-----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, en1CnQ1nniFF3Q3kIwHhWarEdoJEfeMfmuwWrxfWWFZBJREfqreY5cJMAMUrhbGW loZHNEGBDgwG7ys5G027gQ== 0000950168-95-000757.txt : 19950830 0000950168-95-000757.hdr.sgml : 19950830 ACCESSION NUMBER: 0000950168-95-000757 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950829 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: 95568696 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: FIRST UNION FUNDS/ 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: 95568697 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 HIGH GRADE TAX FREE PORT DATE OF NAME CHANGE: 19940519 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION FUNDS DATE OF NAME CHANGE: 19921230 FORMER COMPANY: FORMER CONFORMED NAME: SALEM FUNDS DATE OF NAME CHANGE: 19920703 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: 95568698 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 N30D #82264.1 EVERGREEN TREASURY MONEY MARKET FUND (FORMERLY FIRST UNION TREASURY MONEY MARKET PORTFOLIO) TABLE OF CONTENTS President's Message....................................................... 1 A Review of 1st Half and Prospects for Remainder of 1995....................................... 2 TREASURY MONEY MARKET FUND A Report From Your Portfolio Manager...................................... 4 (Photo of Treasure Chest) Statement of Investments.................................................. 5 Statement of Assets and Liabilities....................................... 6 Statement of Operations................................................... 7 Statement of Changes in Net Assets........................................ 8 Financial Highlights...................................................... 9 Notes to Financial Statements............................................. 10 Trustees and Officers..................................................... IBC
EVERGREEN TREASURY MONEY MARKET FUND (FORMERLY FIRST UNION TREASURY MONEY MARKET PORTFOLIO) PRESIDENT'S MESSAGE BY JOHN J. PILEGGI Dear Valued Shareholder: I am pleased to present you with the Semi-Annual (Photo of Report for the Evergreen Treasury Money Market Fund John J. Pileggi) (formerly the First Union Treasury Money Market Portfolio) for the six-month period ended June 30, 1995. This Report contains complete financial information -- including the Investment Review and Statement of Investments. As you can see, this Report features our new family of the Evergreen Funds. This is the result of the First Union Funds combining with and taking the name of the Evergreen Funds effective July 7, 1995. In addition, we have completed the acquisition of the ABT Funds, which added two new funds to our expanding fund family, Florida High Income Municipal Bond and Aggressive Growth funds. The Evergreen Family of Funds now consists of more than 30 funds, each carefully designed to help meet specific objectives. We are excited about the creation of one COMBINED fund family, since it offers our shareholders a wider range of mutual fund options to help achieve a broad spectrum of investment needs. The combination of funds and the acquisition of two new funds provides you with the following benefits: (Bullet) a wider array of fund options, many with outstanding track records (Bullet) free exchanges among all funds* (Bullet) the investment expertise of two experienced investment advisors -- Evergreen Asset Management Corp. and First Union National Bank of North Carolina's Capital Management Group If you wish to receive more complete information about any of the Evergreen Funds, please call 1-800-807-2940 to speak with a First Union Brokerage Services' registered representative. We'll be glad to send you a prospectus describing the fund choices and their objectives, fees and expenses. Please read the prospectus carefully before you invest or send money. I hope you're pleased with the recent growth we have experienced, and the opportunities this growth affords you. As always, we welcome any questions, comments, and suggestions you may have. We look forward to serving your investment needs in the months and years to come. Sincerely, (Signature of John J. Pileggi) August 15, 1995 * EXCHANGES MUST BE WITHIN THE SAME CLASS OF SHARES. SHARE EXCHANGES ARE SUBJECT TO CERTAIN LIMITATIONS DESCRIBED IN THE PROSPECTUS. 