-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, a66Ef/Gsp1rxkBm4GV1lmNu3Vp5JvEFtP6DFdWeUQDp7nVubWYHh4R2ei3c2wHhK kvizMnKDdmriUkqMAVqt6w== 0000820636-95-000005.txt : 19950509 0000820636-95-000005.hdr.sgml : 19950509 ACCESSION NUMBER: 0000820636-95-000005 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950228 FILED AS OF DATE: 19950508 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVERGREEN MUNICIPAL TRUST CENTRAL INDEX KEY: 0000836375 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: NY FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05579 FILM NUMBER: 95535258 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 SEMI ANNUAL REPORT - -------------------------------------------------------------------------------- EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND - --CALIFORNIA SEMI-ANNUAL REPORT FEBRUARY 28, 1995 The Evergreen Funds [logo] - -------------------------------------------------------------------------------- DEAR FELLOW SHAREHOLDER: We are pleased to bring you the Semi-Annual Report for Evergreen Short-Intermediate Municipal Fund- California, covering the six months ended February 28, 1995. During this period, the Fund (Class Y, no-load shares) produced a total return of 0.56%*. The Fund's average annual compounded rates of return for the one-year period and the period from inception on October 16, 1992, through February 28, 1995, were 0.89% and 4.02%, respectively. The Fund's 30-day current annualized yield (Class Y, no-load shares) as of February 28, 1995, was 4.35%, which is equivalent to a taxable yield of 7.64% for investors in the 43% combined Federal and California State tax brackets. We are happy to report that during the period under review, all the Fund's net investment income was free of Federal and California State income taxes. In an effort to moderate the pace of economic growth and restrain inflation, the Federal Reserve took seven separate steps to raise short-term interest rates since February, 1994. This move toward a neutral, as opposed to accommodative, monetary policy caused yields on fixed income securities of all maturities to move sharply higher. The increase in yields, and corresponding drop in prices, was one of the fastest on record and caused much turmoil in the U.S. fixed income markets. In 1994, as higher interest rates translated into lower bond prices, many new bond and bond fund investors who were unaccustomed to the markets' volatility began what evolved into a ten-month sell-off. In the municipal bond market, where mutual funds play an especially large role, the higher-than-usual redemptions drove many funds simultaneously to liquidate positions of their portfolios, pushing a weak market even lower and with surprising speed. Finally, breaking news stunned the market late in the year, when Orange County, California reported that the county's $7.5 billion investment fund sustained losses of approximately $1.7 billion during the year. The losses resulted from County Treasurer Robert Citron's inappropriately aggressive management strategy that combined leveraged and derivative securities. As interest rates sharply increased during the year, the securities owned by the county investment fund began to decline in value. Those losses were magnified by the investment fund's leveraged position and its inverse floaters. By the time Citron took any defensive action, the investment fund had already started to unravel. The losses affected more than just Orange County - 187 other California municipalities had money invested in the county investment fund. The demands (cash withdrawals) ultimately forced the county to file for bankruptcy on December 6. Filing for bankruptcy gave the county time to come up with a solution to its problems. While California municipal securities were hit hard, the overall municipal market rebounded from its initial decline following the bankruptcy announcement. Orange County was one of the largest bond issuers in the municipal market, so its disappearance from the market will have a significant impact on supply. - -------------------------------------------------------------------------------- FIGURES REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS. * Performance figures include reinvestment of income dividend and capital gain distributions, if any. The Fund's return, net asset value and yield will vary and there can be no guarantee that the Fund will achieve its objective or any particular tax exempt yield. Investors' shares, when redeemed, may be worth more or less than their original cost. The Fund may invest in securities, the income from which may be subject to the Federal alternative minimum tax for certain investors. Currently, the Adviser is voluntarily waiving a portion of its advisory fee. Had this fee not been waived, the Fund's 30-day annualized and tax-equivalent yields as of February 28, 1995, would have been 4.15% and 7.29% for Class Y shares and returns would have been lower. Voluntary fee waivers may be revised at any time. Tax-equivalent yield would be lower for investors in lower marginal income tax brackets. The Fund adopted a multiple class distribution program, effective January 3, 1995, to issue additional classes of shares designated as Class A and Class B. As of February 28, 1995, these Classes did not commence operations. 