<PAGE>
Evergreen
State Municipal
Bond Funds
September 30, 1998
Semiannual Report
[ARTWORK APPEARS HERE]
[LOGO OF EVERGREEN FUNDS/SM/ APPEARS HERE]
<PAGE>
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Table of Contents
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Letter to Shareholders .................................................... 1
Evergreen California Tax Free Fund
Fund at a Glance ....................................................... 2
Portfolio Manager Interview ............................................ 3
Evergreen Connecticut Municipal
Bond Fund
Fund at a Glance ....................................................... 4
Portfolio Manager Interview ............................................ 5
Evergreen Massachusetts Tax Free Fund
Fund at a Glance ....................................................... 6
Portfolio Manager Interview ............................................ 7
Evergreen Missouri Tax Free Fund
Fund at a Glance ....................................................... 8
Portfolio Manager Interview ............................................ 9
Evergreen New Jersey Tax Free
Income Fund
Fund at a Glance ....................................................... 10
Portfolio Manager Interview ............................................ 11
Evergreen New York Tax Free Fund
Fund at a Glance ....................................................... 12
Portfolio Manager Interview ............................................ 13
Evergreen Pennsylvania Tax Free Fund
Fund at a Glance ....................................................... 14
Portfolio Manager Interview ............................................ 15
Financial Highlights
Evergreen California Tax Free Fund ..................................... 16
Evergreen Connecticut Municipal Bond Fund .............................. 18
Evergreen Massachusetts Tax Free Fund .................................. 20
Evergreen Missouri Tax Free Fund ....................................... 22
Evergreen New Jersey Tax Free Income Fund .............................. 24
Evergreen New York Tax Free Fund ....................................... 27
Evergreen Pennsylvania Tax Free Fund ................................... 29
Schedule of Investments
Evergreen California Tax Free Fund ..................................... 31
Evergreen Connecticut Municipal Bond Fund .............................. 33
Evergreen Massachusetts Tax Free Fund .................................. 36
Evergreen Missouri Tax Free Fund ....................................... 37
Evergreen New Jersey Tax Free Income Fund .............................. 39
Evergreen New York Tax Free Fund ....................................... 44
Evergreen Pennsylvania Tax Free Fund ................................... 46
Statements of Assets and Liabilities ...................................... 52
Statements of Operations .................................................. 53
Statements of Changes in Net Assets ....................................... 54
Combined Notes to Financial
Statements ................................................................ 56
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Evergreen Funds
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Evergreen Funds is one of the nation's fastest growing investment companies with
approximately $50 billion in assets under management.
With over 70 mutual funds to choose among and acclaimed service and operations
capabilities, investors enjoy a broad range of quality investment products and
services designed to meet their needs.
The Evergreen Funds employ intensive, research-driven investment strategies
executed by over 90 research analysts and portfolio managers. The fund company
remains dedicated to meeting the needs of investors and their advisors in a
global economy. Look to the Evergreen Funds to provide a distinctive level of
service and excellence in investment management.
This semiannual report must be preceded or accompanied by a prospectus of an
Evergreen fund contained herein. The prospectus contains more complete
information, including fees and expenses, and should be read carefully before
investing or sending money.
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Mutual Funds: ARE NOT FDIC INSURED May lose value . Are not bank guaranteed
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Evergreen Distributor, Inc.
Evergreen(SM) is a Service Mark of Evergreen Investment Services, Inc.
<PAGE>
Letter to Shareholders
----------------------
November 1998
[PHOTO WILLIAM M. ENNIS APPEARS HERE]
William M. Ennis
Managing Director
Dear Shareholders:
We are pleased to provide you the Evergreen State Municipal Bond Funds
semiannual report covering the six-month period ended September 30, 1998.
Market Volatility
The financial markets have certainly experienced volatility in the past few
months. After a five-year period of unprecedented growth, the stock market
peaked on July 17, 1998, when prices were at historic highs relative to
benchmarks such as corporate profits and dividends. Since that point, fears of
foreign currency devaluations, political turbulence and instability abroad have
produced an uncertain market. Through September, the market all but lost its
year-to-date gains, and then in October was on the rise, nearing the levels of
July's peak. We encourage you to take this opportunity to review your investment
time horizon and ensure you are on track with your goals. We also encourage you
to consider an invaluable strategy of investing during uncertain times: Dollar
Cost Averaging./1/ By investing a little at a time in regular intervals, you can
remain focused on your investment goals while not worrying about predicting
market trends. Contact your investment representative or call us at 800.343.2898
to start your Systematic Investment Plan today.
Year 2000/2/
The year 2000 is nearly upon us, and unlike some we are looking forward to it.
We have been addressing the Year 2000 issue since February 1996 and have adopted
an industry best practices methodology for the project. Our team is on schedule
to complete the following milestones: Inventory and Assessment, Remediation,
Testing and Contingency. We believe that for Evergreen shareholders, the
transition into the next millennium should be seamless, with virtually no impact
---------
on the products and services you receive from us.
Cost Savings
In an effort to achieve efficiencies and cost savings, we are combining your
funds' required mailings so you only receive one per household, based on the
registration last name and exact address./3/ This reduces the mailing costs, not
to mention the amount of paper needed to print, which in turn benefits your
funds by reducing the overall expenses. If you prefer to receive separate copies
of reports and prospectuses for each registered holder in your household, please
notify us by calling the number on your statement and we will adjust our records
accordingly.
Thank you for your continued investment with Evergreen Funds.
Sincerely,
/s/ William M. Ennis
William M. Ennis
Managing Director
Evergreen Funds
Good News!
Effective for the 1998 Tax Year, long-term capital gains taxes are reduced to
20%.
/1/ This type of plan does not assure a profit or protect against loss in a
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declining market.
----------------
/2/ The information above constitutes Year 2000 readiness disclosure.
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/3/ If you purchased your shares through a financial representative, we may not
be able to consolidate your mailings by last name and address, because that
institution controls the mailings.
Some portion of the funds' income may be subject to the Federal Alternative
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Minimum Tax
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1
<PAGE>
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EVERGREEN
California Tax Free Fund
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Fund at a Glance as of September 30, 1998
Portfolio
Characteristics
---------------
Total Net Assets $26,779,917
..............................................................................
Average Credit Quality AAA
..............................................................................
Average Maturity 17.8 years
..............................................................................
Average Duration 8.4 years
..............................................................................
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CURRENT INVESTMENT STYLE/1/
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[GRAPHIC APPEARS HERE]
Morningstar's Style Box is based on a portfolio date as of 9/30/98.
The Fixed-Income Style Box placement is based on a fund's average effective
maturity or duration and the average credit rating of the bond portfolio.
/1/ Source: 1998 Morningstar, Inc.
The Lehman Brothers Municipal Bond Index is a broad measure of the municipal
bond market. To be included in this index, bonds must have a minimum credit
rating of at least BBB, and outstanding par value of at least $3 million and be
issued as part of a transaction of at least $50 million. The bonds must have
been issued after December 31, 1990, and have a remaining maturity of at least
one year. Taxable municipal bonds, bonds with floating rates, derivatives, and
certificates of participation are excluded.
The Lehman Brothers California Municipal Bond Index includes investment-grade
California Municipal bonds.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost. The LBMBI and LBCAMBI are unmanaged indices. These indices
do not include transaction costs associated with buying and selling securities
or any management fees. The CPI is a commonly used measure of inflation and does
not represent an investment return. It is not possible to invest directly in an
index.
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PERFORMANCE AND RETURNS*
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Class A Class B Class C
Inception Date 2/1/94 2/1/94 2/1/94
................................................................................
Average Annual Returns
................................................................................
6 months with sales charge -0.06% -0.45% 3.66%
................................................................................
6 months w/o sales charge 4.93% 4.55% 4.66%
................................................................................
1 year with sales charge 3.88% 3.38% 7.39%
................................................................................
1 year w/o sales charge 9.06% 8.38% 8.39%
................................................................................
3 years 6.19% 6.28% 7.16%
................................................................................
Since Inception 4.68% 4.76% 5.08%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00%
Front End CDSC CDSC
................................................................................
30-day SEC Yield 3.83% 3.28% 3.28%
................................................................................
Taxable Equivalent Yield* 6.34% 5.43% 5.43%
................................................................................
6-month distributions per share $0.21 $0.18 $0.18
................................................................................
Lipper Ranking out of 26 California Insured #7 #15 #14
Municipal Debt Funds/1/
(for the 1 year period ending 9/30/98)
................................................................................
* Adjusted for maximum applicable sales charge.
** Assumes maximum 39.6% federal tax rate. Results for investors subject to
lower tax rates would not be as advantageous.
/1/ Source: Lipper Analytical Services, Inc., an independent mutual fund rating
company. The rankings are based on total return and do not include the effect of
a sales charge. Past performance is no guarantee of future results.
[LINE GRAPH APPEARS HERE]
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LONG TERM GROWTH
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CPI LBMBI Class A LBCAMBI
Feb 3, 94 10,000 10,000 9,525 10,000
Sep 30, 94 10,219 9,512 9,089 9,424
Sep 30, 95 10,479 10,576 9,847 10,514
Sep 30, 96 10,793 11,215 10,475 11,228
Sep 30, 97 11,026 12,226 11,350 12,274
Sep 30, 98 11,190 13,217 12,377 14,245
Comparison of a $10,000 investment in Evergreen California Tax Free Fund Class
A, versus a similar investment in the Lehman Brothers Municipal Bond Index
(LBMBI), the Lehman Brothers California Municipal Bond Index (LBCAMBI), and the
Consumer Price Index (CPI).
2
<PAGE>
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EVERGREEN
California Tax-Free Fund
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Portfolio Manager Interview
Portfolio
Management
-------------------------------------------
[PHOTO OF GEORGE KIMBALL, CFA APPEARS HERE]
George Kimball, CFA
Tenure: January 1996
Your Fund's Class A shares produced a total return of 4.93%, unadjusted for
sales charge, for the six months ended September 30, 1998. This performance
outpaced the average return of 4.68% generated by the California insured
municipal funds followed by Lipper Analytical Services, Inc./1/
The market for California municipal bonds remained positive over the past six
months. Citing the state's well established, broad based economy and continued
improvement in California's fiscal health, Moody's Investors' Services upgraded
the ratings on over $20 billion in the state's municipal bonds, shortly after
the close of the reporting period. Of particular note, the state's general
obligation bonds were upgraded from Aa3 to Aa1.
In this environment, we focused the Fund's investment strategies on increasing
the potential for both total return and yield. We kept the Fund's duration
somewhat longer than that of its competitive group, emphasizing bonds in the
20-year maturity range. A longer duration made the Fund more sensitive to
changes in interest rates, a benefit as interest rates fell and bond prices
rose. As of September 30, 1998, your Fund's average maturity stood at 17.8 years
and its duration was 8.4 years.
To increase yield, we reduced the Fund's AAA-rated position and raised its
investment in uninsured holdings. We primarily selected bonds rated A and some
non-rated bonds. Although bonds may not be rated by one of the major rating
agencies, the securities undergo a rigorous research process by our analysts
prior to investment and are closely monitored once they are positioned in the
portfolio. We also maintained an emphasis on securities that are subject to the
alternative minimum tax (AMT), which provided an attractive yield advantage to
non-AMT bonds.
Going forward, our outlook for California municipal bonds is positive. As of the
end of the Fund's fiscal period, municipal bonds were extremely "cheap" compared
to U.S. Treasuries and, in our opinion, represented very attractive relative
value. Additionally, we expect both a favorable interest rate environment at the
national level, and solid economic and fiscal conditions in California to help
create solid returns for municipal bond investors in the coming months.
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PORTFOLIO COMPOSITION
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(based on 9/30/98 net assets)
[PIE CHART APPEARS HERE]
Lease Rental Bonds/Municipal Leases - 21.8%
Housing - 17.5%
Special Feature Revenue - 16.5%
Hospitals/Healthcare - 12.5%
Other investments and other assets and liabilities, net - 9.5%
General Obligation Notes/Bonds - 7.9%
Airport - 4.3%
Industrial Development/Pollution Control - 3.9%
Utility 3.8%
Education - 2.3%
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PORTFOLIO QUALITY
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(based on 9/30/98 portfolio assets)
[PIE CHART APPEARS HERE]
AAA - 86.2%
A - 6.8%
Not rated - 5.0%
BBB - 2.0%
3
<PAGE>
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EVERGREEN
Connecticut Municipal Bond Fund
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Fund at a Glance as of September 30, 1998
Portfolio
Characteristics
---------------
Total Net Assets $ 71,672,914
................................................................................
Average Credit Quality AA
................................................................................
Average Maturity 12.7 years
................................................................................
Average Duration 7.7 years
................................................................................
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CURRENT INVESTMENT STYLE/1/
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[GRAPHIC APPEARS HERE]
Morningstar's Style Box is based on a portfolio date as of 9/30/98.
The Fixed-Income Style Box placement is based on a fund's average effective
maturity or duration and the average credit rating of the bond portfolio.
/1/Source: 1998 Morningstar, Inc.
The Lehman Brothers Municipal Bond Index is a broad measure of the municipal
bond market. To be included in this index, bonds must have a minimum credit
rating of at least BBB, and outstanding par value of at least $3 million and be
issued as part of a transaction of at least $50 million. The bonds must have
been issued after December 31, 1990, and have a remaining maturity of at least
one year. Taxable municipal bonds, bonds with floating rates, derivatives, and
certificates of participation are excluded.
Past performance is no guarantee of future results. The investment return and
principal value will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than original cost. Class Y performance information
includes the performance of the Fund's predecessor common trust fund for periods
before the Fund's registration statement became effective on November 21, 1997.
The inception date of the predecessor common trust fund was January 31, 1981.
Performance for the common trust fund has been adjusted to include the effect of
estimated expenses based upon the mutual fund expense ratios as stated in the
Fund's current prospectus. The return of Class Y since its commencement of class
operations was 8.83%. The common trust fund was not registered under the
Investment Company Act of 1940 (the "1940 Act") or subject to certain investment
restrictions that are imposed by the 1940 Act. If the common trust fund had been
registered under the 1940 Act, its performance may have been adversely affected.
The LBMBI is an unmanaged index and does not include transaction costs
associated with buying and selling securities or any management fees. The CPI is
a commonly used measure of inflation and does not represent an investment
return. It is not possible to invest directly in an index.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS
- --------------------------------------------------------------------------------
Inception Date 1/31/81
................................................................................
Average Annual Returns
................................................................................
6 months with sales charge n/a
................................................................................
6 months w/o sales charge 4.96%
................................................................................
1 year with sales charge n/a
................................................................................
1 year w/o sales charge 8.10%
................................................................................
5 years 5.28%
................................................................................
10 years 6.24%
................................................................................
Since Inception 7.28%
................................................................................
Maximum Sales Charge n/a
................................................................................
30-day SEC Yield 3.98%
................................................................................
Taxable Equivalent* 6.59%
................................................................................
6-month distribution per share $0.14
................................................................................
* Assumes maximum 39.6% federal tax rate. Results for investors subject to
lower tax rates would not be as advantageous.
Note: No annual performance data is available for Class A and Class B shares;
their inception dates were 12/30/97 and 1/9/98, respectively.
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LONG TERM GROWTH
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[LINE GRAPH APPEARS HERE]
Date CPI LBMBI Class Y
---- --- ----- -------
9/30/88 $10,000 $10,000 $10,000
9/30/89 $10,434 $10,868 $10,634
9/30/90 $11,077 $11,609 $11,182
9/30/91 $11,452 $13,139 $12,339
9/30/92 $11,795 $14,513 $13,301
9/30/93 $12,112 $16,362 $14,167
9/30/94 $12,471 $15,963 $14,050
9/30/95 $12,788 $17,748 $15,168
9/30/96 $13,172 $18,820 $15,804
9/30/97 $13,456 $20,517 $16,953
9/30/98 $13,656 $22,029 $18,326
Comparison of a $10,000 investment in Evergreen Connecticut Municipal Bond Fund
Class Y, versus a similar investment in the Lehman Brothers Municipal Bond Index
(LBMBI), and the Consumer Price Index (CPI).
Class Y shares represent an Institutional class of shares which has a lower
expense ratio than Class A and Class B shares. Returns in Class A and B shares
would be lower.
4
<PAGE>
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EVERGREEN
Connecticut Municipal Bond Fund
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Portfolio Manager Interview
Portfolio
Management
--------------------------------------
[PHOTO OF JOCELYN TURNER APPEARS HERE]
Jocelyn Turner
Tenure: November 1997
&
Joseph R. Baxter
Tenure: November 1998*
Despite a volatile period for fixed income investors, the Evergreen Connecticut
Municipal Bond Fund's Class A, B, and Y shares returned 4.83%, 4.44%, and 4.96%,
respectively, unadjusted for sales charges, for the six months ended September
30, 1998. Strong performance was fueled by adjustments made in early 1998 when
we structured the portfolio to emphasize non-callable securities. As interest
rates steadily declined during the year, prompting many issuers to "call" their
bonds and reissue to take advantage of lower rates, our portfolio remained
safeguarded due to our heavy exposure to bonds with non-callable features. Also
adding to performance was the decision to keep duration neutral to modestly
long, relative to our benchmark. Looking ahead, we anticipate maintaining an
emphasis on non-callable issues and will continue to monitor the market for
opportunities which will increase the Fund's current yield and enhance total
return.
* Effective November 1998, Joseph R. Baxter (not pictured) is co-managing the
Fund. Mr. Baxter has 14 years of institutional investment experience and has
been with Evergreen Funds since April 1998. Prior to that he was Head of the Tax
Advantaged Unit at Corestates Investment Advisers from 1990-1998.
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PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(based on 9/30/98 net assets)
[PIE CHART APPEARS HERE]
General Obligation Notes/Bonds -- 39.9%
Hospitals/Healthcare -- 22.7%
Other investments and other assets and liabilities, net -- 12.9%
Transportation -- 4.9%
Water & Sewer -- 4.8%
Education -- 3.9%
Escrow -- 2.9%
Housing -- 2.8%
Lease Rental Bonds/Municipal Leases -- 2.8%
Industrial Development/Pollution Control -- 2.4%
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY
- --------------------------------------------------------------------------------
(based on 9/30/98 portfolio assets)
[PIE CHART APPEARS HERE]
AAA -- 60.8%
AA -- 19.1%
A -- 12.6%
BBB -- 6.0%
Not rated -- 1.5%
5
<PAGE>
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EVERGREEN
Massachusetts Tax Free Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of September 30, 1998
Portfolio
Characteristics
---------------
Total Net Assets $ 9,684,171
................................................................................
Average Credit Quality AA
................................................................................
Average Maturity 21.1 years
................................................................................
Average Duration 8.6 years
................................................................................
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CURRENT INVESTMENT STYLE/1/
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[GRAPHIC APPEARS HERE]
Morningstar's Style Box is based on a portfolio date as of 9/30/98.
The Fixed-Income Style Box placement is based on a fund's average effective
maturity or duration and the average credit rating of the bond portfolio.
/1/ Source: 1998 Morningstar, Inc.
The Lehman Brothers Municipal Bond Index is a broad measure of the municipal
bond market. To be included in this index, bonds must have a minimum credit
rating of at least BBB, and outstanding par value of at least $3 million and be
issued as part of a transaction of at least $50 million. The bonds must have
been issued after December 31, 1990, and have a remaining maturity of at least
one year. Taxable municipal bonds, bonds with floating rates, derivatives, and
certificates of participation are excluded.
The Lehman Brothers Massachusetts Municipal Bond Index includes investment-grade
Massachusetts Municipal bonds.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost. The LBMBI and the LBMMBI are unmanaged indices. These
indices do not include transaction costs associated with buying and selling
securities or any management fees. The CPI is a commonly used measure of
inflation and does not represent an investment return. It is not possible to
invest directly in an index.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
- --------------------------------------------------------------------------------
Class A Class B Class C
Inception Date 2/4/94 2/4/94 2/4/94
................................................................................
Average Annual Returns
6 months with sales charge -0.93% -1.16% 2.95%
................................................................................
6 months w/o sales charge 4.01% 3.84% 3.95%
................................................................................
1 year with sales charge 2.84% 2.41% 6.41%
................................................................................
1 year w/o sales charge 7.97% 7.41% 7.41%
................................................................................
3 years 5.58% 5.64% 6.57%
................................................................................
Since Inception 4.11% 4.16% 4.50%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00%
Front End CDSC CDSC
................................................................................
30-day SEC Yield 3.97% 3.43% 3.43%
................................................................................
Taxable Equivalent** 6.57% 5.68% 5.68%
................................................................................
6-month distributions per share $0.22 $0.18 $0.18
................................................................................
Lipper Ranking out of 57 #33 #44 #43
Massachusetts Municipal Debt Funds/1/
(for the 1 year period ending 9/30/98)
................................................................................
* Adjusted for maximum applicable sales charge.
** Assumes maximum 39.6% federal tax rate. Results for investors subject to
lower tax rates would not be as advantageous.
/1/ Source: Lipper Analytical Services, Inc., an independent mutual fund rating
company. The rankings are based on total return and do not include the effect
of a sales charge. Past performance is no guarantee of future results.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
CPI LBMBI Class A LBMAMBI
2/3/94 10,000 10,000 9,525 10,000
9/30/94 10,219 9,512 8,903 9,520
9/30/95 10,479 10,576 9,764 10,647
9/30/96 10,793 11,215 10,174 11,243
9/30/97 11,026 12,226 11,174 12,247
9/30/98 11,190 13,217 12,051 13,334
Comparison of a $10,000 investment in Evergreen Massachusetts Tax Free Fund
Class A, versus a similar investment in the Lehman Brothers Municipal Bond Index
(LBMBI), the Lehman Brothers Massachusetts Municipal Bond Index (LBMAMBI), and
the Consumer Price Index (CPI).
6
<PAGE>
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EVERGREEN
MASSACHUSETTS TAX FREE FUND
- --------------------------------------------------------------------------------
Portfolio Manager Interview
Portfolio
Management
-------------------------------------------
[PHOTO OF GEORGE KIMBALL, CFA APPEARS HERE]
George Kimball, CFA
Tenure: January 1996
Your Fund's Class A shares produced a total return of 4.01%, unadjusted for
sales charges, for the six months ended September 30, 1998. This performance
slightly lagged the average total return of 4.24% generated by the Massachusetts
municipal debt category followed by Lipper Analytical Services, Inc., an
independent monitor of mutual fund performance.
We attribute this modest underperformance to the fact that the Fund had been
positioned to be less sensitive to interest rate changes at the beginning of the
reporting period. At that time, the Fund would have benefited from a greater
sensitivity because interest rates had just begun to fall and bond prices began
to rise. We increased the Fund's sensitivity to changes in interest rates
shortly thereafter, improving both total return and relative performance as the
reporting period progressed.
Massachusetts municipal bondholders continued to benefit from the state's strong
economy, sound financial conditions and manageable supply of tax-exempt bonds
over the past six months. The state's unemployment rate also remained lower than
the national average.
We centered our investment strategies on enhancing total return and maintaining
yield as interest rates declined. We increased total return potential by keeping
the Fund's duration somewhat longer than that of its competitive group.
Expressed in years, duration measures a fund's sensitivity to changes in
interest rates. The longer a fund's duration, the greater its sensitivity to
interest rate changes. We primarily invested in higher quality bonds in the
twenty-year maturity range to reach our targeted duration. As of September 30,
1998, the Fund's duration stood at 8.6 years and its average maturity was 21.1
years.
To help insulate the Fund's yield from declining rates, we sold some
lower-yielding, AAA-rated positions and reinvested assets in higher yielding
bonds rated A and BBB. We also increased higher quality holdings in the Higher
Education sector and reduced the Fund's position in lower quality Hospital
bonds. The Fund's average credit quality was AA, as of the end of the reporting
period.
Our outlook for Massachusetts municipal bonds is favorable. We expect minimal
inflation and slower economic growth to keep interest rates low at the national
level. In Massachusetts, we anticipate continued positive trends in both the
state economy and fiscal operations, as well as an abundant supply of bonds.
Further, as of September 30, 1998, municipal bonds were exceptionally "cheap"
compared to U.S. Treasuries, based on historical levels. In our opinion, the
combination of attractive relative value, abundant supply and positive economic
and fiscal conditions bodes well for total return potential.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(based on 9/30/98 net assets)
[PIE CHART APPEARS HERE]
General Obligation Notes/Bonds -- 45.5%
Industrial Development/Pollution Control -- 20.0%
Education -- 12.0%
Hospitals/Healthcare -- 8.8%
Water & Sewer -- 6.0%
Housing -- 3.4%
Utility -- 2.3%
Transportation -- 1.9%
Other Investments and other assets and liabilities, net -- 0.1%
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY
- --------------------------------------------------------------------------------
(based on 9/30/98 portfolio assets)
[PIE CHART APPEARS HERE]
AAA -- 64.2%
BBB -- 14.1%
AA -- 13.9%
Not Rated -- 7.8%
7
<PAGE>
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EVERGREEN
Missouri Tax Free Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of September 30, 1998
Portfolio
Characteristics
---------------
Total Net Assets $25,249,295
..............................................................................
Average Credit Quality AA
..............................................................................
Average Maturity 18.7 years
..............................................................................
Average Duration 7.5 years
..............................................................................
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE]
Morningstar's Style Box is based on a portfolio date as of 9/30/98.
The Fixed-Income Style Box placement is based on a fund's average effective
maturity or duration and the average credit rating of the bond portfolio.
/1/ Source: 1998 Morningstar, Inc.
