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Evergreen
Short-Intermediate
Municipal Fund
SEMI-ANNUAL REPORT
FEBRUARY 28, 1995
THE EVERGREEN FUNDS [logo]
<PAGE>
DEAR FELLOW SHAREHOLDER: March 21, 1995
We are pleased to bring you the Semi-Annual Report for Evergreen
Short-Intermediate Municipal Fund, covering the six months ended February 28,
1995. The Fund's historical performance as of February 28, 1995, is illustrated
in the table below*.
- ----------------------------------------------------
Class Y Class A Class B
Shares Shares Shares
6-Month Total Return 0.68% -4.00% -4.35%
1-Year Total Return 0.91% -3.79% -4.03%
Average Annual
Compound Return
Since Inception 5.12% 3.61% 4.26%
30-Day SEC Yield 4.44% 4.42% 3.53%
Tax-Equivalent Yield 6.94% 6.91% 5.52%
- ----------------------------------------------------
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 yield, and corresponding drop
in prices, was one of the fastest on record and caused much turmoil in the U.S.
fixed income market.
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 declared bankruptcy. This was the result of a multi-leveraged
speculation on interest rates by the Orange County Investment Pool. 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 then 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 order 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 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.
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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
fluctuate 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. Income may be subject to some state
and local taxes and the Federal alternative minimum tax for certain investors.
Fund's inception: 11/18/91.
Currently, the Adviser is voluntarily waiving a portion of its advisory fee, and
for Class A and Class B shares absorbing a portion of these classes other
expenses. Had these fees and expenses not been waived or absorbed, the Fund's
30-day annualized and tax-equivalent yields as of February 28, 1995, would have
been 4.31% and 6.73% for Class Y shares, 4.19% and 6.55% for Class A shares, and
3.09% and 4.83% for Class B shares, respectively, and returns would have been
lower. Voluntary fee waivers may be revised at any time. Tax-equivalent yields
would be lower for investors in lower tax brackets.
The Fund's Class A shares are subject to a maximum front-end sales charge of
4.75%, and its Class B shares are subject to a maximum contingent deferred sales
charge of 5.00%.
Since Class A and Class B shares were not in existence until 1/5/95, the
performance for such classes until 1/5/95 has been calculated based upon the
performance of the existing no-load (Class Y ) shares as adjusted for any
front-end or back-end sales charges. That performance data until 1/5/95 does not
reflect any 12b-1 fees and if reflected, the returns would be lower.
The Fund may incur 12b-1 expenses up to an annual maximum of .75 of 1% of its
aggregate average daily net assets attributable to Class A shares and 1.00% of
its aggregate average daily net assets attributable to Class B shares. For the
foreseeable future, however, management intends to limit such payments on the
Class A shares to .10 of 1% of the Fund's aggregate average daily net assets.
5/95
<PAGE>
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EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
STATEMENT OF INVESTMENTS
FEBRUARY 28, 1995 (UNAUDITED)
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PAR
(000) ISSUE VALUE
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LONG-TERM INVESTMENTS--65.1%
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ALASKA--6.4%
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$ 400 Alaska Student Loan Corp. State Assisted $ 405,392
Student Loan RB Series 1991A,
6.20% Due 07/01/96
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1,045 Municipality of Anchorage, Alaska 1,043,830
1993 GO School RFB Series 1993A,
5.00% Due 02/01/98 (MBIA Insured)
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1,950 North Slope Borough, 2,053,955
GO RFB Series 1988G,
7.50% Due 06/30/97
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3,503,177
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ARIZONA--2.1%
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1,100 City of Tuscon, Arizona Water 1,164,086
System RRB Series 1993,
Prerefunded @ 102,
7.70% Due 07/01/96
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COLORADO--2.0%
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1,075 Colorado Student Obligation 1,088,330
Board Authority
Student Loan RB Series 1985B,
6.125% Due 12/01/98
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DELAWARE--1.7%
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City of Wilmington, GO
200 Series 1986, 6.80% Due 03/01/96 204,640
685 Series 1987, 7.50% Due 08/15/97 708,591
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913,231
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DISTRICT OF COLUMBIA--2.8%
