Vlg. of Hazel Crest Retirement Ctr. RB (Waterford Estates), Ser. 1992A , 4.00% -- VRDN (LOC: Sumitomo Bk.)................ 16,640,000 2,345 Vlg. of Lombard IDRB (Chicago Roll Co., Inc.), Ser. 1995, 3.90% -- VRDN (LOC: Amer. Natl. Bk. & Tr., Co. of Chicago)............. 2,345,000 1,200 Vlg. of Palatine IDRB (Lightner Land Holdings LLC), Ser. 1995, 3.85% -- VRDN (LOC: Bk. One, Chicago, N.A.)...... 1,200,000 10,000 Vlg. of Schaumburg MHRB (Treehouse II Apt.), Ser. 1989, 4.00% -- VRDN (LOC: Sumitomo Bk.)................ 10,000,000 2,000 Vlg. of Skokie EDRB (Skokie Fashion Square Assn.), Ser. 1984, 3.775% -- VRDN (LOC: LaSalle Ntl. Bk.)............ 2,000,000 15,210 Vlg. of Vernon Hills MHRB (Hawthorn Lakes), Ser. 1991, 4.35% -- VRDN (LIQ: Fuji Bk., Ltd. & Ins. by FSA)............................... 15,210,000 154,502,512
26 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED INDIANA -- 4.9% $17,800 City of Fort Wayne PCRB (Gen. Mtrs. Corp.), 3.70% -- VRDN (Gtd. by Gen. Mtrs. Corp.)....................... $ 17,800,000 7,000 City of Gary EDRB (Miller Partnership, L.P.), Ser. 1995A, 3.75% -- ARB (LOC: Royal Bk. of Scotland)....... 7,000,000 2,000 City of New Albany EDRB (Bert R. Huncilman & Son Inc.), Ser. 1996A, 3.80% -- VRDN (LOC: PNC Bk.)..................... 2,000,000 2,000 City of New Albany EDRB (Gordon L. & Jeffery Huncilman -- Partner.), Ser. 1996B, 3.80% -- VRDN (LOC: PNC Bk.)..................... 2,000,000 2,000 City of South Bend MHRB (Maple Lane Assn.), Ser. 1987, 4.00% -- VRDN (LOC: Society Bk. of Cleveland).... 2,000,000 1,080 Decatur Indl. EDA-RB (Silberline Mfg. Co. Inc.), 4.125%, 12/01/96 (LOC: Corestates Capital Mkt., Inc.).............................. 1,080,000 25,000 Indiana Bd. Bk. (Reassessment Assist. Prog. Nts.), Ser. 1996B, 4.50%, 1/30/97..................... 25,060,261 3,150 Indianapolis EDA-EDRB (Sutton Pl. Apt.), Ser. A, 4.30% -- ARB, 10/1/96 (GIC: Berkshire Hathaway).......... 3,150,000 2,435 Indianapolis Airport Auth. RB (MSTR Ser. SGA-31), 3.60% -- VRDN (LIQ: Societe Generale & Ins. by FGIC)**............................ 2,435,000 62,525,261 IOWA -- .8% 5,680 Iowa Finance Auth. IDRB (McWane, Inc.), Ser. 1992, 3.75% -- VRDN (LOC: Amsouth Bk., N.A.)........... 5,680,000 PRINCIPAL AMOUNT (000) VALUE IOWA -- CONTINUED $ 5,000 City of Council Bluffs RB Catholic Hlth. Corp. (Mercy Hosp., Council Bluffs), Ser. 1985, 3.75% -- ARB, 10/1/96 (LOC: Fuji Bk., Ltd., LA).......... $ 5,000,000 10,680,000 KANSAS -- .6% 2,250 Burlington PCRB 3.70%, 9/24/96 -- TECP (Gtd. by Natl. Rural Utility Fin. Corp.).......... 2,250,000 1,000 City of Fredonia RB (Systech Envir. Corp.), Ser. 1989, 3.80% -- VRDN (LOC: Banque Natl. de Paris, NY)... 1,000,000 City of Salina RB (Salina Central Mall L.P.), Ser. 1984, 3.65% -- VRDN, (LOC: Boatmen's Bancshares, Inc.) 1,105 Dillard's........................ 1,105,000 1,200 Penney's......................... 1,200,000 1,800 City of Praire Vlg. MHRB (J.C. Nichol's Co.), Ser. 1985, 4.00% -- VRDN (Gtd. by Bankers Life Ins. Co.).... 1,800,000 7,355,000 KENTUCKY -- 1.5% 2,000 Cnty. of Jefferson Indl. Bldg. RB (Thomas Dev.), Ser. 1995, 3.70% -- ARB (LOC: PNC Bk.)..................... 2,000,000 10,300 Cnty. of Ohio PCRB (Big Rivers Elec. Corp.), Ser. 1985, 3.80% -- VRDN (LOC: Chemical Bk.)................ 10,300,000 904 Jefferson Cnty. IDRB (Belknap Inc.), 3.60% -- VRDN (LOC: Chemical Bk.)................ 904,000 6,100 Pendleton Cnty. RB (Kentucky Assn. of Cnty. Leasing Tr. Prog.), Ser. 1989, 3.70% -- ARB, 10/9/96 (LOC: PNC Bk.)........................... 6,100,000 19,304,000
27 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED LOUISIANA -- .4% $ 5,000 Indl. Dist. No. 3 of the Parish of West Baton Rouge (Dow Chemical Co.), Ser. 1994B, 3.85% -- VRDN (Gtd. by Dow Chemical Co.)......... $ 5,000,000 MARYLAND -- 1.0% 3,355 Community Dev. Admin. State of Maryland Dept. of Hsg. & Comm. Dev. (Single Family Prog.), Ser. 1987 Fourth, 3.60% -- ARB, 10/1/96 (LOC: First Natl. Bk. of Boston)... 3,355,000 9,400 Mayor & City Council of Baltimore RRB (MSTR SGA-20), (Wastewater), 3.60% -- VRDN (LIQ: Societe Generale & Ins. by MBIA)**......... 9,400,000 12,755,000 MASSACHUSETTS -- .2% 360 City of Lowell Indl. RB (Oak Realty Tr.) Ser. 1985, 4.2925% -- VRDN (LOC: First Natl. Bk. of Boston)... 360,000 500 Massachusetts Indl. Finl. Agy. (Copley Pharmac), 4.5425% -- VRDN (LOC: First Natl. Bk. of Boston)... 500,000 855 Massachusetts Indl. Finl. Auth. IDRB (Leavy Realty & Jencoat Metal), Ser. 1994, 4.2925% -- VRDN (LOC: First Natl. Bk. of Boston)... 855,000 700 Massachusetts Indl. Finl. Auth. Indl. RB (Portland Causeway Rlty.), Ser. 1988, 4.2925% -- VRDN (LOC: Citibank, N.A.).................... 700,000 2,415,000 MICHIGAN -- 1.3% 2,000 Economic Dev. Corp. of the Twp. of Van Buren Economic RB (Daikin Clutch USA, Inc.), Ser. 1987, 3.90% -- VRDN (LOC: Sanwa Bk., Ltd.)............. 2,000,000 5,000 Sault. Ste. Marie Tribe Bldg. Auth. RB Ser. 1996A, 4.46% -- ARB, 12/2/96 (LOC: First of Amer. Bk., N.A.).............................. 5,000,000 PRINCIPAL AMOUNT (000) VALUE MICHIGAN -- CONTINUED $10,000 School Dist.of the City of Detroit Wayne Cnty. GO Bds., (State School Aid Nts.), Ser. 1996, 4.50%, 5/1/97............................. $ 10,035,317 17,035,317 MINNESOTA -- 2.7% 14,905 City of Eden Prairie MHRB (Park at City West Apt.), Ser. 1990, 4.00% -- VRDN (LOC: Sumitomo Bk.)................ 14,905,000 2,300 City of Robbinsdale IDRB (Unicare Homes, Inc.), Ser. 1984, 3.80% -- VRDN (LOC: Banque Paribas).............. 2,300,000 1,700 Eagle Tax-Exmp. Tr. Cl. A-COP (Minnesota Hsg. Fin. Agy.), Ser. D, 3.61% -- VRDN (LOC: Citibank, N.A.)**............ 1,700,000 5,750 Hennepin Cnty. GO Bds. Ser. 1996C, 3.75% -- VRDN.......... 5,750,000 4,220 Minneapolis GO (Sports Arena), (MSTR Ser. 1996A), 3.75% -- VRDN (LIQ: Norwest Bk., MN)**........... 4,220,000 845 Minneapolis/Saint Paul Housing Fin. Brd. RB (Minneapolis/Saint Paul Fam. Hsg. Prog., Phase VI), 4.00%, 2/1/97 (Coll: GNMA)................ 845,000 2,550 Minnesota Agric. & EDRB (Como Partnership), Ser. 1996, 3.85% -- VRDN (LOC: First Bk. Natl. Assn.)....... 2,550,000 1,000 Minnesota Insured (MSTR Ser. 1996B), 3.75% -- VRDN (LIQ: Norwest Bk., MN & Ins. by MBIA)............ 1,000,000 750 Southern Minnesota Mun. Pwr. Agy. Supply Sys., (MSTR Ser. 1996I), 3.75% -- VRDN (LIQ: Norwest Bk., MN & Ins. by FGIC)**............................ 750,000 1,000 Spring Lake Park I.S.D. No. 16 (MSTR Ser. 1996G), 3.75% -- VRDN (LIQ: Norwest Bk., MN & Ins. by MBIA)**............................ 1,000,000 35,020,000
28 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED MISSISSIPPI -- .2% $ 3,000 Lee Cnty. IDRB (Hunter Douglas Inc.), Ser. 1985, 3.75% -- VRDN (LOC: Bk. of Amer. Natl. Tr. & Svg. Assn.)............................. $ 3,000,000 MISSOURI -- 2.4% 3,000 Boatmens St. Louis Grantor Tr. (Cert. Partn.), Ser. 1996A-1, 3.70% -- VRDN (LOC: Boatmens Natl. Bk., St. Louis).................... 3,000,000 8,375 City of St. Louis TRANS 4.75%, 6/30/97..................... 8,425,585 7,700 Health & Ed. Fac. Auth. of the State of Missouri RB (Washington University), Ser. 1989A, 3.80% VRDN (LOC: Morgan Gty., NY)............. 7,700,000 IDA of the City of Kansas MHRB Ser. 1988A, 4.20%, 10/1/96 (LOC: Home Svgs. Assn. of Kansas City) 2,950 (Twin Oaks I Apt.)............... 2,950,000 2,950 (Twin Oaks II Apt.).............. 2,950,000 4,415 Missouri Dev. Fin. Brd. IDRB (Cook Composites & Polymers Co.), Ser. 1994, 3.85% -- VRDN (LOC: Societe Generale).......................... 4,415,000 825 School District of North Kansas GO School Bldg. Bds. (Missouri Direct Deposit Prog.), Ser. 1996 7.00%, 3/1/97............................. 836,966 30,277,551 MONTANA -- .1% 760 Butte Silver Bow City & Cnty. (Copper City Assn.), Ser. 1988, 4.25% -- VRDN (LOC: Bank of America)............. 760,000 NEBRASKA -- .7% 4,200 Lancaster Cnty. IDRB (AS Mid-Amer., Inc.), Ser. 1994, 4.25% -- VRDN (LOC: Heller Finl., Inc.)..... 4,200,000 4,300 Nebraska Investment Fin. Auth. MHRB (Briarhurst/Candle Tree Apts.) Ser. 1985, 3.65% -- ARB, 10/1/96 (LOC: Citibank, N.A.).................... 4,300,000 8,500,000 PRINCIPAL AMOUNT (000) VALUE NEVADA -- .4% $ 4,450 Nevada Housing Division RB (Oakmont at Reno), 3.90% -- VRDN (LOC: Banque Paribas).................... $ 4,450,000 NEW HAMPSHIRE -- .1% 1,500 New Hampshire Hsg. Fin. Auth. MHRB (Nashua-Oxford), Ser. 1990, 3.80% -- VRDN (Surety Bond: Contl. Cas. Corp.)... 1,500,000 NEW JERSEY -- .4% 4,750 New Jersey EDA (Center for Aging, Inc. Applewood), 3.95% -- VRDN (LOC: Banque Paribas).............. 4,750,000 NEW MEXICO -- 2.8% 31,300 City of Farmington PCRB (El Paso Elec. Co. Four Corners), Ser. 1994A, 3.60% -- VRDN (LOC: Citibank, N.A.).............. 31,300,000 4,855 Cnty. of Sandoval MHRB (Arrowhead Ridge Apt.) Ser. 1996, 4.65%, 7/1/97 (LIQ: FGIC)................. 4,855,000 36,155,000 NEW YORK -- 2.5% Battery Park City Auth. Hsg. RB (Marina Towers Tender Corp.), 3.95% -- VRDN (LOC: Sumitomo Bk.) 8,560 Ser. A........................... 8,560,000 7,765 Ser. B........................... 7,765,000 1,000 Nassau Cnty. Indl. Dev. Agy. IDRB (Crand Plumbing, Inc.), 3.75% -- VRDN (LOC: Amer. Natl. Bk. & Tr. of Chicago).................. 1,000,000 New York City GO Subser. H3, 3.90%, TECP (LIQ: Banque Paribas & Ins. by FSA) 2,000 9/9/96........................... 2,000,000 11,900 10/1/96.......................... 11,900,000 31,225,000 NORTH CAROLINA -- 2.2% 3,600 Cabarrus Cnty. Indl. Fac. PCRB (Oiles Amer. Corp.), Ser. 1989, 4.20% -- VRDN (LOC: Industral Bk. of Japan, Ltd., NY)................ 3,600,000
