-----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, HjSTFcpQC/3DLQ8E7xIhL1r2nBZ9Jc2FaLKWKc3IvtOL8JspqcUZrzFTE+u4DUxQ dVJhPFdkuhzfW+BLdCRTpg== 0000950168-97-001142.txt : 19970507 0000950168-97-001142.hdr.sgml : 19970507 ACCESSION NUMBER: 0000950168-97-001142 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970505 SROS: NONE 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: 97595876 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: 97595877 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: 97595878 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 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: 97595879 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 N30D 48465 EVERGREEN MONEY MARKET FUNDS (Photo of currency) (Photo of coins) (Photo of building) (Photo of eagle) SEMIANNUAL REPORT FEBRUARY 28, 1997 Evergreen Keystone [logo] FUNDS(sm) [logo] EVERGREEN MONEY MARKET FUNDS TABLE OF CONTENTS (Photo of currency) Economic Overview......................................................... 1 MONEY MARKET A Report From Your Portfolio Manager...................................... 2 FUND Statement of Investments.................................................. 3 Statement of Assets and Liabilities....................................... 8 Statement of Operations................................................... 9 Statement of Changes in Net Assets........................................ 10 Financial Highlights...................................................... 11 (Photo of building) PENNSYLVANIA A Report From Your Portfolio Manager...................................... 13 TAX-FREE MONEY Statement of Investments.................................................. 14 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....................................... 34 Statement of Operations................................................... 35 Statement of Changes in Net Assets........................................ 36 Financial Highlights...................................................... 37 (Photo of eagle) TREASURY A Report From Your Portfolio Manager...................................... 38 MONEY MARKET FUND Statement of Investments.................................................. 39 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 Trustees and Officers...................................... Inside Back Cover
EVERGREEN MONEY MARKET FUNDS ECONOMIC OVERVIEW BY STEPHEN A. LIEBER, CHAIRMAN EVERGREEN ASSET MANAGEMENT CORP. The strong momentum of the United States economy at the end of 1996 was well sustained through the [photo] first quarter of 1997. Industrial production rose in each month of the first quarter, 0.10% in January, 0.60% in February, and 0.90% in March. Industrial capacity utilization reflected the dynamic economy, rising to 84.1%, the highest level since March 1995. Despite the sustained growth in the U.S. economy, the rate of inflation continues to be moderate. The Consumer Price Index increase was 1.8% on an annual rate basis during the first quarter, well below the moderate 3.3% rise during 1996. These recent economic figures combine to offset the fearful expectations of many economists and participants in the fixed income markets that the economy might not be capable of significant overall growth without inciting inflation. Most observers, however, are very reluctant to assume that the major driving force of inflation, rising wages, is unlikely to appear. They point to record low inventory-to-sales ratios, low level of inventories on the retailing and wholesaling level, and the rising operating rate of industrial production. While arguing over whether the recent 6% growth in consumer spending is sustainable, and whether consumer credit card debt is over-extended, there are few who would project any near-term significant decline in overall domestic demand. The many aspects of domestic economic growth have led to an intense watch on the trends of wage levels. The rise in average hours worked, some gradual creep in compensation, and the sustained jobless level at just over 5%, have led many key observers to conclude that any further acceleration in the economy's momentum will lead to some breakout in wage compensation, especially in areas of labor shortage. The Federal Reserve has clearly concluded that this risk justifies the slowing effort of the recent 0.25% increase in the discount rate. The majority of observers expect that the economic figures published through April will probably lead to another 0.25% rise in May. There is widespread discussion about whether there will be more increases of 0.25%, or even a rise of 0.50% over the next few months. In initiating the recent discount rate increase, Federal Reserve Chairman, Alan Greenspan, described the move as "pre- emptive". Consequently, most observers conclude that the Federal Reserve policy is going to be one of pre-emptive moves when inflationary signs appear in the economy. Higher short-term interest rates will be the Fed's first line of defense. The real return in long-term fixed income investments today is in the area of 5%. This is strikingly higher than the "normal" real return of 3% to 4%, and well above the 3.6% yield of the new ten-year U.S. Treasury Inflation Indexed Bonds, which are an appropriate proxy for the real return. This extremely high rate of real return suggests either that the long-term interest rate structure in the United States is forecasting a much higher rate of inflation than presently seen, or is at a level which discounts expectations of a higher rate of inflation. Many bond market observers believe that the discounting has been done and, therefore, has provided the better than 7% yields now available in long-term United States Treasuries. The fixed income markets currently provide a combination of short-term uncertainty, and increased long-term confidence. Over the short-term, the data on economic strength and trends are being read with anxiety as indicators of whether or not interest rates will rise. Over the longer term, the demonstrated readiness of the Federal Reserve Open Market Committee to act "pre-emptively" to ensure the longer term control of inflation, and to maintain stability in the economy, is highly encouraging for fixed income investment. 1 EVERGREEN MONEY MARKET FUND (Photo of currency) A REPORT FROM YOUR PORTFOLIO MANAGER ETHEL SUTTON We are happy to present you with the Semiannual Report for Evergreen Money Market Fund. In a pre-emptive strike against inflation, the Federal Reserve Board raised the overnight Federal Funds rate to 5 1/2% from 5 1/4% at its Open Market Committee meeting on March 25, 1997, finally deciding to act on a policy bias that had been in effect since July. Although the economy turned in a strong performance in the [Photo] fourth quarter of last year and appears to be equally as strong so far this year, inflation has been remarkably subdued, owing to the strong U.S. dollar. The latest Producer Price Index actually showed a decline from the previous period. The sustained job growth of the past several months, however, has not produced lower unemployment rates, leading to a belief that a growing economy could manage to accommodate tighter labor markets without driving up unemployment costs and overheating the economy. In his most recent Congressional testimony, Federal Reserve Chairman, Alan Greenspan, emphasized that, historically, most policy mistakes occurred because rate hikes were started too late, putting the Fed "behind the curve" in coping with inflation and necessitating a more drastic response than the gentle one-quarter point nudge of March 25. Many economists think that this is the first of a series of one-quarter point increases that will lead to a Federal Funds rate of 6% by year-end. Our approach since the beginning of 1997 has been to "barbell" the portfolio, moving out on the yield curve to longer maturities when nervousness over strong economic data causes rates to steepen. Our average maturities are, consequently, longer than they would be if we had adopted a strictly "laddered" approach. On February 28, for instance, the Fund's weighted average maturity was 79 days, as compared with a 61-day average for the 275 first tier money market funds as tracked by IBC's Money Fund Report* during that time. As we search for attractive value, we not only monitor the latest economic data, we constantly review credit quality in our quest to match stability of principal with competitive yield. * MONTHLY AVERAGES AS REPORTED IN THE MONTHLY IBC'S MONEY FUND REPORT. IBC IS AN INDEPENDENT MONEY MARKET MUTUAL FUND PERFORMANCE MONITOR. 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. 2 EVERGREEN MONEY MARKET FUND (Photo of currency) STATEMENT OF INVESTMENTS FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE BANKERS' ACCEPTANCES* -- 0.2% (COST $4,987,689) $ 5,000 Suntrust Bank, Inc., 5.54%, 3/17/97..................... $ 4,987,689 BANKERS' ACCEPTANCES -- YANKEE & EURO DOLLAR* -- 1.0% 18,000 Bank of Tokyo-Mitsubishi, 5.43%, 5/21/97..................... 17,780,085 5,000 Dai-Ichi Kangyo Bank Ltd., 5.45%, 5/2/97...................... 4,953,070 5,000 Sanwa Bank Ltd., 5.45%, 6/5/97...................... 4,927,333 TOTAL BANKERS' ACCEPTANCES -- YANKEE & EURO DOLLAR (COST $27,660,488)............ 27,660,488 CERTIFICATES OF DEPOSIT -- 10.1% 25,000 Bank Brussels Lambert, 5.85%, 1/9/98...................... 25,000,000 25,000 Banque National de Paris, 5.86%, 1/23/98..................... 25,000,000 25,000 Bayerische Vereinsbank AG, 5.76%, 12/19/97.................... 25,000,000 Canadian Imperial Bank of Commerce: 25,000 5.70%, 1/2/98...................... 25,000,000 25,000 5.75%, 12/23/97.................... 25,000,000 25,000 5.85%, 2/27/98..................... 25,000,000 25,000 National Bank of Canada, 5.50%, 11/14/97.................... 25,000,000 Societe Generale: 25,000 5.70%, 12/16/97.................... 25,000,000 25,000 5.70%, 1/2/98...................... 25,000,000 25,000 5.80%, 1/9/98...................... 25,000,000 25,000 Societe Generale (New York), 5.66%, 2/23/98..................... 25,000,000 TOTAL CERTIFICATES OF DEPOSIT (COST $275,000,000)........... 275,000,000 COMMERCIAL PAPER* -- 86.6% BANK HOLDING COMPANIES -- 24.0% 15,000 Banca CRT Financial Corp., 5.45%, 7/15/97..................... 14,691,167 25,000 BankAmerica Corp., 5.40%, 8/13/97..................... 24,381,250 Bankers Trust New York Corp.: 25,000 5.48%, 10/20/97.................... 24,113,306 25,000 5.51%, 10/10/97.................... 24,146,715 PRINCIPAL AMOUNT (000) VALUE BANK HOLDING COMPANIES -- CONTINUED BHF Finance (De), Inc.: $20,565 5.30%, 4/11/97..................... $ 20,440,867 30,000 5.35%, 4/16/97..................... 29,794,917 Chiao Tung Bank: 20,000 5.37%, 4/22/97..................... 19,844,867 20,000 5.40%, 4/3/97...................... 19,901,000 10,000 5.44%, 7/23/97..................... 9,782,400 50,000 Compagnie Bancaire USA Finance Corp., 5.42%, 7/21/97..................... 48,931,055 10,000 Deutsche Bank Financial Inc., 5.46%, 5/1/97...................... 9,907,483 HSBC Americas, Inc.: 20,000 5.31%, 4/21/97..................... 19,849,550 50,000 5.38%, 3/14/97..................... 49,902,861 33,485 Indosuez N.A., Inc., 5.40%, 4/9/97...................... 33,289,113 Industrial Bank Korea: 5,000 5.35%, 3/7/97...................... 4,995,542 25,000 5.37%, 4/24/97..................... 24,798,625 15,000 5.38%, 8/11/97..................... 14,634,608 10,000 5.40%, 4/18/97..................... 9,928,000 2,858 5.41%, 4/14/97..................... 2,839,102 Korea Development Bank: 20,600 5.31%, 5/13/97..................... 20,378,189 46,500 5.45%, 3/17/97..................... 46,387,367 10,000 Nordbanken N.A., Inc., 5.40%, 6/23/97..................... 9,829,000 6,700 Societe Generale (Canada), 5.30%, 5/5/97...................... 6,635,885 Sumitomo Bank Capital Markets, Inc.: 39,000 5.42%, 3/10/97..................... 38,947,155 25,000 5.45%, 3/4/97...................... 24,988,646 20,000 5.48%, 6/10/97..................... 19,692,511 Unifunding, Inc.: 11,800 5.31%, 5/12/97..................... 11,674,684 10,300 5.33%, 4/21/97..................... 10,222,227 50,000 5.39%, 7/2/97...................... 49,079,208 10,000 5.42%, 5/14/97..................... 9,888,589 653,895,889 CHEMICALS -- 2.5% 2,500 Burmah Castrol Finance PLC, 5.50%, 3/18/97..................... 2,493,507 7,300 Great Lakes Chemical Corp., 5.34%, 3/21/97..................... 7,278,343
3 EVERGREEN MONEY MARKET FUND (Photo of currency) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE COMMERCIAL PAPER* -- CONTINUED CHEMICALS -- CONTINUED Hercules, Inc.: $15,500 5.30%, 3/24/97..................... $ 15,447,515 13,920 5.35%, 3/19/97..................... 13,882,764 4,200 Sherwin Williams Co., 5.37%, 4/8/97...................... 4,176,193 WMX Technologies, Inc.: 14,613 5.37%, 3/25/97..................... 14,560,686 10,000 5.77%, 3/25/97..................... 9,961,533 67,800,541 DIVERSIFIED -- 8.8% Daewoo International (America) Corp., (LOC: Korean Development Bank): 10,000 5.35%, 5/27/97..................... 9,870,708 20,000 5.41%, 5/7/97...................... 19,798,628 15,000 Green Tree Financial Corp., 5.42%, 3/10/97..................... 14,979,675 Mitsubishi International Corp.: 20,000 5.34%, 4/1/97...................... 19,908,033 10,000 5.35%, 3/12/97..................... 9,983,653 Mitsui & Co. (USA), Inc.: 15,000 5.30%, 3/7/97...................... 14,986,750 4,680 5.30%, 3/19/97..................... 4,667,598 19,760 5.55%, 3/17/97..................... 19,711,259 28,725 5.55%, 3/18/97..................... 28,649,716 Progress Funding Corp., (LOC: Fuji Bank Ltd.): 17,500 5.45%, 3/7/97...................... 17,484,104 10,000 5.47%, 4/11/97..................... 9,937,703 4,920 Rubbermaid, Inc., 5.44%, 4/3/97...................... 4,895,466 Sumitomo Corp. of America: 16,000 5.32%, 3/11/97..................... 15,976,356 11,100 5.32%, 3/18/97..................... 11,072,114 16,000 5.36%, 3/24/97..................... 15,945,209 19,300 5.37%, 3/27/97..................... 19,225,148 237,092,120 ELECTRICAL POWER -- 0.6% 16,608 Fpl Fuels, Inc., (LOC: Sumitomo Bank), 5.35%, 3/20/97..................... 16,561,106 ELECTRONICS -- 4.0% 5,000 Avnet, Inc., 5.33%, 3/18/97..................... 4,987,415 PRINCIPAL AMOUNT (000) VALUE ELECTRONICS -- CONTINUED Hitachi Credit America Corp.: $ 8,500 5.50%, 3/25/97..................... $ 8,468,833 9,000 5.50%, 3/27/97..................... 8,964,250 15,500 5.55%, 3/27/97..................... 15,437,871 10,000 5.55%, 3/31/97..................... 9,953,750 Orix America, Inc., (LOC: Sanwa Bank Ltd.): 25,000 5.43%, 3/17/97..................... 24,939,666 11,500 5.46%, 6/30/97..................... 11,288,956 13,700 Sharp Electronics Corp., 5.32%, 3/14/97..................... 13,673,681 10,000 Toshiba America, Inc., 5.35%, 4/1/97...................... 9,953,931 107,668,353 FINANCE -- 22.2% 12,423 Apex Funding Corp., (LOC: Bank of Tokyo-Mitsubishi Ltd.), 5.57%, 3/31/97..................... 12,365,337 Aristar, Inc.: 8,700 5.32%, 4/3/97...................... 8,657,573 5,500 5.35%, 3/10/97..................... 5,492,644 19,279 Astro Capital Corp., 5.40%, 3/31/97..................... 19,192,244 30,000 Atlas Funding Corp., (LOC: Dai-Ichi Kangyo Bank Ltd.), 5.41%, 3/31/97..................... 29,864,750 6,001 Barton Capital Corp., 5.32%, 4/17/97..................... 5,959,320 Dynamic Funding Corp., (LOC: Fuji Bank Ltd.): 5,000 5.42%, 3/5/97...................... 4,996,989 56,311 5.42%, 4/2/97...................... 56,039,706 20,000 5.46%, 4/11/97..................... 19,875,633 17,200 5.60%, 3/12/97..................... 17,170,569 5,740 Enterprise Funding Corp., (LOC: NationsBank), 5.40%, 3/5/97...................... 5,736,556 15,159 Gotham Funding Corp., (LOC: Bank of Tokyo-Mitsubishi Ltd.), 5.42%, 4/16/97..................... 15,054,015 20,600 Island Finance Puerto Rico, Inc., (LOC: Norwest Corp.), 5.43%, 3/14/97..................... 20,559,607