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1,500 District of Columbia GO RFB 1,550,445
Series 1989 B,
6.625% Due 06/01/98 (MBIA Insured)
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FLORIDA--4.4%
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375 City of Sunrise Special Tax District No. 1 376,762
Ad Valoren Tax RFB Series 1991,
5.10% Due 11/01/96
(LOC: Hypo Bank)
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2,000 Florida Housing Finance 2,007,720
Agency Multifamily Housing RB 1985
Series QQ (Lantana-Oxford)
5.50% Due 11/01/97
(FSA surety bonds)
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2,384,482
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GEORGIA--1.9%
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1,000 Municipal Electric Authority 1,059,440
of Georgia Power RB Series 1986L,
7.50% Due 01/01/98
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ILLINOIS--3.7%
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180 City of Joliet, Will County Waterworks 187,166
and Sewage RB Series 1989,
9.75% Due 01/01/96 (FGIC Insured)
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1,000 Du Page Water Commission RB 1,012,220
(Du Page, Cook and Will Counties)
Series 1987, 5.90% Due 05/01/96
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300 Illinois Health Facilities Authority RB 304,833
(Edward Hospital Association Project)
Series 1992, 6.00% Due 02/15/97
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500 Illinois Student Assistance 498,590
Commission Student Loan RB Series 1992M,
5.45% Due 03/01/97
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2,002,809
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KENTUCKY--0.3%
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155 Kentucky State University Consolidated 157,720
Educational Buildings RB Series 1991G,
6.25% Due 05/01/96
(MBIA Insured)
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MAINE--1.9%
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1,000 Maine Educational Loan Marketing Corp. 997,890
Student Loan RB Series 1988A,
5.20% Due 05/01/97
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55 Maine Housing Authority RB 55,982
Mortgage Purchase Series 1988D-4,
6.30% Due 11/15/95
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1,053,872
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MARYLAND--2.4%
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325 Board of Education of Baltimore County 328,806
(Seven Oaks Elementary School Facility) COP
Series 1990A,
5.75% Due 12/01/96
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1,000 Montgomery County Health Facilities 1,012,520
Development Corporation Facilities RRB
(Panther Creek-Oxford
Limited Partnership Project)
RRB 1986 Series A,
7.375% Due 09/01/95 (MBIA Insured)
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1,341,326
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MASSACHUSETTS--5.9%
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2,160 Massachusetts Bay Transportation 2,247,415
Authority General Transportation System
Bond Series 1990A,
7.00% Due 03/01/97 (MBIA Insured)
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1,000 New England Educational Loan Marketing 986,430
Corp. Student Loan RB Series 1993B,
5.40% Due 06/01/00
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3,233,845
- --------------------------------------------------------------------------------
MICHIGAN--1.6%
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865 Michigan State Building Authority 866,280
Building RB Unit Refunding Series III,
5.00% Due 10/01/95 (MBIA Insured)
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MISSOURI--1.0%
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530 Missouri Environmental Improvement 534,473
& Energy Resources Authority Water
Pollution Control RB (State Revolving Fund
Program-Multiple
Participant Series) Series 1992A,
5.40% Due 07/01/97
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NEVADA--2.0%
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1,000 Las Vegas Valley Water District GO 1,078,340
(Limited Tax) Water RRB Series 1987,
Prerefunded @102, 7.25% Due 05/01/98
(AMBAC Insured)
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NEW JERSEY--0.7%
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200 City of Passaic GO Fiscal Year Adjustment 205,086
Bonds Series 1991,
6.40% Due 11/15/96
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200 New Jersey Health Care Facilities Financing 202,988
Authority RB (Pascack Valley Hospital
Association Issue) Series 1991,
6.00% Due 07/01/96
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408,074
- --------------------------------------------------------------------------------
NEW YORK--1.3%
- --------------------------------------------------------------------------------
New York Local Government Assistance
(A Public Benefit Corporation of the
State of New York)
500 Series 1991B, 6.25% Due 04/01/96 508,600