29 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED NORTH CAROLINA -- CONTINUED $ 7,700 Columbus Cnty. Indl. Fac. & Pollution Ctl. Fin. Auth. Solid Waste Disposal RB (Fed. Paper Brd. Co., Inc.), Ser. 1992, 3.90% -- VRDN (LOC: Dai-Ichi Kangyo Bk., Ltd.)... $ 7,700,000 3,000 Guilford Cnty. Indl. Fac. & Pollution Control Fing. Auth. RB Sewage Disp. (High Pt. Chem.), 3.90% -- VRDN (LOC: Sumitomo Bk.)................ 3,000,000 10,300 Lenoir Cnty. Indl. Fac. PCRB (Carolina Energy, Ltd. Partnership), Ser. 1995, 3.75% -- VRDN (LOC: Bank of Tokyo, Ltd. NY)...... 10,300,000 870 NCNB Pooled Tax-Exmp.Tr. COP Ser. 1990A, 4.125% -- VRDN (LOC: NationsBank of NC)**............... 870,000 3,000 Richmond Cnty. Indl. Fac. PCRB (Bibb Co.), 4.21% -- VRDN (LOC: Citibank, NY)...................... 3,000,000 28,470,000 OHIO -- 2.9% 5,000 City of Dayton Ohio Spec. Fac. RB (Emery Air Fght. Corp.), Ser. 1993E, 3.80% -- VRDN (LOC: Mellon Bk., N.A.)............ 5,000,000 16,250 Cleveland City School Dist. TRANS Ser. 1996, 5.85%, 12/31/96 (LOC: Banque Paribas).................... 16,344,729 4,800 Cnty. of Stark IDRB (Crane Plumbing, Inc.), Ser. 1984, 3.80% -- VRDN (LOC: Amer. Natl. Bk. & Tr. Co. of Chicago).............. 4,800,000 4,200 Cnty. of Summit IDA-IDRB (Shin-Etsu Silicones of Amer. Inc.) Ser. 1994, 3.90% -- VRDN (LOC: Bk. of Tokyo, Ltd. & Mitsubishi Bk., Ltd.)....... 4,200,000 4,250 Dayton Ohio Airport Impt. Nts. 4.50%, 3/25/97..................... 4,261,617 3,000 Ohio Hsg. Fin. Agy. MHRB (10 Wilmington Place), Ser. 1991B, 4.35% -- VRDN (LIQ: Fuji Bk., Ltd. & Ins. by FSA)..................... 3,000,000 37,606,346 PRINCIPAL AMOUNT (000) VALUE OREGON -- 1.4% Oregon EDRB Series CLVI, 4.00% -- VRDN (LOC: Bk. of California, N.A.) $ 1,960 (Pacific Coast Seafoods Co.)..... $ 1,960,000 1,210 (Pacific Oyster Co.)............. 1,210,000 2,050 Oregon EDRB (Stagg Foods, Inc.), Ser. 75, 3.80% -- VRDN (LOC: Bk. of Amer.)................ 2,050,000 5,050 Oregon Health Hsg. Ed. & Culture Fac. Auth. RB (Evangelical Lutheran), Ser A, 3.60% -- VRDN (LOC: First Natl. Bk. N.A.)........ 5,050,000 7,000 Oregon State Brd. of Higher Ed. (MSTR SGA-29), Ser. 1996, 3.60% -- VRDN (LIQ: Societe Generale)**.......... 7,000,000 17,270,000 PENNSYLVANIA -- 6.9% 1,430 Chester Cnty. IDA Coml. Dev. RB (Plaza Assn.), Ser. A, 3.70% -- VRDN (LOC: First Fed. Svgs. & Ln.)...... 1,430,000 3,000 Chester Cnty. IDA Mfg. Fac. RB (Devault Packing Co., Inc.), Ser. 1995, 3.95% -- VRDN (LOC: Meridian Bk.)................ 3,000,000 25,000 City of Philadelphia GO Bds., Ser. 1990, 3.65%, 9/12/96 (LOC: Fuji Bk., Ltd., NY).......... 25,000,000 500 Elk Cnty. IDA-IDRB Ref. (Stackpole Corp.), Ser. 1989, 4.2925% -- VRDN (LOC: First Natl. Bk. of Boston)... 500,000 855 Fayette Cnty. Hosp. Auth. RB (Uniontown Hosp.), Ser. 1996, 4.25%, 6/15/97 (Ins. by Connie Lee)............... 855,912 650 Lawrence Cnty. IDA-PCRB (Calgon Carbon), Ser. 1983A, 3.90% -- VRDN (Gtd. by Merck & Co.).............. 650,000 25,000 Montgomery Cnty. Higher Ed. & Hlth. Auth. RB (Pennsylvania Higher Ed. & Hlth. Ln. Prog.), Ser. 1996A, 3.65% -- VRDN (LOC: Dauphin Deposit Bk. & Tr. Co.)..................... 25,000,000
30 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED PENNSYLVANIA -- CONTINUED $ 1,500 Montgomery Cnty. IDA-RB (Laneko Engineering Co.), Ser. 1995 3.95% -- VRDN (LOC: Meridian Bk.)................ $ 1,500,000 3,000 Moon IDRB (One Thorn Run Ctr.) Ser. 1995A, 3.85% -- VRDN (LOC: Natl. City Bk.).......................... 3,000,000 2,500 Northeastern PA Hosp. Auth. (Hosp. Central Svs, Capital Asset Fin. Prog.), Ser. B, 3.70% -- VRDN (LIQ: PNC Bk. & Ins. by MBIA)...... 2,500,000 1,300 Pennsylvania Economic Dev. Fin. Auth. RB (C.F. Martin & Co., Inc.), Ser. H, 3.95% -- VRDN (LOC: Meridian Bk.)**.................... 1,300,000 8,760 Pennsylvania Hsg. Fin. Agy. Single Family Mtg. RB Ser. O, 4.125% -- ARB...................... 8,760,000 9,400 School Dist. of Philadelphia TRANS, Ser. 1996, 4.50%, 6/30/97..................... 9,437,443 2,010 West Cornwall Twp. Mun. Auth. RB (Lebanon Vly. Brethren Home), Ser. 1995, 3.75% -- VRDN (LOC: Meridian Bk.)............................... 2,010,000 3,040 Westmoreland Cnty. IDA-IDRB (White Consolidated Ind., Inc.), 4.125% -- ARB, 12/1/96 (LOC: Chemical Bk.)................ 3,041,829 87,985,184 RHODE ISLAND -- .2% 3,000 Rhode Island Solid Waste Mgmt. Corp. Landfill Lease Nts. Ser. 1995A, 4.50%, 8/1/97............... 3,009,223 SOUTH CAROLINA -- .9% 3,500 Darlington Cnty. IDA-IDRB (Hobart Corp.), 3.90% -- VRDN (LOC: Fuji Bk., Ltd.)......................... 3,500,000 4,000 South Carolina Jobs EDA-EDRB (B.F. Shaw, Inc.), Ser. 1995, 3.95% -- VRDN (LOC: Mercantile Bk. of St. Louis N.A.)................. 4,000,000 2,700 South Carolina Jobs EDA-EDRB (Roller Bearing Co.), Ser. 1994A, 4.36% -- VRDN (LOC: Cr. Coml. de France)**....... 2,700,000 PRINCIPAL AMOUNT (000) VALUE SOUTH CAROLINA -- CONTINUED South Carolina Jobs EDA-EDRB Ser. 1989B, 3.80% -- VRDN (LOC: Cr. Coml. de France) $ 800 Ser. A (Tuttle Co., Inc.)........ $ 800,000 650 Ser. B (Ridge Pallets)........... 650,000 11,650,000 SOUTH DAKOTA -- .7% 5,385 City of Rapid EDRB (Civic Center Assoc.), 3.81% -- VRDN (LOC: Bayerische Vereinsbank AG)......... 5,385,000 3,500 South Dakota Hsg. Dev. Auth. RB (Homeownership Mtg. Bd.), Ser. 1995E, 4.05% -- ARB, 10/24/96...... 3,500,000 8,885,000 TENNESSEE -- 3.2% 1,000 IDB of Blount Cnty. IDRB (Advanced Crystal, Inc.), Ser. 1988, 4.15% -- VRDN (LOC: Indl. Bk. of Japan, Ltd.).... 1,000,000 5,000 IDB of the City of Morristown IDRB (Camvac Intl., Inc.), Ser. 1983, 3.775% -- VRDN (LOC: ABN Amro Bk.)................ 5,000,000 3,700 IDB of Rutherford Cnty. IDRB Ref. (Outboard Marine Corp.), Ser. 1987, 3.80% -- VRDN (LOC: First Chicago NBD Corp.)..... 3,700,000 3,200 IDB of the City of Chattanooga RRB (Radisson Read House), Ser. 1995, 4.25% -- VRDN (LOC: Heller Finl., Inc.).......... 3,200,000 IDB of the Met. Govt. of Nashville & Davidson Cnty. RB, 4.00% -- VRDN Ser. 1989 (LOC: Sumitomo Bk.) 8,995 (Beechwood)...................... 8,995,000 4,680 (Belle Vly.)..................... 4,680,000 6,710 (Graybrook Apts.)................ 6,710,000 4,285 Smyrna Hsg. Assn. MHRB (Imperial Gardens Apts.), Ser. 1989, 4.00% -- VRDN (LOC: Sumitomo Bk.)................ 4,285,000
31 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED TENNESSEE -- CONTINUED $ 3,405 Shelby Cnty. Hlth. Edl.& Hsg. Fac. Brd. (Methodist Hlth. Sys.), Ser. C, 4.05% -- ARB (LIQ: Sanwa Bk., Ltd. & Ins. by MBIA)............... $ 3,405,000 40,975,000 TEXAS -- 8.4% 1,000 Bexar Cnty. Hsg. Fin. Corp. Gtd. Mtg. Multifamily RFB Ser. 1988A, (Creightons Mill Dev.), 3.65% -- VRDN (Surety Bond: New England Mutual).................... 1,000,000 3,000 Board of Reg. of the Texas A&M Univ. Sys. Rev. Fin. Bds., Ser. 1996, 3.60% -- VRDN (LIQ: Societe Generale)**.......... 3,000,000 7,040 Brazos River Harbor IDA-PCRB 3.70%, 9/25/96 -- TECP (Gtd. by Dow Chemical)............. 7,040,000 4,250 City of Dallas Indl. Dev. Corp. IDRB (Crane Plumbing), Ser. 1985, 3.75% -- VRDN (LOC: Amer. Natl. Bk. & Tr. Co. of Chicago).................... 4,250,000 6,600 Dallas Fort Worth Regl. Arpt. RB (MSTR Ser. SGB5), 3.60% -- VRDN (LIQ: Societe Generale & Ins. by FGIC)**............................ 6,600,000 5,010 Dallas Fort Worth Regl. Airport RRB Ser. B, 5.00%, 11/1/96............. 5,019,780 8,230 Denton Utility System RRB (MSTR Ser. SGA-32), 3.60% -- VRDN (LIQ: Societe Generale & Ins. by MBIA)**............................ 8,230,000 6,225 Galveston Hsg. Fin. Corp. MHRB Ref. (Vlg. by the Sea Apt.), Ser. 1993, 3.95% -- VRDN (LOC: Sumitomo Bk.)................ 6,225,000 12,000 Harris Cnty. Health Fac. Hosp. (Methodist Hosp.), Ser. 1994, 3.75% -- VRDN (LOC: Morgan Guaranty, NY)......... 12,000,000 1,000 Harris Cnty. Hsg. Fin. Corp, MHRB (Arbor II Ltd.), 3.95% -- ARB, 10/1/96 (LOC: Guardian Svgs. & Ln., Houston)........................... 1,000,000 5,000 Harris Cnty. Toll Road Unlimited Tax and Sub Lien RB, Ser. 1994A, 3.61% -- VRDN (LOC: Citibank, N.A.).............. 5,000,000 PRINCIPAL AMOUNT (000) VALUE TEXAS -- CONTINUED $ 4,400 Houston, Wtr. and Swr. Sys. (MSTR SGA-22), 3.60% -- VRDN (LIQ: Societe Generale & Ins. by MBIA)**......... $ 4,400,000 15,000 Houston, Wtr. and Swr. Sys. RB Fltg. SG-77, 3.70% -- VRDN (LIQ: Societe Generale & Ins. by MBIA)**............................ 15,000,000 9,205 NCNB Pooled Tax Empt.-Tr. COP Ser. 1990B, 4.125% -- VRDN (LOC: NationsBank of Texas)**............ 9,205,000 4,000 Port of Corpus Christi Auth. Nueces Cnty. RRB (Union Pacific Corp.), Ser. 1989, 4.05%, 11/25/96 -- TECP (Gtd. by Union Pacific Corp.)...... 4,000,000 2,470 Robertson Cnty. IDRB (Crane Plumbing), Ser. 1990, 3.75% -- VRDN (LOC: Amer Natl. Bk. & Tr. Co. of Chicago).... 2,470,000 4,380 Tarrant Cnty. Hsg. Fin. Corp. MHRB Ref. (Lincoln Meadows), Ser. 1988 -- ARB, 4.30%,12/1/96 (Surety Bond: Contl. Cas. Corp.)........... 4,380,000 2,500 Texas Wtr. Dev. Brd. State Revolving Fd. Senior Lien RB Ser. 1996A, 3.60% -- VRDN (LIQ: Societe Generale)**.......... 2,500,000 6,000 Tyler Health Fac. Dev. Corp. RB (East Texas Med. Ctr. Regl. Hlth.), Ser. 1993C, 4.00%, 9/24/96 -- TECP (LOC: Banque Paribas).............. 6,000,000 107,319,780 UTAH -- 3.4% 3,900 Hsg. Auth. of Provo City Multifamily Rent Hsg. Rent Hsg. RRB (Branbury Park), Ser. 1987A, 3.60% -- VRDN (LOC: Dai-Ichi Kangyo Bk., Ltd.)... 3,900,000 2,800 Summit Cnty. IDRB (Hornes' Kimball Junction L.P.), Ser. 1985, 3.90% -- VRDN (LOC: West One Tr.)................ 2,800,000