1 EVERGREEN TREASURY MONEY MARKET FUND (FORMERLY FIRST UNION TREASURY MONEY MARKET PORTFOLIO) SOFT LANDING OR PERFECT LANDING? REVIEW OF 1ST HALF AND PROSPECTS FOR REMAINDER OF 1995 BY DICK WAGONER, CHIEF INVESTMENT OFFICER In our last report we stated, "In our view, the (Photo of investment climate for 1995 is improving," and we looked Dick Wagoner) for much improved investment returns. The basis for our optimism was our belief that the Federal Reserve's interest rate increases, designed to slow the economy and pre-empt inflation, were, in fact, going to be effective and would permit the economy to come in for a "soft landing" after a period of rapid growth in 1994. In addition to the Fed's actions, we believed then as we believe now that several powerful secular forces -- including global competition, demographics and significant productivity gains -- are working to keep inflation in check longer-term. Current evidence confirms our view of moderating economic growth in 1995. Leading economic indicators have fallen 4 out of 5 consecutive months and are likely to fall again. Industrial production and capacity utilization have also begun to moderate. Further confirming a slowdown were the back-to-back rises in unemployment claims in April and May, the first such occurrence in over three years. These increases along with rising inventories and sluggish retail sales assure that slower economic growth is at hand for the remainder of the year. WHILE WE CONTINUE TO BE OPTIMISTIC ABOUT THE INVESTMENT OUTLOOK FOR 1995, WE BELIEVE THE MARKETS MAY BE GETTING AHEAD OF THEMSELVES IN ANTICIPATION OF A "PERFECT LANDING." STANDING OVATION FROM WALL STREET As the economy began to slow, interest rates fell and the markets responded with a standing ovation to the prospects of a "soft landing" -- perhaps even anticipating a "perfect landing" in the economy. For the six months ended June 30, 1995, the S&P 500 Reinvested Index* was up over 20% and the Lehman Brothers Intermediate Bond Index** was up over 9%. An increasing number of investors believe the transition to a slow growth, low inflation economy will be smooth -- providing a highly favorable investment climate. While we continue to be optimistic about the investment outlook for 1995, we believe the markets may be getting ahead of themselves in anticipation of a "perfect landing" rather than a slowdown which is likely to be characterized by modestly higher inflation, a choppy and subdued pattern of economic growth, and less favorable corporate earnings comparisons. BOND MARKETS POST NEAR-RECORD RETURNS Once it became clear that inflation would be constrained by slower growth, bond markets reacted forcefully. Yields on 10-year Treasury notes plummeted 1.5% during the half which provided total returns in excess of 15%. This yield decline provided bonds with their fourth strongest half-year returns on record. Strong performances from the Treasury and Corporate bond sectors led the taxable market's charge toward lower yields. Buoyed by strong corporate earnings and improved credit quality, corporate bonds outpaced all taxable bond sectors for the half. By June, however, increased concern about slowing economic growth gave pause to their outperformance. * THE S&P 500 IS A REINVESTED UNMANAGED COMPOSITE INDEX OF 425 INDUSTRIAL, 20 TRANSPORTATION, AND 55 PUBLIC UTILITY COMMON STOCKS. ** UNMANAGED INDICES OF SELECTED SECURITIES. 2 EVERGREEN TREASURY MONEY MARKET FUND (FORMERLY FIRST UNION TREASURY MONEY MARKET PORTFOLIO) REVIEW OF 1ST HALF AND PROSPECTS FOR REMAINDER OF 1995 -- (CONTINUED) SHORT-TERM RATES DECLINE MODESTLY While intermediate and long-term interest rates declined substantially during the first half, reflecting the prospects for slower growth and constrained inflation, short-term rates held relatively stable. Beginning the year, 90-day Treasury bills were yielding 5.83%, and by June 30th they had declined to 5.60%. SECOND HALF OUTLOOK The investment climate for the balance of 1995 is likely to require a more cautious stance on the part of investors. The first half of the year witnessed a rapid run-up in equity prices, powered by declining interest rates and improved corporate profit performance. Interest rate declines reflected the moderation in economic growth brought on by the Federal Reserve's actions in 1994 to slow the forward momentum of the economy and