200 Series 1991D, 5.70% Due 04/01/96 202,304
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710,904
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OHIO--1.8%
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1,000 The Student Loan Funding Corporation 991,560
(Cincinnati) Student Loan RB Series 1993A,
5.50% Due 12/01/01
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OKLAHOMA--1.4%
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750 Oklahoma Student Loan Authority RRB 751,380
Series 1992A, 5.35% Due 09/01/96
- --------------------------------------------------------------------------------
PENNSYLVANIA--0.9%
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500 State of Pennsylvania GO Series 1971, 505,045
6.00% Due 12/15/98
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RHODE ISLAND--1.9%
- --------------------------------------------------------------------------------
1,000 Rhode Island GO Construction Capital 1,014,960
Development Loan Series 1991B,
6.00% Due 05/15/96
- --------------------------------------------------------------------------------
SOUTH CAROLINA--3.8%
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1,000 Rock Hill School District No. 3 of 1,051,120
York County RFB Series 1992B,
7.75% Due 02/01/97 (FGIC Insured)
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1,000 School District of Chester County 1,044,610
GO School Building Bonds Series 1992,
7.70% Due 02/01/97
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2,095,730
- --------------------------------------------------------------------------------
TENNESSEE--0.9%
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500 Industrial Development Board of the 500,000
County of Roane, Tennessee Solid Waste
Disposal (Horsehead Resource Development
Company, Inc.
Project) RB Series 1990A,
4.85% Due 11/01/95 (LOC: Long Term
Credit Bank of Japan)
<PAGE>
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TEXAS--5.7%
- --------------------------------------------------------------------------------
Brazos Higher Education Authority, Inc.
Student Loan RRB
760 Series 1992-A, 6.00% Due 03/01/96 764,849
1,000 Series 1993A-1, 5.30% Due 12/01/97 998,000
- --------------------------------------------------------------------------------
250 City of Austin (Travis & Williamson Counties) 280,817
Improvement Bonds Series 1991-A,
8.875% Due 09/01/98
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1,000 Northside, Texas Independent School GO 1,054,020
(District Unlimited Tax) Series 1986,
7.00% Due 02/01/98
- --------------------------------------------------------------------------------
3,097,686
- --------------------------------------------------------------------------------
UTAH--1.2%
- --------------------------------------------------------------------------------
180 Intermountain Power Agency 186,055
Power Supply RRB Series 1985G, Prerefunded
@102,
8.40% Due 07/01/95
- --------------------------------------------------------------------------------
490 Utah Housing Finance Agency 478,642
Single Family Mortgage RRB
Senior Bonds Series 1993A,
5.20% Due 01/01/01
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664,697
- --------------------------------------------------------------------------------
VIRGINIA--3.5%
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410 Medical College of Hampton Roads RRB 413,690
Series 1991A, 5.60% Due 11/15/96
- --------------------------------------------------------------------------------
1,500 Virginia Housing Development Authority 1,516,995
Commonwealth Mortgage Bonds Series
1992B Subseries B-1,
6.00% Due 01/01/98
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1,930,685
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WISCONSIN--1.9%
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1,000 State of Wisconsin GO Series 1992A 1,019,320
5.75% Due 05/01/97
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TOTAL LONG-TERM INVESTMENTS (COST $35,381,680) 35,621,897
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--32.9%
- --------------------------------------------------------------------------------
ALASKA--1.8%
- --------------------------------------------------------------------------------
1,000 Municipality of Anchorage, 1,000,000
Higher Education RB (Alaska Pacific
University) Series 1993, VR-4.10%
(LOC: First National Bank-Seattle)
- --------------------------------------------------------------------------------
CALIFORNIA--24.7%
- --------------------------------------------------------------------------------
Irvine Ranch Water District (Orange County)
Sewer Bonds Election RB VR-4.20%,
(LOC: Sumitomo Bank, Ltd.)
1,500 Series 1985B 1,500,000
200 District No. 282 Series 1988A 200,000
1,000 District No. 284 Series 1988A 1,000,000
- --------------------------------------------------------------------------------
2,000 Orange County Sanitation Districts 2,000,000
COP Nos. 1,2,3,5,6,7 and 11 Adjustable
Refunding Notes Series 1992, VR-4.75%
(LOC: Industrial Bank of Japan, Ltd.)