4 EVERGREEN MONEY MARKET FUND (Photo of currency) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE COMMERCIAL PAPER* -- CONTINUED FINANCE -- CONTINUED Jet Funding Corp.: $18,968 5.43%, 3/31/97..................... $ 18,882,170 8,317 5.47%, 4/30/97..................... 8,241,177 18,600 5.48%, 6/2/97...................... 18,336,686 12,435 5.50%, 3/31/97..................... 12,378,006 25,000 Lehman Brothers Holdings, Inc., 5.53%, 3/26/97..................... 24,903,993 31,620 Market Street Funding Corp., 5.30%, 3/27/97..................... 31,498,966 9,000 Oak Funding Corp., (LOC: Sumitomo Bank), 5.60%, 3/19/97..................... 8,974,800 Premium Funding, Inc., (LOC: Citibank): 13,067 5.30%, 4/3/97...................... 13,003,516 12,000 5.30%, 4/18/97..................... 11,915,200 21,900 Rembrandt International Co., Inc., 5.35%, 3/14/97..................... 21,857,690 52,075 Sigma Finance Corp., (LOC: Deutsche Bank), 5.35%, 3/27/97..................... 51,873,788 7,000 Stanford University, 5.38%, 7/23/97..................... 6,849,360 11,054 Strait Capital Corp., (LOC: Sumitomo Bank), 5.42%, 3/31/97..................... 11,004,073 31,590 Tri-Lateral Capital (USA), Inc., (LOC: Industrial Bank of Japan Ltd.), 5.40%, 4/1/97...................... 31,443,106 Twin Towers, Inc., (LOC: Deutsche Bank): 34,000 5.30%, 4/24/97..................... 33,729,700 14,716 5.30%, 7/31/97..................... 14,386,689 Wood Street Funding Corp., (LOC: PNC Bank): 7,886 5.32%, 4/7/97...................... 7,842,881 25,000 5.37%, 3/21/97..................... 24,925,417 25,000 Working Capital Management Corp. II, (LOC: Industrial Bank of Japan Ltd.), 5.45%, 4/4/97...................... 24,871,319 6,300 Yale University, 5.35%, 4/21/97..................... 6,252,251 604,135,731 PRINCIPAL AMOUNT (000) VALUE FOOD & BEVERAGE -- 0.3% $10,000 Cargill Financial Services Corp., 5.40%, 10/10/97.................... $ 9,665,500 INSURANCE -- 2.6% 9,988 Allianz of America Finance Corp., 5.39%, 4/10/97..................... 9,928,183 16,320 Equitable Life Assurance Society of the U.S., 5.32%, 3/10/97..................... 16,298,295 Equitable of Iowa: 5,000 5.34%, 4/2/97...................... 4,976,267 5,000 5.35%, 3/21/97..................... 4,985,139 13,100 5.35%, 4/8/97...................... 13,026,021 12,500 John Hancock Capital Corp., 5.32%, 3/31/97..................... 12,444,583 10,000 Swiss RR Financial Prods. Corp., 5.25%, 4/15/97..................... 9,934,375 71,592,863 LEASING -- 0.6% JLUS Funding Corp., (LOC: Norinchukin Bank): 7,000 5.42%, 3/5/97...................... 6,995,784 8,252 5.45%, 4/28/97..................... 8,179,543 15,175,327 MACHINERY, EQUIPMENT & AUTOS -- 7.4% 10,200 BTR Dunlop Finance, Inc., 5.35%, 4/7/97...................... 10,143,914 General Motors Acceptance Corp.: 20,000 5.31%, 8/22/97..................... 19,486,700 25,000 5.32%, 8/18/97..................... 24,371,944 20,000 5.50%, 4/1/97...................... 19,905,278 25,000 5.50%, 5/16/97..................... 24,709,722 15,000 Hyundai Motor Finance Co., (LOC: Bank of America), 5.30%, 4/25/97..................... 14,878,542 Mitsubishi Motors Credit of America, Inc., (LOC: The Bank of Tokyo-Mitsubishi Ltd.): 21,000 5.36%, 4/25/97..................... 20,828,033 10,000 5.40%, 4/10/97..................... 9,940,000 20,000 5.45%, 4/17/97..................... 19,857,695 (LOC: Norinchukin Bank), 25,000 5.45%, 4/29/97..................... 24,776,701
5 EVERGREEN MONEY MARKET FUND (Photo of currency) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE COMMERCIAL PAPER* -- CONTINUED MACHINERY, EQUIPMENT & AUTOS -- CONTINUED Ryobi Finance Corp., (LOC: Sumitomo Bank): $ 7,000 5.42%, 3/6/97...................... $ 6,994,730 5,730 5.42%, 3/18/97..................... 5,715,334 201,608,593 PHARMACEUTICALS & HEALTH CARE -- 3.9% AC Acquisition Holding CO.: 4,100 5.32%, 3/4/97...................... 4,098,182 20,000 5.32%, 3/27/97..................... 19,923,156 Holy Cross Health System Corp.: 58,200 5.34%, 4/7/97...................... 57,880,579 6,500 5.35%, 4/10/97..................... 6,461,361 8,743 Massachusetts College of Pharmacy and Allied Health Services, 5.40%, 4/1/97...................... 8,702,345 10,000 Metrocrest Hospital Authority, (LOC: Bank of New York), 5.41%, 3/3/97...................... 9,996,997 107,062,620 REAL ESTATE -- 4.5% Copley Financing Corp., (Aetna Surety Bond): 3,500 5.28%, 4/3/97...................... 3,483,060 6,656 5.30%, 3/21/97..................... 6,636,402 21,000 Mec Finance USA, Inc., 5.38%, 3/5/97...................... 20,987,447 PHH Corp.: 20,300 5.28%, 3/18/97..................... 20,249,385 41,535 5.30%, 3/19/97..................... 41,424,932 28,500 5.32%, 3/6/97...................... 28,478,942 121,260,168 RETAIL -- 0.3% 8,100 Southland Corp., 5.30%, 4/14/97..................... 8,047,530 TELECOMMUNICATIONS -- 0.3% 7,820 Frontier Corp., 5.34%, 4/18/97..................... 7,764,322 PRINCIPAL AMOUNT (000) VALUE TEXTILES & APPAREL -- 3.0% $20,000 B.I. Funding, Inc., 5.30%, 4/30/97..................... $ 19,823,334 Calcot Ltd.: 4,000 5.38%, 4/18/97..................... 3,971,307 5,000 5.40%, 3/5/97...................... 4,997,000 5,000 5.40%, 3/7/97...................... 4,995,500 5,000 5.40%, 3/11/97..................... 4,992,500 8,000 5.40%, 3/21/97..................... 7,976,000 8,000 5.40%, 3/27/97..................... 7,968,800 5,000 5.40%, 4/9/97...................... 4,970,750 5,000 5.40%, 4/17/97..................... 4,964,750 5,000 5.40%, 5/6/97...................... 4,950,500 4,000 5.42%, 5/9/97...................... 3,958,447 8,000 5.42%, 5/13/97..................... 7,912,075 81,480,963 TRANSPORTATION -- 1.6% 9,000 Harper Group, Inc. (The), 5.37%, 3/10/97..................... 8,987,917 Norfolk Southern Corp.: 6,850 5.27%, 4/24/97..................... 6,795,851 18,600 5.32%, 4/24/97..................... 18,451,572 10,000 Yamaha Motor Finance Corp. USA, (LOC: Dai-Ichi Kangyo Bank Ltd.), 5.38%, 3/6/97...................... 9,992,528 44,227,868 TOTAL COMMERCIAL PAPER (COST $2,355,039,494)......... 2,355,039,494 CORPORATE NOTES -- 2.0% 4,000 Federal Home Loan Bank, 5.35%, 3/14/97..................... 4,000,000 25,000 Federal National Mortgage Association, 5.245%, 4/11/97, (VR).............. 24,998,783 25,000 Student Loan Marketing Association, 5.76%, 1/14/98..................... 25,000,000 TOTAL CORPORATE NOTES (COST $53,998,783)............ 53,998,783
6 EVERGREEN MONEY MARKET FUND (Photo of currency) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE TAXABLE MUNICIPALS -- 0.2% (COST $6,000,000) $ 6,000 Brittany Acres, 5.875%, 4/1/97..................... $ 6,000,000 SHARES (000) MUTUAL FUND SHARES -- 0.0% (COST $53,419) 53 Federated Prime Value Obligation Fund............................... 53,419
TOTAL INVESTMENTS -- (COST $2,722,739,873) 100.1% 2,722,739,873 NET OTHER ASSETS AND LIABILITIES --........ (0.1) (1,720,515) NET ASSETS --............ 100.0% $2,721,019,358
Summary of Abbreviations: LOC -- Letter of Credit VR -- Variable-rate issue. Rate shown is the rate in effect at February 28, 1997. * -- These securities held by the Fund at February 28, 1997 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. See accompanying notes to financial statements. 7 EVERGREEN MONEY MARKET FUND (Photo of currency) STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1997 (UNAUDITED)
ASSETS: Investments at value (cost $2,722,739,873).................................................................. $2,722,739,873 Cash........................................................................................................ 99,255 Receivable for Fund shares sold............................................................................. 5,181,649 Interest receivable......................................................................................... 2,493,496 Prepaid expenses and other assets........................................................................... 126,825 Total assets.......................................................................................... 2,730,641,098 LIABILITIES: Dividends payable........................................................................................... 6,410,848 Payable for Fund shares redeemed............................................................................ 1,058,365 Distribution fee payable.................................................................................... 935,913 Accrued advisory fee........................................................................................ 767,763 Accrued expenses............................................................................................ 448,851 Total liabilities..................................................................................... 9,621,740 NET ASSETS..................................................................................................... $2,721,019,358 NET ASSETS CONSIST OF: Paid-in capital............................................................................................. $2,721,622,178 Accumulated net realized loss on investment transactions.................................................... (602,820) Net assets............................................................................................ $2,721,019,358 CALCULATION OF NET ASSET VALUE PER SHARE: Class A Shares ($1,916,360,422)(1,916,403,945 shares of beneficial interest outstanding)..................... $ 1.00 Class B Shares ($11,333,510)(11,333,722 shares of beneficial interest outstanding)........................... $ 1.00 Class Y Shares ($793,325,426)(793,880,420 shares of beneficial interest outstanding)......................... $ 1.00
See accompanying notes to financial statements. 8
EVERGREEN MONEY MARKET FUND (Photo of currency) STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED) INVESTMENT INCOME: Interest...................................................................................... $71,580,270 EXPENSES: Advisory fee.................................................................................. $ 6,061,353 Distribution fee -- Class A Shares............................................................ 2,698,374 Distribution fee -- Class B Shares............................................................ 39,539 Shareholder services fee -- Class B Shares.................................................... 13,180 Transfer agent fee............................................................................ 294,153 Custodian fee................................................................................. 261,156 Registration and filing fees.................................................................. 117,104 Reports and notices to shareholders........................................................... 110,915 Professional fees............................................................................. 20,465 Trustees' fees and expenses................................................................... 16,820 Insurance..................................................................................... 11,362 Other......................................................................................... 8,149 9,652,570 Less advisory fee waiver...................................................................... (1,255,415) Net expenses............................................................................ 8,397,155 Net investment income............................................................................ 63,183,115 Net realized loss on investments................................................................. (51,967) NET INCREASE IN ASSETS RESULTING FROM OPERATIONS................................................. $63,131,148
See accompanying notes to financial statements. 9 EVERGREEN MONEY MARKET FUND (Photo of currency) STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED FEBRUARY 28, YEAR ENDED 1997 AUGUST 31, (UNAUDITED) 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income................................................................ $ 63,183,115 $ 85,949,891 Net realized loss on investment transactions......................................... (51,967) (26,141) Net increase in net assets resulting from operations.............................. 63,131,148 85,923,750 DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A Shares....................................................................... (43,236,799) (63,327,347) Class B Shares....................................................................... (215,992) (382,116) Class Y Shares....................................................................... (19,730,324) (22,240,428) Total distributions to shareholders from net investment income.................... (63,183,115) (85,949,891) FUND SHARE TRANSACTIONS: Proceeds from shares sold............................................................ 4,338,016,279 6,275,701,649 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 reinvestment of distributions.......................................... 19,150,157 28,242,023 Payments for shares redeemed......................................................... (4,072,764,478) (5,531,191,681) Net increase resulting from Fund share transactions............................... 284,401,958 1,460,945,281 Net increase in net assets........................................................ 284,349,991 1,460,919,140 NET ASSETS: Beginning of period.................................................................. 2,436,669,367 975,750,227 End of period........................................................................ $2,721,019,358 $ 2,436,669,367
See accompanying notes to financial statements. 10 EVERGREEN MONEY MARKET FUND -- CLASS A AND B SHARES (Photo of currency) FINANCIAL HIGHLIGHTS
CLASS A SHARES CLASS B SHARES SIX MONTHS JANUARY 4, SIX MONTHS ENDED 1995* ENDED FEBRUARY 28, YEAR ENDED THROUGH FEBRUARY 28, YEAR ENDED 1997 AUGUST 31, AUGUST 31, 1997 AUGUST 31, (UNAUDITED) 1996 1995 (UNAUDITED) 1996 PER SHARE DATA: Net asset value, beginning of period................ $1.00 $1.00 $1.00 $1.00 $1.00 Net investment income............................... 0.02 0.05 0.03 0.02 0.04 Less distributions to shareholders from net investment income................................. (0.02) (0.05) (0.03) (0.02) (0.04) Net asset value, end of period...................... $1.00 $1.00 $1.00 $1.00 $1.00 TOTAL RETURN+....................................... 2.4% 5.0% 3.5% 2.1% 4.3% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted) $1,916,360 $1,755,267 $685,155 $11,334 $10,218 Ratios to average net assets: Expenses**........................................ 0.74%++ 0.75% 0.81%++ 1.44%++ 1.45% Net investment income**........................... 4.81%++ 4.86% 5.26%++ 4.10%++ 4.18% JANUARY 26, 1995* THROUGH AUGUST 31, 1995 PER SHARE DATA: Net asset value, beginning of period................ $1.00 Net investment income............................... 0.03 Less distributions to shareholders from net investment income................................. (0.03) Net asset value, end of period...................... $1.00 TOTAL RETURN+....................................... 2.8% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted) $7,927 Ratios to average net assets: Expenses**........................................ 1.51%++ Net investment income**........................... 4.54%++
+ Total return is calculated on net asset value for the periods indicated and is not annualized. Contingent deferred sales charge is not reflected. ++ 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 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 SIX MONTHS JANUARY 4, SIX MONTHS ENDED 1995* ENDED FEBRUARY 28, YEAR ENDED THROUGH FEBRUARY 28, YEAR ENDED 1997 AUGUST 31, AUGUST 31, 1997 AUGUST 31, (UNAUDITED) 1996 1995 (UNAUDITED) 1996 Expenses.............................................. 0.83%++ 0.89% 1.02%++ 1.53%++ 1.59% Net investment income................................. 4.71%++ 4.72% 5.05%++ 4.00%++ 4.04% JANUARY 26, 1995* THROUGH AUGUST 31, 1995 Expenses.............................................. 2.39%++ Net investment income................................. 3.66%++
See accompanying notes to financial statements. 11 EVERGREEN MONEY MARKET FUND -- CLASS Y SHARES (Photo of currency) FINANCIAL HIGHLIGHTS
SIX MONTHS YEAR ENDED TEN MONTHS ENDED FEBRUARY 28, YEAR ENDED AUGUST ENDED OCTOBER 1997 31, AUGUST 31, 31, (UNAUDITED) 1996 1995 1994# 1993 PER SHARE DATA: Net asset value, beginning of period................... $1.00 $1.00 $1.00 $1.00 $1.00 Net investment income.................................. 0.03 0.05 0.05 0.03 0.03 Less distributions to shareholders from net investment income............................................... (0.03) (0.05) (0.05) (0.03) (0.03) Net asset value, end of period......................... $1.00 $1.00 $1.00 $1.00 $1.00 TOTAL RETURN+.......................................... 2.6% 5.3% 5.4% 2.9% 3.2% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted).............. $793,325 $671,185 $282,668 $273,115 $299,418 Ratios to average net assets: Expenses**........................................... 0.44%++ 0.45% 0.53% 0.32%++ 0.39% Net investment income**.............................. 5.10%++ 5.16% 5.26% 3.46%++ 3.19% YEAR ENDED OCTOBER 31, 1992 PER SHARE DATA: Net asset value, beginning of period................... $1.00 Net investment income.................................. 0.04 Less distributions to shareholders from net investment income............................................... (0.04) Net asset value, end of period......................... $1.00 TOTAL RETURN+.......................................... 4.2% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted).............. $357,917 Ratios to average net assets: Expenses**........................................... 0.36% Net investment income**.............................. 4.18%
