EVERGREEN MUNICIPAL TRUST /DE/, 485APOS, 1998-10-30

EVERGREEN MUNICIPAL TRUST /DE/
485APOS, 1998-10-30

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1933 Act No. 333-36033
1940 Act No. 811-08367

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 9 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 10 [X]

EVERGREEN MUNICIPAL TRUST
(Exact Name of Registrant as Specified in Charter)

200 Berkeley Street, Boston, Massachusetts 02116-5034
(Address of Principal Executive Offices)

(617) 210-3200
(Registrant's Telephone Number)

The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
(Name and Address of Agent for Service)

It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[X] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485

If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)

<PAGE>

EVERGREEN MUNICIPAL TRUST

CONTENTS OF
POST-EFFECTIVE AMENDMENT NO. 9
to
REGISTRATION STATEMENT

This Post-Effective Amendment No. 9 to Registrant's Registration Statement
No. 333-36033/811-08367 consists of the following pages, items of information
and documents:

The Facing Sheet

The Contents Page

PART A
------

Prospectuses for Evergreen Florida High Income Municipal Bond Fund, Evergreen
Florida Municipal Bond Fund, Evergreen Georgia Municipal Bond Fund, Evergreen
Maryland Municipal Bond Fund, Evergreen North Carolina Municipal
Bond Fund, Evergreen South Carolina Municipal Bond Fund and Evergreen
Virginia Municipal Bond Fund are contained herein.

Prospectuses for Evergreen High Grade Tax Free Fund, Evergreen Short-
Intermediate Municipal Fund and Evergreen Tax Free Fund
contained in Post-Effective Amendment No. 8 to Registration Statement
No. 333-36033/811-08367 filed on September 30, 1998 are
incorporated by reference herein.

Prospectuses for Evergreen California Tax Free Fund, Evergreen Connecticut
Municipal Bond Fund, Evergreen Massachusetts Tax Free Fund, Evergreen Missouri
Tax Free Fund, Evergreen New York Tax Free Fund, Evergreen Pennsylvania Tax Free
Fund and Evergreen New Jersey Tax Free Income Fund contained in Post-
Effective Amendment No. 7 to Registration Statement No. 333-36033/811-08367
filed on July 31, 1998 are incorporated by reference herein.

PART B
------

Statement of Additional Information for Evergreen Florida High Income Municipal
Bond Fund, Evergreen Florida Municipal Bond Fund, Evergreen Georgia Municipal
Bond Fund, Evergreen Maryland Municipal Bond Fund, Evergreen North Carolina
Municipal Bond Fund, Evergreen South Carolina Municipal Bond Fund
and Evergreen Virginia Municipal Bond Fund
is contained herein.

Statement of Additional Information for Evergreen High Grade Tax Free Fund,
Evergreen Short-Intermediate Municipal Fund and Evergreen Tax Free Fund
contained in Post-Effective Amendment No. 8 to Registration Statement
No. 333-36033/811-08367 filed on September 30, 1998 is incorporated
by reference herein.

Statement of Additional Information for Evergreen California Tax Free Fund,
Evergreen Connecticut Municipal Bond Fund, Evergreen Massachusetts Tax Free
Fund, Evergreen Missouri Tax Free Fund, Evergreen New York Tax Free Fund,
Evergreen Pennsylvania Tax Free Fund and Evergreen New Jersey Tax Free Income
Fund contained in Post-Effective Amendment No. 7 to Registration Statement
No. 333-36033/811-08367 filed on July 31, 1998 is incorporated by reference
herein.

PART C
------

Exhibits

Indemnification

Business and Other Connections of Investment Advisor

Principal Underwriter

Location of Accounts and Records

Undertakings

Signatures

<PAGE>

EVERGREEN MUNICIPAL TRUST

PART A

PROSPECTUSES

<PAGE>

EVERGREEN

Southern State
Municipal Bond
Funds

Evergreen Florida High Income Municipal Bond Fund
Evergreen Florida Municipal Bond Fund
Evergreen Georgia Municipal Bond Fund
Evergreen Maryland Municipal Bond Fund
Evergreen North Carolina Municipal Bond Fund
Evergreen South Carolina Municipal Bond Fund
Evergreen Virginia Municipal Bond Fund

Class A
Class B
Class C

Prospectus, January 1, 1999

The Securities and Exchange Commission has not guaranteed that the information
in this prospectus is accurate or complete, nor has it evaluated the investment
merit of these mutual fund shares. Anyone who tells you otherwise is committing
a federal crime.

<PAGE>

FUND SUMMARIES:
Evergreen Florida High Income Municipal
Bond Fund 4
Evergreen Florida Municipal Bond Fund 6
Evergreen Georgia Municipal Bond Fund 8
Evergreen Maryland Municipal Bond Fund 10
Evergreen North Carolina Municipal
Bond Fund 12
Evergreen South Carolina Municipal
Bond Fund 14
Evergreen Virginia Municipal Bond Fund 16
GENERAL INFORMATION:
The FundsA Investment Advisor 18
Calculating the Share Price 18
How to Choose a Fund 18
How to Choose the Share Class
That Best Suits You 18
How to Buy Shares 19
How to Sell Shares 20
Other Services 21
The Tax Consequences of
Investing in the Fund 22
Sales Compensation and Expenses 23
Financial Highlights 24
Fund Investments 32

- --------------------------------------------------
Risk Factors For All Mutual Funds
Please remember that mutual fund shares are:
o not guaranteed to achieve their goal
o not insured, endorsed or guaranteed by the
FDIC, a bank or any government agency
o subject to investment risks, including possible
loss of your original investment

IN GENERAL, funds included in this prospectus seek to provide investors with
current income exempt from federal income tax and certain state income tax,
consistent with the preservation of capital. The funds emphasize investments in
securities with higher yields and longer maturities.

Fund Summaries Key
Each fund's summary is organized around the following basic topics and
questions:

INVESTMENT GOAL
What is the fund's financial objective? You can find clarification on how the
fund seeks to achieve these goals by looking at the fund's strategy and
investment policies. The fund's Board of Trustees can change the investment
objective without a shareholder vote.

INVESTMENT STRATEGY
How does the fund go about trying to meet its goals? What types of investments
does it contain? What style of investing and investment philosophy does it
follow? Does it have limits on the amount invested in any particular type of
security?

RISK FACTORS
What are the specific risks for an investor in the fund?

PORTFOLIO MANAGEMENT
Who selects investments for the fund? What is his or her background and
experience?

PERFORMANCE
How well has the fund performed in the past year? The past five years? The past
ten years?

EXPENSES
How much does it cost to invest in the fund? What is the difference between
sales charges and expenses?

Southern State Municipal Bond Funds typically rely on the following strategies:

o investing at least 80% of their assets in federally tax exempt municipal
securities;

o investing at least 65% of their assets in municipal securities that are
exempt from income or intangibles taxes, as applicable, in the state for
which the fund is named; and

o investing at least 80% of their assets in investment grade municipal
securities, which are bonds rated within the four highest ratings
categories by the nationally recognized statistical ratings organizations
(except Florida High Income Municipal Bond Fund which invests 65% of its
assets in below investment grade bonds and Maryland Municipal Bond Fund
invests all of its assets in investment grade securities).

may be appropriate for investors who:

o seek a high quality portfolio of municipal bond funds (except Florida
High Income Municipal Bond Fund )

o seek income which is exempt from federal and state income tax

Like most investments, your investment in an Evergreen Southern State Municipal
Bond Fund could fluctuate significantly in value over time and could result in a
loss of money.

Each of the Evergreen Southern State Municipal Bond Funds reserves the right to
invest in high quality money market instruments in order to protect the value of
the fund in response to adverse economic, political or market conditions. This
strategy is inconsistent with these funds' principal investment strategies, and
if employed could result in a low return and potential loss of market
opportunity.

Here are the most important factors that may affect the value of your
investment:

Stock Market Risk
Your investment will be affected by general economic conditions such as
prevailing economic growth, inflation and interest rates. When economic growth
slows, or interest or inflation rates increase, securities tend to decline in
value. Even if general economic conditions do not change, your investment may
decline in value if the particular industries or issuers your fund invests in do
not perform well.

Interest Rate Risk
When interest rates go up, the value of debt securities tends to fall. Since
your fund invests a significant portion of its portfolio in debt securities and
interest rates rise, then the value of your investment may decline. The opposite
is also true.

Credit Risk
The value of debt securities is directly affected by an issuer's ability to pay
principal and interest on time. Since your fund invests in debt securities, then
the value of your investment may be adversely affected when an issuer fails to
pay an obligation on a timely basis.

Municipal Securities Risk
The value of municipal bonds tends to go up when interest rates go down and to
go down when interest rates go up. Political developments or fiscal
mismanagement could affect the issuer's ability to make prompt payments of
interest and principal. Those events could also affect the market value of the
security. Moreover, the market for municipal bonds may at times be inactive and
can be temporarily affected by large purchases and sales, including those by a
fund.

Below Investment Grade Bond Risk
Below investment grade bonds are commonly referred to as "junk bonds" because
they are usually backed by issuers of less proven or questionable financial
strength. Such issuers are more vulnerable to financial setbacks and less
certain to pay interest and principal than issuers of bonds offering lower
yields and risk. Markets may react to unfavorable news about issuers of below
investment grade bonds causing sudden and steep declines in value.

Non-Diversification Risk
An investment in a fund that is non-diversified entails greater risk than an
investment in a diversified fund. When a fund is non-diversified, there is no
limit on the percentage of assets that can be invested in any single issuer. A
higher percentage of investments among fewer issuers may result in greater
fluctuation in the total market value of the fund's portfolio.
<PAGE>

Florida High Income Municipal Bond Fund
FUND FACTS:

Goal:
- - High Current Income

Principal Investment:
- - Municipal Securities

Classes of Shares:
- - Class A
- - Class B
- - Class C

Investment Advisor:
- - Capital Management Group

Portfolio Manager:
- - Richard K. Marrone

NASDAQ Symbols:
EFHAX (Class A)
EFHBX (Class B)
EFHCX (Class C)

[GRAPHIC OMITTED] INVESTMENT GOAL

The Fund seeks to provide a high level of current income that is exempt from
federal income taxes.

[GRAPHIC OMITTED] INVESTMENT STRATEGY

The Fund normally invests at least 65% of its assets in below investment grade
municipal securities. The Fund currently invests at least 80% of its assets in
federally exempt municipal securities. The Fund also invests at least 65% of its
assets in municipal securities that are exempt from intangibles taxes in the
State of Florida.

The Fund is a diversified series, and, as such, there is a limit on the
percentage of assets that can be invested in any single issuer. See the
Statement of Additional Information for more detail.

Dividend Payment Schedule: Monthly

[GRAPHIC OMITTED] RISK FACTORS

Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:

- - Stock Market Risk
- - Interest Rate Risk
- - Credit Risk
- - Municipal Securities Risk
- - Below Investment Grade Bond Risk

In addition, you may lose money in the Fund due to adverse political and
economic developments within the State of Florida.

Although individual shareholders of the Fund will not be subject to any Florida
State income tax on distributions received from the Fund, certain distributions
will be taxable to corporate shareholders who are subject to Florida corporate
income tax. Florida currently imposes intangibles tax at the annual rate of
0.20% on certain securities and other intangible assets owned by Florida
residents.

In some instances, only a portion of the shares of the Fund which relate to
securities issued by the U.S. and its possessions and territories will be exempt
from the Florida intangibles tax, and the remaining portion of such shares will
be fully subject to the intangibles tax, even if they partly relate to Florida
tax exempt securities. See the Statement of Additional Information for more
detail.

[GRAPHIC OMITTED] PORTFOLIO MANAGEMENT

The Fund's investment advisor is the Capital Management Group of First Union
National Bank ("CMG").

The day-to-day management of the Fund is handled by Richard K. Marrone. Since
joining First Union National Bank in 1993, Mr. Marrone has been a Vice President
and Senior Fixed Income Portfolio Manager. Mr. Marrone has managed the Fund
since 1995.

<PAGE>

[GRAPHIC OMITTED] PERFORMANCE

The following charts show how the Fund has performed in the past.

This chart below shows the percentage gains or loss for Class A shares of the
Fund in each calendar year since the Class A shares' inception on 6/17/92. It
should give you a general idea of how the Fund's return has varied from
year-to-year. This graph includes the effects of Fund expenses, but not sales
charges. Returns would be lower if sales charges were included.

Year-by-Year Total Return for Class A Shares (%)

1992* 1993 1994 1995 1996 1997

4.74% 13.97% -4.41% 18.47% 5.57% 10.73%

Best Quarter: 1st Quarter 1995 +7.54%
Worst Quarter: 1st Quarter 1994 -4.53%

*From inception on 6/17/92 to 12/31/92.

Year to date total return through 9/30/98 is 5.67%

This next table lists the Fund's average year-by-year return over the past one
and five years or since each class' inception (through 12/31/97), including
sales charges. At the bottom of the table you can compare this performance with
the Lehman Brothers Municipal Bond Index. The Lehman Brothers Municipal Bond
Index is a broad market performance benchmark for the tax exempt bond market.
This index tracks investments similar to the Fund; it is not an actual
investment. PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS.

Average Annual Total Return
(for the period ended 12/31/97)
Inception Since
Date 1 year 5 year 10 year Inception

Class A 6/17/92 5.47% 7.52% N/A 7.65%
Class B 7/10/95 4.90% N/A N/A 7.02%
Class C 3/6/98 N/A N/A N/A N/A
Lehman
Muni Bond 9.19% 7.36% 8.58%

[GRAPHIC OMITTED] EXPENSES

This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

Fees You Pay Directly
Shareholder Transaction Expenses Class A Class B Class C
Maximum sales charge imposed on 4.75% None None
purchases (as a % of offering
price)
Maximum deferred sales charge None 5.00% 1.00%

Fees the Fund Pays Directly (and You Pay Indirectly) Annual Fund Operating
Expenses (as a % of net asset value)*:
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses
Class A 0.60% 0.25% 0.21% 1.06%
Class B 0.60% 1.00% 0.21% 1.81%
Class C 0.60% 1.00% 0.21% 1.81%

*From time to time, the Fundis investment advisor may, at its discretion, reduce
or waive its fees or reimburse a Fund for certain of its expenses in order to
reduce expense ratios. The Fundis investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating fees for Class A, Class B and Class C would be
0.86%, 1.61% and 1.61%, respectively.

The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.

Example of Fund Expenses

Assuming Redemption at Assuming
End of Period No Redemption

Class A Class B Class C Class B Class C

After 1 year $578 $684 $284 $184 $184
After 3 years $796 $869 $569 $569 $569
After 5 years $1,032 $1,080 $980 $980 $980
After 10 years $1,708 $1,837 $2,127 $1,837 $2,127

<PAGE>

Florida Municipal Bond Fund
FUND FACTS:

Goal:
- - Current Income

Principal Investment:
- - Municipal Securities

Classes of Shares:
- - Class A
- - Class B
- - Class C

Investment Advisor:
- - Capital Management Group

Portfolio Manager:
- - Richard K. Marrone

NASDAQ Symbols:
EFMAX (Class A)
EFMBX (Class B)

[GRAPHIC OMITTED] INVESTMENT GOAL

The Fund seeks current income exempt from federal regular income tax and
intangibles taxes, consistent with preservation of capital.

[GRAPHIC OMITTED] INVESTMENT STRATEGY

The Fund normally invests at least 80% of its assets in federally tax exempt
municipal securities and investment grade municipal securities. The Fund also
invests at least 65% of its assets in municipal securities that are exempt from
intangibles taxes in the State of Florida. The Fund may invest at least 20% of
its assets in below investment grade bonds.

Dividend Payment Schedule: Monthly

[GRAPHIC OMITTED] RISK FACTORS

Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:

- - Stock Market Risk
- - Interest Rate Risk
- - Credit Risk
- - Municipal Securities Risk
- - Below Investment Grade Bond Risk
- - Non-Diversification Risk

In addition, you may lose money in the Fund due to adverse political and
economic developments within the State of Florida.

Although individual shareholders of the Fund will not be subject to any Florida
state income tax on distributions received from the Fund, certain distributions
will be taxable to corporate shareholders that are subject to Florida corporate
income tax. Florida currently imposes intangibles tax at the annual rate of
0.20% on certain securities and other intangible assets owned by Florida
residents.

[GRAPHIC OMITTED] PORTFOLIO MANAGEMENT

The Fund's investment advisor is the Capital Management Group of First Union
National Bank ("CMG").

<PAGE>

[GRAPHIC OMITTED] PERFORMANCE

The following charts show how the Fund has performed in the past.

This chart below shows the percentage gain or loss of the Fund's Class A shares
in each of the last ten calendar years. It should give you a general idea of how
the Fund's return has varied from year-to-year. This graph includes the effects
of Fund expenses, but not sales charges. Returns would be lower if sales charges
were included.

Year-by-Year Total Return for Class A Shares (%)

1988* 1989 1990 1991 1992 1993

6.84% 7.25% 7.21% 12.32% 9.13% 12.30%

1994 1995 1996 1997

- -4.63% 17.44% 3.14% 9.78%

Best Quarter: 1st Quarter 1995 + 7.06%
Worst Quarter: 1st Quarter 1994 -5.07%

*From inception on 5/11/88 to 12/31/88

Year to date total return through 9/30/98 is 5.78%.

This next table lists the Fund's average year-by-year return over the past one
and five years or since each class' inception (through 12/31/97), including
sales charges. At the bottom of the table you can compare this performance with
the Lehman Brothers Municipal Bond Index. The Lehman Brothers Municipal Bond
Index is a broad market performance benchmark for the tax exempt bond market
which tracks investments similar to the those of the Fund; it is not an actual
investment. PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS.

Average Annual Total Return
(for the period ended 12/31/97)

Inception Since
Date 1 year 5 year 10 year Inception
Class A 5/11/88 4.56% 6.29% N/A 7.68%
Class B 6/30/95 3.77% N/A N/A 6.07%
Class C 1/20/98 N/A N/A N/A N/A
Lehman
Muni Bond 9.19% 7.36% 8.58%

[GRAPHIC OMITTED] EXPENSES

This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

Fees You Pay Directly

Shareholder Transaction Expenses Class A Class B Class C
Maximum sales charge 4.75% None None
imposed on purchases
(as a % of offering price)
Maximum deferred sales charge None 5.00% 1.00%

Fees the Fund Pays Directly (and You Pay Indirectly) Annual Fund Operating
Expenses (as a % of net asset value)*:

Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses

Class A 0.50% 0.25% 0.20% 0.95%
Class B 0.50% 1.00% 0.20% 1.70%
Class C 0.50% 1.00% 0.20% 1.70%

Example of Fund Expenses

Assuming Redemption at Assuming
End of Period No Redemption

Class A Class B Class C Class B Class C

After 1 year $567 $673 $273 $173 $173
After 3 years $763 $836 $536 $536 $536
After 5 years $976 $1,123 $923 $923 $923
After 10 years $1,586 $1,712 $2,009 $1,712 $2,009

<PAGE>

Georgia Municipal Bond Fund
FUND FACTS:

Goal:
- - Current Income

Principal Investment:
- - Municipal Securities

Classes of Shares:
- - Class A
- - Class B

Investment Advisor:
- - Capital Management Group

Portfolio Manager:
- - Charles E. Jeanne

NASDAQ Symbols:
EGAAX (Class A)
EGABX (Class B)

[GRAPHIC OMITTED] INVESTMENT GOAL

The Fund seeks current income exempt from federal regular income tax and state
income taxes, consistent with preservation of capital.

INVESTMENT STRATEGY

The Fund normally invests at least 80% of its assets in federally tax exempt
municipal securities and investment grade municipal securities. The Fund also
invests at least 65% of its assets in municipal securities that are exempt from
income or intangibles taxes in the State of Georgia. The Fund may invest at
least 20% of its assets in below investment grade bonds

Dividend Payment Schedule: Monthly

[GRAPHIC OMITTED] RISK FACTORS

Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:

- - Stock Market Risk
- - Interest Rate Risk
- - Credit Risk
- - Municipal Securities Risk
- - Below Investment Grade Bond Risk
- - Non-Diversification Risk

In addition, you may lose money in the Fund due to adverse political and
economic developments within the State of Georgia.

Fund distributions, if any, derived from capital gains generally will be subject
to Georgia income tax. See the Statement of Additional Information for more
detail.

[GRAPHIC OMITTED] PORTFOLIO MANAGEMENT

The Fund's investment advisor is the Capital Management Group of First Union
National Bank ("CMG").

The day-to-day management of the Fund is handled by Charles E. Jeanne. Since
joining First Union National Bank in 1993, Mr. Jeanne has been an Assistant Vice
President and Portfolio Manager.

<PAGE>

[GRAPHIC OMITTED] PERFORMANCE

The following charts show how the Fund has performed in the past.

This chart below shows the percentage gains or loss for Class A shares of the
Fund in each calendar year since the Class A shares' inception on 7/2/93. It
should give you a general idea of how the Fund's return has varied from
year-to-year. This graph includes the effects of Fund expenses, but not sales
charges. Returns would be lower if sales charges were included.

Year-by-Year Total Return for Class A Shares (%)

1993* 1994 1995 1996 1997

3.96% -9.64% 19.80% 3.17% 10.47%

Best Quarter: 1st Quarter 1995 +8.60%
Worst Quarter: 1st Quarter 1994 -8.72%
*From inception on 7/2/93 to 12/31/93.
Year to date total return through 9/30/98 is 5.80%.

This next table lists the Fund's average year-by-year return over the past year
and since each class' inception, including sales charges. At the bottom of the
table you can compare this performance with the Lehman Brothers Municipal Bond
Index. The Lehman Brothers Municipal Bond Index is a broad market performance
benchmark for the tax exempt bond market which tracks investments similar to
those of the Fund; it is not an actual investment. PAST PERFORMANCE IS NOT AN
INDICATION OF FUTURE RESULTS.

Average Annual Total Return
(for the period ended 12/31/97)
Inception Since
Date 1 year 5 year 10 year Inception

Class A 7/2/93 5.22% N/A N/A 4.55%
Class B 7/2/93 4.64% N/A N/A 4.60%
Lehman
Muni Bond 9.19% 7.36% 8.58%

[GRAPHIC OMITTED] EXPENSES

This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

Fees You Pay Directly

Shareholder Transaction Expenses Class A Class B
Maximum sales charge imposed on
purchases (as a % of offering 4.75% None
price)
Maximum deferred sales charge None 5.00%

Fees the Fund Pays Directly (and You Pay Indirectly) Annual Fund Operating
Expenses (as a % of net asset value)*:

Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses

Class A 0.50% 0.25% 0.30% 1.05%
Class B 0.50% 1.00% 0.30% 1.80%

Example of Fund Expenses

Assuming Redemption at Assuming
End of Period No Redemption

Class A Class B Class B

After 1 year $577 $683 $182
After 3 years $793 $866 $566
After 5 years $1,027 $1,175 $974
After 10 years $1,697 $1,826 $1,826

<PAGE>

Maryland Municipal Bond Fund
FUND FACTS:

Goal:
- - Current Income

Principal Investment:
- - Municipal Securities

Classes of Shares:
- - Class A
- - Class B
- - Class C

Investment Advisor:
- - Capital Management Group

Portfolio Manager:
- - Charles E Jeanne

NASDAQ Symbols:
EMDAX (Class A)
EMDBX (Class B)

[GRAPHIC OMITTED] INVESTMENT GOAL

The Fund seeks current income exempt from federal regular income tax and, where
applicable, state income taxes, consistent with preservation of capital.

[GRAPHIC OMITTED] INVESTMENT STRATEGY

The Fund currently invests all of its assets in investment grade municipal
securities. The Fund invests at least 80% of its assets in federally tax exempt
municipal securities. The Fund also invests at least 65% of its assets in
municipal securities that are exempt from income or intangibles taxes, as
applicable, in the State of Maryland.

Dividend Payment Schedule: Monthly

[GRAPHIC OMITTED] RISK FACTORS

Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:

- - Stock Market Risk
- - Interest Rate Risk
- - Credit Risk
- - Municipal Securities Risk
- - Non-Diversification Risk

In addition, you may lose money in the Fund due to
adverse political and economic developments within the State of Maryland.

[GRAPHIC OMITTED] PORTFOLIO MANAGEMENT

The Fund's investment advisor is the Capital Management Group of First Union
National Bank ("CMG").

The day-to-day management of the Fund is handled by Charles E. Jeanne. Since
joining First Union National Bank in 1993, Mr. Jeanne has been an Assistant Vice
President and Portfolio Manager.

<PAGE>

[GRAPHIC OMITTED] PERFORMANCE

The following charts show how the Fund has performed in the past.

This chart below shows the percentage gains or loss for Class A shares of the
Fund in each calendar year since the Class A shares' inception on 10/30/90. It
should give you a general idea of how the Fund's return has varied from
year-to-year. This graph includes the effects of Fund expenses, but not sales
charges. Returns would be lower if sales charges were included.

Year-by-Year Total Return for Class B Shares (%)

1990* 1991 1992 1993 1994 1995

0.63% 8.88% 7.38% 11.96% -6.82% 14.88%

1996 1997

1.57% 6.77%

Best Quarter: 1st Quarter 1995 +6.58%
Worst Quarter: 1st Quarter 1994 -5.77%

*From inception on 10/30/90 to 12/31/90.

Year to date total return through 9/30/98 is 4.90%.

This next table lists the Fund's average year-by-year return over the past one
and five years or since each class' inception (through 12/31/97), including
sales charges. At the bottom of the table you can compare this performance with
the Lehman Brothers Municipal Bond Index. The Lehman Brothers Municipal Bond
Index is a broad market performance benchmark for the tax exempt bond market
which tracks investments similar to those of the Fund; it in not an actual
investment. PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS.

Average Annual Total Return
(for the period ended 12/31/97)

Inception Since
Date 1 year 5 year 10 year Inception

Class A 10/30/90 1.70% 4.36% N/A 5.38%
Class B 3/27/98 N/A N/A N/A N/A
Class C 3/27/98 N/A N/A N/A N/A
Lehman
Muni Bond 9.19% 7.36% 8.58%

[GRAPHIC OMITTED] EXPENSES

This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

Fees the Fund Pays Directly (and You Pay Indirectly) Annual Fund Operating
Expenses (as a % of net asset value)*:

Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses

Class A 0.50% 0.25% 0.51% 1.26%
Class B 0.50% 1.00% 0.51% 2.01%
Class C 0.50% 1.00% 0.51% 2.01%

Example of Fund Expenses

Assuming Redemption at Assuming
End of Period No Redemption
Class A Class B Class C Class B Class C

After 1 year $597 $704 $304 $204 $204
After 3 years $856 $930 $630 $630 $630
After 5 years $1,134 $1,283 $1,083 $1,083 $1,083
After 10 years $1,925 $2,054 $2,338 $2,054 $2,338

<PAGE>

North Carolina Municipal Bond Fund
FUND FACTS:

Goal:
- - Current Income

Principal Investment:
- - Municipal Securities

Classes of Shares:
- - Class A
- - Class B

Investment Advisor:
- - Capital Management Group

Portfolio Manager:
- - Richard K. Marrone

NASDAQ Symbols:
ENCMX (Class A)
ENCBX (Class B)

[GRAPHIC OMITTED] INVESTMENT GOAL

The Fund seeks current income exempt from federal regular income tax and state
income taxes, consistent with preservation of capital.

[GRAPHIC OMITTED] INVESTMENT STRATEGY

The Fund normally invests at least 80% of its assets in federally tax exempt
municipal securities and investment grade municipal securities. The Fund also
invests at least 65% of its assets in municipal securities that are exempt from
income or intangibles taxes in the State of North Carolina. The Fund may invest
at least 20% of its assets in below investment grade bonds.

Dividend Payment Schedule: Monthly

[GRAPHIC OMITTED] RISK FACTORS

Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:

- - Stock Market Risk
- - Interest Rate Risk
- - Credit Risk
- - Municipal Securities Risk
- - Below Investment Grade Bond Risk
- - Non-Diversification Risk

In addition, you may lose money in the Fund due to adverse political and
economic developments within the State of North Carolina.

For corporate shareholders, the exemption from individual or corporate North
Carolina income taxes is limited to $15,000 per year, and otherwise exempt
income from the Fund will be subject to a corporate income tax. Distributions,
if any, derived from Fund net capital gains or other sources generally will be
subject to the North Carolina income tax. See the Statement of Additional
Information for more detail.

[GRAPHIC OMITTED] PORTFOLIO MANAGEMENT

The Fund's investment advisor is the Capital Management Group of First Union
National Bank ("CMG").

<PAGE>

[GRAPHIC OMITTED] PERFORMANCE

The following charts show how the Fund has performed in the past.

This chart below shows the percentage gains or loss for Class A shares of the
Fund in each calendar year since the Class A shares' inception on 1/11/93. It
should give you a general idea of how the Fund's returns have varied from
year-to-year. This graph includes the effects of Fund expenses, but not sales
charges. Returns would be lower if sales charges were included.

Year-by-Year Total Return for Class A Shares (%)

1993* 1994 1995 1996 1997

11.28% -9.12% 20.76% 1.54% 10.40%

Best Quarter: 1st Quarter 1995 +8.95%
Worst Quarter: 1st Quarter 1994 - 7.47%

*From inception on 1/11/93 to 12/31/93.

Year to date total return through 9/30/98 is 5.75%.

This next table lists the Fund's average year-by-year return over the past year
or since each class' inception (through 12/31/97), including sales charges. At
the bottom of the table you can compare this performance with the Lehman
Brothers Municipal Bond Index. The Lehman Brothers Municipal Bond Index is a
broad market performance benchmark for the tax exempt bond market which tracks
investments similar to those of the Fund; it is not an actual investment. PAST
PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS.

Average Annual Total Return
(for the period ended 12/31/97)

Inception Since
Date 1 year 5 year 10 year Inception

Class A 1/11/93 5.16% N/A N/A 5.48%
Class B 1/11/93 4.58% N/A N/A 5.50%
Lehman
Muni Bond 9.19% 7.36% 8.58%

[GRAPHIC OMITTED] EXPENSES

This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

Fees You Pay Directly

Shareholder Transaction Expenses Class A Class B
Maximum sales charge imposed on 4.75% None
purchases (as a % of offering
price)
Maximum deferred sales charge None 5.00%

Fees the Fund Pays Directly (and You Pay Indirectly) Annual Fund Operating
Expenses (as a % of net asset value)*:

Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses

Class A 0.50% 0.25% 0.25% 1.00%
Class B 0.50% 1.00% 0.25% 1.75%

Example of Fund Expenses

Assuming Redemption at Assuming
End of Period No Redemption

Class A Class B Class B

After 1 year $572 $678 $178
After 3 years $778 $851 $551
After 5 years $1,001 $1,149 $948
After 10 years $1,641 $1,771 $1,771

<PAGE>

South Carolina Municipal Bond Fund
FUND FACTS:

Goal:
- - Current Income

Principal Investment:
- - Municipal Securities

Classes of Shares:
- - Class A
- - Class B

Investment Advisor:
- - Capital Management Group

Portfolio Manager:
- - Charles E. Jeanne

NASDAQ Symbols:
None

[GRAPHIC OMITTED] INVESTMENT GOAL

The Fund seeks current income exempt from federal regular income tax and state
income taxes, consistent with preservation of capital.

[GRAPHIC OMITTED] INVESTMENT STRATEGY

The Fund normally invests at least 80% of its assets in federally tax exempt
municipal securities and investment grade municipal securities. The Fund also
invests at least 65% of its assets in municipal securities that are exempt from
income or intangibles taxes, as applicable, in the State of South Carolina. The
Fund may invest at least 20% of its assets in below investment grade bonds.

Dividend Payment Schedule: Monthly

[GRAPHIC OMITTED] RISK FACTORS

Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:

- - Stock Market Risk
- - Interest Rate Risk
- - Credit Risk
- - Municipal Securities Risk
- - Below Investment Grade Bond Risk
- - Non-Diversification Risk

In addition, you may lose money in the Fund due to adverse political and
economic developments within the State of South Carolina.

Distributions, if any, derived from Fund net capital gains or other sources,
generally will be subject to South Carolina income tax. See the Statement of
Additional Information for more detail.

[GRAPHIC OMITTED] PORTFOLIO MANAGEMENT

The Fund's investment advisor is the Capital Management Group of First Union
National Bank ("CMG").

The day-to-day management of the Fund is handled by Charles E. Jeanne. Since
joining First Union National Bank in 1993, Mr. Jeanne has been an Assistant Vice
President and Portfolio Manager.

[GRAPHIC OMITTED] PERFORMANCE

The following charts show how the Fund has performed in the past.

This chart below shows the percentage gains or loss for Class A shares of the
Fund in each calendar year since the Class A shares' inception on 1/3/94. It
should give you a general idea of how the Fund's return has varied from
year-to-year. This graph includes the effects of Fund expenses, but not sales
charges. Returns would be lower if sales charges were included.

Year-by-Year Total Return for Class A Shares (%)

1994* 1995 1996 1997

- -9.32% 21.81% 4.49% 9.60%

Best Quarter: 1st Quarter 1995 +9.90%
Worst Quarter: 1st Quarter 1994 -7.66%

*Since inception on 1/3/94 to 12/31/94.

Year to date total return through 9/30/98 is 5.68%.

This next table lists the Fund's average year-by-year return over the past year
or since each class' inception, including sales charges. At the bottom of the
table you can compare this performance with the Lehman Brothers Municipal Bond.
The Lehman Brothers Municipal Bond Index is a broad market performance benchmark
for the tax exempt bond market which tracks investments similar to those of the
Fund; it is not an actual investment. Past performance is not an indication of
future results.

Average Annual Total Return
(for the period ended 12/31/97)

Inception Since
Date 1 year 5 year 10 year Inception

Class A 1/3/94 4.39% N/A N/A 4.77%
Class B 1/3/94 3.78% N/A N/A 4.66%
Lehman
Muni Bond 9.19% 7.36% 8.58%

[GRAPHIC OMITTED] EXPENSES

This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

Fees You Pay Directly

Shareholder Transaction ExpensesClass A Class B Maximum sales charge imposed
on 4.75% None purchases (as a % of offering price) Maximum deferred sales
charge None 5.00%

Fees the Fund Pays Directly (and You Pay Indirectly) Annual Fund Operating
Expenses (as a % of net asset value)*:

Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses

Class A 0.50% 0.25% 0.20% 0.95%
Class B 0.50% 1.00% 0.20% 1.70%

*From time to time, the Fund's investment advisor may, at its discretion, reduce
or waive its fees or reimburse a Fund for certain of its expenses in order to
reduce expense ratios. The Fund's investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating fees for Class A, Class B and Class C would be
0.70%, 1.45% and 1.45%, respectively.

Example of Fund Expenses

Assuming Redemption at Assuming
End of Period No Redemption

Class A Class B Class B

After 1 year $567 $673 $173
After 3 years $763 $836 $536
After 5 years $976 $1,123 $923
After 10 years $1,586 $1,716 $1,716

<PAGE>

Virginia Municipal Bond Fund
FUND FACTS:

Goal:
- - Current Income

Principal Investment:
- - Municipal Securities

Classes of Shares:
- - Class A
- - Class B

Investment Advisor:
- - Capital Management Group

Portfolio Manager:
- - Charles E. Jeanne

NASDAQ Symbols:
EGVRX (Class A)

[GRAPHIC OMITTED] INVESTMENT GOAL

The Fund seeks current income exempt from federal regular income tax and state
income taxes, consistent with preservation of capital.

[GRAPHIC OMITTED] INVESTMENT STRATEGY

The Fund normally invests at least 80% of its assets in federally tax exempt
municipal securities and investment grade municipal securities. The Fund also
invests at least 65% of its assets in municipal securities that are exempt from
income or intangibles taxes in the State of Virginia. The Fund may invest at
least 20% of its assets in below investment grade bonds.

Dividend Payment Schedule: Monthly

[GRAPHIC OMITTED] RISK FACTORS

Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:

- - Stock Market Risk
- - Interest Rate Risk
- - Credit Risk
- - Municipal Securities Risk
- - Below Investment Grade Bond Risk
- - Non-Diversification Risk

In addition, you may lose money in the Fund due to adverse political and
economic developments within the State of Virginia.

Distributions, if any, derived from the Fund's net capital gains or other
sources generally will be subject to Virginia income tax. See the Statement of
Additional Information for more detail.

[GRAPHIC OMITTED] PORTFOLIO MANAGEMENT

The Fund's investment advisor is the Capital Management Group of First Union
National Bank ("CMG").

The day-to-day management of the Fund is handled by Charles E. Jeanne. Since
joining First Union National Bank in 1993, Mr. Jeanne has been an Assistant Vice
President and Portfolio Manager.

[GRAPHIC OMITTED] PERFORMANCE

The following charts show how the Fund has performed in the past.

Year-by-Year Total Return for Class A Shares (%)

1993* 1994 1995 1996 1997

3.89% -8.60% 20.32% 2.79% 9.57%

+ 9.25%
Worst Quarter: 1st Quarter 1994 -8.02%

*From inception on 7/2/93 to 12/31/93.

Year to date total return through 9/30/98 is 5.79%.

This next table lists the Fund's average year-by-year return over the past year
or since each class' inception, including sales charges. At the bottom of the
table you can compare this performance with the Lehman Brothers Municipal Bond
Index. The Lehman Brothers Municipal Bond Index is a broad market performance
benchmark for the tax exempt bond market which tracks investments similar to the
those of the Fund; it is not an actual investment. Past performance is not an
indication of future results.

Average Annual Total Return
(for the period ended 12/31/97)

Inception Since
Date 1 year 5 year 10 year Inception

Class A 7/2/93 4.37% N/A N/A 4.62%
Class B 7/2/93 3.75% N/A N/A 4.67%
Lehman
Muni Bond 9.19% 7.36% 8.58%

[GRAPHIC OMITTED] EXPENSES

This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

Fees You Pay Directly

Shareholder Transaction Expenses Class A Class B
Maximum sales charge imposed on 4.75% None
purchases (as a % of offering
price)
Maximum deferred sales charge None 5.00%

Fees the Fund Pays Directly (and You Pay Indirectly) Annual Fund Operating
Expenses (as a % of net asset value)*:
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses
Class A 0.50% 0.25% 0.29% 1.04%
Class B 0.50% 1.00% 0.29% 1.79%

Example of Fund Expenses

Assuming Redemption at Assuming
End of Period No Redemption

Class A Class B Class B

After 1 year $576 $682 $182
After 3 years $790 $863 $563
After 5 years $1,022 $1,170 $970
After 10 years $1,686 $1,815 $1,815

<PAGE>

THE FUNDS' INVESTMENT ADVISOR

The investment advisor manages a Fund's investments and supervises its daily
business affairs. There is one investment advisor for the Evergreen Southern
State Municipal Bond Funds. The advisor and portfolio manager for each Fund is
listed in the section entitled portfolio management. All investment advisors for
the Evergreen Funds are subsidiaries of First Union Corporation, the sixth
largest bank holding company in the United States, with over $220 billion in
consolidated assets as of {DATE}. First Union Corporation is located at 301
South College Street, Charlotte, North Carolina 28288-0630.

Capital Management Group of First Union National Bank (CMG) has been managing
money for over 50 years and currently manages over $XX billion in investment
assets, including XX of the Evergreen Funds. CMG is located at 201 South College
Street, Charlotte, North Carolina 28288-0630.

Year 2000 Compliance
The investment advisors and other service providers for the Evergreen Funds are
taking steps to address any potential Year 2000-related computer problems.
However, there is some risk that these problems could disrupt the funds'
operations or financial markets generally.

CALCULATING THE SHARE PRICE

The value of one share, also known as the net asset value, or NAV, is calculated
on each day the New York Stock Exchange is open as of the close of the Exchange
(normally 4:00 p.m. Eastern time). We calculate the share price for each share
by adding up the total assets of the portfolio, subtracting all liabilities,
then dividing by the total number of shares outstanding. Each security held by a
fund is valued using the most recent market quote for that security. If no
market quotation is available for a given security, we will price that security
at fair value according to policies established by the Funds' Board of Trustees.

The price relative for a fund purchase or redemption is the next price
calculated after the order is received and all required information is provided.
The value of your account at any given time is the latest share price multiplied
by the number of shares you own. Your account balance may change daily because
the share price may change daily.

HOW TO CHOOSE A FUND

There are two important steps to choosing an Evergreen Fund:
1. Most importantly, read the prospectus to see if the fund is suitable for you.
2. Talk to an investment professional. He or she is qualified to give you
investment advice based on your investment goals and financial situation and
will be able to answer questions you may have after reading the fund's
prospectus. He or she can also assist you through all phases of opening your
account.

HOW TO CHOOSE THE SHARE
CLASS THAT BEST SUITS YOU

After choosing a fund, you select a share class. Evergreen Florida High Income
Municipal Bond Fund and Evergreen Florida Municipal Bond Fund offer three
different retail share classes. The other funds offer two different retail
classes. Each retail class of shares has its own sales charge. Pay particularly
close attention to this fee structure so you know how much you will be paying
before you invest.

Class A
If you select Class A shares, you may pay a front-end sales charge of up to
4.75%. This charge is deducted from your deposit before it is invested. The
actual charge depends on the amount invested, as shown below:

As a % of As a %
Your NAV excluding of your
Investment sales charge investment

Up to $49,999 4.75% 4.99%
$50,000-$99,999 4.50% 4.71%
$100,000-$249,999 3.75% 3.90%
$250,000-$499,999 2.50% 2.56%
$500,000-$999,999 2.00% 2.04%
$1,000,000-$2,999,999 0% 0%
$2,999,999-$4,999,999 0% 0%
$5,000,000 and over 0% 0%

Although no front-end sales charge applies to purchases of $1,000,000 and over,
you will pay a 1% deferred sales charge if you redeem any such shares within
thirteen months of purchase.

Two ways you can reduce your Class A sales charges:
1.Rights of Accumulation (ROA) allow you to combine your or your family
memberAs investment with all existing investments in all your Evergreen Fund
accounts when determining whether you meet the threshold for a reduced Class A
sales charge.
2.Letter of Intent (LOI). If you agree to purchase at least $50,000 over a
13-month period, you pay the same sales charge as if you had invested the full
amount all at once. The fund will hold a certain portion of your investment in
escrow until your LOI commitment is met.

Contact your investment dealer or the Evergreen Service Company at
1-800-343-2898 if you think you may qualify for either of these services.

The Funds may also sell Class A shares at net asset value without any initial or
contingent sales charge to certain Directors, Trustees, officers and employees
of the Fund and the advisory affiliates of First Union, and to members of their
immediate families, to registered representatives of firms with dealer
agreements with Evergreen Distributor, Inc., and to a bank or trust company
acting as trustee for a single account.