5/95 - -------------------------------------------------------------------------------- Although we did not own any bonds issued by Orange County or any of its municipalities at the time of bankruptcy, this financial crisis did present a buying opportunity, as Orange County issues backed by irrevocable letters of credit fell out of favor. We took advantage of the opportunity to buy issues, secured by letters of credit, at higher coupon rates than were available on comparable securities. Importantly, our credit exposure is to the bank that provides the letter of credit, not to Orange County. Going into the second half of the year, we continued to shorten duration and average weighted maturity in our attempt to protect principal. Proceeds were reinvested in high yielding short-term securities. Our current strategy is to alter the Fund's structure in anticipation of a flattening municipal yield curve. Currently, we are in the process of shifting to a "barbell" structure, which means that most of the Fund's securities will have maturities at the short and long ends of the intermediate range. We believe this barbell structure will enhance the performance of the Fund while giving us protection, should there be further turbulence in the market. With higher interest rates, new-issue volume has slowed significantly over the past year. In addition, we expect that many investors will be searching for tax-free replacements as their older, higher coupon bonds are called for redemption in the coming months. The resulting supply/demand imbalance should be positive for the municipal bond market. We appreciate your continued confidence in Evergreen Short-Intermediate Municipal Fund-California as we look forward to a more prosperous 1995. Sincerely, /s/Stephen A. Lieber /s/Steven C. Shachat Stephen A. Lieber Steven C. Shachat Chairman Portfolio Manager Evergreen Asset Management Corp. March 22, 1995 - -------------------------------------------------------------------------------- EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND--CALIFORNIA STATEMENT OF INVESTMENTS FEBRUARY 28, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- PRINCIPAL AMOUNT (000) ISSUE VALUE - -------------------------------------------------------------------------------- LONG-TERM INVESTMENTS--83.2% - -------------------------------------------------------------------------------- $1,200 Alameda County Transportation $1,202,700 Authority Sales Tax (Limited Tax) Series 1992-RB (FGIC Insured) 5.00% Due 05/01/98 - -------------------------------------------------------------------------------- 1,000 Burbank-Glendale-Pasadena Airport 1,001,990 Authority Airport Series 1992-RRB (AMBAC Insured) 5.00% Due 06/01/98 - -------------------------------------------------------------------------------- California Housing Finance Agency Multi-Unit Rental Housing 1992 Series A-RB 310 4.70% Due 02/01/96 308,493 325 5.00% Due 02/01/97 323,222 320 5.25% Due 02/01/98 317,850 - -------------------------------------------------------------------------------- 500 California Statewide Communities 499,830 Development Authority (Sutter Obligated Group)-COP (AMBAC Insured) 5.00% Due 08/15/98 - -------------------------------------------------------------------------------- 490 California Various Purpose Bonds-GO 490,912 5.00% Due 09/01/97 - -------------------------------------------------------------------------------- 320 Chino Unified School District 322,602 San Bernardino County 1975 Series 3-GO 5.25% Due 02/01/97 - -------------------------------------------------------------------------------- City of Beverly Hills (1992 Refunding Project)-COP 250 4.70% Due 06/01/97 247,555 300 4.90% Due 06/01/98 297,396 - -------------------------------------------------------------------------------- 980 City of Burbank Public Service 1,006,656 Department of Electric and Water 1992 Series A-RB (AMBAC Insured) 6.10% Due 06/01/97 - -------------------------------------------------------------------------------- 200 City of Los Angeles Department of 201,272 Water and Power Electric Plant, Issue of 1977-RRB 5.10% Due 12/15/95 - -------------------------------------------------------------------------------- 1,090 City of Los Angeles Judgment 1,074,195 Obligation Bonds Series 1992-A 5.00% Due 08/01/00 - -------------------------------------------------------------------------------- 565 City of Santa Rosa (Sonoma County) 568,062 Wastewater Service Facilities District 1992 Refunding Improvement Bonds (AMBAC Insured) 5.10% Due 07/02/98 - -------------------------------------------------------------------------------- 650 City of Santa Rosa (Sonoma County) 653,718 Wastewater 1992 Series B-RRB (FGIC Insured) 5.10% Due 09/01/98 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PRINCIPAL AMOUNT (000) ISSUE VALUE - -------------------------------------------------------------------------------- $1,100 City of Vallejo (Water Improvement $1,138,269 Project) 1992 Series B-RB (FGIC Insured) 6.00% Due 11/01/98 - -------------------------------------------------------------------------------- 475 County of Los Angeles (1993 Disney 472,649 Parking Project)-COP 5.25% Due 03/01/98 - -------------------------------------------------------------------------------- 685 County of San Bernardino (West Valley 761,206 Detention Center Project)-COP Prerefunded @ $102 7.70% Due 11/01/98 - -------------------------------------------------------------------------------- 1,000 Los Angeles Building Authority Lease 1,013,300 (State of California Department of General Services Lease) 1988 Series A-RB 6.25% Due 03/01/96 - -------------------------------------------------------------------------------- 1,250 Los Angeles County Transportation 1,248,475 Commission Proposition C Sales Tax Senior Series 1992 A-RB (MBIA Insured) 4.75% Due 07/01/96 - -------------------------------------------------------------------------------- 585 Northern California Power Agency 594,787 Geothermal Project Number 3 1987 Series A-RRB 6.20% Due 07/01/96 - -------------------------------------------------------------------------------- 1,200 Pasadena Community Development 1,193,928 Commission Multifamily Housing (Civic Center West Project) Series B-RB (FSA Insured) 5.00% Due 12/01/96 - -------------------------------------------------------------------------------- 450 Pico Rivera Public Financing 461,561 Authority 1992 (Water Enterprise Project) Series A-RRB (MBIA Insured) 5.70% Due 12/01/98 - -------------------------------------------------------------------------------- Rim of the World Unified School District 1992 (Measure V Capital Project)-COP (AMBAC Insured) 500 5.10% Due 09/01/97 503,615 500 5.25% Due 09/01/98 505,090 - -------------------------------------------------------------------------------- 1,000 Sacramento Municipal Utility 1,083,260 District Electric Series V-RB Prerefunded @ $100 7.50% Due 08/15/98 - -------------------------------------------------------------------------------- 575 San Diego Unified School District 586,126 Series B-COP 5.90% Due 07/01/97 - -------------------------------------------------------------------------------- 250 San Francisco Bay Area Rapid 261,305 Transit District Sales Tax Revenue Notes Series 1993 6.50% Due 07/01/98 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND--CALIFORNIA STATEMENT OF INVESTMENTS (CONTINUED) FEBRUARY 28, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- PRINCIPAL AMOUNT (000) ISSUE VALUE - -------------------------------------------------------------------------------- LONG-TERM INVESTMENTS--(CONTINUED) - -------------------------------------------------------------------------------- $ 785 San Francisco City & County Sewer $ 849,723 Series B-RB Prerefunded @ $101.50 (AMBAC Insured) 7.60% Due 10/01/97 - -------------------------------------------------------------------------------- 300 Sunnyvale Financing Authority Utility 301,740 Revenue (Solid Waste Materials Recovery and Transfer Station) 1992 Series B-RB (MBIA Insured) 5.10% Due 10/01/98 - -------------------------------------------------------------------------------- TOTAL LONG-TERM INVESTMENTS (COST $19,460,759) 19,491,487 - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENTS--15.8% - -------------------------------------------------------------------------------- 200 California Statewide Communities 200,000 Development Authority Industrial Development (South Bay Circuits) Series 1990-RB (LOC: Bank of Tokyo) 4.45%-VRDN - -------------------------------------------------------------------------------- 200 County of Orange (Office and Courthouse 200,000 Projects) Series 1985 Refunding-COP (LOC: The Dai-Ichi Kangyo Bank, Ltd.) 4.15%-VRDN - -------------------------------------------------------------------------------- 1,100 County of Orange Unit Priced 1,100,000 Apartment Development RB Issue I of 1985 (The Irvine Co.) (LOC: Dai-Ichi Kangyo Bank, Ltd.) 4.75%--TECP - -------------------------------------------------------------------------------- 1,100 Housing Authority of the City of 1,100,000 Santa Ana (Vintage Apartments Project) 1986 Series A-RB (LOC: The Tokai Bank, Ltd.) 4.95%-VRDN - -------------------------------------------------------------------------------- 1,100 Irvine Ranch Water District, 1,100,000 Consolidated Refunding Series 1993A-GO (LOC: Bank of America National Trust and Savings Association) 4.20%-VRDN - -------------------------------------------------------------------------------- TOTAL SHORT-TERM INVESTMENTS (COST $3,700,000) 3,700,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENTS (COST $23,160,759) 99.0% 23,191,487 OTHER ASSETS AND LIABILITIES-NET 1.0 234,059 - -------------------------------------------------------------------------------- NET ASSETS 100.0% $23,425,546 ================================================================================ SUMMARY OF ABBREVIATIONS AMBAC--American Municipal Bond Assurance Corp. COP--Certificates of Participation FGIC--Financial Guaranty Insurance Co. FSA--Financial Security Assurance Inc. GO--General Obligations LOC--Letter of Credit MBIA--Municipal Bond Investors Assurance RB--Revenue Bonds RRB--Refunding Revenue Bonds TECP--Tax Exempt Commercial Paper VRDN--Variable Rate Demand Notes are payable on demand at par 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 or weekly depending upon the terms of the security. The interest rates presented for these securities are those in effect at February 28, 1995. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS: Investments at value (cost $23,160,759) $23,191,487 Cash 2,908 Interest receivable 310,673 Receivable for Fund shares sold 4,458 Prepaid expenses 1,433 - -------------------------------------------------------------------------------- Total assets 23,510,959 - -------------------------------------------------------------------------------- LIABILITIES: Payable for Fund shares repurchased 39,685 Accrued expenses 31,308 Accrued advisory fee 6,278 Dividend payable in cash 8,142 - -------------------------------------------------------------------------------- Total liabilities 85,413 - -------------------------------------------------------------------------------- NET ASSETS: Paid-in capital 23,840,066 Accumulated net realized loss on investment transactions (445,248) Net unrealized appreciation of investments 30,728 - -------------------------------------------------------------------------------- Net assets $23,425,546 ================================================================================ CALCULATION OF MAXIMUM OFFERING PRICE: CLASS A SHARES Net asset value per share ($9.91/1 share of beneficial interest issued and outstanding) $ 9.91 Sales charge--4.75% of public offering price .49 - -------------------------------------------------------------------------------- Maximum offering price $10.40 ======= CLASS B SHARES Net asset value and offering price per share ($9.91/1 share of beneficial interest issued and outstanding) $ 9.91 ======= CLASS Y SHARES Net asset value and offering price per share ($23,425,526/2,363,834 shares of beneficial interest issued and outstanding) $ 9.91 ======= - -------------------------------------------------------------------------------- See accompanying notes to financial statements. - -------------------------------------------------------------------------------- EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 28, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME: Interest and discount earned $ 648,875 EXPENSES: Advisory fee $ 72,267 Custodian fee 22,251 Professional fees 16,953 Transfer agent fee 7,590 Trustees' fees and expenses 4,298 Insurance 3,455 Reports and notices to shareholders 2,262 Registration and filing fees 934 Other 70 -- 130,080 Less: Advisory fee waiver (26,280) ------- Total expenses 103,800 - -------------------------------------------------------------------------------------------------------------------- Net investment income 545,075 - -------------------------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS: Net realized loss on investments (445,211) Net decrease in unrealized appreciation of investments (49,847) - -------------------------------------------------------------------------------------------------------------------- Net loss on investments (495,058) - -------------------------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 50,017 ====================================================================================================================
