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EVERGREEN
U.S. GOVERNMENT
SECURITIES FUND
ANNUAL REPORT
MARCH 31, 1995 [logo]
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DEAR FELLOW SHAREHOLDER: March 31, 1995
As we bring you our Annual Report for Evergreen U.S. Government
Securities Fund, we look back on twelve months of unusual volatility in the
fixed income markets; caused by the perception of a surging economy and
validated by the Federal Reserve's eight interest rate increases since February
of 1994.
In our semi-annual report, we made note of the dramatic increase in
long-term yields and that our reaction to the resulting market decline was to
reduce the maturity and duration of the Fund. The bottom of this current cycle
occurred in November, when long-term Treasuries yielded 8.16%. Since that time,
we have seen a significant market turn and although the Federal Reserve
tightened credit twice since then, evidence of moderation in economic activity
allowed the market to rally substantially. Long Treasuries, at the end of the
first quarter of 1995, yielded 7.43%, an improvement (in price, and decline in
yield) of nearly 75 basis points (3/4 of 1%).
The market performance during this past quarter, though positive
overall, was uneven as the yield curve alternately flattened then steepened.
With this observable volatility and prospects that continued pressure on the
value of our currency relative to the Yen and the Deutsche Mark was likely to
produce yet more volatility, we felt it prudent to maintain a conservative
strategy of reduced maturity and duration exposure.
As of March 31, 1995, the Fund's portfolio has net assets of $4.4
million, an average maturity of 5.75 years and average duration of 4.45 years.
All of the Fund's holdings were in U.S. Treasury securities.
The Trustees of Evergreen U.S. Government Securities Fund have approved
the sale of substantially all of the assets of the Fund to the First Union U.S.
Government Fund, whose investment objectives and policies are substantially
similar to those of Evergreen U.S. Government Securities Fund. As a
shareholder, you should have received proxy material soliciting your vote in
favor of the transaction. Assuming shareholder approval, it is anticipated that
the transaction will be completed on or about July 1, 1995.
Thank you for investing in Evergreen U.S. Government Securities Fund and
for allowing us to serve your investment needs.
Very truly yours,
Stephen A. Lieber
Chairman
Evergreen Asset
Management Corp.
James T. Colby, III
Portfolio Manager
6/95
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PERFORMANCE AS OF MARCH 31, 1995*
CLASS Y CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES
------ ------- ------- -------
12-month Total Return .24% -4.67% -4.78% -1.03%
Average Annual Compound
Return Since
inception
on 6/11/93 -.23% -2.99% -2.39% -0.41%
30-Day SEC Yield 6.19% 5.96% 5.18% 5.19%
- ----------------------------------------------------
FIGURES REPRESENT PAST PERFORMANCE WHICH DOES NOT GUARANTEE FUTURE RESULTS.
* Performance figures include reinvestment of income dividends and capital gain
distributions. Investment return and principal value will fluctuate. Investors'
shares, when redeemed, may be worth more or less than their original cost.
Effective 1/3/95, the Fund adopted a multi-class distribution arrangement to
issue additional classes of shares, designated as Class A, Class B and Class C.
The Fund's performance for its Class A shares (subject to a maximum front-end
sales charge of 4.75%), its Class B shares (subject to a maximum contingent
deferred sales charge of 5.00%) and its Class C shares (subject to a 1%
contingent deferred sales charge within the first year of purchase) for the
period prior to 1/3/95, has been calculated based on the performance of the
existing no-load (Class Y) shares as adjusted for any front-end or back-end
sales charges. Performance data prior to 1/3/95 does not reflect any 12b-1 fees,
and if reflected the returns would be lower. Performance data beginning from
1/3/95 reflects actual performance including 12b-1 fees.
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, 1.00% of its
aggregate average daily net assets attributable to Class B shares and 1.00% of
its aggregate average daily net assets attributable to Class C shares. For the
foreseeable future, however, management intends to limit such payments on the
Class A shares to .25 of 1% of the Fund's aggregate average daily net assets.