Class B
If you select Class B shares, you do not pay a front-end sales charge, so the
entire amount of your purchase is invested in the fund. However, your shares are
subject to an additional expense, known as the 12(b)-1 fee. In addition, you may
pay a deferred charge if you redeem your shares within six years after the month
of purchase. The amount of the deferred sales charge depends on the length of
time the shares were held, as shown below:

Time Held Contingent Deferred Sales Charge
Less than 13 months 5.00%
1 to 2 years 4.00%
2 to 3 years 3.00%
3 to 4 years 3.00%
4 to 5 years 2.00%
5 to 6 years 1.00%
6 to 7 years 0%
After 7 years Converts to Class A
Dealer Allowance 4.00%

The deferred sales charge percentage is applied to the value of the shares when
purchased or when redeemed, whichever is less. No deferred sales charge is paid
on shares purchased through dividend or capital gains reinvestments or on any
gains in the value of your shares.

Class C
Class C Shares are similar to B Shares, except the deferred sales charge is less
and only applies if shares are redeemed within the first year after the month of
purchase. Also, these shares do not convert to Class A shares and so the higher
12(b)-1 fee continues for the life of the account.

Time Held Deferred Sales Charge

Less than 13 months 1.00%
13 months or more 0.00%

Waiver of Class B or C Sales Charges

You will not be assessed a redemption charge for Class B or Class C shares if
you sell in the following situations: AE When the shares were purchased through
reinvestment of dividends/capital gains AE Death or disability AE Lump-sum
distribution from a 401(k) plan or other benefit plan qualified under ERISA
AE Automatic IRA withdrawals if you are at least 59 1/2 AE Automatic withdrawals
of up to 1.5% of the account balance a month AE Loan proceeds and financial
hardship distributions from a retirement plan

AE Returns of excess contributions or excess deferral amounts made to a
retirement plan participant

HOW TO BUY SHARES

Evergreen Funds' low investment minimums make investing easy. Once you decide on
an amount and a share class, simply fill out an application and send in your
payment, or talk to your investment professional.

Minimum Investments
Initial Additional
Regular Accounts $1,000 $0
IRAs $250 $0
Systematic Investment Plan $50 $25

Method

By Mail or through
an Investment Professional

AE Complete and sign the account application.
AE Make the check payable to Evergreen Funds.
AE Mail the application and your check to the address below:
Evergreen Service Company
P.O. Box 2121
Boston, MA 02106-2121
Overnight Address:
Evergreen Service Company
200 Berkeley St.
Boston, MA 02116

AE Or deliver them to your investment representative (provided he or she has a
broker/dealer arrangement with EDI)

Adding to an Account

AE Make your check payable to Evergreen Funds AE Write a note specifying:
- the fund name
- share class
- your account number
- the name(s) in which the account is registered

AE Mail to the address below or deliver to your investment representative

By Phone

AE Call 1-800-343-2898 to set up an account number and get wiring
instructions (call before 12 noon if you want wired funds to be credited that
day).
AE Instruct your bank to wire or transfer your purchase (they may charge a
wiring fee).
AE Complete the account application and mail to:
Evergreen Service Company Overnight Address:
P.O. Box 2121 Evergreen Service
Boston, MA 02106-2121 Company
200 Berkeley St.
Boston, MA 02116

AE Wires received after 4:00 p.m. Eastern time on market trading days will
receive the next market day's closing price.

AE Call the Evergreen Express Line at
1-800-346-3858 anytime 24 hours a day or
1-800-343-2898 between 8 a.m. and 6 p.m. Eastern time, Monday through Friday.
AE If your bank account is set up on file, you can request either:
- Federal Funds Wire (offers immediate access to funds) or
- Electronic transfer through Automated Clearing House which avoids wiring
fees.

By Exchange

AE You can make an additional investment by exchange from an existing Evergreen
Funds account by contacting your investment representative or calling the
Evergreen Express Line at 1-800-346-3858.*
AE You can only exchange shares within the same class.
AE There is no sales charge or redemption fee when exchanging funds within the
Evergreen Fund family.
AE Orders placed before 4 p.m. Eastern time on market trading days will receive
that day's closing share price (if not, you will receive the next market
day's closing price).
AE Exchanges are limited to three per calendar quarter, and five per calendar
year.
AE Exchanges between accounts that do not have identical ownership must be in
writing with a signature guarantee (see below).

Systematic
Investment Plan (SIP)

AE You can transfer money automatically from your bank account into your fund on
a monthly basis. AE Initial investment minimum is $50 if you invest at least $25
per month with this service. AE To enroll, check off the box on the account
application and provide:
- your bank account information
- the amount and date of your monthly investment

AE To establish automatic investing for an existing account, call 1-800-343-2898
for an application. AE The minimum is $25 per month or $75 per quarter. AE You
can also establish an investing program through direct deposit from your
paycheck. Call 1-800-343-2898 for details. * Once you have authorized either the
telephone exchange or redemption service, anyone with a Personal Identification
Number (PIN) and the required account information (including your broker) can
request a telephone transaction in your account. All calls are recorded or
monitored for verification, recordkeeping and quality-assurance purposes. The
Evergreen Funds reserve the right to terminate the exchange privilege of any
shareholder who exceeds the listed maximum number of exchanges, as well as to
reject any large dollar exchange if placing it would, in the judgment of the
portfolio managers, adversely affect the price of the fund.

HOW TO SELL SHARES

We offer you several convenient ways to sell your shares in any of the Evergreen
Funds:

Methods

Call Us

Requirements

AE Call the Evergreen Express Line at 1-800-346-3858 anytime 24 hours a day or
1-800-343-2898 between 8 a.m. and 6 p.m. Eastern time, Monday through Friday.
AE This service must be authorized ahead of time, and is only available for
regular accounts.*
AE All authorized requests before 4 p.m. Eastern time on market trading days
will be processed at that day's closing price. Requests after 4 p.m. will be
processed the following business day.
AE We can either:
- wire the proceeds into your bank account (service charges may apply)
- electronically transmit your redemption to your bank account via the
Automated Clearing House service u mail you a check.
AE All telephone calls are recorded for your protection. We are not responsible
for properly acting on telephone orders we reasonably believe are genuine.
AE See exceptions list below for requests that must be made in writing.

Write Us

AE You can mail a redemption request to:

Evergreen Service Company Overnight Address:
P.O. Box 2121 Evergreen Service
Boston, MA 02106-2121 Company
200 Berkeley St.
Boston, MA 02116

AE Your letter of instructions must:
- list the fund name and the account number
- indicate the number of shares or dollar value you wish to redeem
- be signed by the registered owner(s)
AE See list below for requests that must be signature guaranteed.
AE To redeem from an IRA or other retirement account, call 1-800-346-3858 for a
special application.

Sell Your Shares in Person

AE You may also redeem your shares through participating broker-dealers by
delivering a letter as described above to your broker dealer.
AE A fee may be charged for this service.

Systematic
Withdrawal
Plan (SWP)

AE You can transfer money automatically from your fund on a monthly or quarterly
basis (beta) without redemption fees. AE The withdrawal can be mailed to you, or
deposited directly to your bank account. AE A minimum of $75 per month AE A
maximum of 1% of your account per month or 3% per quarter AE To enroll, call
1-800-343-2898 for an application.

Timing of Proceeds

Normally, we will send your redemption proceeds on the next business day after
we receive your request; however, we reserve the right to wait up to seven
business days to redeem any investments made by check and five business days for
investments made by ACH transfer. We also reserve the right to redeem in kind,
and to redeem the account if your redemption brings the account balance below
the initial minimum of $1,000.

Exceptions: Redemption Requests That Require A Signature Guarantee

To protect you and Evergreen Funds against fraud, certain redemption requests
must be in writing with your signature guaranteed. A signature guarantee can be
obtained at most banks and securities dealers. A notary public is not authorized
to provide a signature guarantee. The following circumstances require signature
guarantees:

AE You are redeeming more than $50,000
AE You want the funds transmitted to a bank account not listed on the account AE
You want the proceeds payable to anyone other than the registered owner(s) of
the account AE Either your address or the address of your bank account has been
changed within 30 days AE The account is registered in the name of a
corporation, fiduciary and/or institution.

In these cases, additional documentation is required:
corporate accounts: certified copy of corporate resolution
fiduciary accounts: copy of the power of attorney or other governing document

Who Can Provide A Signature Guarantee:

AE Commercial Bank
AE Trust Company
AE Savings Association
AE Credit Union
AE Member of a U.S. stock exchange

OTHER SERVICES

Evergreen Express Line
Use our automated, 24-hour service to check your balance; purchase, redeem or
exchange shares; find a fund's price, yield or total return; order a statement
or duplicate tax form; or hear market commentary from Evergreen portfolio
managers.

Automatic Reinvestment of Dividends
For the convenience of investors, all dividends and capital gains distributions
are automatically reinvested, unless you request otherwise. Distributions can be
made by check or electronic transfer through the Automated Clearing House to
your bank account. The details of your dividends and other distributions will be
included on your statement.

Payroll Deduction
If you want to invest automatically through your paycheck, call us to find out
how you can set up direct payroll deposit. Funds will be deposited into your
account using the Electronic Funds Transfer System. We will provide the account
number. Your payroll department will let you know the date of the pay period
when your investment begins.

Telephone Investment Plan
You may make additional investments electronically in an existing account at
amounts of not less than $100 or more than $10,000 per investment. Telephone
requests received by 4:00 p.m. Eastern time will be credited to your account the
day the request is received.

Dividend Exchange
You may elect on the application to reinvest capital gains and/or dividends
earned in one Evergreen Fund into an existing account in another Evergreen Fund
in the same share class -- automatically. Please indicate on the application the
Evergreen Fund(s) into which you want to invest the distributions.

Reinvestment Privileges
Under certain circumstances, shareholders may, within one year of redemption,
reinstate their accounts at the current price (net asset value).

<PAGE>

THE TAX CONSEQUENCES OF INVESTING IN THE FUND

You may be taxed in two ways:
o On fund distributions (capital gains and dividends)
o On the profit you make when you sell any or all of your shares.

Fund Distributions

A mutual fund passes along to all of its shareholders any income or profits it
receives from its investments. The shareholders of the fund then pay any taxes
due, whether they receive these distributions in cash or elect to have them
reinvested. The Evergreen Southern State Municipal Bond Funds expect that
substantially all of their regular dividends will be exempt from federal income
tax. The funds may also distribute two types of taxable income to you:

o Dividends. To the extent the regular dividends are derived from interest that
is not tax exempt, or from short term capital gains, you will have to include
them in your federal taxable income. The fund pays either a monthly,
quarterly or yearly dividend from the dividends, interest and other income on
the securities in which it invests. The frequency of dividends for each
particular Evergreen municipal bond fund is listed under the fund's
investment strategy.

o Capital Gains. When a mutual fund sells a security it owns for a profit, the
result is a capital gain. Evergreen Southern State Municipal Bond Funds
generally distribute capital gains at least once a year, near the end of the
calendar year. Short-term capital gains reflect securities held by the fund
for a year or less and are considered ordinary income just like dividends.
Profits on securities held longer than 12 months are considered long-term
capital gains and are taxed at a special tax rate (20% for most taxpayers, on
sales made after January 1, 1998).

Distributions generally will cause a fund's share price to drop by the amount of
a distribution.

Dividend and Capital Gain Reinvestment

Unless you choose otherwise on the account application, all dividend and capital
gain payments will be reinvested to buy additional shares. Distribution checks
that are returned and distribution checks that are uncashed when the shareholder
has failed to respond to mailings from the shareholder servicing agent will
automatically be reinvested to buy additional shares.

No interest will accrue on amounts represented by uncashed distribution or
redemption checks.

We will send you a complete statement each January with the federal tax status
of dividends and distributions paid by each fund during the previous calendar
year.

Profits You Realize When You Redeem Shares

When you sell shares in a mutual fund, whether by redeeming or exchanging, you
have created a taxable event. You must report any gain or loss on your taxes
unless the transaction occurred in a tax-deferred retirement plan or a money
market fund. It is your responsibility to keep accurate records of your mutual
fund transactions. You will need this information when you file your income tax
returns, since you must report any capital gains or losses you incur when you
sell shares.

Remember, an exchange is a purchase and a sale for tax purposes.

Tax Reporting

Evergreen Service Company provides you with a tax statement of your dividend and
capital gains distributions for the year on Form 1099 DIV. Proceeds from a sale
are reported on Form 1099B. You must report these on your tax returns. Since the
IRS receives a copy as well, you could pay a penalty if you neglect to report
them.

Evergreen Service Company will send you a tax information guide each year during
tax season, which may include a cost basis statement detailing the gain or loss
on taxable transactions you made during the year. Please consult your own tax
advisor for further information regarding the federal, state and local tax
consequences of an investment in the funds.

Retirement Plans

You may invest in each fund through various retirement plans, including IRAs,
401(k) plans, Simplified Employee Plan (SEP) IRAs, 403(b) plans, 457 plans and
others. For special rules concerning these plans, including applications,
restrictions, tax advantages, and potential sales charge waivers, contact your
broker/dealer. To determine if a retirement plan is appropriate for you, consult
your tax advisor.

<PAGE>

SALES COMPENSATION
AND EXPENSES

Every mutual fund has fees and expenses that are assessed either directly or
indirectly. This section describes each of those fees.

Management Fee

The management fee pays for the normal expenses of managing the fund, including
portfolio manager salaries, research costs, investment advisory fees and related
expenses.

12(b)-1 Fee

The Trustees of the Evergreen Funds have approved a policy to assess 12(b)-1
fees for Class A, B and C shares. These fees will increase the cost of your
investment. The purpose of the 12(b)-1 fee is to promote the sale of more shares
of the funds to the public. The Fund might use this fee for advertising and
marketing and as a "service fee" to the broker/dealer to compensate for
additional shareholder services.

Other Expenses

This figure covers miscellaneous fees from outside service providers. These may
include legal, audit, custodial and safekeeping fees, the printing and mailing
of reports and statements, automatic reinvestment of distributions and other
conveniences for which the shareholder pays no transaction fees.

Total Fund Operating Expenses

The total cost of running the fund is called the expense ratio. As a
shareholder, you are not charged these fees directly; instead they are taken out
before the fund's price is calculated, and are expressed as a percentage of the
fund's net assets. The effect of these fees is reflected in any performance
numbers for that share class. Because these fees are "invisible," investors
should examine them closely in the prospectus, especially when comparing one
fund with another fund in the same investment category. There are two things to
remember about expense ratios: 1) your total return in the fund is reduced in
direct proportion to the fees; and 2) expense ratios can vary greatly between
funds and fund families, from under 0.25 percent to over 3 percent.

FINANCIAL HIGHLIGHTS

This section looks in detail at the results for one share in each share class of
the fund -- how much income it earned, how much of this income was passed along
as a distribution and how much the return was reduced by expenses. These tables,
except for Florida High Income Municipal Bond Fund, have been audited by KPMG
Peat Marwick LLP, the Funds' independent accountants. Florida High Income
Municipal Bond Fund's tables have been audited by PricewaterhouseCoopers LLP,
that Fund's independent accountants. For a more complete picture of the Funds'
financials, please see the Funds' Annual Report as well as the Statement of
Additional Information.

<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN
Florida High Income Municipal Bond Fund
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)

<TABLE>
<CAPTION>
Year Ended
Year Ended August 31, Four Months April 30,
--------------------------- Ended ----------------
1998 1997 1996 August 31, 1995* 1995 1994
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE,
BEGINNING OF YEAR $ 10.89 $ 10.42 $ 10.40 $ 10.16 $ 10.08 $ 10.36
-------- -------- ------- ------- ------- -------
.........................................................................................
INCOME FROM INVESTMENT
OPERATIONS
.........................................................................................
Net investment income 0.58 0.62 0.63 0.21 0.65 0.68
.........................................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.37 0.47 0.02 0.24 0.08 (0.26)
-------- -------- ------- ------- ------- -------
.........................................................................................
Total from investment
operations 0.95 1.09 0.65 0.45 0.73 0.42
-------- -------- ------- ------- ------- -------
.........................................................................................
LESS DISTRIBUTIONS
.........................................................................................
Distributions (from
capital gains) 0 0 0 0 0 (0.02)
-------- -------- ------- ------- ------- -------
.........................................................................................
Dividends (from net
investment income) (0.58) (0.62) (0.63) (0.21) (0.65) (0.68)
.........................................................................................
Total distributions (0.58) (0.62) (0.63) (0.21) (0.65) (0.70)
-------- -------- ------- ------- ------- -------
.........................................................................................
NET ASSET VALUE, END OF
YEAR $ 11.26 $ 10.89 $ 10.42 $ 10.40 $ 10.16 $ 10.08
-------- -------- ------- ------- ------- -------
.........................................................................................
TOTAL RETURN (B) 8.94% 10.77% 6.42% 4.43% 7.56% 3.94%
.........................................................................................
RATIOS/SUPPLEMENTAL DATA
.........................................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $279,079 $119,942 $76,267 $59,551 $65,043 $72,683
.........................................................................................
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.89% 0.88% 0.85% 1.07%(a) 0.60% 0.14%
.........................................................................................
Expenses, excluding
indirectly paid
expenses 0.89% 0.87% -- -- -- --
.........................................................................................
Expenses, excluding
waivers and
reimbursements 1.06% 1.12% 1.15% 1.42%(a) 1.26% 1.12%
.........................................................................................
Net investment income 5.15% 5.86% 6.02% 5.92%(a) 6.52% 6.16%
.........................................................................................
PORTFOLIO TURNOVER RATE 70% 32% 42% 14% 28% 31%
.........................................................................................
</TABLE>

<TABLE>
<CAPTION>
July 10, 1995
(Commencement of
Year Ended August 31, Class Operations)
-------------------------- through
1998 1997 1996 August 31, 1995
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
CLASS B SHARES
- --------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF
YEAR $ 10.89 $ 10.42 $ 10.40 $10.41
-------- ------- ------- ------
.................................................................................
INCOME FROM INVESTMENT
OPERATIONS
.................................................................................
Net investment income 0.50 0.54 0.55 0.08
.................................................................................
Net gains or losses on
securities (both realized and
unrealized) 0.37 0.47 0.02 (0.01)
-------- ------- ------- ------
.................................................................................
Total from investment
operations 0.87 1.01 0.57 0.07
-------- ------- ------- ------
.................................................................................
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.50) (0.54) (0.55) (0.08)
-------- ------- ------- ------
.................................................................................
NET ASSET VALUE, END OF YEAR $ 11.26 $ 10.89 $ 10.42 $10.40
-------- ------- ------- ------
.................................................................................
TOTAL RETURN (B) 8.13% 9.95% 5.63% 0.64%
.................................................................................
RATIOS/SUPPLEMENTAL DATA
.................................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $103,309 $63,475 $19,219 $3,137
.................................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 1.64% 1.63% 1.59% 1.09%(a)
.................................................................................
Expenses, excluding indirectly
paid expenses 1.64% 1.63% -- --
.................................................................................
Expenses, excluding waivers and
reimbursements 1.81% 1.87% 1.89% --
.................................................................................
Net investment income 4.46% 5.09% 5.27% 3.40%(a)
.................................................................................
PORTFOLIO TURNOVER RATE 70% 32% 42% 14%
.................................................................................
</TABLE>
* The Fund changed its fiscal year end from April 30 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.

1
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Florida High Income Municipal Bond Fund
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
March 6, 1998
(Commencement of
Class Operations)
through
August 31, 1998
<S> <C>
CLASS C SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $11.11
------
.........................................................................
INCOME FROM INVESTMENT OPERATIONS
.........................................................................
Net investment income 0.24
.........................................................................
Net gains or losses on securities (both realized and
unrealized) 0.15
------
.........................................................................
Total from investment operations 0.39
------
.........................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (0.24)
------
.........................................................................
NET ASSET VALUE, END OF PERIOD $11.26
------
.........................................................................
TOTAL RETURN (B) 3.50%
.........................................................................
RATIOS/SUPPLEMENTAL DATA
.........................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $1,098
.........................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 1.65%(a)
.........................................................................
Expenses, excluding indirectly paid expenses 1.65%(a)
.........................................................................
Expenses, excluding waivers and reimbursements 1.81%(a)
.........................................................................
Net investment income 4.21%(a)
.........................................................................
PORTFOLIO TURNOVER RATE 70%
.........................................................................
</TABLE>

(a) Annualized.
(b) Excluding applicable sales charges.

2
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Florida Municipal Bond Fund
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Year Ended Year Ended
August 31, Four Months April 30,
---------------------------- Ended ------------------
1998 1997 1996 August 31, 1995 (c)* 1995 (c) 1994 (c)
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
CLASS A SHARES
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $ 9.98 $ 9.70 $ 9.74 $ 9.61 $ 9.52 $ 9.95
-------- -------- -------- -------- -------- --------
................................................................................................
INCOME FROM INVESTMENT
OPERATIONS
................................................................................................
Net investment income 0.48 0.51 0.54 0.19 0.54 0.56
................................................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.38 0.35 (0.04) 0.22 0.11 (0.36)
-------- -------- -------- -------- -------- --------
................................................................................................
Total from investment
operations 0.86 0.86 0.50 0.41 0.65 0.20
-------- -------- -------- -------- -------- --------
................................................................................................
LESS DISTRIBUTIONS
................................................................................................
Distributions (from
capital gains) (0.21) (0.06) 0 (0.06) (0.02) (0.07)
-------- -------- -------- -------- -------- --------
................................................................................................
Dividends (from net
investment income) (0.48) (0.52) (0.54) (0.22) (0.54) (0.56)
................................................................................................
Total distributions (0.69) (0.58) (0.54) (0.28) (0.56) (0.63)
-------- -------- -------- -------- -------- --------
................................................................................................
NET ASSET VALUE, END OF
YEAR $ 10.15 $ 9.98 $ 9.70 $ 9.74 $ 9.61 $ 9.52
-------- -------- -------- -------- -------- --------
................................................................................................
TOTAL RETURN (B) 8.96% 9.06% 5.15% 4.20% 7.05% 1.87%
................................................................................................
RATIOS/SUPPLEMENTAL DATA
................................................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $164,255 $105,673 $115,723 $136,449 $168,542 $199,612
................................................................................................
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.46% 0.74% 0.63% 0.82%(a) 0.61% 0.56%
................................................................................................
Expenses, excluding
indirectly paid
expenses 0.46% 0.74% -- -- -- --
................................................................................................
Expenses, excluding
waivers and
reimbursements 0.97% 0.91% 0.95% 1.05%(a) -- --
................................................................................................
Net investment income 4.79% 5.22% 5.46% 4.89%(a) 5.73% 5.37%
................................................................................................
PORTFOLIO TURNOVER RATE 64% 41% 30% 29% 53% 32%
................................................................................................
</TABLE>

<TABLE>
<CAPTION>
June 30, 1995
(Commencement of
Year Ended August 31, Class Operations)
------------------------- through
1998 1997 1996 August 31, 1995
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
CLASS B SHARES
- -------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF
YEAR $ 9.98 $ 9.70 $ 9.74 $ 9.67
------- ------- ------- -------
...............................................................................
INCOME FROM INVESTMENT
OPERATIONS
...............................................................................
Net investment income 0.38 0.42 0.44 0.07
...............................................................................
Net gains or losses on
securities (both realized and
unrealized) 0.39 0.35 (0.04) 0.10
------- ------- ------- -------
Total from investment operations 0.77 0.77 0.40 0.17
------- ------- ------- -------
...............................................................................
LESS DISTRIBUTIONS
...............................................................................
Dividends (from net investment
income) (0.39) (0.43) (0.44) (0.07)
Distributions (from capital
gains) (0.21) (0.06) 0 (0.03)
------- ------- ------- -------
...............................................................................
Total distributions (0.60) (0.49) (0.44) (0.10)
------- ------- ------- -------
...............................................................................
NET ASSET VALUE, END OF YEAR $ 10.15 $ 9.98 $ 9.70 $ 9.74
------- ------- ------- -------
...............................................................................
TOTAL RETURN (B) 7.97% 8.06% 4.17% 1.49%
...............................................................................
RATIOS/SUPPLEMENTAL DATA
...............................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $66,142 $31,281 $28,849 $27,351
...............................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 1.36% 1.66% 1.56% 1.44%(a)
...............................................................................
Expenses, excluding indirectly
paid expenses 1.36% 1.66% -- --
...............................................................................
Expenses, excluding waivers and
reimbursements 1.70% 1.84% 1.76% 1.64%(a)
...............................................................................
Net investment income 3.88% 4.29% 4.52% 3.22%(a)
...............................................................................
PORTFOLIO TURNOVER RATE 64% 41% 30% 29%
...............................................................................
</TABLE>
* The Fund changed its fiscal year end from April 30 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.
(c) On June 30, 1995, ABT Florida Tax-Free Fund sold substantially all of its
net assets to Evergreen Florida Municipal Bond Fund. As ABT Florida Tax-
Free Fund is the accounting survivor, its basis of accounting for assets
and liabilities and its operating results for periods prior to June 30,
1995 have been carried forward in these financial highlights.

3
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Florida Municipal Bond Fund
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
January 26, 1998
(Commencement of
Class Operations)
through
August 31, 1998
<S> <C>
CLASS C SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $10.06
------
.........................................................................
INCOME FROM INVESTMENT OPERATIONS
.........................................................................
Net investment income 0.23
.........................................................................
Net gains or losses on securities (both realized and
unrealized) 0.09
------
.........................................................................
Total from investment operations 0.32
------
.........................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (0.23)
------
.........................................................................
NET ASSET VALUE, END OF PERIOD $10.15
------
.........................................................................
TOTAL RETURN (B) 3.25%
.........................................................................
RATIOS/SUPPLEMENTAL DATA
.........................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $8,963
.........................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 1.29%(a)
.........................................................................
Expenses, excluding indirectly paid expenses 1.29%(a)
.........................................................................
Expenses, excluding waivers and reimbursements 1.62%(a)
.........................................................................
Net investment income 3.86%(a)
.........................................................................
PORTFOLIO TURNOVER RATE 64%
.........................................................................
</TABLE>

4
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Georgia Municipal Bond Fund
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
July 2, 1993
(Commencement of
Year Ended August 31, Eight Months Class Operations)
------------------------- Ended Year Ended through
1998 1997 1996 August 31, 1995* December 31, 1994 December 31, 1993
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
CLASS A SHARES
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $ 9.90 $ 9.57 $ 9.47 $ 8.74 $10.19 $10.00
------- ------- ------- ------ ------ ------
...........................................................................................................
INCOME FROM INVESTMENT
OPERATIONS
...........................................................................................................
Net investment income 0.49 0.49 0.48 0.33 0.48 0.20
...........................................................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.45 0.33 0.10 0.73 (1.45) 0.19
------- ------- ------- ------ ------ ------
...........................................................................................................
Total from investment
operations 0.94 0.82 0.58 1.06 (0.97) 0.39
------- ------- ------- ------ ------ ------
...........................................................................................................
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.49) (0.49) (0.48) (0.33) (0.48) (0.20)
------- ------- ------- ------ ------ ------
...........................................................................................................
NET ASSET VALUE, END OF
YEAR $ 10.35 $ 9.90 $ 9.57 $ 9.47 $ 8.74 $10.19
------- ------- ------- ------ ------ ------
...........................................................................................................
TOTAL RETURN (B) 9.67% 8.73% 6.22% 12.28% (9.64%) 3.96%
...........................................................................................................
RATIOS/SUPPLEMENTAL DATA
...........................................................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $ 3,932 $ 2,201 $ 1,954 $2,098 $1,387 $ 817
...........................................................................................................
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.57% 0.94% 0.88% 0.71%(a) 0.53% 0.25%(a)
...........................................................................................................
Expenses, excluding
indirectly paid
expenses 0.57% 0.94% -- -- -- --
...........................................................................................................
Expenses, excluding
waivers and
reimbursements 1.03% 1.83% 2.82% 2.83%(a) 3.61% 6.82%(a)
...........................................................................................................
Net investment income 4.81% 5.00% 4.96% 5.39%(a) 5.26% 4.71%(a)
...........................................................................................................
PORTFOLIO TURNOVER RATE 50% 32% 21% 91% 147% 15%
...........................................................................................................
</TABLE>

<TABLE>
<CAPTION>
July 2, 1993
(Commencement of
Year Ended August 31, Eight Months Class Operations
------------------------ Ended Year Ended through
1998 1997 1996 August 31, 1995* December 31, 1994 December 31, 1993
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
CLASS B SHARES
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $ 9.90 $ 9.57 $ 9.47 $ 8.74 $10.19 $10.00
------- ------- ------ ------ ------ ------
.........................................................................................................
INCOME FROM INVESTMENT
OPERATIONS
.........................................................................................................
Net investment income 0.41 0.41 0.41 0.28 0.43 0.18
.........................................................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.45 0.33 0.10 0.73 (1.45) 0.19
------- ------- ------ ------ ------ ------
.........................................................................................................
Total from investment
operations 0.86 0.74 0.51 1.01 (1.02) 0.37
------- ------- ------ ------ ------ ------
.........................................................................................................
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.41) (0.41) (0.41) (0.28) (0.43) (0.18)
------- ------- ------ ------ ------ ------
.........................................................................................................
NET ASSET VALUE, END OF
YEAR $ 10.35 $ 9.90 $ 9.57 $ 9.47 $ 8.74 $10.19
------- ------- ------ ------ ------ ------
.........................................................................................................
TOTAL RETURN (B) 8.86% 7.93% 5.44% 11.72% (10.15%) 3.74%
.........................................................................................................
RATIOS/SUPPLEMENTAL DATA
.........................................................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $12,559 $10,870 $9,271 $7,538 $6,912 $3,692
.........................................................................................................
RATIOS TO AVERAGE NET
ASSETS
Expenses 1.34% 1.69% 1.63% 1.46%(a) 1.13% 0.75%(a)
.........................................................................................................
Expenses, excluding
indirectly paid
expenses 1.34% 1.69% -- -- -- --
.........................................................................................................
Expenses, excluding
waivers and
reimbursements 1.80% 2.58% 3.54% 3.58%(a) 4.21% 7.32%(a)
.........................................................................................................
Net investment income 4.06% 4.25% 4.21% 4.64%(a) 4.66% 4.15%(a)
.........................................................................................................
PORTFOLIO TURNOVER RATE 50% 32% 21% 91% 147% 15%
.........................................................................................................
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.

5
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Maryland Municipal Bond Fund
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Eleven Months Year Ended September 30,
Ended ------------------------------------------------
August 31, 1998* (c) 1997 (c) 1996 (c) 1995 (c) 1994 (c) 1993 (c)
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
CLASS A SHARES
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.91 $ 10.56 $ 10.69 $ 10.17 $ 11.24 $ 10.39
------- ------- ------- ------- ------- -------
................................................................................................
INCOME FROM INVESTMENT
OPERATIONS
................................................................................................
Net investment income 0.36 0.37 0.38 0.40 0.45 0.49
................................................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.25 0.35 (0.13) 0.54 (0.97) 0.85
------- ------- ------- ------- ------- -------
................................................................................................
Total from investment
operations 0.61 0.72 0.25 0.94 (0.52) 1.34
------- ------- ------- ------- ------- -------
................................................................................................
LESS DISTRIBUTIONS
................................................................................................
Distributions (from
capital gains) 0 0 0 (0.02) (0.10) 0
------- ------- ------- ------- ------- -------
................................................................................................
Dividends (from net
investment income) (0.36) (0.37) (0.38) (0.40) (0.45) (0.49)
................................................................................................
Total distributions (0.36) (0.37) (0.38) (0.42) (0.55) (0.49)
------- ------- ------- ------- ------- -------
................................................................................................
NET ASSET VALUE, END OF
PERIOD $ 11.16 $ 10.91 $ 10.56 $ 10.69 $ 10.17 $ 11.24
------- ------- ------- ------- ------- -------
................................................................................................
TOTAL RETURN (B) 5.70% 6.92% 2.36% 9.81% (4.74%) 13.24%
................................................................................................
RATIOS/SUPPLEMENTAL DATA
................................................................................................
NET ASSETS, END OF
PERIOD (THOUSANDS) $24,754 $27,786 $31,284 $32,172 $34,580 $33,907
................................................................................................
RATIOS TO AVERAGE NET
ASSETS
................................................................................................
Expenses 1.52%(a) 1.69% 1.43% 1.24% 1.17% 1.00%
................................................................................................
Expenses, excluding
indirectly paid
expenses 1.52%(a) -- -- -- -- --
................................................................................................
Expenses, excluding
waivers and
reimbursements 1.76%(a) 1.69% 1.68% 1.68% 1.68% 1.77%
................................................................................................
Net investment income 3.56%(a) 3.45% 3.57% 4.24% 4.22% 4.50%
................................................................................................
PORTFOLIO TURNOVER RATE 37% 13% 138% 21% 27% 23%
................................................................................................
</TABLE>

<TABLE>
<CAPTION>
March 27,1998
(Commencement of
Class Operations)
through
August 31, 1998
<S> <C>
- ------------------------------------------------------------------------
CLASS B SHARES
- ------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.99
------
.........................................................................
INCOME FROM INVESTMENT OPERATIONS
.........................................................................
Net investment income 0.16
.........................................................................
Net gains or losses on securities (both realized and
unrealized) 0.17
------
.........................................................................
Total from investment operations 0.33
------
.........................................................................
LESS DIVIDENDS (FROM NET INVESTMENT INCOME) (0.16)
------
.........................................................................
NET ASSET VALUE, END OF PERIOD $11.16
------
.........................................................................
TOTAL RETURN (B) 2.99%
.........................................................................
RATIOS/SUPPLEMENTAL DATA
.........................................................................
NET ASSETS, END OF PERIOD (THOUSANDS) $ 990
.........................................................................
RATIOS TO AVERAGE NET ASSETS
.........................................................................
Expenses 1.49%(a)
.........................................................................
Expenses, excluding indirectly paid expenses 1.49%(a)
.........................................................................
Expenses, excluding waivers and reimbursements 1.98%(a)
.........................................................................
Net investment income 3.41%(a)
.........................................................................
PORTFOLIO TURNOVER RATE 37%
.........................................................................
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
(c) On February 28, 1998, Virtus Maryland Municipal Bond Fund sold substan-
tially all of its net assets to Evergreen Maryland Municipal Bond Fund. As
Virtus Maryland Municipal Bond Fund is the accounting survivor, its basis
of accounting for assets and liabilities and its operating results for the
periods prior to February 28, 1998 have been carried forward in these fi-
nancial highlights.
* The Fund changed its fiscal year end from September 30 to August 31 during
the current period.

6
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
North Carolina Municipal Bond Fund
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
January 11, 1993
(Commencement of
Year Ended August 31, Eight Months Class Operations)
----------------------- Ended Year Ended through
1998 1997 1996 August 31, 1995* December 31, 1994 December 31, 1993
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
CLASS A SHARES
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $ 10.37 $ 9.98 $ 9.95 $ 9.16 $10.61 $ 10.00
------- ------ ------ ------ ------ -------
........................................................................................................
INCOME FROM INVESTMENT
OPERATIONS
........................................................................................................
Net investment income 0.51 0.49 0.49 0.33 0.49 0.46
........................................................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.47 0.40 0.02 0.79 (1.45) 0.64
------- ------ ------ ------ ------ -------
........................................................................................................
Total from investment
operations 0.98 0.89 0.51 1.12 (0.96) 1.10
------- ------ ------ ------ ------ -------
........................................................................................................
LESS DISTRIBUTIONS
........................................................................................................
Distributions (from
capital gains) 0 0 0 0 0 (0.03)
------- ------ ------ ------ ------ -------
........................................................................................................
Dividends (from net
investment income) (0.51) (0.50) (0.48) (0.33) (0.49) (0.46)
........................................................................................................
Total distributions (0.51) (0.50) (0.48) (0.33) (0.49) (0.49)
------- ------ ------ ------ ------ -------
........................................................................................................
NET ASSET VALUE, END OF
YEAR $ 10.84 $10.37 $ 9.98 $ 9.95 $ 9.16 $ 10.61
------- ------ ------ ------ ------ -------
........................................................................................................
TOTAL RETURN (B) 9.66% 9.11% 5.21% 12.34% (9.12%) 11.28%
........................................................................................................
RATIOS/SUPPLEMENTAL DATA
........................................................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $15,768 $8,115 $7,989 $8,279 $7,979 $12,739
........................................................................................................
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.56% 1.11% 1.08% 0.92%(a) 0.79% 0.32%(a)
........................................................................................................
Expenses, excluding
indirectly paid
expenses 0.56% 1.11% -- -- -- --
........................................................................................................
Expenses, excluding
waivers and
reimbursements 0.97% 1.11% 1.35% 1.27%(a) 1.18% 1.25%(a)
........................................................................................................
Net investment income 4.81% 4.77% 4.81% 5.09%(a) 5.11% 4.91%(a)
........................................................................................................
PORTFOLIO TURNOVER RATE 53% 50% 86% 117% 126% 57%
........................................................................................................
</TABLE>

<TABLE>
<CAPTION>
January 11, 1993
(Commencement of
Year Ended August 31, Eight Months Class Operations)
------------------------- Ended Year Ended through
1998 1997 1996 August 31, 1995* December 31, 1994 December 31, 1993
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
CLASS B SHARES
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $ 10.37 $ 9.98 $ 9.95 $ 9.16 $ 10.61 $ 10.00
------- ------- ------- ------- ------- -------
..........................................................................................................
INCOME FROM INVESTMENT
OPERATIONS
..........................................................................................................
Net investment income 0.43 0.41 0.42 0.28 0.44 0.42
..........................................................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.47 0.40 0.02 0.79 (1.45) 0.64
------- ------- ------- ------- ------- -------
..........................................................................................................
Total from investment
operations 0.90 0.81 0.44 1.07 (1.01) 1.06
------- ------- ------- ------- ------- -------
..........................................................................................................
LESS DISTRIBUTIONS
..........................................................................................................
Distributions (from
capital gains) 0 0 0 0 0 (0.03)
------- ------- ------- ------- ------- -------
..........................................................................................................
Dividends (from net
investment income) (0.43) (0.42) (0.41) (0.28) (0.44) (0.42)
..........................................................................................................
Total distributions (0.43) (0.42) (0.41) (0.28) (0.44) (0.45)
------- ------- ------- ------- ------- -------
..........................................................................................................
NET ASSET VALUE, END OF
YEAR $ 10.84 $ 10.37 $ 9.98 $ 9.95 $ 9.16 $ 10.61
------- ------- ------- ------- ------- -------
..........................................................................................................
TOTAL RETURN (B) 8.85% 8.30% 4.42% 11.78% (9.64%) 10.80%
..........................................................................................................
RATIOS/SUPPLEMENTAL DATA
..........................................................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $49,320 $48,198 $49,382 $49,040 $44,616 $45,168
..........................................................................................................
RATIOS TO AVERAGE NET
ASSETS
Expenses 1.33% 1.86% 1.83% 1.67%(a) 1.37% 0.79%(a)
..........................................................................................................
Expenses, excluding
indirectly paid
expenses 1.33% 1.86% -- -- -- --
..........................................................................................................
Expenses, excluding
waivers and
reimbursements 1.74% 1.86% 2.10% 2.02%(a) 1.76% 1.74%(a)
..........................................................................................................
Net investment income 4.07% 4.02% 4.06% 4.34%(a) 4.53% 4.47%(a)
..........................................................................................................
PORTFOLIO TURNOVER RATE 53% 50% 86% 117% 126% 57%
..........................................................................................................
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.

7
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
South Carolina Municipal Bond Fund
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
January 3, 1994
(Commencement of
Year Ended August 31, Eight Months Class Operations)
------------------------- Ended through
1998 1997 1996 August 31, 1995* December 31, 1994
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
CLASS A SHARES
- -----------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $ 10.08 $ 9.69 $ 9.59 $ 8.62 $10.00
------- ------- ------- ------ ------
.........................................................................................
INCOME FROM INVESTMENT
OPERATIONS
.........................................................................................
Net investment income 0.46 0.48 0.49 0.34 0.46
.........................................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.39 0.40 0.10 0.97 (1.38)
------- ------- ------- ------ ------
.........................................................................................
Total from investment
operations 0.85 0.88 0.59 1.31 (0.92)
------- ------- ------- ------ ------
.........................................................................................
LESS DISTRIBUTIONS
.........................................................................................
Distributions (from
capital gains) (0.03) (0.01) 0 0 0
------- ------- ------- ------ ------
.........................................................................................
Dividends (from net
investment income) (0.46) (0.48) (0.49) (0.34) (0.46)
.........................................................................................
Total distributions (0.49) (0.49) (0.49) (0.34) (0.46)
------- ------- ------- ------ ------
.........................................................................................
NET ASSET VALUE, END OF
YEAR $ 10.44 $ 10.08 $ 9.69 $ 9.59 $ 8.62
------- ------- ------- ------ ------
.........................................................................................
TOTAL RETURN (B) 8.60% 9.33% 6.23% 15.35% (9.32%)
.........................................................................................
RATIOS/SUPPLEMENTAL DATA
.........................................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $ 1,744 $ 1,025 $ 841 $ 610 $ 312
.........................................................................................
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.77% 0.98% 0.86% 0.53%(a) 0.25%(a)
.........................................................................................
Expenses, excluding
indirectly paid
expenses 0.77% 0.98% -- -- --
.........................................................................................
Expenses, excluding
waivers and
reimbursements 1.02% 2.16% 4.00% 6.50%(a) 10.71%(a)
.........................................................................................
Net investment income 4.56% 4.87% 4.98% 5.41%(a) 5.57%(a)
.........................................................................................
PORTFOLIO TURNOVER RATE 31% 62% 37% 66% 23%
.........................................................................................
</TABLE>

<TABLE>
<CAPTION>
Year Ended August 31,
-------------------------
January 3, 1994
(Commencement of
Eight Months Class Operations)
Ended through
1998 1997 1996 August 31, 1995* December 31, 1994
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
CLASS B SHARES
- ------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $ 10.08 $ 9.69 $ 9.59 $ 8.62 $10.00
------- ------- ------- ------ ------
..........................................................................................
INCOME FROM INVESTMENT
OPERATIONS
..........................................................................................
Net investment income 0.38 0.41 0.41 0.29 0.41
..........................................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.39 0.40 0.10 0.97 (1.38)
------- ------- ------- ------ ------
..........................................................................................
Total from investment
operations 0.77 0.81 0.51 1.26 (0.97)
------- ------- ------- ------ ------
..........................................................................................
LESS DISTRIBUTIONS
..........................................................................................
Distributions (from
capital gains) (0.03) (0.01) 0 0 0
------- ------- ------- ------ ------
..........................................................................................
Dividends (from net
investment income) (0.38) (0.41) (0.41) (0.29) (0.41)
..........................................................................................
Total distributions (0.41) (0.42) (0.41) (0.29) (0.41)
------- ------- ------- ------ ------
..........................................................................................
NET ASSET VALUE, END OF
YEAR $ 10.44 $ 10.08 $ 9.69 $ 9.59 $ 8.62
------- ------- ------- ------ ------
..........................................................................................
TOTAL RETURN (B) 7.79% 8.52% 5.43% 14.77% (9.83%)
..........................................................................................
RATIOS/SUPPLEMENTAL DATA
..........................................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $ 4,542 $ 4,734 $ 4,282 $3,542 $2,456
..........................................................................................
RATIOS TO AVERAGE NET
ASSETS
Expenses 1.53% 1.73% 1.61% 1.28%(a) 0.87%(a)
..........................................................................................
Expenses, excluding
indirectly paid
expenses 1.53% 1.73% -- -- --
..........................................................................................
Expenses, excluding
waivers and
reimbursements 1.78% 2.91% 4.76% 7.25%(a) 11.33%(a)
..........................................................................................
Net investment income 3.76% 4.13% 4.23% 4.66%(a) 4.88%(a)
..........................................................................................
PORTFOLIO TURNOVER RATE 31% 62% 37% 66% 23%
..........................................................................................
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.