# The Fund changed its fiscal year end from October 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:
SIX MONTHS YEAR ENDED TEN MONTHS ENDED FEBRUARY 28, YEAR ENDED ENDED OCTOBER 1997 AUGUST 31, AUGUST 31, 31, (UNAUDITED) 1996 1995 1994# 1993 Expenses............................................................ 0.53%++ 0.59% 0.73% 0.71%++ 0.71% Net investment income............................................... 5.00%++ 5.02% 5.06% 3.07%++ 2.87% YEAR ENDED OCTOBER 31, 1992 Expenses............................................................ 0.72% Net investment income............................................... 3.82%
See accompanying notes to financial statements. 12 EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND (Photo of building) A REPORT FROM YOUR PORTFOLIO MANAGER DIANE BEAVER We are pleased to present the Semiannual Report for Evergreen Pennsylvania Tax-Free Money Market Fund for the six-month period ended February 28, 1997. The Fund's total return (Class Y, no-load shares) for the six-month period was 1.54%* as compared with 1.52% for the average of the 15 Pennsylvania Tax-Free Money [Photo] Market funds tracked by Lipper Analytical Services** during that time. The six-month total return at net asset value for the Fund's Class A shares was 1.49%*. At February 28, the seven-day current, effective and tax-equivalent yields*** were 3.03%, 3.08% and 4.95%, respectively for the Fund's Class Y shares and 2.88%, 2.93% and 4.71%, respectively, for the Fund's Class A shares. As the fourth quarter of 1996 progressed, talk of a Fed-induced rate hike circulated but never transpired, in part due to economic data that supported a low inflation environment. Although the Federal Reserve Board has neither raised nor lowered interest rates in well over a year, Fed Chairman, Alan Greenspan, has twice shaken the financial markets with his comments. In December, Mr. Greenspan expressed his concern that "irrational exuberance" may have driven the stock markets to overpriced levels. The financial markets were again jolted in February when Greenspan suggested raising interest rates as a "pre-emptive strike" against inflation. In both instances, interest rates rose. Despite the rhetoric, the Federal Reserve Board had not interfered with interest rates, economic indicators portray a healthy economy promoting strong corporate earnings growth with little inflationary pressure. The seasonal back-up in interest rates, which usually occurs in December as a result of year-end redemptions, never materialized. Likewise, the "January effect" of large cash inflows such as coupon payments and maturities, which causes rates to decline, did not occur. Although strategic adjustments in maturity and asset allocation are more of a challenge in a state-specific fund due to lack of supply and liquidity, the Fund will continue to look for yield opportunities such as those found in smaller instruments where yield can be enhanced. At February 28, the Fund's weighted average maturity was 54 days and total net assets stood at $73.2 million. Thank you for your investment in the Evergreen Pennsylvania Tax-Free Money Market Fund. FIGURES REPRESENT PAST PERFORMANCE WHICH IS NO GUARANTEE OF FUTURE RESULTS. * PERFORMANCE FIGURES INCLUDE THE REINVESTMENT OF INCOME DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, IF ANY. DURING THE PERIOD UNDER REVIEW, THE ADVISER CONTINUED TO VOLUNTARILY WAIVE A PORTION OF ITS ADVISORY FEE AND ABSORB A PORTION OF THE FUND'S OTHER EXPENSES. HAD FEE NOT BEEN WAIVED OR EXPENSES ABSORBED, PERFORMANCE AND 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. DURING THE PERIOD UNDER REVIEW, SUCH PAYMENTS TOTALLED .09 OF 1% OF THE FUND'S DAILY NET ASSETS OF ITS CLASS A SHARES. ** SOURCE: LANA (LIPPER ANALYTICAL NEW APPLICATIONS) LIPPER ANALYTICAL SERVICES INC., IS AN INDEPENDENT MUTUAL FUNDS PERFORMANCE MONITOR. LIPPER AVERAGE DOES NOT INCLUDE SALES CHARGES, AND IF INCLUDED PERFORMANCE MAY BE LOWER AND THE FUND'S RANKINGS MAY BE DIFFERENT. *** TAX-EQUIVALENT YIELDS ASSUME A 36% FEDERAL TAX BRACKET AND A 2.8% PENNSYLVANIA STATE TAX BRACKET. TAX-EQUIVALENT YIELDS WOULD BE LOWER FOR INVESTORS IN LOWER TAX BRACKETS AND HIGHER FOR INVESTORS IN HIGHER TAX BRACKETS. SOME INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX FOR CERTAIN INVESTORS. 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. 13 EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND STATEMENT OF INVESTMENTS (Photo of building) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- 100.6% PENNSYLVANIA -- 99.4% $ 1,500 Allegheny Cnty. Higher Ed. Bldg. Auth. RB, Allegheny Cnty. Cmnty. College, Prerefunded @ 100, (Ins. by MBIA), 6.65%, 11/1/97........................ $ 1,529,905 1,000 Allegheny Cnty. Hosp. Dev. Auth. RB Allegheny Gen. Hosp., Ser. 1995B, (LOC: Morgan Gty. Tr. Co. of NY), 3.30%, VRDN........................... 1,000,000 1,200 Allegheny Health Ed. & Resh. Corp., Ser. A-ACES, (LOC: PNC Bk., Pittsburgh), 3.30%, VRDN........................... 1,200,000 1,100 Allegheny Health Ed. & Resh. Corp., Ser. C-ACES, (LOC: PNC Bk., Pittsburgh), 3.30%, VRDN........................... 1,100,000 Allegheny Cnty. IDA Envir. RRB, US Steel Corp., TECP, (LOC: The Long-Term Cr. Bk. of Japan): 1,500 3.35%, 3/5/97......................... 1,500,000 1,300 3.35%, 3/11/97........................ 1,300,000 2,000 3.40%, 4/8/97......................... 2,000,000 300 Beaver Cnty. IDA-PCRR Duquesne Light Co., Beaver Vly., Ser. A, (LOC: Barclays Bk. PLC), 3.25%, VRDN........................... 300,000 500 Berks Cnty. Muni. Auth. RB, Pooled Fin. Prog., Prerefunded @100, 7.00%, 9/1/97......................... 508,344 240 Big Spring School Dist. Cumberland Cnty. GO Bds., Ser. 1992, (Ins. by FGIC), 4.35%, 3/1/97......................... 240,000 250 Brandywine Heights Area Dist. GO Bds., (Ins. by MBIA), 4.40%, 4/1/97......................... 250,044 1,000 Bucks Cnty. IDA Environmental Impt., RB, USX Corp., ARB, (LOC: Wachovia Bk. N.C.), 3.65%, 3/3/97......................... 1,000,000 100 Bucks Cnty. IDA-RRB, SHV Real Estate, Inc., Ser. 1984, (LOC: ABN-AMRO Bk.), 3.25%, VRDN........................... 100,000 PRINCIPAL AMOUNT (000) VALUE PENNSYLVANIA -- CONTINUED $ 1,000 Cnty. of Chester Hlth. & Ed. Fac. Auth. RB, Barclays Friends, Ser. A, (LOC: Bk. of Ireland), 3.30%, VRDN........................... $ 1,000,000 435 Coudersport School Dist. GO Bds., Ins. by FSA, 3.75%, 9/1/97......................... 435,000 Delaware Cnty. IDA Solid Waste RB, Scott Paper Co., 1984, 3.30%, VRDN: 700 Ser. C................................ 700,000 400 Ser. D................................ 400,000 1,000 Delaware Cnty. IDA-PCRR, Philadelphia Electric Co., Ser. 1988B -- TECP, (SPA: FGIC), 3.40%, 4/7/97......................... 1,000,000 Delaware Vly. Regl. Fin. Auth. Local Govt. RB: 1,000 Ser. 1985A, (LOC: Midland Bk. PLC), 3.40%, VRDN........................... 1,000,000 250 Ser. 1986A, (Ins. by AMBAC), 3.80%, 4/15/97........................ 250,000 500 Downingtown Area School Dist. GO Bds., Ser. 1986A, 4.00%, 3/1/97......................... 500,000 445 East Hempfield Township GO Bds., (Ins. by AMBAC), 4.25%, 11/1/97........................ 446,322 Emmaus Gen. Auth. Local Govt. RB Ser. 1989, Bd. Pool Pgm., VRDN: 4,300 Subsrs. B-12, (LOC: Midland Bk. PLC), 3.40%............................... 4,300,000 2,000 Subsrs. C-8, (LOC: Midland Bk. PLC), 3.40%............................... 2,000,000 1,400 Subsrs. D-11, (LOC: Midland Bk. PLC), 3.40%............................... 1,400,000 400 Subsrs. E-8, (LOC: Canadian Imperial Bk. of Commerce), 3.35%............................... 400,000 425 Subsrs. E-9, (LOC: Midland Bk. PLC), 3.40%............................... 425,000
14 EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND STATEMENT OF INVESTMENTS -- (CONTINUED) (Photo of building) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED PENNSYLVANIA -- CONTINUED Emmaus Gen. Auth. Local Govt. RB Ser. 1989, Bd. Pool Pgm., VRDN: $ 2,000 Subsrs. F-5, (LOC: Midland Bk. PLC), 3.40%................................. $ 2,000,000 300 Geisinger Auth. Health Sys. RB, Montour Cnty., Ser. B, 7.10%, 7/1/97......................... 302,920 400 Health Care Facs. Auth. of Sayre RB, VHA of PA, Inc., Capital Asset Fin. Prog., Ser. A, (SPA: Mellon Bk. PLC), 3.30%, VRDN........................... 400,000 475 Lancaster Higher Ed. Auth. College RB, Franklin & Marshall College, Ser. 1995, 3.45%, VRDN........................... 475,000 500 Lancaster School Dist. GO Bds., (Ins. by FGIC), 4.00%, 2/15/98........................ 500,650 200 Lehigh Cnty. IDA-PCRB, Ser. 1985A, (LOC: Rabobank Nederland), 3.25%, VRDN........................... 200,000 470 Lehigh Cnty. Auth. Wtr. RB, Ser. 1984, (SPA: ABN-Amro Bk.), 3.25%, VRDN........................... 470,000 200 Mars Area School Dist. GO Bds., Ser. C, (Ins. by FGIC), 4.30%, 3/1/97......................... 200,000 660 Montgomery Cnty. GO Bds., Ser. A, 4.00%, 7/15/97........................ 660,419 Montgomery Cnty. IDA-PCRR, PECO Energy Co., Ser. 1994A -- TECP, (LOC: Deutsche Bk. AG, NY): 2,000 3.30%, 4/7/97......................... 2,000,000 1,000 3.50%, 3/5/97......................... 1,000,000 2,000 New Castle Area Hosp. Auth. RB, Jameson Mem. Hosp., (SPA: PNC Bk.), 3.30%, VRDN........................... 2,000,000 1,000 North Penn Water Auth. RB, Prerefunded @ 102, (Ins. by FGIC), 6.90%, 11/1/97........................ 1,035,738 1,000 Northeastern Hosp. & Ed. Auth. Rev., Health Care Rev. Wyoming Vly., Ser. A, (LOC: Industrial Bk. of Japan Ltd., NY), 3.25%, VRDN........................... 1,000,000 PRINCIPAL AMOUNT (000) VALUE PENNSYLVANIA -- CONTINUED $ 2,800 Northeastern Pwr. Co., Ser. 1985, (LOC: Sumitomo Bk., Ltd.), 3.50%, 3/3/97......................... $ 2,800,000 500 Penn Manor School Dist. GO Bds., Series A, (Ins. by FGIC), 5.50%, 6/1/97......................... 501,838 1,000 Pennsylvania Higher Ed. Fac. Auth. RB: Allegheny Delaware Vly., Ser. D, (LOC: PNC), 3.35%, VRDN........................... 1,000,000 2,300 Carnegie Mellon Univ., Ser. B, (SPA: Union Bk. of Switzerland & Morgan Gty.), 3.45%, VRDN........................... 2,300,000 2,000 Allegheny College, (LOC: Mellon Bk. PLC), 3.35%, VRDN........................... 2,000,000 565 LaSalle Univ., Ser. 1996, (Ins. by MBIA), 4.00%, 5/1/97......................... 565,273 2,000 The Univ. of Pennsylvania Health Svs., (SPA: Credit Suisse, NY), 3.20%, VRDN........................... 2,000,000 500 The Univ. of Pennsylvania Health Svs., Ser. 1994B-ACES, 3.20%, VRDN........................... 500,000 2,900 Pennsylvania TRANS, 4.50%, 6/30/97........................ 2,908,307 2,000 Pennsylvania State Ser. 1997A, 3.30%, 4/22/97........................ 2,000,000 1,500 Philadelphia Gas Wks. RB, Ser.10, (Ins. by BIG), 6.90%, 7/1/97......................... 1,516,308 3,000 Philadelphia Hosp. & Higher Ed. Facs. Auth. RB, Children's Hosp. of Philadelphia, Ser. B, (SPA: Morgan Guaranty), 3.45%, VRDN........................... 3,000,000 700 Philadelphia Municipal Auth. Municipal Svs. Building Lease Rental Bds., Ser. 1990, (Ins. by FSA), 6.80%, 3/15/97........................ 700,798 3,500 Philadelphia TRANS, Ser. A, 4.50%, 6/30/97........................ 3,506,130 500 Pittsburgh School Dist. GO Bds., Ser. C, (Ins. by FGIC), 5.50%, 8/1/97......................... 503,254
15 EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND (Photo of building) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED PENNSYLVANIA -- CONTINUED $ 665 Pottstown Borough Auth. Swr. RB, (Ins. by AMBAC), 4.00% 11/1/97......................... $ 666,500 400 Presbyterian Univ. Hosp., Ser. 1988B3-ACES, (LOC: PNC Bk., Pittsburgh), 3.35%, VRDN........................... 400,000 5 Presbyterian Univ. Hosp., Ser. B2-ACES, (LOC: PNC Bk., Pittsburgh), 3.35%, VRDN........................... 5,000 4,200 Schuylkill Cnty. IDA Res. Recovery RB Gilberton Pwr., (LOC: Mellon Bk. PLC), 3.35%, VRDN........................... 4,200,000 2,000 The Toledo Edison Co. Mansfield, Ser. 1992E-TECP, (LOC: Toronto Dominion Bk.), 3.70%, 12/4/97........................ 2,000,000 1,000 University Pittsburgh Higher Ed. RB, Univ. Capital., Ser. A Prerefunded @ 102, 8.375%, 6/1/97........................ 1,031,708 160 Upper Merion Township GO Bds., 3.80%, 11/1/97........................ 160,000 72,794,458 PRINCIPAL AMOUNT (000) VALUE PUERTO RICO -- 1.2% $ 875 Puerto Rico Indl., Med. & Environmental Pollution Control Facs. Fin. Auth. RB, Merck & Co., Inc., Ser. 1983A-ARB, 4.00%, 12/1/97........................ $ 875,000 TOTAL SHORT-TERM MUNICIPAL SECURITIES (COST $73,669,458).................. 73,669,458
SHARES (000) MUTUAL FUND SHARES -- 0.1% (COST $100,000) 100 Federated Pennsylvania Municipal Cash Trust........... 100,000 TOTAL INVESTMENTS -- (COST $73,769,458)........... 100.7% 73,769,458 OTHER ASSETS AND LIABILITIES -- (NET)......... (0.7) (523,462) NET ASSETS --.................. 100.0% $73,245,996
16 EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND (Photo of building) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED) 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. GO -- General Obligations IDA -- Industrial Development Authority LIQ -- Liquidity Provider LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance MFHR -- Multifamily Housing Revenue MHRB -- Multifamily Housing Revenue Bond PCRB -- Pollution Control Revenue Bond PCRR -- Pollution Control Revenue Refunding Bonds RB -- Revenue Bonds RRB -- Refunding Revenue Bonds SPA -- Securities Purchase Agreement TECP -- Tax Exempt Commercial Paper TRANS -- Tax Revenue Anticipation 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 February 28, 1997. These securities represent 3% of total investments at February 28, 1997. 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 February 28, 1997. These securities represent 54% of total investments at February 28, 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. ** Rule 144A security which are restricted in resale to qualified institutions and are considered liquid. See accompanying notes to financial statements. 17 EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND (Photo of building) STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1997 (UNAUDITED)
ASSETS: Investments at value (amortized cost $73,769,458)............... $73,769,458 Cash............................................................ 1,543 Interest receivable............................................ 511,583 Receivable for Fund shares sold................................. 75,000 Prepaid expenses................................................ 9,902 Total assets.............................................. 74,367,486 LIABILITIES: Payable for investment securities purchased..................... 947,345 Dividends payable............................................... 87,431 Accrued advisory fee............................................ 15,228 Distribution fee payable........................................ 8,297 Accrued expenses................................................ 63,189 Total liabilities......................................... 1,121,490 NET ASSETS......................................................... $73,245,996 NET ASSETS CONSIST OF: Paid-in capital................................................. $73,256,123 Undistributed net investment income............................. 90 Accumulated net realized loss on investment transactions........ (10,217) Net assets................................................ $73,245,996 CALCULATION OF NET ASSET VALUE PER SHARE: Class A Shares ($34,138,308)(34,139,945 shares of beneficial interest outstanding)....................................... $ 1.00 Class Y Shares ($39,107,688)(39,116,178 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 FEBRUARY 28, 1997 (UNAUDITED) INVESTMENT INCOME: Interest.............................................. $1,268,443 EXPENSES: Advisory fee.......................................... $141,458 Distribution fee -- Class A Shares.................... 41,509 Custodian fee......................................... 24,518 Administration fee.................................... 15,535 Professional fees..................................... 15,182 Transfer agent fee.................................... 14,224 Reports and notices to shareholders................... 6,668 Registration and filing fees.......................... 5,993 Insurance............................................. 5,705 Trustees' fees and expenses........................... 1,180 Other................................................. 796 272,768 Less advisory and distribution fee waivers............ (83,065) Net expenses.................................... 189,703 Net investment income.................................... 1,078,740 Net realized loss on investments......................... -- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..... $1,078,740