The Adviser is currently waiving its advisory fee and absorbing a portion of the
Fund's other expenses. Had the fee not been waived and expenses not been
absorbed, the Fund's 30-day SEC yield as of 3/31/95 would have been 5.51% for
Class Y shares, 5.43% for Class A shares, 4.56% for Class B shares, 4.47% for
Class C shares and returns would have been lower. Fee waivers may be revised at
anytime.
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STATEMENT OF INVESTMENTS
March 31, 1995
PAR INTEREST MATURITY
ISSUE (000) RATE DATE VALUE
- ---- ----- -------- -------- -----
U.S. GOVERNMENT
OBLIGATIONS - 94.7%
U.S. Treasury Notes $2,050 7.125% 02/29/00 $2,052,562
U.S. Treasury Notes 1,100 7.50% 02/15/05 1,122,688
U.S. Treasury Notes 1,000 7.25% 02/15/98 1,009,219
----------
TOTAL INVESTMENTS -
(COST $4,187,426) 94.7% 4,184,469
OTHER ASSETS AND LIABILITIES - NET 5.3 233,747
----- ----------
TOTAL NET ASSETS 100.0% $4,418,216
===== ==========
See accompanying notes to financial statements.
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STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995
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ASSETS:
Investments at market value (identified cost $4,187,426) $ 4,184,469
Cash 39,539
Receivable for Fund shares sold 144,785
Interest receivable 31,969
Unamortized organization expenses 38,539
Prepaid expenses 55,638
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Total assets 4,494,939
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LIABILITIES:
Payable to Adviser 35,481
Payable for Fund shares repurchased 5,046
Accrued expenses 32,266
Dividends payable in cash 3,930
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Total liabilities 76,723
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NET ASSETS:
Paid-in capital 5,690,162
Accumulated net realized loss on investment transactions (1,268,989)
Net unrealized depreciation of investments (2,957)
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Net assets $ 4,418,216
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CALCULATION OF MAXIMUM OFFERING PRICE:
CLASS A SHARES
Net asset value per share
($81,472/9,276 shares of beneficial interest outstanding) $8.78
Sales charge - 4.75% of offering price .44
-----
Maximum offering price $9.22
=====
CLASS B SHARES
Net asset value per share
($2,123,245/241,809 shares of beneficial interest outstanding) $8.78
=====
CLASS C SHARES
Net asset value per share
($65,483/7,457 shares of beneficial interest outstanding) $8.78
=====
CLASS Y SHARES
Net asset value per share
($2,148,016/244,482 shares of beneficial interest outstanding) $8.79
=====
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See accompanying notes to financial statements.
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STATEMENT OF OPERATIONS
For the Year Ended March 31, 1995
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INVESTMENT INCOME:
Interest and discount earned $ 517,869
EXPENSES:
Advisory fee $ 38,576
Distribution fee - Class A shares 21
Distribution and shareholder servicing
fees - Class B shares 2,496
Distribution and shareholder servicing
fees - Class C shares 74
Custodian fee 34,885
Registration and filing fees 33,080
Professional fees 32,810
Transfer agent fees 13,965
Amortization of organization expenses 12,023
Insurance 6,708
Trustees fees and expenses 5,286
Reports and notices to shareholders 1,276
Other 584
-------
181,784
Less - Expense reimbursement (96,271)
- Advisory fee waiver (38,576)
-------
Total expenses 46,937
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Net investment income 470,932
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NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments (1,205,835)
Net decrease in unrealized depreciation of investments 584,846
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Net loss on investments (620,989)
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NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (150,057)
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See accompanying notes to financial statements.
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STATEMENT OF CHANGES IN NET ASSETS
June 14, 1993*
Year Ended through
March 31, 1995 March 31, 1994
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INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 470,932 $ 249,002
Net realized gain (loss)
on investments (1,205,835) 30,785
Net change in unrealized
appreciation (depreciation) of
investments 584,846 (587,803)
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Net decrease resulting from
operations (150,057) (308,016)
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DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -
Class A shares (432) --
From net investment income -
Class B shares (11,429) --
From net investment income -
Class C shares (322) --
From net investment income -
Class Y shares (458,749) (249,002)
From net realized gains on investment
transactions - Class Y shares (9,484) (30,785)
In excess of net realized gains on
investment transactions -
Class Y shares -- (53,670)
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Total distributions to
shareholders (480,416) (333,457)
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FUND SHARE TRANSACTIONS (NOTE 7):
Net increase (decrease) resulting
from Fund share transactions (3,754,990) 9,345,152
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Net increase (decrease) (4,385,463) 8,703,679
NET ASSETS:
Beginning of year 8,803,679 100,000
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End of year $ 4,418,216 $ 8,803,679
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* Commencement of operations.