- --------------------------------------------------------------------------------
8,800 Orange County Unit Priced 8,800,000
Apartment Development RB Issue 1
of 1985 (The Irvine Co.) VR-4.75%
(LOC: Dai-Ichi Kangyo Bank, Ltd.)
- --------------------------------------------------------------------------------
13,500,000
- --------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--2.0%
- --------------------------------------------------------------------------------
1,100 District of Columbia GO RFB 1992A-5, 1,100,000
VR-4.40% (LOC: Bank of Nova Scotia)
- --------------------------------------------------------------------------------
MICHIGAN--4.4%
- --------------------------------------------------------------------------------
2,400 City of Madison, Indiana Economic 2,400,000
Development Authority (Arvin Sango, Inc.,
Project) RB Series 1987, VR-7.00%
(LOC: Tokai Bank, Ltd. Chicago)
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $18,000,000) 18,000,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $53,381,680) 98.0% 53,621,897
OTHER ASSETS AND LIABILITIES-NET 2.0 1,086,718
- --------------------------------------------------------------------------------
NET ASSETS 100.0% $54,708,615
================================================================================
<PAGE>
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
RFB--Refunding Bonds
RRB--Revenue Refunding Bonds
VR-- 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. The interest rates are determined and reset by the
issuer daily or weekly. The interest rates presented for these securities are
those in effect as of February 28, 1995.
Certain obligations held in the portfolio have credit enhancements that may,
under certain circumstances, provide for repayment of principal and interest on
the obligation upon demand date, interest reset date or final maturity. These
enhancements include letters of credit and third party insurance (i.e. AMBAC,
FSA and MBIA).
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $53,381,680) $53,621,897
Cash 51,734
Interest receivable 637,209
Receivable for Fund shares sold 472,535
Unamortized organization expenses 12,135
Prepaid expenses 47,303
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Total assets 54,842,813
- ---------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for Fund shares repurchased 22,500
Payable to Adviser 32,050
Accrued expenses 36,166
Accrued advisory fees 14,671
Dividend payable in cash 28,811
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities 134,198
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Paid-in capital 55,362,940
Accumulated net realized loss on investment transactions (894,542)
Net unrealized appreciation of investments 240,217
- ---------------------------------------------------------------------------------------------------------------------
Net assets $54,708,615
=====================================================================================================================
CALCULATION OF MAXIMUM OFFERING PRICE:
CLASS A SHARES
Net asset value per share
($7,736,366/769,333 shares of beneficial interest outstanding) $10.06
Sales charge--4.75% of public offering price .50
-----
Maximum offering price $10.56
=====
CLASS B SHARES
Net asset value and offering price per share
($2,564,151/255,027 shares of beneficial interest outstanding) $10.05
=====
CLASS Y SHARES
Net asset value and offering price per share
($44,408,098/4,418,784 shares of beneficial interest outstanding) $10.05
=====
</TABLE>
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See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest and discount earned $1,293,722
EXPENSES:
Advisory fee $123,251
Custodian fee 23,685
Registration and filing fees 14,528
Transfer agent expense 12,763
Professional fees 11,867
Insurance expense 6,290
Reports and notices to shareholders 6,022
Amortization of organization expenses 4,375
Trustees' fees and expenses 4,144
Distribution fee--Class A shares 447
Distribution and shareholder services fees--Class B shares 1,744
Other 1,701
-----
210,817
Less: Advisory fee waiver (29,852)
Expense reimbursement (1,538)
------
Total expenses 179,427
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 1,114,295
- ---------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments (745,856)
Net decrease in unrealized appreciation of investments (93,426)
- ---------------------------------------------------------------------------------------------------------------------
Net loss on investments (839,282)
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 275,013
=====================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994
- -------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income $ 1,114,295 $ 2,734,785
Net realized loss on investments (745,856) (53,108)
Net decrease in unrealized appreciation
of investments (93,426) (1,837,704)
- -----------------------------------------------------------------------------------------------------------------
Net increase resulting from operations 275,013 843,973
- -----------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income--Class A shares (18,268) --
From net investment income--Class B shares (6,106) --
From net investment income--Class Y shares (1,089,921) (2,734,785)
From net realized gains on investment transactions--Class Y shares -- (180,991)
In excess of net realized gains on
investment transactions--Class Y shares -- (96,012)
- -----------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (1,114,295) (3,011,788)
- -----------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net increase (decrease) resulting from
Fund share transactions 2,130,728 (11,022,200)
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) 1,291,446 (13,190,015)
NET ASSETS:
Beginning of year 53,417,169 66,607,184
- -----------------------------------------------------------------------------------------------------------------
End of period $54,708,615 $53,417,169
=================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--ORGANIZATION
Evergreen Short-Intermediate Municipal Fund (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 July 17, 1991.