See accompanying notes to financial statements. 19 EVERGREEN PENNSYLVANIA TAX-FREE MONEY MARKET FUND STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED YEAR FEBRUARY 28, ENDED 1997 AUGUST 31, (UNAUDITED) 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income...................................................................... . $ 1,078,740 $ 1,091,227 Net realized loss on investment transactions................................................ -- (378) Net increase in net assets resulting from operations..................................... 1,078,740 1,090,849 DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A Shares.............................................................................. (414,887) (242,309) Class Y Shares.............................................................................. (667,563) (848,918) Total distributions to shareholders...................................................... (1,082,450) (1,091,227) FUND SHARE TRANSACTIONS: Proceeds from shares sold................................................................... 71,827,918 61,460,030 Proceeds from reinvestment of distributions................................................. 540,006 621,908 Payments for shares redeemed................................................................ (69,633,636) (79,296,671) Net increase (decrease) resulting from Fund share transactions........................... 2,734,288 (17,214,733) Net increase (decrease) in net assets.................................................... 2,730,578 (17,215,111) NET ASSETS: Beginning of period......................................................................... 70,515,418 87,730,529 End of period (including undistributed net investment income of $90 and $3,800 at February 28, 1997 and August 31, 1996, respectively)............................................... $ 73,245,996 $ 70,515,418
See accompanying notes to financial statements. 20 EVERGREEN PENNSYLVANIA TAX-FREE (Photo of building) MONEY MARKET FUND FINANCIAL HIGHLIGHTS
CLASS A SHARES CLASS Y SHARES SIX MONTHS MARCH 1, AUGUST 22, SIX MONTHS MARCH 1, ENDED 1996 1995* ENDED 1996 FEBRUARY 28, THROUGH THROUGH FEBRUARY 28, THROUGH YEAR ENDED 1997 AUGUST 31, FEBRUARY 29, 1997 AUGUST 31, FEBRUARY 29, FEBRUARY 28, (UNAUDITED) 1996# 1996 (UNAUDITED) 1996# 1996 1995 PER SHARE DATA: Net asset value, beginning of period.... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 Net investment income................. 0.01 0.01 0.02 0.02 0.01 0.03 0.03 Less distributions to shareholders from net investment income...... (0.01) (0.01) (0.02) (0.02) (0.01) (0.03) (0.03) Net asset value, end of period................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 TOTAL RETURN+............ 1.5% 1.5% 1.7% 1.5% 1.5% 3.5% 2.8% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)........ $34,138 $22,196 $4,333 $39,108 $48,319 $83,398 $43,539 Ratios to average net assets: Expenses**............. 0.59%++ 0.55%++ 0.47%++ 0.50%++ 0.50%++ 0.37% 0.33% Net investment income**............... 2.99%++ 2.97%++ 3.14%++ 3.09%++ 2.92%++ 3.42% 3.09% YEAR ENDED YEAR ENDED FEBRUARY 28, FEBRUARY 28, 1994 1993 PER SHARE DATA: Net asset value, beginning of period.... $1.00 $1.00 Net investment income................. 0.02 0.03 Less distributions to shareholders from net investment income...... (0.02) (0.03) 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**............. 0.47% 0.35% 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 SIX MONTHS MARCH 1, AUGUST 22, SIX MONTHS MARCH 1, ENDED 1996 1995* ENDED 1996 FEBRUARY 28, THROUGH THROUGH FEBRUARY 28, THROUGH YEAR ENDED 1997 AUGUST 31, FEBRUARY 29, 1997 AUGUST 31, FEBRUARY 29, FEBRUARY 28, (UNAUDITED) 1996# 1996 (UNAUDITED) 1996# 1996 1995 Expenses................. 0.95%++ 0.96%++ 1.08%++ 0.65%++ 0.66%++ 0.73% 1.05% Net investment income.... 2.63%++ 2.56%++ 2.53%++ 2.94%++ 2.76%++ 3.06% 2.37% YEAR ENDED YEAR ENDED 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 present the Evergreen Tax Exempt Money Market Fund Semiannual Report. Despite the presidential election last November, the Federal Reserve and Chairman, Alan Greenspan commanded the spotlight for fixed income markets. At the end of the period under review, the Fed did not raise short-term interest rates, thereby, in the view of some participants, [Photo] gambling that the economy would slow. Since much of the economic data released during the six-month period supported a consumer pullback, the debt markets enjoyed a rally and the stock market roared to new highs. Just as the economic, fiscal and political scenario and financial market backdrop couldn't look better, some statements made by Fed Chairman Alan Greenspan in a speech in December prompted the market to re-think the gamble. Traders and investors had fully priced in continued non-inflationary slow growth without a glimmer of a risk premium and the phrase "irrational exuberance" caught their attention. This added some uncertainty and volatility into the market through the end of February. Despite the mixed news on the strength of the economy, the municipal market generally experienced strong demand, perhaps because of the absence of tax reform and credit scares. Retail investors', insurance companies' and mutual funds' preference to buy and hold securities through 1996 also contributed to stability in municipal markets. We began the six-month period with an aggressive approach to the market, allowing the Fund's weighted average portfolio maturity to fluctuate in the 55-day to 60-day range. The strategy was based on a technical weakness in the market due to supply combined with our belief that the Federal Board was not going to tighten monetary policy. We purchased short-term bonds and municipal notes as well as tax exempt commercial paper. At the close of the period, economic statistics started to indicate that the economy was indeed growing and concerns that the Federal Reserve Board may begin to tighten monetary policy began to creep into the market. We changed our strategy to a neutral one, allowing the Fund's weighted average maturity to decline to the 40-day range. As of February 28, over 60% of the Fund's net assets were invested in tax exempt variable rate demand notes. These short-term securities pay interest at current market levels and return their entire face value when redeemed, which helps afford the Fund a great deal of liquidity and price stability. In the coming months, we will maintain a neutral approach to the market while positioning the Fund for the upcoming period of supply imbalances in the short-term municipal market. We anticipate taking advantage of attractively priced short-term municipal notes as opportunities become available. Diversity and credit quality are paramount to the Fund, and we will seek to offer an attractive tax exempt yield to our shareholders. 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. 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. 22 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- 100.2% ALABAMA -- 1.5% Alabama IDA-IDRB, $ 2,290 Air-Dro Cylinders, Inc., (LOC: Southtrust Bk. of Alabama, N.A.), 3.79%, VRDN........................ $ 2,290,000 3,590 Automation Technologies Ind., Inc., (LOC: Columbus Bk. & Tr. Co.), 3.70%, VRDN........................ 3,590,000 Coml. Dev. Auth. of the City of Birmingham RB, 3.60%, VRDN: 1,140 Avondale Comm. Park, Phase II, (LOC: Amsouth Bk., N.A.)......... 1,140,000 665 Southside Business Ctr., (LOC: Amsouth Bk., N.A).......... 665,000 1,100 IDB of the City of Livingston IDRB, Toin Corp. U.S.A., Ser. 1987, (LOC: Indl. Bk. of Japan, Ltd. NY), 3.75%, VRDN........................ 1,100,000 3,235 IDB of Mobile Cnty. RB, Sherman Intl. Corp., Ser. 1994A, (LOC: Columbus Bk. & Tr. Co.), 3.70%, VRDN........................ 3,235,000 2,140 IDB of the City of Pell IDRB, Reh Kinder/Gorbel, (LOC: Key Bk. of NY), 3.60%, VRDN........................ 2,140,000 3,000 IDB of the City of Prattville IDRB, Kuhnash Ppty./Arkay Plastics, (LOC: PNC Bank), 3.60%, VRDN........................ 3,000,000 17,160,000 ALASKA -- 2.1% 20,465 Alaska State Dept. Admin. COP, Ser. PT-94, (LIQ: Credit Suisse & Ins. by Cap. Mkt. Assurance), 3.45%, VRDN........................ 20,465,000 4,025 North Slope Boro. Capital Appreciation Bds. GO, Ser. 1996 B, (Ins. by MBIA), zero coupon (4.00% YTM), 6/30/97............................ 3,972,789 24,437,789 PRINCIPAL AMOUNT (000) VALUE ARIZONA -- 0.8% $ 7,400 IDA of the City of Glendale RB, Thunderbird Gardens, (LOC: Sumitomo Trust & Bk. Co. Ltd., NY), 3.70%, VRDN........................ $ 7,400,000 200 IDA of the Cnty. of Maricopa, McLane Co., Inc., Ser. 1984, (LOC: Vly. Natl. Bk.), 3.80%, VRDN........................ 200,000 1,800 Maricopa Cnty. School Dist. #006 TRANS, Ser. 1996A, 4.25%, 7/31/97..................... 1,801,812 9,401,812 ARKANSAS -- 0.3% City of Jonesboro Residential Housing & Hlth. Care Fac. Brd. Hosp. RRB, St. Bernards Regnl. Medical Ctr., (Ins. by AMBAC) 4.10%, 7/1/97: 425 Ser. 1996A....................... 425,000 605 Ser. 1996B....................... 605,000 2,800 Fayetteville Public Facilities Brd. RB, Charter Vista Hosp., (LOC: Bank of Tokyo), 3.50%, 3/4/97...................... 2,800,000 3,830,000 CALIFORNIA -- 7.6% 6,000 California Higher Ed. Loan Auth. Inc., Ser. A-1, (Gtd. by SLMA), 3.95%, 7/1/97...................... 6,000,000 2,975 California TRANS, Ser. A, 4.50%, 6/30/97..................... 2,980,185 1,900 Glenn Cnty. IDA RB, Land O'Lakes, Inc., Ser. 1995, (LOC: Sanwa Bk., Ltd.), 3.70%, VRDN........................ 1,900,000 4,250 Hsg. Auth. of the City of Paramount MFHR, Century Place Apt., Ser. 1989A, (LOC: Heller Finl. Inc.),** 3.95%, VRDN........................ 4,250,000 5,000 Hsg. Auth. of the City of Santa Ana MFHR, Villa Verde Apt., Ser. 1985B, (LOC: Mercury Svgs. & Ln.) Coll: U.S. Treas. Bills, 3.55%, VRDN........................ 5,000,000
23 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED CALIFORNIA -- CONTINUED $ 2,500 IDA of the City of Simi Vly. IDRB, Wambold Furniture, Ser. 1984, (LOC: Wells Fargo Bk., N.A.), 3.75%, VRDN........................ $ 2,500,000 4,200 North Cnty. School Fin. Auth. TRANS, Orange Cnty., Ser. 1996, 4.75%, 7/1/97...................... 4,208,080 Pitney Bowes Cr. Corp. Leasetops Trs., 3.50%, VRDN: 22,846 Bart Telesystem Lease, (LOC: ABN-Amro Bk., N.V.),**........... 22,845,645 12,831 San Diego Regl. Comm. Sys. Lease, Ser. 1996A, (LOC: Landesbank Hessen)............... 12,831,200 15,375 San Bernardino Cnty. COP, Ser. 1995, (Ins. by MBIA), 3.55%, VRDN........................ 15,375,000 6,000 South Coast Local Ed. Agy. Pooled TRANS Prog., Ser. 1996A, 4.75%, 6/30/97..................... 6,013,185 5,000 Stanislaus Cnty. Office of Ed., 1996 TRANS, 4.50%, 6/30/97..................... 5,007,961 88,911,256 COLORADO -- 4.8% 6,055 Arapahoe Cnty. MFHR Ref., Stratford Sta., Ser. 1994, (LOC: Heller Finl., Inc.), 3.70%, VRDN........................ 6,055,000 5,080 Colorado Hsg. Fin. Auth. RB MERLOTS, Ser. C-ARB, 4.20%, 8/1/97...................... 5,080,000 3,000 Dove Valley Metropolitan Dist. Arapahoe Cnty. GO Bds., Ser. 1996C, (LOC: Dai-Ichi Kangyo Bk., Ltd.), 4.15%, 11/1/97..................... 3,000,000 23,700 Eagle Tax Exempt Trust, Nevada State Colorado River Commission, (LIQ: Citibank, N.A.), 3.40%, VRDN........................ 23,700,000 15,000 El Paso Cnty. School Dist. #011 TRANS, 4.25%, 6/30/97..................... 15,014,520 PRINCIPAL AMOUNT (000) VALUE COLORADO -- CONTINUED $ 2,680 Parkview Met. Dist. Arapahoe Cnty. GO Bds., Ser. 1993, (LOC: Cent Bk./Bk. Western, N.A.), 3.55%, VRDN........................ $ 2,680,000 55,529,520 DELAWARE -- 1.1% 5,100 Delaware Economic Dev. Auth. RB, Delmarva P&L CO, (Gtd. by Delmarva P&L), 3.60%, VRDN........................ 5,100,000 3,000 Delaware EDA-IDRB, Arlon, Inc., Ser. 1989, (LOC: Bk. of Amer., IL), 3.70%, VRDN........................ 3,000,000 2,640 Delaware Hsg. Auth. RB MERLOTS, Ser. G ARB, (Ins. by FGIC), 4.20%, 6/1/97...................... 2,640,000 2,480 New Castle Cnty. EDRB, Toys R Us, (LOC: Bankers Tr. Co., NY), 3.55%, VRDN........................ 2,480,000 13,220,000 DISTRICT OF COLUMBIA -- 5.1% Dist. of Columbia GO Gen. Fd. Recovery Bd., 3.50%, VRDN: 8,700 Ser. B, (LOC: Union Bk. of Switzerland)..................... 8,700,000 2,800 Ser. B-2, (LOC: Westdeutsche Landesbank)...................... 2,800,000 5,000 Ser. B-3, (LOC: Landesbank Hessen).......................... 5,000,000 5,120 Dist. of Columbia GO RB, Puttable Floating Opt. Tax-Exmp. Rcpt., Ser. PA-64, Ser. 1993C, (LIQ: Merrill Lynch Cap. Svs., Inc.), 3.65%, VRDN........................ 5,120,000 Dist. of Columbia GO RFB, 3.55%, VRDN: 14,300 Ser. 1992A-1, (LOC: Natl. Westminster Bk.)................. 14,300,000 3,600 Ser. 1992A-2, (LOC: Bk. of Nova Scotia)..................... 3,600,000 7,900 Ser. 1992A-4, (LOC: Toronto Dominion Bk.).................... 7,900,000 1,400 Ser. 1992A-5, (LOC: Bk. of Nova Scotia)..................... 1,400,000
24 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED DISTRICT OF COLUMBIA -- CONTINUED $ 6,000 District of Columbia, Ser. A-3, (LOC: Toronto Dominion Bk.), 3.55%, VRDN........................ $ 6,000,000 5,000 District of Columbia Hsg. Fin. Agy. Mortgage RB, Ser. 1996 C, (Invest. Agreement: Trinity Funding Corp.), 3.90%, 12/1/97..................... 5,000,000 59,820,000 FLORIDA -- 1.2% 3,500 Escambia Cnty. Indl. Dev. RB, Daws Manufacturing Co., Inc., (LOC: Amsouth Bk., Birmingham), 3.50%, VRDN........................ 3,500,000 1,010 Florida COP, Consolidated Equipment Fin. Prog., 6.05%, 5/15/97..................... 1,014,512 2,800 Orange Cnty. Hsg. Fin. Auth. MHRB, Oakwood, Ser. E, (LOC: Fleet Bk., N.A.), 4.15%, 10/1/97..................... 2,800,000 1,005 Palm Beach Cnty. Hsg. RB, Meridian Hsg., Ser. 1985, (LOC: Bk. of California, N.A.), 4.21%, VRDN........................ 1,005,000 5,875 Palm Beach Cnty. School Brd., MSTR Ser. 1996B, (LIQ: Norwest Bk., MN & Ins. by AMBAC), 3.50%, VRDN........................ 5,875,000 14,194,512 GEORGIA -- 1.2% 1,000 Albany Dougherty Cnty. Hosp. RB, Ser. 1984A, (Gtd. By Merck & Co.), 3.80%, VRDN........................ 1,000,000 5,000 Albany Dougherty Payroll, (Gtd. By Merck & Co.), 3.55%, VRDN........................ 5,000,000 6,000 Dev. Auth. of Polk Cnty. RB, Kimoto Tech. Inc., Ser. 1985, (LOC: Indl. Bk. of Japan, Ltd.), 3.75%, VRDN........................ 6,000,000 2,200 Hsg. Auth. of Columbus MHRB Ref., Quail Ridge, Ser. 1988, (LOC: Columbus Bk. & Tr. Co.), 3.70%, VRDN........................ 2,200,000 14,200,000 PRINCIPAL AMOUNT (000) VALUE ILLINOIS -- 10.8% $ 9,670 City of Aurora MHRB, Fox Valley Vlg. Apts, Ser. 1993, (LOC: Sumitomo Bk., Ltd.), 3.65% VRDN......................... $ 9,670,000 2,900 City of Chicago GO Bds., MSTR SAK-13, Ser. 1984, (LIQ: Societe Generale & Ins. by AMBAC), 3.55%, VRDN........................ 2,900,000 1,000 City of Chicago, Cook Cnty. RB, CSX Beckett Aviation, Ser. 1984, (LOC: Barclay's Bk. PLC), 3.54%, 3/14/97..................... 1,000,000 29,000 City of Oakbrook Terrace Multifamily Hsg. Mtg. RB, Renaissance, Ser. 1985A, (LOC: Bayerische Landesbank, Girozentrale), 4.90%, 11/3/97..................... 29,000,000 4,000 City of Peoria Solid Waste Disposal RB, PMP Fermentation Products, Inc., Ser. 1996, (LOC: Sanwa Bk., Ltd.), 3.75% VRDN......................... 4,000,000 5,900 City of West Chicago IDRB, Acme Printing Inc., Ser. 1989, (LOC: Bk. of Tokyo, Ltd.), 3.925%, VRDN....................... 5,900,000 3,400 Illinois Dev. Fin. Auth. EDRB, MTI Corp., (LOC: Indl. Bk. of Japan, Ltd.), 4.05%, VRDN........................ 3,400,000 3,040 Illinois Dev. Fin. Auth. IDRB, Uhlich Children's Home, (LOC: American Natl. Bk. & Tr., Chicago), 3.60%, VRDN........................ 3,040,000 1,200 Illinois Dev. Fin. Auth. PCRB, Diamond Star Motor, (LOC: Bk. of Tokyo), 3.55%, VRDN........................ 1,200,000 Illinois Dev. Fin. Auth. RB, Gen. Accident Ins. Co., Ser. 1985 ARB, (Gtd. by Gen. Accident Ins. Co. of America): 6,800 3.70%, 9/1/97.................... 6,800,000 6,800 3.80%, 3/1/97.................... 6,800,000