The Lehman Brothers Municipal Bond Index is a broad measure of the municipal
bond market. To be included in this index, bonds must have a minimum credit
rating of at least BBB, and outstanding par value of at least $3 million and be
issued as part of a transaction of at least $50 million. The bonds must have
been issued after December 31, 1990, and have a remaining maturity of at least
one year. Taxable municipal bonds, bonds with floating rates, derivatives and
certificates of participation are excluded.
The Lehman Brothers Missouri Municipal Bond Index includes investment-grade
Missouri Municipal bonds.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost. The LBMBI and the LBMMBI are unmanaged indices. These
indices do not include transaction costs associated with buying and selling
securities or any management fees. The CPI is a commonly used measure of
inflation and does not represent an investment return. It is not possible to
invest directly in an index.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
- --------------------------------------------------------------------------------
Class A Class B Class C
Inception Date 2/1/94 2/1/94 2/1/94
................................................................................
Average Annual Returns
................................................................................
6 months with sales charge -1.16% -1.30% 2.80%
................................................................................
6 months w/o sales charge 3.77% 3.70% 3.80%
................................................................................
1 year with sales charge 2.63% 2.30% 6.29%
................................................................................
1 year w/o sales charge 7.75% 7.30% 7.29%
................................................................................
3 years 5.85% 6.05% 6.96%
................................................................................
Since Inception 4.93% 4.93% 5.26%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00%
Front End CDSC CDSC
................................................................................
30-day SEC Yield 4.25% 3.72% 3.72%
................................................................................
Taxable Equivalent** 7.04% 6.16% 6.16%
................................................................................
6-month distributions per share $0.24 $0.20 $0.20
................................................................................
Lipper Ranking out of 23 #11 #18 #18
Missouri Municipal Debt Funds/1/
+(for the 1 year period ending 9/30/98)
* Adjusted for maximum applicable sales charge.
** Assumes maximum 39.6% federal tax rate. Results for investors subject to
lower tax rates would not be as advantageous.
/1/ Source: Lipper Analytical Services, Inc., an independent mutual fund rating
company. The rankings are based on total return and do not include the effect of
a sales charge. Past performance is no guarantee of future results.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
CPI LBMBI Class A LBMOMBI
2/3/94 10,000 10,000 9,525 10,000
9/30/94 10,219 9,512 9,179 9,476
9/30/95 10,479 10,576 10,050 10,538
9/30/96 10,793 11,215 10,606 11,178
9/30/97 11,026 12,226 11,615 12,122
9/30/98 11,190 13,217 12,515 13,099
Comparison of a $10,000 investment in Evergreen Missouri Tax Free Fund Class A
shares, versus a similar investment in the Lehman Brothers Municipal Bond Index
(LBMBI), the Lehman Brothers Missouri Municipal Bond Index (LBMOMBI), and the
Consumer Price Index (CPI).
8
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Missouri Tax Free Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
Portfolio
Management
-------------------------------------------
[PHOTO OF GEORGE KIMBALL, CFA APPEARS HERE]
George Kimball, CFA
Tenure: January 1996
Your Fund's Class A shares produced a total return of 3.77%, unadjusted for
sales charge, for the six months ended September 30, 1998. This performance
slightly lagged the average return of 3.98% generated by the Missouri municipal
funds followed by Lipper Analytical Services, Inc., an independent monitor of
mutual fund performance.
We attribute this modest underperformance to the fact that the Fund had been
positioned to be less sensitive to interest rate changes at the beginning of the
reporting period. At that time, the Fund would have benefited from a greater
sensitivity to changes in interest rates, because interest rates had just begun
to fall and bond prices began to rise. We increased the Fund's sensitivity to
changes in interest rates shortly thereafter, improving total return as the
reporting period progressed.
Missouri municipal bondholders continued to benefit from the state's sound,
diversified economy, strong fiscal management and favorable supply and demand
factors. Missouri's growth in employment and personal income outpaced its
national counterparts over the past six months. There was some weakness in the
state's manufacturing sector; however, it was largely offset by strength in
trade and services. Missouri also continued to exhibit considerable fiscal
strength. In addition to the state maintaining low per capita debt, residents
benefited from tax reductions during the reporting period.
We structured the Fund to build total return potential and maintain yield, in
light of the declining interest rate environment. We kept the Fund's duration
slightly longer than that of its competitive group by investing in bonds in the
20-year maturity range. Expressed in years, duration measures a portfolio's
sensitivity to changes in interest rates. The longer a fund's duration, the more
sensitive it is to interest rate changes. This strategy benefited the Fund when
interest rates fell and bond prices rose. As of September 30, 1998, the Fund's
duration was 7.5 years and its average maturity was 18.7 years.
We helped protect yield from falling interest rates by reducing the Fund's lower
yielding AA-rated positions and increasing holdings in both BBB-rated bonds and
in securities that were non-rated. The Fund also maintained a heavy weighting in
the Health and Hospitals sector, which typically provides more generous yields.
The Fund's average quality stood at AA, as of September 30, 1998.
Looking ahead, we anticipate a favorable interest rate climate at the national
level and expect many of the positive trends we have witnessed in the Missouri
municipal bond market to continue. We believe the state's limited supply of
tax-exempt bonds, combined with steady demand, will support prices in the coming
months.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(based on 9/30/98 net assets)
[PIE CHART APPEARS HERE]
Hospitals/Healthcare -- 24.4%
Lease Rental Bonds/Municipal Leases -- 21.1%
Housing -- 13.2%
Water & Sewer -- 11.9%
Utility -- 10.2%
Education -- 9.1%
Transportation -- 4.7%
General Obligation Notes/Bonds -- 4.4%
Other investments and other assets and liabilities, net -- 1.0%
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY
- --------------------------------------------------------------------------------
(based on 9/30/98 portfolio assets)
[PIE CHART APPEARS HERE]
AAA -- 54.3%
A -- 15.5%
AA -- 13.4%
BBB -- 9.5%
Not rated -- 7.3%
9
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEEN
New Jersey Tax Income Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of September 30, 1998
Portfolio
Characteristics
---------------
Total Net Assets $169,805,709
..............................................................................
Average Credit Quality AA
..............................................................................
Average Maturity 24.7 years
..............................................................................
Average Duration 8.9 years
..............................................................................
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE]
Morningstar's Style Box is based on a portfolio date as of 9/30/98.
The Fixed-Income Style Box placement is based on a fund's average effective
maturity or duration and the average credit rating of the bond portfolio.
/1/ Source: 1998 Morningstar, Inc.
The Lehman Brothers Municipal Bond Index is a broad measure of the municipal
bond market. To be included in this index, bonds must have a minimum credit
rating of at least BBB, and outstanding par value of at least $3 million and be
issued as part of a transaction of at least $50 million. The bonds must have
been issued after December 31, 1990, and have a remaining maturity of at least
one year. Taxable municipal bonds, bonds with floating rates, derivatives and
certificates of participation are excluded.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost. The LBMBI is an unmanaged index. The index does not include
transaction costs associated with buying and selling securities or any
management fees. The CPI is a commonly used measure of inflation and does not
represent an investment return. It is not possible to invest directly in an
index.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
- --------------------------------------------------------------------------------
Class A Class B Class Y
Inception Date 7/16/91 1/30/96 2/8/96
................................................................................
Average Annual Returns
................................................................................
6 months with sales charge 0.16% (0.32%) n/a
................................................................................
6 months w/o sales charge 5.15% 4.68% 5.20%
................................................................................
1 year with sales charge 3.87% 3.07% n/a
................................................................................
1 year w/o sales charge 9.05% 8.07% 9.15%
................................................................................
5 years 4.65% -- --
................................................................................
Since Inception 6.79% 4.52% 6.33%
................................................................................
Maximum Sales Charge 4.75% 5.00% n/a
Front End CDSC
................................................................................
30-day SEC Yield 4.08% 3.38% 4.38%
................................................................................
Taxable Equivalent** 6.75% 5.60% 7.25%
................................................................................
6-month distributions per share $0.25 $0.20 $0.26
................................................................................
Lipper Ranking out of 58 New Jersey #8 #30 #6
Municipal Debt Funds/1/
(for the 1 year period ending 9/30/98)
................................................................................
* Adjusted for maximum applicable sales charge.
** Assumes maximum 39.6% federal tax rate. Results for investors subject to
lower tax rates would not be as advantageous.
/1/Source: Lipper Analytical Services, Inc., an independent mutual fund rating
company. The rankings are based on total return and do not include the effect of
a sales charge. For the 5-year period ended 9/30/98, the Fund's Class A shares
ranked 8 out of the 26 New Jersey Municipal Debt Funds tracked by Lipper. Past
performance is no guarantee of future results.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
CPI LBMBI Class A
7/31/91 10,000 10,000 9,525
9/30/92 10,374 11,337 10,713
9/30/93 10,653 12,781 12,161
9/30/94 10,969 12,469 11,782
9/30/95 11,248 13,864 12,972
9/30/96 11,586 14,702 13,697
9/30/97 11,836 16,027 14,696
9/30/98 12,012 17,208 16,026
Comparison of a $10,000 investment in Evergreen New Jersey Tax Free Income Fund,
Class A shares, versus a similar investment in the Lehman Brothers Municipal
Bond Index (LBMBI) and the Consumer Price Index (CPI).
10
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
New Jersey Tax Free Income Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
Portfolio
Management
--------------------------------------
[PHOTO OF JOCELYN TURNER APPEARS HERE]
Jocelyn Turner
Tenure: November 1992
&
Joseph R. Baxter
Tenure: November 1998*
For the first half of the fiscal year, the Fund's Class A shares posted a 5.15%
total return, unadjusted for sales charge. During the past 12 months, the Fund's
Class Y shares ranked 6 out of 58 New Jersey municipal debt funds tracked by
Lipper Analytical Services./1/ Strong relative performance can be attributed to
a favorable duration stance that was increased from 8.6 years to 8.9 years
during the six months. From a security selection standpoint, we are emphasizing
issues with non-callable features, a move that will serve to reduce the Fund's
exposure to prepayment risk. The portfolio's average quality was kept at
relatively high levels due to increasingly narrow spreads, which have reduced
the attractiveness of lower quality issues. Also noteworthy is the fact that the
Fund underwent a merger with the CoreFund New Jersey Municipal Bond Fund during
the six months; a transition which was seamless and increased net assets by over
$20 million.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(based on 9/30/98 net assets)
[PIE CHART APPEARS HERE]
General Obligation Notes/Bonds -- 23.4%
Other investments and other assets and liabilities, net -- 22.8%
Transportation -- 16.2%
Hospitals/Healthcare -- 13.4%
Water & Sewer -- 12.9%
Education -- 4.3%
Escrow -- 2.9%
Industrial Development/Pollution Control -- 2.8%
Lease Rental Bonds/Municipal Leases -- 1.3%
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY
- --------------------------------------------------------------------------------
(based on 9/30/98 portfolio assets)
[PIE CHART APPEARS HERE]
AAA -- 63.7%
AA -- 22.3%
BBB -- 5.3%
A -- 4.6%
Not rated -- 4.1%
* Effective November 1998, Joseph R. Baxter (not pictured) is co-managing the
Fund. Mr. Baxter has 14 years of institutional investment experience and has
been with Evergreen Funds since April 1998. Prior to that he was Head of the Tax
Advantaged Unit at Corestates Investment Advisers from 1990-1998.
11
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
New York Tax Free Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of September 30, 1998
Portfolio
Characteristics
---------------
Total Net Assets $21,292,308
..............................................................................
Average Credit Quality AAA
..............................................................................
Average Maturity 20.3 years
..............................................................................
Average Duration 8.2 years
..............................................................................
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE /1/
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE]
Morningstar's Style Box is based on a portfolio date as of 9/30/98.
The Fixed-Income Style Box placement is based on a fund's average effective
maturity or duration and the average credit rating of the bond portfolio.
/1/ Source: 1998 Morningstar, Inc.
The Lehman Brothers Municipal Bond Index is a broad measure of the municipal
bond market. To be included in this index, bonds must have a minimum credit
rating of at least BBB, and outstanding par value of at least $3 million and be
issued as part of a transaction of at least $50 million. The bonds must have
been issued after December 31, 1990 and have a remaining maturity of at least
one year. Taxable municipal bonds, bonds with floating rates, derivatives, and
certificates of participation are excluded.
The Lehman Brothers New York Municipal Bond Index includes investment-grade New
York Municipal bonds.
Past performance is not guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost, The LBMBI and the LBNYMBI are unmanaged indices. These
indices do not include transaction costs associated with buying and selling
securities or any management fees. The CPI is a commonly used measure of
inflation and does not represent an investment return. It is not possible to
invest directly in an index.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
- --------------------------------------------------------------------------------
Class A Class B Class C
Inception Date 2/4/94 2/4/94 2/4/94
................................................................................
Average Annual Returns
................................................................................
6 months with sales charge -0.26% -0.66% 3.44%
................................................................................
6 months w/o sales charge 4.71% 4.34% 4.44%
................................................................................
1 year with sales charge 3.11% 2.59% 6.59%
................................................................................
1 year w/o sales charge 8.25% 7.59% 7.59%
................................................................................
3 years 5.98% 6.06% 6.94%
................................................................................
Since Inception 5.00% 5.00% 5.34%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00%
Front End CDSC CDSC
................................................................................
30-day SEC Yield 3.98% 3.44% 3.44%
................................................................................
Taxable Equivalent** 6.59% 5.70% 5.70%
................................................................................
6-month distributions per share $0.23 $0.19 $0.19
................................................................................
Lipper Ranking out of 15 New York #3 #7 #7
Insured Funds/1/
(for the 1 year period ending 9/30/98)
................................................................................
* Adjusted for maximum applicable sales charge.
** Assumes maximum 39.6% federal tax rate. Results for investors subject to
lower tax rates would not be as advantageous.
/1/Source: Lipper Analytical Services, Inc., an independent mutual fund rating
company. The rankings are based on total return and do not include the effect of
a sales charge. Past performance is no guarantee of future results.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
[LINE GRAPH APPEARS HERE]
CPI LBMBI Class A LBNYMBI
2/1/94 10,000 10,000 9,525 10,000
9/30/94 10,219 9,512 9,096 9,551
9/30/95 10,479 10,576 10,043 10,565
9/30/96 10,793 11,215 10,617 11,253
9/30/97 11,026 12,226 11,596 12,333
9/30/98 11,190 13,217 12,554 13,458
Comparison of a $10,000 investment in Evergreen New York Tax Free Fund Class A,
versus a similar investment in the Lehman Brothers Municipal Bond Index (LBMBI),
the Lehman Brothers New York Municipal Bond Index (LBNYMBI), and the Consumer
Price Index (CPI).
12
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
New York Tax Free Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
Portfolio
Management
-------------------------------------------
[PHOTO OF GEORGE KIMBALL, CFA APPEARS HERE]
George Kimball, CFA
Tenure: January 1996
For the six months ended September 30, 1998, your Fund's Class A shares produced
a total return of 4.71%, unadjusted for sales charge. This performance surpassed
the 4.25% average return generated by the insured New York municipal funds
followed by Lipper Analytical Services Inc.
The market for New York municipal bonds remained favorable during the reporting
period. The state's employment rate outpaced that of the nation and fiscal
operations continued to improve. New York's healthy financial conditions
prompted tax cuts for its residents. There was good news in New York City, as
well. New York City posted a budget surplus, benefiting from rising tax revenues
largely generated by Wall Street activity.
Supply in New York municipal bonds continued to be plentiful. The Long Island
Power Authority (LIPA) brought $6.5 billion in bonds to market during the
reporting period, the biggest transaction ever to occur in either the taxable or
tax-exempt sector. The deal's large size caused it to be priced attractively.
The Fund's LIPA holdings - which amounted to approximately 5% of net assets -
became some of the best performing bonds in the portfolio over the past six
months.
In this environment, our investment strategies focused on building yield and
total return potential, while maintaining an average quality rating of AAA. We
increased yield by selling some of the Fund's lower yielding, AAA-rated
positions and maximizing the Fund's holdings in uninsured securities. We
primarily selected bonds rated AA and A. We boosted the potential for total
return by focusing on securities with maturities in the 20-year range, which
benefited the Fund when interest rates declined. As of September 30, 1998, your
Fund's average maturity stood at 20.3 years.
Going forward, we will closely monitor fiscal conditions in New York - and
particularly New York City - in light of recent fluctuations in the stock
market. We also expect New York municipal bonds to provide attractive relative
value. As of the close of the Fund's reporting period, municipal bonds were
exceptionally "cheap" compared to U.S. Treasuries, based on historical
relationships. Further, we anticipate an abundant supply of New York municipal
bonds over the next six months. In our opinion, this combination should create a
broad selection of attractively priced bonds.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(based on 9/30/98 net assets)
[PIE CHART APPEARS HERE]
General Obligation Notes/Bonds -- 26.5%
Water & Sewer -- 14.9%
Hospitals/Healthcare -- 13.5%
Housing -- 11.5%
Transportation -- 10.6%
Other investments and other assets and liabilities, net -- 9.0%
Education -- 5.2%
Utility -- 4.8%
Airport -- 2.8%
Lease Rental Bonds/Municipal Leases -- 1.2%
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY
- --------------------------------------------------------------------------------
(based on 9/30/98 portfolio assets)
[PIE CHART APPEARS HERE]
AAA -- 59.3%
AA -- 16.0%
A -- 13.4%
BBB -- 10.2%
BB -- 0.8%
B -- 0.3%
13
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Pennsylvania Tax Free Fund
- --------------------------------------------------------------------------------
Fund at a Glance as of September 30, 1998
Portfolio
Characteristics
---------------
Total Net Assets $248,740,410
..............................................................................
Average Credit Quality AA
..............................................................................
Average Maturity 15.6 years
..............................................................................
Average Duration 8.9 years
..............................................................................
- --------------------------------------------------------------------------------
CURRENT INVESTMENT STYLE/1/
- --------------------------------------------------------------------------------
[GRAPHIC APPEARS HERE]
Morningstar's Style Box is based on a portfolio date as of 9/30/98.
The Fixed-Income Style Box placement is based on a fund's average effective
maturity or duration and the average credit rating of the bond portfolio.
/1/Source: 1998 Morningstar, Inc.
The Lehman Brothers Municipal Bond Index is a broad measure of the municipal
bond market. To be included in this index, bonds must have a minimum credit
rating of at least BBB, and outstanding par value of at least $3 million and be
issued as part of a transaction of at least $50 million. The bonds must have
been issued after December 31, 1990, and have a remaining maturity of at least
one year. Taxable municipal bonds, bonds with floating rates, derivatives, and
certificates of participation are excluded.
Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost. The LBMBI is an unmanaged index. The index does not include
transaction costs associated with buying and selling securities or any
management fees. The CPI is a commonly used measure of inflation and does not
represent an investment return. It is not possible to invest directly in an
index.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
- --------------------------------------------------------------------------------
Class A Class B Class C Class Y
Inception Date 12/27/90 2/1/93 2/1/93 11/24/97
................................................................................
Average Annual Returns
................................................................................
6 months with sales charge -0.49% -0.81% -3.10% n/a
................................................................................
6 months w/o sales charge 4.47% 4.19% 4.10% 4.60%
................................................................................
1 year with sales charge 2.82% 2.27% 6.26% n/a
................................................................................
1 year w/o sales charge 7.95% 7.27% 7.26% -
................................................................................
5 years 4.32% 4.25% 4.58% -
................................................................................
Since Inception 7.63% 5.77% 5.91% 8.57%
................................................................................
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
................................................................................
30-day SEC Yield 4.10% 3.56% 3.56% 4.55%
................................................................................
Taxable Equivalent** 6.79% 5.89% 5.89% 7.53%
................................................................................
6-month distributions per share $0.26 $0.21 $0.21 $0.27
................................................................................
Lipper Ranking out of 60 Pennsylvania #28 #45 #46 n/a
Municipal Debt Funds/1/
(for the 1 year period ending 9/30/98)
................................................................................
* Adjusted for maximum applicable sales charge.
** Assumes maximum 39.6% federal tax rate. Results for investors subject to
lower tax rates would not be as advantageous.
/1/Source: Lipper Analytical Services, Inc., an independent mutual fund rating
company. The rankings are based on total return and do not include the effect of
a sales charge. For the 5-year period ended 9/30/98, Class A, B, and C shares
ranked 23, 34, and 35 out of 37 Pennsylvania Municipal Debt Funds. Past
performance is no guarantee of future results.
[LINE GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
LONG TERM GROWTH
- --------------------------------------------------------------------------------
Evergreen Pennsylvania
Consumer Lehman Brothers Tax Free Fund
Price Index Municipal Bond Index Class A Shares
----------- -------------------- ----------------------
12/31/90 10,000 10,000 9,525
9/30/91 10,254 10,850 10,651
9/30/92 10,561 11,985 11,849
9/30/93 10,845 13,512 13,645
9/30/94 11,166 13,182 13,078
9/30/95 11,450 14,656 14,229
9/30/96 11,794 15,542 15,033
9/30/97 12,048 16,943 16,399
9/30/98 12,227 18,192 17,703
Comparison of a $10,000 investment in Evergreen Pennsylvania Tax Free Fund Class
A, versus a similar investment in the Lehman Brothers Municipal Bond Index
(LBMBI) and the Consumer Price Index (CPI).
14
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Pennsylvania Tax Free Fund
- --------------------------------------------------------------------------------
Portfolio Manager Interview
Portfolio
Management
--------------------------------------
[PHOTO OF JOCELYN TURNER APPEARS HERE]
Jocelyn Turner
Tenure: November 1992
&
Joseph R. Baxter
Tenure: November 1998*
Municipal bond investors enjoyed a solid rally over the past six months buoyed
by favorable interest rates and strong cash inflows. Within this environment the
Fund's Class Y shares posted a six-month return of 4.60%. Class A, B, and C
shares returned 4.47%, 4.19%, and 4.10%, respectively, unadjusted for sales
charges. Underlying this solid performance, the portfolio continued to maintain
an emphasis on high quality municipal bonds despite the fact that spreads - or
the difference between yields - between high and lower quality bonds became more
narrow. The decision to keep the Fund's duration, currently at 8.9 years,
neutral to modestly long relative to our benchmark, had a positive impact on
performance. Also noteworthy is the fact that the Fund merged with the CoreFund
Pennsylvania Municipal Bond Fund during the period, a move which increased net
assets by roughly $17 million. In anticipation of the combination, we modestly
extended duration so that, following the merger, the Fund's duration would be at
pre- merger levels. The transition was seamless.
* Effective November 1998, Joseph R. Baxter (not pictured) is co-managing the
Fund. Mr. Baxter has 14 years of institutional investment experience and has
been with Evergreen Funds since April 1998. Prior to that he was Head of the Tax
Advantaged Unit at Corestates Investment Advisers from 1990-1998.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(based on 9/30/98 net assets)
[PIE CHART APPEARS HERE]
General Obligation Notes/Bonds -- 19.3%
Other investments and other assets and liabilities, net -- 18.5%
Hospitals/Healthcare -- 15.8%
Escrow -- 10.3%
Transportation -- 9.6%
Industrial Development/Pollution Control -- 8.8%
Education -- 7.7%
Water & Sewer -- 5.6%
Housing -- 2.9%
Airport -- 1.5%
- --------------------------------------------------------------------------------
PORTFOLIO QUALITY
- --------------------------------------------------------------------------------
(based on 9/30/98 portfolio assets)
[PIE CHART APPEARS HERE]
AAA -- 68.7%
AA -- 12.7%
Not Rated -- 9.2%
BBB -- 5.3%
A -- 4.1%
15
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
California Tax Free Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Year Ended February 1, 1994
Ended Year Four Months November 30, (Commencement of
September 30, 1998 Ended Ended -------------- Class Operations) to
(Unaudited) March 31, 1998 March 31, 1997* 1996 1995 November 30, 1994
- -----------------------------------------------------------------------------------------------------------------
CLASS A SHARES
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.98 $ 9.44 $ 9.73 $ 9.86 $ 8.70 $10.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.21 0.45 0.16 0.48 0.49 0.44
Net gains or losses on
securities (both
realized and
unrealized) 0.27 0.53 (0.28) (0.11) 1.17 (1.30)
------ ------ ------ ------ ------ ------
Total from investment
operations 0.48 0.98 (0.12) 0.37 1.66 (0.86)
------ ------ ------ ------ ------ ------
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.21) (0.44) (0.17) (0.50) (0.50) (0.44)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $10.25 $ 9.98 $ 9.44 $ 9.73 $ 9.86 $ 8.70
------ ------ ------ ------ ------ ------
TOTAL RETURN (B) 4.93% 10.55% (1.29%) 3.99% 19.63% (8.78%)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $6,899 $6,420 $4,192 $4,759 $4,555 $3,006
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.93%(a) 0.78% 0.77%(a) 0.77% 0.72% 0.41%(a)
Expenses, excluding
indirectly paid
expenses 0.92%(a) 0.78% 0.75%(a) 0.75% 0.69% --
Expenses, excluding
waivers and
reimbursements 0.93%(a) 1.03% 1.24%(a) 1.19% 1.31% 1.66%(a)
Net investment income 4.29%(a) 4.60% 4.91%(a) 5.06% 5.37% 5.53%(a)
PORTFOLIO TURNOVER RATE 26% 74% 39% 120% 119% 104%
</TABLE>
<TABLE>
<CAPTION>
Six Months Year Ended February 1, 1994
Ended Four Months November 30, (Commencement of
September 30, 1998 Year Ended Ended ---------------- Class Operations) to
(Unaudited) March 31, 1998 March 31, 1997* 1996 1995 November 30, 1994
- ------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.94 $ 9.40 $ 9.69 $ 9.82 $ 8.68 $ 10.00
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.18 0.37 0.13 0.41 0.44 0.40
Net gains or losses on
securities (both
realized and
unrealized) 0.27 0.53 (0.28) (0.11) 1.17 (1.28)
------- ------- ------- ------- ------- -------
Total from investment
operations 0.45 0.90 (0.15) 0.30 1.61 (0.88)
------- ------- ------- ------- ------- -------
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.18) (0.36) (0.14) (0.43) (0.47) (0.44)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD $ 10.21 $ 9.94 $ 9.40 $ 9.69 $ 9.82 $ 8.68
------- ------- ------- ------- ------- -------
TOTAL RETURN (B) 4.55% 9.75% (1.54%) 3.23% 18.95% (9.00%)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $18,674 $18,967 $21,794 $22,719 $22,743 $11,415
RATIOS TO AVERAGE NET
ASSETS
Expenses 1.67%(a) 1.52% 1.52%(a) 1.52% 1.48% 1.16%(a)
Expenses, excluding
indirectly paid
expenses 1.67%(a) 1.52% 1.50%(a) 1.50% 1.45% --
Expenses, excluding
waivers and
reimbursements 1.68%(a) 1.77% 1.99%(a) 1.94% 2.07% 2.36%(a)
Net investment income 3.54%(a) 3.87% 4.16%(a) 4.31% 4.57% 4.83%(a)
PORTFOLIO TURNOVER RATE 26% 74% 39% 120% 119% 104%
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
* The Fund changed its fiscal year end from November 30 to March 31.