8
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Virginia Municipal Bond Fund
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
July 2, 1993
(Commencement of
Year Ended August 31, Eight Months Class Operations)
----------------------- Ended Year Ended through
1998 1997 1996 August 31, 1995* December 31, 1994 December 31, 1993
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
CLASS A SHARES
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $ 10.05 $ 9.68 $ 9.67 $ 8.85 $10.19 $10.00
------- ------ ------ ------ ------ ------
.........................................................................................................
INCOME FROM INVESTMENT
OPERATIONS
.........................................................................................................
Net investment income 0.48 0.50 0.48 0.33 0.47 0.20
.........................................................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.42 0.37 0.01 0.82 (1.34) 0.19
------- ------ ------ ------ ------ ------
.........................................................................................................
Total from investment
operations 0.90 0.87 0.49 1.15 (0.87) 0.39
------- ------ ------ ------ ------ ------
.........................................................................................................
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.49) (0.50) (0.48) (0.33) (0.47) (0.20)
------- ------ ------ ------ ------ ------
.........................................................................................................
NET ASSET VALUE, END OF
YEAR $ 10.46 $10.05 $ 9.68 $ 9.67 $ 8.85 $10.19
------- ------ ------ ------ ------ ------
.........................................................................................................
TOTAL RETURN (B) 9.12% 9.05% 5.12% 13.09% (8.60%) 3.89%
.........................................................................................................
RATIOS/SUPPLEMENTAL DATA
.........................................................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $54,298 $2,934 $2,892 $1,983 $1,606 $1,306
.........................................................................................................
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.50% 1.03% 0.93% 0.72%(a) 0.53% 0.25%(a)
.........................................................................................................
Expenses, excluding
indirectly paid
expenses 0.50% 1.02% -- -- -- --
.........................................................................................................
Expenses, excluding
waivers and
reimbursements 0.95% 1.84% 3.47% 3.83%(a) 5.14% 7.75%(a)
.........................................................................................................
Net investment income 4.71% 4.95% 4.83% 5.17%(a) 5.11% 4.64%(a)
.........................................................................................................
PORTFOLIO TURNOVER RATE 46% 72% 68% 87% 59% 0%
.........................................................................................................
</TABLE>

<TABLE>
<CAPTION>
July 2, 1993
(Commencement of
Year Ended August 31, Eight Months Class Operations)
------------------------- Ended Year Ended through
1998 1997 1996 August 31, 1995* December 31, 1994 December 31, 1993
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
CLASS B SHARES
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE,
BEGINNING OF YEAR $ 10.05 $ 9.68 $ 9.67 $ 8.85 $10.19 $10.00
------- ------- ------- ------ ------ ------
...........................................................................................................
INCOME FROM INVESTMENT
OPERATIONS
...........................................................................................................
Net investment income 0.41 0.41 0.41 0.28 0.42 0.17
...........................................................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.41 0.37 0.01 0.82 (1.34) 0.19
------- ------- ------- ------ ------ ------
...........................................................................................................
Total from investment
operations 0.82 0.78 0.42 1.10 (0.92) 0.36
------- ------- ------- ------ ------ ------
...........................................................................................................
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.41) (0.41) (0.41) (0.28) (0.42) (0.17)
------- ------- ------- ------ ------ ------
...........................................................................................................
NET ASSET VALUE, END OF
YEAR $ 10.46 $ 10.05 $ 9.68 $ 9.67 $ 8.85 $10.19
------- ------- ------- ------ ------ ------
...........................................................................................................
TOTAL RETURN (B) 8.31% 8.24% 4.34% 12.53% (9.13%) 3.66%
...........................................................................................................
RATIOS/SUPPLEMENTAL DATA
...........................................................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $ 8,935 $ 6,695 $ 5,963 $5,083 $3,817 $2,235
...........................................................................................................
RATIOS TO AVERAGE NET
ASSETS
Expenses 1.35% 1.79% 1.68% 1.47%(a) 1.12% 0.75%(a)
...........................................................................................................
Expenses, excluding
indirectly paid
expenses 1.35% 1.78% -- -- -- --
...........................................................................................................
Expenses, excluding
waivers and
reimbursements 1.79% 2.59% 4.23% 4.58%(a) 5.73% 8.25%(a)
...........................................................................................................
Net investment income 3.99% 4.21% 4.09% 4.42%(a) 4.54% 4.25%(a)
...........................................................................................................
PORTFOLIO TURNOVER RATE 46% 72% 68% 87% 59% 0%
...........................................................................................................
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.

<PAGE>

OTHER FUND PRACTICES

The Funds may invest in futures and options. Such practices are used to hedge a
Fund's portfolio. Although this may increase returns, these practices may
actually reduce returns or increase volatility.

The Funds may also invest in other investment companies. This practice may
expose a fund to duplicate expenses and lower its value.

In addition, the Funds may borrow money and lend their securities. Borrowing is
a form of leverage that may magnify a fund's gain or loss. Lending securities
may cause the fund to lose the opportunity to sell these securities at the most
desirable price and, therefore, lose money.

Please consult the Statement of Additional Information for more information
regarding these and other investment practices used by the Funds, including
risks.

<PAGE>

Notes
Evergreen Funds

Money Market

Treasury Money Market Fund
Money Market Fund
Municipal Money Market Fund
Pennsylvania Municipal Money Market Fund
Florida Municipal Money Market Fund
New Jersey Municipal Money Market Fund

Tax Exempt

Short Intermediate Municipal Fund
High Grade Tax Free Fund
Tax Free Fund
California Tax Free Fund
Connecticut Municipal Bond Fund
Florida High Income Municipal Bond Fund
Florida Municipal Bond Fund
Georgia Municipal Bond Fund
Maryland Municipal Bond Fund
Massachusetts Tax Free Fund
Missouri Tax Free Fund
New Jersey Tax Free Income Fund
New York Tax Free Fund
North Carolina Municipal Bond Fund
Pennsylvania Tax Free Fund
South Carolina Municipal Bond Fund
Virginia Municipal Bond Fund

Income

Capital Preservation and Income Fund
Short Intermediate Bond Fund
Intermediate Term Government Securities Fund
Intermediate Term Bond Fund
U.S. Government Fund
Diversified Bond Fund
Strategic Income Fund
High Yield Bond Fund

Balanced

American Retirement Fund
Balanced Fund
Tax Strategic Foundation Fund
Foundation Fund

Growth & Income

Utility Fund
Income and Growth Fund
Fund for Total Return
Value Fund
Blue Chip Fund
Growth and Income Fund
Small Cap Equity Income Fund

Domestic Growth

Strategic Growth Fund
Stock Selector Fund
Evergreen Fund
Omega Fund
Small Company Growth Fund
Aggressive Growth Fund
Micro Cap Fund
Tax Strategic Equity Fund

Global International

Global Leaders Fund
International Growth Fund
Global Opportunities Fund
Precious Metals Fund
Emerging Markets Growth Fund
Latin America Fund

Express Line
800.346.3858

Investor Services
800.343.2898

Retirement Plan Services
800.247.4075

WWW.EVERGREENFUNDS.COM

<PAGE>

Evergreen Express Line
Call 1-800-346-3858
24 hours a day to
o check your account
o order a statement
o get a fund's current price, yield and
total return
o buy, sell or exchange fund shares

Non-retirement account holders
Call 1-800-343-2898
Monday through Friday, 8 a.m. to 6 p.m. Eastern time to
o buy, sell or exchange shares
o order applications
o get assistance with your account

Retirement plan account holders
Call 1-800-247-4075
Monday through Friday, 8 a.m. to 6 p.m. Eastern time

Information Line for Hearing and Speech Impaired (TTY/TDD)
Call 1-800-343-2888
Monday through Friday, 8 a.m. to 6 p.m. Eastern time

Write us a letter
Evergreen Service Company
P.O. Box 2121
Boston, MA 02106-2121
o to buy, sell or exchange shares
o to change the registration on your account
o for general correspondence

For express, registered, certified mail:
Evergreen Service Company
200 Berkeley Street
Boston, MA 02116-5039

Regular communications youAll receive:
ACCOUNT STATEMENTS -- You'll receive quarterly statements for each fund you
own.

CONFIRMATION NOTICES -- We send a confirmation of any transaction you make
within five days of the transaction.

ANNUAL AND SEMIANNUAL REPORTS -- You'll receive a detailed financial report
on your fund(s) twice a year.

TAX FORMS -- Each January you'll receive any tax forms you need to file
your taxes as well as the Evergreen Tax Information Guide.

EVERGREEN EVENTS -- You'll receive a periodic newsletter published
exclusively for Evergreen shareholders.

<PAGE>

For More Information About the Evergreen Southern State Municipal Bond
Funds, Ask for:

THE FUNDS' MOST RECENT ANNUAL OR SEMI-ANNUAL REPORT, which contains a
complete financial accounting for each fund and a complete list of
portfolio holdings as of a specific date, as well as commentary from the
portfolio manager. This commentary discusses the market conditions and
investment strategies that significantly affected the fund's performance
during the most recent fiscal year or period.

THE STATEMENT OF ADDITIONAL INFORMATION (SAI), which contains more detailed
information about the policies and procedures of the funds. The SAI has
been filed with the Securities and Exchange Commission ("SEC") and its
contents are legally considered to be part of this prospectus.

For questions, other information, or to request a copy of either document,
call 1-800-343-2898 or ask your investment representative. We will mail
material within three business days.

Information about these funds (including the SAI) is also available on the
SEC's Internet web site at http://www.sec.gov, or, for a duplication fee,
by writing the SEC Public Reference Section, Washington DC 20549-6009. This
material can be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. For more information, call the SEC at 1-800-SEC-0330.

[LOGO OF EVERGREEN FUNDS APPEARS HERE]

Evergreen Distributor, Inc.

125 W. 55th Street

New York, New York 10019
<PAGE>
EVERGREEN

Southern State
Municipal Bond
Funds

Evergreen Florida High Income Municipal Bond Fund Evergreen Florida Municipal
Bond Fund Evergreen Georgia Municipal Bond Fund Evergreen Maryland Municipal
Bond Fund Evergreen North Carolina Municipal Bond Fund Evergreen South Carolina
Municipal Bond Fund Evergreen Virginia Municipal Bond Fund

Class Y

Prospectus, January 1, 1999

FUND SUMMARIES:
Evergreen Florida High Income Municipal Bond Fund 4 Evergreen Florida Municipal
Bond Fund 6 Evergreen Georgia Municipal Bond Fund 8 Evergreen Maryland Municipal
Bond Fund 10 Evergreen North Carolina Municipal Bond Fund 12 Evergreen South
Carolina Municipal Bond Fund 14 Evergreen Virginia Municipal Bond Fund 16
GENERAL INFORMATION: The FundsA Investment Advisor 19 Calculating the Share
Price 19 How to Choose a Fund 19 Who Can Buy Class Y Shares 19 How to Buy Shares
19 How to Sell Shares 20 Other Services 21 The Tax Consequences of Investing in
the Fund 22 Expenses 23 Financial Highlights 23 Other Fund Practices 30

Risk Factors For All Mutual Funds
Please remember that mutual fund shares are:
o not guaranteed to achieve their goal
o not insured, endorsed or guaranteed by the
FDIC, a bank or any government agency
o subject to investment risks, including possible
loss of your original investment In general, funds included in this
prospectus seek to provide investors with current income exempt from federal
income tax and certain state income tax, consistent with the preservation of
capital. The funds emphasize investments in securities with higher yields and
longer maturities.

Fund Summaries Key
Each fundAs summary is organized around the following basic topics and
questions:

INVESTMENT GOAL
What is the fundAs financial objective? You can find clarification on how the
fund seeks to achieve these goals by looking at the fundAs strategy and
investment policies. The fundAs Board of Trustees can change the investment
objective without a shareholder vote.

RISK FACTORS
What are the specific risks for an investor in the fund?

PORTFOLIO MANAGEMENT
Who selects investments for the fund? What is his or her
background and experience?

PERFORMANCE
How well has the fund performed in the past year? The past five years? The past
ten years?

EXPENSES
How much does it cost to invest in the fund? What is the difference between
sales charges and expenses?

OVERVIEW
Southern State Municipal Bond Funds typically rely on the following strategies:

o investing at least 80% of their assets in federally tax exempt municipal
securities;

o investing at least 65% of their assets in municipal securities that are exempt
from income or intangible taxes, as applicable, in the state for which the Fund
is named;

o investing at
least 80% of their assets in investment grade municipal securities, which are
bonds rated within the four highest ratings categories by the nationally
recognized statistical ratings organizations (except Florida High Income
Municipal Bond Fund which invests 65% of its assets in below investment grade
bonds and Maryland Municipal Bond Fund invests all of its assets in investment
grade securities)

may be appropriate for investors who:
o seek a high quality portfolio of municipal bond funds (except Florida High
Income Municipal Bond Fund)

o seek income which is exempt from federal and state income tax

Like most investments, your investment in an Evergreen Southern State Municipal
Bond Fund could fluctuate significantly in value over time and could result in a
loss of money.

Here are the most important factors that may affect the value of your
investment:

Municipal Securities Risk
The value of municipal bonds tends to go up when interest rates go down and to
go down when interest rates go up. Those events could also affect the market
value of the security. Moreover, the market for municipal bonds may at times be
inactive and can be temporarily affected by large purchases and sales, including
those by a Fund.

<PAGE>

Florida High
Income Municipal
Bond Fund

FUND FACTS:
Goal:
- - High Current Income

Principal Investment:
- - Municipal Securities

Class of Shares:
- - Class Y

Investment Advisor:
- - Capital Management Group

Portfolio Manager:
- - Richard K. Marrone

NASDAQ Symbol:
EFHYX (Class Y)

INVESTMENT GOAL
The Fund seeks to provide a high level of current income which is exempt from
federal income taxes.

INVESTMENT STRATEGY
The Fund normally invests at least 65% of its assets in below investment grade
municipal securities. The Fund currently invests at least 80% of its assets in
federally exempt municipal securities. The Fund also invests at least 65% of its
assets in municipal securities that are exempt from intangibles taxes in the
State of Florida.

The Fund is a diversified series, and, as such, there is a limit on the
percentage of assets which can be invested in any single issuer. See the
Statement of Additional Information for more detail.

Dividend Payment Schedule: Monthly

RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:

? Stock Market Risk
? Interest Rate Risk
? Credit Risk
? Municipal Securities Risk
? Below Investment Grade Bond Risk

In addition, you may lose money in the Fund due to adverse political and
economic developments within the State of Florida.

Although individual shareholders of the Fund will not be subject to any Florida
state income tax on distributions received from the Fund, certain distributions
will be taxable to corporate shareholders which are subject to Florida corporate
income tax. Florida currently imposes intangibles tax at the annual rate of
0.20% on certain securities and other intangible assets owned by Florida
residents.

PORTFOLIO MANAGEMENT

The Fund's investment advisor is the Capital Management Group of First Union
National Bank ("CMG").

PERFORMANCE
The following charts show how the Fund has performed in the past.

This chart below shows the percentage gain or loss for Class Y shares of the
Fund in each calendar year since the Class Y shares' inception on 9/20/95. It
should give you a general idea of how the Fund's return has varied from
year-to-year. This graph includes the effects of Fund expenses.

Year-by-Year Total Return for Class Y Shares (%)

1995* 1996 1997

3.88% 5.84% 11.01%

Best Quarter: 3rd Quarter 1995 4.18%
Worst Quarter: 1st Quarter 1996 -0.14%
*From inception on 9/20/95 to 12/31/95.
Year to date total return through 9/30/98 is 5.87%

This next table lists the Fund's average year-by-year return over the past year
and since the Class Y shares' inception (through 12/31/97). At the bottom of the
table you can compare this performance with the Lehman Brothers Municipal Bond.
The Lehman Brothers Municipal Bond Index is a broad market performance benchmark
for the tax-exempt bond market which tracks investments similar to the Fund's;
it is not an actual investment. Past performance is not an indication of future
results.

Average Annual Total Return
(for the period ended 12/31/97)

Inception Since
Date 1 year 5 year 10 year Inception

Class Y 9/20/95 11.01% N/A N/A 9.11%

Lehman Muni Bond 9.19% 7.36% 8.58%

EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

Fees You Pay Directly
Shareholder Transaction Expenses Class Y

Maximum sales charge imposed on None
purchases (as a % of offering
price)
Maximum deferred sales charge None

Fees the Fund Pays Directly (and You Pay Indirectly)

Annual Fund Operating Expenses (as a % of net asset value)*:

Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses

Class Y 0.60% None 0.21% 0.81%

*From time to time, the FundIs investment advisor may, at its discretion,
reduce or waive its fees or reimburse a Fund for certain of its expenses in
order to reduce expense ratios. The FundIs investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating fees for Class Y would be 0.61%.

Example of Fund Expenses

After 1 year $83
After 3 years $259
After 5 years $450
After 10 years $1,002
<PAGE>

Florida Municipal
Bond Fund

FUND FACTS:

Goal:
- - Current Income

Principal Investment:
- - Municipal Securities

Class of Shares:
- - Class Y

Investment Advisor:
- - Capital Management Group

Portfolio Manager:
- - Richard K. Marrone

NASDAQ Symbol:
EFMYX (Class Y)

INVESTMENT GOAL
The Fund seeks current income exempt from federal regular income tax and
intangibles taxes consistent with preservation of capital.

INVESTMENT STRATEGY
The Fund normally invests at least 80% of its assets in federally tax exempt
municipal securities and investment grade municipal securities. The Fund also
invests at least 65% of its assets in municipal securities that are exempt
intangibles taxes in the State of Florida. The Fund may invest at least 20% of
its assets in below investment grade bonds.

Dividend Payment Schedule: Monthly

RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:

- - Stock Market Risk
- - Interest Rate Risk
- - Credit Risk
- - Municipal Securities Risk
- - Below Investment Grade Bond Risk
- - Non-Diversification Risk

In addition, you may lose money in the Fund due to adverse political and
economic developments within the State of Florida.

Although individual shareholders of the Fund will not be subject to any Florida
state income tax on distributions received from the Fund, certain distributions
will be taxable to corporate shareholders who are subject to Florida corporate
income tax. Florida currently imposes intangibles tax at the annual rate of
0.20% on certain securities and other intangible assets owned by Florida
residents.

PORTFOLIO MANAGEMENT

The Fund's investment advisor is the Capital Management Group of First Union
National Bank ("CMG").

<PAGE>

PERFORMANCE
The following charts show how the Fund has performed in the past.

This chart below shows the percentage gain or loss of the Fund's Class Y in each
calendar year since the Class Y shares' inception on 6/30/95. It should give you
a general idea of how the Fund's return has varied from year-to-year. This graph
includes the effects of Fund expenses.

Year-by-Year Total Return for Class Y Shares (%)

1995* 1996 1997

7.54% 3.22% 9.86%

Best Quarter: 4th Quarter 1995 4.97%
Worst Quarter: 1st Quarter 1996 -2.24%
*From inception on 6/30/95 to 12/31/95.
Year to date total return through 9/30/98 is 5.85%

This next table lists the Fund's average year-by-year return over the past year
and since the Class Y shares' inception (through 12/31/97). At the bottom of the
table you can compare this performance with the Lehman Brothers Municipal Bond.
The Lehman Brothers Municipal Bond Index is a broad market performance benchmark
for the tax-exempt bond market which tracks investments similar to the those of
the Fund; it is not an actual investment. Past performance is not an indication
of future results.

Average Annual Total Return
(for the period ended 12/31/97)
Inception Since
Date 1 year 5 year 10 year Inception

Class Y 6/30/95 9.86% N/A N/A 8.23%
Lehman Muni
Bond 9.19% 7.36% 8.58%

EXPENSES

This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

Fees You Pay Directly
Shareholder Transaction Expenses Class Y
Maximum sales charge imposed on None
purchases (as a % of offering
price)
Maximum deferred sales charge None

Fees the Fund Pays Directly (and You Pay Indirectly) Annual Fund Operating
Expenses (as a % of net asset value)*:

Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses

Class Y 0.50% None 0.20% 0.70%

*From time to time, the FundIs investment advisor may, at its discretion, reduce
or waive its fees or reimburse a Fund for certain of its expenses in order to
reduce expense ratios. The FundIs investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating fees for Class Y would be 0.24%.

Example of Fund Expenses

After 1 year $72
After 3 years $224
After 5 years $390
After 10 years $871

<PAGE>

Georgia Municipal
Bond Fund

FUND FACTS:

Goal:
- - Current Income

Principal Investment:
- - Municipal Securities

Class of Shares:
- - Class Y

Investment Advisor:
- - Capital Management Group

Portfolio Manager:
- - Charles E. Jeanne

NASDAQ Symbol:
EGAYX (Class Y)

INVESTMENT GOAL
The Fund seeks current income exempt from federal regular income tax and state
income taxes, consistent with preservation of capital.

INVESTMENT STRATEGY
The Fund normally invests at least 80% of its assets in federally tax exempt
municipal securities and investment grade municipal securities. The Fund also
invests at least 65% of its assets in municipal securities that are exempt from
income or intangibles taxes in the State of Georgia. The Fund may invest at
least 20% of its assets in below investment grade bonds

Dividend Payment Schedule: Monthly

RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:

- - Stock Market Risk
- - Interest Rate Risk
- - Credit Risk
- - Municipal Securities Risk
- - Below Investment Grade Bond Risk
- - Non-Diversification Risk

In addition, you may lose money in the Fund due to adverse political and
economic developments within the State of Georgia.

Fund distributions, if any, derived from capital gains generally will be subject
to Georgia income tax. See the Statement of Additional Information for more
detail.

PORTFOLIO MANAGEMENT

The Fund's investment advisor is the Capital Management Group of First Union
National Bank ("CMG").

The day-to-day management of the Fund is handled by Charles E. Jeanne. Since
joining First Union National Bank in 1993, Mr. Jeanne has been an Assistant Vice
President and Portfolio Manager.

<PAGE>

PERFORMANCE
The following charts show how the Fund has performed in the past.

This chart below shows the percentage gain or loss for Class Y shares of the
Fund in each calendar year since the Class Y shares' inception on 2/28/94. It
should give you a general idea of how the Fund's return has varied from
year-to-year. This graph includes the effects of Fund expenses.

Year-by-Year Total Return for Class Y Shares (%)

1994* 1995 1996 1997

- -6.87% 20.09% 3.42% 10.74%

Best Quarter: 1st Quarter 1995 8.67%
Worst Quarter: 1st Quarter 1996 -2.38%
*From inception on 2/28/94 to 12/31/94.
Year to date total return through 9/30/98 is 5.99%.

This next table lists the Fund's average year-by-year return over the past year
and since the Class Y shares' inception (through 12/31/97). At the bottom of the
table you can compare this performance with the Lehman Brothers Municipal Bond.
The Lehman Brothers Municipal Bond Index is a broad market performance benchmark
for the tax-exempt bond market which tracks investments similar to those of the
Fund; it is not an actual investment. Past performance is not an indication of
future results.

Average Annual Total Return
(for the period ended 12/31/97)

Inception Since
Date 1 year 5 year 10 year Inception

Class Y 2/28/94 10.74% N/A N/A 6.65%
Lehman Muni
Bond 9.19% 7.36% 8.58%

EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

Fees You Pay Directly

Shareholder Transaction Expenses Class Y
Maximum sales charge imposed on None
purchases (as a % of offering
price)
Maximum deferred sales charge None

Fees the Fund Pays Directly (and You Pay Indirectly) Annual Fund Operating
Expenses (as a % of net asset value)*:

Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses

Class Y 0.50% None 0.30% 0.80%

*From time to time, the FundIs investment advisor may, at its discretion, reduce
or waive its fees or reimburse a Fund for certain of its expenses in order to
reduce expense ratios. The FundIs investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating fees for Class Y would be 0.34%.

Example of Fund Expenses

After 1 year $82
After 3 years $255
After 5 years $444
After 10 years $990

<PAGE>

Maryland
Municipal Bond
Fund

FUND FACTS:

Goal:
- - Current Income

Principal Investment:
- - Municipal Securities

Class of Shares:
- - Class Y

Investment Advisor:
- - Capital Management Group

Portfolio Manager:
- - Charles E Jeanne

NASDAQ Symbol:
None

INVESTMENT GOAL
The Fund seeks current income exempt from federal regular income tax and state
income taxes, consistent with preservation of capital.

INVESTMENT STRATEGY
The Fund currently invests all of its assets in investment grade municipal
securities. The Fund invests at least 80% of its assets in federally tax exempt
municipal securities. The Fund also invests at least 65% of its assets in
municipal securities that are exempt from income or intangibles taxes, as
applicable, in the State of Maryland.

Dividend Payment Schedule: Monthly

RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:

? Stock Market Risk
? Interest Rate Risk
? Credit Risk
? Municipal Securities Risk
? Non-Diversification Risk

In addition, you may lose money in the Fund due to adverse political and
economic developments within the State of Maryland.

PORTFOLIO MANAGEMENT

The Fund's investment advisor is the Capital Management Group of First Union
National Bank ("CMG").

The day-to-day management of the Fund is handled by Charles E. Jeanne. Since
joining First Union National Bank in 1993, Mr. Jeanne has been an Assistant Vice
President and Portfolio Manager.

<PAGE>

PERFORMANCE
The following charts show how the Fund has performed in the past.

This chart below shows the percentage gain or loss for Class Y shares of the
Fund in each calendar year since the Class Y shares' inception on 10/30/90. It
should give you a general idea of how the Fund's return has varied from
year-to-year. This graph includes the effects of Fund expenses.

Year-by-Year Total Return for Class Y Shares (%)

1990* 1991 1992 1993 1994 1995

0.63% 8.88% 7.38% 12.15% -6.58% 15.17%

1996 1997

1.82% 7.04%

Best Quarter: 1st Quarter 1995 6.65%
Worst Quarter: 1st Quarter 1994 -5.71%
*From inception on 10/30/90 to 12/31/90.
Year to date total return through 9/30/98 is 5.10%.

This next table lists the Fund's average year-by-year return over the past one
and five years and since the Class Y shares' inception (through 12/31/97). At
the bottom of the table you can compare this performance with the Lehman
Brothers Municipal Bond. The Lehman Brothers Municipal Bond Index is a broad
market performance benchmark for the tax-exempt bond market which tracks
investments similar to those of the Fund; it is not an actual investment. Past
performance is not an indication of future results.

Average Annual Total Return
(for the period ended 12/31/97)
Inception Since
Date 1 year 5 year 10 year Inception
Class Y 10/30/90 7.04% 5.63% N/A 6.27%
Lehman Muni
Bond 9.19% 7.36% 8.58%

EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

Fees You Pay Directly
Shareholder Transaction Expenses Class Y
Maximum sales charge imposed on None
purchases (as a % of offering price)
Maximum deferred sales charge None

Fees the Fund Pays Directly (and You Pay Indirectly) Annual Fund Operating
Expenses (as a % of net asset value)*:

Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses

Class Y 0.50% None 0.51% 1.01%

*From time to time, the FundIs investment advisor may, at its discretion, reduce
or waive its fees or reimburse a Fund for certain of its expenses in order to
reduce expense ratios. The FundIs investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating fees for Class Y would be 0.51%.

Example of Fund Expenses

After 1 year $103
After 3 years $322
After 5 years $558
After 10 years $1236
<PAGE>

North Carolina
Municipal Bond
Fund

FUND FACTS:
Goal:
- - Current Income

Principal Investment:
- - Municipal Securities

Class of Shares:
- - Class Y

Investment Advisor:
- - Capital Management Group

Portfolio Manager:
- - Richard K. Marrone

NASDAQ Symbol:
ENCYX (Class Y)

INVESTMENT GOAL
The Fund seeks current income exempt from federal regular income tax and state
income taxes, consistent with preservation of capital.

INVESTMENT STRATEGY
The Fund normally invests at least 80% of its assets in federally tax exempt
municipal securities and investment grade municipal securities. The Fund also
invests at least 65% of its assets in municipal securities that are exempt from
income or intangibles taxes in the State of North Carolina. The Fund may invest
at least 20% of its assets in below investment grade bonds.

Dividend Payment Schedule: Monthly

RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:

- - Stock Market Risk
- - Interest Rate Risk
- - Credit Risk
- - Municipal Securities Risk
- - Below Investment Grade Bond Risk
- - Non-Diversification Risk

In addition, you may lose money in the Fund due to adverse political and
economic developments within the State of North Carolina.

PORTFOLIO MANAGEMENT

The Fund's investment advisor is the Capital Management Group of First Union
National Bank ("CMG").

<PAGE>

PERFORMANCE
The following charts show how the Fund has performed in the past.

This chart below shows the percentage gain or loss for Class Y shares of the
Fund in each calendar year since the Class Y shares' inception on 2/28/94. It
should give you a general idea of how the Fund's returns have varied from
year-to-year. This graph includes the effects of Fund expenses.

Year-by-Year Total Return for Class Y Shares (%)

1994* 1995 1996 1997

- -7.01% 21.06% 1.79% 10.68%

Best Quarter: 1st Quarter 1995 9.01%
Worst Quarter: 1st Quarter 1996 -3.29%
*From inception on 2/28/94 to 12/31/94.
Year to date total return through 9/30/98 is 5.94%.

This next table lists the Fund's average year-by-year return over the past year
and since the Class Y shares' inception (through 12/31/97). At the bottom of the
table you can compare this performance with the Lehman Brothers Municipal Bond
Index. The Lehman Brothers Municipal Bond Index is a broad market performance
benchmark for the tax-exempt bond market which tracks investments similar to
those of the Fund; it is not an actual investment. Past performance is not an
indication of future results.

Average Annual Total Return
(for the period ended 12/31/97)
Inception Since
Date 1 year 5 year 10 year Inception
Class Y 2/28/94 10.68% N/A N/A 6.38%
Lehman
Muni Bond 9.19% 7.36% 8.58%

EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

Fees You Pay Directly

Shareholder Transaction Expenses Class Y
Maximum sales charge imposed on None
purchases (as a % of offering
price)
Maximum deferred sales charge None

Fees the Fund Pays Directly (and You Pay Indirectly) Annual Fund Operating
Expenses (as a % of net asset value)*:

Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses
Class Y 0.50% None 0.25% 0.75%

*From time to time, the FundIs investment advisor may, at its discretion, reduce
or waive its fees or reimburse a Fund for certain of its expenses in order to
reduce expense ratios. The FundIs investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating fees for Class Y would be 0.34%.

Example of Fund Expenses

After 1 year $77
After 3 years $240
After 5 years $417
After 10 years $930

<PAGE>

South Carolina
Municipal Bond
Fund

FUND FACTS:

Goal:
- - Current Income

Principal Investment:
- - Municipal Securities

Class of Shares:
- - Class Y

Investment Advisor:
- - Capital Management Group

Portfolio Manager:
- - Charles E. Jeanne

NASDAQ Symbol:
EGSYX

INVESTMENT GOAL
The Fund seeks current income exempt from federal regular income tax and state
income taxes, consistent with preservation of capital.

INVESTMENT STRATEGY
The Fund normally invests at least 80% of its assets in federally tax exempt
municipal securities and investment grade municipal securities. The Fund also
invests at least 65% of its assets in municipal securities that are exempt from
income or intangibles taxes, as applicable, in the State of South Carolina. The
Fund may invest at least 20% of its assets in below investment grade bonds.

Dividend Payment Schedule: Monthly

RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:

- - Stock Market Risk
- - Interest Rate Risk
- - Credit Risk
- - Municipal Securities Risk
- - Below Investment Grade Bond Risk
- - Non-Diversification Risk

In addition, you may lose money in the Fund due to adverse political and
economic developments within the State of South Carolina.

Distributions, if any, derived from Fund net capital gains or other sources,
generally will be subject to South Carolina income tax. See the Statement of
Additional Information for more detail.

PORTFOLIO MANAGEMENT

The Fund's investment advisor is the Capital Management Group of First Union
National Bank ("CMG").

The day-to-day management of the Fund is handled by Charles E. Jeanne. Since
joining First Union National Bank in 1993, Mr. Jeanne has been an Assistant Vice
President and Portfolio Manager.

<PAGE>

PERFORMANCE
The following charts show how the Fund has performed in the past.

Year-by-Year Total Return for Class Y Shares (%)

1994* 1995 1996 1997

- -7.12% 22.11% 4.75% 9.87%
Best Quarter: 1st Quarter 1995 9.97%
Worst Quarter: 4th Quarter 1994 -2.12%
*Since inception on 2/28/94 to 12/31/94.
Year to date total return through 9/30/98 is 5.87%.

This next table lists the Fund's average year-by-year return over the past year
and since the Class Y shares' inception (through 12/31/97). At the bottom of the
table you can compare this performance with the Lehman Brothers Municipal Bond.
The Lehman Brothers Municipal Bond Index is a broad market performance benchmark
for the tax-exempt bond market which tracks investments similar to those of the
Fund; it is not an actual investment. Past performance is not an indication of
future results.

Average Annual Total Return
(for the period ended 12/31/97)

Inception Since
Date 1 year 5 year 10 year Inception

Class Y 2/28/94 9.87% N/A N/A 7.18%
Lehman
Muni Bond 9.19% 7.36% 8.58%

EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

Fees You Pay Directly

Shareholder Transaction Expenses Class Y
Maximum sales charge imposed on None
purchases (as a % of offering
price)
Maximum deferred sales charge None

Fees the Fund Pays Directly (and You Pay Indirectly) Annual Fund Operating
Expenses (as a % of net asset value)*:

Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses

Class Y 0.50% None 0.20% 0.70%

*From time to time, the FundIs investment advisor may, at its discretion, reduce
or waive its fees or reimburse a Fund for certain of its expenses in order to
reduce expense ratios. The FundIs investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating fees for Class Y would be 0.45%.

Example of Fund Expenses

After 1 year $72
After 3 years $224
After 5 years $390
After 10 years $871

<PAGE>

Virginia Municipal
Bond Fund

FUND FACTS:

Goal:
- - Current Income

Principal Investment:
- - Municipal Securities

Class of Shares:
- - Class Y

Investment Advisor:
- - Capital Management Group

Portfolio Manager:
- - Charles E. Jeanne

NASDAQ Symbols:
EGVZX (Class Y)

INVESTMENT GOAL
The Fund seeks current income exempt from federal regular income tax and state
income taxes, consistent with preservation of capital.

INVESTMENT STRATEGY
The Fund normally invests at least 80% of its assets in federally tax exempt
municipal securities and investment grade municipal securities. The Fund also
invests at least 65% of its assets in municipal securities that are exempt from
income or intangibles taxes in the State of Virginia. The Fund may invest at
least 20% of its assets in below investment grade bonds.

Dividend Payment Schedule: Monthly

RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:

- - Stock Market Risk
- - Interest Rate Risk
- - Credit Risk
- - Municipal Securities Risk
- - Below Investment Grade Bond Risk
- - Non-Diversification Risk

In addition, you may lose money in the Fund due to adverse political and
economic developments within the State of Virginia.

Distributions, if any, derived from Fund net capital gains or other sources
generally will be subject to Virginia income tax. See the Statement of
Additional Information for more detail.

PORTFOLIO MANAGEMENT

The Fund's investment advisor is the Capital Management Group of First Union
National Bank ("CMG").

The day-to-day management of the Fund is handled by Charles E. Jeanne. Since
joining First Union National Bank in 1993, Mr. Jeanne has been an Assistant Vice
President and Portfolio Manager.

PERFORMANCE
The following charts show how the Fund has performed in the past.

Year-by-Year Total Return for Class Y Shares (%)

1994* 1995 1996 1997

- -5.80% 20.62% 3.05% 9.84%

Best Quarter: 1st Quarter 1995 9.32%
Worst Quarter: 1st Quarter 1996 -2.43%
*From inception on 2/28/94 to 12/31/94.
Year to date total return through 9/30/98 is 5.99%

This next table lists the Fund's average year-by-year return over the past year
and since the Class Y shares' inception (through 12/31/97). At the bottom of the
table you can compare this performance with the Lehman Brothers Municipal Bond
Index. The Lehman Brothers Municipal Bond Index is a broad market performance
benchmark for the tax-exempt bond market which tracks investments similar to the
those of the Fund; it is not an actual investment. Past performance is not an
indication of future results.

Average Annual Total Return
(for the period ended 12/31/97)

Inception Since
Date 1 year 5 year 10 year Inception
Class Y 2/28/94 9.84% N/A N/A 6.77%
Lehman
Muni Bond 9.19% 7.36% 8.58%

EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

Fees You Pay Directly

Shareholder Transaction Expenses Class Y
Maximum sales charge imposed on None
purchases (as a % of offering
price)
Maximum deferred sales charge None

Fees the Fund Pays Directly (and You Pay Indirectly) Annual Fund Operating
Expenses (as a % of net asset value)*:

Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses

Class Y 0.50% None 0.29% 0.79%
*From time to time, the FundIs investment advisor may, at its discretion, reduce
or waive its fees or reimburse a Fund for certain of its expenses in order to
reduce expense ratios. The FundIs investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating fees for Class Y would be 0.24%.

Example of Fund Expenses

After 1 year $81
After 3 years $252
After 5 years $439
After 10 years $978

THE FUNDS' INVESTMENT ADVISOR
The investment advisor manages a Fund's investments and supervises its daily
business affairs. There is one investment advisor for the Evergreen Southern
State Municipal Bond Funds. The advisor and portfolio manager for each Fund is
listed in the section entitled portfolio management. All investment advisors for
the Evergreen Funds are subsidiaries of First Union Corporation, the sixth
largest bank holding company in the United States, with over $220 billion in
consolidated assets as of {date}. First Union Corporation is located at 301
South College Street, Charlotte, North Carolina 28288-0630.

Capital Management Group of First Union National Bank (CMG) has been managing
money for over 50 years and currently manages over $xx billion in investment
assets, including xx of the Evergreen Funds. CMG is located at 201 South College
Street, Charlotte, North Carolina
28288-0630.

CALCULATING THE SHARE PRICE
The value of one share, also known as the net asset value, or NAV, is calculated
on each day the New York Stock Exchange is open as of the close of the Exchange
(normally 4:00 p.m. Eastern time). We calculate the share price for each share
by adding up the total assets of the portfolio, subtracting all liabilities,
then dividing by the total number of shares outstanding. Each security held by a
fund is valued using the most recent market quote for that security. If no
market quotation is available for a given security, we will price that security
at fair value according to policies established by the Funds' Board of Trustees.

HOW TO CHOOSE A FUND
There are two important steps to choosing an Evergreen Fund:
1. Most importantly, read the prospectus to see if the fund is suitable for
you.
2. Talk to an investment professional. He or she is qualified to give you
investment advice based on your investment goals and financial situation and
will be able to answer questions you may have after reading the fund's
prospectus. He or she can also assist you through all phases of opening your
account.

WHO CAN BUY CLASS Y SHARES Class Y shares are only offered to:
- - Persons who owned shares in a fund advised by
Evergreen Asset Management Corp. on or before
December 31, 1994.
Certain institutional investors - Investment advisory clients of an investment
advisor of an Evergreen Fund (or the advisor's affiliate)

HOW TO BUY SHARES
Evergreen Funds' low investment minimums make
investing easy. Once you decide on an amount and a
share class, simply fill out an application and send in your
payment, or talk to your investment professional.

Minimum Investments
Initial Additional

Regular Accounts $1,000 $0
IRAs $250 $0
Systematic Investment Plan $50 $25

Method

By Mail or through
an Investment Professional

- - Complete and sign the account application.
- - Make the check payable to Evergreen Funds.
- - Mail the application and your check to the address below:

Evergreen Service Company Overnight Address:
P.O. Box 2121 Evergreen Service Co.
Boston, MA 02106-2121 200 Berkeley St.
Boston, MA 02116

- - Or deliver them to your investment representative (provided he
or she has a broker/dealer arrangement with Evergreen)

Adding to an Account

- - Make your check payable to Evergreen Funds
- - Write a note specifying:
- - the fund name
- - share class
- - your account number
- - the name(s) in which the account is registered
- - Mail to the address below or deliver to your investment
representative

By Phone
- - Call 1-800-343-2898 to set up an account number and get wiring
instructions (call before 12 noon if you want wired funds to be
credited that day).
- - Instruct your bank to wire or transfer your purchase (they may
charge a wiring fee).
- - Complete the account application and mail to:
Evergreen Service Company Overnight Address:
P.O. Box 2121 Evergreen Service
Boston, MA 02106-2121 Company
200 Berkeley St.
Boston, MA 02116

- - Wires received after 4:00 p.m. Eastern time on market trading days will
receive the next market day's closing price.

- - Call the Evergreen Express Line at
1-800-346-3858 anytime 24 hours a day or
1-800-343-2898 between 8 a.m. and 6 p.m. Eastern time,
Monday through Friday.
- - If your bank account is set up on file, you can request either:
- - Federal Funds Wire (offers immediate access to funds) or
- - Electronic transfer through Automated Clearing House which
avoids wiring fees.

By Exchange
- - You can make an additional investment by exchange from an existing Evergreen
Funds account by contacting your investment representative or calling the
Evergreen Express Line at 1-800-346-3858.* ? There is no sales charge or
redemption fee when exchanging funds within the Evergreen Fund family. ? Orders
placed before 4 p.m. Eastern time on market trading days will receive that day's
closing share price (if not, you will receive the next market day's closing
price). ? Exchanges are limited to three per calendar quarter, and five per
calendar year. ? Exchanges between accounts which do not have identical
ownership must be in writing with a signature guarantee (see below).

Systematic
Investment Plan (SIP)
- - You can transfer money automatically from your bank account into your fund on
a monthly basis. ? Initial investment minimum is $50 if you invest at least $25
per month with this service. ? To enroll, check off the box on the account
application and provide: ? your bank account information ? the amount and date
of your monthly investment ? To establish automatic investing for an existing
account, call 1- 800-343-2898 for an application. ? The minimum is $25 per month
or $75 per quarter. ? You can also establish an investing program through direct
deposit from your paycheck. Call 1-800-343-2898 for details. * Once you have
authorized either the telephone exchange or redemption service, anyone with a
Personal Identification Number (PIN) and the required account information
(including your broker) can request a telephone transaction in your account. All
calls are recorded or monitored for verification, recordkeeping and
quality-assurance purposes. The Evergreen Funds reserve the right to terminate
the exchange privilege of any shareholder who exceeds the listed maximum number
of exchanges, as well as to reject any large dollar exchange if placing it
would, in the judgment of the portfolio managers, adversely affect the price of
the fund.