25 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED ILLINOIS -- CONTINUED $ 8,705 LaSalle Natl. Bk. Leasetops Trs., Ser. 1995A, (LOC: LaSalle Natl. Bk.),** 3.50%, VRDN........................ $ 8,705,128 16,640 Vlg. of Hazel Crest Retirement Ctr. RB, Waterford Estates, Ser. 1992A, (LOC: Sumitomo Bk.), 3.65%, VRDN........................ 16,640,000 10,000 Vlg. of Schaumburg MFHR, Treehouse II Apt., Ser. 1989, (LOC: Sumitomo Bk.), 3.65%, VRDN........................ 10,000,000 2,000 Vlg. of Skokie EDRB, Skokie Fashion Square Assn., Ser. 1984, (LOC: LaSalle Natl. Bk.), 3.625%, VRDN....................... 2,000,000 15,210 Vlg. of Vernon Hills MFHR, Hawthorn Lakes, Ser. 1991, (LIQ: Fuji Bk., Ltd. & Ins. by FSA), 3.80%, VRDN.................. 15,210,000 126,265,128 INDIANA -- 2.5% 6,500 Avilla Economic Development RB, Pent Assemblies Inc., Ser. 1996, (LOC: Fort Wayne Natl. Bk.), 4.30%, 8/1/97...................... 6,500,000 15,580 City of Fort Wayne PCRB, Gen. Mtrs. Corp., (Gtd. by Gen. Mtrs. Corp.), 3.45%, VRDN........................ 15,580,000 City of New Albany EDRB, (LOC: PNC Bk.) 3.60%, VRDN: 2,000 Bert R. Huncilman & Son. Inc., Ser. 1996A....................... 2,000,000 2,000 Gordon L. & Jeffery Huncilman-Partner., Ser. 1996B............................ 2,000,000 2,000 City of South Bend MFHR, Maple Lane Assn., Ser. 1987, (LOC: Society Bk. of Cleveland), 3.60%, VRDN........................ 2,000,000 925 Decatur Indl. EDA-RB, Silberline Mfg. Co. Inc., (LOC: Corestates Capital Mkt., Inc.), 4.20%, 6/1/97...................... 925,000 29,005,000 PRINCIPAL AMOUNT (000) VALUE IOWA -- 0.4% $ 5,000 City of Council Bluffs RB Catholic Hlth. Corp., Mercy Hosp., Council Bluffs, Ser. 1985, (LOC: Fuji Bk., Ltd., LA), 4.00%, 4/1/97...................... $ 5,000,000 KANSAS -- 0.5% 1,000 City of Fredonia RB, Systech Envir. Corp., Ser. 1989, (LOC: Banque Natl. de Paris, NY), 3.65%, VRDN........................ 1,000,000 540 City of Manhattan Tax Increment RRB, Central Business Distr. Tax Increment Redev., Ser. 1996A, 4.10%, 12/1/97..................... 540,000 1,800 City of Praire Vlg. MFHR, J.C. Nichol's Co., Ser. 1985, (Gtd. by Bankers Life Ins. Co.), 3.90%, VRDN........................ 1,800,000 City of Salina RB (Salina Central Mall L.P.), Ser. 1984, (LOC: Boatmen's Bancshares, Inc.), 3.50%, VRDN: 1,200 Dillard's........................ 1,200,000 1,105 Penny's.......................... 1,105,000 5,645,000 KENTUCKY -- 1.8% 20,300 Cnty. of Ohio PCRB, Big Rivers Elec. Corp., Ser. 1985, (LOC: Chemical Bk.), 3.90%, VRDN........................ 20,300,000 856 Jefferson Cnty. IDRB, Belknap Inc., (LOC: Chemical Bk.), 3.65%, VRDN........................ 856,000 21,156,000 LOUISIANA -- 2.1% 7,000 Ascension Parish RB, Basf Corp., (Gtd. by BASF Corp.), 3.55%, VRDN........................ 7,000,000 3,050 IDB of the Parish of Bossier, Inc., H. J. Wilson Co., Inc., Ser. 1982, (LOC: First Natl. Bk. of Chicago), 4.00%, 12/1/97..................... 3,050,000
26 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED LOUISIANA -- CONTINUED $15,000 Louisiana HFA Mortgage RB, Ser. 1996D-4, 4.10%, 9/15/97..................... $ 15,000,000 25,050,000 MARYLAND -- 0.2% 2,035 Community Dev. Admin. State of Maryland Dept. of Hsg. & Comm. Dev., Single Family Prog., Ser. 1987 Fourth ARB, (LOC: First Natl. Bk. of Boston), 3.75%, 4/1/97...................... 2,035,000 MASSACHUSETTS -- 0.2% 360 City of Lowell Indl. RB, Oak Realty Tr., Ser. 1985, (LOC: First Natl. Bk. of Boston), 4.21%, VRDN........................ 360,000 500 Massachusetts Indl. Finl. Agy., Copley Pharmac, (LOC: First Natl. Bk. of Boston), 4.46%, VRDN........................ 500,000 600 Massachusetts Indl. Finl. Auth. IDRB, Leavy Realty & Jencoat Metal, Ser. 1994, (LOC: First Natl. Bk. of Boston), 4.21%, VRDN........................ 600,000 700 Massachusetts Indl. Finl. Auth. Indl. RB, Portland Causeway Rlty., Ser. 1988, (LOC: Citibank, N.A.), 4.21%, VRDN........................ 700,000 2,160,000 MICHIGAN -- 1.4% 2,000 Economic Dev. Corp. of the Twp. of Van Buren Economic RB, Daikin Clutch USA, Inc., Ser. 1987, (LOC: Sanwa Bk., Ltd.), 3.75%, VRDN........................ 2,000,000 4,645 Sault. Ste. Marie Tribe Bldg. Auth. RB, Ser. 1996A ARB, (LOC: First of Amer. Bk., N.A.), 4.22%, 6/1/97...................... 4,645,000 10,000 School Dist. of the City of Detroit Wayne Cnty. GO Bds., State School Aid Nts., Ser. 1996, 4.50%, 5/1/97...................... 10,008,902 16,653,902 PRINCIPAL AMOUNT (000) VALUE MINNESOTA -- 9.1% $50,000 Capital Investors Tax Exempt Fund Ltd., Partnership, Ser. 1996-5, 3.60%, VRDN........................ $ 50,000,000 14,905 City of Eden Prairie MFHR, Park at City West Apt., Ser. 1990, (LOC: Sumitomo Bank), 3.65%, VRDN........................ 14,905,000 2,300 City of Robbinsdale IDR, Unicare Homes, Inc., Ser. 1984, (LOC: Banque Paribas), 3.60%, VRDN........................ 2,300,000 4,420 Dakota & Washington Cnties. Hsg. & Redev. Auth. MERLOTS, Ser. J, (LOC: Corestates Bk., N.A.), 4.20%, 3/1/97...................... 4,420,000 4,220 Minneapolis GO (Sports Arena), MSTR Ser. 1996A, (LIQ: Norwest Bk.), 3.50%, VRDN........................ 4,220,000 800 Minneapolis/Saint Paul Hsg. Fin. Brd. RB, Minneapolis/Saint Paul Fam. Hsg. Prog., Phase VI, (COLL: GNMA), 4.20%, 8/1/97...................... 800,000 2,550 Minnesota Agric. & EDRB, Como Partnership, Ser. 1996, (LOC: First Bk. Natl. Assn.), 3.65%, VRDN........................ 2,550,000 1,510 Richfield Independent School Dist. #280, MSTR Ser. 1994P, (Ins. by FGIC), 3.50%, VRDN........................ 1,510,000 750 Southern Minnesota Muni. Pwr. Agy. Supply Sys., MSTR Ser. 1996I, (LIQ: Norwest Bk., MN & Ins. by FGIC), 3.50%, VRDN........................ 750,000 1,000 Spring Lake Park I.S.D. No. 16, MSTR Ser. 1996G, (LIQ: Norwest Bk., MN & Ins. by FGIC), 3.50%, VRDN........................ 1,000,000 24,200 St. Louis Park Hlth. Care Fac. RB Fltg. Tr. Cert., (LIQ: Norwest Bk., & Ins. by AMBAC), 3.50%, VRDN........................ 24,200,000 106,655,000
27 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED MISSISSIPPI -- 0.3% $ 3,000 Lee Cnty. IDRB, Hunter Douglas Inc., Ser. 1985, (LOC: Bk. of Amer. Natl. Tr. & Svg. Assn.), 3.95%, VRDN........................ $ 3,000,000 MISSOURI -- 1.5% 4,000 Boatmens St. Louis Grantor Tr., Cert. Partn., Ser. 1996A-1, (LOC: Boatmens Natl. Bk., St. Louis), 3.55%, VRDN........................ 4,000,000 8,375 City of St. Louis TRANS, 4.75%, 6/30/97..................... 8,395,268 4,330 Missouri Dev. Fin. Brd. IDRB, Cook Composites & Polymers Co., Ser. 1994, (LOC: Societe Generale), 3.75%, VRDN........................ 4,330,000 825 School District of North Kansas GO School Bldg. Bds., Missouri Direct Deposit Prog., Ser. 1996, 7.00%, 3/1/97...................... 825,000 17,550,268 MONTANA -- 0.1% 710 Butte Silver Bow City & Cnty., Copper City Assn., Ser. 1988, (LOC: Bank of America), 3.55%, VRDN........................ 710,000 NEBRASKA -- 0.4% 4,200 Lancaster Cnty. IDRB, AS Mid-Amer., Inc., Ser. 1994, (LOC: Heller Finl., Inc.), 3.85%, VRDN........................ 4,200,000 NEVADA -- 0.4% 4,450 Nevada Housing Division RB, Oakmont at Reno, (LOC: Banque Paribas), 3.55%, VRDN........................ 4,450,000 NEW HAMPSHIRE -- 0.1% 1,500 New Hampshire Hsg. Fin. Auth. MFHR, Nashua-Oxford, Ser. 1990, (Surety Bond: Contl. Cas. Corp.), 3.50%, VRDN........................ 1,500,000 NEW JERSEY -- 3.2% 15,000 County of Essex TRANS, Ser. A, 4.50%, 9/17/97..................... 15,035,454 PRINCIPAL AMOUNT (000) VALUE NEW JERSEY -- CONTINUED $ 3,000 Jersey City Promissory Notes, 4.00%, 4/3/97...................... $ 3,000,973 4,220 Jersey City Refunding Notes, 4.125%, 1/16/98.................... 4,224,405 10,000 Jersey City TRANS, 4.75%, 9/26/97............................ 10,038,470 2,585 New Jersey EDA-EDRB, Wood Hollow Assn. L.L.C., (LOC: Corestates Bk.), 3.55%, VRDN........................ 2,585,000 2,800 Newark Healthcare Fac. RB, New Community Urban Renewal, Ser. 1995, (COLL: GNMA), 3.40%, VRDN........................ 2,800,000 37,684,302 NEW MEXICO -- 0.5% 4,855 Cnty. of Sandoval MFHR, Arrowhead Ridge Apt., Ser. 1996, (LIQ: FGIC), 4.65%, 7/1/97...................... 4,855,000 1,000 Rio Arriba Cnty. IDRB, Franklin Industries, (LOC: NationsBank), 3.60%, VRDN........................ 1,000,000 5,855,000 NEW YORK -- 3.2% Battery Park City Auth. Hsg. RB, Marina Towers Tender Corp., (LOC: Sumitomo Bk.) 3.90%, VRDN: 8,560 Ser. A........................... 8,560,000 7,765 Ser. B........................... 7,765,000 6,400 City of New Rochelle NY School Dist. TRANS, 4.25%, 6/30/97..................... 6,404,989 6,000 New York City GO, Ser. 1993B, (Ins. by FGIC), 3.55%, VRDN........................ 6,000,000 2,500 New York City GO Subser. B5, (Ins. by MBIA), 3.50%, VRDN........................ 2,500,000 6,000 New York City Mun. Wtr. Fin. Auth. RB, Ser. 1995A, (Ins by FGIC), 3.55%, VRDN........................ 6,000,000 37,229,989
28 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED NORTH CAROLINA -- 0.6% $ 3,600 Cabarrus Cnty. Indl. Fac. PCRB, Oiles America Corp., Ser. 1989, (LOC: Indl. Bk. of Japan, Ltd., NY), 4.05%, VRDN........................ $ 3,600,000 3,000 Guilford Cnty. Indl. Fac. & Pollution Control Fing. Auth. RB Sewage Disp., High Pt. Chem., Ser. 1994, (LOC: Sumitomo Bk., Ltd., NY), 3.65%, VRDN........................ 3,000,000 570 NCNB Pooled Tax-Empt. Tr. COP, Ser. 1990A, (LOC: NationsBank of NC),** 4.125%, VRDN....................... 570,000 7,170,000 OHIO -- 1.0% 4,200 Cnty. of Summit IDA-IDRB, Shin-Etsu Silicones of Amer. Inc., Ser. 1994, (LOC: Bk of Tokyo, Ltd. & Mitsubishi Bk., Ltd.), 3.70%, VRDN........................ 4,200,000 4,250 Dayton Ohio Airport Impt. Nts., 4.50%, 3/25/97..................... 4,251,360 3,000 Ohio Hsg. Fin. Agy. MFHR, 10 Wilmington Place, Ser. 1991B, (LIQ: Fuji Bk., Ltd. & Ins. by FSA), 3.80%, VRDN........................ 3,000,000 11,451,360 OREGON -- 0.3% Oregon EDRB Series CLVI, (LOC: Bk. of California, N.A.) 3.75%, VRDN: 1,960 Pacific Coast Seafoods Co........ 1,960,000 1,210 Pacific Oyster Co................ 1,210,000 3,170,000 PENNSYLVANIA -- 7.9% 2,855 Chester Cnty. IDA Mfg. Fac. RB, Devault Packing Co., Inc., Ser. 1995, (LOC: Meridian Bk.), 3.75%, VRDN........................ 2,855,000 10,000 City of Philadelphia GO Bds., Ser 1990, (LOC: Fuji Bk., Ltd., NY), 3.50%, 4/7/97...................... 10,000,000 PRINCIPAL AMOUNT (000) VALUE PENNSYLVANIA -- CONTINUED $ 500 Elk Cnty. IDA-IDRB Ref., Stackpole Corp., Ser. 1989, (LOC: First Natl. Bk. of Boston), 4.21%, VRDN........................ $ 500,000 39,865 Emmaus General Auth. RB, Pennsylvania Variable Rate Ln. Prog., (Ins by FSA), 3.40%, VRDN........................ 39,865,000 855 Fayette Cnty. Hosp. Auth. RB, Uniontown Hosp., Ser. 1996, (Ins. by Connie Lee), 4.25%, 6/15/97..................... 855,337 650 Lawrence Cnty. IDA-PCRB, Calgon Carbon, Ser. 1983A, (Gtd. by Merck & Co.), 3.80%, VRDN........................ 650,000 1,990 Monroe Cnty. IDA-RB, United Steel, Ser. A, (LOC: Corestates Bk., N.A.), 3.75%, VRDN........................ 1,990,000 1,500 Montgomery Cnty. IDA-RB, Laneko Engineering Co., Ser. 1995, (LOC: Meridian Bk.), 3.75%, VRDN........................ 1,500,000 3,200 Pennsylvania Higher Ed. Fac. Auth. RB, Carnegie Mellon Univ., Ser. 1995D, 3.45%, VRDN........................ 3,200,000 1,235 Pennsylvania Econ. Dev. Fin. Auth. RB, C.F. Martin & Co., Inc., Ser. H, (LOC: Meridian Bk.), 3.75%, VRDN........................ 1,235,000 3,880 Pennsylvania Hsg. Fin. Agy. MERLOTS, Ser. I, (LIQ: Corestates Bk., N.A.), 4.125%, 4/1/97..................... 3,880,000 8,100 Philadelphia Hosp. & Higher Ed. Fac. Auth. RB., Children Hosp., Ser. A, (SPA: Morgan Guaranty, NY), 3.45%, VRDN........................ 8,100,000 920 Reading School Dist. GO, Ser. 1997, 3.95%, 1/15/98............... 920,736 9,400 School Dist. of Philadelphia TRANS, Ser. 1996, 4.50%, 6/30/97..................... 9,415,002
29 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED PENNSYLVANIA -- CONTINUED $ 2,000 Schuylkill Cnty. IDA-RB, Craftex Mills, Inc., (LOC: Corestates Bk.), 3.75%, 3/5/97...................... $ 2,000,000 2,010 West Cornwall Twp. Muni. Auth. RB, Lebanon Vly. Brethren Home, Ser. 1995, (LOC: Meridian Bk.), 3.50%, VRDN........................ 2,010,000 3,040 Westmoreland Cnty. IDA-IDRB, White Consolidated Ind., Inc., (LOC: Chemical Bk.), 3.96%, 6/1/97...................... 3,041,936 92,018,011 RHODE ISLAND -- 0.3% 3,000 Rhode Island Solid Waste Mgmt. Corp. Landfill Lease Nts., Ser. 1995A, 4.50%, 8/1/97...................... 3,004,225 SOUTH CAROLINA -- 0.9% 3,500 Darlington Cnty. IDA-IDRB, B.F. Shaw, Inc., Ser. 1995, (LOC: Mercantile Bk. of St. Louis N.A.), 3.90%, VRDN........................ 3,500,000 2,225 Lexington Cnty. RB, Charter Rivers Hosp., (LOC: Bk. of Tokyo), 3.50%, VRDN........................ 2,225,000 250 South Carolina Jobs EDA Hosp. Facs. RB, Beloit Corp., (LOC: Cr. Coml. de France), 3.60%, VRDN........................ 250,000 South Carolina Jobs EDA-EDRB, (LOC: Cr. Coml. de France): 600 Ridge Pallets, Ser. B 3.70%............................ 600,000 2,700 Roller Bearing Co., Ser. 1994A, 4.10%............................ 2,700,000 750 Tuttle Co., Inc., Ser. A, 3.70%............................ 750,000 10,025,000 SOUTH DAKOTA -- 0.5% 5,285 Rapid City EDRB, Civic Center Assoc., (LOC: Bayerische Vereinsbank AG), 3.65%, VRDN........................ 5,285,000 PRINCIPAL AMOUNT (000) VALUE TENNESSEE -- 3.2% $ 1,000 IDB of Blount Cnty. IDRB, Advance Crystal, Inc., Ser. 1988, (LOC: Indl. Bk. of Japan, Ltd.), 3.75%, VRDN........................ $ 1,000,000 IDB of Met. Govt. of Nashville, Ser. 1989, (LOC: Sumitomo Bk.), 3.65%, VRDN: 8,995 Beechwood........................ 8,995,000 4,680 Belle Valley..................... 4,680,000 6,710 Graybrook Apts................... 6,710,000 3,200 IDB of the City Chattanooga RRB, Radisson Read House, Ser. 1995, (LOC: Heller Finl. Inc.), 4.15%, VRDN........................ 3,200,000 5,000 IDB of the City of Morristown IDRB, Camvac Intl., Inc., Ser. 1983, (LOC: ABN-Amro Bk.), 3.625%, VRDN....................... 5,000,000 500 Monroe Cnty. Indl. Dev. Brd. IDRB, Amer. Transit Corp., (LOC: Bk. of New York), 3.60%, VRDN........................ 500,000 3,405 Shelby Cnty. Hlth. Edl. & Hsg. Fac. Brd., Methodist Hlth. Sys., Ser. C, (LIQ: Sanwa Bk., Ltd & Ins. by MBIA), 4.05%, 8/1/97...................... 3,405,000 4,285 Smyrna Hsg. Assn. MFHR, Imperial Gardens Apts., Ser. 1989, (LOC: Sumitomo Bk.), 3.65%, VRDN........................ 4,285,000 37,775,000 TEXAS -- 5.5% 2,500 Brazos River Harbor Navigation Dist. RB, BASF Corp., (Gtd. by Basf Corp.), 3.55%, VRDN........................ 2,500,000 5,985 Galveston Hsg. Fin. Corp. MFHR Ref., Vlg. by the Sea Apt., Ser. 1993, (LOC: Sumitomo Bk.), 3.75%, VRDN........................ 5,985,000 3,400 Gulf Coast Waste Disposal Auth. RB, Amoco Oil Co., (Gtd. by Amoco Oil), 3.55%, VRDN........................ 3,400,000
30 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED TEXAS -- CONTINUED $ 2,600 Harris Cnty. Hsg. Fin. Corp., MFHR, Methodist Hosp., Ser. 1994, (LOC: Morgan Guaranty, NY), 3.45%, VRDN........................ $ 2,600,000 7,000 Matagorda Cnty. Nav. Dist. #1 CDC Certificates, Ser. 97D, (LIQ: Caisse Depots & Ins. by FGIC), 3.50%, VRDN........................ 7,000,000 7,905 NCNB Pooled Tax-Empt. Tr. COP, Ser. 1990B, (LOC: NationsBank of Texas), 4.125%, VRDN....................... 7,905,000 4,000 Port of Corpus Christi Auth. Nueces Cnty. RRB, Union Pacific Corp., Ser. 1989 TECP, (Gtd. by Union Pacific Corp.), 3.85%, 5/21/97..................... 4,000,000 4,800 Southwest Higher Ed. Auth. RB, Southern Methodist Univ., (LOC: Morgan Guaranty, NY), 3.45%, VRDN........................ 4,800,000 4,380 Tarrant Cnty. Hsg. Fin. Corp. MFHR Ref., Lincoln Meadows, Ser. 1988 ARB, (Surety: Contl. Cas. Corp.), 4.10%, 12/1/97..................... 4,379,636 15,000 Texas TRANS, 4.75%, 8/29/97........ 15,055,196 6,000 Tyler Health Fac. Dev. Corp. RB, East Texas Med. Ctr. Regl. Hlth., Ser. 1993C TECP, (LOC: Banque Paribas), 3.50%, 3/12/97..................... 6,000,000 63,624,832 UTAH -- 4.8% 2,800 Summit Cnty. IDRB, Hornes' Kimball Junction L.P., Ser. 1985, (LOC: West One Tr.), 3.80%, VRDN........................ 2,800,000 PRINCIPAL AMOUNT (000) VALUE UTAH -- CONTINUED Tooele Cnty. Hazardous Waste Treatment RB, Union Pacific Corp., Ser. A TECP, (Gtd. by Union Pacific Corp.): $ 7,000 3.80%, 3/10/97................... $ 7,000,000 6,290 3.80%, 4/10/97................... 6,290,000 10,000 3.80%, 4/24/97................... 10,000,000 15,400 3.80%, 4/28/97................... 15,400,000 15,000 3.85%, 4/7/97.................... 15,000,000 56,490,000 VERMONT -- 0.2% 2,000 Burlington Wastwater Revenue TRANS, 5.60%, 1/30/98..................... 2,028,545 VIRGINIA -- 0.9% 2,900 Henrico Cnty. IDA RB, (LOC: Tokai Bk., Ltd.), 3.95%, VRDN........................ 2,900,000 3,000 Richmond Cnty. Indl. Fac. PCRB, Cogentrix of Richmond, (LOC: Banque Paribas), 3.90%, VRDN........................ 3,000,000 3,500 Richmond IDA-RB, Cogentrix of Richmond, (LOC: Banque Paribas), 3.90%, VRDN........................ 3,500,000 1,000 Rockingham Cnty. Indl. Dev. PCRB, Merck & Co., Inc., Ser. 1983A, (Gtd. by Merck & Co.), 3.55%, VRDN........................ 1,000,000 10,400,000 WASHINGTON -- 1.8% 2,200 Klickitat Cnty. Pub. Corp. RB, Mercer Ranches, Ser. 1996, (LOC: U.S. Bk. of Washington, N.A.), 3.80%, VRDN........................ 2,200,000 2,000 Pierce Cnty. Econ. Dev. Corp., McFarland Cascade, (LOC: U.S. Bk. of Washington, N.A.), 3.80%, VRDN........................ 2,000,000