See Combined Notes to Financial Statements.
16
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
California Tax Free Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Year Ended
Ended Four Months November 30,
September 30, 1998 Year Ended Ended --------------
(Unaudited) March 31, 1998 March 31, 1997* 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
CLASS C SHARES
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.92 $ 9.38 $ 9.68 $ 9.80 $ 8.68
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.18 0.37 0.14 0.41 0.43
Net gains or losses on securities (both realized
and unrealized) 0.28 0.53 (0.30) (0.10) 1.15
------ ------ ------ ------ ------
Total from investment operations 0.46 0.90 (0.16) 0.31 1.58
------ ------ ------ ------ ------
LESS DIVIDENDS (FROM NET INVESTMENT
INCOME) (0.18) (0.36) (0.14) (0.43) (0.46)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.20 $ 9.92 $ 9.38 $ 9.68 $ 9.80
------ ------ ------ ------ ------
TOTAL RETURN (B) 4.66% 9.77% (1.64%) 3.34% 18.69%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (THOUSANDS) $1,207 $1,735 $1,849 $1,521 $1,535
RATIOS TO AVERAGE NET ASSETS
Expenses 1.67%(a) 1.52% 1.52%(a) 1.52% 1.49%
Expenses, excluding indirectly paid
expenses 1.67%(a) 1.52% 1.50%(a) 1.50% 1.46%
Expenses, excluding waivers and
reimbursements 1.68%(a) 1.77% 1.99%(a) 1.94% 2.07%
Net investment income 3.55%(a) 3.87% 4.16%(a) 4.31% 4.51%
PORTFOLIO TURNOVER RATE 26% 74% 39% 120% 119%
<CAPTION>
February 1, 1994
(Commencement of
Class Operations) to
November 30, 1994
- ----------------------------------------------------------------------
CLASS C SHARES
- ----------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
--------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.39
Net gains or losses on securities (both realized
and unrealized) (1.29)
--------------------
Total from investment operations (0.90)
--------------------
LESS DIVIDENDS (FROM NET INVESTMENT
INCOME) (0.42)
--------------------
NET ASSET VALUE, END OF PERIOD $ 8.68
--------------------
TOTAL RETURN (B) (9.08%)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (THOUSANDS) $ 624
RATIOS TO AVERAGE NET ASSETS
Expenses 1.16%(a)
Expenses, excluding indirectly paid
expenses --
Expenses, excluding waivers and
reimbursements 2.38%(a)
Net investment income 4.96%(a)
PORTFOLIO TURNOVER RATE 104%
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
* The Fund changed its fiscal year end from November 30 to March 31.
See Combined Notes to Financial Statements.
17
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Connecticut Municipal Bond Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months December 30, 1997
Ended (Commencement of
September 30, 1998 Class Operations) to
(Unaudited) March 31, 1998
- --------------------------------------------------------------------------------
CLASS A SHARES
- --------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $6.38 $6.40
----- -----
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.13 0.07
Net gains or losses on securities
(both realized and unrealized) 0.16 (0.02)
----- -----
Total from investment operations 0.29 0.05
----- -----
LESS DIVIDENDS (FROM NET INVESTMENT
INCOME) (0.13) (0.07)
----- -----
NET ASSET VALUE, END OF PERIOD $6.54 $6.38
----- -----
TOTAL RETURN (B) 4.83% 0.77%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (THOUSANDS) $ 314 $ 146
RATIOS TO AVERAGE NET ASSETS
Expenses 0.80%(a) 0.86%(a)
Expenses, excluding indirectly paid
expenses 0.80%(a) 0.85%(a)
Expenses, excluding waivers and
reimbursements 0.92%(a) 1.13%(a)
Net investment income 4.14%(a) 4.38%(a)
PORTFOLIO TURNOVER RATE 26% 17%
</TABLE>
<TABLE>
<CAPTION>
Six Months January 9, 1998
Ended (Commencement of
September 30, 1998 Class Operations) to
(Unaudited) March 31, 1998
- --------------------------------------------------------------------------------
CLASS B SHARES
- --------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 6.38 $6.44
------ -----
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.11 0.05
Net gains or losses on securities
(both realized and unrealized) 0.16 (0.06)
------ -----
Total from investment operations 0.27 (0.01)
------ -----
LESS DIVIDENDS (FROM NET INVESTMENT
INCOME) (0.11) (0.05)
------ -----
NET ASSET VALUE, END OF PERIOD $ 6.54 $6.38
------ -----
TOTAL RETURN (B) 4.44% (0.21%)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (THOUSANDS) $ 435 $ 331
RATIOS TO AVERAGE NET ASSETS
Expenses 1.55%(a) 1.61%(a)
Expenses, excluding indirectly paid
expenses 1.54%(a) 1.60%(a)
Expenses, excluding waivers and
reimbursements 1.66%(a) 1.89%(a)
Net investment income 3.42%(a) 3.36%(a)
PORTFOLIO TURNOVER RATE 26% 17%
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
See Combined Notes to Financial Statements.
18
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Connecticut Municipal Bond Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months November 24, 1997
Ended (Commencement of
September 30, 1998 Class Operations) to
(Unaudited) March 31, 1998
- --------------------------------------------------------------------------------
CLASS Y SHARES
- --------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 6.37 $ 6.32
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.14 0.10
Net gains or losses on securities
(both realized and unrealized) 0.17 0.05
------- -------
Total from investment operations 0.31 0.15
------- -------
LESS DIVIDENDS (FROM NET INVESTMENT
INCOME) (0.14) (0.10)
------- -------
NET ASSET VALUE, END OF PERIOD $ 6.54 $ 6.37
------- -------
TOTAL RETURN 4.96% 2.39%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (THOUSANDS) $70,923 $67,675
RATIOS TO AVERAGE NET ASSETS
Expenses 0.55%(a) 0.61%(a)
Expenses, excluding indirectly paid
expenses 0.55%(a) 0.60%(a)
Expenses, excluding waivers and
reimbursements 0.66%(a) 0.88%(a)
Net investment income 4.43%(a) 4.50%(a)
PORTFOLIO TURNOVER RATE 26% 17%
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
See Combined Notes to Financial Statements.
19
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Massachusetts Tax Free Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months February 4, 1994
Ended Year Ended March 31, (Commencement of
September 30, 1998 ------------------------------ Class Operations) to
(Unaudited) 1998 1997 1996 1995 March 31, 1994
- -------------------------------------------------------------------------------------------------
CLASS A SHARES
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.76 $ 9.23 $ 9.29 $ 9.19 $ 9.17 $10.00
------ ------ ------ ------ ------ ------
Income from investment
operations
Net investment income 0.22 0.45 0.47 0.51 0.53 0.08
Net gains or losses on
securities
(both realized and
unrealized) 0.18 0.50 (0.03) 0.09 0.02 (0.82)
------ ------ ------ ------ ------ ------
Total from investment
operations 0.40 0.95 0.44 0.60 0.55 (0.74)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.22) (0.42) (0.47) (0.48) (0.53) (0.08)
Distributions (from
capital gains) 0 0 (0.03) (0.02) 0 (0.01)
------ ------ ------ ------ ------ ------
Total distributions (0.22) (0.42) (0.50) (0.50) (0.53) (0.09)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $ 9.94 $ 9.76 $ 9.23 $ 9.29 $ 9.19 $ 9.17
------ ------ ------ ------ ------ ------
TOTAL RETURN (B) 4.01% 10.50% 4.92% 6.64% 6.23% (7.40%)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $2,153 $2,076 $2,063 $1,786 $1,974 $1,472
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.85%(a) 0.77% 0.76% 0.75% 0.46% 0.35%(a)
Expenses, excluding
indirectly paid
expenses 0.85%(a) 0.77% 0.75% 0.74% -- --
Expenses, excluding
waivers and
reimbursements 1.31%(a) 1.26% 1.58% 1.59% 1.93% 3.22%(a)
Net investment income 4.41%(a) 4.64% 5.19% 5.36% 5.90% 5.07%(a)
PORTFOLIO TURNOVER RATE 55% 97% 110% 165% 77% 7%
</TABLE>
<TABLE>
<CAPTION>
Six Months February 4, 1994
Ended Year Ended March 31, (Commencement of
September 30, 1998 ------------------------------ Class Operations) to
(Unaudited) 1998 1997 1996 1995 March 31, 1994
- -------------------------------------------------------------------------------------------------
CLASS B SHARES
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.69 $ 9.17 $ 9.22 $ 9.15 $ 9.19 $10.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.18 0.36 0.41 0.43 0.48 0.08
Net gains or losses on
securities
(both realized and
unrealized) 0.20 0.51 (0.03) 0.09 (0.01) (0.80)
------ ------ ------ ------ ------ ------
Total from investment
operations 0.38 0.87 0.38 0.52 0.47 (0.72)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.18) (0.35) (0.41) (0.43) (0.47) (0.07)
Distributions (from
capital gains) 0 0 (0.02) (0.02) (0.04) (0.02)
------ ------ ------ ------ ------ ------
Total distributions (0.18) (0.35) (0.43) (0.45) (0.51) (0.09)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $ 9.89 $ 9.69 $ 9.17 $ 9.22 $ 9.15 $ 9.19
------ ------ ------ ------ ------ ------
TOTAL RETURN (B) 3.84% 9.60% 4.25% 5.77% 5.41% (7.20%)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $5,918 $6,384 $7,803 $7,274 $6,169 $1,817
RATIOS TO AVERAGE NET
ASSETS
Expenses 1.60%(a) 1.52% 1.51% 1.49% 1.24% 1.10%(a)
Expenses, excluding
indirectly paid
expenses 1.60%(a) 1.52% 1.50% 1.48% -- --
Expenses, excluding
waivers and
reimbursements 2.04%(a) 2.01% 2.35% 2.38% 2.68% 4.60%(a)
Net investment income 3.66%(a) 3.89% 4.45% 4.60% 5.15% 3.23%(a)
PORTFOLIO TURNOVER RATE 55% 97% 110% 165% 77% 7%
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
See Combined Notes to Financial Statements.
20
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Massachusetts Tax Free Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months February 4, 1994
Ended Year Ended March 31, (Commencement of
September 30, 1998 ------------------------------ Class Operations) to
(Unaudited) 1998 1997 1996 1995 March 31, 1994
- -------------------------------------------------------------------------------------------------
CLASS C SHARES
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.68 $ 9.16 $ 9.22 $ 9.14 $ 9.19 $10.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.18 0.36 0.41 0.43 0.48 0.08
Net gains or losses on
securities
(both realized and
unrealized) 0.21 0.52 (0.04) 0.10 (0.02) (0.80)
------ ------ ------ ------ ------ ------
Total from investment
operations 0.39 0.87 0.37 0.53 0.46 (0.72)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.18) (0.35) (0.41) (0.43) (0.47) (0.07)
Distributions (from
capital gains) 0 0 (0.02) (0.02) (0.04) (0.02)
------ ------ ------ ------ ------ ------
Total distributions (0.18) (0.35) (0.43) (0.45) (0.51) (0.09)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $ 9.89 $ 9.68 $ 9.16 $ 9.22 $ 9.14 $ 9.19
------ ------ ------ ------ ------ ------
TOTAL RETURN (B) 3.95% 9.62% 4.14% 5.89% 5.20% (7.21%)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $1,614 $1,639 $2,066 $2,303 $1,971 $ 369
RATIOS TO AVERAGE NET
ASSETS
Expenses 1.60%(a) 1.54% 1.51% 1.49% 1.23% 1.10%(a)
Expenses, excluding
indirectly paid
expenses 1.60%(a) 1.53% 1.50% 1.48% -- --
Expenses, excluding
waivers and
reimbursements 2.05%(a) 2.02% 2.36% 2.39% 2.68% 4.91%(a)
Net investment income 3.66%(a) 3.94% 4.46% 4.60% 5.11% 4.28%(a)
PORTFOLIO TURNOVER RATE 55% 97% 110% 165% 77% 7%
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
See Combined Notes to Financial Statements.
21
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Missouri Tax Free Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Year Ended February 1, 1994
Ended Year Four Months November 30, (Commencement of
September 30, 1998 Ended Ended -------------- Class Operations) to
(Unaudited) March 31, 1998 March 31, 1997* 1996 1995 November 30, 1994
- ----------------------------------------------------------------------------------------------------------------
CLASS A SHARES
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $10.21 $ 9.64 $ 9.86 $ 9.91 $ 8.72 $10.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.24 (c) 0.46 0.16 0.50 0.50 0.44
Net gains or losses on
securities
(both realized and
unrealized) 0.14 0.58 (0.22) (0.06) 1.19 (1.28)
------ ------ ------ ------ ------ ------
Total from investment
operations 0.38 1.04 (0.06) 0.44 1.69 (0.84)
------ ------ ------ ------ ------ ------
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.24) (0.47) (0.16) (0.49) (0.50) (0.44)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $10.35 $10.21 $ 9.64 $ 9.86 $ 9.91 $ 8.72
------ ------ ------ ------ ------ ------
TOTAL RETURN (B) 3.77% 11.01% (0.57%) 4.66% 19.86% (8.55%)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $5,214 $4,897 $2,627 $2,610 $4,848 $3,581
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.86%(a) 0.78% 0.76%(a) 0.76% 0.72% 0.43%(a)
Expenses, excluding
indirectly paid
expenses 0.85%(a) 0.78% 0.75%(a) 0.75% 0.69% --
Expenses, excluding
waivers and
reimbursements 1.17%(a) 1.16% 1.31%(a) 1.22% 1.32% 1.54%(a)
Net investment income 4.67%(a) 4.83% 5.05%(a) 4.93% 5.26% 5.38%(a)
PORTFOLIO TURNOVER RATE 36% 42% 12% 126% 74% 25%
</TABLE>
<TABLE>
<CAPTION>
Six Months Year Ended February 1, 1994
Ended Four Months November 30, (Commencement of
September 30, 1998 Year Ended Ended ---------------- Class Operations) to
(Unaudited) March 31, 1998 March 31, 1997* 1996 1995 November 30, 1994
- ------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.09 $ 9.52 $ 9.74 $ 9.80 $ 8.67 $ 10.00
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.20 (c) 0.40 0.13 0.40 0.44 0.40
Net gains or losses on
securities
(both realized and
unrealized) 0.17 0.56 (0.21) (0.04) 1.15 (1.29)
------- ------- ------- ------- ------- -------
Total from investment
operations 0.37 0.96 (0.08) 0.36 1.59 (0.89)
------- ------- ------- ------- ------- -------
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.20) (0.39) (0.14) (0.42) (0.46) (0.44)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD $ 10.26 $ 10.09 $ 9.52 $ 9.74 $ 9.80 $ 8.67
------- ------- ------- ------- ------- -------
TOTAL RETURN (B) 3.70% 10.26% (0.83%) 3.83% 18.79% (9.06%)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $19,243 $19,552 $20,127 $21,925 $21,231 $12,906
RATIOS TO AVERAGE NET
ASSETS
Expenses 1.61%(a) 1.53% 1.51%(a) 1.52% 1.47% 1.16%(a)
Expenses, excluding
indirectly paid
expenses 1.60%(a) 1.52% 1.50%(a) 1.50% 1.44% --
Expenses, excluding
waivers and
reimbursements 1.92%(a) 1.90% 2.06%(a) 2.00% 2.08% 2.49%(a)
Net investment income 3.93%(a) 4.12% 4.31%(a) 4.20% 4.56% 4.70%(a)
PORTFOLIO TURNOVER RATE 36% 42% 12% 126% 74% 25%
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
(c) Calculation based on average shares outstanding.
* The Fund changed its fiscal year end from November 30 to March 31.
See Combined Notes to Financial Statements.
22
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Missouri Tax Free Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months Year Ended February 1, 1994
Ended Four Months November 30, (Commencement of
September 30, 1998 Year Ended Ended -------------- Class Operations) to
(Unaudited) March 31, 1998 March 31, 1997* 1996 1995 November 30, 1994
- ----------------------------------------------------------------------------------------------------------------
CLASS C SHARES
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $10.08 $ 9.52 $ 9.73 $ 9.79 $ 8.66 $10.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.20 (c) 0.38 0.13 0.39 0.43 0.39
Net gains or losses on
securities
(both realized and
unrealized) 0.18 0.57 (0.20) (0.03) 1.16 (1.29)
------ ------ ------ ------ ------ ------
Total from investment
operations 0.38 0.95 (0.07) 0.36 1.59 (0.90)
------ ------ ------ ------ ------ ------
LESS DIVIDENDS (FROM NET
INVESTMENT INCOME) (0.20) (0.39) (0.14) (0.42) (0.46) (0.44)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD 10.26 $10.08 $ 9.52 $ 9.73 $ 9.79 $ 8.66
------ ------ ------ ------ ------ ------
TOTAL RETURN (B) 3.80% 10.15% (0.73%) 3.83% 18.78% (9.25%)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $ 793 $ 990 $1,306 $1,387 $1,788 $1,045
RATIOS TO AVERAGE NET
ASSETS
Expenses 1.61%(a) 1.52% 1.51%(a) 1.52% 1.46% 1.15%(a)
Expenses, excluding
indirectly paid
expenses 1.60%(a) 1.51% 1.50%(a) 1.50% 1.44% --
Expenses, excluding
waivers and
reimbursements 1.93%(a) 1.90% 2.06%(a) 1.99% 2.07% 2.60%(a)
Net investment income 3.95%(a) 4.10% 4.30%(a) 4.18% 4.56% 4.72%(a)
PORTFOLIO TURNOVER RATE 36% 42% 12% 126% 74% 25%
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
(c) Calculation based on average shares outstanding.
* The Fund changed its fiscal year end from November 30 to March 31.
See Combined Notes to Financial Statements.
23
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
New Jersey Tax Free Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Seven Months Six Months Year
September 30, 1998 Year Ended Ended Ended Ended
(Unaudited) March 31, 1998 March 31, 1997** August 31, 1996* February 29, 1996
- -------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD $ 11.11 $ 10.74 $ 10.75 $ 11.01 $ 10.53
------- ------- ------- ------- -------
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income 0.25 0.53 0.31 0.28 0.56
Net gains or losses on securities
(both realized and
unrealized) 0.31 0.46 (0.01) (0.26) 0.48
------- ------- ------- ------- -------
Total from
investment
operations 0.56 0.99 0.30 0.02 1.04
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.25) (0.53) (0.31) (0.28) (0.56)
Distributions (from
capital gains) 0 (0.09) 0 0 0
------- ------- ------- ------- -------
Total distributions (0.25) (0.62) (0.31) (0.28) (0.56)
------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD $ 11.42 $ 11.11 $ 10.74 $ 10.75 $ 11.01
------- ------- ------- ------- -------
TOTAL RETURN (B) 5.15% 9.34% 2.83% 0.19% 10.08%
RATIOS/SUPPLEMENTAL
DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $33,259 $31,614 $31,434 $32,377 $41,762
RATIOS TO AVERAGE
NET ASSETS
Expenses 0.50%(a) 0.50% 0.44%(a) 0.34%(a) 0.36%
Expenses,
excluding
indirectly paid
expenses 0.50%(a) 0.50% 0.44%(a) -- --
Expenses,
excluding waivers
and
reimbursements 0.90%(a) 1.01% 1.13%(a) 1.11%(a) 1.03%
Net investment
income 4.56%(a) 4.77% 5.02%(a) 5.08%(a) 5.15%
PORTFOLIO TURNOVER
RATE 23% 37% 15% 0% 4%
<CAPTION>
Year Ended
February 28,
-----------------
1995 1994
- -----------------------------------------------------
CLASS A SHARES
- -----------------------------------------------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD $ 10.99 $ 11.01
-------- --------
INCOME FROM
INVESTMENT
OPERATIONS
Net investment
income 0.57 0.60
Net gains or losses on securities
(both realized and
unrealized) (0.46) (0.02)
-------- --------
Total from
investment
operations 0.11 0.58
-------- --------
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.57) (0.60)
Distributions (from
capital gains) 0 0
-------- --------
Total distributions (0.57) (0.60)
-------- --------
NET ASSET VALUE,
END OF PERIOD $ 10.53 $ 10.99
-------- --------
TOTAL RETURN (B) 1.41% 5.30%
RATIOS/SUPPLEMENTAL
DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $34,852 $42,783
RATIOS TO AVERAGE
NET ASSETS
Expenses 0.25% 0.14%
Expenses,
excluding
indirectly paid
expenses -- --
Expenses,
excluding waivers
and
reimbursements 1.04% 1.05%
Net investment
income 5.52% 5.31%
PORTFOLIO TURNOVER
RATE 8% 2%
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
* The Fund changed its fiscal year end from February 28 to August 31.
** The Fund changed its fiscal year end from August 31 to March 31.
See Combined Notes to Financial Statements.
24
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
New Jersey Tax Free Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months January 30, 1996
Ended Seven Months Six Months (Commencement of
September 30, 1998 Year Ended Ended Ended Class Operations) to
(Unaudited) March 31, 1998 March 31, 1997** August 31, 1996* February 29, 1996
- -------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 11.11 $ 10.74 $10.75 $11.01 $11.08
------- ------- ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.20 0.43 0.25 0.24 0.05
Net gains or losses on
securities
(both realized and
unrealized) 0.31 0.46 0 (0.26) (0.07)
------- ------- ------ ------ ------
Total from investment
operations 0.51 0.89 0.25 (0.02) (0.02)
------- ------- ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.20) (0.43) (0.26) (0.24) (0.05)
Distributions (from
capital gains) 0 (0.09) 0 0 0
------- ------- ------ ------ ------
Total distributions (0.20) (0.52) (0.26) (0.24) (0.05)
------- ------- ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $ 11.42 $ 11.11 $10.74 $10.75 $11.01
------- ------- ------ ------ ------
TOTAL RETURN (B) 4.68% 8.35% 2.29% (0.20%) (0.22%)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $17,068 $13,645 $7,847 $2,709 $ 186
RATIOS TO AVERAGE NET
ASSETS
Expenses 1.41%(a) 1.41% 1.36%(a) 1.28%(a) 0.31%(a)
Expenses, excluding
indirectly paid
expenses 1.41%(a) 1.41% 1.36%(a) -- --
Expenses, excluding
waivers and
reimbursements 1.64%(a) 1.76% 1.88%(a) 1.85%(a) 1.66%(a)
Net investment income 3.62%(a) 3.85% 4.07%(a) 4.14%(a) 5.23%(a)
PORTFOLIO TURNOVER RATE 23% 37% 15% 0% 4%
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
* The Fund changed its fiscal year end from February 28 to August 31.
** The Fund changed its fiscal year end from August 31 to March 31.
See Combined Notes to Financial Statements.
25
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
New Jersey Tax Free Income Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months February 8, 1996
Ended Seven Months Six Months (Commencement of
September 30, 1998 Year Ended Ended Ended Class Operations) to
(Unaudited) March 31, 1998 March 31, 1997** August 31, 1996* February 29, 1996
- -------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 11.11 $ 10.74 $10.75 $11.01 $11.14
-------- -------- ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.26 0.54 0.32 0.28 0.03
Net gains or losses on
securities
(both realized and
unrealized) 0.31 0.46 (0.01) (0.26) (0.13)
-------- -------- ------ ------ ------
Total from investment
operations 0.57 1.00 0.31 0.02 (0.10)
-------- -------- ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.26) (0.54) (0.32) (0.28) (0.03)
Distributions (from
capital gains) 0 (0.09) 0 0 0
-------- -------- ------ ------ ------
Total distributions (0.26) (0.63) (0.32) (0.28) (0.03)
-------- -------- ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $ 11.42 $ 11.11 $10.74 $10.75 $11.01
-------- -------- ------ ------ ------
TOTAL RETURN 5.20% 9.44% 2.88% 0.20% (0.87%)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $119,479 $105,331 $9,436 $9,076 $ 18
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.41%(a) 0.41% 0.36%(a) 0.31%(a) 0.31%(a)
Expenses, excluding
indirectly paid
expenses 0.41%(a) 0.41% 0.36%(a) -- --
Expenses, excluding
waivers and
reimbursements 0.65%(a) 0.76% 0.88%(a) 0.87%(a) 0.88%(a)
Net investment income 4.65%(a) 4.79% 5.08%(a) 5.12%(a) 5.28%(a)
PORTFOLIO TURNOVER RATE 23% 37% 15% 0% 4%
</TABLE>
(a) Annualized.