See accompanying notes to financial statements.
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NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION
Evergreen U.S. Government Securities Fund (the "Fund") is the only portfolio of
The Evergreen Fixed Income Trust (the "Trust"). The Trust was organized in the
Commonwealth of Massachusetts as a Massachusetts business trust on August 19,
1992. The Fund is registered under the Investment Company Act of 1940, as
amended (the "Act") as an open-end, diversified management investment company.
On June 3, 1993, the Fund initially sold 10,000 shares of beneficial interest
for $100,000 to Stephen A. Lieber, Chairman and Co-Chief Executive Officer of
Evergreen Asset Management Corp. The Fund commenced investment operations on
June 14, 1993.
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
designated the existing shares of the Fund as Class Y (no-load) shares and
created three new classes of shares designated Class A, Class B and Class C
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
charge would decline from 5% to zero over a seven year period. Class C shares
are offered with a 1% contingent deferred sales charge on shares redeemed during
the first year of purchase. All four classes of shares have identical voting,
dividend, liquidation and other rights, except that certain classes bear
distribution expenses and have exclusive voting rights with respect to their
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 market 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 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.
At March 31, 1995, the Fund had a net capital loss carryover of approximately
$1,208,081 which will be available through March 31, 2003 to offset future
capital gains, if any, to the extent provided by the Treasury regulations. To
the extent that this carryover is used to offset future capital gains it is
probable that the gains so offset will not be distributed to shareholders.
Capital losses incurred after October 31, within the Fund's fiscal year are
deemed to arise on the first business day of the following fiscal year for tax
purposes. The Fund incurred and will elect to defer such capital losses of
approximately $61,992 when it files its returns for the year ended March 31,
1995.
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DEFERRED ORGANIZATION EXPENSES -- The expenses of the Fund incurred in
connection with its organization and initial registration, which aggregated
approximately $60,000, 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. If any shares of the Fund representing amounts initially
invested by Stephen A. Lieber are redeemed during the amortization period, the
proceeds of such redemption will be reduced by any unamortized organization
expenses in the same proportion as the number of initial shares being redeemed
bears to the initial shares outstanding at the time of the redemption.
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.
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 servicing fees and extraordinary
expenses) exceed 1.25% of its average net assets for any fiscal year.
For the year ended March 31, 1995, the Adviser voluntarily waived its entire
advisory fee and reimbursed the Fund for certain of its other expenses including
class specific expenses of $1,225 for each of Class A, Class B, and Class C
shares. The Adviser may, at its discretion, revise or cease this voluntary
expense limitation at any time.
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.
At March 31, 1995, Stephen A. Lieber, Chairman of the Adviser owned, directly or
beneficially, 5% of the outstanding shares of the Fund.
NOTE 5 - DISTRIBUTION AND SHAREHOLDER
SERVICE FEES
The Fund has adopted for each of its Class A, Class B and Class C 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% of Class A shares and 1% for both
Class B and Class C shares. The payments under the Class A Plan will be
voluntarily limited to .25 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, .25 of 1% for Class A shares and .75 of 1% for both Class B and Class C
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, Class B and Class C shares.
A portion of the payments under the Class B and Class C Plans up to .25 of 1% of
average daily net assets may constitute a shareholder servicing 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
shareholders accounts relating to the the Fund's Class B and Class C shares.
Such fees are accrued daily and paid monthly.
NOTE 6 - PORTFOLIO TRANSACTIONS
Cost of purchases and proceeds from sales of U.S. Government securities, other
than short-term obligations, aggregated $57,740,292 and $60,942,308
respectively, for the year ended March 31, 1995.