HOW TO SELL SHARES
We offer you several convenient ways to sell your shares in any of the Evergreen
Funds:

Methods

Call Us

Requirements

- - Call the Evergreen Express Line at 1-800-346-3858 anytime 24
hours a day or 1-800-343-2898 between 8 a.m. and 6 p.m.
Eastern time, Monday through Friday.
- - This service must be authorized ahead of time, and is only
available for regular accounts.*
- - All authorized requests before 4 p.m. Eastern time on market
trading days will be processed at that day's closing price.
Requests after 4 p.m. will be processed the following business
day.
- - We can either:
- - wire the proceeds into your bank account (service charges
may apply)
- - electronically transmit your redemption to your bank account
via the Automated Clearing House service
- - mail you a check.
- - All telephone calls are recorded for your protection. We are not
responsible for properly acting on telephone orders we
reasonably believe are genuine.
- - See exceptions list below for requests that must be made in
writing.

Write Us
- - You can mail a redemption request to:
Evergreen Service Company Overnight Address:
P.O. Box 2121 Evergreen Service
Company
Boston, MA 02106-2121 200 Berkeley St.
Boston, MA 02116

- - Your letter of instructions must:
- - list the fund name and the account number
- - indicate the number of shares or dollar value you wish to
redeem
- - be signed by the registered owner(s)
- - See list below for requests that must be signature guaranteed.
- - To redeem from an IRA or other retirement account, call 1-800-
346-3858 for a special application.

Sell Your Shares in Person

- - You may also redeem your shares through participating broker-
dealers by delivering a letter as described above to your broker
dealer.
- - A fee may be charged for this service.

Systematic
Withdrawal
Plan (SWP)
- - You can transfer money automatically from your fund on a
monthly or quarterly basis ? without redemption fees.
- - The withdrawal can be mailed to you, or deposited directly to
your bank account.
- - A minimum of $75 per month
- - A maximum of 1% of your account per month or 3% per quarter
- - To enroll, call 1-800-343-2898 for an application.

Timing of Proceeds
Normally, we will send your redemption proceeds on the next business day after
we receive your request; however, we reserve the right to wait up to seven
business days to redeem any investments made by check and five business days for
investments made by Automated Clearing House transfer. We also reserve the right
to redeem in kind, and to redeem the account if your redemption brings the
account balance below the initial minimum of $1,000.

Exceptions: Redemption Requests That Require A Signature Guarantee To protect
you and Evergreen Funds against fraud, certain redemption requests must be in
writing with your signature guaranteed. A signature guarantee can be obtained at
most banks and securities dealers. A notary public is not authorized to provide
a signature guarantee. The following circumstances require signature guarantees:
- - You are redeeming more than $50,000 ? You want the funds transmitted to a bank
account not listed on the account ? You want the proceeds payable to anyone
other than the registered owner(s) of the account ? Either your address or the
address of your bank account has been changed within 30 days ? The account is
registered in the name of a corporation, fiduciary and/or institution. In these
cases, additional documentation is required: corporate accounts: certified copy
of corporate resolution fiduciary accounts: copy of the power of attorney or
other governing document

Who Can Provide A Signature Guarantee:
- - Commercial Bank
- - Trust Company
- - Savings Association
- - Credit Union
- - Member of a U.S. stock exchange

OTHER SERVICES
Evergreen Express Line
Use our automated, 24-hour service to check your balance; purchase, redeem or
exchange shares; find a fund's price, yield or total return; order a statement
or duplicate tax form; or hear market commentary from Evergreen portfolio
managers.

Reinvestment Privileges
Under certain circumstances, shareholders may, within one year of redemption,
reinstate their accounts at the current price (net asset value).

THE TAX CONSEQUENCES OF INVESTING IN THE FUND You may be taxed in two ways:
o On fund distributions (capital gains and dividends) o On the profit you make
when you sell any or all of your shares.

Fund Distributions
A mutual fund passes along to all of its shareholders any income or profits it
receives from its investments. The shareholders of the fund then pay any taxes
due, whether they receive these distributions in cash or elect to have them
reinvested. The Evergreen Southern State Municipal Bond Funds expect that
substantially all of their regular dividends will be exempt from federal income
tax. The funds may also distribute two types of taxable income to you:

o Dividends. To the extent the regular dividends are derived from interest which
is not tax exempt, or from short-term capital gains, you will have to include
them in your federal taxable income. The fund pays either a monthly, quarterly
or yearly dividend from the dividends, interest and other income on the
securities in which it invests. The frequency of dividends for each particular
Evergreen municipal bond fund is listed under the fund's investment strategy. o
Capital Gains. When a mutual fund sells a security it owns for a profit, the
result is a capital gain. Evergreen Southern State Municipal Bond Funds
generally distribute capital gains at least once a year, near the end of the
calendar year. Short-term capital gains reflect securities held by the fund for
a year or less and are considered ordinary income just like dividends. Profits
on securities held longer than 12 months are considered long-term capital gains
and are taxed at a special tax rate (20% for most taxpayers, on sales made after
January 1, 1998).

Distributions generally will cause a fund's share price to drop by the amount of
a distribution.

Dividend and Capital Gain Reinvestment Unless you choose otherwise on the
account application, all dividend and capital gain payments will be reinvested
to buy additional shares. Distribution checks that are returned and distribution
checks that are uncashed when the shareholder has failed to respond to mailings
from the shareholder servicing agent will automatically be reinvested to buy
additional shares.

No interest will accrue on amounts represented by uncashed distribution or
redemption checks.

We will send you a complete statement each January with the federal tax status
of dividends and distributions paid by each portfolio during the previous
calendar year.

Profits You Realize When You Redeem Shares When you sell shares in a mutual
fund, whether by redeeming or exchanging, you have created a taxable event. You
must report any gain or loss on your taxes unless the transaction occurred in a
tax-deferred retirement plan or a money market fund. It is your responsibility
to keep accurate records of your mutual fund transactions. You will need this
information when you file your income tax returns, since you must report any
capital gains or losses you incur when you sell shares. Remember, an exchange is
a purchase and a sale for tax purposes.

Tax Reporting
Evergreen Service Company provides you with a tax statement of your dividend and
capital gains distributions for the year on Form 1099 DIV. Proceeds from a sale
are reported on Form 1099B. You must report these on your tax returns. Since the
IRS receives a copy as well, you could pay a penalty if you neglect to report
them.

Retirement Plans
You may invest in each fund through various retirement plans, including IRAs,
401(k) plans, Simplified Employee Plan (SEP) IRAs, 403(b) plans, 457 plans and
others. For special rules concerning these plans, including applications,
restrictions, tax advantages, and potential sales charge waivers, contact your
broker/dealer. To determine if a retirement plan is appropriate for you, consult
your tax advisor.

EXPENSES
Every mutual fund has fees and expenses that are assessed either directly or
indirectly. This section describes each of those fees.

Management Fee
The management fee pays for the normal expenses of managing the fund, including
portfolio manager salaries, research costs, investment advisory fees and related
expenses.

Other Expenses
This figure covers miscellaneous fees from outside service providers. These may
include legal, audit, custodial and safekeeping fees, the printing and mailing
of reports and statements, automatic reinvestment of distributions and other
conveniences for which the shareholder pays no transaction fees.

Total Fund Operating Expenses
The total cost of running the fund is called the expense ratio. As a
shareholder, you are not charged these fees directly; instead they are taken out
before the fund's price is calculated, and are expressed as a percentage of the
fund's net assets. The effect of these fees is reflected in any performance
numbers for that share class. Because these fees are "invisible," investors
should examine them closely in the prospectus, especially when comparing one
fund with another fund in the same investment category. There are two things to
remember about expense ratios: 1) your total return in the fund is reduced in
direct proportion to the fees; and 2) expense ratios can vary greatly between
funds and fund families, from under 0.25 percent to over 3 percent.

FINANCIAL HIGHLIGHTS
This section looks in detail at the results for one Class Y share of the fund --
how much income it earned, how much of this income was passed along as a
distribution and how much the return was reduced by expenses. These tables,
except for Florida High Income Municipal Bond Fund, have been audited by KPMG
Peat Marwick LLP, the Funds' independent accountants. Florida High Income
Municipal Bond Fund's tables have been audited by PricewaterhouseCoopers LLP,
that Fund's independent accountants. For a more complete picture of the Funds'
financials, please see the Funds' Annual Report as well as the Statement of
Additional Information.

<PAGE>

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)

<TABLE>
<CAPTION>
September 20, 1995
(Commencement of
Year Ended August 31, Class Operations)
----------------------- through
1998 1997 August 31, 1996
<S> <C> <C> <C>
CLASS Y SHARES
NET ASSET VALUE, BEGINNING OF
YEAR $ 10.89 $ 10.42 $10.48
----------- ---------- ------
.........................................................................
INCOME FROM INVESTMENT OPERATIONS
.........................................................................
Net investment income 0.61 0.65 0.63
.........................................................................
Net gains or losses on securities
(both realized and unrealized) 0.37 0.47 (0.06)
----------- ---------- ------
.........................................................................
Total from investment operations 0.98 1.12 0.57
----------- ---------- ------
.........................................................................
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.61) (0.65) (0.63)
----------- ---------- ------
.........................................................................
NET ASSET VALUE, END OF YEAR $ 11.26 $ 10.89 $10.42
----------- ---------- ------
.........................................................................
TOTAL RETURN 9.22% 11.04% 5.54%
.........................................................................
RATIOS/SUPPLEMENTAL DATA
........................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $ 29,152 $ 6,326 $1,970
.........................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 0.65% 0.63% 0.59%(a)
.........................................................................
Expenses, excluding indirectly
paid expenses 0.65% 0.63% --
.........................................................................
Expenses, excluding waivers and
reimbursements 0.82% 0.87% 0.89%(a)
.........................................................................
Net investment income 5.47% 6.08% 6.27%(a)
.........................................................................
PORTFOLIO TURNOVER RATE 70% 32% 42%
.........................................................................
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.

1
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN
Florida Municipal Bond Fund
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)

<TABLE>
<CAPTION>
June 30, 1995
(Commencement of
Year Ended August 31, Class Operations)
-------------------------- through
1998 1997 1996 August 31, 1995
<S> <C> <C> <C> <C>
CLASS Y SHARES
NET ASSET VALUE, BEGINNING OF
YEAR $ 9.98 $ 9.70 $ 9.74 $ 9.67
-------- ------- ------- ------
.........................................................................
INCOME FROM INVESTMENT
OPERATIONS
.........................................................................
Net investment income 0.48 0.52 0.53 0.09
.........................................................................
Net gains or losses on
securities (both realized and
unrealized) 0.39 0.35 (0.03) 0.10
-------- ------- ------- ------
Total from investment
operations 0.87 0.87 0.50 0.19
-------- ------- ------- ------
.........................................................................
LESS DISTRIBUTIONS
.........................................................................
Distributions (from capital
gains) (0.21) (0.06) 0 (0.03)
-------- ------- ------- ------
Dividends (from net investment
income) (0.49) (0.53) (0.54) (0.09)
.........................................................................
Total distributions (0.70) (0.59) (0.54) (0.12)
-------- ------- ------- ------
.........................................................................
NET ASSET VALUE, END OF YEAR $ 10.15 $ 9.98 $ 9.70 $ 9.74
-------- ------- ------- ------
.........................................................................
TOTAL RETURN 9.05% 9.14% 5.22% 1.67%
.........................................................................
RATIOS/SUPPLEMENTAL DATA
.........................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $418,847 $24,850 $12,259 $3,602
.........................................................................
RATIOS TO AVERAGE NET ASSETS
Expenses 0.33% 0.67% 0.57% 0.59%(a)
.........................................................................
Expenses, excluding indirectly
paid expenses 0.33% 0.67% -- --
.........................................................................
Expenses, excluding waivers and
reimbursements 0.66% 0.84% 0.77% 0.79%(a)
.........................................................................
Net investment income 4.85% 5.27% 5.55% 4.93%(a)
.........................................................................
PORTFOLIO TURNOVER RATE 64% 41% 30% 29%
.........................................................................
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.

2
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN
Georgia Municipal Bond Fund
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)

<TABLE>
<CAPTION>
February 28, 1994
(Commencement of
Year Ended August 31, Eight Months Class Operations)
----------------------- Ended through
1998 1997 1996 August 31, 1995* December 31, 1994
<S> <C> <C> <C> <C> <C>
CLASS Y SHARES
NET ASSET VALUE,
BEGINNING OF YEAR $ 9.90 $ 9.57 $ 9.47 $ 8.74 $ 9.83
------- ------ ------ ------ ------
................................................................................
INCOME FROM INVESTMENT
OPERATIONS
................................................................................
Net investment income 0.51 0.51 0.50 0.35 0.42
................................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.45 0.33 0.10 0.73 (1.09)
------- ------ ------ ------ ------
Total from investment
operations 0.96 0.84 0.60 1.08 (0.67)
------- ------ ------ ------ ------
................................................................................
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.51) (0.51) (0.50) (0.35) (0.42)
------- ------ ------ ------ ------
................................................................................
NET ASSET VALUE, END OF
YEAR $ 10.35 $ 9.90 $ 9.57 $ 9.47 $ 8.74
------- ------ ------ ------ ------
................................................................................
TOTAL RETURN 9.94% 9.00% 6.48% 12.47% (6.86%)
...............................................................................
RATIOS/SUPPLEMENTAL DATA
................................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $67,630 $1,180 $1,620 $1,339 $ 284
................................................................................
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.24% 0.69% 0.63% 0.46%(a) 0.31%(a)
................................................................................
Expenses, excluding
indirectly paid
expenses 0.24% 0.69% -- -- --
................................................................................
Expenses, excluding
waivers and
reimbursements 0.70% 1.58% 2.51% 2.58%(a) 3.39%(a)
................................................................................
Net investment income 5.09% 5.25% 5.21% 5.64%(a) 5.68%(a)
................................................................................
PORTFOLIO TURNOVER RATE 50% 32% 21% 91% 147%
................................................................................
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.

3
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN
Maryland Municipal Bond Fund
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)

<TABLE>
<CAPTION>
Eleven Months Year Ended September 30,
Ended ----------------------------------------------
August 31, 1998* (b) 1997 (b) 1996 (b) 1995 (b) 1994 (b) 1993 (b)
<S> <C> <C> <C> <C> <C> <C>
CLASS Y SHARES
NET ASSET VALUE,
BEGINNING OF PERIOD $10.91 $10.56 $10.69 $10.17 $ 11.24 $ 10.39
------ ------ ------ ------ ------- -------
.............................................................................................
INCOME FROM INVESTMENT
OPERATIONS
.............................................................................................
Net investment income 0.39 0.40 0.41 0.42 0.48 0.50
............................................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.25 0.35 (0.13) 0.54 (0.97) 0.85
------ ------ ------ ------ ------- -------
.............................................................................................
Total from investment
operations 0.64 0.75 0.28 0.96 (0.49) 1.35
------ ------ ------ ------ ------- -------
.............................................................................................
LESS DISTRIBUTIONS
.............................................................................................
Distributions (from
capital gains) 0 0 0 (0.02) (0.10) 0
------ ------ ------ ------ ------- -------
Dividends (from net
investment income) (0.39) (0.40) (0.41) (0.42) (0.48) (0.50)
.............................................................................................
Total distributions (0.39) (0.40) (0.41) (0.44) (0.58) (0.50)
------ ------ ------ ------ ------- -------
.............................................................................................
NET ASSET VALUE, END OF
PERIOD $11.16 $10.91 $10.56 $10.69 $ 10.17 $ 11.24
------ ------ ------ ------ ------- -------
.............................................................................................
TOTAL RETURN 5.94% 7.19% 2.61% 10.09% (4.50%) 13.37%
.............................................................................................
RATIOS/SUPPLEMENTAL DATA
.............................................................................................
NET ASSETS, END OF
PERIOD (THOUSANDS) $5,229 $5,683 $8,889 $9,447 $11,301 $12,014
.............................................................................................
RATIOS TO AVERAGE NET
ASSETS
Expenses 1.25%(a) 1.44% 1.18% 0.99% 0.92% 0.86%
.............................................................................................
Expenses, excluding
indirectly paid
expenses 1.25%(a) -- -- -- -- --
............................................................................................
Expenses, excluding
waivers and
reimbursements 1.50%(a) 1.44% 1.43% 1.43% 1.43% 1.63%
.............................................................................................
Net investment income 3.83%(a) 3.70% 3.82% 4.49% 4.46% 4.64%
.............................................................................................
PORTFOLIO TURNOVER RATE 37% 13% 138% 21% 27% 23%
.............................................................................................
</TABLE>
(a) Annualized.
(b) On February 28, 1998, Virtus Maryland Municipal Bond Fund sold substantially
all of its net assets to Evergreen Maryland Municipal Bond Fund. As Virtus
Maryland Municipal Bond Fund is the accounting survivor, its basis of
accounting for assets and liabilities and its operating results for the
periods prior to February 28, 1998 have been carried forward in these
financial highlights.
* The Fund changed its fiscal year end from September 30 to August 31 during
the current period.

4
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN
North Carolina Municipal Bond Fund
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)

<TABLE>
<CAPTION>
February 28, 1994
(Commencement of
Year Ended August 31, Eight Months Class Operations)
------------------------ Ended through
1998 1997 1996 August 31, 1995* December 31, 1994
<S> <C> <C> <C> <C> <C>
CLASS Y SHARES
NET ASSET VALUE,
BEGINNING OF YEAR $ 10.37 $ 9.98 $ 9.95 $ 9.16 $10.31
-------- ------ ------ ------ ------
.................................................................................
INCOME FROM INVESTMENT
OPERATIONS
.................................................................................
Net investment income 0.54 0.51 0.51 0.35 0.43
.................................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.47 0.41 0.03 0.79 (1.15)
-------- ------ ------ ------ ------
Total from investment
operations 1.01 0.92 0.54 1.14 (0.72)
-------- ------ ------ ------ ------
.................................................................................
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.54) (0.53) (0.51) (0.35) (0.43)
-------- ------ ------ ------ ------
.................................................................................
NET ASSET VALUE, END OF
YEAR $ 10.84 $10.37 $ 9.98 $ 9.95 $ 9.16
-------- ------ ------ ------ ------
.................................................................................
TOTAL RETURN 9.93% 9.39% 5.47% 12.52% (7.01%)
................................................................................
RATIOS/SUPPLEMENTAL DATA
.................................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $256,231 $4,042 $3,771 $1,006 $ 642
.................................................................................
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.20% 0.86% 0.84% 0.67%(a) 0.59%(a)
.................................................................................
Expenses, excluding
indirectly paid
expenses 0.20% 0.86% -- -- --
.................................................................................
Expenses, excluding
waivers and
reimbursements 0.61% 0.86% 1.07% 1.02%(a) 0.98%(a)
.................................................................................
Net investment income 5.04% 5.02% 5.05% 5.34%(a) 5.58%(a)
.................................................................................
PORTFOLIO TURNOVER RATE 53% 50% 86% 117% 126%
.................................................................................
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.

5
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN
South Carolina Municipal Bond Fund
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)

<TABLE>
<CAPTION>
February 28, 1994
(Commencement of
Year Ended August 31, Eight Months Class Operations)
----------------------- Ended through
1998 1997 1996 August 31, 1995* December 31, 1994
<S> <C> <C> <C> <C> <C>
CLASS Y SHARES
NET ASSET VALUE,
BEGINNING OF YEAR $ 10.08 $ 9.69 $ 9.59 $ 8.62 $ 9.74
------- ------ ------ ------ ------
................................................................................
INCOME FROM INVESTMENT
OPERATIONS
................................................................................
Net investment income 0.48 0.51 0.51 0.35 0.43
...............................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.40 0.40 0.10 0.97 (1.12)
------- ------ ------ ------ ------
Total from investment
operations 0.88 0.91 0.61 1.32 (0.69)
------- ------ ------ ------ ------
................................................................................
LESS DISTRIBUTIONS
Distributions (from
capital gains) (0.03) (0.01) 0 0 0
------- ------ ------ ------ ------
................................................................................
Dividends (from net
investment income) (0.49) (0.51) (0.51) (0.35) (0.43)
...............................................................................
Total distributions (0.52) (0.52) (0.51) (0.35) (0.43)
------- ------ ------ ------ ------
NET ASSET VALUE, END OF
YEAR $ 10.44 $10.08 $ 9.69 $ 9.59 $ 8.62
------- ------ ------ ------ ------
................................................................................
TOTAL RETURN 8.87% 9.60% 6.49% 15.54% (7.12%)
................................................................................
RATIOS/SUPPLEMENTAL DATA
................................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $66,303 $7,012 $4,555 $1,673 $ 92
................................................................................
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.46% 0.73% 0.62% 0.28%(a) 0.00%(a)
................................................................................
Expenses, excluding
indirectly paid
expenses 0.46% 0.73% -- -- --
................................................................................
Expenses, excluding
waivers and
reimbursements 0.71% 1.91% 3.70% 6.25%(a) 10.46%(a)
................................................................................
Net investment income 4.71% 5.12% 5.22% 5.66%(a) 5.92%(a)
................................................................................
PORTFOLIO TURNOVER RATE 31% 62% 37% 66% 23%
................................................................................
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.

See Combined Notes to Financial Statements.

6
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN
Virginia Municipal Bond Fund
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each year)

<TABLE>
<CAPTION>
February 28, 1994
(Commencement of
Year Ended August 31, Eight Months Class Operations)
------------------------ Ended through
1998 1997 1996 August 31, 1995* December 31, 1994
<S> <C> <C> <C> <C> <C>
CLASS Y SHARES
NET ASSET VALUE,
BEGINNING OF YEAR $ 10.05 $ 9.68 $ 9.67 $ 8.85 $ 9.83
-------- ------ ------ ------ ------
................................................................................
INCOME FROM INVESTMENT
OPERATIONS
.................................................................................
Net investment income 0.51 0.51 0.50 0.34 0.41
.................................................................................
Net gains or losses on
securities (both
realized and
unrealized) 0.41 0.37 0.01 0.82 (0.98)
-------- ------ ------ ------ ------
Total from investment
operations 0.92 0.88 0.51 1.16 (0.57)
-------- ------ ------ ------ ------
.................................................................................
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.51) (0.51) (0.50) (0.34) (0.41)
-------- ------ ------ ------ ------
................................................................................
NET ASSET VALUE, END OF
YEAR $ 10.46 $10.05 $ 9.68 $ 9.67 $ 8.85
-------- ------ ------ ------ ------
.................................................................................
TOTAL RETURN 9.39% 9.32% 5.38% 13.28% (5.80%)
.................................................................................
RATIOS/SUPPLEMENTAL DATA
.................................................................................
NET ASSETS, END OF YEAR
(THOUSANDS) $105,931 $6,195 $4,266 $ 965 $ 344
.................................................................................
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.25% 0.79% 0.70% 0.47%(a) 0.28%(a)
.................................................................................
Expenses, excluding
indirectly paid
expenses 0.25% 0.78% -- -- --
.................................................................................
Expenses, excluding
waivers and
reimbursements 0.70% 1.60% 3.24% 3.58%(a) 4.89%(a)
.................................................................................
Net investment income 4.98% 5.27% 5.05% 5.42%(a) 5.54%(a)
.................................................................................
PORTFOLIO TURNOVER RATE 46% 72% 68% 87% 59%
.................................................................................
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.

See Combined Notes to Financial Statements.

OTHER FUND PRACTICES
The Funds may invest in futures and options. Such practices are used to hedge a
Fund's portfolio. Although this may increase returns, these practices may
actually reduce returns or increase volatility.

The Funds may also invest in other investment companies. This practice may
expose a fund to duplicate expenses and lower its value.

In addition, the Funds may borrow money and lend their securities. Borrowing is
a form of leverage which may magnify a fund's gain or loss. Lending securities
may cause the fund to lose the opportunity to sell these securities at the most
desirable price and, therefore, lose money.

Please consult the Statement of Additional Information for more information
regarding these and other investment practices used by the Funds, including
risks.

Notes
Evergreen Funds
Money Market
Treasury Money Market Fund
Money Market Fund
Municipal Money Market Fund
Pennsylvania Municipal Money Market Fund
Florida Money Market Fund
New Jersey Money Market Fund

Tax Exempt
Short Intermediate Municipal Fund High Grade Tax Free Fund Tax Free Fund
California Tax Free Fund Connecticut Municipal Bond Fund Florida Municipal Bond
Fund Florida High Income Municipal Bond Fund Georgia Municipal Bond Fund
Maryland Municipal Bond Fund Massachusetts Tax Free Fund Missouri Tax Free Fund
New Jersey Tax Free Income Fund New York Tax Free Fund North Carolina Municipal
Bond Fund Pennsylvania Tax Free Fund South Carolina Municipal Bond Fund Virginia
Municipal Bond Fund

Income
Capital Preservation and Income Fund
Short Intermediate Bond Fund
Intermediate Term Government Securities Fund
Intermediate Term Bond Fund
U.S. Government Fund
Diversified Bond Fund
Strategic Income Fund
High Yield Bond Fund

Balanced
American Retirement Fund
Balanced Fund
Tax Strategic Foundation Fund
Foundation Fund

Growth & Income
Utility Fund
Income and Growth Fund
Fund for Total Return
Value Fund
Blue Chip Fund
Growth and Income Fund
Small Cap Equity Income Fund

Domestic Growth
Strategic Growth Fund
Stock Selector Fund
Evergreen Fund
Omega Fund
Small Company Growth Fund
Aggressive Growth Fund
Micro Cap Fund
Tax Strategic Equity Fund

Global International
Global Leaders Fund
International Growth Fund
Global Opportunities Fund
Precious Metals Fund
Emerging Markets Growth Fund
Latin America Fund

Express Line
800.346.3858

Investor Services
800.343.2898

Retirement Plan Services
800.247.4075

www.evergreenfunds.com

<PAGE>

Evergreen Express Line
Call 1-800-346-3858
24 hours a day to
o check your account
o order a statement
o get a fund's current price, yield and
total return
o buy, sell or exchange fund shares

Non-retirement account holders
Call 1-800-343-2898
Monday through Friday, 8 a.m. to 6 p.m. Eastern
time to
o buy, sell or exchange shares
o order applications
o get assistance with your account

Retirement plan account holders
Call 1-800-247-4075
Monday through Friday, 8 a.m. to 6 p.m. Eastern
time

Information Line for Hearing and Speech Impaired
(TTY/TDD)
Call 1-800-343-2888
Monday through Friday, 8 a.m. to 6 p.m. Eastern
time

Write us a letter
Evergreen Service Company
P.O. Box 2121
Boston, MA 02106-2121
o to buy, sell or exchange shares
o to change the registration on your account
o for general correspondence

For express, registered, certified mail:
Evergreen Service Company
200 Berkeley Street
Boston, MA 02116-5039

Regular communications youvll receive: Account Statements -- You'll receive
quarterly statements for each fund you own. Confirmation Notices -- We send a
confirmation of any transaction you make within five days of the
transaction.

Annual and Semiannual reports -- You'll receive a detailed financial report on
your fund(s) twice a year. Tax Forms -- Each January you'll receive any tax
forms you need to file your taxes as well as the Evergreen Tax Information
Guide. Evergreen Events -- You'll receive a periodic newsletter published
exclusively for Evergreen shareholders.

For More Information About the Evergreen Southern State Municipal Bond Funds,
Ask for: The funds' most recent Annual or Semi-Annual Report, which contains a
complete financial accounting for each fund and a complete list of portfolio
holdings as of a specific date, as well as commentary from the portfolio
manager. This commentary discusses the market conditions and investment
strategies that significantly affected the fund's performance during the most
recent fiscal year or period.

The Statement of Additional Information (SAI), which contains more detailed
information about the policies and procedures of the funds. The SAI has been
filed with the Securities and Exchange Commission ("SEC") and its contents are
legally considered to be part of this prospectus.

For questions, other information, or to request a copy of either document, call
1-800-343-2898 or ask your investment representative. We will mail material
within three business days.

Information about these funds (including the SAI) is also available on the SEC's
Internet web site at http://www.sec.gov, or, for a duplication fee, by writing
the SEC Public Reference Section, Washington DC 20549-6009. This material can be
reviewed and copied at the SEC's Public Reference Room in Washington, DC. For
more information, call the SEC at 1-800-SEC-0330.

[LOGO OF EVERGREEN FUNDS APPEARS HERE]

Evergreen Distributor, Inc.
125 W. 55th Street
New York, New York 10019

<PAGE>

EVERGREEN MUNICIPAL TRUST

PART B

STATEMENT OF ADDITIONAL INFORMATION

<PAGE>
EVERGREEN MUNICIPAL TRUST

200 Berkeley Street
Boston, Massachusetts 02116
(800) 633-2700

SOUTHERN STATE MUNICIPAL BOND FUNDS

STATEMENT OF ADDITIONAL INFORMATION

January 1, 1999

Evergreen Florida High Income Municipal Bond Fund ("Florida High Income Fund")
Evergreen Florida Municipal Bond Fund ("Florida Fund")
Evergreen Georgia Municipal Bond Fund ("Georgia Fund")
Evergreen Maryland Municipal Bond Fund ("Maryland Fund")
Evergreen North Carolina Municipal Bond Fund ("North Carolina Fund")
Evergreen South Carolina Municipal Bond Fund ("South Carolina Fund")
Evergreen Virginia Municipal Bond Fund ("Virginia Fund")
(Each a "Fund"; together, the "Funds")

Each Fund is a series of Evergreen Municipal Trust (the
"Trust").

This Statement of Additional Information ("SAI") pertains to all
classes of shares of the Funds listed above. It is not a prospectus but should
be read in conjunction with the prospectuses dated January 1, 1999 for the Fund
in which you are interested. The Funds are offered through two separate
prospectuses: one offering Class A and Class B shares of each Fund and Class C
shares of the Florida High Income Fund and the Florida Fund, and one offering
Class Y shares of each Fund. You may obtain either of these prospectuses without
charge by calling (800) 343-2898.

Certain information may be incorporated by reference to the Funds'
Annual Report dated August 31, 1998. You may obtain a copy of the Annual Report
without charge by calling (800) 343- 2898.

24939

<PAGE>

TABLE OF CONTENTS

PART 1

FUND HISTORY.............................................................1-3
INVESTMENT POLICIES......................................................1-3
OTHER SECURITIES AND PRACTICES...........................................1-5
PRINCIPAL HOLDERS OF FUND SHARES.........................................1-5
EXPENSES.................................................................1-11
PERFORMANCE..............................................................1-14
SERVICE PROVIDERS........................................................1-16
FINANCIAL STATEMENTS.....................................................1-18
ADDITIONAL INFORMATION CONCERNING FLORIDA................................1-18
ADDITIONAL INFORMATION CONCERNING GEORGIA................................1-23
ADDITIONAL INFORMATION CONCERNING MARYLAND...............................1-24
ADDITIONAL INFORMATION CONCERNING NORTH CAROLINA.........................1-27
ADDITIONAL INFORMATION CONCERNING SOUTH CAROLINA.........................1-28
ADDITIONAL INFORMATION CONCERNING VIRGINIA...............................1-29

PART 2

ADDITIONAL INFORMATION ON SECURITIES AND INVESTMENT PRACTICES............2-1
PURCHASE, REDEMPTION AND PRICING OF SHARES...............................2-8
SALES CHARGE WAIVERS AND REDUCTIONS......................................2-10
PERFORMANCE CALCULATIONS.................................................2-13
PRINCIPAL UNDERWRITER....................................................2-13
DISTRIBUTION EXPENSES UNDER RULE 12b-1...................................2-14
TAX INFORMATION..........................................................2-16
BROKERAGE................................................................2-19
ORGANIZATION.............................................................2-20
INVESTMENT ADVISORY AGREEMENT............................................2-21
MANAGEMENT OF THE TRUST..................................................2-22
CORPORATE AND MUNICIPAL BOND RATINGS.....................................2-24
ADDITIONAL INFORMATION...................................................2-34

24939
1- 2

<PAGE>

PART 1

FUND HISTORY

The Evergreen Municipal Trust is an open-end management investment
company, which was organized as a Delaware business trust on September 18, 1997.
A copy of the Declaration of Trust is on file as an exhibit to the Trust's
Registration Statement, of which this SAI is a part. This summary is qualified
in its entirety by reference to the Declaration of Trust.

INVESTMENT POLICIES

FUNDAMENTAL INVESTMENT RESTRICTIONS

Each Fund has adopted the fundamental investment restrictions set forth
below which may not be changed without the vote of a majority of the Fund's
outstanding shares, as defined in the Investment Company Act of 1940 (the"1940
Act"). Where necessary, an explanation beneath a fundamental policy describes
the Fund's practices with respect to that policy, as allowed by current law. If
the law governing a policy changes, the Fund's practices may change accordingly
without a shareholder vote. Unless otherwise stated, all references to the
assets of the Fund are in terms of current market value.

1. Diversification (Florida High Income Fund)

The Fund may not make any investment that is inconsistent with its
classification as a diversified investment company under the 1940 Act.

Further Explanation of Diversification Policy:

To remain classified as a diversified investment company under the 1940
Act, the Fund must conform with the following: With respect to 75% of its total
assets, a diversified investment company may not invest more than 5% of its
total assets, determined at market or other fair value at the time of purchase,
in the securities of any one issuer, or invest in more than 10% of the
outstanding voting securities of any one issuer, determined at the time of
purchase. These limitations do not apply to investments in securities issued or
guaranteed by the United States ("U.S.") government or its agencies or
instrumentalities.

Florida High Income Fund is the only fund in the Southern State
Municipal Bond Funds which is a diversified series; the remaining funds are
classified as non-diversified. For further information see the Overview section
of the prospectus.

2. Concentration

Each Fund may not concentrate its investments in the securities of
issuers primarily engaged in any particular industry (other than securities that
are issued or guaranteed by the U.S.
government or its agencies or instrumentalities).

Further Explanation of Concentration Policy:

Each Fund may not invest more than 25% of its total assets, taken at
market value, in the

24939
1- 3

<PAGE>

securities of issuers primarily engaged in any particular industry (other than
securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities).

3. Issuing Senior Securities

Except as permitted under the 1940 Act, each Fund may not issue senior
securities.

4. Borrowing

Each Fund may not borrow money, except to the extent permitted by
applicable law.

Further Explanation of Borrowing Policy:

Each Fund may borrow from banks and enter into reverse repurchase
agreements in an amount up to 33 1/3% of its total assets, taken at market
value. Each Fund may also borrow up to an additional 5% of its total assets from
banks or others. Each Fund may borrow only as a temporary measure for
extraordinary or emergency purposes such as the redemption of Fund shares. Each
Fund may purchase additional securities as long as outstanding borrowings do not
exceed 5% of its total assets. Each Fund may obtain such short-term credit as
may be necessary for the clearance of purchases and sales of portfolio
securities. Each Fund may purchase securities on margin and engage in short
sales to the extent permitted by applicable law

5. Underwriting

Each Fund may not underwrite securities of other issuers, except
insofar as a Fund may be deemed to be an underwriter in connection with the
disposition of its portfolio securities.

6. Real Estate

Each Fund may not purchase or sell real estate, except that, to the
extent permitted by applicable law, a Fund may invest in (a) securities that are
directly or indirectly secured by real estate, or (b) securities issued by
issuers that invest in real estate.

7. Commodities

Each Fund may not purchase or sell commodities or contracts on
commodities, except to the extent that a Fund may engage in financial futures
contracts and related options and currency contracts and related options and may
otherwise do so in accordance with applicable law and without registering as a
commodity pool operator under the Commodity Exchange Act.

8. Lending

Each Fund may not make loans to other persons, except that a Fund may
lend its portfolio securities in accordance with applicable law. The acquisition
of investment securities or other investment instruments shall not be deemed to
be the making of a loan.

Further Explanation of Lending Policy:

To generate income and offset expenses, a Fund may lend portfolio
securities to broker-dealers and other financial institutions in an amount up to
33 1/3% of its total assets, taken at market value. While securities are on
loan, the borrower will pay the Fund any income accruing on the security. The
Fund may invest any collateral it receives in additional portfolio securities,
such as U.S. Treasury notes, certificates of deposit, other high-grade,
short-term obligations or

24939
1- 4

<PAGE>

interest bearing cash equivalents. Gains or losses in the market value of a
security lent will affect the Fund and its shareholders.

When a Fund lends its securities, it will require the borrower to give
the Fund collateral in cash or government securities. The Fund will require
collateral in an amount equal to at least 100% of the current market value of
the securities lent, including accrued interest. The Fund has the right to call
a loan and obtain the securities lent any time on notice of not more than five
business days. The Fund may pay reasonable fees in connection with such loans.

OTHER SECURITIES AND PRACTICES

For information regarding certain securities the Funds may purchase and
certain investment practices the Funds may use, see the following sections under
"Additional Information on Securities and Investment Practices" in Part 2 of
this SAI:

Defensive Investments
U.S. Government Securities
When-Issued, Delayed-Delivery and Forward Commitment Transactions Repurchase
Agreements Reverse Repurchase Agreements Options Futures Transactions "Margin"
in Futures Transactions High Yield, High Risk Bonds (Florida High Income Fund
only) Illiquid and Restricted Securities Municipal Bonds

PRINCIPAL HOLDERS OF FUND SHARES

As of September 30, 1998, the officers and Trustees of the Trust owned
as a group less than 1% of the outstanding shares of any class of each Fund.

Set forth below is information with respect to each person who, to each
Fund's knowledge, owned beneficially or of record more than 5% of the
outstanding shares of any class of each Fund as of September 30, 1998.

Florida High Income Fund - Class A
MLPF&S For the Sole Benefit of Its 9.032%
Customers
Attn: Fund Administration
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484
Florida High Income Fund - Class B

24939
1- 5

<PAGE>

MLPF&S For the Sole Benefit of its 10.312%
Customers
Attn: Fund Administration
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484

Florida High Income Fund - Class C
First Union Brokerage Services 28.316%
Leon Lerner
3501 Keyser Avenue
Hollywood, FL 33021

First Union Brokerage Services 9.415%
William A. Floyd
3613 Providence Plantation Lane
Charlotte, NC 28270-3771

Robert W. Baird & Co. Inc. 9.241%
777 East Wisconsin Avenue
Milwaukee, WI 53202-5391

First Union Brokerage Services 7.825%
Claire O'Donnell
4820 Glenbrook Road
Washington, DC 20016

MLPF&S For the Sole Benefit of Its 7.101%
Customers
Attn: Fund Administration
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484

Florida High Income Fund - Class Y
First Union National Bank 91.275%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28202-1910

Florida Municipal Bond Fund - Class A
MLPF&S For the Sole Benefit of Its 5.436%
Customers
Attn: Fund Administration
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484

Florida Municipal Bond Fund - Class B

24939
1- 6

<PAGE>

MLPF&S For the Sole Benefit of Its 10.416%
Customers
Attn: Fund Administration
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484

Florida Municipal Bond Fund - Class C
MLPF&S for the Sole Benefit of Its 27.633%
Customers
Attn: Fund Administration
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484

Paine Webber for the Benefit of 7.520%
Betty J. Puskar Trustee
Betty J. Puskar Rev. Trust
708 Ocean Drive
Juno Beach, FL 33408-1911

Paine Webber for the Benefit of 5.552%
Wayne D Rebertus Trustee
U/A dtd 8/3/89
FBO Wayne D. Rebertus
23725 SR 180
Rockbridge, OH 43149

Florida Municipal Bond Fund - Class Y
First Union National Bank 98.769%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28202-1910

Georgia Municipal Bond Fund - Class A
MLPF&S for the Sole Benefit of Its 11.886%
Customers
Attn: Fund Administration
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484

First Union Brokerage Services 9.270%
Susan B. Hanchey
1388 St. Michaels
Lilburn, GA 30047

FUBS & Co. FEBO 6.168%
Lee R. Meadows and
Mary Lee Meadows
1270 Hicks Circle SW
Conyers, GA 30207-4221

24939
1- 7

<PAGE>

Jasper G. Woodroof Jr. 5.846%
Jane W. Akers Cade W. Smith Co. Trust
J G Woodroof Living Trust
P.O. Box 995
Griffin, GA 30224

Georgia Municipal Bond Fund - Class B
None

Georgia Municipal Bond Fund - Class Y
First Union National Bank 98.978%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28202-1910

Maryland Municipal Bond Fund - Class A
Charles Schwab & Co. Inc. 13.011%
Special Custody Account
FBO Exclusive Benefit of Customers
Reinvest Account Attn: Mutual fund
101 Montgomery Street
San Francisco, CA 94104-4122

Maryland Municipal Bond Fund - Class B
Jeanne Hochreiter 8.616%
50 Moonsheel Drive
Berlin, MD 21811

First Union Brokerage Services 6.693%
Deborah D. Ringgold
21 Dawman Court
Baltimore, MD 21244

Maryland Municipal Bond Fund - Class C
None

Maryland Municipal Bond Fund - Class Y
First Union National Bank/EB/INT 97.535%
Cash Account
Attn: Trust Operations Fund Group
401 S. Tryon Street 3rd Floor CMG-1151
Charlotte, NC 28202-1911

North Carolina Municipal Bond Fund - Class A

24939
1- 8

<PAGE>

First Union Brokerage Services 6.385%
Walter L. Williams and
Marie S. Williams
207 Crown Point Road
Greenville, NC 27834

Kenneth Edward Haigler 6.366%
P.O. Box 249
Greenville, NC 27835-0249

First Union Brokerage Services 6.301%
Frank J. Blythe Jr.
4312 Foxcroft Road
Charlotte, NC 28211

North Carolina Municipal Bond Fund - Class B
None

North Carolina Municipal Bond Fund - Class Y
First Union National Bank 97.970%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28202-1910

South Carolina Municipal Bond Fund - Class A
MLPF&S For the Sole Benefit of Its 19.357%
Customers
Attn: Fund Administration
4800 Deer Lake Drive E. 2nd Floor
Jacksonville, FL 32246-6484

FUBS & CO FEBO 10.773%
Charles W. Lombard Trust
Charlotte Lombard and
Warren Prout Co-Trustees
U/A/D 5/4/94
Boone, NC 28607

Donaldson Lufkin Jenrette 9.003%
Securities Corporaiton Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998

FUBS & CO 7.599%
EN Todd Crittenden
201 S. College Street 5th Floor
Charlotte, NC 28288-1167

24939
1- 9

<PAGE>

FUBS & CO FEBO 6.040%
Warren A. Ransom Jr.
Laurie P. Ransom
1162 East Parkview Place
Mount Pleasant, SC 29464-7909

Wheat First Securities Inc 5.677%
Richard E. Johnson
4 Conch Court
Isle of Palms, SC 29451-2558

First Union Brokerage Services 5.308%
Ann D. Schwab
2189 Windy Oaks Road
FT Mill, SC 29715

South Carolina Municipal Bond Fund - Class B
None

South Carolina Municipal Bond Fund - Class Y
First Union National Bank 99.102%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28202-1910

Virginia Municipal Bond Fund - Class A
Charles Schwab & Co. Inc. 12.067%
Special Custody Account
FBO Exclusive Benefit of Customers
Reinvest Account Attn: Mutual Fund
101 Montgomery Street
San Francisco, CA 94104-4122

Virginia Municipal Bond Fund - Class B
First Union Brokerage Services 5.117%
Estate of Patsy B. Williams
P.O. Box 1327
6 Sixth Street, Suite 354
Bristol, VA 24203

Virginia Municipal Bond Fund - Class Y
First Union National Bank 98.771%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28202-1910

24939
1- 10

<PAGE>

EXPENSES

Advisory Fees

The Capital Management Group ("CMG") of First Union National Bank
("FUNB") is the investment advisor to the Fund. CMG is entitled to receive from
each of these Funds an annual fee equal to 0.50% of the average daily net assets
of the Fund except Florida High Income Fund which pays 0.60% annually. (For more
information, see "Investment Advisory Agreements" in Part 2 of this SAI.)