32 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED UTAH -- CONTINUED Tooele Cnty. Hazardous Waste Treatment RB -- TECP (Union Pacific Corp.), Ser. A (Gtd. by Union Pacific Corp.) $10,000 4.15%, 9/12/96................... $ 10,000,000 15,000 4.125%, 10/17/96................. 15,000,000 7,000 4.125%, 10/24/96................. 7,000,000 4,725 Utah Cnty. IDRB (McWane Inc.), 3.75% -- VRDN (LOC: Amsouth Bk., N.A.)........... 4,724,991 43,424,991 VIRGINIA -- .9% 1,200 Henrico Cnty. IDA RB (San-J), 3.95% -- VRDN (LOC: Tokai Bk., Ltd).............. 1,200,000 9,800 Richmond Cnty. Indl. Fac. PCRB (Cogentrix of Richmond), 4.40% -- VRDN (LOC: Banque Paribas).............. 9,800,000 1,000 Rockingham Cnty. Indl. Dev. PCRB (Merck & Co., Inc.), Ser. 1983A, 3.65% -- VRDN (Gtd. by Merck & Co.).............. 1,000,000 12,000,000 WASHINGTON -- 4.6% 8,370 City of Kent Ltd. Tax GO Bds. Ser. 1996A, 3.60% -- VRDN (LIQ: Societe Generale)**........................ 8,370,000 2,200 Klickitat Cnty. Pub. Corp. RB (Mercer Ranches), Ser. 1996 3.75% -- VRDN (LOC: U.S. Bk. of Washington, N.A.).................. 2,200,000 Pilchuck Dev. Pub. Corp. IDRB (Hillsdale Assn.), 4.05% -- VRDN (LOC: Bk. of California, N.A.) 1,455 (Canyon Park Assn.).............. 1,455,000 1,047 (Hillsdale Assn.)................ 1,047,000 1,312 (Omni Assn.)..................... 1,312,000 8,450 Pilchuck Dev. Pub. Corp. IDRB (Romac Industries, Inc.), Ser. 1995 3.90% -- VRDN (LOC: Bk. of California, N.A.)..... 8,450,000 3,000 Port Pasco EDRB (Douglas Fruit Co.), 3.75% -- VRDN (LOC: U.S. Bk. of Washington)...... 3,000,000 PRINCIPAL AMOUNT (000) VALUE WASHINGTON -- CONTINUED $ 1,090 Washington Cmnty. Econ. Brd. Redevelopment Bd., 3.90% -- VRDN (LOC: Indl. Bk. of Japan, Ltd.).... $ 1,090,000 3,185 Washington Cmnty. Econ. Brd. Revitalization Bd., 3.90% -- VRDN (LOC: Indl. Bk. of Japan, Ltd.).... 3,185,000 15,020 Washington GO Bds. Ser. 1995A, 3.61% -- VRDN (LIQ: Citibank, N.A.).............. 15,020,000 6,555 Washington Hsg. Fin. Comm. (Emerald Heights), Ser. 1990, 4.25% -- VRDN (LOC: Banque Paribas).............. 6,555,000 6,410 Washington Pub. Pwr. Sup. Sys. Nuclear No. 2 RB (CR-145), Ser. 1990, 3.61% -- VRDN (LOC: Citibank, N.A.).............. 6,410,000 1,000 Washington Pub. Pwr. Sup. Sys. Nuclear RRB No. 1 7.10%, 7/1/97...................... 1,025,011 59,119,011 WEST VIRGINIA -- .1% 1,000 Marshall Cnty. PCRB (Allied Signal Co.), 3.65% -- VRDN (Gtd. by Allied Signal, Co.)....................... 1,000,000 WISCONSIN -- .2% 3,000 City of Whitewater IDRB (Maclean-Fogg Co.), Ser. 1989, 3.80% -- VRDN (LOC: Bk. of Amer. Illinois)....... 3,000,000 OTHER -- 4.7% 50 Puttable Floating Opt. Tax-Empt. PPT4, 3.70% -- VRDN (LIQ: Merrill Lynch)**............. 50,000 54,490 Puttable Floating Opt. Tax-Empt. (IBM Grantor Trust), Ser. 1996C 3.85% -- VRDN (LIQ: Credit Suisse)**............. 54,490,000 5,920 Puttable Floating Opt. Tax-Empt. (KOCH Fin. Corp.), 3.95% -- VRDN (LIQ: Credit Suisse)**............. 5,920,000 60,460,000
TOTAL INVESTMENTS (COST $1,286,198,412)....... 100.7% 1,286,198,412 OTHER ASSETS AND LIABILITIES -- NET........ (.7) (8,849,189) NET ASSETS.................. 100.0% $1,277,349,223
33 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996 Summary of Abbreviations: ACES -- Adjustable Convertible Extendable Securities AMBAC -- American Municipal Bond Assurance Corp. ARB -- Adjustable Rate Bonds COP -- Certificates of Participation EDA -- Economic Development Authority EDRB -- Economic Development Revenue Bond FGIC -- Financial Guaranty Insurance Co. FSA -- Financial Security Assurance Inc. GNMA -- Governmental National Mortgage Association GO -- General Obligations IDA -- Industrial Development Authority IDB -- Industrial Development Bond IDRB -- Industrial Development Revenue Bond LIQ -- Liquidity Provider LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance MERLOTS -- Municipal Exempt Receipts Liquidity Option Tenders MHRB -- Multifamily Housing Revenue Bond MSTR -- Municipal Securities Trust Receipt PCRB -- Pollution Control Revenue Bond RB -- Revenue Bonds RFB -- Refunding Bonds RRB -- Refunding Revenue Bonds TECP -- Tax Exempt Commercial Paper TRANS -- Tax Revenue Anticipation Notes VRDN -- Variable Rate Demand Notes Adjustable Rate Bonds are putable back to the issuer or other parties not affiliated with the issuer at par on the interest reset dates. Interest rates are determined and set by the issuer quarterly, semi-annually or annually depending upon the terms of the security. Interest rates presented for these securities are those in effect at August 31, 1996. These securities represent 10% of total investments at August 31, 1996. Variable Rate Demand Notes are payable on demand on no more than seven calendar days notice given by the Fund to the issuer or other parties not affiliated with the issuer. Interest rates are determined and reset by the issuer daily, weekly or monthly depending upon the terms of the security. Interest rates presented for these securities are those in effect at August 31, 1996. These securities represent 76% of total investments at August 31, 1996. Certain obligations held in the portfolio have credit enhancements or liquidity features that may, under certain circumstances, provide for repayment of principal and interest on the obligation upon demand date, interest rate reset date or final maturity. These enhancements include: letters of credit; liquidity guarantees; standby bond purchase agreements; tender option purchase agreements; and third party insurance (i.e. AMBAC, FGIC and MBIA). Adjustable rate bonds and variable rate demand notes held in the portfolio may be considered derivative securities within the standards imposed by the Securities and Exchange Commission under Rule 2a-7 which were designed to minimize both credit and market risk. * Security of which $200,000 was purchased on a delayed settlement basis and an additional $200,000 was segregated as collateral for the delayed settlement purchase. ** Rule 144A security which are restricted in resale to qualified institutions and are considered liquid. See accompanying notes to financial statements. 34 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996
ASSETS: Investments at value (identified cost $1,286,198,412)....................................................... $1,286,198,412 Interest receivable......................................................................................... 6,664,474 Receivable for Fund shares sold............................................................................. 1,113,117 Other assets................................................................................................ 41,698 Total assets.......................................................................................... 1,294,017,701 LIABILITIES: Due to custodian bank....................................................................................... 6,042,257 Payable for investment securities purchased................................................................. 4,580,086 Payable for Fund shares repurchased......................................................................... 2,873,540 Dividends payable........................................................................................... 1,846,107 Accrued expenses............................................................................................ 519,220 Accrued advisory fee........................................................................................ 455,408 Distribution fee payable.................................................................................... 351,860 Total liabilities..................................................................................... 16,668,478 NET ASSETS..................................................................................................... $1,277,349,223 NET ASSETS CONSISTS OF: Paid-in capital............................................................................................. $1,277,607,103 Accumulated net realized loss on investment transactions.................................................... (257,880) Net assets............................................................................................ $1,277,349,223 CALCULATION OF NET ASSET VALUE PER SHARE: Class A Shares ($660,515,996(division sign)660,634,719 shares of beneficial interest outstanding)......................... $1.00 Class Y Shares ($616,833,227(division sign)616,933,587 shares of beneficial interest outstanding)......................... $1.00