relieve potential inflationary pressures. By mid-year 1995, tangible evidence was available to indicate that those policies had been successful, and the Fed signaled a moderation of its stance. This indicates further that substantial interest rate declines from current levels are less likely, removing one of the driving forces behind higher stock prices. Unexpectedly, strong earnings were an additional factor in lifting stock prices. For the balance of 1995 and into 1996, we believe profit comparisons will be less robust related to the moderation in the economy and more difficult year-over-year comparisons. In the absence of a further slowdown in the economy, profits should continue to grow, but at a more measured pace. Valuations on stocks are high reflecting the aforementioned variables. While this in and of itself is not a reason for stocks to fall, it indicates that a reasonable degree of caution is appropriate. At this point, it appears that the economic recovery is intact and that inflation is under control. U.S. manufacturing competitiveness is high related to corporate restructuring and the level of the dollar in world markets. Productivity gains have had a powerful impact on our ability to keep inflation under control. Business capital spending remains high, which bodes well for a continuation of these trends. Nonetheless, we are approaching the sixth year of the economic recovery and one must be more cognizant of risks to the outlook, given that we are in the mature phase. The fixed income markets have also reached levels where further reductions will be more moderate and will require further evidence that the economy is not going to repeat its strong second half performance of 1994. We believe that interest rates may move upward moderately (7% bond yield) as economic data reflects more growth after three months of very weak growth. However, we do not expect a recurrence of 4% plus growth, and we believe interest rates will decline. Actions on the political front may be the wildcard looking forward. Over the next 18 months, the issues of tax reform, deficit reduction and Presidential election politics will all be on the front pages. Positive action on the deficit could have very positive implications for the financial markets. 3 EVERGREEN TREASURY MONEY MARKET FUND (FORMERLY FIRST UNION TREASURY MONEY MARKET PORTFOLIO) (Photo of Treasure Chest) A REPORT FROM YOUR PORTFOLIO MANAGER BY KELLIE ALLEN After a sharp rise in the Federal Fund's* rate from (Photo of February 1994 through February 1995, it seems the Federal Kellie Allen) Reserve has accomplished what it set out to do -- put the brakes on the economy. The Federal Fund's rate was maintained at 6.00% since the last increase in February, until early July, when it was reduced by 0.25%. This move clearly signalled that the Fed was beginning to move toward a more accommodative mode and was attempting to avoid any further economic slowdown. In this environment, the relationship between the Fed Funds rate (and other short-term rates) and the 3 year treasury yield is inverted (short-term interest rates are higher than the longer-term 3-year rates). This "inverted yield curve" is due to the fact that the Fed has not yet lowered interest rates, while the rest of the market has reacted to the weak economic data. To take advantage of the higher yields available in shorter maturity instruments, our strategy has been to concentrate investments on the shorter end of our typical operating range. We utilize a barbell approach in the portfolio (i.e., the portfolio is composed of 26% U.S. treasuries with maturities of six months to one year and 71% overnight repurchase agreements). The weighted average maturity of the Fund at the end of the second quarter was 44 days. * THE FEDERAL FUND'S RATE IS THE RATE OF INTEREST ON OVERNIGHT LOANS OF EXCESS RESERVES AMONG COMMERCIAL BANKS. 4 EVERGREEN TREASURY MONEY MARKET FUND (FORMERLY FIRST UNION TREASURY MONEY MARKET PORTFOLIO) STATEMENT OF INVESTMENTS JUNE 30, 1995 (Photo of Treasure Chest) (UNAUDITED)