Advisory Fees Paid

Below are the advisory fees paid by each Fund for the last three fiscal
periods.

Fiscal Period/Fund Advisory Fee Waiver

Periods Ended 1998

Florida High Income Fund $1,737,325 $489,599
Florida Fund $2,509,498 $1,688,280
Georgia Fund $326,000 $300,583
Maryland Fund $173,896 $67,938
North Carolina Fund $1,294,225 $1,063,800
South Carolina Fund $281,276 $136,669
Virginia Fund $565,473 $504,686

Periods Ended 1997
Florida High Income Fund $791,322 $330,629
Florida Fund $66,245 $81,274
Georgia Fund $305,634 $66,245
Maryland Fund $58,299 $0
North Carolina Fund $70,972 $0
South Carolina Fund $813,790 $58,299
Virginia Fund $273,851 $70,972

Periods Ended 1996
Florida High Income Fund $477,128 $238,564
Florida Fund $803,741 $321,496
Georgia Fund $63,102 $63,102
Maryland Fund $315,941 $0

24939
1- 11

<PAGE>

Fiscal Period/Fund Advisory Fee Waiver

North Carolina Fund $306,892 $164,001
South Carolina Fund $40,781 $40,781
Virginia Fund $51,952 $51,952

Brokerage Commissions

The Funds paid no brokerage commissions during 1998, 1997 and 1996.

Underwriting Commissions

Below are the underwriting commissions paid by each Fund and the
amounts retained by the principal underwriter for the last three fiscal periods.
For more information, see "Principal Underwriter" in Part 2 of this SAI.

Total Underwriting Underwriting
Fiscal Period/Fund Commissions Commissions Retained

Periods ended 1998
Florida High Income Fund $4,723,685 $25,749
Florida Fund $1,118,965 $5,901
Georgia Fund $114,119 $6,249
Maryland Fund $22,642 $586
North Carolina Fund $158,554 $2,417
South Carolina Fund $26,249 $238
Virginia Fund $93,502 $28,121

Periods ended 1997

Florida High Income Fund $757,824 $34,454
Florida Fund $236,607 $22,335
Georgia Fund $22,854 $2,488
Maryland Fund -- --
North Carolina Fund $35,137 $2,377
South Carolina Fund $5,744 $710
Virginia Fund $14,653 $1,596
Periods Ended 1996

24939
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<PAGE>

Total Underwriting Underwriting
Fiscal Period/Fund Commissions Commissions Retained

Periods ended 1998

Florida High Income Fund $4,723,685 $25,749
Florida Fund $1,118,965 $5,901
Georgia Fund $114,119 $6,249
Maryland Fund $22,642 $586
North Carolina Fund $158,554 $2,417
South Carolina Fund $26,249 $238
Virginia Fund $93,502 $28,121

Periods ended 1997

Periods ended 1996

Florida High Income Fund $276,615 $29,467
Florida Fund $49,589 $5,996
Georgia Fund $7,300 $875
Maryland Fund -- --
North Carolina Fund $16,557 $154
South Carolina Fund $1,447 $2,228
Virginia Fund $20,400 $2,033

12b-1 Fees

Below are the 12b-1 fees paid by each Fund for the fiscal year ended
August 31, 1998. For more information, see "Distribution Plans and Agreements"
in Part 2 of this SAI.
<TABLE>
<CAPTION>

Class A Class B Class C
Fund
===================
Distribution Service Distribution Service Distribution Service
Fees Fees Fees Fees Fees Fees
================ ================= ================= ================= ================= =================
<S> <C> <C> <C> <C> <C> <C>
Florida High
Income Fund $0 $475,289 $615,488 $205,163 $2,864 $955
Florida Fund $0 $330,600 $0 $0 $0 $0
Georgia Fund $0 $6,559 $0 $0 $0 $0
Maryland Fund $0 $59,345 $1,260 $420 $0 $0
North Carolina
Fund $0 $25,891 $364,752 $121,584 $0 $0
South Carolina
Fund $0 $3,277 $34,091 $11,364 $0 $0
Virginia Fund $0 $73,823 $57,663 $19,221 $0 $0
</TABLE>

Trustee Compensation

Listed below is the Trustee compensation for the twelve months ended
August 31, 1998. The Trustees do not receive pension or retirement benefits from
the Funds. For more information, see "Management of the Trust" in Part 2 of this
SAI.

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<PAGE>

Aggregate Total Compensation
Trustee Compensation from from Trust and Eight (8)
Trust Other Trusts in Fund
Complex Paid to
Trustees*
Laurence B. Ashkin $6,163 $72,067
Charles A. Austin, III $6,362 $61,967
K. Dun Gifford $5,839 $58,200
James S. Howell $8,054 $102,671
Leroy Keith Jr. $6,114 $59,700
Gerald M. McDonnell $6,896 $83,115
Thomas L. McVerry $7,306 $90,283
William Walt Pettit $6,187 $75,249
David M. Richardson $6,172 $59,675
Russell A. Salton, III $6,629 $84,300
Michael S. Scofield $6,876 $85,998
Richard J. Shima $6,307 $69,334

*Certain Trustees have elected to defer all or part of their
total compensation for the twelve months ended August 31,
1998. The amounts listed below will be payable in later years
to the respective Trustees:

Austin $7,763
McVerry $90,283
Howell $77,761
Salton $84,300
Petit $75,249
McDonnell $83,115
Scofield $15,600

PERFORMANCE

Total Return

Below are the average annual total returns for each class of shares of
the Funds (including applicable sales charges) as of August 31, 1998. For more
information, see "Total Return" under "Performance Calculations" in Part 2 of
this SAI.

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<PAGE>

Fund/Class One Year Five Years Ten Years or Inception Date
Since Inception
<S> <C> <C> <C> <C>
Florida High Income Fund
Class A 8.94% 6.34% 7.60% 6/17/92
Class B 8.13% N/A 6.90% 7/10/95
Class C N/A N/A N/A 3/6/98
Class Y 9.22% N/A 8.72% 9/20/95

Florida Fund
Class A 8.96% 5.25% 7.64% 5/11/88
Class B 7.97% N/A 6.01% 6/30/95
Class C N/A N/A N/A 1/26/98
Class Y 9.05% N/A 7.90% 6/30/95

Georgia Fund
Class A 9.67% 4.55% 4.77% 7/2/93
Class B 8.86% 4.51% 4.89% 7/2/93
Class Y 9.94% N/A 6.65% 2/28/94

Maryland Fund
Class A 6.96% 3.28% 5.37% 10/16/90
Class B N/A N/A N/A 3/27/98
Class Y 7.22% 4.55% 6.21% 10/16/90

North Carolina Fund
Class A 9.66% 4.73% 5.64% 1/11/93
Class B 8.85% 4.69% 5.71% 1/11/93
Class Y 9.93% N/A 6.48% 2/28/94

South Carolina Fund
Class A 8.60% N/A 5.02% 1/3/94
Class B 7.79% N/A 5.02% 1/3/94
Class Y 8.87% N/A 7.12% 2/28/94

Virginia Fund
Class A 9.12% 4.72% 4.88% 7/2/93
Class B 8.31% 4.68% 4.99% 7/2/93
Class Y 9.39%% N/A 6.79% 2/28/94
</TABLE>

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<PAGE>

Current and Tax Equivalent Yields

Current yield quotations as they may appear from time to time in
advertisements will consist of a quotation based on a 30-day period ended on the
date of the most recent balance sheet of a Fund, computed by dividing the net
investment income per share earned during the period by the maximum offering
price per share on the last day of the base period. Such yield will include
income from sources other than municipal obligations, if any. Tax equivalent
yield is, in general, the current yield divided by a factor equal to one minus a
stated income tax rate and reflects the yield a taxable investment would have to
achieve in order to equal on an after-tax basis a tax-exempt yield. For the
30-day period ended August 31, 1998, the current and tax-equivalent yields of
the Funds are shown below. Any given yield or total return quotation should not
be considered representative of the Fund's yield or total return for any future
period.
<TABLE>
<CAPTION>

30-Day Yield Tax-Equivalent Yield
===================================== ================================================= ===========================================
Combined
Federal &
State Tax
Fund Rate (1) Class A Class B Class C Class Y Class A Class B Class C Class Y
====================== ============= =========== ========== ========== =========== =========== =========== =========== ========
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Florida High Income 28% 4.87% 4.37% 4.37% 5.73% 6.76% 6.07% 6.07% 7.96%
Fund
Florida Fund 28% 4.36% 3.67% 3.67% 4.66% 6.06% 5.10% 5.10% 6.47%
Georgia Fund 34% 4.30% 3.77% N/A 4.77% 6.52% 5.71% N/A 7.23%
Maryland Fund 28% 3.90% 3.32% N/A 4.35% 5.42% 4.61% N/A 6.04%
North Carolina Fund 28% 4.28% 3.77% N/A 4.77% 5.94% 5.24% N/A 6.63%
South Carolina Fund 35% 4.01% 3.47% N/A 4.46% 6.17% 5.34% N/A 6.86%
Virginia Fund 33.25% 4.30% 3.76% N/A 4.76% 6.44% 5.63% N/A 7.13%
</TABLE>

(1) Assumed for purposes of this chart. Your tax may vary.

SERVICE PROVIDERS

Administrator

Evergreen Investment Services, Inc. ("EIS") serves as administrator to
the Funds, subject to the supervision and control of the Trust's Board of
Trustees. EIS provides the Funds with facilities, equipment and personnel and is
entitled to receive a fee from the Funds based on the total assets of all mutual
funds for which EIS serves as administrator and are advised by First Union
Corporation subsidiaries. The fee paid to EIS is calculated in accordance with
the following schedule:

Assets Fee

first $7 billion 0.050%
next $3 billion 0.035%
next $5 billion 0.030%

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<PAGE>

Assets Fee

next $10 billion 0.020%
next $5 billion 0.015%
over $30 billion 0.010%

Transfer Agent

Evergreen Service Company ("ESC"), a subsidiary of First Union
Corporation, is the Funds' transfer agent. ESC issues and redeems shares, pays
dividends and performs other duties in connection with the maintenance of
shareholder accounts. The transfer agent's address is P.O. Box 2121, Boston,
Massachusetts 02106-2121. The Fund pays ESC a fee of $10.00 when a new account
is established, plus annual fees as follows:

Fund Type Annual Fee Per Annual Fee Per
Open Account Closed Account
Monthly Dividend Funds $26.50 $9.00
Quarterly Dividend Funds $25.50 $9.00
Semiannual Dividend Funds $24.50 $9.00
Annual Dividend Funds $26.50 $9.00
Money Market Funds $24.50 $9.00

Distributor

Evergreen Distributor, Inc. (the "Distributor") markets the Funds
through broker-dealers and other financial representatives. Its address is 125
W. 55th Street, New York, NY 10019.

Independent Auditors

KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110,
audits the financial statements of each Fund except Florida High Income Fund.

PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New
York 10036 audits the financial statements of Florida High Income Fund.

Custodian

State Street Bank and Trust Company is the Funds' custodian. The bank
keeps custody of each Fund's securities and cash and performs other related
duties. The custodian's address is 225 Franklin Street, Boston, Massachusetts
02110.

Legal Counsel

Sullivan & Worcester LLP provides legal advice to the Funds. Its
address is 1025 Connecticut Avenue, N.W., Washington, D.C. 20036.

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<PAGE>

FINANCIAL STATEMENTS

The audited financial statements and the reports thereon are hereby
incorporated by reference to the Funds' Annual Report, a copy of which may be
obtained without charge from ESC, P.O. Box 2121, Boston, Massachusetts
02106-2121.

ADDITIONAL INFORMATION CONCERNING FLORIDA

The performance of the Florida Fund and the Florida High Income
Fund is susceptible to various statutory, political and economic factors unique
to the State of Florida. The information summarized below describes some of the
more significant factors that could affect the ability of the bond issuers to
repay interest and principal on securities acquired by each Fund. Such
information is derived from various public sources all of which are available to
investors generally and which each Fund believes to be accurate.

State Economy

General. Florida is the nation's fourth most popular state with an
estimated population of 14,713,000 as of April 1, 1997. Only California, New
York and Texas have populations larger than Florida. The State's population grew
from 6,800,000 in 1970 to 12,900,000 in 1990 and to an estimated 14,713,000 in
1997. This represents a 13.7% growth since the 1990 Census. Florida's population
is primarily an urban population with approximately 85% of its population
located in urbanized areas. The University of Florida, Bureau of Economic and
Business Research projects Florida's population will exceed 17,900,000 by April
1, 2010.

Economic Condition and Outlook. The current Florida Economic Consensus
Estimating Conference (February 5, 1998) forecast shows that the Florida economy
is expected to grow at a moderate pace along with the nation, but will continue
to outperform the U.S. as a whole. Total non-farm employment is expected to
increase 3.9% for the 1997-98 fiscal year which began July 1, 1997. By the end
of fiscal year 1998-99, non-farm employment is expected to reach an average of
6.7 million. Trade and service employment, the two largest sectors, account for
more than half of total non-farm employment. Florida's unemployment rate is
forecasted at 4.6% for 1997-98, then to rise to 4.8% in 1998-99.

Tourism is an important element of Florida's economy. Tourist arrivals
are expected to increase 2.1% for 1997-98 and 4.0% for 1998-99. Air tourist will
increase 1.6% and 3.7%, while auto tourists will increase 2.7% and 4.2%
respectively. By the end of 1997-98, 43.8 million domestic and international
tourists are expected to have visited the State. In 1998-99, tourist visits
should reach 45.6 million.

Florida's Budget Process

Balance Budget Requirement. Florida's constitution requires an annual
balanced budget. In addition, the constitution requires a Budget Stabilization
Fund equal to 4% of the last fully completed fiscal year's net revenue
collections for the General Revenue Fund for the fiscal year 1997-1998 and 5%
for fiscal year 1998-1999 and thereafter. In the Governor's Recommended Budget,
the Budget Stabilization Fund is required to be funded at 4 percent, or $586
million. Figure 1.2 shows the current balance in the Budget Stabilization Fund
as well as the projected future funding levels.

State Revenue Limitations. On November 8, 1994, the citizens of Florida
enacted a Constitutional Amendment on state revenue. This amendment provides
that the rate of growth in

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<PAGE>

state revenues is limited to no more than the average annual growth rate in
Florida personal income during the past five years. Revenue growth in excess of
the limitation is to be deposited into the Budget Stabilization Fund unless
two-thirds of the members of both houses of the Legislature vote to raise the
limit. The revenue limit is determined by multiplying the average annual growth
rate in Florida personal income over the past five years times state revenues
for the previous year.

Budget Process. Chapter 216 Florida Statutes, promulgates the process
used to develop the budget for the State of Florida. By September 1, of each
year, the head of each State agency and the Chief Justice of the Supreme Court
for the Judicial Branch submit a final annual legislative budget request to the
Governor and Legislature. Then, at least 45 days before the scheduled annual
legislative session in each year, the Governor, as chief budget officer, submits
his recommended budget to each legislator.

The Governor also provides estimates of revenues sufficient to fund the
recommended appropriations. Estimates for the General Revenue Fund, Budget
Stabilization Fund and Working Capital Fund are made by the Revenue Estimating
Conference (see the description of the budgetary basis fund types in the next
section). This group includes members of the executive and legislative branches
with forecasting experience who develop official information regarding
anticipated State and local government revenues as needed for the State
budgeting process. In addition to the Revenue Estimating Conference, other
consensus estimating conferences cover national and state economics, national
and state demographics, the state public education system, criminal justice
system, social services system, transportation planning and budgeting, the child
welfare system, the juvenile justice system and the career education planning
process.

Trust fund revenue estimates are generally made by the agency that
administers the fund. These estimates are reviewed by the Governor and then
incorporated into his recommended budget.

The Governor's recommended budget forms the basis of the appropriations
bill. As amended and approved by the Legislature (subject to the line-item veto
power of the Governor and override authority of the Legislature), this bill
becomes the General Appropriations Act.

The Governor and the Comptroller are responsible for detecting
conditions which could lead to a deficit in any agency's funds and reporting
that fact to the Administration Commission and the Chief Justice of the Supreme
Court. The Constitution of the State, Article VII, Section 1(d), states,
"Provision shall be made by law for raising sufficient revenue to defray the
expenses of the State for each fiscal year."

The Legislature is responsible for annually providing direction in the
General Appropriations Act regarding the use of the Working Capital Fund to
offset General Revenue Fund deficits. Absent any specific direction to the
contrary, the Governor and the Chief Justice of the Supreme Court shall comply
with guidelines provided in Section 216.221(5), F.S., for reductions in the
approved operating budgets of the executive branch and the judicial branch.

The State of Florida is progressing toward full implementation of a
performance-based budgeting system. Chapter 216., F.S., designates when each
department will be phased into this new budgeting method. Some agencies are
already subject to the performance-based budgeting standards and all agencies
will be under this new system by the fiscal year ended June 30, 2002. With
performance-based budgeting, a department receives a lump-sum appropriation from
the Legislature for each designated program at the beginning of the year. The
Governor, for State agencies, or the Chief Justice, for the judicial branch, is
responsible for allocating the amounts among the traditional appropriation
categories so that specified performance standards can be met. At any time
during the year, the agency head or Chief Justice may transfer appropriations
between categories within the performance-based program with no limit on the
amount of the transfer in order for the designated program to accomplish its
objectives. However, no transfer from any other

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<PAGE>

budget entity may be made into the performance-based program, nor may any funds
be transferred from the performance-based program to another budget entity,
except pursuant to Section 216.77, FS.

Line Item Veto. Florida's Constitution grants the Governor the power to
veto any specific appropriation in a general appropriation bill, but the
Governor may not veto any qualification or restriction without also vetoing the
appropriation to which it relates. A statement identifying the items vetoed and
containing his or her objections thereto must be delivered to the appropriate
house in which the bill originated, if in session, otherwise to the Secretary of
State. The legislature may reconsider and restate the vetoed specific
appropriation items by a two-thirds vote of each house.

Revenues. The State accounts for its receipts using fund accounting. It
has established the General Revenue Fund, the working Capital Fund and various
other trust funds, which are maintained for the receipt of monies which under
law or trust agreements must be maintained separately. The General Revenue Fund
consists of all monies received by the State from every source whatsoever which
are not allocable to the other funds. Major sources of tax revenues for the
General Revenue Fund are the sales and use tax, the corporate income tax, and
the intangible personal property tax, which are projected for fiscal year
1998-99 to amount to 71%, 8% and 4%, respectively, of the total receipts of that
fund. Florida's constitution and statutes mandate that the State budget as a
whole and each separate fund within the State budget be kept in balance from
currently available revenues for each fiscal year.

Sales and Use Tax. The greatest single source of tax receipts in
Florida is the sales and use tax, which is projected to amount to $12.5 billion
for fiscal year 1998-99. The sales tax rate is 6% of the sales price of tangible
personal property sold at retail in the state. The use tax rate is 6% of the
cash price of fair market value of tangible personal property when it is not
sold but is used, or stored for use, in the State. In other words, the use tax
applies to the use of tangible personal property in Florida, which was purchased
in another state but would have been subject to the sales tax if purchased in
Florida. Approximately 10% of the sales tax is designated for local governments
and is distributed to the respective counties in which collected for use by such
counties and municipalities therein. In addition to this distribution, local
governments may (by referendum) assess a 1% sales surtax within their county.
Proceeds from this local option sales surtax can be earmarked for funding county
wide bus and rapid transit systems local infrastructure construction and
maintenance, medical care for indigents and capital projects for county school
districts as set forth in Section 212.055(2), of the Florida Statutes.

The two taxes, sales and use, stand as complements to each other, and
taken together provide a uniform tax upon either the sale at retail or the use
of all tangible personal property irrespective of where it may have been
purchased. The sales tax also includes a levy on the following: (1) rentals on
tangible personal property and accommodations in hotels, motels, some
apartments, offices, real estate, parking and storage places in parking lots,
garages and marinas for motor vehicles or boats; (ii) admissions to places of
amusements, most sports and recreation events; (iii) utilities, except those
used in homes; and (iv) restaurant meals and expendables used in radio and
television broadcasting. Exemptions include: groceries; medicines; hospital
rooms and meals; seeds, feeds, fertilizers and farm crop protection materials;
purchases by religious, charitable and educational nonprofit institutions;
professional services, insurance and certain personal service transaction;
newspapers; apartments used as permanent dwellings; and kindergarten through
community college athletic contests or amateur plays.

Other State Taxes. Other taxes which Florida levies include the motor
fuel tax, intangible property tax, documentary stamp tax, gross-receipts
utilities tax and severance tax on the production of oil and gas and the mining
of solid minerals, such as phosphate and sulfur.

Government Debt. Florida maintains a high bond rating from Moody's
Investors Services

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<PAGE>

("Moody's") (AA+), Standard and Poor's Corporation ("S&P")(AA) and Fitch IBCA,
Inc.("Fitch") (AA) on all State general obligation bonds. Outstanding general
obligations bonds have been issued to finance capital outlay for educational
projects of local school districts, community colleges and state universities,
environmental protection and highway construction.

Numerous government units, counties, cities, school districts and
special taxing districts, issue general obligation bonds backed by their taxing
power. State and local government units may issue revenue obligations, which are
supported by the revenues generated from the particular projects or enterprises.
Examples include obligations issued to finance the construction of water and
sewer systems, health care facilities and educational facilities. In some cases,
sewer or water revenue obligations may be further secured by the full faith and
credit of the State.

Florida's Constitution generally limits State bonds pledging the full
faith and credit of the State, to those necessary to finance or refinance the
cost of state fixed capital outlay projects authorized by law, and then only
upon approval by a vote of the electors. The constitution further limits the
total outstanding principal of such bonds to no more than 50% of the total tax
revenues of the State for the two preceding fiscal years, excluding any tax
revenues held in trust. Exceptions to the requirement for voter approval are:
(i) bonds issued for pollution control and abatement and solid waste disposal
facilities and other water facilities authorized by general law and operated by
State or local governmental agencies; and (ii) bonds issued to finance or
refinance the cost of acquiring real property or rights thereto for State roads
as defined by law, or to finance or refinance the cost of State bridge
construction.

State revenue bonds may be issued without a vote of the electors to
finance or refinance the cost of State fixed capital outlay projects authorized
by law, as long as they are payable solely from funds derived directly from
sources other than State tax revenues. Revenue bonds may be issued to establish
a student loan fund, as well as to finance or refinance housing and related
facilities so long as repayments come solely from revenues derived from the fund
or projects so financed. The Constitution imposes no limit on the principal
amount of revenue bonds which may be issued by the State and Local Governmental
Agency. Local Governmental Agencies, such as counties, school boards or
municipalities may issue bonds, certificates of indebtedness or any form of tax
anticipation certificate, payable from ad valorem taxes and maturing more than
12 months from the date of issuance only: (i) to finance or refinance capital
projects authorized by law, and only when approved by a vote of the electors who
are property owners living within boundaries of the agency. Generally, ad
valorem taxes levied by a Local Governmental Agency may not exceed 10 mills on
the value of real estate and tangible personal property unless approved by the
electors. Local Governmental Agencies may issue revenue bonds to finance or
refinance the cost of capital projects for airports or port facilities or for
industrial or manufacturing plants, without the vote of electors, so long as the
revenue bonds are payable solely from revenues derived from the projects.

Other Factors. The performance of the obligations issued by Florida,
its municipalities, subdivisions and instrumentalities are in part tied to
state-wide, regional and local conditions within Florida. Adverse changes to
state-wide, regional or local economies may adversely affect the
creditworthiness of Florida, its municipalities, etc. Also, some revenue
obligations may be issued to finance construction of capital projects which are
leased to nongovernmental entities. Adverse economic conditions might affect
those lessees' ability to meet their obligations to the respective governmental
authority which in turn might jeopardize the repayment of the principal of, or
the interest on, the revenue obligations.

Litigation

Due to its size and broad range of activities, the State is involved in
numerous routine legal actions. The ultimate disposition and fiscal consequences
of these lawsuits are not presently determinable, however, according to the
departments involved, the results of such litigation

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<PAGE>

pending or anticipated will not materially affect the State of Florida's
financial position. The information disclosed in this Litigation Section has
been deemed material by the Florida Auditor General and has been derived from
information disclosed in the Florida Comptroller's Annual Report dated January
29, 1998. No assurance can be made that other litigation has not been filed or
is not pending which may have a material impact of the State's financial
position.

A. Coastal Petroleum v. State of Florida

Case No. 90-3195, 2nd Judicial Circuit. This is an inverse condemnation
case claiming that the action of the Trustees and Legislature constitute a
taking of Coastal's leases for which compensation is due. The Circuit judge
granted the State's motion for summary judgment finding that as a matter of law,
the State had not deprived Coastal of any royalty they might have. Coastal
appealed to the First District Court of Appeals, but the case was remanded to
Circuit Court for trial. On August 6, 1996, final judgment was made in favor of
the State. Coastal petitioned the Florida Supreme Court for a review, which was
denied on January 28, 1998.

B. Florida Department of Transportation v. 745 Property Investments, CSX
Transportation, Inc. and Continental Equities

Case No. 94-17739 CA 27, Dade County Circuit Court. This cases involves
the Florida Department of Transportation (FDOT) and CSX Transportation, Inc.
FDOT has filed an action against the adjoining property owners seeking a
declaratory judgment from the Dade County Circuit Court that the Department is
not the owner of the property that is subject to a claim by the U.S.
Environmental Protection Agency (EPA). The case was dismissed and FDOT's appeal
of the order of dismissal is pending in the Third District Court of Appeal.

The EPA is seeking clean-up costs, pursuant to the Comprehensive
Environmental Response Compensation and Liability Act, regarding property which
the EPA alleges is owned by the FDOT (and formerly owned by CSX Transportation,
Inc.). The EPA has agreed to await the outcome of the Department's declaratory
action before proceeding further. If the Department is unsuccessful in its
actions, the possible clean-up costs could exceed $25 million.

C. Jenkins v. Florida Department of Health and Rehabilitative Services

Case No. 79-102-CIV-J-16, United States District Court. This is a class
action suit on behalf of clients of residential placement for the
developmentally disabled seeking refunds for services where children were
entitled to free education under the Education for Handicapped Act. The district
court held that the State could not charge maintenance fees for children between
the ages of 5 and 17 based on the Education for Handicapped Act. The State's
potential cost of refunding these charges could exceed $42 million. Attorneys
are in the process of negotiating a settlement amount.

D. Nathan M. Hameroff, M.D., et. al. v. Agency for Health Care
Administration, et. al.

Case No. 95-5036, Leon County Circuit Court. The plaintiffs challenge
the constitutionality of the Public Medical Assistance Trust Fund (PMATF) annual
assessment on net operating revenue of free-standing out-patient facilities
offering sophisticated radiology services. A trial has not been scheduled.
Plaintiff filed a Notice of Pendency of Class Action on July 29, 1997.If the
State is unsuccessful in its actions, the potential refund liability could
amount to approximately $70 million.

E. Walden v. Department of Corrections

Case No. 95-40357-WS (USDC N.D. Fla.) This action is brought by one
captain and one lieutenant in the Department of Corrections seeking declaratory
judgment that they (and potentially

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<PAGE>

700 similarly situated others) are not exempt employees under the Fair Labor
Standards Act (FLSA) and, therefore, are entitled to overtime compensation at a
rate of not less than one and one-half times their regular rate of pay for
overtime hours worked since April 1, 1992, forward and including liquidated
damages. The U.S. District Court for the Northern District of Florida entered an
order dismissing the case for lack of jurisdiction on June 24, 1996. Plaintiffs
filed a lawsuit against the Department (Case No. 96-3955) in July 1996 at the
State level (Circuit Court, Second Judicial Circuit), making the same
allegations at that level which plaintiffs previously made before the U.S.
District Court for the Northern District of Florida. On December 20, 1996, that
Court determined that it has jurisdiction over the FLSA claim. On December 10,
1997, the court entered final summary judgment. Plaintiffs were not awarded any
damages, but were awarded attorneys fees and costs.

F. Barnett Bank v. Department of Revenue

Case No. 97-02375, 4th Judicial Circuit, involves the issue of whether
Florida's refund statute for dealer repossessions authorizes the Department to
grant a refund to a financial institution as the assignee of numerous security
agreements governing the sale of automobiles and other property sold by dealers.
The questions turns on whether the Legislature intended the statute only to
provide a refund or credit to the dealer who actually sold the tangible personal
property and collected and remitted the tax or intended that right to be
assignable. Several banks have applied for refunds; the potential refund to
financial institutions exceeds $30,000,000.

ADDITIONAL INFORMATION CONCERNING GEORGIA

The performance of the Georgia Fund is influenced by the political,
economic and statutory environment within the State. The Fund invests in
obligations of Georgia issuers, which results in the Fund's performance being
subject to risks associated with the most current conditions in the State. The
information presented below describes in more detail the factors that could
affect the ability of the bond issuers to repay interest and principal on
securities acquired by the Fund. The following information has been obtained
from a variety of public sources and is believed to be accurate, but should not
be relied upon as a complete description of all relevant information.

General

The State of Georgia has continued to benefit from job growth, personal
income growth and continued economic expansion. The State ranks tenth in
population and 26th in personal income according to the U.S. Bureau of Economic
Statistics. The State has yet to feel the post-Olympic headache that was
expected when the games closed in July of 1996. Employment gains have slowed
from 3.7% in 1996, but still continued at a respectable 2.4% in 1997. The
unemployment rate has continued to notch down to the present level of 3.8%. This
stands at 0.9% lower than the national average of 4.7%. The slow growth that was
anticipated after the Olympics is probably still on its way, but it may not
arrive until late 1998 or 1999. Some negative trends in employment in the
apparel industry, utilities and the military have surfaced during this
expansion. However, these have been offset by gains in services, transportation
and finance. The construction industry has seen a $3.5 billion boost due to
school construction. Georgia is following most states in their push to upgrade
old school buildings and build new structures to meet population growth and keep
current with technological advances.

Budget Process

The State has been consistently rebuilding their reserves that were
drawn down in the early 1990's. At that time, the State had basically reduced
its reserves to zero. As of fiscal year-end 1996, the State's main reserves of
Revenue Shortfall, Lottery and Midyear Adjustment stood at $313 million,

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$128 million and $105 million, respectively. In continuing with this positive
trend, the State ended fiscal 1997 with another substantial surplus of $476.4
million. The 1998 budget again reflects a healthy increase in revenues of 4.7%.

In 1997, the grocery sales tax was reduced by one cent. This should
have had a negative effect, but the State had set aside $129 million to buffer
this in 1996 surplus. The State will again reduce this by a penny in the fall of
1998, which will eliminate the tax completely. Each cent reduction signals a
loss of approximately $175 million in tax revenue.

The budget for 1998 authorized $564.1 million in new debt. This new
issuance should not have an adverse affect on their moderate level of $651 debt
per capita. The State has been able to use their extremely successful lottery to
enhance their budgetary reserves. Specific programs funded by the lottery are
intended to be educational in nature and one time expenses.

State's Revenues and Expenditures

State revenue estimates show that the reduction in grocery sales tax
did not derail the tax collections to this point in the year. Collections now
stand at 6.1% above the original projections through six months. Tax collections
should benefit from strong capital gains for individuals and continued strong
corporate collections. These increases should help the State post a 9% increase
in collections. However, rising labor costs will probably lead to a slowdown in
fiscal 1999 that will cause growth to temper to a still respectable 7%. As is
the case in many southeastern States, Georgia continues to spend heavily on
education and transportation. These initiatives will continue to be a large part
of their spending.

As of December 31, 1997, general obligations of the State of North
Carolina were rated Aaa/AAA/AAA by Moody's, S&P and Fitch, respectively. There
can be no assurance that the economic conditions on which these ratings are
based will continue or that particular bond issues may not be adversely affected
by changes in economic, political or other conditions.

ADDITIONAL INFORMATION CONCERNING MARYLAND

The following information constitutes only a brief summary, does not
purport to be a complete description of risk factors, and is principally drawn
from official statements relating to securities offerings of the State of
Maryland that were available as of the date of this SAI.

According to 1990 Census reports, Maryland's population in that year
was 4,780,800, reflecting an increase of 13.4% from the 1980 Census. Maryland's
population in 1997 was 5,094,300. Maryland's population is concentrated in urban
areas: the eleven counties and Baltimore City located in the
Baltimore-Washington Corridor contain 50.4% of the State's land area and 87.2%
of its population. The estimated 1990 population for the Baltimore Standard
Metropolitan Statistical Area was 2,382,172 and for the Maryland portion of the
Washington Standard Metropolitan Statistical Area, 1,788,314. Overall,
Maryland's population per square mile in 1990 was 489.1.

Personal income in Maryland grew at annual rates between 8.2% and 9.6%
in each of the years 1986 through 1988, but fell from a rate of 8.5% in 1989 to
3.1% in 1991. Commencing in 1992, however, personal income growth rebounded,
increasing at annual rates of between 4.0% and 5.4% in each of the years 1992
through 1997. Similarly, per capita personal income, which had grown at rates no
lower than 6.4% for the period from 1972 to 1989, grew at a rate of 4.8% in 1990
and only 1.8% in 1991. Subsequently, per capita personal income has grown at
annual rates of between 3.0% and 4.7% in each of the years 1992 through 1997.
Unemployment in Maryland peaked in 1982 at 8.5%, then decreased steadily to a
low of 3.7% in 1989. In 1990, unemployment increased to 4.7%, and increased
further to 6.0% in 1991, 6.7% in 1992 and 6.2% in 1993, before

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dropping to 5.1% in 1994 and 1995, 4.9% in 1996 and rising to 5.1% in 1997.

Retail sales in Maryland dropped by 2.2% in 1991, but rebounded
slightly and grew by 0.2% in 1992, 6.1% in 1993, 9.6% in 1994, 2.9% in 1995 and
1.5% in 1996, versus nationwide growth of 0.6%, 4.8%, 6.5%, 7.5%, 4.7% and 5.3%
in such years, respectively.

Services (including mining), wholesale and retail trade, government and
manufacturing (primarily printing and publishing, food and kindred products,
instruments and related products, industrial machinery, electronic equipment and
chemical and allied products) are the leading areas of employment in the State
of Maryland. In contrast to the nation as a whole, more people in Maryland are
employed in government than in manufacturing (18.5% versus 16.1% in 1997).
Between 1976 and 1996, manufacturing wages decreased by 25.2%, while
non-manufacturing wages increased by 58.5%.

The State's total expenditures for the fiscal years ending June 30,
1995, 1996, 1997 and 1998 were $13.5 billion, $14.2 billion, $14.8 billion and
$15.9 billion respectively. These results were due primarily to revenue
collections which fell short of projections, and increases in expenditures for
public assistance. The Governor of Maryland reduced fiscal year 1993
appropriations by approximately $56 million to offset the fiscal year 1992
deficit. The State Constitution mandates a balanced budget. Balances in the
Revenue Stabilization Account of the State Reserve Fund have also risen from
$300,000 in 1992 to $50.9 million in 1993, $161.8 million in 1994, $286.1
million in 1995, $461.2 million in 1996 (reflecting a net transfer to the
General Fund of $56.4 million) and $490.1 in 1997.

In April 1996, the General Assembly approved a $14.6 billion 1997
fiscal year budget. The budget included funds sufficient to meet all fiscal year
1996 deficiencies and to meet all specific statutory funding requirements; the
budget incorporated $29 million in savings from revisions to the State personnel
system and reform to the welfare and Medicare programs. The State ended fiscal
year 1997 with $490.1 million in the Revenue Stabilization Account of the State
Reserve Fund which exceeds 5% of general fund revenues.

In April 1997, the General Assembly approved a $15.4 billion 1998
fiscal year budget. This budget (i) included funds sufficient to meet all
specific statutory funding requirements; (ii) incorporated the first year of a
five-year phase-in of a 10% reduction in personal income taxes (estimated to
reduce revenues by $38.5 million in fiscal year 1998 and $450 million when fully
phased in) and certain reductions in sales taxes on certain manufacturing
equipment (estimated to reduce revenues by $38.6 million when the reductions are
fully phased in, in fiscal year 2001); and (iii) includes the first year's $30
million funding under an agreement to provide additional funds totaling $230
million over a five-year period to schools in the City of Baltimore and related
grants to other subdivisions totaling $32 million. When this budget was enacted,
the State estimated the General Fund surplus on a budgetary basis would be $28.2
million, in addition to which the State projected that there would be a balance
of $617.6 million in the Revenue Stabilization Account of the State Reserve
Fund. Based on the 1999 budget, it is estimated that the general Fund surplus on
a budgetary basis at June 30, 1999, will be approximately $14.5 million. The
balance in the Revenue Stabilization Account is estimated to be $634 million
after a $185.2 transfer general Fund.

The State of Maryland and its various political subdivisions issue a
number of different kinds of municipal obligations, including general obligation
bonds supported by tax collections, revenue bonds payable from certain
identified tax levies or revenue streams, conduit revenue bonds payable from the
repayment of certain loans to authorized entities such as hospitals and
universities, and certificates of participation in tax-exempt municipal leases.

The State of Maryland issues general obligation bonds, which are
payable from ad valorem property taxes. The State Constitution prohibits the
contracting of State debt unless the debt is authorized by law levying an annual
tax or taxes sufficient to pay the debt service within 15 years and prohibiting
the repeal of the tax or taxes or their use for another purpose until the debt
has been paid. The State also enters into lease-purchase agreements, in which
participation interests are often sold

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publicly as individual securities.

As of July 1998, the State's general obligation bonds were rated "Aaa"
by Moody's, "AAA" by S&P, and "AAA" by Fitch.

The Maryland Department of Transportation issues Consolidated
Transportation Bonds, which are payable out of specific excise taxes, motor
vehicle taxes, and corporate income taxes, and from the general revenues of the
Department. Issued to finance highway, port, transit, rail or aviation
facilities, these bonds are rated "Aa" by Moody's, "AA" by S&P, and "AA" by
Fitch. The Maryland Transportation Authority, a unit of the Department, issues
its own revenue bonds for transportation facilities, which are payable from
certain highway, bridge and tunnel tolls. These bonds are rated "A+" by S&P.

Other State agencies which issue municipal obligations include the
Maryland Stadium Authority, which has issued bonds payable from sports facility
and other lease revenues and certain lottery revenues and convention center
lease revenue bonds; the Maryland Water Quality Financing Administration, which
issues bonds to provide loans to local governments for wastewater control
projects; the Community Development Administration of the Department of Housing
and Community Development, which issues mortgage revenue bonds for housing; the
Maryland Environmental Service, which issues bonds secured by the revenues from
its various water supply, wastewater treatment and waste management projects;
and the various public institutions of higher education in Maryland (which
include the University System of Maryland, Morgan State University and State
University, and St. Mary's College of Maryland) which issue their own revenue
bonds. None of these bonds constitute debts or pledges of the full faith and
credit of the State of Maryland. The issuers of these obligations are subject to
various economic risks and uncertainties, and the credit quality of the
securities issued by them may vary considerably from the quality of obligations
backed by the full faith and credit of the State.

In addition, the Maryland Health and Higher Educational Facilities
Authority and the Maryland Industrial Development Financing Authority issue
conduit revenue bonds, the proceeds of which are lent to borrowers eligible
under relevant state and federal law. The Northeast Maryland Waste Disposal
Authority, the Maryland Economic Development Corporation and the Maryland Energy
Financing Administration also issue conduit revenue bonds. These bonds of these
issuers are payable solely from the loan payments made by borrowers and other
financing participants, and their credit quality varies with the financial
strengths of these entities.

Maryland has 24 geographical subdivisions, composed of 23 counties plus
the independent City of Baltimore, which functions much like a county. Some of
the counties and the City of Baltimore operate pursuant to the provisions of
codes of their own adoption, while others operate pursuant to State-approved
charters and State statutes.

Maryland counties and municipalities and the City of Baltimore receive
most of their revenues from ad valorem taxes on real and personal property,
individual income taxes, transfer taxes, miscellaneous taxes and aid from the
State. Their expenditures include public safety, public works, health, public
welfare, court and correctional services, education, and general governmental
costs.

The economic factors affecting the State, as discussed above, also have
affected the counties, municipalities and the City of Baltimore. In addition,
reductions in State aid caused by State budget deficits have caused the local
governments to trim expenditures and, in some cases, raise taxes.

According to recent available ratings, general obligation bonds of
Montgomery County (abutting Washington, D.C.) are rated "Aaa" by Moody's and
"AAA" by S&P. Prince George's County, also in the Washington, D.C. suburbs,
issues general obligation bonds rated "Aa3" by Moody's and "AA-" by S&P, while
Baltimore County, a separate political subdivision surrounding the City of
Baltimore, issues general obligation bonds rated "Aaa" by Moody's and "AAA" by
S&P and Anne Arundel County

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issues general obligation bonds which are rated "AA+" by both Fitch and S&P and
"Aa2" by Moody's. The City of Baltimore's general obligation bonds are rated
"A1" by Moody's and "A" by S&P. The other counties in Maryland all have general
obligation bond ratings of "A" or better, except for Allegheny County and
Garrett County, the bonds of which are rated "Baa2" and "Baa3", respectively, by
Moody's. The Washington Suburban Sanitary District, a bi-county agency providing
water and sewerage services in Montgomery and Prince George's counties, issues
general obligation bonds rated "Aa1" by Moody's and "AA" by S&P. Additionally,
some of the large municipal corporations in Maryland (such as the cities of
Rockville, Annapolis and Frederick) have issued general obligation bonds. There
can be no assurance that these ratings will continue.

Many of Maryland's counties and the City of Baltimore have established
subsidiary agencies with bond issuing powers, such as housing authorities,
parking revenue authorities, and industrial development authorities. In
addition, all Maryland municipalities have the authority under State law to
issue conduit revenue bonds. These entities are subject to various economic
risks and uncertainties and the credit quality of the securities issued by them
may vary considerably from the credit quality of obligations backed by the full
the faith and credit of the State.