* The Fund changed its fiscal year end from February 28 to August 31.
** The Fund changed its fiscal year end from August 31 to March 31.
See Combined Notes to Financial Statements.
26
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
New York Tax Free Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months February 4, 1994
Ended Year Ended March 31, (Commencement of
September 30, 1998 ---------------------------------- Class Operations) to
(Unaudited) 1998 1997 1996 1995 March 31, 1994
- ------------------------------------------------------------------------------------------------------
CLASS A SHARES
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.12 $ 9.64 $ 9.67 $ 9.44 $ 9.32 $10.00
------- ------- ------- ------- ------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.23 0.48 0.49 0.48 0.52 0.09
Net gains or losses on
securities
(both realized and
unrealized) 0.24 0.52 (0.03) 0.24 0.12 (0.68)
------- ------- ------- ------- ------- ------
Total from investment
operations 0.47 1.00 0.46 0.72 0.64 (0.59)
------- ------- ------- ------- ------- ------
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.23) (0.46) (0.49) (0.49) (0.52) (0.09)
Distributions (from
capital gains) 0 (0.06) 0 0 0 0
------- ------- ------- ------- ------- ------
Total distributions (0.23) (0.52) (0.49) (0.49) (0.52) (0.09)
------- ------- ------- ------- ------- ------
NET ASSET VALUE, END OF
PERIOD $ 10.36 $ 10.12 $ 9.64 $ 9.67 $ 9.44 $ 9.32
------- ------- ------- ------- ------- ------
TOTAL RETURN (B) 4.71% 10.56% 4.87% 7.73% 7.08% (5.91%)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $ 3,622 $ 3,559 $ 3,693 $ 3,947 $ 3,323 $ 680
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.84%(a) 0.77% 0.76% 0.75% 0.50% 0.35%(a)
Expenses, excluding
indirectly paid
expenses 0.84%(a) 0.77% 0.75% 0.74% -- --
Expenses, excluding
waivers and
reimbursements 1.22%(a) 1.01% 1.19% 1.31% 1.59% 4.44%(a)
Net investment income 4.52%(a) 4.78% 5.00% 4.95% 5.48% 3.85%(a)
PORTFOLIO TURNOVER RATE 40% 41% 62% 53% 77% 14%
<CAPTION>
Six Months February 4, 1994
Ended Year Ended March 31, (Commencement of
September 30, 1998 ---------------------------------- Class Operations) to
(Unaudited) 1998 1997 1996 1995 March 31, 1994
- ------------------------------------------------------------------------------------------------------
CLASS B SHARES
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 10.03 $ 9.55 $ 9.59 $ 9.38 $ 9.32 $10.00
------- ------- ------- ------- ------- ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.19 0.40 0.41 0.41 0.47 0.08
Net gains or losses on
securities
(both realized and
unrealized) 0.24 0.52 (0.03) 0.24 0.09 (0.67)
------- ------- ------- ------- ------- ------
Total from investment
operations 0.43 0.92 0.38 0.65 0.56 (0.59)
------- ------- ------- ------- ------- ------
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.19) (0.38) (0.42) (0.44) (0.50) (0.09)
Distributions (from
capital gains) 0 (0.06) 0 0 0 0
------- ------- ------- ------- ------- ------
Total distributions (0.19) (0.44) (0.42) (0.44) (0.50) (0.09)
------- ------- ------- ------- ------- ------
NET ASSET VALUE, END OF
PERIOD $ 10.27 $ 10.03 $ 9.55 $ 9.59 $ 9.38 $ 9.32
------- ------- ------- ------- ------- ------
TOTAL RETURN (B) 4.34% 9.80% 4.03% 7.02% 6.28% (5.91%)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $16,249 $17,245 $19,064 $17,151 $11,907 $2,276
RATIOS TO AVERAGE NET
ASSETS
Expenses 1.59%(a) 1.52% 1.51% 1.50% 1.25% 1.10%(a)
Expenses, excluding
indirectly paid
expenses 1.59%(a) 1.52% 1.50% 1.49% -- --
Expenses, excluding
waivers and
reimbursements 1.97%(a) 1.76% 1.94% 2.05% 2.35% 5.60%(a)
Net investment income 3.77%(a) 4.04% 4.25% 4.19% 4.78% 3.01%(a)
PORTFOLIO TURNOVER RATE 40% 41% 62% 53% 77% 14%
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
See Combined Notes to Financial Statements.
27
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
New York Tax Free Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months February 4, 1994
Ended Year Ended March 31, (Commencement of
September 30, 1998 ------------------------------ Class Operations) to
(Unaudited) 1998 1997 1996 1995 March 31, 1994
- --------------------------------------------------------------------------------------------------------
CLASS C SHARES
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $10.02 $ 9.55 $ 9.58 $ 9.37 $ 9.31 $10.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.19 0.39 0.40 0.41 0.48 0.07
Net gains or losses on
securities
(both realized and unrealized) 0.25 0.52 (0.01) 0.24 0.07 (0.67)
------ ------ ------ ------ ------ ------
Total from investment
operations 0.44 0.91 0.39 0.65 0.55 (0.60)
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net investment
income) (0.19) (0.38) (0.42) (0.44) (0.49) (0.09)
Distributions (from capital
gains) 0 (0.06) 0 0 0 0
------ ------ ------ ------ ------ ------
Total distributions (0.19) (0.44) (0.42) (0.44) (0.49) (0.09)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.27 $10.02 $ 9.55 $ 9.58 $ 9.37 $ 9.31
------ ------ ------ ------ ------ ------
TOTAL RETURN (B) 4.44% 9.69% 4.14% 7.02% 6.18% (6.02%)
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD
(THOUSANDS) $1,421 $1,465 $1,871 $2,296 $2,890 $ 255
RATIOS TO AVERAGE NET ASSETS
Expenses 1.60%(a) 1.52% 1.51% 1.50% 1.26% 1.10%(a)
Expenses, excluding
indirectly paid expenses 1.59%(a) 1.52% 1.50% 1.48% -- --
Expenses, excluding waivers
and reimbursements 1.97%(a) 1.77% 1.93% 2.07% 2.32% 5.13%(a)
Net investment income 3.78%(a) 4.05% 4.25% 4.24% 4.88% 3.71%(a)
PORTFOLIO TURNOVER RATE 40% 41% 62% 53% 77% 14%
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
See Combined Notes to Financial Statements.
28
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Pennsylvania Tax Free Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended March 31,
September 30, 1998 -------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------
CLASS A SHARES
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 11.70 $ 11.14 $ 11.15 $ 10.91 $ 11.01 $ 11.42
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.25 0.55 0.59 0.60 0.61 0.62
Net gains or losses on
securities
(both realized and
unrealized) 0.27 0.55 (0.01) 0.23 (0.09) (0.30)
------- ------- ------- ------- ------- -------
Total from investment
operations 0.52 1.10 0.58 0.83 0.52 0.32
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Distributions (from
capital gains) 0 0 0 0 0 (0.07)
------- ------- ------- ------- ------- -------
Dividends (from net
investment income) (0.26) (0.54) (0.59) (0.59) (0.62) (0.66)
Total distributions (0.26) (0.54) (0.59) (0.59) (0.62) (0.73)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD $ 11.96 $ 11.70 $ 11.14 $ 11.15 $ 10.91 $ 11.01
------- ------- ------- ------- ------- -------
TOTAL RETURN (B) 4.47% 10.02% 5.30% 7.66% 4.91% 2.58%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $29,268 $24,119 $24,535 $28,710 $30,450 $30,560
RATIOS TO AVERAGE NET
ASSETS
Expenses 0.83%(a) 0.76% 0.76% 0.76% 0.75% 0.75%
Expenses, excluding
indirectly paid
expenses 0.83%(a) 0.76% 0.75% 0.75% -- --
Expenses, excluding
waivers and
reimbursements 0.86%(a) 0.96% 0.99% 0.99% 1.05% 1.06%
Net investment income 4.36%(a) 4.79% 5.26% 5.29% 5.65% 5.27%
PORTFOLIO TURNOVER RATE 34% 54% 84% 55% 97% 37%
<CAPTION>
Six Months
Ended Year Ended March 31,
September 30, 1998 -------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------
CLASS B SHARES
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 11.55 $ 10.99 $ 11.00 $ 10.81 $ 10.98 $ 11.42
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.21 0.46 0.49 0.51 0.54 0.56
Net gains or losses on
securities
(both realized and
unrealized) 0.27 0.54 (0.01) 0.22 (0.10) (0.34)
------- ------- ------- ------- ------- -------
Total from investment
operations 0.48 1.00 0.48 0.73 0.44 0.22
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends (from net
investment income) (0.21) (0.44) (0.49) (0.54) (0.61) (0.59)
Distributions (from
capital gains) 0 0 0 0 0 (0.07)
------- ------- ------- ------- ------- -------
Total distributions (0.21) (0.44) (0.49) (0.54) (0.61) (0.66)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD $ 11.82 $ 11.55 $ 10.99 $ 11.00 $ 10.81 $ 10.98
------- ------- ------- ------- ------- -------
TOTAL RETURN (B) 4.19% 9.27% 4.50% 6.84% 4.15% 1.70%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $37,430 $37,036 $37,215 $37,719 $30,657 $21,958
RATIOS TO AVERAGE NET
ASSETS
Expenses 1.58%(a) 1.52% 1.51% 1.48% 1.50% 1.50%
Expenses, excluding
indirectly paid
expenses 1.58%(a) 1.51% 1.50% 1.47% -- --
Expenses, excluding
waivers and
reimbursements 1.61%(a) 1.71% 1.74% 1.74% 1.80% 1.81%
Net investment income 3.60%(a) 4.04% 4.50% 4.55% 4.89% 4.32%
PORTFOLIO TURNOVER RATE 34% 54% 84% 55% 97% 37%
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
See Combined Notes to Financial Statements.
29
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Pennsylvania Tax Free Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended March 31,
September 30, 1998 --------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------
CLASS C SHARES
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $11.59 $11.02 $11.03 $10.83 $11.00 $11.42
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.21 0.45 0.47 0.51 0.53 0.54
Net gains or losses on
securities
(both realized and
unrealized) 0.26 0.57 0.01 0.23 (0.10) (0.32)
------ ------ ------ ------ ------ ------
Total from investment
operations 0.47 1.02 0.48 0.74 0.43 0.22
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Distributions (from
capital gains) 0 0 0 0 0 (0.07)
------ ------ ------ ------ ------ ------
Dividends (from net
investment income) (0.21) (0.45) (0.49) (0.54) (0.60) (0.57)
Total distributions (0.21) (0.45) (0.49) (0.54) (0.60) (0.64)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD $11.85 $11.59 $11.02 $11.03 $10.83 $11.00
------ ------ ------ ------ ------ ------
TOTAL RETURN (B) 4.10% 9.34% 4.49% 6.92% 4.05% 1.78%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF
PERIOD (THOUSANDS) $6,448 $6,414 $6,830 $9,675 $9,559 $9,385
RATIOS TO AVERAGE NET
ASSETS
Expenses 1.58%(a) 1.52% 1.51% 1.48% 1.50% 1.50%
Expenses, excluding
indirectly paid
expenses 1.58%(a) 1.51% 1.50% 1.47% -- --
Expenses, excluding
waivers and
reimbursements 1.61%(a) 1.71% 1.74% 1.74% 1.80% 1.90%
Net investment income 3.60%(a) 4.05% 4.52% 4.57% 4.90% 4.33%
PORTFOLIO TURNOVER RATE 34% 54% 84% 55% 97% 37%
</TABLE>
<TABLE>
<CAPTION>
Six Months November 24, 1997
Ended (Commencement of
September 30, 1998 Class Operations) to
(Unaudited) March 31, 1998
- -------------------------------------------------------------------------------
CLASS Y SHARES
- -------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.70 $ 11.60
-------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.27 0.19
Net gains or losses on securities
(both realized and unrealized) 0.26 0.10
-------- --------
Total from investment operations 0.53 0.29
-------- --------
LESS DIVIDENDS (FROM NET INVESTMENT
INCOME) (0.27) (0.19)
-------- --------
NET ASSET VALUE, END OF PERIOD $ 11.96 $ 11.70
-------- --------
TOTAL RETURN 4.60% 2.82%
RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD (THOUSANDS) $175,594 $152,960
RATIOS TO AVERAGE NET ASSETS
Expenses 0.58%(a) 0.59%(a)
Expenses, excluding indirectly paid
expenses 0.58%(a) 0.58%(a)
Expenses, excluding waivers and
reimbursements 0.61%(a) 0.66%(a)
Net investment income 4.60%(a) 4.75%(a)
PORTFOLIO TURNOVER RATE 34% 54%
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
See Combined Notes to Financial Statements.
30
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
California Tax Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
<C> <S> <C>
MUNICIPAL OBLIGATIONS - 98.0%
CALIFORNIA - 94.4%
$ 500,000 Abag, California,
Finance Authority for Non-Profit Corporations,
Rhoda Haas Goldman Plaza
5.125%, 5/15/15....................................... $ 507,005
1,000,000 Alameda, California,
Multifamily Housing Authority Revenue,
Series A
5.35%, 2/20/31, (GNMA)................................ 1,018,610
500,000 Bakersfield, California,
Certificates of Participation,
Convention Center Expansion Project
5.80%, 4/1/17, (MBIA)................................. 550,100
California State Health
Facilities Finance Authority Revenue:
1,000,000 Catholic Health Systems, Series A
5.75%, 7/1/15, (AMBAC)................................ 1,088,520
1,000,000 Cedars Sinai Center, Series A
5.125%, 8/1/17, (MBIA)................................ 1,021,620
500,000 Enloe Health Systems, Series A
5.00%, 11/15/18, (FSA)................................ 501,605
California State Housing
Finance Agency Revenue:
1,000,000 Home Mortgage, Series A
5.05%, 8/1/17, (AMBAC/FHA/VA)......................... 1,006,880
500,000 Home Mortgage, Series L
6.40%, 8/1/27, (MBIA)................................. 541,870
1,000,000 Multifamily Housing, Series B
6.05%, 8/1/16, (AMBAC/FHA)............................ 1,075,710
1,000,000 Single Family Mortgage,
Series A-1, Class III
5.70%, 8/1/11, (MBIA)................................. 1,066,650
500,000 California State Pollution Control
Financing Authority, Solid Waste
Disposal Revenue,
Browning Ferris Industries Inc.,
Series A
5.80%, 12/1/16........................................ 536,245
California State Public Works Board, Lease Revenue:
California State University Project:
1,000,000 Series A
5.35%, 12/1/15, (AMBAC)............................... 1,059,080
350,000 Series B
5.50%, 6/1/19......................................... 365,179
350,000 Trustees of California State University, Series A
5.25%, 10/1/16........................................ 363,790
California Statewide Communities Development Authority
Revenue:
700,000 Certificates of Participation,
John Muir, Mt. Diablo Health Systems
5.125%, 8/15/17, (MBIA)............................... 715,191
500,000 United Air Lines Inc., Los Angeles
5.625%, 10/1/34....................................... 516,990
500,000 Elk Grove, California,
Special Tax, Unified School District, Community
Facilities, District No. 1
6.50%, 12/1/24, (AMBAC)............................... 625,205
1,000,000 Los Angeles County, California,
Special Tax, Community Facilities District No. 3,
Series A
5.50%, 9/1/14, (FSA)................................. 1,085,050
500,000 Los Angeles, California,
Community Redevelopment Agency, Tax Allocation,
Bunker Hill, Series H
6.50%, 12/1/16, (FSA)................................ 562,710
1,000,000 Los Angeles, California,
Convention & Exhibition Center Authority, Lease
Revenue, Series A
6.00%, 8/15/10, (MBIA/IBC)........................... 1,166,510
500,000 Orange County, California,
Irvine Coast Assessment
Improvement Board, Act 1915,
District 88-1, Series A
5.50%, 9/2/16........................................ 505,575
500,000 Paramount, California,
Unified School District, Series A
5.125%, 9/1/19, (FSA)................................ 511,225
750,000 Poway, California,
Special Tax, Community Facilities District, Parkway
Business Center,
No. 88-1
6.75%, 8/15/15....................................... 830,228
1,000,000 Sacramento County, California,
Airport System Revenue, Series A
6.00%, 7/1/11, (MBIA)................................ 1,138,910
San Francisco, California,
State Building Authority, Lease Revenue, San
Francisco Civic Center Complex, Series A:
1,300,000 5.25%, 12/1/16, (AMBAC).............................. 1,355,510
500,000 6.00%, 12/1/09, (AMBAC).............................. 581,760
1,100,000 San Jose, California,
Redevelopment Tax Allocation Agency, Merged Area
Redevelopment Project
6.00%, 8/1/15, (MBIA)................................ 1,281,786
100,000 San Mateo, California,
Foster City School District,
Capital Appreciation, Series C
(Eff. Yield 5.60%) (b)
0.00%, 9/1/03, (FGIC)................................ 83,094
300,000 Santa Ana, California,
Financing Authority, Lease Revenue, Police
Administration & Holding Facility, Series A
6.25%, 7/1/15, (MBIA)................................ 358,119
1,000,000 South Orange County, California,
Special Tax Revenue,
Public Finance Authority,
Senior Lien, Series A
7.00%, 9/1/09, (MBIA)................................ 1,245,660
Southern California Public Power Authority:
1,000,000 Mead Adelanto Project Revenue,
Series A
5.00%, 7/1/17, (AMBAC)............................... 1,011,480
</TABLE>
31
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
California Tax Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS(continued)
September 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
<C> <S> <C>
MUNICIPAL OBLIGATIONS - CONTINUED
CALIFORNIA - CONTINUED
Southern California Public Power Authority -
continued:
$1,000,000 Transmission Project Revenue,
Southern Transmission
(Eff. Yield 7.30%)(b)
0.00%, 7/1/14, (FGIC)................................ $ 480,840
500,000 Watsonville, California, Solid Waste Revenue
5.50%, 5/15/16, (MBIA).............................. 533,990
-----------
25,292,697
-----------
PUERTO RICO - 3.6%
2,000,000 Commonwealth of Puerto Rico,
General Obligation, Capital Appreciation,
(Eff. Yield 4.85%)(b)
0.00%, 7/1/14, (MBIA/IBC)............................ 961,680
-----------
Total Municipal Obligations
(cost $24,442,991).................................. 26,254,377
-----------
SHORT-TERM MUNICIPAL SECURITIES - 1.0% (COST $255,000)
CALIFORNIA - 1.0%
255,000 Irvine Ranch, California,
Water District Revenue,
Consolidated Bonds
(LOC: Landesbank Hessen)
3.80%, 10/1/10 (a)..................................... 255,000
-----------
TOTAL INVESTMENTS -
(COST $24,697,991)............................. 99.0% 26,509,377
OTHER ASSETS AND
LIABILITIES - NET.............................. 1.0 270,540
----- -----------
NET ASSETS - ................................... 100.0% $26,779,917
===== ===========
</TABLE>
(a) Security is a variable or floating rate instrument with periodic demand
features. The Fund is entitled to full payment of principal and accrued
interest upon surrendering the security to the issuing agent.
(b) Effective yield (calculated at date of purchase) is the annual yield at
which the bond accretes until its maturity date.
SUMMARY OF ABBREVIATIONS:
AMBAC Insured by American Municipal Bond Assurance Corporation
FGIC Insured by Federal Guaranty Insurance Company
FHA Insured by Federal Housing Administration
FSA Insured by Financial Security Assurance Corporation
GNMA Insured by Government National Mortgage Association
IBC Insured Bond Certification
LOC Letter of Credit
MBIA Insured by Municipal Bond Investors Assurance Corporation
VA Guaranteed by Veteran's Authority
See Combined Notes to Financial Statements.
32
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Connecticut Minicipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
<C> <S> <C>
MUNICIPAL OBLIGATIONS - 95.8%
CONNECTICUT - 70.4%
$1,000,000 Bridgeport, Connecticut,
General Obligation,
Bond Anticipation Notes
4.25%, 3/18/99...................................... $ 1,003,190
Bristol, Connecticut,
General Obligation:
130,000 5.00%, 6/15/05....................................... 138,995
355,000 5.25%, 6/15/08....................................... 390,990
275,000 Cheshire, Connecticut,
General Obligation,
5.75%, 8/15/09....................................... 303,556
1,450,000 Connecticut State, Clean Water
Fund Revenue,
6.00%, 3/1/08........................................ 1,675,692
Connecticut State, Development
Authority Revenue:
Church Homes, Inc. Project:
710,000 4.80%, 4/1/01........................................ 723,064
425,000 4.90%, 4/1/02........................................ 436,126
1,000,000 5.80%, 4/1/21........................................ 1,042,330
890,000 Special Revenue,
State General Fund, Series A
5.50%, 5/1/08, (FGIC)................................ 987,713
1,000,000 Water Facilities Revenue,
Bridgeport Hydraulic Co.