See accompanying notes to financial statements. 35 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1996 INVESTMENT INCOME: Interest...................................................................................... $43,981,149 EXPENSES: Advisory fee.................................................................................. $ 5,540,924 Distribution fee -- Class A Shares............................................................ 1,898,665 Registration and filing fees.................................................................. 359,766 Transfer agent fee............................................................................ 295,626 Custodian fee................................................................................. 270,970 Reports and notices to shareholders........................................................... 118,264 Professional fees............................................................................. 34,283 Insurance..................................................................................... 21,691 Trustees' fees and expenses................................................................... 17,641 Miscellaneous................................................................................. 28,431 8,586,261 Less advisory fee waiver...................................................................... (1,243,131) Net expenses............................................................................... 7,343,130 Net investment income............................................................................ 36,638,019 Net realized loss on investments................................................................. (6,227) NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................. $36,631,792
See accompanying notes to financial statements. 36 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31, 1996 1995 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income................................................................... $ 36,638,019 $ 16,223,403 Net realized loss on investments........................................................ (6,227) (374,299) Net increase in net assets resulting from operations................................. 36,631,792 15,849,104 DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A Shares.......................................................................... (19,837,670) (2,645,739) Class Y Shares.......................................................................... (16,800,349) (13,577,664) Total distributions to shareholders.................................................. (36,638,019) (16,223,403) FUND SHARE TRANSACTIONS: Proceeds from shares sold............................................................... 2,572,408,736 523,419,419 Proceeds from shares issued from acquisition of FFB Tax-Free Money Market Fund.......... 103,129,021 -- Proceeds from shares issued from acquisition of First Union Tax-Free Money Market Portfolio............................................................................. -- 604,010,226 Proceeds from reinvestment of distributions............................................. 16,202,992 13,277,476 Payments for shares redeemed............................................................ (2,390,799,129) (566,638,173) Net increase resulting from Fund share transactions.................................. 300,941,620 574,068,948 CAPITAL CONTRIBUTION (NOTE 4).............................................................. -- 300,000 Net increase in net assets........................................................... 300,935,393 573,994,649 NET ASSETS: Beginning of year....................................................................... 976,413,830 402,419,181 End of year............................................................................. $1,277,349,223 $976,413,830
See accompanying notes to financial statements. 37 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) FINANCIAL HIGHLIGHTS
CLASS A SHARES JANUARY 5, 1995* CLASS Y SHARES YEAR ENDED THROUGH AUGUST 31, AUGUST 31, YEAR ENDED AUGUST 31, 1996 1995 1996 1995 1994 1993 PER SHARE DATA: Net asset value, beginning of period.................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 Net investment income................................... .03 .02 .03 .04 .02 .03 Less distributions to shareholders from net investment income..................................... (.03) (.02) (.03) (.04) (.02) (.03) Net asset value, end of period.......................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 TOTAL RETURN+........................................... 3.2% 2.2% 3.5% 3.6% 2.5% 2.6% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)............... $660,516 $ 554,924 $ 616,833 $421,490 $402,419 $401,376 Ratios to average net assets: Expenses**............................................ .79% .78%++ .49% .50% .34% .34% Net investment income**............................... 3.14% 3.28%++ 3.44% 3.53% 2.47% 2.58% 1992 PER SHARE DATA: Net asset value, beginning of period.................... $1.00 Net investment income................................... .04 Less distributions to shareholders from net investment income..................................... (.04) Net asset value, end of period.......................... $1.00 TOTAL RETURN+........................................... 3.7% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)............... $416,924 Ratios to average net assets: Expenses**............................................ .32% Net investment income**............................... 3.72%
* Commencement of class operations. + Total return is calculated on net asset value per share for the periods indicated and is not annualized. ++ Annualized. ** Net of expense waivers and reimbursement. If the Fund had borne all expenses that were reimbursed or waived by the investment adviser, the annualized ratios of expenses and net investment income to average net assets would have been the following:
CLASS A SHARES JANUARY 5, 1995* CLASS Y SHARES YEAR ENDED THROUGH AUGUST 31, AUGUST 31, YEAR ENDED AUGUST 31, 1996 1995 1996 1995 1994 1993 Expenses................................................ .90% .90%++ .60% .63% .64% .63% Net investment income................................... 3.03% 3.16%++ 3.33% 3.40% 2.17% 2.29% 1992 Expenses................................................ .63% Net investment income................................... 3.41%
See accompanying notes to financial statements. 38 EVERGREEN TREASURY MONEY MARKET FUND (Photo of an eagle) A REPORT FROM YOUR PORTFOLIO MANAGER KELLIE ALLEN In the last half of 1995, we saw very mixed economic data, but (Photo of as the year came to a close, economic reports grew progressively Kellie weaker, clearly showing signs that the Federal Reserve would Allen) need to lower the Fed Funds rate in order to help boost the slowing economy. In December and again in February, short-term rates were indeed lowered by 25 basis points each time, ending February at 5.25%. In anticipation of short-term rates dropping, we extended the average maturity of the Fund. This allowed us to lock in higher yielding securities for longer time periods. In the first half of 1996, a continued stream of strong economic data re-ignited fears about future inflation and caused a reversal in fortunes in the bond market from the positive returns experienced in 1995. The underpinnings of economic growth in 1996 have been in the strength of the housing market, consumer spending, and job creation. With second quarter Gross Domestic Product (GDP) coming in at 4.8%, there were concerns in the market about inflation rearing its ugly head. So far this year, monthly job growth has averaged 230,000 versus about 185,000 for last year. This would lead the markets to believe that inflation is not far behind and the Fed should start raising interest rates to head it off. (The primary means by which the Federal Reserve attempts to control the economy is by raising or lowering short-term interest rates, i.e. the Fed Funds rate. For example, if the economy is growing too fast the Federal Reserve can raise the Fed Funds rate and, in essence, try to put the brakes on the economy.) The Fed has not made a move since January because inflation has not shown itself even with the economy moving along at a fairly strong pace. Lack of inflation cannot go on forever with this pace of economic activity. In our view, it is not a question of whether short-term rates will move higher over the next several months but when it will happen. It is questionable, however, whether the Federal Reserve will raise rates before the November election. All eyes will be on the November Federal Open Market Committee (FOMC) meeting to see if they will finally make their move. We use a barbell approach in the Fund's portfolio maturities as opposed to a laddered approach, in order to take advantage of higher yields out on the curve. This helps us to remain competitive while still maintaining the shorter average maturities that AAA rated money funds are limited to in order to maintain their rating. In the last six months, the yield curve from overnight to one year has continued to steepen. We have taken advantage of this by extending our maturities further out on the curve and keeping our Repurchase Agreement versus Treasury position in the 65%/35% range. We ended the fiscal year with an average maturity of 52 days. In anticipation of the Federal Reserve raising interest rates, we will shorten our average maturity slightly, making our maturity target 45 to 50 days. At its ficsal year-end on August 31, 1996, Evergreen Treasury Money Market Fund's total net assets were $3.4 billion. The Fund's seven-day current and effective yields at that time are illustrated in the table below.