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED FEBRUARY 28, 1995 YEAR ENDED (UNAUDITED) AUGUST 31, 1994 - ------------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income $ 545,075 $ 1,256,000 Net realized gain (loss) on investments (445,211) 97,167 Net decrease in unrealized appreciation of investments (49,847) (823,736) - ----------------------------------------------------------------------------------------------------------------- Net increase resulting from operations 50,017 529,431 - ----------------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income--Class Y shares (545,075) (1,256,000) Net realized gains on investments--Class Y shares (77,111) (22,749) - ------------------------------------------------------------------------------------------------------------------ Total distributions to shareholders (622,186) (1,278,749) - ----------------------------------------------------------------------------------------------------------------- FUND SHARE TRANSACTIONS (NOTE 8): Net decrease resulting from Fund share transactions (4,435,320) (953,150) - ----------------------------------------------------------------------------------------------------------------- Net decrease in net assets (5,007,489) (1,702,468) NET ASSETS: Beginning of year 28,433,035 30,135,503 - ----------------------------------------------------------------------------------------------------------------- End of period $23,425,546 $28,433,035 =================================================================================================================
See accompanying notes to financial statements. - -------------------------------------------------------------------------------- EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND--CALIFORNIA NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 1--ORGANIZATION The Evergreen Short-Intermediate Municipal Fund--California (the "Fund"), is a portfolio of the Evergreen Municipal Trust (the "Trust"). The Trust was organized in the Commonwealth of Massachusetts as a Massachusetts business trust on July 13, 1988. The Fund is registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end diversified management investment company. The Fund commenced investment operations on November 2, 1988. NOTE 2--APPROVAL AND ISSUANCE OF MULTIPLE CLASSES OF SHARES On December 13, 1994, the Fund's shareholders, among other things, approved amendments to the Declaration of Trust to permit the issuance of additional classes of shares. On December 27, 1994, the Securities and Exchange Commission approved the application to issue additional classes of shares. In connection with the adoption of the multiple class distribution program, the Trustees have designated the existing shares of the Fund as Class Y (no load) shares and have created two new classes of shares designated Class A and Class B shares. Class A shares are offered with a front-end sales charge of 4.75% which will be reduced on purchases in excess of $100,000. Class B shares are offered with a contingent deferred sales charge payable when shares are redeemed which would decline from 5% to zero over a seven year period. All three classes of shares have identical voting, dividend, liquidation and other rights, except that certain classes bear distribution expenses (see note 5) and have exclusive voting rights with respect to its distribution plan. Through February 28, 1995, there were no transactions in Class A and Class B shares other than the purchase of one share in each class at a purchase price of $9.78, on December 30, 1994, by Stephen A. Lieber, the Chairman of Evergreen Asset Management Corp. (the "Adviser"). NOTE 3--SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. SECURITY VALUATION--Portfolio securities (other than short-term obligations purchased with a remaining maturity of 60 days or less) are valued on the basis of valuations provided by a pricing service when such prices are believed to reflect the fair value of such securities. Short-term obligations, when purchased with a remaining maturity of 60 days or less, are valued at amortized cost, which approximates market value. SECURITIES TRANSACTIONS AND INVESTMENT INCOME--Securities transactions are recorded on the trade date (the date the order to buy or sell is executed). Interest income, including the amortization of discount and premium, is recognized on the accrual basis. DISTRIBUTIONS TO SHAREHOLDERS--The Fund declares substantially all of its net investment income as dividends each business day to shareholders of record. At the end of each month, such dividends are either reinvested in Fund shares and credited to the shareholder's account or, if elected by the shareholder, paid in cash. Distributions of net realized capital gains (if any) will be made at least annually. FEDERAL INCOME TAX--It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable and other income to its shareholders. Therefore, no Federal income tax provision is required. OTHER--Expenses incurred directly by the Fund in connection with its operations are charged to the Fund. Expenses common to the Trust as a whole, - -------------------------------------------------------------------------------- including the compensation