6.15%, 4/1/35........................................ 1,103,750
Connecticut State, Health & Educational Facilities
Revenue:
225,000 Choate Rosemary Hall, Series A
6.50%, 7/1/09........................................ 257,171
300,000 Connecticut College, Issue B
5.875%, 7/1/99....................................... 305,724
500,000 Greenwich Hospital Assn., Series A
5.40%, 7/1/09........................................ 548,730
1,000,000 Hospital for Special Care, Series B
5.125%, 7/1/07....................................... 1,053,610
1,000,000 Hospital of St. Raphael, Series H
5.00%, 7/1/06, (AMBAC)............................... 1,070,160
1,000,000 Kent School Corp., Series B
5.50%, 7/1/15........................................ 1,066,810
625,000 Lawrence & Memorial Hospital,
Series D
4.875%, 7/1/07, (MBIA)............................... 655,912
190,000 Mansfield Nursing Center, Series C
4.40%, 11/1/98....................................... 190,154
250,000 New Britain General Hospital,
Series B
5.875%, 7/1/08, (AMBAC).............................. 277,157
Newington Childrens'
Hospital, Series A:
1,000,000 5.90%, 7/1/08, (MBIA)................................ 1,109,900
250,000 6.05%, 7/1/10, (MBIA)................................ 276,658
1,345,000 St. Mary's Hospital Corp., Series E
6.00%, 7/1/08........................................ 1,517,469
1,000,000 Stamford Hospital, Series F
5.25%, 7/1/11........................................ 1,058,610
1,500,000 Suffield Academy, Series A
5.40%, 7/1/27........................................ 1,576,080
Connecticut State, Health & Educational Facilities
Revenue - continued
100,000 Trinity College, Series F
5.00%, 7/1/15, (MBIA)................................. 103,226
Veterans Memorial Medical
Center, Series A:
1,000,000 5.375%, 7/1/14........................................ 1,056,250
2,000,000 5.50%, 7/1/26......................................... 2,104,680
1,500,000 Westminster School, Series A
5.50%, 7/1/16......................................... 1,606,755
1,000,000 Yale New Haven Hospital
5.625%, 7/1/16........................................ 1,074,050
325,000 Connecticut State, Higher Education Loan Authority
Revenue, Series A
7.00%, 11/15/00....................................... 332,696
Connecticut State, Housing Finance Authority Revenue,
Housing Mortgage Finance Project:
Series A:
860,000 7.20%, 11/15/98....................................... 862,382
985,000 7.40%, 11/15/99....................................... 1,003,311
100,000 Series C-1
5.75%, 5/15/05........................................ 106,380
290,000 Connecticut State, Regional School
District #14, General Obligation,
5.70%, 12/15/98....................................... 291,433
Connecticut State, Special Tax Obligation:
Transportation Infrastructure, Series A:
3,000,000 5.50%, 10/1/12, (FGIC)................................ 3,348,930
1,000,000 6.00%, 6/1/06, (FGIC)................................. 1,137,280
500,000 7.125%, 6/1/07........................................ 548,785
1,000,000 Transportation Infrastructure, Series C
6.00%, 10/1/09........................................ 1,160,170
Connecticut State, General Obligation:
Series A:
1,000,000 6.00%, 3/1/06......................................... 1,134,130
3,000,000 6.25%, 5/15/06........................................ 3,456,720
Series B:
1,000,000 5.30%, 9/15/07........................................ 1,099,420
500,000 6.00%, 11/15/02....................................... 544,195
Series C:
400,000 5.70%, 11/15/09....................................... 410,716
200,000 5.875%, 8/15/09....................................... 222,926
1,000,000 Fairfield, Connecticut,
General Obligation,
4.70%, 1/1/11......................................... 1,037,500
525,000 Guilford, Connecticut,
General Obligation,
5.00%, 11/15/07....................................... 555,739
Hamden, Connecticut,
General Obligation:
1,000,000 5.375%, 8/15/10, (MBIA)............................... 1,087,360
1,275,000 5.40%, 8/15/11, (MBIA)................................ 1,384,382
</TABLE>
33
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Connecticut Minicipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS(continued)
September 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
<C> <S> <C>
MUNICIPAL OBLIGATIONS - CONTINUED
CONNECTICUT - CONTINUED
Middletown, Connecticut,
General Obligation:
$ 445,000 5.60%, 4/15/00........................................ $ 458,897
1,000,000 6.00%, 4/15/07........................................ 1,147,380
500,000 Milford, Connecticut,
General Obligation,
5.20%, 1/15/13........................................ 541,515
Montville, Connecticut,
General Obligation:
250,000 5.15%, 12/1/07........................................ 273,480
300,000 5.25%, 12/1/08........................................ 331,326
250,000 Naugatuck, Connecticut,
General Obligation,
5.40%, 3/15/08........................................ 271,033
500,000 New Haven, Connecticut,
General Obligation,
6.50%, 8/1/00, (FSA).................................. 525,125
1,100,000 Newtown, Connecticut,
General Obligation,
5.125%, 6/15/15, (MBIA)............................... 1,142,020
100,000 Pomfret, Connecticut,
General Obligation,
6.50%, 8/1/99......................................... 102,573
385,000 Putnam, Connecticut,
General Obligation,
5.60%, 11/15/00, (MBIA)............................... 401,105
185,000 Stamford, Connecticut,
General Obligation,
6.25%, 1/15/00........................................ 191,490
Wallingford, Connecticut,
General Obligation, Lot B:
170,000 5.50%, 6/15/08........................................ 187,682
170,000 5.60%, 6/15/09........................................ 187,930
250,000 Woodstock, Connecticut,
General Obligation,
6.00%, 2/15/10, (FGIC)................................ 276,712
----------
50,477,235
----------
GUAM - 0.4%
250,000 Guam Power Authority
Revenue, Series A
5.90%, 10/1/08, (AMBAC)............................... 279,353
----------
PUERTO RICO - 23.6%
Commonwealth of Puerto Rico, Aqueduct & Sewer
Authority Revenue:
1,000,000 5.20%, 7/1/08, (MBIA)................................. 1,094,370
1,000,000 6.25%, 7/1/12, (MBIA)................................. 1,196,170
1,000,000 Commonwealth of Puerto Rico,
Electric Power Authority Revenue, Series DD
5.00%, 7/1/28......................................... 999,920
Commonwealth of Puerto Rico,
Highway & Transportation Authority:
1,000,000 Series W
5.50%, 7/1/13, (FSA).................................. 1,120,690
2,000,000 Series Z
6.00%, 7/1/18, (FSA).................................. 2,349,140
15,000 Commonwealth of Puerto Rico,
Housing Finance Authority Revenue, Single Family
Housing Revenue
5.80%, 10/15/00....................................... 15,408
1,000,000 Commonwealth of Puerto Rico,
Municipal Finance Agency
5.00%, 7/1/99......................................... 1,011,810
1,800,000 Commonwealth of Puerto Rico,
Public Buildings Authority
Revenue, Series L
5.50%, 7/1/21......................................... 1,981,080
1,000,000 Commonwealth of Puerto Rico,
Public Buildings Authority
Revenue, Public Education &
Health Facilities, Series M
5.70%, 7/1/09, (AMBAC)................................ 1,137,000
2,000,000 Commonwealth of Puerto Rico,
Public Finance Corp.,
Commonwealth Appropriation,
Series A
5.375%, 6/1/19, (AMBAC)............................... 2,191,100
Commonwealth of Puerto Rico,
General Obligation:
1,000,000 5.375%, 7/1/25........................................ 1,037,730
1,250,000 5.40%, 7/1/25......................................... 1,303,813
205,000 5.50%, 7/1/08, (MBIA)................................. 229,442
1,000,000 6.50%, 7/1/14, (MBIA)................................. 1,229,000
----------
16,896,673
----------
U.S. VIRGIN ISLANDS - 1.4%
1,000,000 Virgin Islands, Public Finance Authority Revenue,
7.00%, 10/1/99........................................ 1,035,750
----------
Total Municipal Obligations
(cost $65,186,791)................................... 68,689,011
----------
</TABLE>
34
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Connecticut Municipal Bond Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS(continued)
September 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
<C> <S> <C> <C>
MUTUAL FUND SHARES - 3.0%
1,232,185 Federated Connecticut
Municipal Cash Trust................................ $ 1,232,185
921,645 Federated Tax Free Obligations Fund.................. 921,645
-----------
Total Mutual Fund Shares
(cost $2,153,830)................................... 2,153,830
-----------
TOTAL INVESTMENTS -
(COST $67,340,621)........................... 98.8% 70,842,841
OTHER ASSETS AND
LIABILITIES - NET............................ 1.2 830,073
----- -----------
NET ASSETS - ................................. 100.0% $71,672,914
===== ===========
</TABLE>
SUMMARY OF ABBREVIATIONS:
AMBAC Insured by American Municipal Bond Assurance Corporation
FGIC Insured by Federal Guaranty Insurance Company
FSA Insured by Financial Security Assurance, Incorporated
MBIA Insured by Municipal Bond Investors Assurance Corporation
See Combined Notes to Financial Statements.
35
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Massachusetts Tax Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1998 (Unaudited)
See Combined Notes to Financial Statements.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
<C> <S> <C>
MUNICIPAL OBLIGATIONS - 99.6%
MASSACHUSETTS - 91.6%
$ 305,000 Gloucester, Massachusetts,
General Obligation
5.25%, 7/15/15, (MBIA)................................. $ 318,511
250,000 Lowell, Massachusetts,
General Obligation, School Improvements
5.50%, 12/15/15, (AMBAC)............................... 266,348
500,000 Massachusetts State College,
Building Authority Project, Series A
7.50%, 5/1/08.......................................... 634,195
260,000 Massachusetts State Education
Loan Authority, Issue E, Series B
6.00%, 1/1/12, (AMBAC)................................. 274,630
Massachusetts State Health & Education Facilities
Authority Revenue:
300,000 Boston College Issue, Series L
5.00%, 6/1/26........................................... 300,342
250,000 Cape Cod Healthcare, Series B
5.45%, 11/15/23......................................... 253,440
295,000 Caregroup Issue, Series A
5.00%, 7/1/18........................................... 296,434
200,000 Jordan Hospital, Series D
5.25%, 10/1/23.......................................... 197,826
100,000 Milford Whitinsville Regional, Series C
5.25%, 7/15/18.......................................... 100,035
300,000 Partners Healthcare Systems, Series A
5.375%, 7/1/24.......................................... 309,870
300,000 Massachusetts State Housing
Finance Agency Revenue,
Single Family Housing, Series 52
6.00%, 6/1/14, (MBIA).................................. 321,981
Massachusetts State Industrial Finance Agency Revenue:
1,100,000 Avon Associates LLC, Series A
5.375%, 4/1/20, (MBIA).................................. 1,121,846
300,000 Belmont Hill School
5.625%, 9/1/20.......................................... 315,234
250,000 Ogden Haverhill Project, Series A
5.60%, 12/1/19.......................................... 251,747
250,000 Wentworth Institute Technology
5.55%, 10/1/13.......................................... 262,435
400,000 Massachusetts State Municipal
Wholesale Electric Company,
Power Supply Systems Revenue,
Series A, INFLOs
7.02%, 7/1/18.......................................... 435,656
400,000 Massachusetts State Port Authority Revenue, Special
Facilities, Boston Fuel Project
5.30%, 7/1/08.......................................... 428,064
Massachusetts State Water Pollution, Abatement Trust:
400,000 New Bedford Loan Program, Series A
5.70%, 2/1/12......................................... 435,944
125,000 South Essex, Sewer District Revenue, Series A
6.375%, 2/1/15........................................ 138,041
250,000 Massachusetts State, General Obligation, Series A
5.25%, 2/1/08........................................ 264,843
500,000 Methuen, Massachusetts,
General Obligation
5.625%, 11/15/15, (FSA).............................. 539,575
250,000 North Andover, Massachusetts,
General Obligation
5.00%, 8/15/18....................................... 251,453
400,000 North Attleborough, Massachusetts, General Obligation
5.25%, 3/1/14........................................ 420,196
400,000 Springfield, Massachusetts,
Municipal Purpose Loan
5.00%, 9/1/12........................................ 414,824
300,000 Worcester, Massachusetts,
Municipal Purpose Loan, Series A
5.25%, 8/1/12, (AMBAC)............................... 316,014
----------
8,869,484
----------
PUERTO RICO - 8.0%
Commonwealth of Puerto Rico:
1,000,000 Capital Appreciation
(Eff. Yield 4.85%)(b)
0.00%, 7/1/14, (MBIA)................................. 480,840
170,000 Highway & Transportation Authority
5.50%, 7/1/15......................................... 184,793
100,000 Public Improvement
5.50%, 7/1/11......................................... 108,874
----------
774,507
----------
Total Municipal Obligations
(cost $9,168,389).................................... 9,643,991
----------
SHORT-TERM MUNICIPAL SECURITIES - 1.0% (COST $95,000)
MASSACHUSETTS - 1.0%
95,000 Massachusetts State Health & Education Facilities
Authority Revenue, Capital Assets Program, Series D
3.90%, 1/1/35 (a).................................... 95,000
----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS -
(COST $9,263,389).............................. 100.6% 9,738,991
OTHER ASSETS AND
LIABILITIES - NET.............................. (0.6) (54,820)
----- ----------
NET ASSETS - ................................... 100.0% $9,684,171
===== ==========
</TABLE>
(a) Security is a variable or floating rate instrument with periodic demand
features. The Fund is entitled to full payment of principal and accrued
interest upon surrendering the security to the issuing agent.
(b) Effective yield (calculated at date of purchase) is the annual yield at
which the bond accretes until its maturity date.
SUMMARY OF ABBREVIATIONS:
AMBAC Insured by American Municipal Bond Assurance Corporation
FSA Insured by Financial Security Assurance, Incorporated
INFLOs Inverse Floating Rate Securities
MBIA Insured by Municipal Bond Investors Assurance Corporation
See Combined Notes to Financial Statements
36
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Missouri Tax Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
<C> <S> <C>
MUNICIPAL OBLIGATIONS - 100.4%
MISSOURI - 88.1%
$ 750,000 Bridge, Missouri,
Industrial Development Authority,
Senior Housing Revenue, The Sarah Community Project
5.80%, 5/1/18.......................................... $ 748,673
1,105,000 Butler County, Missouri,
Public Facilities Authority, Leasehold Revenue, Butler
County Jail Project
6.50%, 12/1/14, (FGIC)................................. 1,231,898
1,000,000 Clay County, Missouri,
Public Building Authority,
Leasehold Revenue
7.00%, 5/15/14, (FGIC)................................. 1,160,280
500,000 Missouri State,
Certificates of Participation, Rehabilitation Center
Project, Series A
6.00%, 11/1/15......................................... 545,620
Missouri State Environmental Improvement & Energy
Resource Authority, Water Pollution Control,
State Revolving Fund:
1,000,000 Series A
5.75%, 1/1/16.......................................... 1,078,560
600,000 Series B
7.20%, 7/1/16.......................................... 699,264
Missouri State Health & Educational Facilities
Authority Revenue:
825,000 Barnes Jewish, Inc., Series A
5.15%, 5/15/10, (AMBAC/TCRS)........................... 884,375
1,000,000 Bethesda Health Group Inc. Project,
Series A
7.50%, 8/15/12......................................... 1,096,200
BJC Health Systems:
Series A
500,000 6.50%, 5/15/20......................................... 494,010
500,000 5.00%, 5/15/28......................................... 574,340
500,000 Children's Mercy Hospital
5.25%, 5/15/18......................................... 507,170
250,000 Jefferson Memorial Hospital
Obligation Group
6.80%, 5/15/25......................................... 275,663
300,000 Lake of Ozarks General Hospital
6.50%, 2/15/21......................................... 331,203
750,000 Maryville University of St. Louis Project
5.75%, 6/15/17......................................... 786,112
1,000,000 Missouri State Higher Education,
Loan Authority, Student Loan Revenue, Series F
6.75%, 2/15/09......................................... 1,073,390
Missouri State Housing Development Commission, Mortgage
Revenue,
Single Family:
235,000 Series A
7.125%, 12/1/14, (GNMA)................................ 262,046
Series B:
455,000 6.25%, 9/1/15, (GNMA/FNMA)............................. 490,458
900,000 6.45%, 9/1/27, (GNMA/FNMA)............................. 974,520
1,000,000 Series B-2
5.50%, 3/1/25, (GNMA/FNMA)............................. 1,020,680
500,000 Series D-2
6.50%, 9/1/29, (GNMA/FNMA)............................. 549,905
Sikeston, Missouri, Electric Revenue:
1,000,000 5.00%, 6/1/22, (MBIA).................................. 1,007,080
800,000 6.00%, 6/1/13, (MBIA).................................. 922,968
500,000 6.00%, 6/1/15, (MBIA).................................. 578,895
400,000 Southeast, Missouri,
State University Systems Facilities
5.00%, 4/1/28.......................................... 400,996
350,000 St. Louis, Missouri,
Airport Revenue, Lambert St. Louis
International Airport, Series B
5.25%, 7/1/27.......................................... 356,738
495,000 St. Louis, Missouri,
Industrial Development Authority,
Health Facilities Revenue,
Mother of Perpetual Help
6.40%, 8/1/35, (GNMA).................................. 552,732
700,000 St. Louis, Missouri,
Land Clearance Redevelopment Authority Revenue, Kiel
Site Lease, Series B
5.125%, 7/1/13, (MBIA)................................. 725,130
950,000 St. Louis, Missouri,
Municipal Finance Corp., Leasehold Revenue
Improvement,
City Justice Center,
Series A
5.75%, 2/15/11, (AMBAC)................................ 1,046,244
500,000 St. Louis, Missouri,
Public Library Building Corp.
4.50%, 9/15/09......................................... 505,240
300,000 Wentzville, Missouri,
School District, Series A
5.60%, 3/1/11, (FSA)................................... 324,915
1,000,000 West Plains, Missouri,
Industrial Development Authority, Hospital Revenue,
Ozarks Medical Center
5.65%, 11/15/22........................................ 1,022,730
----------
22,228,035
----------
</TABLE>
37
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Missouri Tax Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS(continued)
September 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
<C> <S> <C>
MUNICIPAL OBLIGATIONS - CONTINUED
PUERTO RICO - 12.3%
$1,000,000 Commonwealth of Puerto Rico,
Aqueduct & Sewer Authority Revenue
6.25%, 7/1/12........................................ $ 1,174,290
1,600,000 Commonwealth of Puerto Rico,
Capital Appreciation, General Obligation (Eff. Yield
4.85%)(b)
0.00%, 7/1/14, (MBIA/IBC)............................ 769,344
1,000,000 Commonwealth of Puerto Rico,
Highway & Transportation
Authority Revenue,
Series Y
6.25%, 7/1/14........................................ 1,168,480
-----------
3,112,114
-----------
Total Municipal Obligations
(cost $23,558,524).................................. 25,340,149
SHORT-TERM MUNICIPAL SECURITIES - 0.7%
MISSOURI - 0.7%
Kansas City, Missouri,
Industrial Development Hospital Revenue, Insured
Research Health Services Systems:
165,000 4.10%, 4/15/15, (MBIA)(a)............................. 165,000
20,000 4.10%, 12/1/19, (MBIA)(a)............................. 20,000
-----------
185,000
-----------
Total Short-Term Municipal Securities
(cost $185,000)...................................... 185,000
-----------
(COST $23,743,524).................................. 101.1% 25,525,149
OTHER ASSETS AND
LIABILITIES - NET................................... (1.1) (275,854)
----- -----------
NET ASSETS - ........................................ 100.0% $25,249,295
===== ===========
</TABLE>
(a) Security is a variable or floating rate instrument with periodic demand
features. The Fund is entitled to full payment of principal and accrued
interest upon surrendering the security to the issuing agent.
(b) Effective yield (calculated at date of purchase) is the annual yield at
which the bond accretes until its maturity date.
SUMMARY OF ABBREVIATIONS:
AMBAC Insured by American Municipal Bond Assurance Corporation
FGIC Insured by Federal Guaranty Insurance Company
FNMA Insured by Federal National Mortgage Association
FSA Insured by Financial Security Assurance Corporation
GNMA Insured by Government National Mortgage Association
IBC Insured Bond Certification
MBIA Insured by Municipal Bond Investors Assurance Corporation
TCRS Trust Credit Receipts
See Combined Notes to Financial Statements.
38
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
New Jersey Tax Free Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
<C> <S> <C>
MUNICIPAL OBLIGATIONS - 98.5%
DELAWARE - 2.5%
Delaware State, River & Bay
Authority Revenue:
$2,000,000 4.80%, 1/1/07....................................... $ 2,090,780
1,000,000 5.00%, 1/1/17, (MBIA)............................... 1,012,670
1,000,000 5.40%, 1/1/16, (FGIC)............................... 1,062,600
------------
4,166,050
------------
NEW JERSEY - 70.9%
2,000,000 Atlantic City, New Jersey,
Board of Education
5.875%, 12/1/11.................................... 2,305,360
150,000 Bayonne, New Jersey,
General Obligation
5.90%, 5/1/08...................................... 164,329
1,000,000 Bergen County, New Jersey,
General Obligation
5.25%, 10/1/10..................................... 1,079,350
Bergen County, New Jersey,
Utilities Authority, Water Pollution Control
Revenue:
1,000,000 Series A
5.50%, 12/15/06, (FGIC)............................. 1,106,220
500,000 Series B
5.625%, 12/15/04, (FGIC)............................ 548,855
400,000 Bridgewater Township, New Jersey,
General Obligation
6.40%, 7/15/01..................................... 428,688
500,000 Brigantine, New Jersey,
General Obligation
6.35%, 8/1/04, (MBIA).............................. 546,935
Burlington County, New Jersey,
Bridge Commission Systems Revenue:
1,000,000 5.20%, 10/1/06...................................... 1,063,060
500,000 5.30%, 10/1/13...................................... 523,780
80,000 Burlington County, New Jersey,
General Obligation
5.20%, 10/1/05..................................... 84,444
1,270,000 Camden County, New Jersey,
Improvement Authority, Lease Revenue, Series A
5.00%, 12/1/08..................................... 1,355,484
500,000 Camden County, New Jersey,
Lease Authority Revenue
5.625%, 10/1/15, (MBIA)............................ 539,850
1,500,000 Camden County, New Jersey,
Municipal Utilities Authority
5.50%, 7/15/08..................................... 1,664,025
500,000 Camden County, New Jersey,
Property & Equipment Program
5.60%, 12/1/04..................................... 539,090
500,000 Cape May County, New Jersey,
Improvement Authority
5.85%, 4/15/02..................................... 534,685
500,000 Cape May County, New Jersey,
Municipal Utilities Authority,
Sewer Revenue, Series A
5.75%, 1/1/16, (MBIA).............................. 532,385
MUNICIPAL OBLIGATIONS - CONTINUED
NEW JERSEY - CONTINUED
Cherry Hill Township, New Jersey,
General Obligation:
50,000 5.90%, 6/1/05........................................ 54,289
500,000 6.00%, 6/1/06........................................ 543,685
325,000 Essex County, New Jersey,
General Obligation, Lease Revenue
6.65%, 12/1/00, (AMBAC)............................. 345,117
Essex County, New Jersey,
Improvement Authority Revenue:
2,705,000 6.00%, 7/1/18........................................ 3,049,374
500,000 Series A
5.80%, 11/1/07....................................... 561,900
Essex County, New Jersey,
Utilities Authority, Solid Waste:
Series A:
250,000 5.50%, 4/1/11, (FSA)................................. 273,035
250,000 5.60%, 4/1/16, (FSA)................................. 270,528
50,000 Flemington Raritan, New Jersey,
School District, General Obligation
5.70%, 5/1/06....................................... 55,283
500,000 Franklin Township, Somerset County, New Jersey,
School District,
General Obligation
6.20%, 4/1/05....................................... 567,335
500,000 Gloucester County, New Jersey,
General Obligation
6.25%, 2/1/08, (MBIA)............................... 547,990
1,600,000 Gloucester County, New Jersey,
Solid Waste Revenue, Series A
6.20%, 9/1/07....................................... 1,730,496
Gloucester County, New Jersey,
Utilities Authority, Sewer Revenue:
1,300,000 5.45%, 1/1/24, (MBIA)................................ 1,359,618
500,000 6.50%, 1/1/21........................................ 535,235
Gloucester Township, New Jersey,
General Obligation:
500,000 5.45%, 7/15/07, (AMBAC).............................. 552,870
500,000 6.375%, 9/15/04, (AMBAC)............................. 546,315
1,000,000 Gloucester Township, New Jersey,
Municipal Utilities Authority
5.55%, 3/1/09, (AMBAC).............................. 1,113,840
1,000,000 Hamilton Township,
Atlantic County, New Jersey,
School District, General Obligation
5.875%, 12/15/06, (FGIC)............................ 1,093,350
500,000 Hunterdon County, New Jersey,
General Obligation
5.50%, 12/1/02...................................... 536,050
1,500,000 Jersey City, New Jersey,
School District, General Obligation
5.50%, 3/15/16, (MBIA).............................. 1,613,625
225,000 Kearny, New Jersey,
General Obligation
6.30%, 2/1/02....................................... 243,027
400,000 Lakewood Township, New Jersey,
School District, General Obligation
6.25%, 2/15/12, (AMBAC)............................. 481,412
</TABLE>
39
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
New Jersey Tax Free Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS(continued)
September 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
<C> <S> <C>
MUNICIPAL OBLIGATIONS - CONTINUED
NEW JERSEY - CONTINUED
$ 80,000 Manalapan Township, New Jersey,
Fire District No. 1
5.30%, 12/15/99.................................... $ 81,770
40,000 Marlboro Township, New Jersey,
Board of Education
5.50%, 7/15/09..................................... 43,190
500,000 Mercer County, New Jersey,
School District, General Obligation, Series A
5.40%, 12/15/03.................................... 538,185
Middlesex County, New Jersey,
Utilities Authority, Sewer Revenue:
1,150,000 Series A
5.375%, 9/15/15, (FGIC)............................. 1,220,874
70,000 5.125%, 12/1/16..................................... 72,700
Monmouth County, New Jersey, Improvement Authority,
General Obligation:
200,000 6.40%, 8/1/09....................................... 218,328
800,000 6.40%, 8/1/08....................................... 873,312
40,000 Monmouth County, New Jersey,
Improvement Authority Revenue
6.625%, 12/1/05.................................... 42,244
1,000,000 Morris County, New Jersey,
General Obligation
6.00%, 7/15/04..................................... 1,113,890
New Jersey State, Economic Development Authority
Revenue:
50,000 5.40%, 2/1/06....................................... 53,108
785,000 6.00%, 10/1/22...................................... 828,552
55,000 6.125%, 7/1/24...................................... 60,925
7,445,000 (Eff. Yield 5.63%) (a)
0.00%, 7/1/24....................................... 2,181,385
First Mortgage Fellowship Village,
Series A:
530,000 5.20%, 1/1/09....................................... 548,100
585,000 5.30%, 1/1/10....................................... 606,651
2,000,000 5.50%, 1/1/18....................................... 2,018,700
4,500,000 First Mortgage, Franciscan
Oaks Project
5.75%, 10/1/23...................................... 4,541,445
2,300,000 First Mortgage, Keswick Pines