31 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE SHORT-TERM MUNICIPAL SECURITIES -- CONTINUED WASHINGTON -- CONTINUED $ 410 Pierce Cnty. Econ. Dev. Corp. IDRB, Pickering Industries, Ser. 1990, (LOC: Indl. Bk. of Japan, Ltd.), 3.50%, VRDN........................ $ 410,000 Pilchuck Dev. Pub. Corp. IDRB, (LOC: Bk. of California, N.A.), VRDN: 1,455 Canyon Park Assn., 3.65%,........ 1,455,000 1,047 Hillside Assn., 3.65%,........... 1,047,000 1,312 Omni Assn., 3.65%,............... 1,312,000 8,450 Romac Industries, Inc., Ser. 1995, 3.70%,........................... 8,450,000 Washington Pub. Pwr. Sup. Sys. Nuclear RRB No. 1: 1,000 7.10%, 7/1/97.................... 1,010,070 1,635 Ser. A, 4.50%, 7/1/97............ 1,637,631 1,525 Washington Pub. Pwr. Sup. Sys. Nuclear RRB No. 2, Ser. A, 4.50%, 7/1/97...................... 1,527,449 21,049,150 WISCONSIN -- 2.3% 27,230 Southeast Pro. Baseball Park Dist. Sales Tax RB, Ser. 1996, (Invest. Agreement: Bayrland), 4.10%, 12/15/97.................... 27,230,000 PRINCIPAL AMOUNT (000) VALUE OTHER -- 5.6% Puttable Floating Opt. Tax-Empt., (LIQ: Credit Suisse), 3.55%, VRDN: $51,780 IBM Grantor Trust, Ser. 1996C............................ $ 51,780,000 10,370 KOCH Fin. Corp................... 10,370,000 3,340 Puttable Floating Opt. Tax-Empt. PPT-5W, (LIQ: Credit Suisse), 3.55%, VRDN........................ 3,340,000 65,490,000 TOTAL SHORT-TERM MUNICIPAL SECURITIES (COST $1,168,720,601).............. 1,168,720,601 SHARES (000) MUTUAL FUND SHARES -- 0.0% (COST $300,000) 300 Federated Tax-Free Obligation Fund............................. 300,000 TOTAL INVESTMENTS -- (COST $1,169,020,601).... 100.2 % 1,169,020,601 OTHER ASSETS AND LIABILITIES, NET......... (0.2) (2,452,126) NET ASSETS --.............. 100.0 % $1,166,568,475
32 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED) Summary of Abbreviations: ACES -- Adjustable Convertible Extendable Securities AMBAC -- American Municipal Bond Assurance Corp. ARB -- Adjustable Rate Bonds COLL -- Collateral COP -- Certificates of Participation EDA -- Economic Development Authority EDRB -- Economic Development Revenue Bond FGIC -- Financial Guaranty Insurance Co. FSA -- Financial Security Assurance Inc. GNMA -- Government National Mortgage Association GO -- General Obligations HFA -- Housing Finance Agency IDA -- Industrial Development Authority IDB -- Industrial Development Board IDR -- Industrial Development Revenue IDRB -- Industrial Development Revenue Bond LIQ -- Liquidity Provider LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance MERLOTS -- Municipal Exempt Receipts Liquidity Option Tenders MFHR -- Multifamily Housing Revenue MSTR -- Municipal Securities Trust Receipt PCRB -- Pollution Control Revenue Bond RB -- Revenue Bonds RRB -- Refunding Revenue Bonds SLMA -- Student Loan Marketing Association SPA -- Securities Purchase Agreement TECP -- Tax Exempt Commercial Paper TRANS -- Tax Revenue Anticipation Notes VRDN -- Variable Rate Demand Notes YTM -- Yield To Maturity 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 February 28, 1997. These securities represent 2% of total investments at February 28, 1997. 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 February 28, 1997. These securities represent 66% of total investments at February 28, 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. ** Rule 144A securities which are restricted in resale to qualified institutions and are considered liquid. See accompanying notes to financial statements. 33 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1997 (UNAUDITED)
ASSETS: Investments at value (identified cost $1,169,020,601)....................................................... $1,169,020,601 Cash........................................................................................................ 394,307 Interest receivable......................................................................................... 7,498,626 Receivable for Fund shares sold............................................................................. 544,063 Prepaid expenses and other assets........................................................................... 55,690 Total assets.......................................................................................... 1,177,513,287 LIABILITIES: Payable for investments securities purchased................................................................ 8,025,581 Dividends payable........................................................................................... 1,488,403 Accrued advisory fee........................................................................................ 418,469 Payable for Fund shares redeemed............................................................................ 331,387 Distribution fee payable.................................................................................... 326,010 Accrued expenses............................................................................................ 354,962 Total liabilities..................................................................................... 10,944,812 NET ASSETS..................................................................................................... $1,166,568,475 NET ASSETS CONSIST OF: Paid-in capital............................................................................................. $1,166,826,346 Accumulated net realized loss on investment transactions.................................................... (257,871) Net assets............................................................................................ $1,166,568,475
CALCULATION OF NET ASSET VALUE PER SHARE: Class A Shares ($689,576,557)(689,695,276 shares of beneficial interest outstanding)..................................... $1.00 Class Y Shares ($476,991,918)(477,092,273 shares of beneficial interest outstanding)..................................... $1.00
See accompanying notes to financial statements. 34 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED) INVESTMENT INCOME: Interest....................................................................................... $22,596,170 EXPENSES: Advisory fee................................................................................... $2,892,482 Distribution fee -- Class A Shares............................................................. 965,960 Custodian fee.................................................................................. 135,426 Transfer agent fee............................................................................. 91,314 Reports and notices to shareholders............................................................ 53,351 Registration and filing fees................................................................... 37,198 Interest expense............................................................................... 28,513 Professional fees.............................................................................. 23,109 Insurance...................................................................................... 9,341 Trustees' fees and expenses.................................................................... 7,250 Other.......................................................................................... 11,094 4,255,038 Less advisory fee waiver....................................................................... (283,470) Net expenses................................................................................ 3,971,568 Net investment income............................................................................. 18,624,602 Net realized gain on investments.................................................................. 9 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.............................................. $18,624,611
See accompanying notes to financial statements. 35 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED FEBRUARY 28, YEAR ENDED 1997 AUGUST 31, (UNAUDITED) 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income................................................................ $ 18,624,602 $ 36,638,019 Net realized gain (loss) on investment transactions.................................. 9 (6,227) Net increase in net assets resulting from operations.............................. 18,624,611 36,631,792 DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A Shares....................................................................... (9,787,172) (19,837,670) Class Y Shares....................................................................... (8,837,430) (16,800,349) Total distributions to shareholders from net investment income.................... (18,624,602) (36,638,019) FUND SHARE TRANSACTIONS: Proceeds from shares sold............................................................ 1,266,527,489 2,572,408,736 Proceeds from shares issued from aquisition of FFB Tax-Free Money Market Fund........ -- 103,129,021 Proceeds from reinvestment of distributions.......................................... 8,133,007 16,202,992 Payments for shares redeemed......................................................... (1,385,441,253) (2,390,799,129) Net increase (decrease) resulting from Fund share transactions................. (110,780,757) 300,941,620 Net increase (decrease) in net assets.......................................... (110,780,748) 300,935,393 NET ASSETS: Beginning of period.................................................................. 1,277,349,223 976,413,830 End of period........................................................................ $1,166,568,475 $ 1,277,349,223
See accompanying notes to financial statements. 36 EVERGREEN TAX EXEMPT MONEY MARKET FUND (Photo of coins) FINANCIAL HIGHLIGHTS
CLASS A SHARES CLASS Y SHARES SIX MONTHS JANUARY 5, SIX MONTHS ENDED 1995* ENDED FEBRUARY 28, YEAR ENDED THROUGH FEBRUARY 28, 1997 AUGUST 31, AUGUST 31, 1997 YEAR ENDED AUGUST 31, (UNAUDITED) 1996 1995 (UNAUDITED) 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 $1.00 $1.00 Net investment income.............. 0.01 0.03 0.02 0.02 0.03 0.04 0.02 0.03 Less distributions to shareholders from net investment income....... (0.01) (0.03) (0.02) (0.02) (0.03) (0.04) (0.02) (0.03) Net asset value, end of period..... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 TOTAL RETURN+...................... 1.5% 3.2% 2.2% 1.7% 3.5% 3.6% 2.5% 2.6% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted).................. $689,577 $660,516 $ 554,924 $476,992 $ 616,833 $421,490 $402,419 $401,376 Ratios to average net assets: Expenses**....................... .82%++ .79% .78%++ .52%++ .49% .50% .34% .34% Net investment income**.......... 3.06%++ 3.14% 3.28%++ 3.37%++ 3.44% 3.53% 2.47% 2.58% CLASS Y SHARES YEAR ENDED AUGUST 31, 1992 PER SHARE DATA: Net asset value, beginning of period........................... $1.00 Net investment income.............. 0.04 Less distributions to shareholders from net investment income....... (0.04) 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%
# The Fund changed its fiscal year end from February 28 to August 31. + Total return is calculated on the net asset value per share 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 SIX MONTHS JANUARY 5, SIX MONTHS ENDED 1995* ENDED FEBRUARY 28, YEAR ENDED THROUGH FEBRUARY 28, 1997 AUGUST 31, AUGUST 31, 1997 YEAR ENDED AUGUST 31, (UNAUDITED) 1996 1995 (UNAUDITED) 1996 1995 1994 1993 Expenses...................................... .87%++ .90% .90%++ .56%++ .60% .63% .64% .63% Net investment income......................... 3.01%++ 3.03% 3.16%++ 3.32%++ 3.33% 3.40% 2.17% 2.29% CLASS Y SHARES YEAR ENDED AUGUST 31, 1992 Expenses...................................... .63% Net investment income......................... 3.41%
See accompanying notes to financial statements. 37 EVERGREEN TREASURY MONEY MARKET FUND (Photo of eagle) A REPORT FROM YOUR PORTFOLIO MANAGER KELLIE ALLEN We are pleased to present the Semiannual Report for the Evergreen Treasury Money Market Fund for the six-month period ended February 28, 1997. The total return for the Fund's Class A shares for the six months was 2.34%*. This return was ahead of the Lipper average of 97 U.S. Treasury Money Market funds tracked by Lipper Analytical Services during that period**. The seven-day current and effective yields as of February 28, for the Fund's Class A shares were 4.61% and 4.72%, respectively. The past six months have proven to be a roller coaster ride [Photo] for fixed income investors. The bond market rallied throughout the second half of calendar 1996 as interest rates declined, but was stifled as rates jumped in December then steadily increased throughout the first two months of 1997. The yield on the benchmark thirty-year treasury bond began the six-month period at 7.1%, declined, then rebounded and settled at 6.8% on February 28. Short-term rates also fluctuated rather dramatically during the six-month period. The yield on the three-month treasury bill began the fiscal year at 5.3%, declined steadily through mid-December, then climbed sharply to finish at 5.2% on February 28. In the final week of February, Federal Reserve Chairman, Alan Greenspan, rocked the financial markets in an appearance before Congress. Mr. Greenspan, while acknowledging that inflation remains in check, suggested that the best course of action may be to raise rates as a preventative measure to curb inflation before it actually appears. The Federal Reserve Board had neither raised nor lowered interest rates in well over a year. As of February 28, the yield on two-year treasury notes stood at 6.09%, 84 basis points above the Fed Funds rate. The Fund invests exclusively in short-term U.S. Government obligations which are fully guaranteed as to principal and interest by the U.S. Government. Within the Fund, we continue to maintain a maturity at the longer end of our normal range in an attempt to lock in higher, more attractive rates. The Fund also utilizes reverse repurchase agreements to help enhance the portfolio's return. This process, relatively risk-free, provides the Fund an opportunity gain a couple of basis points as a reward, which can help it to outperform similar funds. The Fund's longer-term performance continues to be impressive as its five-year average annual compound return ended March 31, 1997, ranked number one among the 49 Treasury money market funds tracked by Lipper during that time**. The Fund's one-year total return ended March 31, ranked number four out of the 96 Treasury money market funds tracked by Lipper during that time. Thank you for your investment in the Evergreen Treasury Money Market Fund. FIGURES REPRESENT PAST PERFORMANCE WHICH IS NO GUARANTEE OF FUTURE RESULTS. * PERFORMANCE FIGURES INCLUDE THE REINVESTMENT OF INCOME DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS, IF ANY. DURING THE PERIOD UNDER REVIEW, THE ADVISER CONTINUED TO VOLUNTARILY WAIVE A PORTION OF ITS ADVISORY FEE. HAD FEE NOT BEEN WAIVED, PERFORMANCE AND 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 FORESEEABLE FUTURE, HOWEVER, MANAGEMENT INTENDS TO LIMIT SUCH PAYMENTS TO .30 OF 1% OF THE FUND'S DAILY NET ASSETS OF ITS CLASS A SHARES. ** SOURCE: LANA (LIPPER ANALYTICAL NEW APPLICATIONS) LIPPER ANALYTICAL SERVICES INC., IS AN INDEPENDENT MUTUAL FUNDS PERFORMANCE MONITOR. LIPPER AVERAGE DOES NOT INCLUDE SALES CHARGES, AND IF INCLUDED PERFORMANCE MAY BE LOWER AND THE FUND'S RANKINGS MAY BE DIFFERENT. 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. 38 EVERGREEN TREASURY MONEY MARKET FUND (Photo of eagle) STATEMENT OF INVESTMENTS FEBRUARY 28, 1997 (UNAUDITED)