PRINCIPAL AMOUNT VALUE U.S. TREASURY NOTES -- 25.9% $ 75,000,000 4.25%, 7/31/95............... $ 74,875,544 30,000,000 4.625%, 8/15/95.............. 29,937,059 50,000,000 4.625%, 2/29/96.............. 49,498,184 40,000,000 7.375%, 5/15/96.............. 40,536,330 25,000,000 8.50%, 11/15/95.............. 25,182,633 25,000,000 8.875%, 2/15/96.............. 25,439,307 85,000,000 9.25%, 1/15/95............... 86,213,625 20,000,000 10.50%, 8/15/95.............. 20,096,917 TOTAL U.S. TREASURY NOTES................... 351,779,599 *REPURCHASE AGREEMENTS -- 71.3% 60,000,000 Barclays Bank PLC, 5.90%, dated 6/30/95, due 7/5/95.... 60,000,000 60,000,000 Dean Witter Reynolds, Inc., 6.00%, dated 6/30/95, due 7/5/95................... 60,000,000 50,045,000 Donaldson, Lufkin & Jenrette Securities Corp., 6.00%, dated 6/30/95, due 7/3/95.... 50,045,000 60,000,000 First Boston Corp. 5.95%, dated 6/30/95, due 7/3/95.... 60,000,000 100,000,000 Fuji Securities, Inc., 6.05%, dated 6/26/95, due 7/5/95.... 100,000,000 60,000,000 Goldman, Sachs & Co., 5.95%, dated 6/30/95, due 7/5/95.... 60,000,000 60,000,000 HSBC Securities, Inc., 5.90%, dated 6/30/95, due 7/5/95.... 60,000,000 60,000,000 Merrill Lynch, Pierce, Fenner & Smith, 5.75%, dated 6/30/95, due 7/5/95.......... 60,000,000 PRINCIPAL AMOUNT VALUE *REPURCHASE AGREEMENTS -- CONTINUED $ 100,000,000 Morgan Guaranty Trust Co. of New York, 6.00%, dated 6/26/95, due 7/5/95.......... $ 100,000,000 100,000,000 NationsBank, 6.18%, dated 6/30/95, due 7/5/95.......... 100,000,000 100,000,000 Nikko Securities Co. International, Inc., 5.61%, dated 6/26/95, due 7/5/95.... 100,000,000 100,000,000 Shearson Lehman Brothers, 6.10%, dated 6/30/95, due 7/5/95....................... 100,000,000 60,000,000 State Street Bank, 5.85%, dated 6/30/95, due 7/5/95.... 60,000,000 TOTAL REPURCHASE AGREEMENTS.............. 970,045,000 SHARES MUTUAL FUND SHARES -- 2.5% 34,366,377 Fidelity U.S. Treasury, Inc. Portfolio.................... 34,366,377 TOTAL INVESTMENTS -- 99.7% (COST $1,356,190,976).............. 1,356,190,976 OTHER ASSETS AND LIABILITIES -- NET .3%...................... 3,672,083 NET ASSETS -- 100%........... $1,359,863,059
* Repurchase agreements are fully collateralized by U.S. government and/or agency obligations based on market prices at June 30, 1995. See accompanying notes to financial statements. 5 EVERGREEN TREASURY MONEY MARKET FUND (FORMERLY FIRST UNION TREASURY MONEY MARKET PORTFOLIO) STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995 (Photo of Treasure Chest) (UNAUDITED) ASSETS: Investments at value (identified cost $1,356,190,976)....................................................... $1,356,190,976 Interest receivable......................................................................................... 9,062,233 Prepaid expenses............................................................................................ 8,363 Total assets............................................................................................. 1,365,261,572 LIABILITIES: Due to custodian bank....................................................................................... 2,299 Dividends payable........................................................................................... 5,125,119 Payable for Fund shares repurchased......................................................................... 77,215 Accrued expenses............................................................................................ 193,880 Total liabilities........................................................................................ 5,398,513 NET ASSETS..................................................................................................... $1,359,863,059 NET ASSETS CONSIST OF: Paid-in capital............................................................................................. $1,359,863,059 Net assets............................................................................................... $1,359,863,059 CALCULATION OF NET ASSET VALUE PER SHARE: Class A Shares ($1,047,336,416 (divided sign) 1,047,336,416 shares of beneficial interest outstanding)...... $ 1.00 Class Y Shares ($312,526,643 (divided sign) 312,526,643 shares of beneficial interest outstanding).......... $ 1.00