5.70%, 1/1/18....................................... 2,328,359
2,000,000 Liberty State Parking Project
6.80%, 3/15/22...................................... 2,232,520
500,000 New Jersey Performing Arts
Center Project
5.50%, 6/15/13, (AMBAC)............................. 540,955
1,000,000 Public Schools Small Project
Loan Program
5.40%, 8/15/13...................................... 1,055,560
Series A:
300,000 6.60%, 8/1/21....................................... 324,372
4,000,000 (Eff. Yield 5.63%) (a)
0.00%, 7/1/25....................................... 1,116,280
2,605,000 Trenton Office Complex
5.25%, 6/15/12...................................... 2,828,144
MUNICIPAL OBLIGATIONS - CONTINUED
NEW JERSEY - CONTINUED
New Jersey State, Educational Facilities
Authority Revenue:
200,000 4.35%, 7/1/04....................................... 202,734
150,000 4.60%, 7/1/08....................................... 152,946
200,000 5.00%, 7/1/09....................................... 209,480
100,000 5.50%, 7/1/04....................................... 108,704
2,000,000 Higher Education Facilities Trust
Fund, Series A
5.125%, 9/1/10...................................... 2,127,340
1,500,000 Series C
6.375%, 7/1/22...................................... 1,663,755
500,000 Series D
6.20%, 7/1/17, (AMBAC).............................. 546,380
60,000 University of Medicine & Dentistry
5.25%, 12/1/13, (AMBAC)............................ 63,277
New Jersey State, General Obligation:
5,000,000 4.50%, 3/1/18....................................... 4,842,400
110,000 4.75%, 3/1/15....................................... 110,494
500,000 6.25%, 8/1/06....................................... 548,920
3,000,000 Series D
5.75%, 2/15/06...................................... 3,348,510
New Jersey State, Health Care Facilities Financing
Authority Revenue:
50,000 6.00%, 7/1/12....................................... 57,055
500,000 4.00%, 7/1/00....................................... 502,925
50,000 6.00%, 7/1/13....................................... 56,976
AHS Hospital Corporation,
Series A:
2,375,000 5.00%, 7/1/27....................................... 2,390,532
1,345,000 6.00%, 7/1/11, (AMBAC).............................. 1,550,368
1,000,000 Community Medical Center
4.75%, 7/1/19....................................... 990,810
750,000 Hackensack Medical Center
6.625%, 7/1/17, (FGIC).............................. 821,460
500,000 Shore Memorial Hospital
Health Care Systems
5.00%, 7/1/12, (MBIA)............................... 516,175
1,000,000 St. Joseph's Hospital & Medical Center, Series D
5.70%, 7/1/11....................................... 1,095,350
1,000,000 New Jersey State, Higher Education
Student Loan, Series A
5.80%, 6/1/16....................................... 1,100,530
1,500,000 New Jersey State, Highway Authority Revenue
6.25%, 1/1/14....................................... 1,627,770
New Jersey State, Sports &
Exposition Authority Revenue
Series A:
1,000,000 5.375%, 9/1/15...................................... 1,043,970
1,000,000 6.00%, 3/1/21....................................... 1,063,290
300,000 New Jersey State, Transit Corporation, Certificates
of Partnership
6.50%, 10/1/16, (FSA)............................... 349,611
</TABLE>
40
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
New Jersey Tax Free Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS(continued)
September 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS - CONTINUED
NEW JERSEY - CONTINUED
New Jersey State, Transportation Trust Fund
Authority Revenue:
Series A:
$1,000,000 4.75%, 12/15/16..................................... $ 997,520
100,000 5.00%, 6/15/15, (MBIA).............................. 102,260
3,000,000 5.25%, 6/15/08...................................... 3,256,320
1,000,000 6.00%, 6/15/02...................................... 1,077,510
Series B:
3,175,000 5.00%, 6/15/04...................................... 3,352,006
2,750,000 5.25%, 6/15/15...................................... 2,897,235
1,000,000 6.50%, 6/15/10, (MBIA).............................. 1,204,740
New Jersey State, University of
Medicine & Dentistry Revenue:
Series E:
400,000 5.75%, 12/1/21...................................... 424,696
500,000 6.50%, 12/1/18...................................... 550,900
New Jersey State, Wastewater Treatment, Trust Loan
Prerefunded, Series A:
1,970,000 6.00%, 7/1/11....................................... 2,125,748
30,000 Unrefunded Balance
6.00%, 7/1/11....................................... 32,037
75,000 North Bergen Township, New Jersey,
General Obligation
5.00%, 8/15/09...................................... 79,930
1,000,000 North Bergen Township, New Jersey,
Municipal Utility Authority,
Sewer Revenue
5.375%, 12/15/12, (FGIC)............................ 1,060,870
North Brunswick Township, New Jersey, Board of
Education:
100,000 5.00%, 2/1/12....................................... 103,926
150,000 6.30%, 2/1/12....................................... 169,669
24,000 North Brunswick Township, New Jersey,
General Obligation
6.125%, 5/15/04..................................... 26,342
1,000,000 North Hudson, New Jersey,
Sewage Authority, Sewer Revenue
5.50%, 8/1/06, (FGIC)............................... 1,100,700
North Jersey District Water Supply Revenue:
90,000 5.05%, 11/15/11..................................... 94,945
350,000 Wanaque North Project, Series B
6.25%, 11/15/17, (MBIA)............................. 380,054
1,000,000 Northwest Bergen County, New Jersey, Utilities
Authority Systems Revenue
6.00%, 7/15/09, (MBIA).............................. 1,105,210
500,000 Ocean City, New Jersey,
General Obligation
5.90%, 3/15/03, (MBIA).............................. 542,895
75,000 Ocean County, New Jersey,
General Obligation
5.65%, 7/1/03....................................... 81,112
Ocean County, New Jersey,
Utilities Authority:
500,000 Series A
5.75%, 1/1/18....................................... 529,205
Ocean County, New Jersey,
Utilities Authority - continued:
75,000 Wastewater Revenue,
5.125%, 1/1/11...................................... 79,711
300,000 Ocean Township, New Jersey, Municipal Utilities
Authority Revenue
5.20%, 8/1/05, (MBIA)............................... 319,785
Old Bridge Township, New Jersey, Municipal Utilities
Authority Revenue:
285,000 5.75%, 11/1/00, (FGIC).............................. 297,181
500,000 6.25%, 11/1/16, (FGIC).............................. 550,305
500,000 Orange Township, New Jersey, General Obligation
6.60%, 2/1/07, (FSA)................................ 553,430
Passaic County, New Jersey,
General Obligation:
500,000 5.40%, 12/1/02, (MBIA).............................. 532,140
1,295,000 Series A
6.00%, 9/1/07....................................... 1,488,693
500,000 Passaic Valley, New Jersey,
Sewage Commissioners Revenue,
Series D
5.75%, 12/1/13, (AMBAC)............................. 539,335
500,000 Patterson, New Jersey,
General Obligation
6.20%, 2/15/02, (FSA)............................... 537,520
Pleasantville, New Jersey,
School District:
1,050,000 4.75%, 2/15/07...................................... 1,103,245
550,000 5.00%, 2/15/10...................................... 579,854
500,000 Princeton, New Jersey,
Regional School District
6.05%, 4/15/07...................................... 577,055
500,000 Randolph Township, New Jersey,
School District, General Obligation
6.30%, 3/15/06, (FSA)............................... 574,560
500,000 Rutgers State University, College & University
Revenue, Series 1
5.25%, 5/1/12....................................... 524,050
60,000 Secaucus, New Jersey,
Municipal Utilities Authority,
Sewer Revenue,
6.10%, 12/1/10...................................... 67,238
785,000 Somerset County, New Jersey,
General Obligation
5.90%, 8/1/99....................................... 801,870
100,000 South Brunswick Township, New Jersey,
Fire District No. 2
5.95%, 8/1/14....................................... 110,954
50,000 South Monmouth, New Jersey, Regional Sewage
Authority,
5.55%, 1/15/06...................................... 54,572
1,100,000 Sparta Township, New Jersey,
General Obligation
5.80%, 9/1/23, (MBIA)............................... 1,183,941
Stafford, New Jersey,
Municipal Utilities Authority:
500,000 6.20%, 6/1/07....................................... 548,677
375,000 6.25%, 6/1/14....................................... 410,261
41
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
New Jersey Tax Free Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS(continued)
September 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS - CONTINUED
NEW JERSEY - CONTINUED
$ 500,000 Stony Brook, New Jersey,
Regional Sewage Authority Revenue,
Series B
5.45%, 12/1/12...................................... $ 554,330
1,000,000 Sussex County, New Jersey,
Municipal Utilities Authority,
Solid Waste Revenue,
Series B
5.50%, 12/1/13, (MBIA).............................. 1,041,420
1,095,000 Toms River, New Jersey,
Board of Education, School Bond Reserve Act
5.75%, 7/15/19, (FGIC).............................. 1,185,129
500,000 Trenton, New Jersey,
General Obligation
6.55%, 8/15/09, (MBIA).............................. 559,035
200,000 West Morris, New Jersey,
Regional High School District, General Obligation
5.875%, 1/15/01..................................... 209,820
3,655,000 West New York and New Jersey, Municipal Utilities
Authority,
Capital Appreciation Refunding,
(Eff. Yield 6.85%) (a)
0.00%, 12/15/19, (FGIC)............................. 1,339,375
50,000 West Windsor Township, New Jersey,
Parking Authority Revenue,
6.10%, 12/1/12...................................... 55,626
500,000 Willingboro, New Jersey,
Municipal Utilities Authority,
Water & Sewer Revenue
6.30%, 1/1/06, (FGIC)............................... 503,480
500,000 Winslow Township, New Jersey,
General Obligation
6.50%, 10/1/18, (FGIC).............................. 559,585
------------
120,390,232
------------
NEW YORK - 3.9%
Port Authority of New York and New Jersey Revenue:
50,000 5.70%, 8/1/07....................................... 53,562
1,525,000 Consolidated 104 Series
4.75%, 1/15/26...................................... 1,494,042
Port Authority of New York
and New Jersey, Port Airport &
Marine Revenue:
1,000,000 Series 104
5.20%, 7/15/15, (AMBAC)............................. 1,042,850
3,000,000 Series 111
5.00%, 10/1/27...................................... 3,010,080
1,000,000 Port Authority of New York
and New Jersey, Special Obligation,
JFK International Airport Terminal
5.75%, 12/1/25...................................... 1,074,330
------------
6,674,864
------------
PENNSYLVANIA - 3.8%
100,000 Allegheny County, Pennsylvania,
Hospital Development Revenue
4.05%, 3/1/18, VRDN (b)............................. 100,000
475,000 Delaware River, Pennsylvania
Joint Toll Bridge, Commission Revenue
6.25%, 7/1/12....................................... 511,694
2,000,000 Delaware River, Pennsylvania
Port Authority of Pennsylvania and New Jersey
Revenue
5.50%, 1/1/26....................................... 2,121,860
Delaware River, Port Authority of
Pennsylvania and New Jersey Revenue:
2,500,000 5.40%, 1/1/15, (FGIC)............................... 2,656,900
1,000,000 Series 1995
5.40%, 1/1/16, (FGIC)............................... 1,060,430
------------
6,450,884
------------
PUERTO RICO - 15.5%
1,000,000 Commonwealth of Puerto Rico,
Capital Guaranty Certificates
6.50%, 7/1/23....................................... 1,151,470
Commonwealth of Puerto Rico,
Electric Power Authority Revenue:
2,500,000 Series DD
5.00%, 7/1/28....................................... 2,499,800
500,000 Series P
7.00%, 7/1/21....................................... 553,900
Commonwealth of Puerto Rico,
General Obligation:
500,000 5.50%, 7/1/13....................................... 525,020
1,115,000 6.50%, 7/1/08, (MBIA)............................... 1,335,201
1,000,000 6.50%, 7/1/14....................................... 1,229,000
Commonwealth of Puerto Rico, Highway &
Transportation Authority:
4,520,000 Highway Revenue, Series A,
(Eff. Yield 4.50%) (a)
0.00%, 7/1/16....................................... 1,988,258
Series Y:
2,000,000 5.00%, 7/1/36....................................... 2,049,700
1,425,000 6.25%, 7/1/14, (MBIA)............................... 1,711,325
Series Z:
3,000,000 6.00%, 7/1/18, (FSA)................................ 3,523,710
1,000,000 6.25%, 7/1/14, (MBIA)............................... 1,200,930
2,500,000 Commonwealth of Puerto Rico, Industrial Tourist
Educational Facilities, International
American University,
Series A
5.00%, 10/1/11...................................... 2,665,150
3,000,000 Commonwealth of Puerto Rico,
Public Finance Corporation,
Commonwealth Appropriations,
Series A
5.375%, 6/1/19...................................... 3,286,650
250,000 Commonwealth of Puerto Rico,
Public Buildings Authority,
Guaranteed Revenue
6.25%, 7/1/09, (AMBAC).............................. 296,103
2,000,000 Commonwealth of Puerto Rico,
Public Improvement
6.00%, 7/1/16, (MBIA)............................... 2,342,380
------------
26,358,597
------------
42
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
New Jersey Tax Free Income Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS(continued)
September 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS - CONTINUED
U. S. VIRGIN ISLANDS - 1.9%
$3,000,000 Virgin Islands,
Public Finance Authority, Senior Lien, Series A
5.50%, 10/1/13........................................ $ 3,152,190
------------
Total Municipal Obligations
(cost $157,637,130).................................. 167,192,817
------------
MUTUAL FUND SHARES - 0.6%
57,694 Dreyfus Municipal Money
Market Fund............................................. $ 57,694
882,405 Federated Municipal Cash Trust........................... 882,405
61,252 Federated Tax Free Obligations Fund...................... 61,252
------------
Total Mutual Fund Shares
(cost $1,001,351)....................................... 1,001,351
------------
TOTAL INVESTMENTS -
(COST $158,638,481)............................. 99.1% 168,194,168
OTHER ASSETS AND
LIABILITIES - NET............................... 0.9 1,611,541
----- ------------
NET ASSETS - .................................... 100.0% $169,805,709
===== ============
(a) Effective yield (calculated at date of purchase) is the annual yield at
which the bond accretes until its maturity date.
(b) Variable Rate Demand Notes are payable on demand on no more than seven
calendar days notice given by the Fund to the issuer or other parties not
affiliated with the issuer. Interest rates are determined and reset by the
issuer daily, weekly, or monthly depending upon the terms of the security.
Interest rates presented for these securities are those in effect at
September 30, 1998.
SUMMARY OF ABBREVIATIONS:
AMBAC Insured by American Municipal Bond Assurance Corporation
FGIC Insured by Federal Guaranty Insurance Company
FSA Insured by Financial Security Assurance Corporation
MBIA Insured by Municipal Bond Investors Assurance Corporation
VRDN Variable Rate Demand Notes
See Combined Notes to Financial Statements.
43
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
New York Tax Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS - 98.2%
NEW YORK - 90.9%
$ 400,000 Albany County, New York, Public Improvements,
General Obligation, Series B
5.60%, 3/15/14, (FGIC)............................... $ 430,028
465,000 Buffalo, New York, General Obligation, Series E
6.50%, 12/1/22, (AMBAC).............................. 539,288
500,000 Buffalo, New York,
Municipal Water Finance Authority, Water Systems
Revenue, Series B
5.00%, 7/1/18, (FGIC)................................ 504,205
500,000 Cattaraugus County, New York, Industrial Development
Agency, Civic Facilities Revenue, Olean
General Hospital Project, Series A
5.25%, 8/1/23........................................ 504,605
770,000 Erie County, New York, Water Authority Revenue,
Fourth Resolution,
(Eff. Yield 7.30%) (a)
0.00%, 12/1/17, (AMBAC).............................. 194,956
550,000 Hempstead Town, New York, General Obligation, Series
B
5.625%, 2/1/15, (FGIC)............................... 593,296
100,000 Islip, New York,
Resources Recovery Agency Revenue, Series B
7.25%, 7/1/11, (AMBAC)............................... 126,869
Long Island Power Authority, New York, Electric
Systems Revenue, Series A:
500,000 5.00%, 12/1/18, (FSA)................................ 503,745
500,000 5.125%, 12/1/16, (FSA)............................... 510,135
400,000 Metropolitan Transportation Authority, New York,
Service Contractor Revenue, Transportation
Facilities, Series 7
5.625%, 7/1/16....................................... 415,476
695,000 Nassau County, New York, Combined Sewer District,
General Obligation, Series B
6.00%, 5/1/14, (FGIC)................................ 803,976
600,000 New Rochelle, New York, General Obligation, Series B
6.15%, 8/15/17, (MBIA)............................... 660,924
New York City, New York:
100,000 City Industrial Development Agency Revenue, Japan
Airlines
6.00%, 11/1/15....................................... 109,627
400,000 City Municipal Water Finance Authority, Water & Sewer
Systems Revenue, Series A
7.00%, 6/15/15, (FGIC)............................... 432,648
New York State Dormitory Authority Revenue:
500,000 Buena Vida Nursing Home
5.25%, 7/1/28........................................ 506,340
250,000 State University Educational Facilities, Series A
5.875%, 5/15/11, (AMBAC)............................. 286,380
250,000 New York State Environmental Facilities Corporation,
Special Obligation Revenue, Riverbank State Park
5.50%, 4/1/16, (AMBAC)............................... 265,248
875,000 New York State Housing Finance Agency Revenue,
Multifamily Mortgage, Series B
6.25%, 8/15/14, (AMBAC).............................. 951,755
1,000,000 New York State Medical Care Facilities, Finance
Agency Revenue,
Mental Health Services, Series E
6.375%, 8/15/14, (FGIC).............................. 1,124,660
New York State Mortgage Agency Revenue, Homeowner
Mortgage:
1,000,000 Series 71
5.35%, 10/1/18....................................... 1,014,870
525,000 Series 73A
5.30%, 10/1/28....................................... 528,276
700,000 New York State Thruway Authority, Service Contract,
Local Highway & Bridge Revenue
5.75%, 4/1/16........................................ 748,783
New York State Urban Development Corporation Revenue:
Correctional Facilities:
500,000 (Eff. Yield 5.63%) (a)
0.00%, 1/1/10, (AMBAC)............................... 305,950
1,000,000 Series A
6.50%, 1/1/10, (FSA)................................. 1,193,120
500,000 Higher Education Technology Grants
6.00%, 4/1/10, (MBIA)................................ 554,645
Niagara, New York,
Frontier Authority, Airport Revenue,
Greater Buffalo International Airport:
500,000 5.00%, 4/1/28, (FGIC)................................ 497,080
100,000 Series A
6.125%, 4/1/14, (AMBAC).............................. 108,960
Niagara Falls, New York,
Public Improvements, General Obligation:
500,000 7.50%, 3/1/14, (MBIA)................................ 664,740
750,000 7.50%, 3/1/16, (MBIA)................................ 1,001,085
250,000 St. Lawrence County, New York, Industrial
Development,
Civic Facilities Revenue,
St. Lawrence University Project, Series A
5.625%, 7/1/13, (MBIA)............................... 268,808
1,000,000 Suffolk County, New York,
Industrial Development Agency,
Southwest Sewer Systems Revenue
6.00%, 2/1/08, (FGIC)................................ 1,140,500
1,770,000 Triborough Bridge and Tunnel Authority, New York,
Special Obligation, Series A
5.25%, 1/1/14, (FGIC)................................ 1,859,615
-----------
19,350,593
-----------
44
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
New York Tax Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS(continued)
September 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS - CONTINUED
PUERTO RICO - 7.3%
$1,100,000 Commonwealth of Puerto Rico,
Capital Appreciation, General Obligation,
(Eff. Yield 4.85%) (a)
0.00%, 7/1/14, (MBIA).................................. $ 528,924
700,000 Commonwealth of Puerto Rico,
Industrial, Tourist, Educational, Medical &
Environmental Control Facilities, Hospital Auxilio
Mutuo Obligation Group, Series A
6.25%, 7/1/24, (MBIA).................................. 778,911
250,000 Commonwealth of Puerto Rico,
Public Buildings Authority Revenue, Government
Facilities, Series B
5.00%, 7/1/12, (MBIA).................................. 260,872
---------
1,568,707
---------
TOTAL INVESTMENTS -
(COST $19,388,873)............................. 98.2% 20,919,300
OTHER ASSETS AND
LIABILITIES - NET.............................. 1.8 373,008
----- -----------
NET ASSETS - ................................... 100.0% $21,292,308
===== ===========
(a) Effective yield (calculated at date of purchase) is the annual yield
at which the bond accretes until its maturity date.
SUMMARY OF ABBREVIATIONS:
AMBAC Insured by American Municipal Bond Assurance Corporation
FGIC Insured by Federal Guaranty Insurance Company
FSA Insured by Financial Security Assurance Corporation
MBIA Insured by Municipal Bond Investors Assurance Corporation
See Combined Notes to Financial Statements.
45
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Pennsylvania Tax Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
September 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS - 97.8%
DELAWARE - 0.4%
$ 1,000,000 Delaware State, River & Bay Authority Revenue
5.40%, 1/1/16, (FGIC).............................. $ 1,059,110
------------
GEORGIA - 0.0%
100,000 Hapeville, Georgia,
Industrial Development Authority Revenue,
Hapeville Hotel Ltd., Series 1985
(LOC: Deutsche Bank A.G.)
4.10%, 11/1/15, VRDN (d)........................... 100,000
------------
PENNSYLVANIA - 83.5%
280,000 Abington, Pennsylvania, School District, General
Obligation
4.85%, 5/15/18, (FGIC)............................. 279,636
2,000,000 Albert Gallatin, Pennsylvania, Area School
District, General Obligation
5.30%, 9/1/17, (MBIA).............................. 2,067,720
955,000 Allegheny County, Pennsylvania, Finance Authority
Revenue Bond, Single Family Mortgage, Series Y
6.60%, 11/1/14, (GNMA)............................. 1,043,786
60,000 Allegheny County, Pennsylvania, General Obligation
5.875%, 9/15/10, (MBIA)............................ 64,932
2,000,000 Allegheny County, Pennsylvania, Industrial
Development Authority Revenue Bond, USX Corp.,
Series A
6.70%, 12/1/20..................................... 2,214,200
10,000 Allegheny County, Pennsylvania, Redevelopment
Authority Revenue
5.70%, 2/1/07, (FHA)............................... 10,493
130,000 Allegheny County, Pennsylvania, Sanitation
Authority, Sewer Revenue
7.45%, 12/1/09..................................... 133,505
Allegheny County, Pennsylvania, Higher Education
Building Authority Revenue, Duquesne University
Project:
3,350,000 5.50%, 3/1/16, (AMBAC)............................. 3,682,889
1,750,000 5.50%, 3/1/20, (AMBAC)............................. 1,917,913
Allegheny County, Pennsylvania, Hospital
Development Authority Revenue:
1,000,000 Children's Hospital of Pittsburgh
5.375%, 7/1/17, (MBIA)............................. 1,038,250
200,000 Mercy Hospital of Pittsburgh
6.45%, 4/1/01...................................... 212,962
110,000 Montefiore Hospital Association of Western
Pennsylvania
5.80%, 10/1/03..................................... 116,087
2,000,000 Pittsburgh Mercy Health Systems
5.625%, 8/15/18, (AMBAC)........................... 2,224,340
1,000,000 South Hills Health Systems
5.125%, 5/1/23..................................... 996,630
Allegheny County, Pennsylvania, Hospital
Development Authority Revenue:
500,000 Presbyterian University Hospital,
(LOC: PNC Bank, N.A.)
4.05%, 3/1/18...................................... 500,000
University of Pittsburgh Medical Center Health
Systems:
2,500,000 5.25%, 11/1/14, (MBIA)............................. 2,668,200
1,000,000 5.30%, 12/1/12, (MBIA)............................. 1,048,220
1,000,000 6.00%, 4/1/05, (MBIA).............................. 1,110,250
25,000 6.00%, 11/1/12, (MBIA)............................. 27,029
4,325,000 6.00%, 7/1/27, (MBIA).............................. 5,063,494
65,000 Berks County, Pennsylvania,
Municipal Authority Hospital
Revenue, Reading Hospital & Medical Center Project
5.60%, 10/1/06..................................... 70,960
Bradford, Pennsylvania,
Area School District, General Obligation:
1,525,000 5.50%, 10/1/14, (FGIC)............................. 1,639,817
2,000,000 5.75%, 10/1/15, (FGIC)............................. 2,217,980
2,095,000 Bucks County, Pennsylvania,
General Obligation
5.50%, 12/1/10..................................... 2,272,614
1,000,000 Bucks County, Pennsylvania,
Water & Sewer Authority Revenue
6.20%, 12/1/03, (FGIC)............................. 1,068,530
4,485,000 Cambria County, Pennsylvania,
General Obligation, Series A
6.625%, 8/15/12, (FGIC)............................ 5,142,142
60,000 Center City District, Pennsylvania,
Business Improvement Special Assessment
5.60%, 12/1/08, (AMBAC)............................ 65,997
Central Bucks, Pennsylvania,
School District, General Obligation:
175,000 6.60%, 2/1/03...................................... 186,424
1,000,000 Series A
6.90%, 11/15/13.................................... 1,158,730
1,000,000 Central Dauphin, Pennsylvania,
School District, General Obligation
5.90%, 6/1/00...................................... 1,035,610
1,000,000 Council Rock, Pennsylvania,
School District, General Obligation
6.50%, 3/1/02, (FGIC).............................. 1,062,410
Crawford, Pennsylvania,
Central School District,
General Obligation:
1,500,000 5.55%, 2/15/08, (FGIC)............................. 1,617,000
100,000 7.00%, 2/15/05, (FGIC)............................. 116,877
Dauphin County, Pennsylvania,
General Authority Revenue:
15,000,000 Forum Place Office & Parking, Series A
6.00%, 1/15/25..................................... 15,033,600
46
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Pennsylvania Tax Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS(continued)
September 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS - CONTINUED
PENNSYLVANIA - CONTINUED
Dauphin County, Pennsylvania, General
Authority Revenue - continued
$ 6,300,000 Hyatt Regency Hotel & Conference Center
6.00%, 1/1/10..................................... $ 6,381,333
1,000,000 Pinnacle Health Systems Project
5.50%, 5/15/17, (MBIA)............................ 1,051,350
Delaware County, Pennsylvania,
General Obligation:
1,575,000 5.50%, 10/1/15.................................... 1,667,547
170,000 7.10%, 12/1/98.................................... 170,430
6,750,000 Delaware County, Pennsylvania,
Hospital Authority Revenue
5.50%, 1/1/22..................................... 7,046,257
1,350,000 Delaware County, Pennsylvania,
Industrial Development Authority,
Pollution Control Revenue Bond,
Philadelphia Electric Co., Series A
7.375%, 4/1/21.................................... 1,464,588
200,000 Delaware County, Pennsylvania,
University Revenue,
Villanova University
5.40%, 8/1/08..................................... 216,982
Delaware River Port Authority,
Pennsylvania & New Jersey Revenue:
1,000,000 5.30%, 1/1/10, (FGIC)............................. 1,066,400
1,400,000 5.45%, 1/1/12, (FGIC)............................. 1,509,774
15,000 Dover Township, Pennsylvania,
Sewer Authority Revenue
6.25%, 5/1/12..................................... 16,638
500,000 Easton, Pennsylvania,
Area Joint Sewer Authority
5.00%, 12/1/14................................... 511,350
1,485,000 Elizabeth Forward, Pennsylvania,
School District, General Obligation, Series B,
(Eff. Yield 6.70%) (a)
0.00%, 9/1/15, (MBIA)............................ 671,888
500,000 Erie County, Pennsylvania,
Industrial Development Authority, Environmental
Improvement Revenue Bond, International Paper Co.