7-DAY CURRENT YIELD 7-DAY EFFECTIVE YIELD Class Y Shares 4.96% 5.08% Class A Shares 4.66% 4.77%
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. DURING THE PERIOD UNDER REVIEW, THE ADVISER CONTINUED TO VOLUNTARILY WAIVE A PORTION OF ITS ADVISORY FEE. HAD FEE NOT BEEN WAIVED, YIELDS WOULD HAVE BEEN LOWER. FEE WAIVER MAY BE REVISED AT ANY TIME. THE FUND MAY INCUR 12B-1 EXPENSES, UP TO AN ANNUAL MAXIMUM OF .35 OF 1% OF ITS AVERAGE DAILY NET ASSETS OF ITS CLASS A SHARES. FOR THE FORSEEABLE FUTURE, HOWEVER, MANAGEMENT INTENDS TO LIMIT SUCH PAYMENTS TO .30 OF 1% OF THE FUNDS DAILY NET ASSETS OF ITS CLASS A SHARES. AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U. S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1 PER SHARE. YIELDS FLUCTUATE. 39 EVERGREEN TREASURY MONEY MARKET FUND (Photo of an eagle) STATEMENT OF INVESTMENTS AUGUST 31, 1996
PRINCIPAL AMOUNT (000) VALUE U.S. TREASURY BILLS -- 4.4% $150,000 5.25%, 9/17/96 (COST $149,694,041)................ $ 149,694,041 U.S. TREASURY NOTES -- 35.0% 20,000 6.50%, 9/30/96..................... 20,010,343 30,000 8.00%, 10/15/96.................... 30,078,470 150,000 6.875%, 10/31/96................... 150,415,920 125,000 7.25%, 11/15/96.................... 125,455,094 200,000 7.50%, 12/31/96.................... 201,332,352 50,000 8.00%, 1/15/97..................... 50,429,269 250,000 7.50%, 1/31/97..................... 252,264,102 125,000 6.875%, 2/28/97.................... 125,946,960 100,000 6.50% to 6.875%, 4/30/97........... 100,848,499 70,000 8.50%, 5/15/97..................... 71,246,809 50,000 6.00%, 8/31/97..................... 50,003,906 TOTAL U.S. TREASURY NOTES (COST $1,178,031,724).............. 1,178,031,724 REPURCHASE AGREEMENTS* -- 65.2% 150,000 Daiwa Securities Co., Ltd., 5.24%, dated 8/30/96, due 9/3/96 (1)...... 150,000,000 150,000 Dean Witter Reynolds, Inc., 5.24%, dated 8/26/96, due 9/3/96 (2)...... 150,000,000 170,000 Donaldson, Lufkin & Jenrette Securities Corp., 5.23%, dated 8/30/96, due 9/3/96 (3)...... 170,000,000 100,000 Dresdner Bank AG, 5.25%, dated 8/26/96, due 9/3/96 (4)...... 100,000,000 75,000 Dresdner Bank AG, 5.25%, dated 8/30/96, due 9/3/96 (5)...... 75,000,000 150,000 First Boston Corp., 5.25%, dated 8/30/96, due 9/3/96 (6)...... 150,000,000 200,000 Goldman, Sachs Group L.P., 5.24%, dated 8/30/96, due 9/3/96 (7)..................... 200,000,000 PRINCIPAL AMOUNT (000) VALUE REPURCHASE AGREEMENTS* -- CONTINUED $150,000 HSBC Securities, Inc., 5.24%, dated 8/30/96, due 9/3/96 (8)...... $ 150,000,000 150,000 Merrill Lynch, Pierce, Fenner & Smith, 5.20%, dated 8/30/96, due 9/3/96 (9)..................... 150,000,000 200,000 Morgan Guaranty Trust Co. of New York, 5.25%, dated 8/30/96, due 9/3/96 (10).................... 200,000,000 150,000 Morgan Stanley Co., 5.23%, dated 8/30/96, due 9/3/96 (11)..... 150,000,000 50,000 NationsBank, 5.23%, dated 8/30/96, due 9/3/96 (12)..... 50,000,000 200,000 Nikko Securities Co. International, Inc., 5.22%, dated 8/26/96, due 9/3/96 (13).................... 200,000,000 150,000 State Street Bank & Trust Co., 5.21%, dated 8/30/96, due 9/3/96 (14).................... 150,000,000 150,000 Union Bank Switzerland, 5.24%, dated 8/30/96, due 9/3/96 (15)..... 150,000,000 TOTAL REPURCHASE AGREEMENTS (COST $2,195,000,000).............. 2,195,000,000 SHARES (000) MUTUAL FUND SHARES -- 1.1% 36,386 Fidelity U.S. Treasury, Inc., Portfolio (at net asset value) (COST $36,386,133)................ 36,386,133 TOTAL INVESTMENTS (COST $3,559,111,898)..... 105.7% 3,559,111,898 OTHER ASSETS AND LIABILITIES -- NET........ (5.7) (191,448,210) NET ASSETS................ 100.0% $3,367,663,688
See accompanying notes to financial statements. *Collateralized by: (1) $139,858,000 U.S. Treasury Notes, 6.00% to 8.875%, 8/31/97 to 2/15/99; value including accrued interest -- $147,118,513 and $5,472,000 U.S. Treasury Bonds, 7.875%, 11/15/07; value including accrued interest -- $5,882,008. (2) $134,065,401 U.S. Treasury Strips, 2/15/97 to 2/15/26; value -- $133,534,995; $14,637,000 U.S. Treasury Notes, 5.125% to 7.25%, 8/31/96 to 7/15/06; value including accrued interest -- $14,904,368; $2,495,000 U.S. Treasury Bonds, 8.75% to 11.25%, 2/15/15 to 5/15/20; value including accrued interest -- $3,142,556 and $1,420,000 U.S. Treasury Bills, 9/5/96; value -- $1,418,811. (3) $191,154,000 U.S. Treasury Strips, 11/15/97 to 2/15/25; value -- $70,652,564 and $101,611,000 U.S. Treasury Notes, 5.50% to 8.75%, 11/15/98 to 9/30/00; value including interest -- $102,748,325. (4) $59,390,000 U.S. Treasury Notes, 6.25% to 7.75%, 1/31/00 to 8/31/00; value including accrued interest -- $60,853,502 and $42,605,000 U.S. Treasury Bonds, 6.75%, 8/15/26; value including accrued interest -- $41,151,377. (5) $56,857,000 U.S. Treasury Notes, 5.00% to 9.25%, 12/31/97 to 10/31/99; value including accrued interest -- $56,991,500 and $103,700,000 U.S. Treasury Strips, 8/15/19; value $19,509,081. (6) $151,706,000 U.S. Treasury Notes, 5.625% to 6.375%, 3/31/98 to 3/31/01; value including accrued interest -- $153,439,998. (7) $206,574,000 U.S. Treasury Notes, 5.50%, 4/15/00; value including accrued interest -- $204,000,177. (8) $150,104,000 U.S. Treasury Notes, 5.00% to 9.00%, 12/31/97 to 5/31/98; value including accrued interest -- $153,001,642. (9) $152,111,000 U.S. Treasury Notes, 5.25% to 7.75%, 11/30/00 to 3/31/01; value including accrued interest -- $153,001,585. (10) $209,500,000 U.S. Treasury Bills, 2/27/97; value -- $204,002,720. (11) $150,305,000 U.S. Treasury Notes, 7.25%, 8/15/04; value including accrued interest -- $154,759,313. (12) $51,100,000 U.S. Treasury Notes, 5.25%, 12/31/97; value including accrued interest -- $51,017,729. (13) $202,483,000 U.S. Treasury Notes, 5.125% to 8.25%, 2/15/98 to 7/15/06; value including accrued interest -- $205,988,770. (14) $153,880,000 U.S. Treasury Bonds, 7.125%, 2/15/23; value -- $156,154,225. (15) $361,936,000 U.S. Treasury Strips, 5/15/05 to 8/15/10; value -- $153,001,660. 40 EVERGREEN TREASURY MONEY MARKET FUND (Photo of an eagle) STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996
ASSETS: Investments in repurchase agreements........................................................................ $2,195,000,000 Investments in securities................................................................................... 1,364,111,898 Investments at value (identified cost $3,559,111,898).................................................... 3,559,111,898 Interest receivable......................................................................................... 21,792,711 Receivable for Fund shares sold............................................................................. 1,662,207 Prepaid expenses............................................................................................ 43,829 Total assets.......................................................................................... 3,582,610,645 LIABILITIES: Payable for investments purchased........................................................................... 199,722,810 Dividends payable........................................................................................... 11,292,281 Distribution fee payable.................................................................................... 1,403,451 Accrued expenses............................................................................................ 1,266,972 Accrued advisory fee........................................................................................ 905,039 Payable for Fund shares repurchased......................................................................... 246,346 Administration fee payable.................................................................................. 110,058 Total liabilities..................................................................................... 214,946,957 NET ASSETS..................................................................................................... $3,367,663,688 NET ASSETS CONSIST OF: Paid-in capital............................................................................................. $3,367,614,048 Accumulated net realized gain on investment transactions.................................................... 49,640 Net assets............................................................................................ $3,367,663,688 CALCULATION OF NET ASSET VALUE PER SHARE: Class A Shares ($2,607,700,900(division sign)2,607,674,461 shares of beneficial interest outstanding)............................................................................................. $ 1.00 Class Y Shares ($759,962,788(division sign)759,956,138 shares of beneficial interest outstanding)......................... $1.00
See accompanying notes to financial statements. 41 EVERGREEN TREASURY MONEY MARKET FUND (Photo of an eagle) STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1996 INVESTMENT INCOME: Interest.................................................................................... $138,252,376 EXPENSES: Advisory fee................................................................................ $ 8,857,503 Administrative personnel and services fees.................................................. 1,255,724 Distribution fee -- Class A Shares.......................................................... 6,381,827 Registration and filing fees................................................................ 762,020 Custodian fee............................................................................... 600,746 Reports and notices to shareholders......................................................... 170,245 Transfer agent fee.......................................................................... 149,948 Professional fees........................................................................... 95,656 Trustees' fees and expenses................................................................. 56,840 Insurance................................................................................... 27,186 Miscellaneous............................................................................... 36,366 18,394,061 Less advisory fee waiver.................................................................... (2,109,068) Net expenses............................................................................. 16,284,993 Net investment income.......................................................................... 121,967,383 Net realized gain on investments............................................................... 161,674 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................................... $122,129,057
See accompanying notes to financial statements. 42 EVERGREEN TREASURY MONEY MARKET FUND (Photo of an eagle) STATEMENT OF CHANGES IN NET ASSETS