PRINCIPAL AMOUNT (000) VALUE U.S. TREASURY BILLS -- 3.4% (COST $99,358,750) $100,000 5.130%, 4/17/97.................... $ 99,358,750 U.S. TREASURY NOTES -- 27.9% 25,000 6.125%, 3/31/97.................... 25,120,850 50,000 6.875%, 4/30/97++.................. 50,353,066 50,000 6.500%, 4/30/97++.................. 50,055,643 70,000 8.500%, 5/15/97++.................. 70,365,276 150,000 6.375%, 6/30/97++.................. 150,532,859 110,000 6.000%, 8/31/97.................... 109,999,538 135,000 5.750%, 9/30/97.................... 135,140,293 50,000 5.750%, 10/31/97................... 50,037,723 175,000 5.250% 12/31/97.................... 174,566,568 TOTAL U.S. TREASURY NOTES (COST $816,171,816)................ 816,171,816 REPURCHASE AGREEMENTS* -- 80.4% 120,000 Barclays Bank, PLC, 5.350%, dated 2/28/97, due 3/03/97 (1)................................ 120,000,000 120,000 Daiwa Securities Co., Ltd., 5.360%, dated 2/28/97, due 3/03/97 (2)................................ 120,000,000 150,000 Dean Witter Reynolds, Inc., 5.350%, dated 2/24/97, due 3/03/97 (3)................................ 150,000,000 120,000 Donaldson, Lufkin & Jenrette Securities Corp., 5.350%, dated 2/28/97, due 3/03/97 (4)................................ 120,000,000 100,000 Dresdner Bank AG, 5.350%, dated 2/24/97, due 3/03/97 (5)................................ 100,000,000 102,062 Dresdner Bank AG, 5.250%, dated 2/03/97, due 4/30/97 (6)**+............................. 102,062,500 151,500 Dresdner Bank AG, 5.330%, dated 2/04/97, due 6/30/97 (7)**+............................. 151,500,000 120,000 First Boston Corp., 5.350%, dated 2/28/97, due 3/03/97 (8)................................ 120,000,000 120,000 Goldman, Sachs Group L.P., 5.350%, dated 2/28/97, due 3/03/97 (9)................................ 120,000,000 120,000 HSBC Securities, Inc., 5.350%, dated 2/28/97, due 3/3/97 (10)............................... 120,000,000 PRINCIPAL AMOUNT (000) VALUE $130,000 Lehman Brothers Inc., 5.370%, dated 2/28/97, due 3/03/97 (11)............................... $ 130,000,000 120,000 Merrill Lynch, Pierce, Fenner & Smith, 5.350%, dated 2/28/97, due 3/03/97 (12)............................... 120,000,000 120,000 Morgan Guaranty Trust Co. of New York, 5.375%, dated 2/28/97, due 3/03/97 (13)............................... 120,000,000 120,000 Morgan Stanley Co., 5.300%, dated 2/28/97, due 3/03/97 (14)............................... 120,000,000 50,000 NationsBank, Charlotte, NC, 5.350%, dated 2/28/97, due 3/03/97 (15)............................... 50,000,000 200,000 Nikko Securities Co. International, Inc., 5.360%, dated 2/24/97, due 3/03/97 (16)............................... 200,000,000 150,000 Smith Barney Shearson, Inc., 5.280%, dated 2/20/97, due 3/06/97 (17)............................... 150,000,000 72,100 Smith Barney Shearson, Inc., 5.330%, dated 2/20/97, due 5/15/97 (18)**+............................ 72,100,000 50,000 State Street Bank & Trust Co., 5.100%, dated 2/28/97, due 3/03/97 (19)............................... 50,000,000 120,000 Union Bank Switzerland, 5.370%, dated 2/28/97, due 3/03/97 (20)............................... 120,000,000 TOTAL REPURCHASE AGREEMENTS (COST $2,355,662,500).............. 2,355,662,500
SHARES (000) MUTUAL FUND SHARES -- 2.7% (COST $79,540,717) 79,540 Fidelity U.S. Treasury, Inc. Portfolio................... 79,540,717 TOTAL INVESTMENTS -- (COST $3,350,733,783)..... 114.4% 3,350,733,783 OTHER ASSETS AND LIABILITIES -- NET........ (14.4) (422,364,779) NET ASSETS.................. 100.0% $2,928,369,004
39 EVERGREEN TREASURY MONEY MARKET FUND (Photo of eagle) STATEMENT OF INVESTMENTS -- (CONTINUED) FEBRUARY 28, 1997 (UNAUDITED) * Collateralized by: (1) $35,364,000 U.S. Treasury Notes, 6.00% to 6.50%, 12/31/97 to 5/15/05; value including accrued interest -- $35,858,189 and $78,736,000 U.S. Treasury Bonds, 6.625% to 6.875%, 8/15/25 to 2/15/27; value including accrued interest -- $77,342,181 and $39,800,000 U.S. Treasury Strips, 5/15/12 to 8/15/24; value including accrued interest -- $9,200,121. (2) $104,613,000 U.S. Treasury Bonds, 11/15/08 to 11/15/22; value including accrued interest -- $122,400,222. (3) $14,513,000 U.S. Treasury Notes, 5.875% to 8.875%, 7/31/97 to 11/15/01; value including accrued interest -- $15,532,303 and $40,149,000 U.S. Treasury Bills, 7/3/97 to 1/8/98; value including accrued interest -- $38,906,229 and $341,077,033 U.S. Treasury Strips, 5/15/97 to 8/15/26; value including accrued interest -- $98,561,942. (4) $8,010,000 U.S. Treasury Notes, 5.75%, 8/15/03; value including accrued interest -- $7,724,915 and $282,041,000 U.S. Treasury Strips, 5/15/97 to 2/15/25; value including accrued interest -- $114,675,597. (5) $500,000 U.S. Treasury Notes, 6.875%, 7/3/99; value including accrued interest -- $510,629 and $103,014,000 U.S. Treasury Bills, 3/6/97 to 6/26/97; value including accrued interest -- $101,489,538. (6) $1,715,000 U.S. Treasury Notes, 5.25%, 12/31/97; value including accrued interest -- $1,724,856 and $107,037,087 GNMA, 5.50% to 6.50%; value including accrued interest -- $102,330,270. (7) $152,875,000 U.S. Treasury Notes, 5.25% to 6.625%, 12/31/97 to 6/30/01; value including accrued interest -- $154,741,951. (8) $123,190,000 U.S. Treasury Notes, 2/28/98 to 8/15/03; value including accrued interest -- $122,646,400. (9) $137,751,000 U.S. Treasury Bills, 6.00%, 02/15/26; value including accrued interest -- $122,400,124. (10) $127,303,835 GNMA, 5.50% to 7.125%; value including interest -- $122,402,557. (11) $249,009,000 U.S. Treasury Strips, 5/15/05 to 11/15/08; value including accrued interest -- $132,602,012. (12) $60,486,000 U.S. Treasury Bills, 10.375% to 14.00%, 11/15/11 to 8/15/13; value including accrued interest -- $91,040,470 and $205,105,000 U.S. Treasury Strips, 6.00% to 8.75%, 8/15/20 to 8/15/26; value including accrued interest -- $31,364,202. (13) $123,139,000 U.S. Treasury Notes, 6.25%, 2/28/02; value including accrued interest -- $122,400,659. (14) $108,632,000 U.S. Treasury Bills, 8.125%, 8/15/19; value including accrued interest -- $123,326,067. (15) $51,000,000 U.S. Treasury Notes, 6.00%, 9/30/98; value including accrued interest -- $51,023,904. (16) $200,645,000 U.S. Treasury Notes, 5.50% to 8.75%, 6/30/97 to 12/31/00; value including accrued interest -- $204,341,172. (17) & (18) $226,089,367 GNMA, 4.50% to 8.50%, 1/1/00 to 2/20/27; value including accrued interest -- $220,209,709 and $21,771,000 U.S. Treasury Strips, 11/15/14; value including accrued interest -- $6,339,998. (19) $50,000,000 U.S. Treasury Bills, 7.50%, 11/15/16; value including accrued interest -- $49,989,386. (20) $193,243,000 U.S. Treasury Strips, 5/15/02 to 5/15/05; value including accrued interest -- $122,402,760. ** Repurchase agreements are puttable back to the issuer on no more than seven calendar days notice given by the Fund. + Represents investment of cash collateral received from securities on loan. ++ Securities on loan (See Note 3). See accompanying notes to financial statements. 40 EVERGREEN TREASURY MONEY MARKET FUND (Photo of eagle) STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1997 (UNAUDITED)
ASSETS: Investments in repurchase agreements........................................................................ $2,355,662,500 Investments in securities................................................................................... 995,071,283 Investments at value (identified cost $3,350,733,783).................................................... 3,350,733,783 Cash........................................................................................................ 28 Interest receivable......................................................................................... 14,047,611 Receivable for Fund shares sold............................................................................. 262,629 Prepaid expenses and other assets........................................................................... 79,363 Total assets.......................................................................................... 3,365,123,414 LIABILITIES: Securities on loan.......................................................................................... 326,686,987 Payable for investments purchased........................................................................... 99,358,750 Dividends payable........................................................................................... 8,210,392 Accrued expenses............................................................................................ 1,639,593 Accrued advisory fee........................................................................................ 771,366 Payable for Fund shares redeemed............................................................................ 2,393 Administration fee payable.................................................................................. 84,929 Total liabilities..................................................................................... 436,754,410 NET ASSETS..................................................................................................... $2,928,369,004 NET ASSETS CONSIST OF: Paid-in capital............................................................................................. $2,928,319,364 Accumulated net realized gain on investment transactions.................................................... 49,640 Net assets............................................................................................ $2,928,369,004 CALCULATION OF NET ASSET VALUE PER SHARE: Class A Shares ($2,298,842,953)(2,298,816,515 shares of beneficial interest outstanding)..................... $ 1.00 Class Y Shares ($629,526,051)(629,519,400 shares of beneficial interest outstanding)......................... $ 1.00
See accompanying notes to financial statements. 41 EVERGREEN TREASURY MONEY MARKET FUND (Photo of eagle) STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED) INVESTMENT INCOME: Interest..................................................................................... $87,318,975 EXPENSES: Advisory fee................................................................................. $ 5,686,866 Distribution fee -- Class A Shares........................................................... 3,745,455 Administration fee........................................................................... 723,741 Custodian fee................................................................................ 258,368 Transfer agent fee........................................................................... 75,860 Reports and notices to shareholders.......................................................... 55,295 Trustees' fees and expenses.................................................................. 28,363 Registration and filing fees................................................................. 18,433 Professional fees............................................................................ 16,914 Insurance.................................................................................... 10,514 Other........................................................................................ 11,197 10,631,006 Less advisory fee waiver..................................................................... (210,020) Net expenses.............................................................................. 10,420,986 Net investment income........................................................................... 76,897,989 Net realized gain on investments................................................................ -- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................ $76,897,989
See accompanying notes to financial statements. 42 EVERGREEN TREASURY MONEY MARKET FUND (Photo of eagle) STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED FEBRUARY 28, YEAR ENDED 1997 AUGUST 31, (UNAUDITED) 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income............................................................... $ 76,897,989 $ 121,967,383 Net realized gain (loss) on investment transactions................................. -- 161,674 Net increase in net assets resulting from operations............................. 76,897,989 122,129,057 DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A Shares...................................................................... (58,225,400) (101,441,299) Class Y Shares...................................................................... (18,672,589) (20,526,084) Total distributions to shareholders from net investment income................... (76,897,989) (121,967,383) FUND SHARE TRANSACTIONS: Proceeds from shares sold........................................................... 4,033,715,063 6,442,829,718 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......................................... 10,668,847 17,972,077 Payments for shares redeemed........................................................ (4,483,678,594) (5,974,992,600) Net increase (decrease) resulting from Fund share transactions................... (439,294,684) 1,912,241,155 Net increase (decrease) in net assets............................................ (439,294,684) 1,912,402,829 NET ASSETS: Beginning of period................................................................. 3,367,663,688 1,455,260,859 End of period....................................................................... $ 2,928,369,004 $ 3,367,663,688
See accompanying notes to financial statements. 43 EVERGREEN TREASURY MONEY MARKET FUND CLASS A SHARES (Photo of eagle) FINANCIAL HIGHLIGHTS
SIX MONTHS EIGHT ENDED MONTHS FEBRUARY 28, YEAR ENDED ENDED YEAR ENDED 1997 AUGUST 31, AUGUST 31, DECEMBER 31, (UNAUDITED) 1996 1995# 1994 1993 PER SHARE DATA: Net asset value, beginning of period.......................... $1.00 $1.00 $1.00 $1.00 $1.00 Net investment income......................................... 0.02 0.05 0.03 0.04 0.03 Less distributions to shareholders from net investment income...................................................... (0.02) (0.05) (0.03) (0.04) (0.03) Net asset value, end of period................................ $1.00 $1.00 $1.00 $1.00 $1.00 TOTAL RETURN+................................................. 2.3% 5.0% 3.6% 3.8% 2.7% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (in millions)....................... $2,299 $2,608 $1,178 $755 $261 Ratios to average net assets: Expenses**.................................................. 0.71%++ 0.69% 0.63%++ 0.50% 0.48% Net investment income**..................................... 4.66%++ 4.76% 5.30%++ 3.91% 2.70% YEAR ENDED DECEMBER 31, 1992 PER SHARE DATA: Net asset value, beginning of period.......................... $1.00 Net investment income......................................... 0.03 Less distributions to shareholders from net investment income...................................................... (0.03) Net asset value, end of period................................ $1.00 TOTAL RETURN+................................................. 3.4% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (in millions)....................... $209 Ratios to average net assets: Expenses**.................................................. 0.48% Net investment income**..................................... 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:
SIX MONTHS EIGHT ENDED MONTHS FEBRUARY 28, YEAR ENDED ENDED YEAR ENDED 1997 AUGUST 31, AUGUST 31, DECEMBER 31, (UNAUDITED) 1996 1995# 1994 1993 Expenses......................................................... 0.72%++ 0.77% 0.79%++ 0.78% 0.82% Net investment income............................................ 4.65%++ 4.68% 5.14%++ 3.63% 2.36% YEAR ENDED DECEMBER 31, 1992 Expenses......................................................... 0.82% Net investment income............................................ 2.88%
See accompanying notes to financial statements. 44 EVERGREEN TREASURY MONEY MARKET FUND CLASS Y SHARES (Photo of eagle) FINANCIAL HIGHLIGHTS