ADDITIONAL INFORMATION CONCERNING NORTH CAROLINA

The performance of the North Carolina Fund is influenced by the
political, economic and statutory environment within the State. The Fund invests
in obligations of North Carolina issuers, which results in the Fund's
performance being subject to risks associated with the most current conditions
in the State. The information presented below describes in more detail the
factors that could affect the ability of the bond issuers to repay interest and
principal on securities acquired by the Fund. The following information has been
obtained from a variety of public sources and is believed to be accurate, but
should not be relied upon as a complete description of all relevant information.

General

North Carolina's economy has historically been dependent on small
manufacturing and agriculture. More recently, the employment base has shifted
away from the traditional roots in textiles and furniture making into services
and trade. Areas of growth include financial, high technology and research. The
State benefits from (1) a friendly environment for businesses, (2) being the
banking center of the southeast, (3) the research facilities of the
Raleigh/Durham area and (4) access to ports in Wilmington. Tobacco remains the
primary cash crop. The State has continued to post economic gains, although the
current wealth levels are 32nd according to the U.S. Bureau of the Census. This
ranks North Carolina, the 11th largest state in population, just above the
national average for wealth.

Budget Process

The State of North Carolina has continued to expand its economy and
diversify its employment base, while maintaining conservative fiscal and debt
management policies. The State has enjoyed significant surpluses in the past two
years ad has been able to reallocate these to best serve their many needs in
transportation and education. As of early 1998, the State's debt was
approximately $2.15 billion or $289 per capita. The amortization for this debt
is a respectable 62% over the next ten years.

The budget for the 1998-99 year of $12.5 billion calls for significant
increases in spending. The increase of almost $1 billion over the 1997-98 budget
will be offset by strong projected tax revenue growth and the historically
conservative nature of the State's expenditures which continually come in under
budget. The main areas of emphasis for spending include reform to the

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juvenile justice system, Smart Start, an early childhood program, and education,
including a 6.5% increase in teacher salaries.

The State has been very cognizant of its finances since the early
1990's recessionary period. The addition of permanent revenue enhancements and
conservative spending policies resulted in a positive general fund balance of
almost $1.5 billion in 1997. Much of that surplus was used in the 1998-99
budget. $600 million remains in the budget stabilization reserve account to
protect the State from future economic downturns.

State's Revenues and Expenditures

State revenues have continued to come in above projections. For fiscal
1997, tax collections increased 8.3% which exceeded the 2.9% budgeted increase
by a wide margin. Revenues outpaced their budgeted levels in almost every
category. The early indications for 1998 show results ahead of projections. One
unexpected expense was the transfer of $116 million to a disaster relief fund.
On July 1, 1998, the State reduced its sales tax on food to 2%, and the 1997- 98
budget will eliminate the food tax entirely in May 1999. The 1998-99 budget also
eliminates the inheritance tax.

ADDITIONAL INFORMATION CONCERNING SOUTH CAROLINA

The performance of the South Carolina Fund is influenced by the
political, economic and statutory environment within the State. The Fund invests
in obligations of South Carolina issuers, which results in the Fund's
performance being subject to risks associated with the most current conditions
in the State. The information presented below describes in more detail the
factors that could affect the ability of the bond issuers to repay interest and
principal on securities acquired by the Fund. The following information has been
obtained from a variety of public sources and is believed to be accurate, but
should not be relied upon as a complete description of all relevant information.

General

The State's population currently ranks 26th in the nation with
approximately 3.7 million people. The income per capita ranks 41st. The State
has enjoyed strong growth in many areas including durable goods, trade and
services over the past decade. The additions of BMW in Greenville/Spartenburg
and Nucor, Inc. in Charleston have produced significant job growth in the State.
In 1996, jobs were distributed almost evenly between manufacturing, service and
trade at 22%, 22% and 24%, respectively. The textile industry has been hit hard
over the last eight years. It has seen a 28% decrease in employment while the
State has seen 16% growth in employment over the corresponding period. The
increases to offset the textile losses have come from service (45%) and trade
(22%).

Budget Process

The South Carolina State Constitution mandates a balanced budget. If a
deficit occurs, the General Assembly must account from it in the succeeding
fiscal year. In addition, if a deficit appears likely, the State Budget and
Control Board may reduce appropriations during the current fiscal year as
necessary to prevent the deficit. The State Constitution limits annual increases
in

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State appropriations to the average growth rate of the economy of the State and
annual increases in the number of State employees to the average growth of the
population of the State.

The State Constitution requires a General Reserve Fund that equals
three percent of General Fund revenues for the latest fiscal year. When deficits
have occurred, the State has funded them out of the General Fund. The State
Constitution also requires a Capital Reserve Fund equal to two percent of
General Fund revenues. Before March 1st of each year, the Capital Fund must be
used to offset mid-year budget reductions before mandating cuts in operating
appropriations, and after March 1st, the Capital Fund may be appropriated by a
special vote of the General Assembly to finance previously authorized capital
improvements or other non-recurring purposes. Monies in the Capital Fund not
appropriated or any appropriation for a particular project or item that has been
reduced due to application of the monies to a year-ended deficit must go back to
the General Fund.

Debt levels have been very conservative over the years. The current
level of $339 debt per capita and aggressive amortization of 80% of outstanding
indebtedness over the next ten years should continue their previous success.
Currently, the maximum limit for debt service is 5% of the prior year's
revenues. Also, highway bonds are limited to an amount which can be serviced by
15% of the highway revenues.

State's Revenues and Expenditures

State Revenues primarily come from income and sales taxes. The
reduction in property taxes in fiscal 1996 should be offset with better than
budgeted revenues that have created a surplus. Education and healthcare continue
to lead the way in expenditures. Like many other states, South Carolina has been
conscious of the need to upgrade their school infrastructure and become
competitive in salaries with the national averages. A big positive for issuers
within the State is the revamping of the South Carolina State Aid Intercept
Program. The credit enhancement provided by Section 59-71-15, Code of Laws of
South Carolina, has been amended to provide extra protection for bondholders.
The school districts now are required to notify the State Treasurer 15 days
prior to an interest or principal payment of a deficiency in funds on hand to
make the scheduled payment. The law now requires the State to advance funds from
the State's distributed school district revenues or the State's general fund for
an amount up to the total amount appropriated for the Education Finance Act for
that fiscal year.

Road and transportation upgrades are another big initiative for the
State. The State Legislature passed a bill in their last session to fund a state
infrastructure bank that will allow the state to issue up to $1 billion in
bonds. This new funding source should help the State meet their ever expanding
highway needs around their major cities and vacation spots.

As of December 31, 1997, general obligations of the State of South
Carolina were rated Aaa/AAA/AAA by Moody's, S & P and Fitch, respectively. There
can be no assurance that the economic conditions on which these ratings are
based will continue or that particular bond issues may not be adversely affected
by changes in economic, political or other conditions.

ADDITIONAL INFORMATION CONCERNING VIRGINIA

The performance of the Virginia Fund is influenced by the political,
economic and statutory environment within the State. The Fund invests in
obligations of Virginia issuers, which results in the Fund's performance being
subject to risks associated with the most current conditions in the State. The
information presented below describes in more detail the factors that could
affect the ability of the bond issuers to repay interest and principal on
securities acquired by the Fund. The following information has been obtained
from a variety of public sources and is believed to be accurate, but should not
be relied upon as a complete description of all relevant information.

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General

Virginia is the nation's twelfth most populous state. As of July 1997,
the State's population exceeded 6.7 million. The population of the State has
increased 8.8% since 1990 according to the U.S. Bureau of the Census. As for
personal income, the State is currently ranked fourteenth. Although Virginia is
largely rural, almost 80% of the population lives in the eight metropolitan
statistical areas.

Current growth is being fueled by service industries. Employment in the
services increased 19.8% from 1992-96 and now makes up approximately 29% of all
employment. The additions of major semiconductor plants, continued expansion of
healthcare and financial services make up the majority of these gains. Virginia
has one of the highest concentrations of high technology jobs in the nation.
Currently, almost 150,000 people work for approximately 3,900 firms. Many of the
original high-tech jobs were related to defense, but have more recently been
attributed to the computer industry. The State's unemployment rate has typically
remained about 1.0% below the national average. In 1996, the unemployment rate
was 4.4%. The State is governed by the Right-to-Work Law and is considered one
of the least unionized of the industrialized states. This has created a very
favorable business climate in the past.

Tourism continues to be important for the State. In 1994, retail
spending by domestic travelers represented nearly 20% of all retail sales. The
main draws include the beach, mountains, metropolitan cities and the amusement
parks. These tourism dollars represent a significant asset for the State.

The State has been able to weather the most recent base closings in
1993. In some cases, the State's military bases have actually benefited from
realignment of units and programs. The concern of base closings is still
evident, but has subsided for the near-term.

Virginia's Budget Process

With its new Governor, James S. Gilmore III, who took office in January
of 1998, the State is continuing its policy of strong fiscal management. During
his campaign, Governor Gilmore promised to eliminate the personal property tax
on motor vehicles. His current plans include a five-year phase-in period whereby
the State will make up the lost revenues to the localities. The previous
Governor, George Allen, left office after submitting a biennium budget that
included $39.8 billion in spending and procedures in place to continue the
recent success of budget surpluses (4 out of the last 5 years). The State
currently has a fund balance of $491.8 million as of year-end 1997 and a rainy
day fund in excess of $215 million and general obligation debt service of 3% of
operating expenditures. The State also enjoys low debt levels at just $177 per
capita and nearly 68% of the State-backed debt outstanding is not tax supported.
The exceptional revenue growth over the next three years is anticipated to
provide an additional $320 million in revenues above previous projections. The
Debt Capacity Advisory Committee has stated that the State can issue $445
million a year for the next ten years. This figure is up significantly from the
1996 projection of $225 million.

State's Revenues and Expenditures

The State derives over 93% of its revenues from taxes. Individual and
fiduciary income and estate taxes supply nearly two thirds of all tax revenue.
State sales taxes account for nearly 28%. The top expenditure categories include
education (45%), individual and family services (28%) and the administration of
justice (20%).

Governor's Objectives

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Governor Gilmore has made it clear that his first priority is the
elimination of the personal property tax on motor vehicles, as stated earlier.
This decision has caused some concern for the localities that rely on this
source of taxes so heavily, but a rebate system is being discussed which will
allow those localities to recoup their losses. The second initiative that the
Governor has insisted upon is the addition of 1,000 new elementary teachers.
This is expected to increase the dollars spent per student to $2,192 per year.

As of December 31, 1997, general obligations of the State of Virginia
were rated Aaa/AAA/AAA by Moody's, S&P and Fitch, respectively. There can be no
assurance that the economic conditions on which these ratings are based will
continue or that particular bond issues may not be adversely affected by changes
in economic, political or other conditions.

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<PAGE>

EVERGREEN FUNDS
Statement of Additional Information ("SAI")
PART 2

ADDITIONAL INFORMATION ON SECURITIES
AND INVESTMENT PRACTICES

The prospectus describes the Fund's investment objective and the
securities in which it primarily invests. The following describes other
securities the Fund may purchase and investment strategies it may use. Some of
the information below will not apply to the Fund in which you are interested.
See the list under "Other Securities and Practices" in Part 1 of this SAI to
determine which of the sections below are applicable.

Defensive Investments

The Fund may invest up to 100% of its assets in high quality short-term
obligations, such as notes, commercial paper, certificates of deposit, banker's
acceptances, bank deposits or U.S. government securities if, in the opinion of
the investment advisor, market conditions warrant a temporary defensive
investment strategy.

U.S. Government Securities

The Fund may invest in securities issued or guaranteed by U.S.
government agencies or instrumentalities.

These securities are backed by (1) the discretionary authority of the
U.S. government to purchase certain obligations of agencies or instrumentalities
or (2) the credit of the agency or instrumentality issuing the obligations.

Some government agencies and instrumentalities may not receive
financial support from the U.S. government. Examples of such agencies are:

(i) Farm Credit System, including the National Bank for
Cooperatives, Farm Credit Banks and Banks for Cooperatives;

(ii) Farmers Home Administration;

(iii) Federal Home Loan Banks;

(iv) Federal Home Loan Mortgage Corporation;

(v) Federal National Mortgage Association; and

(vi) Student Loan Marketing Association.

Securities Issued by the Government National Mortgage Association ("GNMA")

The Fund may invest in securities issued by the GNMA, a corporation
wholly-owned by the U.S. government. GNMA securities or "certificates" represent
ownership in a pool of underlying mortgages. The timely payment of principal and
interest due on these securities is guaranteed.

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Unlike conventional bonds, the principal on GNMA certificates is not
paid at maturity but over the life of the security in scheduled monthly
payments. While mortgages pooled in a GNMA certificate may have maturities of up
to 30 years, the certificate itself will have a shorter average maturity and
less principal volatility than a comparable 30-year bond.

The market value and interest yield of GNMA certificates can vary due
not only to market fluctuations, but also to early prepayments of mortgages
within the pool. Since prepayment rates vary widely, it is impossible to
accurately predict the average maturity of a GNMA pool. In addition to the
guaranteed principal payments, GNMA certificates may also make unscheduled
principal payments resulting from prepayments on the underlying mortgages.

Although GNMA certificates may offer yields higher than those available
from other types of U.S. government securities, they may be less effective as a
means of locking in attractive long-term rates because of the prepayment
feature. For instance, when interest rates decline, prepayments are likely to
increase as the holders of the underlying mortgages seek refinancing. As a
result, the value of a GNMA certificate is not likely to rise as much as the
value of a comparable debt security would in response to same decline. In
addition, these prepayments can cause the price of a GNMA certificate originally
purchased at a premium to decline in price compared to its par value, which may
result in a loss.

When-Issued, Delayed-Delivery and Forward Commitment Transactions

The Fund may purchase securities on a when-issued or delayed delivery
basis and may purchase or sell securities on a forward commitment basis.
Settlement of such transactions normally occurs within a month or more after the
purchase or sale commitment is made.

The Fund may purchase securities under such conditions only with the
intention of actually acquiring them, but may enter into a separate agreement to
sell the securities before the settlement date. Since the value of securities
purchased may fluctuate prior to settlement, the Fund may be required to pay
more at settlement than the security is worth. In addition, the purchaser is not
entitled to any of the interest earned prior to settlement.

Upon making a commitment to purchase a security on a when-issued,
delayed delivery or forward commitment basis the Fund will hold liquid assets
worth at least the equivalent of the amount due. The liquid assets will be
monitored on a daily basis and adjusted as necessary to maintain the necessary
value.

Purchases made under such conditions may involve the risk that yields
secured at the time of commitment may be lower than otherwise available by the
time settlement takes place, causing an unrealized loss to the Fund. In
addition, when the Fund engages in such purchases, it relies on the other party
to consummate the sale. If the other party fails to perform its obligations, the
Fund may miss the opportunity to obtain a security at a favorable price or
yield.

Repurchase Agreements

The Fund may enter into repurchase agreements with entities that are
registered as U.S. government securities dealers, including member banks of the
Federal Reserve System having at least $1 billion in assets, primary dealers in
U.S. government securities or other financial institutions believed by the
Investment advisor (as defined later) to be creditworthy. In a repurchase
agreement the Fund obtains a security and simultaneously commits to return the
security to the seller at a set price (including principal and interest) within
period of time usually not exceeding seven days. The resale price reflects the
purchase price plus an agreed upon market rate of interest which is unrelated to
the coupon rate or maturity of the underlying security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect

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<PAGE>

secured by the value of the underlying security.

The Fund's custodian or a third party will take possession of the
securities subject to repurchase agreements, and these securities will be marked
to market daily. To the extent that the original seller does not repurchase the
securities from the Fund, the Fund could receive less than the repurchase price
on any sale of such securities. In the event that such a defaulting seller filed
for bankruptcy or became insolvent, disposition of such securities by the Fund
might be delayed pending court action. The Fund's investment advisor believes
that under the regular procedures normally in effect for custody of the Fund's
portfolio securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or disposition
of such securities. The Fund will only enter into repurchase agreements with
banks and other recognized financial institutions, such as broker-dealers, which
are deemed by the investment advisor to be creditworthy pursuant to guidelines
established by the Board of Trustees.

Reverse Repurchase Agreements

As described herein, the Fund may also enter into reverse repurchase
agreements. These transactions are similar to borrowing cash. In a reverse
repurchase agreement, the Fund transfers possession of a portfolio instrument to
another person, such as a financial institution, broker, or dealer, in return
for a percentage of the instrument's market value in cash, and agrees that on a
stipulated date in the future the Fund will repurchase the portfolio instrument
by remitting the original consideration plus interest at an agreed upon rate.

The use of reverse repurchase agreements may enable the Fund to avoid
selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.

When effecting reverse repurchase agreements, liquid assets of the
Fund, in a dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These securities are marked to
market daily and maintained until the transaction is settled.

Options

The Fund may buy or sell (i.e., write) put and call options on
securities it holds or intends to acquire and may also purchase put and call
options for the purpose of offsetting previously written put and call options of
the same series. The Fund may also buy and sell options on financial futures
contracts. The Fund will use options as a hedge against decreases or increases
in the value of securities it holds or intends to acquire.
The Fund may write only covered options. With regard to a call option,
this means that the Fund will own, for the life of the option, the securities
subject to the call option. The Fund will cover put options by holding, in a
segregated account, liquid assets having a value equal to or greater than the
price of securities subject to the put option. If the Fund is unable to effect a
closing purchase transaction with respect to the covered options it has sold, it
will not be able to sell the underlying securities or dispose of assets held in
a segregated account until the options expire or are exercised.

Futures Transactions

The Fund may enter into financial futures contracts and write options
on such contracts. The Fund intends to enter into such contracts and related
options for hedging purposes. The Fund will enter into futures on securities or
index-based futures contracts in order to hedge against changes in interest or
exchange rates or securities prices. A futures contract on securities is an
agreement to buy or sell securities at a specified price during a designated
month. A futures contract on a

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<PAGE>

securities index does not involve the actual delivery of securities, but merely
requires the payment of a cash settlement based on changes in the securities
index. The Fund does not make payment or deliver securities upon entering into a
futures contract. Instead, it puts down a margin deposit, which is adjusted to
reflect changes in the value of the contract and which continues until the
contract is terminated.

The Fund may sell or purchase futures contracts. When a futures contract
is sold by the Fund, the value of the contract will tend to rise when the value
of the underlying securities declines and to fall when the value of such
securities increases. Thus, the Fund sells futures contracts in order to offset
a possible decline in the value of its securities. If a futures contract is
purchased by the Fund, the value of the contract will tend to rise when the
value of the underlying securities increases and fall when the value of such
securities declines. The Fund intends to purchase futures contracts in order to
establish what is believed by the investment advisor to be a favorable price or
rate of return for securities the Fund intends to purchase.

The Fund also intends to purchase put and call options on futures
contracts for hedging purposes. A put option purchased by the Fund would give it
the right to assume a position as the seller of a futures contract. A call
option purchased by the Fund would give it the right to assume a position as the
purchaser of a futures contract. The purchase of an option on a futures contract
requires the Fund to pay a premium. In exchange for the premium, the Fund
becomes entitled to exercise the benefits, if any, provided by the futures
contract, but is not required to take any action under the contract. If the
option cannot be exercised profitably before it expires, the Fund's loss will be
limited to the amount of the premium and any transaction costs.

The Fund may enter into closing purchase and sale transactions in order
to terminate a futures contract and may sell put and call options for the
purpose of closing out its options positions. The Fund's ability to enter into
closing transactions depends on the development and maintenance of a liquid
secondary market. There is no assurance that a liquid secondary market will
exist for any particular contract or at any particular time. As a result, there
can be no assurance that the Fund will be able to enter into an offsetting
transaction with respect to a particular contract at a particular time. If the
Fund is not able to enter into an offsetting transaction, the Fund will continue
to be required to maintain the margin deposits on the contract and to complete
the contract according to its terms, in which case it would continue to bear
market risk on the transaction.

Although futures and options transactions are intended to enable the
Fund to manage market, interest rate or exchange rate risk, unanticipated
changes in interest rates or market prices could result in poorer performance
than if it had not entered into these transactions. Even if the investment
advisor correctly predicts interest rate movements, a hedge could be
unsuccessful if changes in the value of the Fund's futures position did not
correspond to changes in the value of its investments. This lack of correlation
between the Fund's futures and securities positions may be caused by differences
between the futures and securities markets or by differences between the
securities underlying the Fund's futures position and the securities held by or
to be purchased for the Fund. The Fund's investment advisor will attempt to
minimize these risks through careful selection and monitoring of the Fund's
futures and options positions.

The Fund does not intend to use futures transactions for speculation or
leverage. The Fund has the ability to write options on futures, but currently
intends to write such options only to close out options purchased by the Fund.
The Fund will not change these policies without supplementing the information in
the prospectus and SAI.

The Fund will not maintain open positions in futures contracts it has
sold or call options it has written on futures contracts if, in the aggregate,
the value of the open positions (marked to market) exceeds the current market
value of its securities portfolio plus or minus the unrealized gain or loss on
those open positions, adjusted for the correlation of volatility between the
hedged

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<PAGE>

securities and the futures contracts. If this limitation is exceeded at any
time, the Fund will take prompt action to close out a sufficient number of open
contracts to bring its open futures and options positions within this
limitation.

"Margin" in Futures Transactions

Unlike the purchase or sale of a security, the Fund does not pay or
receive money upon the purchase or sale of a futures contract. Rather the Fund
is required to deposit an amount of "initial margin" in cash or U.S. Treasury
bills with its custodian (or the broker, if legally permitted). The nature of
initial margin in futures transactions is different from that of margin in
securities transactions in that futures contract initial margin does not involve
the borrowing of funds by the Fund to finance the transactions. Initial margin
is in the nature of a performance bond or good faith deposit on the contract
which is returned to the Fund upon termination of the futures contract, assuming
all contractual obligations have been satisfied.

A futures contract held by the Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day the Fund pays
or receives cash, called "variation margin," equal to the daily change in value
of the futures contract. This process is known as "marking to market." Variation
margin does not represent a borrowing or loan by the Fund but is instead
settlement between the Fund and the broker of the amount one would owe the other
if the futures contract expired. In computing its daily net asset value the Fund
will mark-to-market its open futures positions. The Fund is also required to
deposit and maintain margin when it writes call options on futures contracts.

Foreign Securities

The Fund may invest in foreign securities or U.S. securities traded in
foreign markets. In addition to securities issued by foreign companies,
permissible investments may also consist of obligations of foreign branches of
U.S. banks and of foreign banks, including European certificates of deposit,
European time deposits, Canadian time deposits and Yankee certificates of
deposit. The Fund may also invest in Canadian commercial paper and Europaper.
These instruments may subject the Fund to investment risks that differ in some
respects from those related to investments in obligations of U.S. issuers. Such
risks include the possibility of adverse political and economic developments;
imposition of withholding taxes on interest or other income; seizure,
nationalization, or expropriation of foreign deposits; establishment of exchange
controls or taxation at the source; greater fluctuations in value due to changes
in exchange rates, or the adoption of other foreign governmental restrictions
which might adversely affect the payment of principal and interest on such
obligations. Such investments may also entail higher custodial fees and sales
commissions than domestic investments. Foreign issuers of securities or
obligations are often subject to accounting treatment and engage in business
practices different from those respecting domestic issuers of similar securities
or obligations. Foreign branches of U.S. banks and foreign banks may be subject
to less stringent reserve requirements than those applicable to domestic
branches of U.S. banks.

Foreign Currency Transactions

As one way of managing exchange rate risk, the Fund may enter into
forward currency exchange contracts (agreements to purchase or sell currencies
at a specified price and date). The exchange rate for the transaction (the
amount of currency the Fund will deliver and receive when the contract is
completed) is fixed when the Fund enters into the contract. The Fund usually
will enter into these contracts to stabilize the U.S. dollar value of a security
it has agreed to buy or sell. The Fund intends to use these contracts to hedge
the U.S. dollar value of a security it already owns, particularly if the Fund
expects a decrease in the value of the currency in which the foreign security is
denominated. Although the Fund will attempt to benefit from using forward

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contracts, the success of its hedging strategy will depend on the investment
advisor's ability to predict accurately the future exchange rates between
foreign currencies and the U.S. dollar. The value of the Fund's investments
denominated in foreign currencies will depend on the relative strengths of those
currencies and the U.S. dollar, and the Fund may be affected favorably or
unfavorably by changes in the exchange rates or exchange control regulations
between foreign currencies and the U.S. dollar. Changes in foreign currency
exchange rates also may affect the value of dividends and interest earned, gains
and losses realized on the sale of securities and net investment income and
gains, if any, to be distributed to shareholders by the Fund. The Fund may also
purchase and sell options related to foreign currencies in connection with
hedging strategies.

High Yield, High Risk Bonds

The Fund may invest a portion of its assets in lower rated bonds. Bonds
rated below BBB by S&P or Fitch or below Baa by Moody's, commonly known as "junk
bonds," offer high yields, but also high risk. While investment in junk bonds
provides opportunities to maximize return over time, they are considered
predominantly speculative with respect to the ability of the issuer to meet
principal and interest payments. Investors should be aware of the following
risks:

(1) The lower ratings of junk bonds reflect a greater possibility that
adverse changes in the financial condition of the issuer or in general economic
conditions, or both, or an unanticipated rise in interest rates may impair the
ability of the issuer to make payments of interest and principal, especially if
the issuer is highly leveraged. Such issuer's ability to meet its debt
obligations may also be adversely affected by the issuer's inability to meet
specific forecasts or the unavailability of additional financing. Also, an
economic downturn or an increase in interest rates may increase the potential
for default by the issuers of these securities.

(2) The value of junk bonds may be more susceptible to real or perceived
adverse economic or political events than is the case for higher quality bonds.

(3) The value of junk bonds, like those of other fixed income
securities, fluctuates in response to changes in interest rates, generally
rising when interest rates decline and falling when interest rates rise. For
example, if interest rates increase after a fixed income security is purchased,
the security, if sold prior to maturity, may return less than its cost. The
prices of junk bonds, however, are generally less sensitive to interest rate
changes than the prices of higher-rated bonds, but are more sensitive to news
about an issuer or the economy which is, or investors perceive as, negative.

(4) The secondary market for junk bonds may be less liquid at certain
times than the secondary market for higher quality bonds, which may adversely
effect (a) the bond's market price, (b) the Fund's ability to sell the bond and
the Fund's ability to obtain accurate market quotations for purposes of valuing
its assets.

For bond ratings descriptions, see "Corporate and Municipal Bond
Ratings" below.

Illiquid and Restricted Securities

The Fund may not invest more than 15% of its net assets in securities
that are illiquid. A security is illiquid when the Fund cannot dispose of it in
the ordinary course of business within seven days at approximately the value at
which the Fund has the investment on its books.

The Fund may invest in "restricted" securities, i.e., securities
subject to restrictions on resale under federal securities laws. Rule 144A under
the Securities Act of 1933 ("Rule 144A") allows certain restricted securities to
trade freely among qualified institutional investors. Since Rule 144A securities
may have limited markets, the Board of Trustees will determine whether such
securities should be considered illiquid for the purpose of determining the
Fund's compliance with

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the limit on illiquid securities indicated above. In determining the liquidity
of Rule 144A securities, the Trustees will consider: (1) the frequency of trades
and quotes for the security; (2) the number of dealers willing to purchase or
sell the security and the number of other potential buyers; (3) dealer
undertakings to make a market in the security; and (4) the nature of the
security and the nature of the marketplace trades.

Investment in Other Investment Companies

The Fund may purchase the shares of other investment companies to the
extent permitted under the 1940 Act. Currently, the Fund may not (1) own more
than 3% of the outstanding voting stocks of another investment company, (2)
invest more than 5% of its assets in any single investment company, and (3)
invest more than 10% of its assets in investment companies. However, the Fund
may invest all of its investable assets in securities of a single open-end
management investment company with substantially the same fundamental investment
objectives, policies and limitations as the Fund.

Short Sales

The Fund may not make short sales of securities or maintain a short
position unless, at all times when a short position is open, it owns an equal
amount of such securities or of securities which, without payment of any further
consideration, are convertible into or exchangeable for securities of the same
issue as, and equal in amount to, the securities sold short. The Fund may effect
a short sale in connection with an underwriting in which the Fund is a
participant.

Municipal Bonds

The Fund may invest in municipal bonds of any state, territory or
possession of the U.S., including the District of Columbia. The Fund may also
invest in municipal bonds of any political subdivision, agency or
instrumentality (e.g., counties, cities, towns, villages, districts,
authorities) of the U.S. or its possessions. Municipal bonds are debt
instruments issued by or for a state or local government to support its general
financial needs or to pay for special projects such as airports, bridges,
highways, public transit, schools, hospitals, housing and water and sewer works.
Municipal bonds may also may be issued to refinance public debt.

Municipal bonds are mainly divided between "general obligation" and
"revenue" bonds. General obligation bonds are backed by the full faith and
credit of governmental issuers with the power to tax. They are repaid from the
issuer's general revenues. Payment, however, may be dependent upon legislative
approval and may be subject to limitations on the issuer's taxing power.
Enforcement of payments due under general obligation bonds varies according to
the law applicable to the issuer. In contrast, revenue bonds are supported only
by the revenues generated by the project or facility.

The Fund may also invest in industrial development bonds. Such bonds
are usually revenue bonds issued to pay for facilities with a public purpose
operated by private corporations. The credit quality of industrial development
bonds is usually directly related to the credit standing of the owner or user of
the facilities. To qualify as a municipal bond, the interest paid on an
industrial development bond must qualify as fully exempt from federal income
tax. However, the interest paid on an industrial development bond may be subject
to the federal alternative minimum tax.

The yield on municipal bonds depends on such factors as market
conditions, the financial condition of the issuer and the issue's size, maturity
date and rating. Municipal bonds are rated by S&P, Moody's and Fitch. Such
ratings, however, are opinions, not absolute standards of quality. Municipal
bonds with the same maturity, interest rates and rating may have different
yields, while

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<PAGE>

municipal bonds with the same maturity and interest rate, but different ratings,
may have the same yield. Once purchased by the Fund, a municipal bond may cease
to be rated or receive a new rating below the minimum required for purchase by
the Fund. Neither event would require the Fund to sell the bond, but the Fund's
investment advisor would consider such events in determining whether a Fund
should continue to hold it.

The ability of the Fund to achieve its investment objective depends upon
the continuing ability of issuers of municipal bonds to pay interest and
principal when due. Municipal bonds are subject to the provisions of bankruptcy,
insolvency and other laws affecting the rights and remedies of creditors. Such
laws extend the time for payment of principal and/or interest, and may otherwise
restrict the Fund's ability to enforce its rights in the event of default. Since
there is generally less information available on the financial condition of
municipal bond issuers compared to other domestic issuers of securities, the
Fund's investment advisor may lack sufficient knowledge of an issue's
weaknesses. Other influences, such as litigation, may also materially affect the
ability of an issuer to pay principal and interest when due. In addition, the
market for municipal bonds is often thin and can be temporarily affected by
large purchases and sales, including those by the Fund.

From time to time, Congress has considered restricting or eliminating
the federal income tax exemption for interest on municipal bonds. Such actions
could materially affect the availability of municipal bonds and the value of
those already owned by the Fund. If such legislation were passed, the Trust's
Board of Trustees may recommend changes in the Fund's investment objectives and
policies or dissolution of the Fund.

Virgin Islands, Guam and Puerto Rico

The Fund may invest in obligations of the governments of the Virgin
Islands, Guam and Puerto Rico to the extent such obligations are exempt from the
income or intangibles taxes, as applicable, of the state for which the Fund is
named. The Fund does not presently intend to invest more than (a) 5% of its net
assets in the obligations of each of the Virgin Islands and Guam or (b) 25% of
its net assets in the obligations of Puerto Rico. Accordingly, the Fund may be
adversely affected by local political and economic conditions and developments
within the Virgin Islands, Guam and Puerto Rico affecting the issuers of such
obligations.

PURCHASE, REDEMPTION AND PRICING OF SHARES

You may buy shares of the Fund through the Distributor,
broker-dealers that have entered into special agreements with the Distributor or
certain other financial institutions. The Fund offers up to four classes of
shares that differ primarily with respect to sales charges and distribution
fees. Depending upon the class of shares, you will pay an initial sales charge
when you buy the Fund's shares, a contingent deferred sales charge (a "CDSC,"
described below under "Contingent Deferred Sales Charge") when you redeem the
Fund's shares or no sales charges at all.

Class A Shares

With certain exceptions, when you purchase Class A shares you will pay
a maximum sales charge of 4.75%. The prospectus contains a complete table of
applicable sales charges and a discussion of sales charge reductions or waivers
that may apply to purchases. If you purchase Class A shares in the amount of $1
million or more, without an initial sales charge, the Fund will charge a CDSC of
1.00% if you redeem during the month of your purchase or the 12-month period
following the month of your purchase (see "Contingent Deferred Sales Charge"
below). Class B Shares

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<PAGE>

The Fund offers Class B shares at net asset value without an initial
sales charge. With certain exceptions, however, the Fund will charge a CDSC on
shares you redeem within 72 months after the month of your purchase, in
accordance with the following schedule:

REDEMPTION TIMING CDSC RATE

Month of purchase and the first twelve-month
period following the month of purchase............................5.00%
Second twelve-month period following the month of purchase........4.00%
Third twelve-month period following the month of purchase.........3.00%
Fourth twelve-month period following the month of purchase........3.00%
Fifth twelve-month period following the month of purchase.........2.00%
Sixth twelve-month period following the month of purchase.........1.00%
Thereafter........................................................0.00%

Class B shares that have been outstanding for seven years after the
month of purchase will automatically convert to Class A shares without
imposition of a front-end sales charge or exchange fee. Conversion of Class B
shares represented by stock certificates will require the return of the stock
certificate to ESC.

Class C Shares

Class C shares are available only through broker-dealers who have
entered into special distribution agreements with the Distributor. The Fund
offers Class C shares at net asset value without an initial sales charge. With
certain exceptions, however, the Fund will charge a CDSC of 1.00% on shares you
redeem within 12-months after the month of your purchase. See "Contingent
Deferred Sales Charge" below.

Class Y Shares

No CDSC is imposed on the redemption of Class Y shares. Class Y shares
are not offered to the general public and are available only to (1) persons who
at or prior to December 31, 1994 owned shares in a mutual fund advised by (2)
certain institutional investors and (3) investment advisory clients of CMG,
Evergreen Asset Management Company, Evergreen Investment Management Company,
Meridian Investment Company, First Investment Advisors, Ltd., or their
affiliates. Class Y shares are offered at net asset value without a front-end or
back-end sales charge and do not bear any Rule 12b-1 distribution expenses.

Contingent Deferred Sales Charge

The Fund charges a CDSC as reimbursement for certain expenses, such as
commissions or shareholder servicing fees, that it has incurred in connection
with the sale of its shares (see "Distribution Expenses Under Rule 12b-1"
below). If imposed, the Fund deducts the CDSC from the redemption proceeds you
would otherwise receive. The CDSC is a percentage of the lesser of (1) the net
asset value of the shares at the time of redemption or (2) the shareholder's
original net cost for such shares. Upon request for redemption, to keep the CDSC
a shareholder must pay as low as possible, the Fund will first seek to redeem
shares not subject to the CDSC and/or shares held the longest, in that order.
The CDSC on any redemption is, to the extent permitted by the National
Association of Securities Dealers, Inc. ("NASD"), paid to the Distributor or its
predecessor.

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<PAGE>

SALES CHARGE WAIVERS AND REDUCTIONS

With a larger purchase, there are several ways that you can combine
multiple purchases of Class A shares in Evergreen funds and take advantage of
lower sales charges.

Combined Purchases

You can reduce your sales charge by combining purchases of Class A
shares of multiple Evergreen funds. For example, if you invested $75,000 in each
of two different Evergreen funds, you would pay a sales charge based on a
$150,000 purchase (i.e., 3.75% of the offering price, rather than 4.75%).

Rights of Accumulation

You can reduce your sales charge by adding the value of Class A shares of
Evergreen funds you already own to the amount of your next Class A investment.
For example, if you hold Class A shares valued at $99,999 and purchase an
additional $5,000 the sales charge for the $5,000 purchase would be at the next
lower sales charge of 3.75%, rather than 4.75%.

Your account, and therefore your rights of accumulation, can be linked
to immediate family members which includes father and mother, brothers and
sisters, and sons and daughters. The same rule applies with respect to
individual retirement plans. Please note, however, that retirement plans
involving employees stand alone and do not pass on rights of accumulation.

Letter of Intent

You can, by completing the "Letter of Intent" section of the
application, purchase Class A shares over a 13-month period and receive the same
sales charge as if you had invested all the money at once. All purchases of
Class A shares of an Evergreen fund during the period will qualify as Letter of
Intent purchases.

Waiver of Initial Sales Charges

The Fund may sell its shares at net asset value without an initial
sales charge to:

1. purchasers of shares in the amount of $1 million or more;

2. a corporate or certain other qualified retirement plan or a
non-qualified deferred compensation plan or a Title 1
tax-sheltered annuity or TSA plan sponsored by an organization
having 100 or more eligible employees (a "Qualifying Plan") or
a TSA plan sponsored by a public educational entity having
5,000 or more eligible employees (an "Educational TSA Plan");

3. institutional investors, which may include bank trust
departments and registered investment advisors;

4. investment advisors, consultants or financial planners who
place trades for their own accounts or the accounts of their
clients and who charge such clients a management, consulting,
advisory or other fee;

5. clients of investment advisors or financial planners who place
trades for their own accounts if the accounts are linked to a
master account of such investment advisors or financial
planners on the books of the broker-dealer through whom shares
are purchased;

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<PAGE>

6. institutional clients of broker-dealers, including retirement
and deferred compensation plans and the trusts used to fund
these plans, which place trades through an omnibus account
maintained with the Fund by the broker-dealer;

7. employees of FUNB, its affiliates, the Distributor, any
broker-dealer with whom the Distributor has entered into an
agreement to sell shares of the Fund, and members of the
immediate families of such employees;

8. certain Directors, Trustees, officers and employees of the
Evergreen funds, the Distributor or their affiliates and to
the immediate families of such persons; or

9. a bank or trust company in a single account in the name of
such bank or trust company as trustee if the initial
investment in or any Evergreen fund made pursuant to this
waiver is at least $500,000 and any commission paid at the
time of such purchase is not more than 1% of the amount
invested.

With respect to items 8 and 9 above, the Fund will only sell shares to
these parties upon the purchasers written assurance that the purchase is for
their personal investment purposes only. Such purchasers may not resell the
securities except through redemption by the Fund. The Fund will not charge any
CDSC on redemptions by such purchasers.

Waiver of CDSCS

The Fund does not impose a CDSC when the shares you are redeeming
represent:

1. an increase in the share value above the net cost of such
shares;

2. certain shares for which the Fund did not pay a commission on
issuance, including shares acquired through reinvestment of
dividend income and capital gains distributions;

3. shares that are in the accounts of a shareholder who has died
or become disabled;

4. a lump-sum distribution from a 401(k) plan or other benefit
plan qualified under the Employee Retirement Income Security
Act of 1974 ("ERISA");

5. an automatic withdrawal from the ERISA plan of a shareholder
who is a least 591/2 years old;

6. shares in an account that we have closed because the account
has an aggregate net asset value of less than $1,000;

7. an automatic withdrawal under an Systematic Income Plan of up
to 1.0% per month of your initial account balance;

8. a withdrawal consisting of loan proceeds to a retirement plan
participant;

9. a financial hardship withdrawal made by a retirement plan
participant;

10. a withdrawal consisting of returns of excess contributions or
excess deferral amounts made to a retirement plan; or

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<PAGE>

11. a redemption by an individual participant in a Qualifying Plan
that purchased Class C shares (this waiver is not available in
the event a Qualifying Plan, as a whole, redeems substantially
all of its assets).

Exchanges

Investors may exchange shares of the Fund for shares of the same class
of any other Evergreen fund. See "By Exchange" under "How to Buy Shares" in the
prospectus. Before you make an exchange, you should read the prospectus of the
Evergreen fund into which you want to exchange. The Trust's Board of Trustees
reserves the right to discontinue, alter or limit the exchange privilege at any
time.

Automatic Reinvestment

As described in the prospectus, a shareholder may elect to receive
dividends and capital gains distributions in cash instead of shares. However,
ESC will automatically reinvest all dividends and distributions in additional
shares when it learns that the postal or other delivery service is unable to
deliver checks or transaction confirmations to the shareholder's address of
record. When a check is returned, the Fund will hold the check amount in a
no-interest account in the shareholder's name until the shareholder updates his
or her address or automatic reinvestment begins. Uncashed or returned redemption
checks will also be handled in the manner described above.

Calculation of Net Asset Value

The Fund calculates its Net Asset Value ("NAV") once daily on Monday
through Friday, as described in the prospectus. The Fund will not compute its
NAV on the day the following legal holidays are observed: New Year's Day, Martin
Luther King Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.

The NAV of the Fund is calculated by dividing the value of the Fund's
net assets attributable to that class by all of the shares issued for that
class.

Valuation of Portfolio Securities

Current values for the Fund's portfolio securities are determined as
follows:

(1) Securities that are traded on an established securities exchange or
the over-the-counter National Market System ("NMS") are valued on the
basis of the last sales price on the exchange where primarily traded or
on the NMS prior to the time of the valuation, provided that a sale has
occurred.

(2) Securities traded on an established securities exchange or in the
over-the-counter market for which there has been no sale and other
securities traded in the over-the-counter market are valued at the mean
of the bid and asked prices at the time of valuation.

(3) Short-term investments maturing in more than sixty days, for which
market quotations are readily available, are valued at current market
value.

(4) Short-term investments maturing in sixty days or less are valued at
amortized cost, which approximates market.

(5) Securities, including restricted securities, for which market
quotations are not readily

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<PAGE>

available; listed securities or those on NMS if, in the Fund's opinion,
the last sales price does not reflect a current market value; and other
assets are valued at prices deemed in good faith to be fair under
procedures established by the Board of Trustees.

PERFORMANCE CALCULATIONS

Total Return

Total return quotations for a class of shares of the Fund as they may
appear from time to time in advertisements are calculated by finding the average
annual compounded rates of return over one, five and ten year periods, or the
time periods for which such class of shares has been effective, whichever is
relevant, on a hypothetical $1,000 investment that would equate the initial
amount invested in the class to the ending redeemable value. To the initial
investment all dividends and distributions are added, and all recurring fees
charged to all shareholder accounts are deducted. The ending redeemable value
assumes a complete redemption at the end of the relevant periods. The following
is the formula used to calculate average annual total return:

n
P(1+T) =ERV

P= initial payment of $1,000
T= average total return
n= number of years
ERV= ending redeemable value of the initial $1,000

PRINCIPAL UNDERWRITER

The Distributor is the principal underwriter for the Trust and with
respect to each class of the Fund. The Trust has entered into a Principal
Underwriting Agreement ("Underwriting Agreement") with the Distributor with
respect to each class of the Fund. The Distributor is a subsidiary of The BISYS
Group, Inc.