EIGHT MONTHS YEAR ENDED ENDED AUGUST 31, AUGUST 31, 1996 1995 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income............................................................... $ 121,967,383 $ 43,113,269 Net realized gain (loss) on investment transactions................................. 161,674 (7,403) Net increase in net assets resulting from operations............................. 122,129,057 43,105,866 DISTRIBUTIONS TO SHAREHOLDERS FROM: NET INVESTMENT INCOME: Class A Shares...................................................................... (101,441,299) (33,495,553) Class Y Shares...................................................................... (20,526,084) (9,617,716) Total distributions to shareholders from net investment income................... (121,967,383) (43,113,269) IN EXCESS OF NET INVESTMENT INCOME: Class A Shares...................................................................... -- (67,232) Class Y Shares...................................................................... -- (15,822) Total distributions to shareholders in excess of net investment income............................................................. -- (83,054) Total distributions to shareholders........................................... (121,967,383) (43,196,323) FUND SHARE TRANSACTIONS: Proceeds from shares sold........................................................... 6,442,829,718 2,358,670,175 Proceeds from shares issued from acquisition of FFB U.S. Treasury Fund........................................................ 1,070,672,333 -- Proceeds from shares issued from acquisition of FFB U.S. Government Fund...................................................... 327,532,054 -- Proceeds from shares issued from acquisition of FFB 100% U.S. Treasury Fund................................................... 28,227,573 -- Proceeds from reinvestment of distributions......................................... 17,972,077 5,178,570 Payments for shares redeemed........................................................ (5,974,992,600) (1,826,468,286) Net increase resulting from Fund share transactions.............................. 1,912,241,155 537,380,459 Net increase in net assets....................................................... 1,912,402,829 537,290,002 NET ASSETS: Beginning of period................................................................. 1,455,260,859 917,970,857 End of period....................................................................... $ 3,367,663,688 $ 1,455,260,859
See accompanying notes to financial statements. 43 EVERGREEN TREASURY MONEY MARKET FUND CLASS A SHARES (Photo of an eagle) FINANCIAL HIGHLIGHTS
EIGHT MONTHS YEAR ENDED ENDED AUGUST 31, AUGUST 31, YEAR ENDED DECEMBER 31, 1996 1995# 1994 1993 1992 PER SHARE DATA: Net asset value, beginning of period....................................... $1.00 $1.00 $1.00 $1.00 $1.00 Net investment income...................................................... .05 .03 .04 .03 .03 Less distributions to shareholders from net investment income.............. (.05) (.03) (.04) (.03) (.03) Net asset value, end of period............................................. $1.00 $1.00 $1.00 $1.00 $1.00 TOTAL RETURN+.............................................................. 5.0% 3.6% 3.8% 2.7% 3.4% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (in millions).................................... $2,608 $1,178 $755 $261 $209 Ratios to average net assets: Expenses**............................................................... .69% .63%++ .50% .48% .48% Net investment income**.................................................. 4.76% 5.30%++ 3.91% 2.70% 3.22%
# The Fund changed its fiscal year end from December 31 to August 31. + Total return is calculated on net asset value per share for the periods indicated and is not annualized. ++ Annualized. ** Net of expense waivers and reimbursements. If the Fund had borne all expenses that were reimbursed or waived by the investment adviser, the annualized ratios of expenses and net investment income to average net assets would have been the following:
EIGHT MONTHS YEAR ENDED ENDED AUGUST 31, AUGUST 31, YEAR ENDED DECEMBER 31, 1996 1995# 1994 1993 1992 Expenses................................................................... .77% .79%++ .78% .82% .82% Net investment income...................................................... 4.68% 5.14%++ 3.63% 2.36% 2.88%
See accompanying notes to financial statements. 44 EVERGREEN TREASURY MONEY MARKET FUND CLASS Y SHARES (Photo of an eagle) FINANCIAL HIGHLIGHTS
EIGHT MONTHS YEAR ENDED ENDED AUGUST 31, AUGUST 31, YEAR ENDED DECEMBER 31, 1996 1995# 1994 1993 1992 PER SHARE DATA: Net asset value, beginning of period...................................... $1.00 $1.00 $1.00 $1.00 $1.00 Net investment income..................................................... .05 .04 .04 .03 .04 Less distributions to shareholders from net investment income............. (.05) (.04) (.04) (.03) (.04) Net asset value, end of period............................................ $1.00 $1.00 $1.00 $1.00 $1.00 TOTAL RETURN+............................................................. 5.3% 3.8% 4.1% 3.0% 3.7% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (in millions)................................... $760 $277 $163 $366 $286 Ratios to average net assets: Expenses**.............................................................. .39% .33%++ .20% .18% .17% Net investment income**................................................. 5.12% 5.60%++ 3.78% 3.00% 3.61%
# The Fund changed its fiscal year end from December 31 to August 31. + Total return is calculated on net asset value per share for the periods indicated and is not annualized. ++ Annualized. ** Net of expense waivers and reimbursements. If the Fund had borne all expenses that were reimbursed or waived by the investment adviser, the annualized ratios of expenses and net investment income to average net assets would have been the following:
EIGHT MONTHS YEAR ENDED ENDED AUGUST 31, AUGUST 31, YEAR ENDED DECEMBER 31, 1996 1995# 1994 1993 1992 Expenses.................................................................. .47% .49%++ .48% .52% .52% Net investment income..................................................... 5.04% 5.44%++ 3.50% 2.66% 3.26%
See accompanying notes to financial statements. 45 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 1 -- ORGANIZATION AND NATURE OF OPERATIONS The Evergreen Money Market Funds (the "Funds") are separate series of open-end management companies registered under the Investment Company Act of 1940, as amended (the "Act"). The Evergreen Money Market Funds consist of Evergreen Money Market Fund ("Money Market"), Evergreen Pennsylvania Tax-Free Money Market Fund ("Pennsylvania"), Evergreen Tax Exempt Money Market Fund ("Tax Exempt") and Evergreen Treasury Money Market Fund ("Treasury"), known collectively as the Funds. Money Market is the sole series of Evergreen Money Market Trust, Pennsylvania is a series of Evergreen Tax-Free Trust, Tax Exempt is a series of Evergreen Municipal Trust and Treasury is a series of Evergreen Investment Trust. The investment objective of Money Market and Pennsylvania is to achieve as high a level of current income as is consistent with preserving capital and providing liquidity. The investment objective of Tax Exempt is to achieve as high a level of current income exempt from Federal income tax, as is consistent with preserving capital and providing liquidity. Treasury's investment objective is to maintain stability of principal while earning current income. NOTE 2 -- ACQUISITION INFORMATION Effective January 1, 1996, First Union Corporation, the corporate parent of First Union National Bank of North Carolina ("First Union"), the Funds' current investment advisor, consummated a merger with First Fidelity Bancorporation. Effective on the close of business January 19, 1996, the Funds noted below acquired substantially all of the net assets of the following management investment companies previously advised by a subsidiary of First Fidelity Bancorporation through non-taxable exchanges. The net assets acquired, valued at $1 per share, and class of shares exchanged are as follows:
CLASS OF SHARES NET ASSETS ACQUIRED FUND ACQUIRING FUND EXCHANGED ACQUIRED FFB Cash Management Fund Money Market Class A $ 592,358,361 FFB Lexicon Cash Management Fund Money Market Class Y 95,834,929 FFB Tax-Free Money Market Fund Tax Exempt Class A 103,129,021 FFB U.S. Treasury Fund Treasury Class A 1,070,672,333 FFB U.S. Government Fund Treasury Class A 327,532,054 FFB 100% U.S. Treasury Fund Treasury Class A 28,227,573
The aggregate net assets of Money Market, Tax Exempt and Treasury immediately after the acquisitions were $1,865,328,722, $1,141,961,188 and $3,053,739,559, respectively. Also, effective January 19, 1996, the FFB Pennsylvania Tax-Free Money Market Fund was renamed Evergreen Pennsylvania Tax-Free Money Market Fund. Shares of the FFB Pennsylvania Tax-Free Money Market Fund's class previously known as the institutional class and service class were redesignated Pennsylvania's Class Y Shares and Class A Shares, respectively. Pennsylvania subsequently changed its fiscal year end to August 31. Effective July 7, 1995, Money Market acquired substantially all of First Union Money Market Portfolio's net assets, valued at $1.00 per share through a non-taxable exchange for 642,283,253 shares of Money Market. The aggregate net assets of Money Market immediately after the acquisition were $884,502,198. In addition, effective July 7, 1995, Tax Exempt acquired substantially all of First Union Tax-Free Money Market Portfolio's net assets, valued at $1.00 per share through a non-taxable exchange for 604,175,076 shares of Tax Exempt. The aggregate net assets of Tax Exempt immediately after the acquisition were $952,382,736. 