The aggregate cost of investments owned at March 31, 1995, is the same for
financial statement and Federal income tax purposes. Gross unrealized
depreciation of securities was $2,957 for Federal income tax purposes.
<PAGE>
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NOTE 7 - SHARES OF BENEFICIAL INTEREST
There is an unlimited number of $.0001 par value shares of beneficial interest
authorized, divided into four classes, designated Class A, Class B, Class C and
Class Y shares. Transactions in shares of beneficial interest were as follows:
YEAR ENDED MARCH 31, 1995
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SHARES DOLLARS
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CLASS A**
Shares sold 9,232 $80,921
Shares issued on
reinvestment of distributions 43 384
Shares redeemed -- --
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Net increase 9,275 $81,305
================================================================================
CLASS B**
Shares sold 245,665 $2,153,021
Shares issued on
reinvestment of distributions 757 6,667
Shares redeemed (4,613) (40,167)
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Net increase 241,809 $2,119,521
================================================================================
CLASS C**
Shares sold 15,090 $132,208
Shares issued on
reinvestment of distributions 32 288
Shares redeemed (7,666) (67,921)
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Net increase 7,456 $ 64,575
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CLASS Y
Shares sold 267,314 $ 2,421,183
Shares issued on
reinvestment of distributions 50,830 452,710
Shares redeemed (1,016,518) (8,894,284)
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Net decrease (698,374) $(6,020,391)
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Total net change resulting
from Fund share transactions (439,834) $(3,754,990)
================================================================================
FOR THE PERIOD JUNE 14, 1993*
THROUGH MARCH 31, 1994
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SHARES DOLLARS
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CLASS Y
Shares sold 1,020,127 $10,234,624
Shares issued on
reinvestment of distributions 32,725 327,167
Shares redeemed (119,996) (1,216,639)
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Net increase 932,856 $ 9,345,152
================================================================================
* Commencement of operations.
** For Class A, Class B and Class C shares, the Fund share
transaction activity reflects the period January 4, 1995
(commencement of class operations) through March 31, 1995.
NOTE 8 - AGREEMENT AND PLAN OF
REORGANIZATION WITH
FIRST UNION U.S. GOVERNMENT FUND
At a special Board meeting held on Tuesday, March 7, 1995, the Trustees, on
behalf of the Fund, approved an Agreement and Plan of Reorganization, pursuant
to which First Union U.S. Government Fund ("First Union Fund"), which is a
series of First Union Funds would purchase substantially all of the net assets
of the Fund, subject to a vote by the shareholders of the Fund to approve the
transaction (the "Acquisition"). First Union Fund is advised by the Capital
Management Group of First Union National Bank of North Carolina ("FUNB"), and
has investment objectives and investment policies which are substantially
similar to those of the Fund. A meeting of the Fund's shareholders is
tentatively scheduled for June 15, 1995, for the purpose of voting on the
Acquisition. Notice regarding this meeting and details of the proposed
acquisition has been sent to shareholders. If the Fund's shareholders approve
the Acquisition, it is presently contemplated that the acquisition will be
completed on July 1, 1995. As part of the transaction, the Fund will cease to
exist, and shareholders of the Fund will receive shares in First Union Fund.
Effective July 1, 1995, the First Union Fund will change its name to Evergreen
U.S. Government Portfolio.
<PAGE>
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FINANCIAL HIGHLIGHTS
FOR THE PERIOD JANUARY 4, 1995*
THROUGH MARCH 31, 1995
-------------------------------
CLASS A CLASS B CLASS C
PER SHARE DATA SHARES SHARES SHARES
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Net asset value, beginning of period $ 8.63 $ 8.63 $ 8.63
- --------------------------------------------------------------------------------
Income from investment operations:
Net investment income .12 .11 .11
Net realized and unrealized
gain on investments .15 .15 .15
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Total income from investment operations .27 .26 .26
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Less distributions to shareholders
from net investment income (.12) (.11) (.11)
- --------------------------------------------------------------------------------
Net asset value, end of period $ 8.78 $ 8.78 $ 8.78
================================================================================
TOTAL RETURN** 3.2% 3.0% 3.0%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $ 81 $2,123 $ 65
Ratios to average net assets:
Expenses+ .97% 1.63% 1.53%
Net investment income+ 5.18% 4.54% 4.29%
Voluntary advisory fee waiver+(a) .50% .50% .50%
Voluntary expense reimbursement+(a) .03% .12% .22%
Portfolio turnover rate++ 784% 784% 784%
================================================================================
+ Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that
of the Class Y shares, and are not necessarily indicative of future ratios.