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.
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
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 TAXES--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 income and net capital gains to its
shareholders. Therefore, no Federal income or excise tax provision is
required.
During the year ended August 31, 1994, the Fund distributed $96,012 in excess
of net realized gains. The Fund has elected for Federal income tax purposes
to treat $148,686 of net capital losses that arose after October 31, 1993
("post October losses") within the prior fiscal year end as if arising on the
first business day of current fiscal year.
UNAMORTIZED ORGANIZATION EXPENSES--The expenses of the Fund incurred in
connection with its organization and initial registration are being deferred
and amortized by the Fund over a period of benefit not to exceed 60 months
from the date the Fund commenced investment operations.
ALLOCATION OF EXPENSES--Expenses specifically identifiable to the Fund or to
a class of shares are charged to the Fund or class. Other expenses common to
the Fund or the Trust as a whole, including the compensation of all
<PAGE>
non-affiliated trustees of the Trust, are primarily allocated to the funds in
the Trust or to the classes in the Fund in proportion to net assets.
NOTE 4--ADVISORY FEE AND RELATED PARTY TRANSACTIONS
Evergreen Asset Management Corp. (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 .50 of 1% of the daily net assets of the
Fund. For the six months ended February 28, 1995, the Adviser voluntarily waived
a portion of the advisory fee. In addition, the Adviser voluntarily reimbursed
Class A and Class B shares for certain class specific expenses in the amount of
$714 and $824, respectively. 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 and amortization of organization expenses,
but excluding interest, taxes, brokerage commissions, 12b-1 distribution and
shareholder services fees and extraordinary expenses) exceed 1.00% of its
average daily net assets for any fiscal year.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.
NOTE 5--DISTRIBUTION AND SHAREHOLDER SERVICES
FEES
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 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. ("EFD"), a subsidiary of Furman Selz
Incorporated, whereby the Fund will compensate EFD for its services at a rate
which may not exceed, as a percentage of average daily net assets on an annual
basis, .10 of 1% for Class A shares and .75 of 1% of Class B shares. Such fees
are accrued daily and paid monthly. The Agreement provides that EFD will use
such fees to finance activities that promote the sale of Class A and Class B
shares.
A portion of the payments under the Class B Plan, up to .25 of 1% of average
daily net assets may constitute a shareholder service fee. The Fund has entered
into a Shareholder Services Agreement with First Union Brokerage Services
("FUBS"), an affiliate of the Adviser, whereby the Fund will compensate FUBS for
certain services provided to shareholders and/or for the maintenance of
shareholder accounts relating to the Fund's Class B shares. Such fees are
accrued daily and paid monthly.
NOTE 6--PORTFOLIO TRANSACTIONS
Cost of purchases and proceeds from sales of investments, other than short-term
obligations, aggregated $3,536,595 and $18,641,297, respectively, for the six
months ended February 28, 1995.
The aggregate cost of investments owned at Feburary 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 $280,276
and $40,059, respectively.
NOTE 7--CONCENTRATION OF CREDIT RISK
The Fund invests in obligations issued by states, territories and possessions of
the United States and by the District of Columbia, and by their political
subdivisions and duly constituted authorities.
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The issuers' abilities to meet their obligations may be affected by economic and
political developments in a specific state or region. 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.