SIX MONTHS EIGHT ENDED MONTHS FEBRUARY 28, YEAR ENDED ENDED YEAR ENDED 1997 AUGUST 31, AUGUST 31, DECEMBER 31, (UNAUDITED) 1996 1995# 1994 1993 PER SHARE DATA: Net asset value, beginning of period......................... $1.00 $1.00 $1.00 $1.00 $1.00 Net investment income........................................ 0.02 0.05 0.04 0.04 0.03 Less distributions to shareholders from net investment income..................................................... (0.02) (0.05) (0.04) (0.04) (0.03) Net asset value, end of period............................... $1.00 $1.00 $1.00 $1.00 $1.00 TOTAL RETURN+................................................ 2.5% 5.3% 3.8% 4.1% 3.0% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (in millions)...................... $630 $760 $277 $163 $366 Ratios to average net assets: Expenses**................................................. 0.41%++ 0.39% 0.33%++ 0.20% 0.18% Net investment income**.................................... 4.96%++ 5.12% 5.60%++ 3.78% 3.00% YEAR ENDED DECEMBER 31, 1992 PER SHARE DATA: Net asset value, beginning of period......................... $1.00 Net investment income........................................ 0.04 Less distributions to shareholders from net investment income..................................................... (0.04) Net asset value, end of period............................... $1.00 TOTAL RETURN+................................................ 3.7% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (in millions)...................... $286 Ratios to average net assets: Expenses**................................................. 0.17% Net investment income**.................................... 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:
SIX MONTHS EIGHT ENDED MONTHS FEBRUARY 28, YEAR ENDED ENDED YEAR ENDED 1997 AUGUST 31, AUGUST 31, DECEMBER 31, (UNAUDITED) 1996 1995# 1994 1993 Expenses........................................................ 0.43%++ 0.47% 0.49%++ 0.48% 0.52% Net investment income........................................... 4.95%++ 5.04% 5.44%++ 3.50% 2.66% YEAR ENDED DECEMBER 31, 1992 Expenses........................................................ 0.52% Net investment income........................................... 3.26%
See accompanying notes to financial statements. 45 COMBINED NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 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. 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. 46 COMBINED NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 3 -- SIGNIFICANT ACCOUNTING POLICIES -- continued 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. LENDING SECURITIES -- In order to generate income and to offset expenses, the Funds may lend portfolio securities to brokers, dealers and other financial organizations. The Funds' investment adviser will monitor the creditworthiness of such borrowers. Loans of securities may not exceed 30% of a Fund's total assets and will be collateralized by cash, letters of credit or United States Government securities that are maintained at all times in an amount equal to at least 100% of the current market value of the loaned securities, including accrued interest. While such securities are on loan, the borrower will pay a Fund any income accruing thereon, and the Fund may invest the collateral in portfolio securities, thereby increasing its return. A fund will have the right to call any such loan and obtain the securities loaned at any time on five days' notice. Any gain or loss in the market price of the loaned securities which occurs during the term of the loan would affect a Fund and its investors. A Fund may pay reasonable fees in connection with such loans. At February 28, 1997, Treasury had $321,306,844 in Treasury Notes on loan and held $326,754,310 (including interest) in repurchase agreements as collateral. The average daily balance of reverse repurchase agreements outstanding during the six months ended February 28, 1997 for Treasury was $90,199,804 at a weighted average interest rate of 5.14%. The maximum amount of borrowing during the six months ended February 28, 1997 was $151,500,000. 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. 47 COMBINED NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 3 -- SIGNIFICANT ACCOUNTING POLICIES -- continued 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 elected to defer $34,087 and $9, respectively, of such capital losses from the prior fiscal year end to the current fiscal year. 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 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 six months ended February 28, 1997, First Union voluntarily waived $210,020 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 February 28, 1997, First Union voluntarily waived $54,465 of its advisory fee for Pennsylvania. First Union can modify or terminate voluntary fee waivers at any time. Pursuant to an agreement with Money Market 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 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 six months ended February 28, 1997, the expenses of Money Market and Tax Exempt did not exceed this limit. For the 48 COMBINED NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 4 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES -- continued six months ended February 28, 1997, Evergreen Asset voluntarily waived $1,255,415 and $283,470 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 for Money Market and Tax Exempt. Lieber & Company is reimbursed by Evergreen Asset at no additional expense to the Funds. ADMINISTRATION AGREEMENT -- Evergreen Asset furnished Money Market and Tax Exempt with administrative services as part of their advisory agreements and accordingly, these Funds did not pay a separate administration fee. Furman Selz LLC ("Furman Selz") was each Fund's sub-administrator through December 31, 1996. Effective January 1, 1997, the BISYS Group Inc. ("BISYS") acquired Furman Selz' mutual fund unit and accordingly, BISYS became sub-administrator for each Fund. For Money Market and Tax Exempt, the sub-administration fee is paid by Evergreen Asset and is not a fund expense. For Pennsylvania and Treasury, Evergreen Asset served as administrator and Furman Selz was each Fund's sub-administrator through December 31, 1996. Effective January 1, 1997, BISYS became sub-administrator. The administrator and sub-administrator to the Funds are each entitled an annual fee based on the average daily net assets of the Funds administered by Evergreen Asset or Evergreen Keystone Investment Services ("EKIS"), a subsidiary of First Union, for which First Union or its investment advisory subsidiaries is also the investment adviser. These fees 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 in excess of $30 billion 0.010%
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 in excess of $25 billion 0.0040%
Effective March 11, 1997, EKIS began providing the administrative services to the funds that were formerly provided by Evergreen Asset. The administrative fees are unchanged from those charged by Evergreen Asset. As sub-administrator, Furman Selz/BISYS provided the officers of the Funds. At February 28, 1997, assets for which EKIS was the administrator for which either Evergreen Asset or First Union was investment adviser totaled approximately $29 billion. State Street Bank & Trust Company ("State Street") serves as transfer agent, dividend disbursing agent and shareholder servicing agent for each of the Funds. For certain accounts, First Union has been sub-contracted by State Street to maintain shareholder sub-account records, take Fund purchase and redemption orders and answer inquiries. First Union was entitled to a monthly fee which totaled $6,782, $60, $2,019 and $1,031 for the six months ended February 28, 1997 for Money Market, Pennsylvania, Tax Exempt and Treasury, respectively. 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 . 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 49 COMBINED NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 4 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES -- continued Money Market, Tax Exempt and Treasury were voluntarily limited to .30 of 1% and for Pennsylvania were limited to .09 of 1% of average daily net assets for the six-months ended February 28, 1997. 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 Keystone Distributor, Inc. (formerly, Evergreen Funds Distributor, Inc.) ("EKD"), a wholly owned subsidiary of BISYS whereby each Fund will compensate EKD 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. EKD has entered into a Shareholder Services Agreement with First Union Brokerage Services ("FUBS"), an affiliate of First Union, whereby EKD 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 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. 50 COMBINED NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- continued Transactions in shares of beneficial interest (valued at $1.00 per share) were as follows:
SIX MONTHS ENDED YEAR ENDED FEBRUARY 28, AUGUST 31, MONEY MARKET 1997 1996 CLASS A Shares sold.................................................................................. 2,013,783,946 3,360,065,151 Shares issued from acquisition of FFB Cash Management Fund................................... -- 592,362,245 Shares issued from reinvestment of distributions............................................. 9,207,708 13,630,468 Shares redeemed.............................................................................. (1,861,861,977) (2,895,924,591) Net increase................................................................................. 161,129,677 1,070,133,273 CLASS B Shares sold.................................................................................. 6,906,195 13,107,126 Shares issued from reinvestment of distributions............................................. 184,749 307,330 Shares redeemed.............................................................................. (5,975,312) (11,123,113) Net increase................................................................................. 1,115,632 2,291,343 CLASS Y Shares sold.................................................................................. 2,317,326,138 2,902,529,372 Shares issued from acquisition of FFB Lexicon Cash Management Fund........................... -- 95,834,876 Shares issued from reinvestment of distributions............................................. 9,757,700 14,304,225 Shares redeemed.............................................................................. (2,204,927,189) (2,624,143,977) Net increase................................................................................. 122,156,649 388,524,496 Total net increase resulting from Fund share transactions.................................... 284,401,958 1,460,949,112 SIX MONTHS SIX MONTHS ENDED ENDED FEBRUARY 28, AUGUST 31, PENNSYLVANIA 1997 1996 CLASS A Shares sold.................................................................................. 46,555,951 40,205,338 Shares issued from reinvestment of distributions............................................. 83,686 35,417 Shares redeemed.............................................................................. (34,695,876) (22,377,383) Net increase................................................................................. 11,943,761 17,863,372 CLASS Y Shares sold.................................................................................. 25,271,967 21,254,692 Shares issued from reinvestment of distributions............................................. 456,320 586,491 Shares redeemed.............................................................................. (34,937,760) (56,919,288) Net decrease................................................................................. (9,209,473) (35,078,105) Total net increase (decrease) resulting from Fund share transactions......................... 2,734,288 (17,214,733)
51 COMBINED NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- continued
SIX MONTHS ENDED YEAR ENDED FEBRUARY 28, AUGUST 31, TAX EXEMPT 1997 1996 CLASS A Shares sold.................................................................................. 634,739,465 1,329,098,871 Shares issued from acquisition of FFB Tax-Free Money Market Fund............................. -- 103,102,728 Shares issued from reinvestment of distributions............................................. 1,666,950 3,435,421 Shares redeemed.............................................................................. (607,345,858) (1,330,067,450) Net increase................................................................................. 29,060,557 105,569,570 CLASS Y Shares sold.................................................................................. 631,788,024 1,243,309,865 Shares issued from reinvestment of distributions............................................. 6,466,057 12,767,571 Shares redeemed.............................................................................. (778,095,395) (1,060,731,679) Net increase (decrease)...................................................................... (139,841,314) 195,345,757 Total net increase (decrease) resulting from Fund share transactions......................... (110,780,757) 300,915,327
SIX MONTHS ENDED YEAR ENDED FEBRUARY 28, AUGUST 31, TREASURY 1997 1996 CLASS A Shares sold.................................................................................. 2,499,162,543 4,828,856,886 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............................................. 9,220,141 16,836,594 Shares redeemed.............................................................................. (2,817,240,630) (4,842,442,130) Net increase (decrease)...................................................................... (308,857,946) 1,429,721,438 CLASS Y Shares sold.................................................................................. 1,534,552,520 1,613,972,832 Shares issued from reinvestment of distributions............................................. 1,448,706 1,135,483 Shares redeemed.............................................................................. (1,666,437,964) (1,132,550,470) Net increase (decrease)...................................................................... (130,436,738) 482,557,845 Total net increase (decrease) resulting from Fund share transactions......................... (439,294,684) 1,912,279,283
NOTE 6 -- DEFERRED TRUSTEE'S FEES Each Trustee may defer any or all compensation related to performance of duties as a Trustee of the Funds. Each Trustee's deferred balances are allocated to deferral accounts which are included in the accrued expenses for each Fund. The investment performance of the deferral accounts are based on the investment performance of certain Evergreen Funds. Any gains earned or losses incurred in the deferral accounts are reported to each Fund's Trustee's fees and expenses. Trustees will 52 COMBINED NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 6 -- DEFERRED TRUSTEE'S FEES -- continued be paid either in one lump sum or in quarterly installments for up to ten years at their election, not earlier that either the year in which the Trustee ceases to be a member of the Board of Trustees or January 1, 2000. As of February 28, 1997, the value of the Trustees deferral accounts was $29,732, $3,448, $14,406, and $76,505 for Money Market, Pennsylvania, Tax Exempt and Treasury, respectively. NOTE 7 -- 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 Pennsylvania and Tax Exempt 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 8 -- LINE OF CREDIT A financing agreement was in place with all of the Evergreen Funds and State Street Bank. Under this agreement, State Street provided an unsecured line of credit facility, in the aggregate amount of $50 million, to be accessed by the Evergreen Funds for temporary or emergency purposes only and is subject to each participating Fund's borrowing restrictions. Effective October 31, 1996, a new financing agreement was put in place with all of the Evergreen Funds and State Street, Societe Generale and ABN Amro Bank N.V. (collectively, the "Banks"). Under this agreement, the Banks provided an unsecured credit facility in the aggregate amount of $225 million ($112.5 million committed and $112.5 million uncommitted) allocated evenly between the Banks. Borrowings under this facility bear interest at .75% per annum above the Federal Funds rate. A commitment fee of 0.10% per annum will be incurred on the unused portion of the committed facility which would be allocated to all participating funds. During the six months ended February 28, 1997, Tax Exempt had borrowings outstanding for 3 days under the line of credit and incurred $28,513 in interest charges related to these borrowings. The Fund's average amount of debt outstanding during the six months ended February 28, 1997 aggregated $47,400,000 at a weighted average interest rate of 7.32%. The Funds had no outstanding borrowings at February 28, 1997. 53 (This Page Left Blank Intentionally) (This Page Left Blank Intentionally) (This Page Left Blank Intentionally) 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 George O. Martinez Secretary Sheryl Hirschfeld Assistant Secretary 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 Keystone Distributor, Inc. Evergreen Keystone(SM) is a Service Mark of Evergreen Keystone Investment Services, Inc. Copyright 1997. 48465 540710 4/97 -----END PRIVACY-ENHANCED MESSAGE-----