The Distributor, as agent, has agreed to use its best efforts to find
purchasers for the shares. The Distributor may retain and employ representatives
to promote distribution of the shares and may obtain orders from broker-dealers,
and others, acting as principals, for sales of shares to them. The Underwriting
Agreement provides that the Distributor will bear the expense of preparing,
printing, and distributing advertising and sales literature and prospectuses
used by it.

All subscriptions and sales of shares by the Distributor are at the
public offering price of the shares, which is determined in accordance with the
provisions of the Trust's Declaration of Trust, By-Laws, current prospectuses
and SAI. All orders are subject to acceptance by the Fund and the Fund reserves
the right, in its sole discretion, to reject any order received. Under the
Underwriting Agreement, the Fund is not liable to anyone for failure to accept
any order.

The Distributor has agreed that it will, in all respects, duly conform
with all state and federal laws applicable to the sale of the shares. The
Distributor has also agreed that it will indemnify and hold harmless the Trust
and each person who has been, is, or may be a Trustee or officer of the Trust
against expenses reasonably incurred by any of them in connection with any
claim, action, suit, or proceeding to which any of them may be a party that
arises out of or is alleged to arise out of any misrepresentation or omission to
state a material fact on the part of the Distributor or any other person for
whose acts the Distributor is responsible or is alleged to be responsible,
unless

24939
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<PAGE>

such misrepresentation or omission was made in reliance upon written information
furnished by the Trust.

The Underwriting Agreement provides that it will remain in effect as
long as its terms and continuance are approved annually (1) by a vote of a
majority of the Trust's Trustees who are not interested persons of the Fund, as
defined in the 1940 Act (the "Independent Trustees"), and (2) by vote of a
majority of the Trust's Trustees, in each case, cast in person at a meeting
called for that purpose.

The Underwriting Agreement may be terminated, without penalty, on 60
days' written notice by the Board of Trustees or by a vote of a majority of
outstanding shares subject to such agreement. The Underwriting Agreement will
terminate automatically upon its "assignment," as that term is defined in the
1940 Act.

From time to time, if, in the Distributor's judgment, it could benefit
the sales of shares, the Distributor may provide to selected broker-dealers
promotional materials and selling aids, including, but not limited to, personal
computers, related software, and data files.

DISTRIBUTION EXPENSES UNDER RULE 12b-1

The Fund bears some of the costs of selling its Class A, Class B and,
if applicable, Class C shares, including certain advertising, marketing and
shareholder service expenses, pursuant to Rule 12b-1 of the 1940 Act. These
"12b-1 fees" or "distribution fees" are indirectly paid by the shareholder, as
shown by the Fund's expense table in the prospectus.

Under the Distribution Plans (each a "Plan," together, the "Plans")
that the Fund has adopted for its Class A, Class B and, if applicable, Class C
Shares, the Fund may incur expenses for distribution costs up to a maximum
annual percentage of the average daily net assets attributable to a class, as
follows:

Class A 0.75%*
Class B 1.00%
Class C 1.00%

*Currently limited to 0.25% or less. See the expense table in the prospectus
of the Fund in which you are interested.

Of the amounts above, each class may pay under its Plan a maximum
service fee of 0.25% to compensate organizations, which may include the Fund's
investment advisor or its affiliates, for personal services provided to
shareholders and the maintenance of shareholder accounts. The Fund may not,
during any fiscal period, pay distribution or service fees greater than the
amounts above.

Amounts paid under the Plans are used to compensate the Distributor
pursuant to Distribution Agreements (each an "Agreement," together, the
"Agreements") that the Fund has entered into with respect to its Class A, Class
B and, if applicable, Class C shares. The compensation is based on a maximum
annual percentage of the average daily net assets attributable to a class, as
follows:

Class A 0.25%*
Class B 1.00%

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<PAGE>

Class A 0.25%*
Class C 1.00%

*May be lower. See the expense table in the prospectus of the Fund in which
you are interested.

The Agreements provide that the Distributor will use the distribution
fees received from a Fund for the following purposes:

(1) to compensate broker-dealers or other persons for distributing
Fund shares;

(2) to compensate broker-dealers, depository institutions and
other financial intermediaries for providing administrative,
accounting and other services with respect to the Fund's
shareholders; and

(3) to otherwise promote the sale of Fund shares.

The Agreements also provide that the Distributor may use distribution
fees to make interest and principal payments in respect of amounts that have
been financed to pay broker-dealers or other persons for distributing Fund
shares. The Distributor may assign its rights to receive compensation under the
Plans to secure such financings. FUNB or its affiliates may finance payments
made by the Distributor to compensate broker-dealers or other persons for
distributing shares of the Fund.

In the event the Fund acquires the assets of another mutual fund,
compensation paid to the Distributor under the Agreements may be paid by the
Fund's Distributor to the acquired fund's distributor or its predecessor.

Since the Distributor's compensation under the Agreements is not
directly tied to the expenses incurred by the Distributor, the compensation
received by it under the Agreements during any fiscal year may be more or less
than its actual expenses and may result in a profit to the Distributor.
Distribution expenses incurred by the Distributor in one fiscal year that exceed
the compensation paid to the Distributor for that year may be paid from
distribution fees received from the Fund in subsequent fiscal years.

Distribution fees are accrued daily and paid at least monthly on Class
A, Class B and Class C shares and are charged as class expenses, as accrued. The
distribution fees attributable to Class B and Class C shares are designed to
permit an investor to purchase such shares through broker-dealers without the
assessment of a front-end sales charge, while at the same time permitting the
Distributor to compensate broker-dealers in connection with the sale of such
shares. In this regard, the purpose and function of the combined contingent
deferred sales charge and distribution services fee on the Class B shares are
the same as those of the front-end sales charge and distribution fee with
respect to the Class A shares in that in each case the sales charge and/or
distribution fee provide for the financing of the distribution of the Fund's
shares.

Under the Plans, the Treasurer of the Trust reports the amounts
expended under the Plans and the purposes for which such expenditures were made
to the Trustees of the Trust for their review on a quarterly basis. Also, each
Plan provides that the selection and nomination of the Independent Trustees are
committed to the discretion of such Independent Trustees then in office.

The investment advisor may from time to time from its own funds or such
other resources as may be permitted by rules of the Securities and Exchange
Commission ("SEC") make payments for distribution services to the Distributor;
the latter may in turn pay part or all of such compensation

24939
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<PAGE>

to brokers or other persons for their distribution assistance.

Each Plan and the Agreement will continue in effect for successive
twelve-month periods provided, however, that such continuance is specifically
approved at least annually by the Trustees of the Trust or by vote of the
holders of a majority of the outstanding voting securities of that class and, in
either case, by a majority of the Independent Trustees of the Trust.

The Plans permit the payment of fees to brokers and others for
distribution and shareholder-related administrative services and to
broker-dealers, depository institutions, financial intermediaries and
administrators for administrative services as to Class A, Class B and Class C
shares. The Plans are designed to (i) stimulate brokers to provide distribution
and administrative support services to the Fund and holders of Class A, Class B
and Class C shares and (ii) stimulate administrators to render administrative
support services to the Fund and holders of Class A, Class B and Class C shares.
The administrative services are provided by a representative who has knowledge
of the shareholder's particular circumstances and goals, and include, but are
not limited to providing office space, equipment, telephone facilities, and
various personnel including clerical, supervisory, and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding Class
A, Class B and Class C shares; assisting clients in changing dividend options,
account designations, and addresses; and providing such other services as the
Fund reasonably requests for its Class A, Class B and Class C shares.

In the event that the Plan or Distribution Agreement is terminated or
not continued with respect to one or more Classes of the Fund, (i) no
distribution fees (other than current amounts accrued but not yet paid) would be
owed by the Fund to the Distributor with respect to that class or classes, and
(ii) the Fund would not be obligated to pay the Distributor for any amounts
expended under the Distribution Agreement not previously recovered by the
Distributor from distribution services fees in respect of shares of such Class
or Classes through deferred sales charges.

All material amendments to any Plan or Agreement must be approved by a
vote of the Trustees of the Trust or the holders of the Fund's outstanding
voting securities, voting separately by class, and in either case, by a majority
of the Independent Trustees, cast in person at a meeting called for the purpose
of voting on such approval; and any Plan or Distribution Agreement may not be
amended in order to increase materially the costs that a particular class of
shares of the Fund may bear pursuant to the Plan or Distribution Agreement
without the approval of a majority of the holders of the outstanding voting
shares of the class affected. Any Plan or Distribution Agreement may be
terminated (i) by the Fund without penalty at any time by a majority vote of the
holders of the outstanding voting securities of the Fund, voting separately by
class or by a majority vote of the Independent Trustees, or (ii) by the
Distributor. To terminate any Distribution Agreement, any party must give the
other parties 60 days' written notice; to terminate a Plan only, the Fund need
give no notice to the Distributor. Any Distribution Agreement will terminate
automatically in the event of its assignment. For more information about
12b-1fees, see "Expenses" in the prospectus and "12b-1 Fees" under "Expenses" in
Part 1 of this SAI.

TAX INFORMATION

Requirements for Qualifications as a Regulated Investment Company

The Fund intends to qualify for and elect the tax treatment applicable
to regulated investment companies ("RIC") under Subchapter M of the Code. (Such
qualification does not involve supervision of management or investment practices
or policies by the Internal Revenue

24939
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<PAGE>

Service.) In order to qualify as a RIC, the Fund must, among other things, (i)
derive at least 90% of its gross income from dividends, interest, payments with
respect to proceeds from securities loans, gains from the sale or other
disposition of securities or foreign currencies and other income (including
gains from options, futures or forward contracts) derived with respect to its
business of investing in such securities; and (ii) diversify its holdings so
that, at the end of each quarter of its taxable year, (a) at least 50% of the
market value of the Fund's total assets is represented by cash, U.S. government
securities and other securities limited in respect of any one issuer, to an
amount not greater than 5% of the Fund's total assets and 10% of the outstanding
voting securities of such issuer, and (b) not more than 25% of the value of its
total assets is invested in the securities of any one issuer (other than U.S.
government securities and securities of other regulated investment companies).
By so qualifying, the Fund is not subject to federal income tax if it timely
distributes its investment company taxable income and any net realized capital
gains. A 4% nondeductible excise tax will be imposed on the Fund to the extent
it does not meet certain distribution requirements by the end of each calendar
year. The Fund anticipates meeting such distribution requirements.

Taxes on Distributions

Unless the Fund is a municipal bond fund, distributions other than
exempt interest dividends will be taxable to shareholders whether made in shares
or in cash. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the net asset value of a share of the Fund on the
reinvestment date.

To calculate ordinary income for federal income tax purposes,
shareholders must generally include dividends paid by the Fund from its
investment company taxable income (net taxable investment income plus net
realized short-term capital gains, if any). The Fund will include dividends it
receives from domestic corporations when the Fund calculates its gross
investment income. None of the Fund's income will consist of corporate
dividends; therefore, none of its distributions will qualify for the 70%
dividends-received deduction for corporations.

From time to time, the Fund will distribute the excess of its net
long-term capital gains over its short-term capital loss to shareholders (i.e.,
capital gain dividends). For federal tax purposes, shareholders must include
such capital gain dividends when calculating their net long-term capital gains.
Capital gain dividends are taxable as net long-term capital gains to a
shareholder, no matter how long the shareholder has held the shares.

Distributions by the Fund reduce its NAV. A distribution that reduces
the Fund's NAV below a shareholder's cost basis is taxable as described above,
although from an investment standpoint, it is a return of capital. In
particular, if a shareholder buys Fund shares just before the Fund makes a
distribution, when the Fund makes the distribution the shareholder will receive
what is in effect a return of capital. Nevertheless, the shareholder may incur
taxes on the distribution. Therefore, shareholders should carefully consider the
tax consequences of buying Fund shares just before a distribution.

All distributions, whether received in shares or cash, must be reported
by each shareholder on his or her federal income tax return. Each shareholder
should consult a tax advisor to determine the state and local tax implications
of Fund distributions.

Special Tax Information for Municipal Bond Fund Shareholders

The Fund expects that substantially all of its dividends will be
"exempt interest dividends," which should be treated as excludable from federal
gross income. In order to pay exempt interest dividends, at least 50% of the
value of the Fund's assets must consist of federally tax-exempt

24939
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<PAGE>

obligations at the close of each quarter. An exempt interest dividend is any
dividend or part thereof (other than a capital gain dividend) paid by the Fund
with respect to its net federally excludable municipal obligation interest and
designated as an exempt interest dividend in a written notice mailed to each
shareholder not later than 60 days after the close of its taxable year. The
percentage of the total dividends paid by the Fund with respect to any taxable
year that qualifies as exempt interest dividends will be the same for all
shareholders of the Fund receiving dividends with respect to such year. If a
shareholder receives an exempt interest dividend with respect to any share and
such share has been held for six months or less, any loss on the sale or
exchange of such share will be disallowed to the extent of the exempt interest
dividend amount.

Any shareholder of the Fund who may be a "substantial user" (as defined
in the Code) of a facility financed with an issue of tax-exempt obligations or a
"related person" to such a user should consult his tax advisor concerning his
qualification to receive exempt interest dividends should the Fund hold
obligations financing such facility.

Under regulations to be promulgated, to the extent attributable to
interest paid on certain private activity bonds, the Fund's exempt interest
dividends, while otherwise tax-exempt, will be treated as a tax preference item
for alternative minimum tax purposes. Corporate shareholders should also be
aware that the receipt of exempt interest dividends could subject them to
alternative minimum tax under the provisions of Section 56(g) of the Code
(relating to "adjusted current earnings").

Interest on indebtedness incurred or continued by shareholders to
purchase or carry shares of the Fund will not be deductible for federal income
tax purposes to the extent of the portion of the interest expense relating to
exempt interest dividends. Such portion is determined by multiplying the total
amount of interest paid or accrued on the indebtedness by a fraction, the
numerator of which is the exempt interest dividends received by a shareholder in
his taxable year and the denominator of which is the sum of the exempt interest
dividends and the taxable distributions out of the Fund's investment income and
long-term capital gains received by the shareholder.

Taxes on The Sale or Exchange of Fund Shares

Upon a sale or exchange of Fund shares, a shareholder will realize a
taxable gain or loss depending on his or her basis in the shares. A shareholder
must treat such gains or losses as a capital gain or loss if the shareholder
held the shares as capital assets. Capital gain on assets held for more than12
months is generally subject to a maximum federal income tax rate of 20% for an
individual. Generally, the Code will not allow a shareholder to realize a loss
on shares he or she has sold or exchanged and replaced within a sixty-one-day
period beginning thirty days before and ending thirty days after he or she sold
or exchanged the shares. The Code will not allow a shareholder to realize a loss
on the sale of Fund shares held by the shareholder for six months or less to the
extent the shareholder received exempt interest dividends on such shares.
Moreover, the Code will treat a shareholder's allowable loss on shares held for
six months or less as a long-term capital loss to the extent the shareholder
received distributions of net capital gains on such shares.

Shareholders who fail to furnish their taxpayer identification numbers
to the Fund and to certify as to its correctness and certain other shareholders
may be subject to a 31% federal income tax backup withholding requirement on
dividends, distributions of capital gains and redemption proceeds paid to them
by the Fund. If the withholding provisions are applicable, any such dividends or
capital gain distributions to these shareholders, whether taken in cash or
reinvested in additional shares, and any redemption proceeds will be reduced by
the amounts required to be withheld. Investors may wish to consult their own tax
advisors about the applicability of the backup withholding provisions.

24939
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<PAGE>

Other Tax Considerations

The foregoing discussion relates solely to U.S. federal income tax law
as applicable to U.S. persons (i.e., U.S. citizens and residents and U.S.
domestic corporations, partnerships, trusts and estates). It does not reflect
the special tax consequences to certain taxpayers (e.g., banks, insurance
companies, tax exempt organizations and foreign persons). Shareholders are
encouraged to consult their own tax advisors regarding specific questions
relating to federal, state and local tax consequences of investing in shares of
the Fund. Each shareholder who is not a U.S. person should consult his or her
tax advisor regarding the U.S. and foreign tax consequences of ownership of
shares of the Fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30% (or at a lower rate under a
tax treaty) on amounts treated as income from U.S. sources under the Code.

BROKERAGE

Brokerage Commissions

If the Fund invests in equity securities, it expects to buy and sell
them through brokerage transactions for which commissions are payable. Purchases
from underwriters will include the underwriting commission or concession, and
purchases from dealers serving as market makers will include a dealer's mark-up
or reflect a dealer's mark-down. Where transactions are made in the
over-the-counter market, the Fund will deal with primary market makers unless
more favorable prices are otherwise obtainable.

If the Fund invests in fixed income securities, it expects to buy and
sell them directly from the issuer or an underwriter or market maker for the
securities. Generally, the Fund will not pay brokerage commissions for such
purchases. When the Fund buys a security from an underwriter, the purchase price
will usually include an underwriting commission or concession. The purchase
price for securities bought from dealers serving as market makers will similarly
include the dealer's mark up or reflect a dealer's mark down. When the Fund
executes transactions in the over-the-counter market, it will deal with primary
market makers unless more favorable prices are otherwise obtainable.

Selection of Brokers

When buying and selling portfolio securities, the investment advisor
seeks brokers who can provide the most benefit to the Fund. When selecting a
broker, an investment advisor will primarily look for the best price at the
lowest commission, but in the context of the broker's:

1. ability to provide the best net financial result to the Fund;
2. efficiency in handling trades;
3. ability to trade large blocks of securities;
4. readiness to handle difficult trades;
5. financial strength and stability; and
6. provision of "research services," defined as (a) reports and
analyses concerning issuers, industries, securities and
economic factors and (b) other information useful in making
investment decisions.

The Fund may pay higher brokerage commissions to a broker providing it
with research services, as defined in item 6, above. Pursuant to Section 28(e)
of the Securities Exchange Act of 1934, this practice is permitted if the
commission is reasonable in relation to the brokerage and research services
provided. Research services provided by a broker to the investment advisor do

24939
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<PAGE>

not replace, but supplement, the services the investment advisor is required to
deliver to the Fund. It is impracticable for the investment advisor to allocate
the cost, value and specific application of such research services among its
clients because research services intended for one client may indirectly benefit
another.

When selecting a broker for portfolio trades, the investment advisor
may also consider the amount of Fund shares a broker has sold, subject to the
other requirements described above.

If the Fund is advised by Evergreen Investment Management Company
("EIMC"), Lieber & Company, an affiliate of EIMC and a member of the New York
and American Stock Exchanges, will to the extent practicable effect
substantially all of the portfolio transactions effected on those exchanges for
the Fund.

Simultaneous Transactions

The investment advisor makes investment decisions for the Fund
independently of decisions made for its other clients. When a security is
suitable for the investment objective of more than one client, it may be prudent
for an investment advisor to engage in a simultaneous transaction, that is, buy
or sell the same security for more than one client. The investment advisor
strives for an equitable result in such transactions by using an allocation
formula. The high volume involved in some simultaneous transactions can result
in greater value to the Fund, but the ideal price or trading volume may not
always be achieved for the Fund.

ORGANIZATION

Description of Shares

The Declaration of Trust authorizes the issuance of an unlimited number
of shares of beneficial interest of series and classes of shares. Each share of
the Fund represents an equal proportionate interest with each other share of
that series and/or class. Upon liquidation, shares are entitled to a pro rata
share of the Trust based on the relative net assets of each series and/or class.
Shareholders have no preemptive or conversion rights. Shares are redeemable and
transferable.

Voting Rights

Under the terms of the Declaration of Trust, the Trust is not required
to hold annual meetings. At meetings called for the initial election of Trustees
or to consider other matters, each share is entitled to one vote for each dollar
of net asset value applicable to such share. Shares generally vote together as
one class on all matters. Classes of shares of the Fund have equal voting
rights. No amendment may be made to the Declaration of Trust that adversely
affects any class of shares without the approval of a majority of the votes
applicable to the shares of that class. Shares have non-cumulative voting
rights, which means that the holders of more than 50% of the votes applicable to
shares voting for the election of Trustees can elect 100% of the Trustees to be
elected at a meeting and, in such event, the holders of the remaining shares
voting will not be able to elect any Trustees.

After the initial meeting as described above, no further meetings of
shareholders for the purpose of electing Trustees will be held, unless required
by law (for such reasons as electing or removing Trustees, changing fundamental
policies, and approving advisory agreements or 12b-1 plans), unless and until
such time as less than a majority of the Trustees holding office have been
elected by shareholders, at which time, the Trustees then in office will call a
shareholders' meeting

24939
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<PAGE>

for the election of Trustees.

Limitation of Trustees' Liability

The Declaration of Trust provides that a Trustee will not be liable for
errors of judgment or mistakes of fact or law, but nothing in the Declaration of
Trust protects a Trustee against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his duties involved in the conduct of his office.

Banking Laws

The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered, open-end investment companies such as the Trust. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment advisor, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of its customer, FUNB and
its affiliates are subject to, and in compliance with, the aforementioned laws
and regulations.

Changes to applicable laws and regulations or future judicial or
administrative decisions could result in FUNB and its affiliates being prevented
from continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of
the Fund by its customers. If FUNB and its affiliates were prevented from
continuing to provide for services called for under the investment advisory
agreement, it is expected that the Trustees would identify, and call upon the
Fund's shareholders to approve a new investment advisor. If this were to occur,
it is not anticipated that the shareholders of the Fund would suffer any adverse
financial consequences.

INVESTMENT ADVISORY AGREEMENT

On behalf of the Fund, the Trust has entered into an investment
advisory agreement with the Fund's investment advisor (the "Advisory
Agreement"). Under the Advisory Agreement, and subject to the supervision of the
Trust's Board of Trustees, the investment advisor furnishes to the Fund
investment advisory, management and administrative services, office facilities,
and equipment in connection with its services for managing the investment and
reinvestment of the Fund's assets. The investment advisor pays for all of the
expenses incurred in connection with the provision of its services. The Fund
pays for all charges and expenses, other than those specifically referred to as
being borne by the investment advisor, including, but not limited to, (1)
custodian charges and expenses; (2) bookkeeping and auditors' charges and
expenses; (3) transfer agent charges and expenses; (4) fees and expenses of
Independent Trustees; (5) brokerage commissions, brokers' fees and expenses; (6)
issue and transfer taxes; (7) applicable costs and expenses under the
Distribution Plan (as described above) (8) taxes and trust fees payable to
governmental agencies; (9) the cost of share certificates; (10) fees and
expenses of the registration and qualification of the Fund and its shares with
the SEC or under state or other securities laws; (11) expenses of preparing,
printing and mailing prospectuses, SAIs, notices, reports and proxy materials to
shareholders of the Fund; (12) expenses of shareholders' and Trustees' meetings;
(13) charges and expenses of legal counsel for the Fund and for the Independent
Trustees on matters relating to the Fund; (14) charges and expenses of filing
annual and other reports with the SEC and other authorities; and (15) all
extraordinary charges and expenses of the Fund. For information on advisory fees
paid by the Fund, see "Expenses" in Part 1 of this SAI.

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<PAGE>

The Advisory Agreement continues in effect for two years from its
effective date and, thereafter, from year to year only if approved at least
annually by the Board of Trustees of the Trust or by a vote of a majority of the
Fund's outstanding shares. In either case, the terms of the Advisory Agreement
and continuance thereof must be approved by the vote of a majority of the
Independent Trustees cast in person at a meeting called for the purpose of
voting on such approval. The Advisory Agreement may be terminated, without
penalty, on 60 days' written notice by the Trust's Board of Trustees or by a
vote of a majority of outstanding shares. The Advisory Agreement will terminate
automatically upon its "assignment" as that term is defined in the 1940 Act.

Transactions Among Advisory Affiliates

The Trust has adopted procedures pursuant to Rule 17a-7 of the 1940 Act
("Rule 17a-7 Procedures"). The Rule 17a-7 Procedures permit the Fund to buy or
sell securities from another investment company for which a subsidiary of First
Union Corporation is an investment advisor. The Rule 17a-7 Procedures also allow
the Fund to buy or sell securities from other advisory clients for whom a
subsidiary of First Union Corporation is an investment advisor. The Fund may
engage in such transaction if it is equitable to each participant and consistent
with each participant's investment objective.

MANAGEMENT OF THE TRUST

The Trust is supervised by a Board of Trustees that is responsible for
representing the interest of the shareholders. The Trustees meet periodically
throughout the year to oversee the Fund's activities, reviewing, among other
things, the Fund's performance and its contractual arrangements with various
service providers. Each Trustee is paid a fee for his or her services. See
"Expenses-Trustee Compensation" in Part 1 of this SAI.

Set forth below are the Trustees and officers of the Trust and their
principal occupations and affiliations over the last five years. Unless
otherwise indicated, the address for each Trustee and officer is 200 Berkeley
Street, Boston, Massachusetts 02116. Each Trustee is also a Trustee of each of
the other Trusts in the Evergreen Fund complex.
<TABLE>
<CAPTION>

Name Position with Trust Principal Occupations for Last Five Years
- ------------------------------- -------------------------- -------------------------------------------------------------
<S> <C> <C>
Laurence B. Ashkin Trustee Real estate developer and construction consultant;
(DOB: 2/2/28) and President of Centrum Equities and Centrum
Properties, Inc.

Charles A. Austin III Trustee Investment Counselor to Appleton Partners, Inc.;
(DOB: 10/23/34) former Director, Executive Vice President and
Treasurer, State Street Research & Management
Company (investment advice); Director, The
Andover Companies (Insurance); and Trustee,
Arthritis Foundation of New England

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<PAGE>

Name Position with Trust Principal Occupations for Last Five Years
- ------------------------------- -------------------------- -------------------------------------------------------------
K. Dun Gifford Trustee Trustee, Treasurer and Chairman of the Finance
(DOB: 10/12/38) Committee, Cambridge College; Chairman Emeritus
and American Institute of Food and Wine; Chairman
and President, Oldways Preservation and Exchange
Trust (education); former Chairman of the Board,
Director, and Executive Vice President, The London
Harness Company; former Managing Partner, Roscommon
Capital Corp.; former Chief Executive Officer,
Gifford Gifts of Fine Foods; and former Chairman,
Gifford, Drescher & Associates (environmental
consulting).

James S. Howell Chairman of the Former Chairman of the Distribution Foundation for
(DOB: 8/13/24) Board of Trustees the Carolinas; and former Vice President of Lance
Inc. (food manufacturing).

Leroy Keith, Jr. Trustee Chairman of the Board and Chief Executive Officer,
(DOB: 2/14/39) Carson Products Company; Director of Phoenix
Total Return Fund and Equifax, Inc.; Trustee of
Phoenix Series Fund, Phoenix Multi-Portfolio Fund,
and The Phoenix Big Edge Series Fund; and former
President, Morehouse College.

Gerald M. McDonnell Trustee Sales Representative with Nucor-Yamoto, Inc.
(DOB: 7/14/39) (steel producer).

Thomas L. McVerry Trustee Former Vice President and Director of Rexham
(DOB: 8/2/39) Corporation; and former Director of Carolina
Cooperative Federal Credit Union.

William Walt Pettit Trustee Partner in the law firm of William Walt Pettit, P.A.
(DOB: 8/26/55)

David M. Richardson Trustee Vice Chair and former Executive Vice President,
(DOB: 9/14/41) DHR International, Inc. (executive recruitment);
former Senior Vice President, Boyden International
Inc. (executive recruitment); and Director,
Commerce and Industry Association of New
Jersey, 411 International, Inc., and J&M Cumming
Paper Co.

Russell A. Salton, III MD Trustee Medical Director, U.S. Health Care/Aetna Health
(DOB: 6/2/47) Services; former Managed Health Care Consultant;
and former President, Primary Physician Care.

Michael S. Scofield Trustee Attorney, Law Offices of Michael S. Scofield.
(DOB: 2/20/43)

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<PAGE>

Name Position with Trust Principal Occupations for Last Five Years
- ------------------------------- -------------------------- -------------------------------------------------------------
Richard J. Shima Trustee Former Chairman, Environmental Warranty, Inc.
(DOB: 8/11/39) (insurance agency); Executive Consultant, Drake
Beam Morin, Inc. (executive outplacement); Director
of Connecticut Natural Gas Corporation, Hartford
Hospital, Old State House Association, Middlesex
Mutual Assurance Company, and Enhance Financial
Services, Inc.; Chairman, Board of Trustees,
Hartford Graduate Center; Trustee, Greater Hartford
YMCA; former Director, Vice Chairman and Chief
Investment Officer, The Travelers Corporation;
former Trustee, Kingswood-Oxford School; and former
Managing Director and Consultant, Russell Miller,
Inc.

William J. Tomko* President and Senior Vice President and Operations Executive,
(DOB:8/30/58) Treasurer BYSIS Fund Services.

Nimish S. Bhatt* Vice President and Vice President, Tax, BISYS Fund Services; former
(DOB: 6/6/63) Assistant Treasurer Assistant Vice President, EAMC/First Union Bank;
former Senior Tax Consulting/Acting Manager,
Investment Companies Group, Pricewaterhouse-
Coopers LLP, New York.

Bryan Haft* Vice President Team Leader, Fund Administration, BISYS Fund
(DOB: 1/23/65) Services.

Michael H. Koonce Secretary Senior Vice President and Assistant General
(DOB: 4/20/60) Counsel, First Union Corporation; former Senior
Vice President and General Counsel, Colonial
Management Associates, Inc.
</TABLE>

*Address: BISYS, 3435 Stelzer Road, Columbus, Ohio 43219-8001

CORPORATE AND MUNICIPAL BOND RATINGS

The Fund relies on ratings provided by independent rating services to
help determine the credit quality of bonds and other obligations the Fund
intends to purchase or already owns. A rating is an opinion of an issuer's
ability to pay interest and/or principal when due. Ratings reflect an issuer's
overall financial strength and whether it can meet its financial commitments
under various economic conditions.

If a security held by the Fund loses its rating or has its rating
reduced after the Fund has purchased it, the Fund is not required to sell or
otherwise dispose of the security, but may consider doing so.

The principal rating services, commonly used by the Fund and investors
generally, are S&P and Moody's. The Fund may also rely on ratings provided by
Fitch. Rating systems are similar among the different services. As an example,
the chart below compares basic ratings for long-term bonds. The "Credit Quality"
terms in the chart are for quick reference only. Following the chart are the
specific definitions each service provides for its ratings.

24939
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<PAGE>

COMPARISON OF LONG-TERM BOND RATINGS

MOODY'S S&P FITCH Credit Quality
================= ================= ================ ==================================================
<S> <C> <C> <C>
Aaa AAA AAA Excellent Quality (lowest risk)
Aa AA AA Almost Excellent Quality (very low risk)
A A A Good Quality (low risk)
Baa BBB BBB Satisfactory Quality (some risk)
Ba BB BB Questionable Quality (definite risk)
B B B Low Quality (high risk)
Caa/Ca/C CCC/CC/C CCC/CC/C In or Near Default
D DDD/DD/D In Default
================= ================= ================ ==================================================
</TABLE>

CORPORATE BONDS

LONG-TERM RATINGS

Moody's Corporate Long-Term Bond Ratings

Aaa Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than the Aaa securities.

A Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium-grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.

Baa Bonds which are rated Baa are considered as medium-grade obligations, (i.e.
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.

24939
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<PAGE>

B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range raking and the modifier 3 indicates that the company ranks in the
lower end of its generic rating category.

S&P Corporate Long-Term Bond Ratings

AAA An obligation rated AAA has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation is
extremely strong.

AA An obligation rated AA differs from the highest-rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.

A An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.

BBB An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.

BB, B, CCC, CC and C: As described below, obligations rated BB, B, CCC,
CC, and C are regarded as having significant speculative characteristics. BB
indicates the least degree of speculation and C the highest. While such
obligations will likely have some quality and protective characteristics, these
may be outweighed by large uncertainties or major exposures to adverse
conditions.

BB An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions, which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.

B An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet it financial
commitment on the obligation.

CCC An obligation rated CCC is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.

24939
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<PAGE>

CC An obligation rated CC is currently highly vulnerable to nonpayment.

C The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.

D The D rating, unlike other ratings, is not prospective; rather, it is used
only where a default has actually occurred--and not where a default is only
expected. S&P changes ratings to D either:

o On the day an interest and/or principal payment is due and is not paid.
An exception is made if there is a grace period and S&P believes that a
payment will be made, in which case the rating can be maintained; or

o Upon voluntary bankruptcy filing or similar action. An exception is
made if S&P expects that debt service payments will continue to be made
on a specific issue. In the absence of a payment default or bankruptcy
filing, a technical default (i.e., covenant violation) is not
sufficient for assigning a D rating.

Plus (+) or minus (-) The ratings from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major rating
categories.

Fitch Corporate Long-Term Bond Ratings

Investment Grade

AAA Highest credit quality. AAA ratings denote the lowest expectation of credit
risk. They are assigned only in case of exceptionally strong capacity for timely
payment of financial commitments. This capacity is highly unlikely to be
adversely affected by foreseeable events.

AA Very high credit quality. AA ratings denote a very low expectation of credit
risk. They indicate very strong capacity for timely payment of financial
commitments. This capacity is not significantly vulnerable to foreseeable
events.

A High credit quality. A ratings denote a lower expectation of credit risk. The
capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.

BBB Good credit quality. BBB ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity. This is the lowest
investment-grade category.

Speculative Grade

BB Speculative. BB ratings indicate that there is a possibility of credit risk
developing, particularly as the result of adverse economic change over time;
however, business or financial alternatives may be available to allow financial
commitments to be met. Securities rated in this category are not investment
grade.

B Highly speculative. B ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met; however, capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.

CCC, CC, C High default risk. Default is a real possibility.
Capacity for meeting financial

24939
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<PAGE>

commitment is solely reliant upon sustained, favorable business or economic
developments. A CC rating indicates that default of some kind appears probable.
C ratings signal imminent default.

DDD, DD, D Default. Securities are not meeting current obligations and are
extremely speculative. DDD designates the highest potential for recovery of
amounts outstanding on any securities involved. For U.S. corporates, for
example, DD indicates expected recovery of 50%-90% of such outstandings, and D
the lowest recovery potential, i.e. below 50%.

+ or - may be appended to a rating to denote relative status within major rating
categories. Such suffixes are not added to the AAA rating category or to
categories below CCC.

CORPORATE SHORT-TERM RATINGS

Moody's Corporate Short-Term Issuer Ratings

Prime-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics.

- -- Leading market positions in well-established industries.

- -- High rates of return on funds employed.

- -- Conservative capitalization structure with moderate reliance on debt and
ample asset protection.

- -- Broad margins in earnings coverage of fixed financial changes and high
internal cash generation.

- -- Well-established access to a range of financial markets and assured sources
of alternate liquidity.

Prime-2 Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

Prime-3 Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.

Not Prime Issuers rated Not Prime do not fall within any of the Prime rating
categories.

S&P Corporate Short-Term Obligation Ratings

A-1 A short-term obligation rated A-1 is rated in the highest category by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
strong. Within this category certain obligations are designated with a plus sign
(+). This indicates that the obligor's capacity to meet its financial commitment
on these obligations is extremely strong.

A-2 A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.

24939
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<PAGE>

A-3 A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.

B A short-term obligation rated B is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.

C A short-term obligation rated C is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.

D The D rating, unlike other ratings, is not prospective; rather, it is used
only where a default has actually occurred--and not where a default is only
expected. S&P changes ratings to D either:

o Upon voluntary bankruptcy filing or similar action, An exception is
made if S&P expects that debt service payments will continue to be made
on a specific issue. In the absence of a payment default or bankruptcy
filing, a technical default (i.e., covenant violation) is not
sufficient for assigning a D rating.

Fitch Corporate Short-Term Obligation Ratings

F1 Highest credit quality. Indicates the strongest capacity for timely payment
of financial commitments; may have an added "+" to denote any exceptionally
strong credit feature.

F2 Good credit quality. A satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of the
higher ratings.

F3 Fair credit quality. The capacity for timely payment of financial commitments
is adequate; however, near-term adverse changes could result in a reduction to
non-investment grade.

B Speculative. Minimal capacity for timely payment of financial commitments,
plus vulnerability to near-term adverse changes in financial and economic
conditions.

C High default risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.

D Default. Denotes actual or imminent payment default.

MUNICIPAL BONDS

LONG-TERM RATINGS

Moody's Municipal Long-Term Bond Ratings

Aaa Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of

24939
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<PAGE>

investment risk and are generally referred to as "gilt edge." Interest payments
are protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.

Aa Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than the Aaa securities.

A Bonds rated A possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.

Baa Bonds rated Baa are considered as medium-grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Ba Bonds rated Ba are judged to have speculative elements; their future cannot
be considered as well-assured. Often the protection of interest and principal
payments may be very moderate, and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.

B Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.

Caa Bonds rated Caa are of poor standing. Such issues may be in default or there
may be present elements of danger with respect to principal or interest.

Ca Bonds rated Ca represent obligations which are speculative in a high degree.
Such issues are often in default or have other marked shortcomings.

C Bonds rated C are the lowest rated class of bonds, and issues so rated can be
regarded as having extremely poor prospects of ever attaining any real
investment standing.

Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B. The modifier 1 indicates that the company ranks in
the higher end of its generic rating category; the modifier 2 indicates a
mid-range raking and the modifier 3 indicates that the company ranks in the
lower end of its generic rating category.

S&P Municipal Long-Term Bond Ratings

AAA An obligation rated AAA has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation is
extremely strong.

AA An obligation rated AA differs from the highest-rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.

24939
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<PAGE>

CC An obligation rated CC is currently highly vulnerable to nonpayment.

C The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.

D An obligation rated D is in payment default. The D rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition or the taking of a similar action if payments on
an obligation are jeopardized.

Plus (+) or minus (-) The ratings from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major rating
categories.

Fitch Municipal Long-Term Bond Ratings

Investment Grade

AA Very high credit quality. AA ratings denote a very low expectation of credit
risk. They indicate very strong capacity for timely payment of financial
commitments. This capacity is not

24939
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<PAGE>

significantly vulnerable to foreseeable events.

Speculative Grade

CCC, CC, C High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained, favorable
business or economic developments. A CC rating indicates that default of some
kind appears probable. C ratings signal imminent default.

DDD, DD, D Default. Securities are not meeting current obligations and are
extremely speculative. DDD designates the highest potential for recovery of
amounts outstanding on any securities involved. DD designates lower recovery
potential and D the lowest.

+ or - may be appended to a rating to denote relative status within major rating
categories. Such suffixes are not added to the AAA rating category or to
categories below CCC.

SHORT-TERM MUNICIPAL RATINGS

Moody's Municipal Short-Term Issuer Ratings

- -- Leading market positions in well-established industries.

- -- High rates of return on funds employed.

- -- Conservative capitalization structure with moderate reliance on debt and
ample asset protection.

- -- Broad margins in earnings coverage of fixed financial changes and high
internal cash generation.

- -- Well-established access to a range of financial markets and assured sources
of alternate liquidity.

Prime-2 Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of

24939
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<PAGE>

senior short-term debt obligations. This will normally be evidenced by many of
the characteristics cited above but to a lesser degree. Earnings trends and
coverage ratios, while sound, may be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.

Not Prime Issuers rated Not Prime do not fall within any of the Prime rating
categories.

Moody's Municipal Short-Term Loan Ratings

MIG 1 This designation denotes best quality. There is strong protection by
established cash flows, superior liquidity support, or demonstrated broad-based
access to the market for refinancing.

MIG 2 This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.

MIG 3 This designation denotes favorable quality. Liquidity and cash-flow
protection may be narrow and market access for refinancing is likely to be less
well established.

SG This designation denotes speculative quality. Debt instruments in this
category may lack margins of protection.

S&P Commercial Paper Ratings

A-1 This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.

A-2 Capacity for timely payment on issues with this designation is satisfactory.
However, the relative degree of safety is not as high as for issues designated
A-1.

A-3 Issues carrying this designation have an adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.

B Issues rated B are regarded as having only speculative capacity for timely
payment.

C This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.

D Debt rated D is in payment default. The D rating category is used when
interest payments of principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes such payments
will be made during such grace period.

S&P Municipal Short-Term Obligation Ratings

SP-1 Strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a plus (+)
designation.

24939
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<PAGE>

SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.

SP-3 Speculative capacity to pay principal and interest.

Fitch Municipal Short-Term Obligation Ratings

F1 Highest credit quality. Indicates the strongest capacity for timely payment
of financial commitments; may have an added "+" to denote any exceptionally
strong credit feature.

F2 Good credit quality. A satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of the
higher ratings.

F3 Fair credit quality. The capacity for timely payment of financial commitments
is adequate; however, near-term adverse changes could result in a reduction to
non-investment grade.

B Speculative. Minimal capacity for timely payment of financial commitments,
plus vulnerability to near-term adverse changes in financial and economic
conditions.

C High default risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.

D Default. Denotes actual or imminent payment default.

ADDITIONAL INFORMATION

Except as otherwise stated in its prospectus or required by law, the
Fund reserves the right to change the terms of the offer stated in its
prospectus without shareholder approval, including the right to impose or change
fees for services provided.

No dealer, salesman or other person is authorized to give any
information or to make any representation not contained in the Fund's
prospectus, SAI or in supplemental sales literature issued by the Fund or the
Distributor, and no person is entitled to rely on any information or
representation not contained therein.

The Fund's prospectus and SAI omit certain information contained in the
Trust's registration statement, which you may obtain for a fee from the SEC in
Washington, D.C.

24939
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<PAGE>

EVERGREEN MUNICIPAL TRUST

PART C

OTHER INFORMATION

Item 23. Exhibits

Unless otherwise noted, the exhibits listed below are contained herein.

<TABLE>
<CAPTION>
Exhibit
Number Description Location
- ------- ----------- -----------
<S> <C> <C>
(a) Declaration of Trust Incorporated by reference to
Registrant's Pre-Effective Amendment No. 1
Filed on October 8, 1997

(b) By-laws Incorporated by reference to
Registrant's Pre-Effective Amendment No. 1
Filed on October 8, 1997

(c) Provisions of instruments defining the rights Incorporated by reference to
of holders of the securities being registered Registrant's Post-Effective Amendment No. 1
are contained in the Declaration of Trust Filed on July 31, 1998
Articles II, III.(6)(c), VI.(3), IV.(8), V, VI,
VII, VIII and By-laws Articles II, III and VIII
included as part of Exhibits 1 and 2, above.

(d)(1) Investment Advisory and Management Incorporated by reference to
Agreement between the Registrant and First Registrant's Post-Effective Amendment No. 7
Union National Bank Filed on July 31, 1998

(d)(2) Investment Advisory and Management Incorporated by reference to
Agreement between the Registrant and Evergreen Registrant's Post-Effective Amendment No. 7
Asset Management Corp. Filed on July 31, 1998

(d)(3) Investment Advisory and Management Incorporated by reference to
Agreement between the Registrant and Keystone Registrant's Post-Effective Amendment No. 7
Investment Management Company Filed on July 31, 1998.