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
(UNAUDITED)
- -------------------------------------------------------
SHARES DOLLARS
- -------------------------------------------------------
CLASS A*
Shares sold 767,614 $7,689,775
Shares issued on
reinvestments of
distributions 1,719 17,278
Shares redeemed -- --
- -------------------------------------------------------
Net increase 769,333 $7,707,053
=======================================================
CLASS B*
Shares sold 264,218 $2,644,835
Shares issued on
reinvestments of
distributions 409 4,102
Shares redeemed (9,600) (96,283)
- -------------------------------------------------------
Net increase 255,027 $2,552,654
=======================================================
CLASS Y
Shares sold 248,696 $2,497,894
Shares issued on
reinvestments of
distributions 90,460 908,518
Shares redeemed (1,150,454) (11,535,391)
- -------------------------------------------------------
Net decrease (811,298) $ (8,128,979)
=======================================================
Total net increase
resulting from Fund
share transactions 213,062 $2,130,728
=======================================================
YEAR ENDED
AUGUST 31, 1994
- -------------------------------------------------------
SHARES DOLLARS
- -------------------------------------------------------
CLASS Y
Shares sold 1,211,704 $ 12,683,649
Shares issued on
reinvestments of
distributions 248,705 2,590,791
Shares redeemed (2,526,223) (26,296,640)
- -------------------------------------------------------
Net decrease (1,065,814) $(11,022,200)
=======================================================
* For Class A and Class B shares, the Fund share transaction activity reflects
the period January 5, 1995 (commencement of class operations) to February 28,
1995.
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE PERIOD JANUARY 5, 1995*
THROUGH FEBRUARY 28, 1995
(UNAUDITED)
--------------------------------------
PER SHARE DATA CLASS A SHARES CLASS B SHARES
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 9.97 $ 9.97
- --------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .07 .06
Net realized and unrealized gain
on investments .09 .08
- --------------------------------------------------------------------------------------------------------------------
Total income from investment operations .16 .14
- --------------------------------------------------------------------------------------------------------------------
Less distributions to shareholders
from net investment income (.07) (.06)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.06 $10.05
====================================================================================================================
TOTAL RETURN+ 1.6% 1.4%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $7,736 $2,564
Ratios to average net assets:
Expenses++ .61% 1.41%
Net investment income++ 3.81% 3.30%
Voluntary advisory fee waiver(a)++ .12% .12%
Voluntary expense reimbursement(a)++ .15% .45%
Portfiolio turnover rate** 8% 8%
====================================================================================================================
</TABLE>
* Commencement of class operations.
** Portfolio turnover rate is calculated for the six months period ended
February 28, 1995.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charges or contingent
deferred sales charges are not reflected.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A and Class B shares are not necessarily comparable to that of the
Class Y shares, and are not necessarily indicative of future ratios.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
FINANCIAL HIGHLIGHTS
CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS JULY 17, 1991*
ENDED YEAR ENDED AUGUST 31, THROUGH
FEBRUARY 28, 1995 -------------------------------
PER SHARE DATA (UNAUDITED) 1994 1993 1992 AUGUST 31, 1991+
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $10.21 $10.58 $10.33 $10.00 $10.00
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .23 .47 .49 .51 .06
Net realized and unrealized gain (loss)
on investments (.16) (.32) .25 .33 --
- -------------------------------------------------------------------------------------------------------------------
Total income from investment operations .07 .15 .74 .84 .06
- -------------------------------------------------------------------------------------------------------------------
Less distributions to shareholders:
From net investment income (.23) (.47) (.49) (.51) (.06)
From net realized gains on investments -- (.03) -- -- --
In excess of net realized gains on investments -- (.02) -- -- --
- -------------------------------------------------------------------------------------------------------------------
Total distributions (.23) (.52) (.49) (.51) (.06)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.05 $10.21 $10.58 $10.33 $10.00
===================================================================================================================
TOTAL RETURN++ .7% 1.4% 7.4% 8.6% .6%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $44,408 $53,417 $66,607 $54,470 $4,025
Ratios to average net assets:
Expenses .72%** .58% .40% .17% 0%**
Net investment income 4.54%** 4.54% 4.73% 4.85% 4.93%**
Voluntary advisory fee waiver(a) .12%** .25% .41% .46% .50%**
Voluntary expense reimbursement(a) -- -- -- .23% .90%**
Portfolio turnover rate 8% 32% 37% 57% --
===================================================================================================================
</TABLE>
* Commencement of operations.