See accompanying notes to financial statements. 6 EVERGREEN TREASURY MONEY MARKET FUND (FORMERLY FIRST UNION TREASURY MONEY MARKET PORTFOLIO) STATEMENT OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1995 (Photo of Treasure Chest) (UNAUDITED) INVESTMENT INCOME: Interest....................................................................................... $33,281,660 EXPENSES: Advisory fee................................................................................... $1,957,301 Administrative personnel and services fees..................................................... 462,002 Distribution fee-Class A shares................................................................ 1,325,477 Custodian fee.................................................................................. 130,814 Registration and filing fees................................................................... 76,072 Transfer agent fee............................................................................. 43,311 Reports and notices to shareholders............................................................ 16,850 Professional fees.............................................................................. 12,757 Trustees' fees and expenses.................................................................... 12,756 Insurance...................................................................................... 4,567 Miscellaneous.................................................................................. 7,640 4,049,547 Less: Advisory fee waiver...................................................................... (898,586) Total expenses.............................................................................. 3,150,961 Net investment income............................................................................. $30,130,699
See accompanying notes to financial statements. 7 EVERGREEN TREASURY MONEY MARKET FUND (FORMERLY FIRST UNION TREASURY MONEY MARKET PORTFOLIO) STATEMENT OF CHANGES IN NET ASSETS (Photo of Treasure Chest)
SIX MONTHS YEAR ENDED ENDED JUNE 30, 1995 DECEMBER 31, (UNAUDITED) 1994 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income................................................................. $ 30,130,699 $ 28,172,647 DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A Shares........................................................................ (23,508,241) (18,913,691) Class Y Shares........................................................................ (6,622,458) (9,258,956) Total distributions to shareholders................................................... (30,130,699) (28,172,647) FUND SHARE TRANSACTIONS: Proceeds from shares sold............................................................. 1,769,988,073 2,812,355,925 Proceeds from reinvestment of dividends............................................... 3,467,463 4,558,410 Payments for shares redeemed.......................................................... (1,331,563,334) (2,526,526,774) Net increase resulting from Fund share transactions................................ 441,892,202 290,387,561 Net increase in net assets......................................................... 441,892,202 290,387,561 NET ASSETS: Beginning of period................................................................... 917,970,857 627,583,296 End of period......................................................................... $1,359,863,059 $ 917,970,857
See accompanying notes to financial statements. 8 EVERGREEN TREASURY MONEY MARKET FUND (FORMERLY FIRST UNION MONEY MARKET PORTFOLIO) (Photo of Treasure Chest) FINANCIAL HIGHLIGHTS
CLASS A SHARES CLASS Y SHARES SIX MONTHS MARCH 6, SIX MONTHS ENDED 1991* ENDED JUNE 30, THROUGH JUNE 30, YEAR ENDED 1995 YEAR ENDED DECEMBER 31, DECEMBER 31, 1995 DECEMBER 31, (UNAUDITED) 1994 1993 1992 1991 (UNAUDITED) 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 Income from investment operations: Net investment income.............. .03 .04 .03 .03 .04 .03 .04 .03 Less distributions to shareholders from net investment income....... (.03) (.04) (.03) (.03) (.04) (.03) (.04) (.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+...................... 2.7% 3.8% 2.7% 3.4% 4.5% 2.8% 4.1% 3.0% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted).................. $1,047,336 $755,050 $261,475 $208,792 $ 99,549 $312,527 $162,921 $366,109 Ratios to average net assets: Expenses (a)..................... .63%++ .50% .48% .48% .47%++ .33%++ .20% .18% Net investment income (a)........ 5.32%++ 3.91% 2.70% 3.22% 4.95%++ 5.64%++ 3.78% 3.00% MARCH 6, YEAR ENDED 1991* DECEMBER 31, THROUGH DECEMBER 31, 1992 1991 PER SHARE DATA Net asset value, beginning of period........................... $1.00 $1.00 Income from investment operations: Net investment income.............. .04 .05 Less distributions to shareholders from net investment income....... (.04) (.05) Net asset value, end of period..... $1.00 $1.00 TOTAL RETURN+...................... 3.7% 4.7% RATIOS & SUPPLEMENTAL DATA Net assets, end of period (000's omitted).................. $286,230 $265,109 Ratios to average net assets: Expenses (a)..................... .17% .20%++ Net investment income (a)........ 3.61% 5.53%++