Project, Series A
7.625%, 11/1/18.................................. 588,030
1,000,000 Fox Chapel, Pennsylvania,
Area School District, General Obligation
5.50%, 8/15/09................................... 1,059,380
1,000,000 Gettysburg, Pennsylvania,
Municipal Authority College Revenue, Gettysburg
College
5.375%, 8/15/13, (MBIA).......................... 1,088,230
1,500,000 Greene County, Pennsylvania,
Industrial Development Authority Revenue,
Monongahela Power Co., Series B
5.10%, 2/1/12.................................... 1,536,975
85,000 Hampden Township, Pennsylvania,
Sewer Authority, Special Obligation Bond
5.35%, 4/1/03.................................... 87,780
Harrisburg, Pennsylvania,
General Obligation:
2,700,000 Series D, (Eff. Yield 5.35%) (a)
0.00%, 3/15/13, (AMBAC).............................. 1,384,614
2,505,000 Series F, (Eff. Yield 5.35%) (a)
0.00%, 3/15/13, (AMBAC).............................. 1,284,614
1,000,000 Harrisburg, Pennsylvania,
Lease Revenue
6.25%, 6/1/01, (FSA)................................ 1,063,090
2,000,000 Hempfield, Pennsylvania,
School District, General Obligation
5.30%, 10/15/14, (FGIC)............................. 2,065,120
2,500,000 Indiana County, Pennsylvania,
Industrial Development Authority, Pollution Control
Revenue, Pennsylvania Electric Co. Project
5.35%, 11/1/10, (MBIA).............................. 2,732,125
500,000 Keystone Oaks, Pennsylvania,
School District, General Obligation
5.00%, 9/1/11....................................... 522,415
435,000 Lancaster, Pennsylvania,
Higher Education Authority, College Revenue,
Franklin & Marshall College (SPA: Chase Manhattan
Bank)
4.10%, 4/15/27, VRDN (d) ........................... 435,000
2,635,000 Latrobe, Pennsylvania,
Industrial Development Authority, College Revenue,
St. Vincent College Project
5.375%, 5/1/18...................................... 2,666,725
Lehigh County, Pennsylvania,
General Purpose Revenue:
1,000,000 Good Shepherd Rehabilitation Hospital
7.50%, 11/15/21...................................... 1,125,340
1,250,000 Lehigh Valley Hospital, Series A
7.00%, 7/1/16, (MBIA)................................ 1,582,937
Lower Merion Township, Pennsylvania,
General Obligation:
100,000 5.625%, 8/1/05....................................... 105,882
1,000,000 5.75%, 8/1/09........................................ 1,058,490
500,000 Lower Merion Township, Pennsylvania,
School District, General Obligation
4.75%, 5/15/01...................................... 513,815
100,000 Manheim, Pennsylvania,
Central School District, General Obligation
6.10%, 5/15/14, (FGIC).............................. 108,759
1,780,000 Mars, Pennsylvania,
Area School District, General Obligation,
(Eff. Yield 6.60%) (a)
0.00%, 9/1/26, (FGIC)............................... 450,109
McKeesport, Pennsylvania,
Area School District, General Obligation, Capital
Appreciation, Series B:
1,200,000 (Eff. Yield 6.30%) (a)
0.00%, 10/1/17, (FSA)................................ 485,136
1,440,000 (Eff. Yield 6.30%) (a)
0.00%, 10/1/18, (FSA)................................ 551,808
47
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Pennsylvania Tax Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS(continued)
September 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS - CONTINUED
PENNSYLVANIA - CONTINUED
$ 4,000,000 McKeesport, Pennsylvania,
Area School District, General Obligation, Series A
6.00%, 10/1/25, (FSA)............................. $ 4,527,840
150,000 Millcreek Township, Pennsylvania,
Sewer Authority Revenue
6.00%, 11/1/06.................................... 154,229
1,305,000 Mon Valley, Pennsylvania,
Sewer Authority Revenue
6.55%, 11/1/19, (MBIA)............................ 1,464,706
1,340,000 Montgomery County, Pennsylvania,
General Obligation, Series B
5.35%, 10/15/16................................... 1,405,124
Montgomery County, Pennsylvania,
Higher Education & Health Authority:
Abington Memorial Hospital, Series A:
2,000,000 5.125%, 6/1/14, (AMBAC)............................ 2,051,500
1,000,000 6.40%, 6/1/02, (AMBAC)............................. 1,067,630
1,025,000 College Revenue, County Community College Project
6.75%, 11/1/02..................................... 1,086,777
950,000 Montgomery County, Pennsylvania,
Industrial Development Authority, Pollution Control
Revenue Bond, Philadelphia Electric Co.
7.60%, 4/1/21..................................... 1,035,614
500,000 Mount Pleasant, Pennsylvania,
Business District Authority, Hospital Revenue, Frick
Hospital
5.75%, 12/1/27.................................... 515,975
500,000 Neshaminy, Pennsylvania,
School District, General Obligation
5.25%, 2/15/07, (FGIC)............................ 541,545
1,280,000 North Penn, Pennsylvania,
School District, General Obligation
5.50%, 3/1/05..................................... 1,390,426
1,000,000 North Penn, Pennsylvania,
Water Authority Revenue
6.00%, 11/1/07, (FGIC)............................ 1,078,570
100,000 North Wales, Pennsylvania,
Water Authority Revenue
6.75%, 11/1/10, (FGIC)............................ 115,566
2,000,000 Owen J. Roberts School District, Pennsylvania,
General Obligation, Series A
5.375%, 5/15/18, (MBIA)........................... 2,070,580
Parkland, Pennsylvania,
School District, General Obligation:
4,110,000 5.375%, 9/1/14..................................... 4,485,572
1,325,000 5.75%, 9/1/14, (MBIA).............................. 1,430,947
1,000,000 Penn Hills, Pennsylvania,
General Obligation
5.60%, 12/1/05, (AMBAC)........................... 1,068,540
1,000,000 Pennridge, Pennsylvania,
School District, General Obligation
6.15%, 2/15/03, (AMBAC)........................... 1,072,790
Pennsylvania State, Convention Center Authority
Revenue, Series A:
1,050,000 6.00%, 9/1/19, (FGIC).............................. 1,194,186
1,000,000 6.60%, 9/1/00, (FGIC).............................. 1,053,790
75,000 6.70%, 9/1/16, (FGIC).............................. 91,625
1,000,000 6.75%, 9/1/19, (MBIA).............................. 1,145,360
2,000,000 (Eff. Yield 6.95%) (a)
0.00%, 9/1/08, (FGIC).............................. 1,319,940
5,000,000 Pennsylvania State, Finance Authority Revenue,
Municipal Capital Imports Program
6.60%, 11/1/09.................................... 5,537,550
Pennsylvania State, General Obligation:
350,000 5.00%, 9/1/12...................................... 360,377
25,000 6.00%, 7/1/05...................................... 28,005
60,000 6.25%, 7/1/11...................................... 71,044
Pennsylvania State, Higher Education Facilities
Authority Revenue:
500,000 5.00%, 12/15/16.................................... 508,570
2,200,000 Drexel University
5.375%, 5/1/16, (MBIA)............................. 2,300,210
1,095,000 Lasalle University
5.25%, 5/1/13, (MBIA).............................. 1,175,811
485,000 Series A
6.625%, 8/15/09, (MBIA)............................ 536,585
Thomas Jefferson University:
285,000 5.15%, 11/1/10, (MBIA)............................. 293,484
1,115,000 6.625%, 8/15/09.................................... 1,244,206
150,000 Series A
6.00%, 7/1/19, (MBIA).............................. 154,364
100,000 Pennsylvania State, Higher Education Facilities
Authority, College & University Revenue,
University of Pennsylvania, Series B
5.85%, 9/1/13..................................... 109,171
Pennsylvania State, Higher Education Facilities
Authority, Health Services Revenue:
400,000 Allegheny Delaware Valley Obligation
5.50%, 11/15/08.................................... 411,964
University of Pennsylvania:
1,000,000 6.00%, 1/1/07...................................... 1,120,760
100,000 Series A
6.00%, 1/1/10...................................... 109,366
Series B:
500,000 5.25%, 1/1/07...................................... 535,520
150,000 5.70%, 1/1/11...................................... 161,904
Pennsylvania State, Housing Finance Authority
Revenue, Single Family Mortgage:
300,000 6.40%, 7/1/12, (FNMA).............................. 321,567
750,000 Series 33
6.90%, 4/1/17...................................... 807,975
2,000,000 Series 34A
6.85%, 4/1/16, (FHA)............................... 2,132,200
48
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Pennsylvania Tax Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS(continued)
September 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS - CONTINUED
PENNSYLVANIA - CONTINUED
Pennsylvania State, Housing Finance Authority
Revenue, Single Family Mortgage - continued
$ 750,000 Series 40
6.80%, 10/1/15....................................... $ 815,348
1,840,000 Series 50A
6.00%, 10/1/13....................................... 1,982,986
Pennsylvania State, Industrial Development Authority
Revenue:
250,000 5.80%, 7/1/09........................................ 282,803
2,000,000 6.00%, 7/1/06........................................ 2,250,000
600,000 6.00%, 7/1/08........................................ 683,772
305,000 6.00%, 7/1/09........................................ 348,252
2,000,000 7.00%, 1/1/06........................................ 2,360,200
1,000,000 7.00%, 7/1/06........................................ 1,190,780
975,000 Series 1994
6.00%, 1/1/12........................................ 1,064,875
400,000 Pennsylvania State, Infrastructure Revenue
6.00%, 9/1/04....................................... 443,188
1,650,000 Pennsylvania State, Intergovernmental Cooperation
Authority, Special Tax Revenue, Philadelphia Funding
Program
6.75%, 6/15/21, (FGIC).............................. 1,924,593
Pennsylvania State, Turnpike Commission Revenue:
6,750,000 4.75%, 12/1/27....................................... 6,574,635
1,000,000 Series L
6.45%, 6/1/03, (AMBAC)............................... 1,082,520
3,000,000 Series M
6.50%, 12/1/13, (FGIC)............................... 3,282,420
Series P:
150,000 5.10%, 12/1/99....................................... 153,115
75,000 5.80%, 12/1/06....................................... 80,846
Pennsylvania State, University Revenue:
185,000 6.15%, 3/1/05........................................ 201,019
1,000,000 6.25%, 3/1/11........................................ 1,076,430
1,000,000 6.60%, 7/1/02........................................ 1,090,150
Philadelphia, Pennsylvania,
Airport Parking Authority Revenue:
400,000 5.75%, 9/1/07........................................ 448,944
1,000,000 5.75%, 9/1/08, (AMBAC)............................... 1,124,120
Philadelphia, Pennsylvania,
Hospital & Higher Education Facilities Authority,
Hospital Revenue:
500,000 Albert Einstein Medical Center
7.625%, 4/1/11....................................... 520,240
500,000 Temple University Hospital
5.50%, 11/15/15...................................... 514,595
500,000 Philadelphia, Pennsylvania,
Industrial Development Authority, Industrial &
Commercial Revenue, Girard Estate Coal Mining
Project
5.25%, 11/15/09..................................... 528,080
$ 4,000,000 Philadelphia, Pennsylvania,
Water & Wastewater Revenue
6.25%, 8/1/12, (MBIA)............................... 4,732,080
25,000 Pittsburgh, Pennsylvania,
General Obligation, Series D
6.125%, 9/1/17, (AMBAC)............................. 27,522
1,000,000 Pleasant Valley, Pennsylvania,
School District, General Obligation
5.60%, 11/15/14, (FGIC)............................. 1,068,140
1,000,000 Pocono Mountain, Pennsylvania,
School District, General Obligation, Series AA
6.10%, 10/1/03, (AMBAC)............................. 1,073,810
Scranton-Lackwanna, Pennsylvania,
Health & Welfare Authority Revenue:
250,000 Mercy Health Project, Series B
5.00%, 1/1/06, (MBIA)................................ 263,962
150,000 University of Scranton Project, Series A
6.15%, 3/1/03........................................ 162,084
Seneca Valley, Pennsylvania,
School District, General Obligation:
105,000 5.85%, 2/15/15, (FGIC)............................... 116,882
100,000 Series A
4.65%, 7/1/09, (FGIC)................................ 103,032
4,000,000 South Fork, Pennsylvania,
Municipal Hospital Authority Revenue, Conemaugh
Valley Memorial Hospital, Series B
5.375%, 7/1/22, (MBIA).............................. 4,148,280
1,500,000 Southeastern Pennsylvania,
Transportation Authority, Special Revenue, Series A
5.625%, 3/1/07, (FGIC).............................. 1,639,125
1,000,000 Tredyffrin Township, Pennsylvania,
General Obligation
5.45%, 11/15/13..................................... 1,059,870
1,000,000 Unionville-Chadds Ford, Pennsylvania,
School District, General Obligation
5.80%, 6/1/13....................................... 1,080,120
University of Pittsburgh, Pennsylvania,
University Revenue:
40,000 Series A
6.125%, 6/1/21, (MBIA)............................... 43,043
5,000 Series B
5.90%, 6/1/03, (MBIA)................................ 5,428
540,000 Upper Merion, Pennsylvania,
Area School District, General Obligation
5.00%, 7/15/12...................................... 556,141
Upper Merion, Pennsylvania,
Municipal Utilities Authority, Sewer Revenue:
1,000,000 6.00%, 8/15/12....................................... 1,067,120
2,325,000 6.00%, 8/15/16....................................... 2,461,245
1,000,000 Wallenpaupack, Pennsylvania,
Area School District, General Obligation, Series B
6.00%, 9/1/03, (FGIC)............................... 1,040,590
49
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Pennsylvania Tax Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS(continued)
September 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
MUNICIPAL OBLIGATIONS - CONTINUED
PENNSYLVANIA - CONTINUED
$ 1,000,000 West Mifflin, Pennsylvania,
Sewer Municipal Authority Revenue, Sewer Revenue
5.70%, 8/1/15, (FGIC)............................. $ 1,109,610
1,000,000 York County, Pennsylvania,
General Obligation
6.00%, 10/1/04, (FGIC)............................ 1,067,210
2,000,000 York County, Pennsylvania,
Hospital Authority Revenue, York Hospital
5.25%, 7/1/17, (AMBAC)............................ 2,062,000
75,000 York, Pennsylvania,
City School District, General Obligation
5.60%, 3/1/07, (FGIC)............................. 79,644
------------
207,660,452
------------
PUERTO RICO - 11.8%
Commonwealth of Puerto Rico, Highway &
Transportation Authority Revenue:
9,000,000 Series A (Eff. Yield 5.00%) (a)
0.00%, 7/1/16, (AMBAC)............................. 3,943,350
1,000,000 Series W
5.50%, 7/1/13, (MBIA).............................. 1,113,590
100,000 Series Y
5.25%, 7/1/15, (FSA)............................... 105,326
5,000,000 Series Z
6.00%, 7/1/18, (FSA)............................... 5,909,400
3,250,000 Commonwealth of Puerto Rico,
Industrial, Tourist, Educational, Medical &
Environmental Control Facilities
6.25%, 7/1/24, (MBIA)............................. 3,616,373
3,950,000 Commonwealth of Puerto Rico,
Linked Bond Payment Obligation,
Series D
7.00%, 7/1/10, (MBIA)(c) ......................... 4,969,100
1,000,000 Commonwealth of Puerto Rico,
Municipal Finance Agency Revenue, Series A
6.00%, 7/1/11, (FSA).............................. 1,157,680
$ 1,800,000 Commonwealth of Puerto
Rico, Public Buildings Authority Revenue,
Guaranteed Public Education & Health Facilities,
Series M 5.70%, 7/1/09............................ 1,994,544
5,000,000 Commonwealth of Puerto
Rico, Public Finance Corp. Revenue, Series A
5.375%, 6/1/19, (AMBAC)........................... 5,485,400
1,000,000 University of Puerto Rico, University Revenue,
Series N 6.25%, 6/1/07, (MBIA).................... 1,165,120
------------
29,459,883
------------
U. S. VIRGIN ISLANDS - 2.1%
5,000,000 Virgin Islands, Public
Finance Authority Revenue, Series A
5.50%, 10/1/18.................................... 5,121,800
------------
Total Municipal Obligations
(cost $230,923,557)............................... 243,401,245
------------
SHORT-TERM MUNICIPAL SECURITIES - 0.9%
PENNSYLVANIA - 0.9%
2,140,000 Philadelphia, Pennsylvania, Hospital & Higher
Education Facilities Authority, Hospital
Revenue, Children's Hospital of
Philadelphia (SPA: Morgan Guaranty)
4.15%, 3/1/27 (b)................................. 2,140,000
------------
- --------------------------------------------------------------------------------
Shares
- --------------------------------------------------------------------------------
MUTUAL FUND SHARES - 0.5%
351,437 Federated Tax Free Obligations Fund.............. 351,437
841,236 Pennsylvania Municipal Cash Trust,
Institutional Service Shares.................... 841,236
-----------
Total Mutual Fund Shares
(cost $1,192,673)............................... 1,192,673
-----------
TOTAL INVESTMENTS -
(COST $234,256,230)............................. 99.2% 246,733,918
OTHER ASSETS AND
LIABILITIES - NET............................... 0.8 2,006,492
----- ------------
NET ASSETS - .................................... 100.0% $248,740,410
===== ============
50
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
Pennsylvania Tax Free Fund
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS(continued)
September 30, 1998 (Unaudited)
(a) Effective yield (calculated at date of purchase) is the annual yield at
which the bond accretes until its maturity date.
(b) Security is a variable or floating rate instrument with periodic demand
features. The Fund is entitled to full payment of principal and accrued in-
terest upon surrendering the security to the issuing agent.
(c) At the discretion of the portfolio manager, these securities may be sepa-
rated into securities with interest or principal payments that are linked
to another rate or index and therefore would be considered derivative secu-
rities.
(d) Variable Rate Demand Notes are payable on demand on no more than seven cal-
endar days notice given by the Fund to the issuer or other parties not af-
filiated with the issuer. Interest rates are determined and reset by the
issuer daily, weekly, or monthly depending upon the terms of the security.
Interest rates presented for these securities are those in effect at Sep-
tember 30, 1998.
SUMMARY OF ABBREVIATIONS:
AMBAC Insured by American Municipal Bond Assurance Corporation
FGIC Insured by Federal Guaranty Insurance Company
FHA Insured by Federal Housing Authority
FNMA Federal National Mortgage Association
FSA Insured by Financial Security Assurance, Incorporated
GNMA Insured by Government National Mortgage Association
LOC Letter of Credit
MBIA Insured by Municipal Bond Investors Assurance Corporation
SPA Security Purchase Agreement
VRDN Variable Rate Demand Notes
See Combined Notes to Financial Statements.
51
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
State Municipal Bond Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
CALIFORNIA CONNECTICUT MASSACHUSETTS MISSOURI NEW JERSEY NEW YORK PENNSYLVANIA
FUND FUND FUND FUND FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments at market
value (identified
cost - $24,697,991,
$67,340,621,
$9,263,389,
$23,743,524,
$158,638,481,
$19,388,873 and
$234,256,230,
respectively)......... $26,509,377 $70,842,841 $9,738,991 $25,525,149 $168,194,168 $20,919,300 $246,733,918
Cash................... 1,645 0 4,551 3,030 0 177,662 3
Receivable for
investments sold...... 750,574 0 558,428 0 0 0 0
Interest receivable.... 310,170 1,062,407 127,675 328,156 2,199,485 253,914 3,458,110
Receivable for Fund
shares sold........... 0 0 5,888 8,002 74,933 1,523 77,126
Prepaid expenses and
other assets.......... 8,567 35,491 3,819 4,602 5,394 2,706 45,112
- ---------------------------------------------------------------------------------------------------------------------
Total assets........... 27,580,333 71,940,739 10,439,352 25,868,939 170,473,980 21,355,105 250,314,269
- ---------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments
purchased............. 721,040 0 735,683 487,165 0 0 0
Dividends payable...... 52,692 254,361 7,395 58,260 534,660 27,986 880,129
Due to related
parties............... 12,396 6,723 130 6,760 44,990 9,840 106,835
Distribution fee
payable............... 9,889 102 2,537 7,606 4,117 6,958 18,521
Payable for Fund shares
redeemed.............. 1,000 0 1,341 0 33,926 0 537,903
Accrued Trustees' fees
and expenses.......... 664 132 607 301 5,782 246 1,815
Accrued expenses and
other liabilities..... 2,735 6,507 7,488 59,552 44,796 17,767 28,656
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities...... 800,416 267,825 755,181 619,644 668,271 62,797 1,573,859
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS.............. $26,779,917 $71,672,914 $9,684,171 $25,249,295 $169,805,709 $21,292,308 $248,740,410
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS REPRESENTED
BY
Paid-in capital........ $24,690,760 $67,513,472 $8,993,266 $23,047,535 $159,322,556 $19,071,122 $233,667,613
Undistributed net
investment income..... (52,878) 0 (6,750) (46,006) 1,870 (14,383) (106,787)
Accumulated net
realized gains and
losses on investments
and futures
contracts............. 330,649 657,222 222,053 466,141 925,596 705,142 2,701,896
Net unrealized gains
and losses on
investments .......... 1,811,386 3,502,220 475,602 1,781,625 9,555,687 1,530,427 12,477,688
- ---------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS....... $26,779,917 $71,672,914 $9,684,171 $25,249,295 $169,805,709 $21,292,308 $248,740,410
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Class A................ $ 6,899,128 $ 314,466 $2,152,596 $ 5,214,117 $ 33,258,665 $ 3,622,250 $ 29,268,068
Class B................ 18,673,581 435,064 5,917,889 19,242,661 17,067,734 16,249,094 37,430,158
Class C................ 1,207,208 0 1,613,686 792,517 0 1,420,964 6,448,239
Class Y................ 0 70,923,384 0 0 119,479,310 0 175,593,945
- ---------------------------------------------------------------------------------------------------------------------
$26,779,917 $71,672,914 $9,684,171 $25,249,295 $169,805,709 $21,292,308 $248,740,410
- ---------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING
Class A................ 673,220 48,092 216,585 503,716 2,913,294 349,667 2,447,994
Class B................ 1,829,373 66,539 598,482 1,875,380 1,495,072 1,582,481 3,167,966
Class C................ 118,385 0 163,192 77,238 0 138,386 544,369
Class Y................ 0 10,846,398 0 0 10,465,934 0 14,686,761
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER
SHARE
Class A................ $ 10.25 $ 6.54 $ 9.94 $ 10.35 $ 11.42 $ 10.36 $ 11.96
- ---------------------------------------------------------------------------------------------------------------------
Class A -- Offering
price (based on sales
charge of 4.75%)...... $ 10.76 $ 6.87 $ 10.44 $ 10.87 $ 11.99 $ 10.88 $ 12.56
- ---------------------------------------------------------------------------------------------------------------------
Class B................ $ 10.21 $ 6.54 $ 9.89 $ 10.26 $ 11.42 $ 10.27 $ 11.82
- ---------------------------------------------------------------------------------------------------------------------
Class C................ $ 10.20 -- $ 9.89 $ 10.26 -- $ 10.27 $ 11.85
- ---------------------------------------------------------------------------------------------------------------------
Class Y................ -- $ 6.54 -- -- $ 11.42 -- $ 11.96
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
52
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
State Municipal Bond Funds
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
Six Months Ended September 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
CALIFORNIA CONNECTICUT MASSACHUSETTS MISSOURI NEW JERSEY NEW YORK PENNSYLVANIA
FUND FUND FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest............... $ 697,552 $1,718,629 $253,188 $695,682 $4,006,143 $577,163 $ 5,974,655
- -------------------------------------------------------------------------------------------------------------
EXPENSES
Distribution Plan
expenses.............. 108,913 2,146 40,353 106,775 116,471 93,905 249,396
Management fee......... 73,596 207,287 26,459 69,199 396,254 59,135 548,923
Professional fees...... 8,645 9,534 9,237 10,702 14,211 8,123 10,282
Transfer agent fees.... 4,194 382 4,206 9,891 10,871 9,517 34,793
Administrative services
fees.................. 1,941 9,329 632 1,492 21,723 1,523 16,742
Shareholder reports
expense............... 505 888 4,377 4,556 29,666 19,917 24,687
Trustees' fees and
expenses.............. 260 306 309 301 863 260 3,329
Custodian fees......... 237 1,197 1,436 4,377 24,455 3,262 36,790
Other.................. 1,903 709 3,567 15,440 16,291 2,810 26,091
Fee waivers............ (1,170) (40,631) (21,321) (39,707) (214,726) (40,585) (28,776)
- -------------------------------------------------------------------------------------------------------------
Total expenses......... 199,024 191,147 69,255 183,026 416,079 157,867 922,257
Less: Indirectly paid
expenses.............. (76) (548) (38) (761) (471) (38) (4,145)
- -------------------------------------------------------------------------------------------------------------
Net expenses........... 198,948 190,599 69,217 182,265 415,608 157,829 918,112
- -------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME... 498,604 1,528,030 183,971 513,417 3,590,535 419,334 5,056,543
- -------------------------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN ON
INVESTMENTS AND FUTURES
CONTRACTS
Net realized gain
(loss) on:
Investments............ 257,378 232,096 182,883 389,479 534,847 560,101 1,352,587
Closed futures
contracts............. (57,515) 0 (13,591) (33,762) 0 (34,456) 0
- -------------------------------------------------------------------------------------------------------------
Net realized gain on
investments and closed
futures contracts..... 199,863 232,096 169,292 355,717 534,847 525,645 1,352,587
Net change in
unrealized gains and
losses on investments
and futures
contracts............. 512,294 1,554,472 17,026 74,216 3,922,033 (19,476) 3,930,142
- -------------------------------------------------------------------------------------------------------------
Net realized and
unrealized gain on
investments and
futures contracts..... 712,157 1,786,568 186,318 429,933 4,456,880 506,169 5,282,729
- -------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS............ $1,210,761 $3,314,598 $370,289 $943,350 $8,047,415 $925,503 $10,339,272
- -------------------------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
53
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
State Municipal Bond Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended September 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
CALIFORNIA CONNECTICUT MASSACHUSETTS MISSOURI NEW JERSEY NEW YORK PENNSYLVANIA
FUND FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income.. $ 498,604 $ 1,528,030 $ 183,971 $ 513,417 $ 3,590,535 $ 419,334 $ 5,056,543
Net realized gain on
investments and closed
futures contracts..... 199,863 232,096 169,292 355,717 534,847 525,645 1,352,587
Net change in
unrealized gains and
losses on investments
and futures
contracts............. 512,294 1,554,472 17,026 74,216 3,922,033 (19,476) 3,930,142
- -----------------------------------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ 1,210,761 3,314,598 370,289 943,350 8,047,415 925,503 10,339,272
- -----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income
Class A................ (142,547) (5,001) (45,609) (118,678) (740,829) (82,125) (556,836)
Class B................ (328,255) (6,297) (108,528) (376,850) (274,659) (310,555) (668,141)
Class C................ (27,802) 0 (29,834) (17,889) 0 (26,654) (114,334)
Class Y................ 0 (1,516,732) 0 0 (2,575,154) 0 (3,717,766)
- -----------------------------------------------------------------------------------------------------------------------
Total distributions to
shareholders.......... (498,604) (1,528,030) (183,971) (513,417) (3,590,642) (419,334) (5,057,077)
- -----------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE
TRANSACTIONS
Proceeds from shares
sold.................. 1,534,425 7,071,011 665,553 1,005,696 22,900,687 1,437,645 21,462,655
Shares issued in
connection with the
acquisition of:
CoreFund New Jersey
Municipal Bond Fund... 0 0 0 0 2,289,826 0 0
CoreFund Pennsylvania
Municipal Bond Fund... 0 0 0 0 0 0 19,628,667
Proceeds from
reinvestment of
distributions......... 195,734 8,748 106,983 186,566 723,892 261,870 802,739
Payment for shares
redeemed.............. (2,784,175) (5,345,654) (1,373,790) (1,812,098) (11,155,200) (3,181,984) (18,964,177)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from capital
share transactions.... (1,054,016) 1,734,105 (601,254) (619,836) 14,759,205 (1,482,469) 22,929,884
- -----------------------------------------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets............... (341,859) 3,520,673 (414,936) (189,903) 19,215,978 (976,300) 28,212,079
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period.... 27,121,776 68,152,241 10,099,107 25,439,198 150,589,731 22,268,608 220,528,331
- -----------------------------------------------------------------------------------------------------------------------
END OF PERIOD.......... $26,779,917 $71,672,914 $ 9,684,171 $25,249,295 $169,805,709 $21,292,308 $248,740,410
- -----------------------------------------------------------------------------------------------------------------------
Undistributed net
investment income...... $ (52,878) $ 0 $ (6,750) $ (46,006) $ 1,870 $ (14,383) $ (106,787)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Combined Notes to Financial Statements.