46 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 3 -- SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Funds in the preparation of their financial statements. These policies are in conformity with generally accepted accounting principles. SECURITY VALUATIONS -- Portfolio securities are valued at amortized cost which approximates market value. The amortized cost method involves valuing a security at cost on the date of purchase and thereafter assuming a straight-line amortization of any discount or premium to maturity. SECURITY TRANSACTIONS -- Security transactions are accounted for on the date purchased or sold. Net realized gains or losses are determined on the identified cost basis. INVESTMENT INCOME AND EXPENSES -- Interest income and expenses are accrued daily. Premiums and discounts paid on securities are amortized or accreted into interest income. REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase agreements are held by the Federal Reserve Bank and are designated as being held on each Fund's behalf by its custodian under a book-entry system. Each Fund monitors the adequacy of the collateral on a daily basis, and can require the seller to provide additional collateral in the event the market value of the securities pledged falls below the carrying value of the repurchase agreement, including accrued interest. Each Fund will only enter into repurchase agreements with banks and other financial institutions which are deemed by the investment adviser to be creditworthy pursuant to guidelines established by each Funds' Trustees. WHEN ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Funds record when-issued or delayed delivery transactions on the trade date and maintain security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis begin earning interest on the settlement date. DIVIDENDS TO SHAREHOLDERS -- Dividends from net investment income are declared daily and paid monthly. Dividends from net realized capital gains on investments, if any, will be distributed at least annually. Income distributions and capital gain distributions are determined in accordance with income tax regulations which may differ from the amounts available for distribution under generally accepted accounting principles. To the extent these differences are permanent in nature, such amounts are reclassified within the components of net assets. INCOME TAXES -- It is each Fund's policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable and other net income to its shareholders. Accordingly, no provisions for Federal income or excise taxes are necessary. To the extent that realized capital gains can be offset by capital loss carryforwards, it is each Fund's policy not to distribute such gains. At August 31, 1996, the Funds had capital loss carryforwards in the following amounts:
EXPIRATION 2001 2002 2003 2004 Money Market.................. -- -- $516,766 -- Pennsylvania.................. $ 3,800 -- 6,039 $ 378 Tax Exempt.................... 177,088 $266 15,847 64,670
Capital losses incurred after October 31 within the Fund's fiscal year are deemed to arise on the first business day of the following fiscal year for tax purposes. Money Market and Tax Exempt have incurred and will elect to defer $34,087 and $9, respectively, of such capital losses. ALLOCATION OF EXPENSES -- Expenses specifically identifiable to a class of shares are charged to that class. Expenses common to a Trust as a whole are allocated to the funds in that Trust. Net investment income (other than class specific expenses) and 47 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 3 -- SIGNIFICANT ACCOUNTING POLICIES -- continued realized and unrealized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class. USE OF ESTIMATES -- The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. NOTE 4 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY AGREEMENTS -- First Union is entitled to an annual fee of .35 of 1% of Treasury's average daily net assets pursuant to the fund's investment advisory agreement. For the year ended August 31, 1996, First Union voluntarily waived $2,109,068 of its advisory fee. For Pennsylvania, First Union is entitled to an annual advisory fee based on the Fund's net assets in accordance with the following schedule:
ADVISORY FEE AVERAGE DAILY NET ASSETS 0.40% on the first $500 million 0.36% on the next $500 million 0.32% on the next $500 million 0.28% in excess of $1.5 billion
For the six months ended August 31, 1996, First Union voluntarily waived $59,186 of its advisory fee. First Union can modify or terminate voluntary fee waivers at any time. Pursuant to an agreement with Money Market's and Tax Exempt's investment adviser, Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly owned subsidiary of First Union, Evergreen Asset is entitled to an annual fee based on Money Market's and Tax Exempt's average daily net assets in accordance with the following schedule:
ADVISORY FEE AVERAGE DAILY NET ASSETS 0.50% on the first $1 billion 0.45% in excess of $1 billion
Evergreen Asset has agreed to reimburse Money Market and Tax Exempt to the extent that either Fund's operating expenses (including the investment advisory fee but excluding interest, taxes, brokerage commissions, 12b-1 distribution and shareholder services fees and extraordinary expenses) exceeds 1.00% of its average daily net assets for any fiscal year. For the year ended August 31, 1996, the expenses of Money Market and Tax Exempt did not exceed this limit. For the year ended August 31, 1996, Evergreen Asset voluntarily waived $2,427,423 and $1,243,131 of its advisory fee for Money Market and Tax Exempt, respectively. Evergreen Asset can modify or terminate these voluntary waivers at any time. Lieber & Company, an affiliate of First Union is the investment sub-adviser to Money Market and Tax Exempt. Lieber & Company is reimbursed by Evergreen Asset at no additional expense to the Funds. During the year ended August 31, 1995, Tax Exempt entered into stand-by purchase agreements ("agreements") with First Union with regards to securities issued by Orange County, California. The agreements enabled the securities to be valued at par, which was $300,000 in excess of the securities fair market value on the date of the issuance. The increase in the value is deemed to be a voluntary contribution of capital to offset the loss in value. The agreements were exercised during the year ended August 31, 1995, and accordingly, the securities were sold to First Union at par. 48 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 4 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES -- continued ADMINISTRATION AGREEMENT -- Evergreen Asset furnishes Money Market and Tax Exempt with administrative services as part of their advisory agreements and accordingly, these Funds do not pay a separate administration fee. Furman Selz LLC ("Furman Selz") is each of the Fund's sub-administrator. As sub-administrator, Furman Selz provides the officers of the Funds. For Money Market and Tax Exempt, Furman Selz' fee is paid by Evergreen Asset and is not a fund expense. Evergreen Asset is also Pennsylvania's and Treasury's administrator and Furman Selz is the sub-administrator. Evergreen Asset's and Furman Selz' fees for Pennsylvania and Treasury are based on the average daily net assets of all the funds administered by Evergreen Asset for which First Union or Evergreen Asset is also investment adviser. These are calculated at the following annual rates:
ADMINISTRATION FEE AVERAGE DAILY NET ASSETS 0.050% on the first $7 billion 0.035% on the next $3 billion 0.030% on the next $5 billion 0.020% on the next $10 billion 0.015% on the next $5 billion 0.010% in excess of $30 billion SUB-ADMINISTRATION FEE AVERAGE DAILY NET ASSETS 0.0100% on the first $7 billion 0.0075% on the next $3 billion 0.0050% on the next $15 billion 0.0040% in excess of $25 billion
At August 31, 1996, assets for which Evergreen Asset was the administrator for which either Evergreen Asset or First Union was investment adviser totaled approximately $15.7 billion. PLANS OF DISTRIBUTION -- The Funds have adopted for their Class A Shares and Class B Shares (Money Market only) Distribution Plans (the "Plans") pursuant to Rule 12b-1 under the Act (See Note 5). Under the terms of the Plans, the Funds may incur distribution-related and shareholder servicing expenses which may not exceed .75 of 1% for Class A Shares for Money Market and Tax Exempt and .35 of 1% for Class A Shares for Pennsylvania and Treasury. The payments for Class A Shares for Money Market, Tax Exempt and Treasury were voluntarily limited to .30 of 1% and for Pennsylvania were limited to .05 of 1% of average daily net assets. Money Market may incur distribution-related and shareholder servicing expenses, which may not exceed an annual fee of 1% for its Class B Shares. In connection with their Plans, the Funds have entered into distribution agreements with Evergreen Funds Distributor, Inc. ("EFD"), a subsidiary of Furman Selz whereby each Fund will compensate EFD for its services at a rate which may not exceed .30 of 1% of its Class A average daily net assets and 1% of its Class B average daily net assets (Money Market only). A portion of Money Market's Class B Plan, up to .25 of 1% of average daily net assets may constitute a shareholder service fee. EFD has entered into a Shareholder Services Agreement with First Union Brokerage Services ("FUBS"), an affiliate of First Union, whereby EFD will compensate FUBS for certain services provided to shareholders and/or maintenance of shareholder accounts relating to Money Market's Class B shares. NOTE 5 -- SHARES OF BENEFICIAL INTEREST Money Market and Tax Exempt have an unlimited number of $0.0001 par value shares of beneficial interest authorized. Pennsylvania and Treasury have an unlimited number of $.001 par value shares of beneficial interest authorized. The shares are divided into classes which are designated Class Y, Class A and Class B Shares (Money Market only). Class Y shares are 49 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- continued available only to investment advisory clients of First Union and its affiliates, certain institutional investors or Class Y shareholders of record of certain other funds managed by First Union and its affiliates as of December 30, 1994. The classes have identical voting, dividend, liquidation and other rights, except that Class A and Class B shares bear distribution expenses (see Note 4) and have exclusive voting rights with respect to their distribution plans. Transactions in shares of beneficial interest (valued at $1.00 per share) were as follows:
YEAR ENDED AUGUST 31, MONEY MARKET 1996 1995* CLASS A Shares sold.................................................................................. 3,360,065,151 263,807,185 Shares issued from acquisition of FFB Cash Management Fund................................... 592,362,245 -- Shares issued from acquisition of First Union Money Market Portfolio......................... -- 577,090,623 Shares issued from reinvestment of distributions............................................. 13,630,468 1,073,970 Shares redeemed.............................................................................. (2,895,924,591) (156,830,783) Net increase................................................................................. 1,070,133,273 685,140,995 CLASS B Shares sold.................................................................................. 13,107,126 1,222,632 Shares issued from acquisition of First Union Money Market Portfolio......................... -- 8,848,122 Shares issued from reinvestment of distributions............................................. 307,330 41,082 Shares redeemed.............................................................................. (11,123,113) (2,185,089) Net increase................................................................................. 2,291,343 7,926,747 CLASS Y Shares sold.................................................................................. 2,902,529,372 1,484,885,160 Shares issued from acquisition of FFB Lexicon Cash Management Fund........................... 95,834,876 -- Shares issued from acquisition of First Union Money Market Portfolio......................... -- 56,344,508 Shares issued from reinvestment of distributions............................................. 14,304,225 13,226,417 Shares redeemed.............................................................................. (2,624,143,977) (1,544,913,353) Net increase................................................................................. 388,524,496 9,542,732 Total net increase resulting from Fund share transactions.................................... 1,460,949,112 702,610,474