(e)(1) Class A and Class C Principal Underwriting Incorporated by reference to
Agreement between the Registrant and Evergreen Registrant's Post-Effecive Amendment No. 7
Distributor, Inc. Filed on July 31, 1998.

(e)(2) Class B Principal Underwriting Agreement Incorporated by reference to
between the Registrant and Evergreen Distributor Registrant's Post-Effective Amendment No. 7
Inc. (B-1) Filed on July 31, 1998.

(e)(3) Class B Principal Underwriting Agreement Incorporated by reference to
between the Registrant and Evergreen Distributor, Registrant's Post-Effective Amendment No. 7
Inc. (B-2) Filed on July 31, 1998.

(e)(4) Class B Principal Underwriting Agreement Incorporated by reference to
between the Registrant and Evergreen Distributor, Registrant's Post-Effective Amendment No. 7
Inc. (Evergreen/KCF) Filed on July 31, 1998.

(e)(5) Class Y Principal Underwriting Agreement Incorporated by reference to
between the Registrant and Evergreen Distributor, Registrant's Post-Effective Amendment No. 7
Inc. Filed on July 31, 1998.

(e)(6) Specimen copy of Dealer Agreement used by Incorporated by reference to
Evergreen Distributor, Inc. Registrant's Pre-Effective Amendment No. 1
Filed November 12, 1997

(f) Form of Deferred Compensation Plan Incorporated by reference to
Registrant's Pre-Effective Amendment No. 2
Filed on November 10, 1997

(g) Custodian Agreement between the Registrant Incorporated by reference to
and State Street Bank and Trust Company Registrant's Post-Effective Amendment No. 7
Filed on July 31, 1998

(h)(1) Administration Agreement between Evergreen Incorporated by reference to
Investment Services, Inc. and the Registrant Registrant's Post-Effective Amendment No. 7
Filed on July 31, 1998.

(h)(2) Transfer Agent Agreement between the Incorporated by reference to
Registrant and Evergreen Service Company Registrant's Post-Effective Amendment No. 7
Filed on July 31, 1998.

(i) Opinion and Consent of Sullivan & Worcester LLP Incorporated by reference to
Registrant's Post-Effective Amendment No. 2
Filed on December 12, 1997

(j)(1) Consent of PricewaterhouseCoopers LLP

(j)(2) Consent of KPMG Peat Marwick LLP

(k) Not applicable

(l) Not applicable

(m)(1) 12b-1 Distribution Plan for Class A Incorporated by reference to
Registrant's Post-Effective Amendment No. 7
Filed on July 31, 1998.

(m)(2) 12b-1 Distribution Plan for Class B Incorporated by reference to
Registrant's Post-Effective Amendment No. 7
Filed on July 31, 1998

(m)(3) 12b-1 Distribution Plan for Class B Incorporated by reference to
(KAF B-1) Registrant's Post-Effective Amendment No. 7
Filed on July 31, 1998.

(m)(4) 12b-1 Distribution Plan for Class B Incorporated by reference to
(KAF B-2) Registrant's Post-Effective Amendment No. 7
Filed on July 31, 1998

(m)(5) 12b-1 Distribution Plan for Class B Incorporated by reference to
(KCF/Evergreen) Registrant's Post-Effective Amendment No. 7
Filed on July 31, 1998.

(m)(6) 12b-1 Distribution Plan for Class C Incorporated by reference to
Registrant's Post-Effective Amendment No. 7
Filed on July 31, 1998

(n) Financial Data Schedules

(o) Multiple Class Plan Incorporated by reference to
Registrant's Pre-Effective Amendment No. 2
Filed on November 10, 1997

</TABLE>

Item 24. Persons Controlled by or Under Common Control with Registrant.

None

Item 25. Indemnification.

Provisions for the indemnification of the Registrant's Trustees and
officers are contained the Registrant's Declaration of Trust.

Provisions for the indemnification of Registrant's Investment Advisors are
contained in their Investment Advisory and Management Agreements.

Provisions for the indemnification of Evergreen Distributor, Inc., the
Registrant's principal underwriter, are contained in each Principal Underwriting
Agreement between Evergreen Distributor, Inc. and the Registrant.

Item 26. Business or Other Connections of Investment Adviser.

The Directors and principal executive officers of First Union National Bank
are:

Edward E. Crutchfield, Jr. Chairman and Chief Executive Officer,
First Union Corporation; Chief Executive
Officer and Chairman, First Union National
Bank

John R. Georgius President, First Union Corporation; Vice
Chairman and President, First Union National
Bank

Marion A. Cowell, Jr. Executive Vice President, Secretary &
General Counsel, First Union Corporation;
Secretary and Executive Vice President,
First Union National Bank

Robert T. Atwood Executive Vice President and Chief Financial
Officer, First Union Corporation; Chief
Financial Officer and Executive Vice
President

All of the above persons are located at the following address: First Union
National Bank, One First Union Center, Charlotte, NC 28288.

The information required by this item with respect to Evergreen Asset
Management Corp. is incorporated by reference to the Form ADV (File No.
801-46522) of Evergreen Asset Management Corp.

The information required by this item with respect to Evergreen Investment
Management Company is incorporated by reference to the Form ADV (File No.
801-8327) of Evergreen Investment Management Company.

Item 27. Principal Underwriters.

The Directors and principal executive officers of Evergreen Distributor,
Inc. are:

Lynn C. Mangum Director, Chairman and Chief Executive
Officer

Robert J. McMullan Director, Executive Vice President and
Treasurer

J. David Huber President

Kevin J. Dell Vice President, General Counsel and Secretary

All of the above persons are located at the following address: Evergreen
Distributor, Inc., 125 West 55th Street, New York, New York 10019.

Evergreen Distributor, Inc. acts as principal underwriter for each
registered investment company or series thereof that is a part of the Evergreen
"fund complex" as such term is defined in Item 22(a) of Schedule 14A
under the Securities Exchange Act of 1934.

Item 28. Location of Accounts and Records.

All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:

Evergreen Investment Services, Inc., Evergreen Service Company and
Evergreen Investment Management Company, all located at 200 Berkeley
Street, Boston, Massachusetts 02110

First Union National Bank, One First Union Center, 301 S. College Street,
Charlotte, North Carolina 28288

Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase,
New York 10577

Iron Mountain, 3431 Sharp Slot Road, Swansea, Massachusetts 02777

State Street Bank and Trust Company, 2 Heritage Drive, North Quincy,
Massachusetts 02171

Item 29. Management Services.

Not Applicable

Item 30. Undertakings.

The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Columbus, and State of Ohio, on the 30th day of
October, 1998.

EVERGREEN MUNICIPAL TRUST

By: /s/ William J. Tomko
-----------------------------
Name: William J. Tomko
Title: President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 30th day of October, 1998.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/William J. Tomko /s/ Laurence B. Ashkin /s/ Charles A. Austin, III
- ------------------------- ----------------------------- --------------------------------
William J. Tomko Laurence B. Ashkin* Charles A. Austin III*
President and Treasurer (Principal Trustee Trustee
Financial and Accounting Officer)

/s/ K. Dun Gifford /s/ James S. Howell /s/ William Walt Pettit
- ---------------------------- ---------------------------- --------------------------------
K. Dun Gifford* James S. Howell* William Walt Pettit*
Trustee Trustee Trustee

/s/Gerald M. McDonnell /s/ Thomas L. McVerry /s/ Michael S. Scofield
- ------------------------------- ----------------------------- --------------------------------
Gerald M. McDonell* Thomas L. McVerry* Michael S. Scofield*
Trustee Trustee Trustee

/s/ David M. Richardson /s/ Russell A. Salton, III MD
- ------------------------------ -------------------------------
David M. Richardson* Russell A. Salton, III MD*
Trustee Trustee

/s/ Richard J. Shima
- ------------------------------
Richard J. Shima*
Trustee
</TABLE>

*By: /s/ Sally E. Ganem
- -------------------------------
Sally E. Ganem
Attorney-in-Fact

*Sally E. Ganem, by signing her name hereto, does hereby sign this
document on behalf of each of the above-named individuals pursuant to powers of
attorney duly executed by such persons.

<PAGE>

INDEX TO EXHIBITS

Exhibit Number Exhibit
- -------------- -------

(j)(1) Consent of PricewaterhouseCoopers LLP

(j)(2) Consent of KPMG Peat Marwick LLP

(n) Financial Data Schedules

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectuses and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 9 to the registration statement on Form N-1A (the "Registration
Statement") of Evergreen Municipal Trust of our report dated October 14, 1998,
relating to the financial statements and financial highlights of Evergreen
Florida High Income Municipal Bond Fund (the "Fund"), appearing in the Fund's
August 31, 1998 Annual Report to Shareholders, which is also incorporated by
reference into the Registration Statement. We also consent to the references to
us under the heading "Financial Highlights" in the Prospectuses and under the
heading "Independent Auditors" in such Statement of Additional Information.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
October 30, 1998

CONSENT OF INDEPENDENT AUDITORS

The Trustees and Shareholders
Evergreen Municipal Trust:

We consent to the use of our report dated October 9, 1998 for Evergreen Florida
Municipal Bond Fund, Evergreen Georgia Municipal Bond Fund, Evergreen Maryland
Municipal Bond Fund, Evergreen North Carolina Municipal Bond Fund, Evergreen
South Carolina Municipal Bond Fund and Evergreen Virginia Municipal Bond Fund
incorporated herein by reference and to the references to our firm under the
captions "FINANCIAL HIGHLIGHTS" in the prospectuses and "Independent Auditors"
in the Statement of Additional Information.

/s/ KPMG Peat Marwick LLP

KPMG Peat Marwick LLP

Boston, Massachusetts
October 30, 1998

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND CLASS A

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 393,182,644
<INVESTMENTS-AT-VALUE> 407,818,175
<RECEIVABLES> 9,426,171
<ASSETS-OTHER> 71,339
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 417,315,685
<PAYABLE-FOR-SECURITIES> 3,099,198
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,578,474
<TOTAL-LIABILITIES> 4,677,672
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 269,473,999
<SHARES-COMMON-STOCK> 24,792,915
<SHARES-COMMON-PRIOR> 11,013,506
<ACCUMULATED-NII-CURRENT> 47,089
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (627,941)
<ACCUM-APPREC-OR-DEPREC> 10,185,362
<NET-ASSETS> 279,078,509
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,478,760
<OTHER-INCOME> 0
<EXPENSES-NET> (1,682,865)
<NET-INVESTMENT-INCOME> 9,795,895
<REALIZED-GAINS-CURRENT> 684,647
<APPREC-INCREASE-CURRENT> 4,953,223
<NET-CHANGE-FROM-OPS> 15,433,765
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9,795,895)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15,959,354
<NUMBER-OF-SHARES-REDEEMED> (2,598,089)
<SHARES-REINVESTED> 418,144
<NET-CHANGE-IN-ASSETS> 159,136,057
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (1,139,137)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (2,385,177)
<AVERAGE-NET-ASSETS> 190,115,688
<PER-SHARE-NAV-BEGIN> 10.89
<PER-SHARE-NII> 0.58
<PER-SHARE-GAIN-APPREC> 0.37
<PER-SHARE-DIVIDEND> (0.58)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.26
<EXPENSE-RATIO> 0.89
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND CLASS B

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 393,182,644
<INVESTMENTS-AT-VALUE> 407,818,175
<RECEIVABLES> 9,426,171
<ASSETS-OTHER> 71,339
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 417,315,685
<PAYABLE-FOR-SECURITIES> 3,099,198
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,578,474
<TOTAL-LIABILITIES> 4,677,672
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 99,008,614
<SHARES-COMMON-STOCK> 9,177,850
<SHARES-COMMON-PRIOR> 5,828,551
<ACCUMULATED-NII-CURRENT> 22,387
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 404,830
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,873,596
<NET-ASSETS> 103,309,427
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,011,747
<OTHER-INCOME> 0
<EXPENSES-NET> (1,347,893)
<NET-INVESTMENT-INCOME> 3,663,854
<REALIZED-GAINS-CURRENT> 375,959
<APPREC-INCREASE-CURRENT> 2,278,058
<NET-CHANGE-FROM-OPS> 6,317,871
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,663,854)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,149,563
<NUMBER-OF-SHARES-REDEEMED> (968,277)
<SHARES-REINVESTED> 168,013
<NET-CHANGE-IN-ASSETS> 39,834,881
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (491,702)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (1,029,548)
<AVERAGE-NET-ASSETS> 82,062,392
<PER-SHARE-NAV-BEGIN> 10.89
<PER-SHARE-NII> 0.50
<PER-SHARE-GAIN-APPREC> 0.37
<PER-SHARE-DIVIDEND> (0.50)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.26
<EXPENSE-RATIO> 1.64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND CLASS C

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 393,182,644
<INVESTMENTS-AT-VALUE> 407,818,175
<RECEIVABLES> 9,426,171
<ASSETS-OTHER> 71,339
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 417,315,685
<PAYABLE-FOR-SECURITIES> 3,099,198
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,578,474
<TOTAL-LIABILITIES> 4,677,672
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,086,987
<SHARES-COMMON-STOCK> 97,549
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 422
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,636
<NET-ASSETS> 1,098,046
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 22,350
<OTHER-INCOME> 0
<EXPENSES-NET> (6,293)
<NET-INVESTMENT-INCOME> 16,057
<REALIZED-GAINS-CURRENT> 423
<APPREC-INCREASE-CURRENT> 10,636
<NET-CHANGE-FROM-OPS> 27,116
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (16,057)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 96,347
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1,202
<NET-CHANGE-IN-ASSETS> 1,098,046
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (4,666)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (9,769)
<AVERAGE-NET-ASSETS> 778,631
<PER-SHARE-NAV-BEGIN> 11.11
<PER-SHARE-NII> 0.24
<PER-SHARE-GAIN-APPREC> 0.15
<PER-SHARE-DIVIDEND> (0.24)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.26
<EXPENSE-RATIO> 1.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND CLASS Y

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 393,182,644
<INVESTMENTS-AT-VALUE> 407,818,175
<RECEIVABLES> 9,426,171
<ASSETS-OTHER> 71,339
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 417,315,685
<PAYABLE-FOR-SECURITIES> 3,099,198
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,578,474
<TOTAL-LIABILITIES> 4,677,672
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28,533,322
<SHARES-COMMON-STOCK> 2,589,757
<SHARES-COMMON-PRIOR> 580,894
<ACCUMULATED-NII-CURRENT> 2,042
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 50,730
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 565,937
<NET-ASSETS> 29,152,031
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,040,122
<OTHER-INCOME> 0
<EXPENSES-NET> (111,039)
<NET-INVESTMENT-INCOME> 929,083
<REALIZED-GAINS-CURRENT> 46,877
<APPREC-INCREASE-CURRENT> 421,652
<NET-CHANGE-FROM-OPS> 1,397,612
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (929,083)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,468,047
<NUMBER-OF-SHARES-REDEEMED> (470,406)
<SHARES-REINVESTED> 11,222
<NET-CHANGE-IN-ASSETS> 22,825,848
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (101,820)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (213,195)
<AVERAGE-NET-ASSETS> 16,993,196
<PER-SHARE-NAV-BEGIN> 10.89
<PER-SHARE-NII> 0.61
<PER-SHARE-GAIN-APPREC> 0.37
<PER-SHARE-DIVIDEND> (0.61)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.26
<EXPENSE-RATIO> 0.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 631,375,951
<INVESTMENTS-AT-VALUE> 667,043,257
<RECEIVABLES> 11,307,287
<ASSETS-OTHER> 61,375
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 678,411,919
<PAYABLE-FOR-SECURITIES> 17,061,894
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,142,883
<TOTAL-LIABILITIES> 20,204,777
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 148,112,726
<SHARES-COMMON-STOCK> 16,184,394
<SHARES-COMMON-PRIOR> 10,589,864
<ACCUMULATED-NII-CURRENT> 18,481
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,306,602
<OVERDISTRIBUTION-GAINS> (3,636,052)
<ACCUM-APPREC-OR-DEPREC> 12,453,108
<NET-ASSETS> 164,254,865
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,944,954
<OTHER-INCOME> 0
<EXPENSES-NET> (608,541)
<NET-INVESTMENT-INCOME> 6,336,413
<REALIZED-GAINS-CURRENT> 2,943,153
<APPREC-INCREASE-CURRENT> 722,629
<NET-CHANGE-FROM-OPS> 10,002,195
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,351,997
<DISTRIBUTIONS-OF-GAINS> 2,150,248
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,507,078
<NUMBER-OF-SHARES-REDEEMED> (2,683,254)
<SHARES-REINVESTED> 321,220
<NET-CHANGE-IN-ASSETS> 120,961,884
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (660,252)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (609,065)
<AVERAGE-NET-ASSETS> 132,247,499
<PER-SHARE-NAV-BEGIN> 9.98
<PER-SHARE-NII> 0.48
<PER-SHARE-GAIN-APPREC> 0.38
<PER-SHARE-DIVIDEND> (0.48)
<PER-SHARE-DISTRIBUTIONS> (0.21)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.15
<EXPENSE-RATIO> 0.46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN FLORIDA MUNICIPAL BOND FUND CLASS B

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 631,375,951
<INVESTMENTS-AT-VALUE> 667,043,257
<RECEIVABLES> 11,307,287
<ASSETS-OTHER> 61,375
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 678,411,919
<PAYABLE-FOR-SECURITIES> 17,061,894
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,142,883
<TOTAL-LIABILITIES> 20,204,777
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 63,743,615
<SHARES-COMMON-STOCK> 6,517,059
<SHARES-COMMON-PRIOR> 3,134,781
<ACCUMULATED-NII-CURRENT> 47,602
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 829,667
<OVERDISTRIBUTION-GAINS> (835,456)
<ACCUM-APPREC-OR-DEPREC> 2,356,258
<NET-ASSETS> 66,141,686
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,789,841
<OTHER-INCOME> 0
<EXPENSES-NET> (724,441)
<NET-INVESTMENT-INCOME> 2,065,400
<REALIZED-GAINS-CURRENT> 1,161,850
<APPREC-INCREASE-CURRENT> 290,613
<NET-CHANGE-FROM-OPS> 3,517,863
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,070,906
<DISTRIBUTIONS-OF-GAINS> 663,807
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 551,773
<NUMBER-OF-SHARES-REDEEMED> (1,191,215)
<SHARES-REINVESTED> 134,648
<NET-CHANGE-IN-ASSETS> 48,646,136
<ACCUMULATED-NII-PRIOR> 53,108
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (265,348)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (724,652)
<AVERAGE-NET-ASSETS> 53,177,760
<PER-SHARE-NAV-BEGIN> 9.98
<PER-SHARE-NII> 0.38
<PER-SHARE-GAIN-APPREC> 0.39
<PER-SHARE-DIVIDEND> (0.39)
<PER-SHARE-DISTRIBUTIONS> (0.21)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.15
<EXPENSE-RATIO> 1.36
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN FLORIDA MUNICIPAL BOND FUND CLASS C

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 631,375,951
<INVESTMENTS-AT-VALUE> 667,043,257
<RECEIVABLES> 11,307,287
<ASSETS-OTHER> 61,375
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 678,411,919
<PAYABLE-FOR-SECURITIES> 17,061,894
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,142,883
<TOTAL-LIABILITIES> 20,204,777
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8,777,028
<SHARES-COMMON-STOCK> 883,176
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (200)
<ACCUMULATED-NET-GAINS> 74,950
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 111,525
<NET-ASSETS> 8,963,303
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 270,812
<OTHER-INCOME> 0
<EXPENSES-NET> (67,582)
<NET-INVESTMENT-INCOME> 203,230
<REALIZED-GAINS-CURRENT> 100,597
<APPREC-INCREASE-CURRENT> 39,038
<NET-CHANGE-FROM-OPS> 342,865
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 203,430
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 68,683
<NUMBER-OF-SHARES-REDEEMED> (82,843)
<SHARES-REINVESTED> 6,601
<NET-CHANGE-IN-ASSETS> 6,534,556
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (26,253)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (67,610)
<AVERAGE-NET-ASSETS> 8,804,016
<PER-SHARE-NAV-BEGIN> 10.06
<PER-SHARE-NII> 0.23
<PER-SHARE-GAIN-APPREC> 0.09
<PER-SHARE-DIVIDEND> (0.23)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.15
<EXPENSE-RATIO> 1.29
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 104
<NAME> EVERGREEN FLORIDA MUNICIPAL BOND FUND CLASS Y

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 631,375,951
<INVESTMENTS-AT-VALUE> 667,043,257
<RECEIVABLES> 11,307,287
<ASSETS-OTHER> 61,375
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 678,411,919
<PAYABLE-FOR-SECURITIES> 17,061,894
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,142,883
<TOTAL-LIABILITIES> 20,204,777
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 390,831,159
<SHARES-COMMON-STOCK> 41,270,172
<SHARES-COMMON-PRIOR> 2,490,213
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (41,719)
<ACCUMULATED-NET-GAINS> 8,014,548
<OVERDISTRIBUTION-GAINS> (703,115)
<ACCUM-APPREC-OR-DEPREC> 20,746,415
<NET-ASSETS> 418,847,288
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 16,120,350
<OTHER-INCOME> 0
<EXPENSES-NET> (1,020,798)
<NET-INVESTMENT-INCOME> 15,099,552
<REALIZED-GAINS-CURRENT> 8,778,533
<APPREC-INCREASE-CURRENT> 1,839,391
<NET-CHANGE-FROM-OPS> 25,717,476
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 15,156,341
<DISTRIBUTIONS-OF-GAINS> 621,250
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,493,445
<NUMBER-OF-SHARES-REDEEMED> (3,720,951)
<SHARES-REINVESTED> 31,324
<NET-CHANGE-IN-ASSETS> 307,898,576
<ACCUMULATED-NII-PRIOR> 15,071
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (1,557,645)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (1,022,132)
<AVERAGE-NET-ASSETS> 311,228,165
<PER-SHARE-NAV-BEGIN> 9.98
<PER-SHARE-NII> 0.48
<PER-SHARE-GAIN-APPREC> 0.39
<PER-SHARE-DIVIDEND> (0.49)
<PER-SHARE-DISTRIBUTIONS> (0.21)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.15
<EXPENSE-RATIO> 0.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 77,862,269
<INVESTMENTS-AT-VALUE> 83,303,095
<RECEIVABLES> 1,134,009
<ASSETS-OTHER> 15,075
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 84,452,179
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 331,697
<TOTAL-LIABILITIES> 331,697
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,766,943
<SHARES-COMMON-STOCK> 379,765
<SHARES-COMMON-PRIOR> 224,162
<ACCUMULATED-NII-CURRENT> 624
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (51,184)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 215,602
<NET-ASSETS> 3,931,985
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 141,306
<OTHER-INCOME> 0
<EXPENSES-NET> (15,054)
<NET-INVESTMENT-INCOME> 126,252
<REALIZED-GAINS-CURRENT> 45,398
<APPREC-INCREASE-CURRENT> 71,608
<NET-CHANGE-FROM-OPS> 243,258
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (126,250)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 215,335
<NUMBER-OF-SHARES-REDEEMED> (66,115)
<SHARES-REINVESTED> 8,134
<NET-CHANGE-IN-ASSETS> 1,730,503
<ACCUMULATED-NII-PRIOR> 622
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (13,118)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (15,054)
<AVERAGE-NET-ASSETS> 2,623,607
<PER-SHARE-NAV-BEGIN> 9.90
<PER-SHARE-NII> 0.49
<PER-SHARE-GAIN-APPREC> 0.45
<PER-SHARE-DIVIDEND> (0.49)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.35
<EXPENSE-RATIO> 0.57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN GEORGIA MUNICIPAL BOND FUND CLASS B

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 77,862,269
<INVESTMENTS-AT-VALUE> 83,303,095
<RECEIVABLES> 1,134,009
<ASSETS-OTHER> 15,075
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 84,452,179
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 331,697
<TOTAL-LIABILITIES> 331,697
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 11,904,194
<SHARES-COMMON-STOCK> 1,212,996
<SHARES-COMMON-PRIOR> 980,367
<ACCUMULATED-NII-CURRENT> 2,584
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (282,398)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 934,596
<NET-ASSETS> 12,558,976
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 637,488
<OTHER-INCOME> 0
<EXPENSES-NET> (158,097)
<NET-INVESTMENT-INCOME> 479,391
<REALIZED-GAINS-CURRENT> 220,018
<APPREC-INCREASE-CURRENT> 313,237
<NET-CHANGE-FROM-OPS> 1,012,646
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (479,386)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 284,928
<NUMBER-OF-SHARES-REDEEMED> (204,318)
<SHARES-REINVESTED> 33,988
<NET-CHANGE-IN-ASSETS> 1,688,003
<ACCUMULATED-NII-PRIOR> 2,579
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (58,988)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (158,097)
<AVERAGE-NET-ASSETS> 11,797,679
<PER-SHARE-NAV-BEGIN> 9.90
<PER-SHARE-NII> 0.41
<PER-SHARE-GAIN-APPREC> 0.45
<PER-SHARE-DIVIDEND> (0.41)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.35
<EXPENSE-RATIO> 1.34
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN GEORGIA MUNICIPAL BOND FUND CLASS Y

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 77,862,269
<INVESTMENTS-AT-VALUE> 83,303,095
<RECEIVABLES> 1,134,009
<ASSETS-OTHER> 15,075
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 84,452,179
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 331,697
<TOTAL-LIABILITIES> 331,697
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 62,809,484
<SHARES-COMMON-STOCK> 6,532,075
<SHARES-COMMON-PRIOR> 142,608
<ACCUMULATED-NII-CURRENT> 380
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 529,029
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,290,628
<NET-ASSETS> 67,629,521
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,707,208
<OTHER-INCOME> 0
<EXPENSES-NET> (123,153)
<NET-INVESTMENT-INCOME> 2,584,055
<REALIZED-GAINS-CURRENT> 532,618
<APPREC-INCREASE-CURRENT> 981,576
<NET-CHANGE-FROM-OPS> 4,098,249
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,584,062)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,137,126
<NUMBER-OF-SHARES-REDEEMED> (729,756)
<SHARES-REINVESTED> 5,439
<NET-CHANGE-IN-ASSETS> 64,285,444
<ACCUMULATED-NII-PRIOR> 387
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (253,894)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (123,153)
<AVERAGE-NET-ASSETS> 50,778,746
<PER-SHARE-NAV-BEGIN> 9.90
<PER-SHARE-NII> 0.51
<PER-SHARE-GAIN-APPREC> 0.45
<PER-SHARE-DIVIDEND> (0.51)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.35
<EXPENSE-RATIO> 0.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 29,319,829
<INVESTMENTS-AT-VALUE> 30,761,637
<RECEIVABLES> 425,982
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 31,187,619
<PAYABLE-FOR-SECURITIES> 150,209
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 64,137
<TOTAL-LIABILITIES> 214,346
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 23,466,960
<SHARES-COMMON-STOCK> 2,217,677
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 139,080
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,147,752
<NET-ASSETS> 24,753,792
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,205,784
<OTHER-INCOME> 0
<EXPENSES-NET> (361,402)
<NET-INVESTMENT-INCOME> 844,382
<REALIZED-GAINS-CURRENT> 399,909
<APPREC-INCREASE-CURRENT> (637,060)
<NET-CHANGE-FROM-OPS> 607,231
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 200,179
<NUMBER-OF-SHARES-REDEEMED> (584,040)
<SHARES-REINVESTED> 53,687
<NET-CHANGE-IN-ASSETS> (3,032,240)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (260,830)
<GROSS-ADVISORY-FEES> (146,869)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (361,402)
<AVERAGE-NET-ASSETS> 25,863,180
<PER-SHARE-NAV-BEGIN> 10.91
<PER-SHARE-NII> 0.36
<PER-SHARE-GAIN-APPREC> 0.25
<PER-SHARE-DIVIDEND> (0.36)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.16
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN MARYLAND MUNICIPAL BOND FUND CLASS B

<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 29,319,829
<INVESTMENTS-AT-VALUE> 30,761,637
<RECEIVABLES> 425,982
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 31,187,619
<PAYABLE-FOR-SECURITIES> 150,209
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 64,137
<TOTAL-LIABILITIES> 214,346
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 977,438
<SHARES-COMMON-STOCK> 88,712
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,254
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,769
<NET-ASSETS> 990,461
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,243
<OTHER-INCOME> 0
<EXPENSES-NET> (2,512)
<NET-INVESTMENT-INCOME> 5,731
<REALIZED-GAINS-CURRENT> 3,254
<APPREC-INCREASE-CURRENT> 4,036
<NET-CHANGE-FROM-OPS> 13,021
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 88,301
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 411
<NET-CHANGE-IN-ASSETS> 990,461
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (842)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (2,512)
<AVERAGE-NET-ASSETS> 417,749
<PER-SHARE-NAV-BEGIN> 10.99
<PER-SHARE-NII> 0.16
<PER-SHARE-GAIN-APPREC> 0.17
<PER-SHARE-DIVIDEND> (0.16)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.16
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN MARYLAND MUNICIPAL BOND FUND CLASS Y

<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 29,319,829
<INVESTMENTS-AT-VALUE> 30,761,637
<RECEIVABLES> 425,982
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 31,187,619
<PAYABLE-FOR-SECURITIES> 150,209
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 64,137
<TOTAL-LIABILITIES> 214,346
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,965,061
<SHARES-COMMON-STOCK> 468,342
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (20,328)
<ACCUM-APPREC-OR-DEPREC> 284,287
<NET-ASSETS> 5,229,020
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 215,820
<OTHER-INCOME> 0
<EXPENSES-NET> (53,189)
<NET-INVESTMENT-INCOME> 162,631
<REALIZED-GAINS-CURRENT> 70,574
<APPREC-INCREASE-CURRENT> (127,323)
<NET-CHANGE-FROM-OPS> 105,882
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 114,329
<NUMBER-OF-SHARES-REDEEMED> (167,074)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (453,729)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (90,902)
<GROSS-ADVISORY-FEES> (26,185)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (53,189)
<AVERAGE-NET-ASSETS> 4,629,238
<PER-SHARE-NAV-BEGIN> 10.91
<PER-SHARE-NII> 0.39
<PER-SHARE-GAIN-APPREC> 0.25
<PER-SHARE-DIVIDEND> (0.39)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.16
<EXPENSE-RATIO> 0.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 302,731,037
<INVESTMENTS-AT-VALUE> 323,528,658
<RECEIVABLES> 4,457,200
<ASSETS-OTHER> 13,280
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 327,999,138
<PAYABLE-FOR-SECURITIES> 5,287,270
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,392,770
<TOTAL-LIABILITIES> 6,680,040
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15,429,302
<SHARES-COMMON-STOCK> 1,454,631
<SHARES-COMMON-PRIOR> 793,756
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (435,590)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 774,328
<NET-ASSETS> 15,768,040
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 555,460
<OTHER-INCOME> 0
<EXPENSES-NET> (57,635)
<NET-INVESTMENT-INCOME> 497,825
<REALIZED-GAINS-CURRENT> 172,670
<APPREC-INCREASE-CURRENT> 193,549
<NET-CHANGE-FROM-OPS> 864,044
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (497,824)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 906,792
<NUMBER-OF-SHARES-REDEEMED> (267,487)
<SHARES-REINVESTED> 32,895
<NET-CHANGE-IN-ASSETS> 7,566,999
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (94,318)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (100,289)
<AVERAGE-NET-ASSETS> 10,353,612
<PER-SHARE-NAV-BEGIN> 10.37
<PER-SHARE-NII> 0.51
<PER-SHARE-GAIN-APPREC> 0.47
<PER-SHARE-DIVIDEND> (0.51)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.84
<EXPENSE-RATIO> 0.97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND CLASS B

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 302,731,037
<INVESTMENTS-AT-VALUE> 323,528,658
<RECEIVABLES> 4,457,200
<ASSETS-OTHER> 13,280
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 327,999,138
<PAYABLE-FOR-SECURITIES> 5,287,270
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,392,770
<TOTAL-LIABILITIES> 6,680,040
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 47,055,810
<SHARES-COMMON-STOCK> 4,550,009
<SHARES-COMMON-PRIOR> 4,570,565
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,925,938)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,189,699
<NET-ASSETS> 49,319,571
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,626,311
<OTHER-INCOME> 0
<EXPENSES-NET> (648,022)
<NET-INVESTMENT-INCOME> 1,978,289
<REALIZED-GAINS-CURRENT> 983,761
<APPREC-INCREASE-CURRENT> 909,682
<NET-CHANGE-FROM-OPS> 3,871,732
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,978,289)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 411,810
<NUMBER-OF-SHARES-REDEEMED> (647,645)
<SHARES-REINVESTED> 138,795
<NET-CHANGE-IN-ASSETS> 875,829
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (442,917)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (848,322)
<AVERAGE-NET-ASSETS> 48,619,807
<PER-SHARE-NAV-BEGIN> 10.37
<PER-SHARE-NII> 0.43
<PER-SHARE-GAIN-APPREC> 0.47
<PER-SHARE-DIVIDEND> (0.43)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.84
<EXPENSE-RATIO> 1.74
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND CLASS Y

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 302,731,037
<INVESTMENTS-AT-VALUE> 323,528,658
<RECEIVABLES> 4,457,200
<ASSETS-OTHER> 13,280
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 327,999,138
<PAYABLE-FOR-SECURITIES> 5,287,270
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,392,770
<TOTAL-LIABILITIES> 6,680,040
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 237,267,331
<SHARES-COMMON-STOCK> 23,639,048
<SHARES-COMMON-PRIOR> 24,494,063
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,130,562
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 15,833,594
<NET-ASSETS> 256,231,487
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10,482,353
<OTHER-INCOME> 0
<EXPENSES-NET> (405,592)
<NET-INVESTMENT-INCOME> 10,076,761
<REALIZED-GAINS-CURRENT> 3,127,345
<APPREC-INCREASE-CURRENT> 3,735,505
<NET-CHANGE-FROM-OPS> 16,939,611
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10,076,762)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 36,967,615
<NUMBER-OF-SHARES-REDEEMED> (13,727,028)
<SHARES-REINVESTED> 8,699
<NET-CHANGE-IN-ASSETS> 252,521,224
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (1,820,790)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (1,229,007)
<AVERAGE-NET-ASSETS> 199,871,530
<PER-SHARE-NAV-BEGIN> 10.37
<PER-SHARE-NII> 0.54
<PER-SHARE-GAIN-APPREC> 0.47
<PER-SHARE-DIVIDEND> (0.54)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.84
<EXPENSE-RATIO> 0.61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 69,973,850
<INVESTMENTS-AT-VALUE> 74,452,726
<RECEIVABLES> 917,314
<ASSETS-OTHER> 18,050
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 75,388,090
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,799,472
<TOTAL-LIABILITIES> 2,799,472
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,551,278
<SHARES-COMMON-STOCK> 166,998
<SHARES-COMMON-PRIOR> 101,700
<ACCUMULATED-NII-CURRENT> 56
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15,190
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 177,530
<NET-ASSETS> 1,744,054
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 69,084
<OTHER-INCOME> 0
<EXPENSES-NET> (9,981)
<NET-INVESTMENT-INCOME> 59,103
<REALIZED-GAINS-CURRENT> 13,954
<APPREC-INCREASE-CURRENT> 29,364
<NET-CHANGE-FROM-OPS> 102,421
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (59,104)
<DISTRIBUTIONS-OF-GAINS> (2,456)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 91,036
<NUMBER-OF-SHARES-REDEEMED> (29,261)
<SHARES-REINVESTED> 3,523
<NET-CHANGE-IN-ASSETS> 719,212
<ACCUMULATED-NII-PRIOR> 56
<ACCUMULATED-GAINS-PRIOR> 726
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (6,482)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (13,238)
<AVERAGE-NET-ASSETS> 1,296,468
<PER-SHARE-NAV-BEGIN> 10.08
<PER-SHARE-NII> 0.46
<PER-SHARE-GAIN-APPREC> 0.39
<PER-SHARE-DIVIDEND> (0.46)
<PER-SHARE-DISTRIBUTIONS> (0.03)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.44
<EXPENSE-RATIO> 0.77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND CLASS B

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 69,973,850
<INVESTMENTS-AT-VALUE> 74,452,726
<RECEIVABLES> 917,314
<ASSETS-OTHER> 18,050
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 75,388,090
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,799,472
<TOTAL-LIABILITIES> 2,799,472
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,436,219
<SHARES-COMMON-STOCK> 434,903
<SHARES-COMMON-PRIOR> 469,801
<ACCUMULATED-NII-CURRENT> 197
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 53,229
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (947,760)
<NET-ASSETS> 4,541,886
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 239,885
<OTHER-INCOME> 0
<EXPENSES-NET> (69,429)
<NET-INVESTMENT-INCOME> 170,456
<REALIZED-GAINS-CURRENT> 44,668
<APPREC-INCREASE-CURRENT> 133,679
<NET-CHANGE-FROM-OPS> 348,803
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (170,455)
<DISTRIBUTIONS-OF-GAINS> (12,377)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 61,561
<NUMBER-OF-SHARES-REDEEMED> (109,281)
<SHARES-REINVESTED> 12,822
<NET-CHANGE-IN-ASSETS> (190,691)
<ACCUMULATED-NII-PRIOR> 197
<ACCUMULATED-GAINS-PRIOR> 2,543
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (22,678)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (80,823)
<AVERAGE-NET-ASSETS> 4,535,852
<PER-SHARE-NAV-BEGIN> 10.08
<PER-SHARE-NII> 0.38
<PER-SHARE-GAIN-APPREC> 0.39
<PER-SHARE-DIVIDEND> (0.38)
<PER-SHARE-DISTRIBUTIONS> (0.03)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.44
<EXPENSE-RATIO> 1.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND CLASS C

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 69,973,850
<INVESTMENTS-AT-VALUE> 74,452,726
<RECEIVABLES> 917,314
<ASSETS-OTHER> 18,050
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 75,388,090
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,799,472
<TOTAL-LIABILITIES> 2,799,472
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 60,459,390
<SHARES-COMMON-STOCK> 6,348,718
<SHARES-COMMON-PRIOR> 695,799
<ACCUMULATED-NII-CURRENT> 2,186
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 591,996
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,249,105
<NET-ASSETS> 66,302,678
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,608,337
<OTHER-INCOME> 0
<EXPENSES-NET> (232,520)
<NET-INVESTMENT-INCOME> 2,375,817
<REALIZED-GAINS-CURRENT> 606,816
<APPREC-INCREASE-CURRENT> 1,253,800
<NET-CHANGE-FROM-OPS> 4,236,433
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,375,817)
<DISTRIBUTIONS-OF-GAINS> (21,740)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,789,134
<NUMBER-OF-SHARES-REDEEMED> (1,145,988)
<SHARES-REINVESTED> 9,773
<NET-CHANGE-IN-ASSETS> 59,289,567
<ACCUMULATED-NII-PRIOR> 2,186
<ACCUMULATED-GAINS-PRIOR> 28,281
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (252,116)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (359,183)
<AVERAGE-NET-ASSETS> 50,426,936
<PER-SHARE-NAV-BEGIN> 10.08
<PER-SHARE-NII> 0.48
<PER-SHARE-GAIN-APPREC> 0.40
<PER-SHARE-DIVIDEND> (0.49)
<PER-SHARE-DISTRIBUTIONS> (0.03)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.44
<EXPENSE-RATIO> 0.46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> AUG-31-97
<PERIOD-END> AUG-31-98
<INVESTMENTS-AT-COST> 160,173,111
<INVESTMENTS-AT-VALUE> 169,422,982
<RECEIVABLES> 2,303,576
<ASSETS-OTHER> 14,187
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 171,740,745
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,577,583
<TOTAL-LIABILITIES> 2,577,583
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51,443,189
<SHARES-COMMON-STOCK> 5,192,353
<SHARES-COMMON-PRIOR> 291,836
<ACCUMULATED-NII-CURRENT> 2,262
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 244,907
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,607,309
<NET-ASSETS> 54,297,667
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,538,162
<OTHER-INCOME> 0
<EXPENSES-NET> (148,170)
<NET-INVESTMENT-INCOME> 1,389,992
<REALIZED-GAINS-CURRENT> 320,290
<APPREC-INCREASE-CURRENT> 518,609
<NET-CHANGE-FROM-OPS> 2,228,891
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,390,153)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,719,869
<NUMBER-OF-SHARES-REDEEMED> (918,424)
<SHARES-REINVESTED> 99,072
<NET-CHANGE-IN-ASSETS> 51,537,233
<ACCUMULATED-NII-PRIOR> 1,253
<ACCUMULATED-GAINS-PRIOR> (75,355)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 37,260
<GROSS-ADVISORY-FEES> (147,646)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (148,170)
<AVERAGE-NET-ASSETS> 29,529,541
<PER-SHARE-NAV-BEGIN> 10.05
<PER-SHARE-NII> 0.49
<PER-SHARE-GAIN-APPREC> 0.41
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.49)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.46
<EXPENSE-RATIO> 0.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN VIRGINIA MUNICIPAL BOND FUND CLASS B

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> AUG-31-97
<PERIOD-END> AUG-31-98
<INVESTMENTS-AT-COST> 160,173,111
<INVESTMENTS-AT-VALUE> 169,422,982
<RECEIVABLES> 2,303,576
<ASSETS-OTHER> 14,187
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 171,740,745
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,577,583
<TOTAL-LIABILITIES> 2,577,583
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8,501,608
<SHARES-COMMON-STOCK> 854,431
<SHARES-COMMON-PRIOR> 665,945
<ACCUMULATED-NII-CURRENT> 2,577
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (86,454)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 517,135
<NET-ASSETS> 8,934,866
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 410,394
<OTHER-INCOME> 0
<EXPENSES-NET> (103,529)
<NET-INVESTMENT-INCOME> 306,865
<REALIZED-GAINS-CURRENT> 71,234
<APPREC-INCREASE-CURRENT> 135,030
<NET-CHANGE-FROM-OPS> 513,129
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (307,250)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 239,158
<NUMBER-OF-SHARES-REDEEMED> (73,319)
<SHARES-REINVESTED> 22,646
<NET-CHANGE-IN-ASSETS> 2,144,602
<ACCUMULATED-NII-PRIOR> 2,657
<ACCUMULATED-GAINS-PRIOR> (158,610)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 77,745
<GROSS-ADVISORY-FEES> (38,443)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (103,529)
<AVERAGE-NET-ASSETS> 7,688,588
<PER-SHARE-NAV-BEGIN> 10.05
<PER-SHARE-NII> 0.41
<PER-SHARE-GAIN-APPREC> 0.41
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.41)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.46
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 103
<NAME> EVERGREEN VIRGINIA MUNICIPAL BOND FUND CLASS Y

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> AUG-31-97
<PERIOD-END> AUG-31-98
<INVESTMENTS-AT-COST> 160,173,111
<INVESTMENTS-AT-VALUE> 169,422,982
<RECEIVABLES> 2,303,576
<ASSETS-OTHER> 14,187
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 171,740,745
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</TABLE>