* Commencement of operations. + Total return is calculated on net asset value per share for the periods indicated and is not annualized. ++ Annualized. (a) Net of expense waivers and reimbursements. If the Fund had borne all expenses that were assumed 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 Y SHARES SIX MONTHS MARCH 6, SIX MONTHS ENDED 1991* ENDED JUNE 30, YEAR ENDED DECEMBER THROUGH JUNE 30, YEAR ENDED DECEMBER 1995 31, DECEMBER 31, 1995 31, (UNAUDITED) 1994 1993 1992 1991 (UNAUDITED) 1994 1993 1992 Expenses.......................... .79% .78% .82% .82% 1.08% .49% .48% .52% .52% Net investment income............. 5.16% 3.63% 2.36% 2.88% 4.34% 5.48% 3.50% 2.66% 3.26% MARCH 6, 1991* THROUGH DECEMBER 31, 1991 Expenses.......................... .52% Net investment income............. 5.21%
9 NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED) NOTE 1 -- ORGANIZATION Evergreen Investment Trust (formerly First Union Funds) (the "Trust") is a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the "Act"), as an open-end management company. The Trust consisted of seventeen funds at June 30, 1995. The financial statements included herein are only those of the Evergreen Treasury Money Market Fund (the "Fund") (see Note 6). NOTE 2 -- CHANGE IN FISCAL YEAR On March 15, 1995, the Trustees approved a change in the Fund's fiscal year from December 31 to August 31. These financial statements are as of and for the six months ended June 30, 1995. NOTE 3 -- SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. These policies are in conformity with generally accepted accounting principles. SECURITY VALUATIONS -- Pursuant to Rule 2a-7 of the Act, portfolio securities are valued at amortized cost which approximates market value. SECURITY TRANSACTIONS -- Security transactions are accounted for on the date purchased or sold. Net realized gains or losses are determined on the identified cost basis. INVESTMENT INCOME AND EXPENSES -- Interest income and expenses are accrued daily. Premiums and discounts paid on securities are amortized or accreted into income as required by the Internal Revenue Code, as amended, (the "Code"). REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase agreements are held by the Federal Reserve Bank and are designated as being held on the Fund's behalf by its custodian under a book-entry system. The 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. The 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 the Trustees. 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 generally accepted accounting principles. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts. INCOME TAXES -- It is the Fund's policy to meet the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its taxable 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 the Fund's policy not to distribute such gains. WHEN ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund records when-issued or delayed delivery transactions on the trade date and maintains 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 are marked to market daily and begin earning interest on the settlement date. DEFERRED EXPENSES -- The costs incurred by the Fund with respect to registration of its shares in its first fiscal year, excluding the initial expense of registering the shares, have been deferred and are being amortized using the straight-line method not to exceed a period of five years from the Fund's commencement. 