* The Fund share activity for Class A reflects the period from January 4, 1995 (commencement of class operations) through August 31, 1995. The Fund share activity for Class B reflects the period from January 26, 1995 (commencement of class operations) through August 31, 1995. 50 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- continued
SIX MONTHS ENDED YEAR ENDED AUGUST 31, FEBRUARY 29, PENNSYLVANIA 1996 1996* CLASS A Shares sold.................................................................................. 40,205,338 4,636,845 Shares issued from reinvestment of distributions............................................. 35,417 3,934 Shares redeemed.............................................................................. (22,377,383) (307,967) Net increase................................................................................. 17,863,372 4,332,812 CLASS Y Shares sold.................................................................................. 21,254,692 174,995,677 Shares issued from reinvestment of distributions............................................. 586,491 1,762,856 Shares redeemed.............................................................................. (56,919,288) (136,899,719) Net increase (decrease)...................................................................... (35,078,105) 39,858,814 Total net increase (decrease) resulting from Fund share transactions......................... (17,214,733) 44,191,626
* The Fund share activity for Class A reflects the period from August 22, 1995 (commencement of class operations) through February 29, 1996.
YEAR ENDED AUGUST 31, TAX-EXEMPT 1996 1995* CLASS A Shares sold.................................................................................. 1,329,098,871 126,822,267 Shares issued from acquisition of FFB Tax-Free Money Market Fund............................. 103,102,728 -- Shares issued from acquisition of First Union Tax-Free Money Market Portfolio................ -- 529,834,393 Shares issued from reinvestment of distributions............................................. 3,435,421 499,871 Shares redeemed.............................................................................. (1,330,067,450) (102,091,382) Net increase................................................................................. 105,569,570 555,065,149 CLASS Y Shares sold.................................................................................. 1,243,309,865 396,597,152 Shares issued from acquisition of First Union Tax-Free Money Market Portfolio................ -- 74,340,683 Shares issued from reinvestment of distributions............................................. 12,767,571 12,777,605 Shares redeemed.............................................................................. (1,060,731,679) (464,546,791) Net increase................................................................................. 195,345,757 19,168,649 Total net increase resulting from Fund share transactions.................................... 300,915,327 574,233,798
* The Fund share activity for Class A reflects the period from January 5, 1995 (commencement of class operations) through August 31, 1995. 51 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- continued
EIGHT MONTHS YEAR ENDED ENDED AUGUST 31, AUGUST 31, TREASURY 1996 1995 CLASS A Shares sold.................................................................................. 4,828,856,886 1,854,109,537 Shares issued from acquisition of FFB U.S. Treasury Fund..................................... 1,070,688,429 -- Shares issued from acquisition of FFB U.S. Government Fund................................... 327,554,031 -- Shares issued from acquisition of FFB 100% U.S. Treasury Fund................................ 28,227,628 -- Shares issued from reinvestment of distributions............................................. 16,836,594 5,178,018 Shares redeemed.............................................................................. (4,842,442,130) (1,436,384,809) Net increase................................................................................. 1,429,721,438 422,902,746 CLASS Y Shares sold.................................................................................. 1,613,972,832 504,560,638 Shares issued from reinvestment of distributions............................................. 1,135,483 552 Shares redeemed.............................................................................. (1,132,550,470) (390,083,477) Net increase................................................................................. 482,557,845 114,477,713 Total net increase resulting from Fund share transactions.................................... 1,912,279,283 537,380,459
NOTE 6 -- CONCENTRATION OF CREDIT RISK Each Fund maintains a diversified portfolio of money market instruments which are deemed, under Rule 2a-7 of the Act, to have a maturity of 397 days or less and whose ratings are determined to be of eligible quality under Securities and Exchange Commission rules. The ability of the issuers of the securities held by the Funds to meet their obligations may be affected by economic developments in a specific industry, state, region or country. Certain instruments may be entitled to the benefit of standby letters of credit or other guarantees of banks or other financial institutions. NOTE 7 -- LINE OF CREDIT Effective July 3, 1996, a financing agreement was put in place with all the Evergreen Funds and their custodian, State Street Bank and Trust Company (the "Bank"). Under the agreement, the Bank is providing an unsecured, uncommitted line of credit facility, in the aggregate amount of $50 million, to be accessed by the Funds for temporary or emergency purposes only and is subject to each participating Fund's borrowing restrictions. Borrowings under this facility bear interest at .75% per annum above the Bank's cost of funds as set periodically by the Bank. During the year ended August 31, 1996, the Funds had no borrowings outstanding under this agreement. 52 REPORT OF INDEPENDENT ACCOUNTANTS TO THE TRUSTEES AND SHAREHOLDERS OF EVERGREEN MONEY MARKET FUND AND EVERGREEN TAX EXEMPT MONEY MARKET FUND In our opinion, the accompanying Statements of Assets and Liabilities, including the Statements of Investments, and the related Statements of Operations and of Changes in Net Assets and the Financial Highlights present fairly, in all material respects, the financial position of Evergreen Money Market Fund and Evergreen Tax Exempt Money Market Fund (one of the Evergreen Municipal Trust Portfolios), (the "Funds"), at August 31, 1996, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended, and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 1996 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP 1177 Avenue of the Americas New York, New York October 18, 1996 53 INDEPENDENT AUDITORS' REPORT THE TRUSTEES AND SHAREHOLDERS OF EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND AND EVERGREEN TREASURY MONEY MARKET FUND We have audited the accompanying statement of assets and liabilities, including the statement of investments, for Evergreen Pennsylvania Tax-Free Money Market Fund and Evergreen Treasury Money Market Fund as of August 31, 1996, and the related statements of operations, changes in net assets and the financial highlights for each of the periods listed below: Evergreen Pennsylvania Tax-Free Money Market Fund -- statement of operations for the six-month period ended August 31, 1996, statements of changes in net assets for the six-month period ended August 31, 1996 and the year ended February 29, 1996 and the financial highlights for each of the years or periods from March 1, 1993 through August 31, 1996. Evergreen Treasury Money Market Fund -- statement of operations for the year ended August 31, 1996, statements of changes in net assets for the year ended August 31, 1996 and the eight month period ended August 31, 1995 and the financial highlights for each of the years or periods from January 1, 1992 through August 31, 1996. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights of Evergreen Pennsylvania Tax-Free Money Market Fund for the year ended February 28, 1993 were audited by other auditors whose reports expressed unqualified opinions on those financial highlights. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of August 31, 1996 by correspondence with the custodian and brokers. An audit also includes assessing the overall accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Evergreen Pennsylvania Tax-Free Money Market Fund and Evergreen Treasury Money Market Fund as of August 31, 1996, and the results of their operations, changes in their net assets and their financial highlights for each of the periods listed in the third preceding paragraph, in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP Pittsburgh, Pennsylvania October 16, 1996 FEDERAL INCOME TAX STATUS OF DIVIDENDS (UNAUDITED) 100% of the dividends distributed by Pennsylvania Tax-Free Money Market Fund and Tax Exempt Money Market Fund for the period ended August 31, 1996 are exempt from federal income tax, other than alternative minimum tax. 54 (This Page Left Blank Intentionally) 55 (This Page Left Blank Intentionally) 56 TRUSTEES AND OFFICERS TRUSTEES: Laurence B. Ashkin* Foster Bam* James S. Howell, Chairman Robert J. Jeffries*+ Gerald M. McDonnell Thomas L. McVerry William W. Pettit Russell A. Salton, III M.D. Michael S. Scofield OFFICERS: John J. Pileggi President and Treasurer Joan V. Fiore Secretary Sheryl Hirschfeld Assistant Secretary Donald E. Brostrom Assistant Treasurer Stephen W. St. Clair Assistant Treasurer * Not a Trustee for Evergreen Treasury Money Market Fund. + Trustee Emeritus This brochure must be preceeded or accompanied by a prospectus of an Evergreen fund contained herein. The prospectus contains more complete information, including fees and expenses, and should be read carefully before investing or sending money. NOT May lose value FDIC No bank guarantee INSURED Evergreen Funds Distributor, Inc. Evergreen(SM) is a Service Mark of Evergreen Asset Management Corp. Copyright 1996, Evergree Asset Management Corp. 44944 539583 10/96 -----END PRIVACY-ENHANCED MESSAGE-----