of all non-affiliated trustees of the Trust, are primarily allocated to the funds in the Trust in proportion to net assets. NOTE 4--ADVISORY FEE AND RELATED PARTY TRANSACTIONS The Adviser, an affiliate of Lieber & Company, is the investment adviser to the Fund and also furnishes the Fund with administrative services. The Adviser, which is an indirect, wholly-owned subsidiary of First Union Corporation, succeeded on June 30, 1994 to the advisory business of the same name, but under different ownership. The Adviser is entitled to a fee, accrued daily and payable monthly, for the performance of its services at the annual rate of .55 of 1% of the daily net assets. For the six months ended February 28, 1995, the Adviser voluntarily waived a portion of its advisory fee. The Adviser may, at its discretion revise or cease this voluntary advisory fee waiver at any time. The Adviser has agreed to reimburse the Fund to the extent that the Fund's aggregate annual operating expenses (including the Adviser's fee but excluding interest, taxes, brokerage commissions, 12b-1 distribution and shareholder service fees and extra-ordinary expenses) exceed 1.00% of its average daily net assets for any fiscal year. The expenses of the Fund for the six months ended February 28, 1995, did not exceed this limit. Lieber & Company is the investment sub-adviser to the Fund. Lieber & Company is reimbursed by the Adviser, at no additional expense to the Fund, for its cost of providing investment advisory services to the Adviser. NOTE 5--DISTRIBUTION AND SHAREHOLDER SERVICES FEE The Fund has adopted for each of its Class A and Class B shares, a Distribution Plan (the "Plans") pursuant to Rule 12b-1 under the Act. Under the terms of the Plans, the Fund may incur, upon commencement of distribution of these classes, distribution-related and shareholder servicing-related expenses which may not exceed, as a percentage of average daily net assets on an annual basis, .75 of 1% for Class A shares and 1% for Class B shares. The payments under the Class A Plan will be voluntarily limited to .10 of 1%. In connection with the Plans, the Fund has entered into a distribution agreement with Evergreen Funds Distributor, Inc. NOTE 6--PORTFOLIO TRANSACTIONS Cost of purchases and proceeds from sales of investments, other than short-term obligations, aggregated $3,114,620 and $8,190,025, respectively, for the six months ended February 28, 1995. The aggregate cost of investments owned at February 28, 1995 is the same for financial statement and Federal income tax purposes. Gross unrealized appreciation and depreciation of securities at February 28, 1995, was $94,609 and $63,881, respectively, resulting in net unrealized appreciation for Federal income tax purposes of $30,728. NOTE 7--CONCENTRATION OF CREDIT RISK The Fund invests in obligations issued by the State of California and by its political subdivisions and duly constituted authorities. The issuers' abilities to meet their obligations may be affected by economic and political developments in the State of California. Certain debt obligations held in the Fund's portfolio may be entitled to the benefit of standby letters of credit or other guarantees of banks or other financial institutions. At February 28, 1995, the Fund held $1.3 million (5.5% of net assets) in Orange County obligations which have the benefit of standby letters of credit. - -------------------------------------------------------------------------------- EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND--CALIFORNIA NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) NOTE 8--SHARES OF BENEFICIAL INTEREST There is an unlimited number of $.0001 par value shares of beneficial interest authorized, divided into three classes, designated Class A, Class B and Class Y. Transactions in shares of beneficial interest were as follows: SIX MONTHS ENDED FEBRUARY 28, 1995 - -------------------------------------------------------------------------------- SHARES DOLLARS - -------------------------------------------------------------------------------- CLASS A* Shares sold 1 $10 ================================================================================ CLASS B* Shares sold 1 $10 ================================================================================ CLASS Y Shares sold 490,595 $ 4,872,824 Shares issued on reinvestment of distributions 56,055 552,385 Shares redeemed (999,368) (9,860,529) - -------------------------------------------------------------------------------- Net decrease (452,718) $(4,435,320) ================================================================================ Total net decrease resulting from Fund share transactions (452,716) $(4,435,300) ================================================================================ YEAR ENDED AUGUST 31, 