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