<PAGE>
EVERGREEN TREASURY MONEY MARKET FUND
(FORMERLY FIRST UNION TREASURY MONEY MARKET PORTFOLIO)
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
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
</TABLE>
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
EVERGREEN TREASURY MONEY MARKET FUND
(FORMERLY FIRST UNION TREASURY MONEY MARKET PORTFOLIO)
STATEMENT OF INVESTMENTS
JUNE 30, 1995
(Photo of Treasure Chest) (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
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
<CAPTION>
*REPURCHASE AGREEMENTS -- 71.3%
<C> <S> <C>
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
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
*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
<CAPTION>
SHARES
<C> <S> <C>
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
</TABLE>
* 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
<PAGE>
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)
<TABLE>
<S> <C>
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
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
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)
<TABLE>
<S> <C> <C>
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
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
EVERGREEN TREASURY MONEY MARKET FUND
(FORMERLY FIRST UNION TREASURY MONEY MARKET PORTFOLIO)
STATEMENT OF CHANGES IN NET ASSETS
(Photo of Treasure Chest)
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
<S> <C> <C>
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
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
EVERGREEN TREASURY MONEY MARKET FUND
(FORMERLY FIRST UNION MONEY MARKET PORTFOLIO)
(Photo of Treasure Chest) FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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%
<CAPTION>
MARCH 6,
YEAR ENDED 1991*
DECEMBER 31, THROUGH
DECEMBER 31,
1992 1991
<S> <C> <C>
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%++
</TABLE>
* 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:
<TABLE>
<CAPTION>
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
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
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%
<CAPTION>
MARCH 6,
1991*
THROUGH
DECEMBER 31,
1991
<S> <C>
Expenses.......................... .52%
Net investment income............. 5.21%
</TABLE>
9
<PAGE>
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
<PAGE>
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
<PAGE>
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:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994*
<S> <C> <C>
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
</TABLE>
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
<PAGE>
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