1994 - -------------------------------------------------------------------------------- SHARES DOLLARS - -------------------------------------------------------------------------------- CLASS Y Shares sold 1,453,754 $ 14,927,525 Shares issued on reinvestment of distributions 114,214 1,169,051 Shares redeemed (1,666,477) (17,049,726) - -------------------------------------------------------------------------------- Net decrease resulting from Fund share transactions (98,509) $ (953,150) ================================================================================ * For Class A and Class B, the Fund share transaction activity reflects the initial purchase of one share in each class on December 30, 1994. Through February 28, 1995 there were no further transactions. - -------------------------------------------------------------------------------- EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND--CALIFORNIA FINANCIAL HIGHLIGHTS CLASS Y SHARES
SIX MONTHS ENDED YEAR ENDED AUGUST 31, FEBRUARY 28, 1995 PER SHARE DATA (UNAUDITED) 1994 1993 1992+ 1991+ 1990+ - ------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of year $10.09 $10.34 $10.00 $10.00 $10.00 $10.00 - ------------------------------------------------------------------------------------------------------------------- Income (loss) from investment operations: Net investment income .20 .43 .41 .33 .47 .55 Net realized and unrealized gain (loss) on investments (.15) (.24) .34 -- -- -- - ------------------------------------------------------------------------------------------------------------------- Total income from investment operations .05 .19 .75 .33 .47 .55 - ------------------------------------------------------------------------------------------------------------------- Less distributions to shareholders from: Net investment income (.20) (.43) (.41) (.33) (.47) (.55) Net realized gains (.03) (.01) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------- Total distributions (.23) (.44) (.41) (.33) (.47) (.55) - ------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $9.91 $10.09 $10.34 $10.00 $10.00 $10.00 =================================================================================================================== TOTAL RETURN .6%++ 1.8% 7.6% 3.4% 4.8% 5.7% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted) $23,426 $28,433 $30,136 $34,452 $42,022 $37,291 Ratios to average net assets: Expenses .79%* .52% .30% .40% .37% .29% Net investment income 4.15%* 4.20% 3.96% 3.36% 4.66% 5.52% Voluntary advisory fee waiver (a) .20%* .43% .52% .44% .45% .51% Voluntary expense reimbursement (a) -- -- .16% -- .03% .08% Portfolio turnover rate 13% 12% 37% -- -- -- ===================================================================================================================
* Annualized + On October 16, 1992, the Fund was converted to a short-intermediate municipal fund with a fluctuating net asset value per share from a money market fund with a stable net asset value per share. The shares outstanding and the related per share data for the fiscal years ended August 31, 1990 through August 31, 1992 are restated to reflect the 1 for 10 reverse share split on October 21, 1992. Total return calculated after October 16, 1992 reflects the fluctuation in net asset value per share. ++ Total return calculated for the six months ended February 28, 1995 is not annualized. (a) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. See accompanying notes to financial statements. - -------------------------------------------------------------------------------- TRUSTEES Laurence B. Ashkin Foster Bam James S. Howell Robert J. Jeffries Gerald M. McDonnell Thomas L. McVerry William Walt Pettit Russell A. Salton, III, M.D. Michael S. Scofield INVESTMENT ADVISER Evergreen Asset Management Corp. 2500 Westchester Avenue Purchase, New York 10577 CUSTODIAN & TRANSFER AGENT State Street Bank and Trust Company LEGAL COUNSEL Shereff, Friedman, Hoffman & Goodman INDEPENDENT ACCOUNTANTS Price Waterhouse LLP DISTRIBUTOR Evergreen Funds Distributor, Inc. The investment adviser to the Evergreen Funds is Evergreen Asset Management Corp., which is wholly- owned by First Union National Bank of North Carolina. Investments in the Evergreen Funds are not endorsed or guaranteed by First Union, are not deposits or other obligations of First Union, are not insured or otherwise protected by the U.S. Government, the FDIC or any other government agency, and involve investment risks, including possible loss of principal. The Evergreen Funds are sponsored and distributed by Evergreen Funds Distributor, Inc., which is independent of Evergreen and First Union. EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND--CALIFORNIA 2500 Westchester Avenue Purchase, New York 10577 -----END PRIVACY-ENHANCED MESSAGE-----