++ Portfolio turnover rate is calculated for the year ended March 31, 1995.
* Commencement of distribution.
** Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales and contingent deferred sales
charges are not reflected.
(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>
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FINANCIAL HIGHLIGHTS
CLASS Y SHARES
FOR THE
PERIOD
JUNE 14,
1993*
YEAR ENDED THROUGH
MARCH 31, MARCH 31,
PER SHARE DATA 1995 1994
- --------------------------------------------------------------------------------
Net asset value, beginning of period $9.34 $ 10.00
- --------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .55 .49
Net realized and unrealized loss on investments (.54) (.53)
- --------------------------------------------------------------------------------
Total income (loss) from investment operations .01 (.04)
- --------------------------------------------------------------------------------
Less distributions to shareholders:
From net investment income (.55) (.49)
From net realized gains on investments (.01) (.05)
In excess of net realized gains on investments -- (.08)
- --------------------------------------------------------------------------------
Total distributions (.56) (.62)
- --------------------------------------------------------------------------------
Net asset value, end of year $ 8.79 $ 9.34
================================================================================
TOTAL RETURN .3% (.7%)**
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted) $2,148 $8,804
Ratios to average net assets:
Expenses .57% 0%+
Net investment income 6.16% 6.04%+
Voluntary advisory fee waiver++ .50% .50%
Voluntary expense reimbursement++ .18% .75%
Portfolio turnover rate 784% 174%
- --------------------------------------------------------------------------------
+ Annualized.
++ This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
* Commencement of operations.
** Total return calculated for the period June 14, 1993 through March 31, 1994
is not annualized.
See accompanying notes to financial statements.
<PAGE>
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of Evergreen U.S. Government Securities Fund
In our opinion, the accompanying Statement of Assets and Liabilities, including
the Statement of Investments, and the related Statements of Operations and of
Changes in Net Assets and the Financial Highlights present fairly, in all
material respects, the financial position of Evergreen U.S. Government
Securities Fund (constituting the only Fund in the Evergreen Fixed Income Trust,
hereafter referred to as the "Fund") at March 31, 1995, the results of its
operations for the year then ended and the changes in its net assets and the
financial highlights for the year then ended and for the period June 14, 1993
(commencement of operations) through March 31, 1994, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at March 31, 1995 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
April 26, 1995
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FEDERAL INCOME TAX STATUS OF DISTRIBUTIONS (unaudited)
During the year ended March 31, 1995, the Evergreen U.S. Government Securities
Fund paid the following distributions per share:
_________ NET INVESTMENT INCOME __________
CLASS Y
CLASS A CLASS B CLASS C CLASS Y SHORT-TERM
PAYABLE DATE SHARES SHARES SHARES SHARES GAIN
- ------------ ------- ------- ------- ------- ----------
April 29, 1994 - - - $.05137 -
May 31, 1994 - - - .04736 -
June 30, 1994 - - - .04775 -
July 29, 1994 - - - .04547 -
August 31, 1994 - - - .04526 -
September 30, 1994 - - - .04532 -
October 31, 1994 - - - .04058 -
November 30, 1994 - - - .04529 -
December 22, 1994 - - - - $.013
December 30, 1994 - - - .04941 -
January 31, 1995 $.03925 $.03583 $.03538 .04630 -
February 28, 1995 .03950 .03448 .03467 .04107 -
March 31, 1995 .04414 .03853 .03851 .04606 -
------ ------ ------ ------ ----
Total $.12289 $.10884 $.10856 $.55124 $.013
======= ======= ======= ======= =====
Net investment income and short-term gains are considered ordinary income for
Federal income tax purposes.
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<PAGE>
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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 & 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
or any bank, 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.