10 NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED NOTE 4 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT ADVISORY AGREEMENT -- First Union National Bank of North Carolina (the "Adviser"), is entitled to a fee of .35 of 1% of the Fund's average daily net assets pursuant to an investment advisory agreement. For the six month period ended June 30, 1995, the Adviser voluntarily waived $898,586 of its advisory fee. The Adviser can modify or terminate this voluntary waiver at any time. ADMINISTRATIVE AGREEMENT -- Federated Investor Services ("FAS") provided the Fund with certain administrative personnel and services including certain clerical and recordkeeping services for the six-month period ended June 30, 1995 (see Note 6). In addition, certain of the Trust's officers and Trustees were officers or directors of FAS. FAS' fee was based on the level of average net assets of the Trust for the period, subject to a minimum fee. PLAN OF DISTRIBUTION -- The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund compensated Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to result in the sale of Class A Shares (see Note 6). The Plan provides that the Fund may incur distribution expenses up to .35 of 1% of the average daily net assets of the Class A Shares, annually, to finance such activities. For the six-month period ended June 30, 1995, FSC limited its fees on Class A shares to .30 of 1% of the Fund's Class A shares average daily net assets. TRANSFER AND DIVIDEND DISBURSEMENT AGENT -- Federated Services Company ("FServ") served as Transfer and dividend disbursing agent for the Trust for the six-month period ended June 30, 1995 (see Note 6). FServ's fee was based on the size, type and number of accounts and transactions made by shareholders. NOTE 5 -- SHARES OF BENEFICIAL INTEREST The Fund has an unlimited number of no par value shares of beneficial interest authorized. The shares are divided into two classes which are designated Class A and Class Y shares. Class Y shares are available only to investment advisory clients of the Adviser and its affiliates, certain institutional investors and Class Y shareholders of record of certain other funds managed by the Adviser and its affiliates as of December 30, 1994. The classes have identical voting, dividend, liquidation and other rights, except that Class A shares bear distribution expenses (see Note 4) and has exclusive voting rights with respect to its distribution plan. 11 NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED 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 JUNE 30, 1995 DECEMBER 31, 1994* CLASS A Shares sold.......................................................................... $ 1,354,900,930 $ 2,181,392,175 Shares issued on reinvestment of dividends........................................... 3,467,463 4,558,410 Shares redeemed...................................................................... (1,066,082,254 ) (1,692,374,918) Net increase......................................................................... 292,286,139 493,575,667 CLASS Y Shares sold.......................................................................... 415,087,143 630,963,750 Shares issued on reinvestment of dividends........................................... -- -- Shares redeemed...................................................................... (265,481,080 ) (834,151,856) Net increase (decrease).............................................................. 149,606,063 (203,188,106) Total net increase resulting from Fund share transactions............................ $ 441,892,202 $ 290,387,561
NOTE 6 -- SUBSEQUENT EVENTS Pursuant to a contract approved by the Trustees on April 20, 1995, effective July 7, 1995, Evergreen Asset Management Corp. (an affiliate of the Adviser) and Boston Financial Data Services became the Administrator and transfer agent respectively. Evergreen Funds Distributor, Inc., a wholly owned subsidiary of Furman Selz, Inc., became the Fund's distributor and sub-administrator. Officers or directors of Furman Selz, Inc. became the Trust's officers. In addition, effective July 7, 1995, the Fund changed its name from First Union Treasury Money Market Portfolio to Evergreen Treasury Money Market Fund. 12 TRUSTEES AND OFFICERS TRUSTEES: Mr. James S. Howell, Chairman Mr. Gerald M. McDonnell Mr. Thomas L. McVerry Mr. William W. Pettit Mr. Russell A. Salton, III M.D. Mr. Michael S. Scofield OFFICERS (EFFECTIVE JULY 7, 1995): John J. Pileggi President and Treasurer Joan V. Fiore Secretary Sheryl Hirschfeld Assistant Secretary Donald E. Brostrom Assistant Treasurer Stephen W. St. Clair Assistant Treasurer -----END PRIVACY-ENHANCED MESSAGE-----