** Annualized.
+ On November 18, 1991, the Fund was changed to a diversified municipal bond
fund with a fluctuating net asset value per share from a non-diversified
money market fund with a stable net asset value per share. The shares
outstanding at August 31, 1991 and the related per share data are restated
to reflect both a 1 for 2 reverse share split on October 30, 1991 and a 1
for 5 reverse share split on August 19, 1992. Total return calculated after
November 18, 1991 reflects the fluctuation in net asset value per share.
++ Total return is calculated for the periods indicated and 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.
<PAGE>
- -------------------------------------------------------------------------------
EVERGREEN FAMILY OF FUNDS
GROWTH FUNDS ____________________________________
EVERGREEN FUND seeks capital appreciation by investing in securities of little
known or relatively small companies and companies with entrepreneurial
management.
GLOBAL REAL ESTATE EQUITY FUND seeks capital appreciation by investing in
securities of companies involved in various aspects of the real estate industry
throughout the world.
LIMITED MARKET FUND seeks capital appreciation by investing in securities of
little-known, small or special situation companies.
U.S. REAL ESTATE EQUITY FUND seeks long-term capital growth by investing in
equity securities of U.S. companies which are principally engaged in the real
estate industry or which own significant real estate assets.
GROWTH & INCOME FUNDS _________________________
AMERICAN RETIREMENT FUND seeks conservation of capital, reasonable income and
capital growth by investing in a diversified and balanced portfolio of equity
and fixed income securities.
EVERGREEN FOUNDATION FUND seeks reasonable income, conservation of capital and
growth by investing in common and preferred stocks, convertibles and fixed
income securities.
GROWTH & INCOME FUND seeks capital appreciation and current income by investing
in securities of companies undervalued in the marketplace due to temporary
adverse circumstances or misperceptions of underlying values.
SMALL CAP EQUITY INCOME FUND seeks a return consisting of current income and
capital appreciation by investing primarily in companies with market
capitalizations of less than $500 million.
TAX STRATEGIC FOUNDATION FUND seeks to maximize the after tax total return on
its portfolio investments by investing in common and preferred stocks and
securities convertible into or exchangeable for common stocks, and municipal
securities.
TOTAL RETURN FUND seeks a total return consisting of current income and capital
appreciation by investing in common and preferred stocks, securities convertible
or exchangeable for common stocks and fixed income securities.
INCOME FUND _____________________________________
U.S. GOVERNMENT SECURITIES FUND seeks a high level of return from a combination
of current income and capital appreciation through investment in obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.
TAX-FREE FUNDS___________________________________
NATIONAL TAX-FREE FUND seeks a high level of current income, exempt from Federal
income tax, by investing at least 80% of its portfolio in insured long-term
municipal securities.
SHORT-INTERMEDIATE MUNICIPAL FUND seeks as high a level of current income,
exempt from Federal income tax (other than the alternative minimum tax), as is
consistent with preserving capital and providing liquidity by investing in short
and intermediate-term municipal securities.
SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA seeks as high a level of current
income, exempt from Federal and California state income taxes, as is consistent
with preserving capital and providing liquidity by investing in short and
intermediate-term municipal securities.
MONEY MARKET FUNDS _________________________
MONEY MARKET TRUST seeks as high a level of current income as is consistent with
preserving capital and providing liquidity.
TAX EXEMPT MONEY MARKET FUND seeks as high a level of current income exempt from
Federal income taxes as is consistent with preserving capital and providing
liquidity.
THE PROSPECTUS(ES) CONTAIN MORE COMPLETE INFORMATION AND SHOULD BE READ
CAREFULLY PRIOR TO INVESTING.
<PAGE>
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<PAGE>
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<PAGE>
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
2500 Westchester Avenue
Purchase, New York 10577