54
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN
State Municipal Bond Funds
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended March 31, 1998
<TABLE>
<CAPTION>
CALIFORNIA CONNECTICUT MASSACHUSETTS MISSOURI NEW JERSEY NEW YORK PENNSYLVANIA
FUND FUND* FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income.. $ 1,090,619 $ 1,056,216 $ 455,667 $ 1,063,630 $ 4,012,108 $ 998,824 $ 5,471,695
Net realized gain on
investments and closed
futures contracts..... 236,358 425,126 369,554 235,429 1,015,421 489,113 3,407,989
Net change in
unrealized gains and
losses on investments
and futures
contracts............. 1,295,323 55,361 258,124 1,157,948 1,915,701 822,112 1,218,774
- -----------------------------------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations............ 2,622,300 1,536,703 1,083,345 2,457,007 6,943,230 2,310,049 10,098,458
- -----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM
Net investment income
Class A................ (205,595) (953) (93,495) (185,708) (1,518,372) (163,491) (1,141,904)
Class B................ (781,308) (1,377) (270,195) (792,663) (419,808) (725,698) (1,487,712)
Class C................ (68,869) 0 (68,044) (47,861) 0 (60,327) (258,914)
Class Y................ 0 (1,053,886) 0 0 (2,083,453) 0 (2,490,364)
Realized capital gains
Class A................ 0 0 0 0 (240,378) (21,835) 0
Class B................ 0 0 0 0 (86,039) (118,363) 0
Class C................ 0 0 0 0 0 (9,455) 0
Class Y................ 0 0 0 0 (81,674) 0 0
- -----------------------------------------------------------------------------------------------------------------------
Total distributions to
shareholders.......... (1,055,772) (1,056,216) (431,734) (1,026,232) (4,429,724) (1,099,169) (5,378,894)
- -----------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE
TRANSACTIONS
Proceeds from shares
sold.................. 4,372,062 6,576,391 1,120,126 6,597,008 16,729,270 2,516,417 17,158,377
Shares issued in
connection with the
acquisition of Common
trust funds........... 0 65,325,420 0 0 93,692,061 0 147,227,043
Proceeds from
reinvestment of
distributions......... 475,762 2,057 281,994 456,051 1,561,654 691,411 1,719,493
Payment for shares
redeemed.............. (7,127,357) (4,232,114) (3,887,027) (7,105,076) (12,623,869) (6,778,220) (18,876,225)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from capital
share transactions.... (2,279,533) 67,671,754 (2,484,907) (52,017) 99,359,116 (3,570,392) 147,228,688
- -----------------------------------------------------------------------------------------------------------------------
Total increase
(decrease) in net
assets............... (713,005) 68,152,241 (1,833,296) 1,378,758 101,872,622 (2,359,512) 151,948,252
NET ASSETS
Beginning of year...... 27,834,781 0 11,932,403 24,060,440 48,717,109 24,628,120 68,580,079
- -----------------------------------------------------------------------------------------------------------------------
END OF YEAR............ $27,121,776 $68,152,241 $10,099,107 $25,439,198 $150,589,731 $22,268,608 $220,528,331
- -----------------------------------------------------------------------------------------------------------------------
Undistributed net
investment income ..... $ (52,878) $ 0 $ (6,750) $ (46,006) $ 1,977 $ (14,383) $ (106,253)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
*The Fund commenced operations on November 24, 1997.
See Combined Notes to Financial Statements.
55
<PAGE>
[GRAPHIC APPEARS HERE]
COMBINED NOTES TO FINANCIAL STATEMENTS(Unaudited)
1. ORGANIZATION
The Evergreen Municipal Bond Funds consist of Evergreen California Tax Free
Fund ("California Fund"), Evergreen Connecticut Municipal Bond Fund ("Connecti-
cut Fund"), Evergreen Massachusetts Tax Free Fund ("Massachusetts Fund"), Ever-
green Missouri Tax Free Fund ("Missouri Fund"), Evergreen New Jersey Tax Free
Income Fund ("New Jersey Fund"), Evergreen New York Tax Free Fund ("New York
Fund") and Evergreen Pennsylvania Tax Free Fund ("Pennsylvania Fund"), (collec-
tively, the "Funds"). Each Fund is a non-diversified series of Evergreen Munic-
ipal Trust (the "Trust"), a Delaware business trust organized on September 18,
1997. The Trust is an open end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act").
The Funds offer Class A, Class B, Class C and/or Class Y shares. Class A shares
are sold with a maximum front-end sales charge of 4.75%. Class B and Class C
shares are sold without a front-end sales charge, but pay a higher ongoing dis-
tribution fee than Class A. Class B shares are sold subject to a contingent de-
ferred sales charge that is payable upon redemption and decreases depending on
how long the shares have been held. For each Fund, except the Connecticut Fund
and New Jersey Fund, Class B shares purchased after January 1, 1997 will auto-
matically convert to Class A shares after seven years. Class B shares of these
Funds purchased prior to January 1, 1997 retain their existing conversion
rights. For the Connecticut Fund and New Jersey Fund, all Class B shares will
automatically convert to Class A shares after seven years. Class C shares are
sold subject to a contingent deferred sales charge payable on shares redeemed
within one year after the month of purchase. Class Y shares are sold at net as-
set value and are not subject to contingent deferred sales charges or distribu-
tion fees. Class Y shares are sold only to investment advisory clients of First
Union Corporation ("First Union") and its affiliates, certain institutional in-
vestors or Class Y shareholders of record of certain other funds managed by
First Union and its affiliates as of December 30, 1994.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently fol-
lowed by the Funds in the preparation of their financial statements. The poli-
cies are in conformity with generally accepted accounting principles, which re-
quire management to make estimates and assumptions that affect amounts reported
herein. Actual results could differ from these estimates.
A. VALUATION OF SECURITIES
An independent pricing service values each Fund's municipal bonds at fair value
using a variety of factors which may include yield, liquidity, interest rate
risk, credit quality, coupon, maturity and type of issue. Securities for which
valuations are not available from an independent pricing service, including re-
stricted securities, are valued at fair value as determined in good faith ac-
cording to procedures established by the Board of Trustees.
Short-term investments with remaining maturities of 60 days or less are carried
at amortized cost, which approximates market value.
B. FUTURES CONTRACTS
In order to gain exposure to or protect against changes in security values, the
Funds may buy and sell futures contracts.
The initial margin deposited with a broker when entering into a futures trans-
action is subsequently adjusted by daily payments or receipts as the value of
the contract changes. Such changes are recorded as unrealized gains or losses.
Realized gains or losses are recognized on closing the contract.
Risks of entering into futures contracts include (i) the possibility of an il-
liquid market for the contract, (ii) the possibility that a change in the value
of the contract may not correlate with changes in the value of the underlying
instrument or index, and (iii) the credit risk that the other party will not
fulfill their obligations under the contract. Futures contracts also involve
elements of market risk in excess of the amount reflected in the statement of
assets and liabilities.
56
<PAGE>
[GRAPHIC APPEARS HERE]
COMBINED NOTES TO FINANCIAL STATEMENTS(Unaudited) (continued)
C. SECURITY TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are accounted for no later than one business day after
the trade date. Realized gains and losses are computed on the identified cost
basis. Interest income is recorded on the accrual basis and includes accretion
of discounts and amortization of premiums.
D. FEDERAL TAXES
The Funds have qualified and intend to continue to qualify as regulated invest-
ment companies under the Internal Revenue Code of 1986, as amended (the
"Code"). Thus, the Funds will not incur any federal tax liability since they
are expected to distribute all of their net investment company taxable income,
net tax-exempt income and net capital gains, if any, to their shareholders. The
Funds also intend to avoid any excise tax liability by making the required dis-
tributions under the Code. Accordingly, no provision for federal taxes is re-
quired. To the extent that realized capital gains can be offset by capital loss
carryforwards, it is each Fund's policy not to distribute such gains.
E. DISTRIBUTIONS
Distributions from net investment income for the Funds are declared daily and
paid monthly. Distributions from net realized capital gains, if any, are paid
at least annually. Distributions to shareholders are recorded at the close of
business on the ex-dividend date.
Income and capital gains distributions to shareholders are determined in accor-
dance with income tax regulations, which may differ from generally accepted ac-
counting principles. The significant differences between financial statement
amounts available for distributions and distributions made in accordance with
income tax regulations are primarily due to differing treatment of market dis-
count on securities.
F. CLASS ALLOCATIONS
Income, expenses (other than class specific expenses) and realized and
unrealized gains and losses are prorated among the classes based on the rela-
tive net assets of each class. Currently, class specific expenses are limited
to expenses incurred under the Distribution Plans for each class.
3. CAPITAL SHARE TRANSACTIONS
Each Fund has an unlimited number of shares of beneficial interest authorized
with $0.001 par value. Shares of beneficial interest of the Funds are currently
divided into Class A, Class B, Class C or Class Y. Transactions in shares of
the Funds were as follows:
- --------------------------------------------------------------------------------
California Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 1998 March 31, 1998
--------------------- ---------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold..................... 72,089 $ 713,797 271,096 $ 2,691,837
Shares issued in reinvestment of
distributions.................. 3,891 39,001 7,540 73,883
Shares redeemed................. (45,920) (458,065) (79,526) (784,304)
- -------------------------------------------------------------------------------
Net increase.................... 30,060 $ 294,733 199,110 $ 1,981,416
- -------------------------------------------------------------------------------
CLASS B
Shares sold..................... 82,025 $ 817,469 153,832 $ 1,498,219
Shares issued in reinvestment of
distributions.................. 14,594 145,593 38,537 374,672
Shares redeemed................. (176,018) (1,752,317) (603,156) (5,920,355)
- -------------------------------------------------------------------------------
Net decrease.................... (79,399) $ (789,255) (410,787) $(4,047,464)
- -------------------------------------------------------------------------------
CLASS C
Shares sold..................... 229 $ 3,159 18,602 $ 182,006
Shares issued in reinvestment of
distributions.................. 1,117 11,140 2,804 27,207
Shares redeemed................. (57,848) (573,793) (43,562) (422,698)
- -------------------------------------------------------------------------------
Net decrease.................... (56,502) $ (559,494) (22,156) $ (213,485)
- -------------------------------------------------------------------------------
</TABLE>
57
<PAGE>
[GRAPHIC APPEARS HERE]
COMBINED NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued)
- --------------------------------------------------------------------------------
Connecticut Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 30, 1998
(Commencement of Class
Six Months Ended Operations) to
September 30, 1998 March 31, 1998
------------------- ----------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold....................... 51,889 $ 331,067 22,857 $ 145,836
Shares issued in reinvestment of
distributions.................... 525 3,379 68 433
Shares redeemed................... (27,247) (174,108) 0 0
- ------------------------------------------------------------------------------
Net increase...................... 25,167 $ 160,338 22,925 $ 146,269
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
January 9, 1998
(Commencement of Class
Six Months Ended Operations) to
September 30, 1998 March 31, 1998
------------------- ----------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS B
Shares sold........................ 14,160 $ 91,172 51,780 $ 331,966
Shares issued in reinvestment of
distributions..................... 446 2,860 153 980
Shares redeemed.................... 0 0 0 0
- ------------------------------------------------------------------------------
Net increase....................... 14,606 $ 94,032 51,933 $ 332,946
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of Class
Six Months Ended Operations) to
September 30, 1998 March 31, 1998
----------------------- ------------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS Y
Shares sold................ 1,040,483 $ 6,648,772 948,480 $ 6,098,589
Shares issued in connection
with the acquisition of
common trust fund......... 0 0 10,328,861 65,325,420
Shares issued in
reinvestment of
distributions............. 391 2,509 101 644
Shares redeemed............ (810,488) (5,171,546) (661,430) (4,232,114)
- -------------------------------------------------------------------------------
Net increase............... 230,386 $ 1,479,735 10,616,012 $67,192,539
- -------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Massachusetts Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 1998 March 31, 1998
-------------------- ---------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold...................... 39,599 $ 382,371 48,781 $ 474,420
Shares issued in reinvestment of
distributions................... 2,592 25,297 5,660 53,489
Shares redeemed.................. (38,357) (372,756) (65,265) (628,762)
- ------------------------------------------------------------------------------
Net increase (decrease).......... 3,834 $ 34,912 (10,824) $ (100,853)
- ------------------------------------------------------------------------------
CLASS B
Shares sold...................... 14,473 $ 140,934 64,229 $ 606,090
Shares issued in reinvestment of
distributions................... 6,547 63,519 19,310 182,827
Shares redeemed.................. (81,307) (782,581) (276,117) (2,637,724)
- ------------------------------------------------------------------------------
Net decrease..................... (60,287) $ (578,128) (192,578) $(1,848,807)
- ------------------------------------------------------------------------------
CLASS C
Shares sold...................... 14,660 $ 142,248 4,224 $ 39,616
Shares issued in reinvestment of
distributions................... 1,872 18,167 4,814 45,678
Shares redeemed.................. (22,559) (218,453) (65,364) (620,541)
- ------------------------------------------------------------------------------
Net decrease..................... (6,027) $ (58,038) (56,326) $ (535,247)
- ------------------------------------------------------------------------------
</TABLE>
58
<PAGE>
[GRAPHIC APPEARS HERE]
COMBINED NOTES TO FINANCIAL STATEMENTS(Unaudited) (continued)
- --------------------------------------------------------------------------------
Missouri Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 1998 March 31, 1998
---------------------- ----------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold................... 52,711 $ 518,327 262,047 $ 2,625,674
Shares issued in reinvestment
of distributions............. 2,979 30,404 6,523 65,281
Shares redeemed............... (31,586) (321,375) (61,382) (621,096)
- ------------------------------------------------------------------------------
Net increase.................. 24,104 $ 227,356 207,188 $ 2,069,859
- ------------------------------------------------------------------------------
CLASS B
Shares sold................... 47,957 $ 483,209 366,631 $ 3,635,733
Shares issued in reinvestment
of distributions............. 14,278 144,274 36,382 359,093
Shares redeemed............... (125,450) (1,264,526) (577,779) (5,726,750)
- ------------------------------------------------------------------------------
Net decrease.................. (63,215) $ (637,043) (174,766) $(1,731,924)
- ------------------------------------------------------------------------------
CLASS C
Shares sold................... 398 $ 4,160 33,594 $ 335,601
Shares issued in reinvestment
of distributions............. 1,178 11,888 3,210 31,677
Shares redeemed............... (22,495) (226,197) (75,805) (757,230)
- ------------------------------------------------------------------------------
Net decrease.................. (20,919) $ (210,149) (39,001) $ (389,952)
- ------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
New Jersey Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 1998 March 31, 1998
---------------------- ----------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold.................... 178,468 $ 1,983,179 252,683 $ 2,784,238
Shares issued in connection
with the acquisition of
CoreFund New Jersey Municipal
Bond Fund..................... 74,926 834,005 0 0
Shares issued in reinvestment
of distributions.............. 39,256 438,988 96,743 1,066,743
Shares redeemed................ (224,222) (2,509,361) (431,044) (4,741,631)
- -------------------------------------------------------------------------------
Net increase (decrease)........ 68,428 $ 746,811 (81,618) $ (890,650)
- -------------------------------------------------------------------------------
CLASS B
Shares sold.................... 359,665 $ 4,010,822 559,918 $ 6,159,394
Shares issued in reinvestment
of distributions.............. 18,275 204,448 35,078 387,261
Shares redeemed................ (110,745) (1,231,496) (97,634) (1,079,382)
- -------------------------------------------------------------------------------
Net increase................... 267,195 $ 2,983,774 497,362 $ 5,467,273
- -------------------------------------------------------------------------------
CLASS Y
Shares sold.................... 1,514,325 $16,906,686 700,533 $ 7,785,638
Shares issued in connection
with the acquisition of:
Common trust fund............. 0 0 8,501,660 93,692,061
CoreFund New Jersey Municipal
Bond Fund.................... 130,888 1,455,821 0 0
Shares issued in reinvestment
of distributions.............. 7,187 80,456 9,734 107,650
Shares redeemed................ (665,016) (7,414,343) (611,893) (6,802,856)
- -------------------------------------------------------------------------------
Net increase................... 987,384 $11,028,620 8,600,034 $94,782,493
- -------------------------------------------------------------------------------
</TABLE>
59
<PAGE>
[GRAPHIC APPEARS HERE]
COMBINED NOTES TO FINANCIAL STATEMENTS(Unaudited) (continued)
- --------------------------------------------------------------------------------
New York Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 1998 March 31, 1998
--------------------- ---------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold..................... 98,526 $ 993,986 101,515 $ 1,028,467
Shares issued in reinvestment of
distributions.................. 5,114 51,944 10,952 109,667
Shares redeemed................. (105,662) (1,069,294) (143,942) (1,442,196)
- -------------------------------------------------------------------------------
Net decrease.................... (2,022) $ (23,364) (31,475) $ (304,062)
- -------------------------------------------------------------------------------
CLASS B
Shares sold..................... 41,821 $ 419,853 139,740 $ 1,373,251
Shares issued in reinvestment of
distributions.................. 18,704 188,232 53,507 527,679
Shares redeemed................. (198,122) (1,989,986) (469,593) (4,681,031)
- -------------------------------------------------------------------------------
Net decrease.................... (137,597) $(1,381,901) (276,346) $(2,780,101)
- -------------------------------------------------------------------------------
CLASS C
Shares sold..................... 2,323 $ 23,806 11,612 $ 114,699
Shares issued in reinvestment of
distributions.................. 2,156 21,694 5,472 54,065
Shares redeemed................. (12,199) (122,704) (66,958) (654,993)
- -------------------------------------------------------------------------------
Net decrease.................... (7,720) $ (77,204) (49,874) $ (486,229)
- -------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Pennsylvania Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended
September 30, 1998 March 31, 1998
--------------------- ---------------------
Shares Amount Shares Amount
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold...................... 164,049 $ 1,922,277 216,700 $ 2,503,060
Shares issued in connection with
the acquisition of CoreFund
Pennsylvania Municipal Bond
Fund............................ 517,010 6,054,216 0 0
Shares issued in reinvestment of
distributions................... 24,190 284,861 52,116 598,085
Shares redeemed.................. (318,235) (3,729,442) (410,639) (4,743,895)
- -------------------------------------------------------------------------------
Net increase (decrease).......... 387,014 $ 4,531,912 (141,823) $(1,642,750)
- -------------------------------------------------------------------------------
CLASS B
Shares sold...................... 193,053 $ 2,273,410 365,986 $ 4,145,693
Shares issued in reinvestment of
distributions................... 32,408 376,649 82,460 937,245
Shares redeemed.................. (263,437) (3,054,098) (627,854) (7,165,289)
- -------------------------------------------------------------------------------
Net decrease..................... (37,976) $ (404,039) (179,408) $(2,082,351)
- -------------------------------------------------------------------------------
CLASS C
Shares sold...................... 19,813 $ 233,574 47,797 $ 554,828
Shares issued in reinvestment of
distributions................... 6,621 77,137 16,198 184,137
Shares redeemed.................. (35,694) (412,924) (129,911) (1,487,976)
- -------------------------------------------------------------------------------
Net decrease..................... (9,260) $ (102,213) (65,916) $ (749,011)
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of
Six Months Ended Class Operations) to
September 30, 1998 March 31, 1998
------------------------ ------------------------
Shares Amount Shares Amount
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS Y
Shares sold............... 1,452,091 $ 17,033,394 848,662 $ 9,954,796
Shares issued in
connection with the
acquisition of:
Common trust fund........ 0 0 12,689,439 147,227,043
CoreFund Pennsylvania
Municipal Bond Fund..... 1,159,236 13,574,451 0 0
Shares issued in
reinvestment of
distributions............ 5,425 64,092 2 26
Shares redeemed........... (1,002,054) (11,767,713) (466,040) (5,479,065)
- ------------------------------------------------------------------------------
Net increase.............. 1,614,698 $ 18,904,224 13,072,063 $151,702,800
- ------------------------------------------------------------------------------
</TABLE>
60
<PAGE>
[GRAPHIC APPEARS HERE]
COMBINED NOTES TO FINANCIAL STATEMENTS(Unaudited) (continued)
4. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) were as follows for the six months ended September 30,
1998:
<TABLE>
<CAPTION>
Cost of Proceeds
Purchases from Sales
<S> <C> <C>
-----------------------
California Fund......................... $ 6,887,305 $ 7,462,785
Connecticut Fund........................ 20,188,604 16,737,352
Massachusetts Fund...................... 5,299,684 5,765,589
Missouri Fund........................... 9,059,904 9,172,141
New Jersey Fund......................... 47,171,687 34,794,268
New York Fund........................... 8,395,816 9,841,548
Pennsylvania Fund....................... 81,507,353 76,866,026
</TABLE>
As of March 31, 1998, the Funds had no capital loss carryovers for federal
income tax purposes.
5. DISTRIBUTION PLANS
Evergreen Distributor, Inc. ("EDI"), a wholly-owned subsidiary of The BISYS
Group Inc. ("BISYS"), serves as principal underwriter to each of the Funds.
Each Fund has adopted Distribution Plans for each class of shares, except Class
Y, as allowed by Rule 12b-1 of the 1940 Act. Distribution plans permit a fund
to reimburse its principal underwriter for costs related to selling shares of
the fund and for various other services. These costs, which consist primarily
of commissions and service fees to broker-dealers who sell shares of the fund,
are paid by the fund through expenses called "Distribution Plan expenses". Each
class, except Class Y, currently pays a service fee equal to an annual rate of
0.25% of the average daily net assets of the class. Class B and Class C also
pay distribution fees equal to an annual rate of 0.75% of the average daily net
assets of the class. Distribution Plan expenses are calculated daily and paid
monthly.
During the six months ended September 30, 1998, amounts paid or accrued to EDI
pursuant to each Fund's Class A, Class B and Class C Distribution Plans were as
follows:
<TABLE>
<CAPTION>
Distribution
Distribution fees accrued fees waived
--------------------------- ------------
Class A Class B Class C Class A
<S> <C> <C> <C> <C>
----------------------------------------
California Fund........................ $ 8,300 $ 92,790 $ 7,823 0
Connecticut Fund....................... 302 1,844 0 0
Massachusetts Fund..................... 2,585 29,623 8,145 0
Missouri Fund.......................... 6,347 95,900 4,528 0
New Jersey Fund........................ 40,657 75,814 0 $26,021
New York Fund.......................... 4,537 82,310 7,058 0
Pennsylvania Fund...................... 31,967 185,678 31,751 0
</TABLE>
With respect to Class B and Class C shares of the California, Massachusetts,
Missouri, New York and Pennsylvania Funds, the principal underwriter may pay
distribution fees greater than the allowable annual amounts the Funds are
permitted to pay. The Funds may reimburse the principal underwriter for such
excess amounts in later years with annual interest at the prime rate plus 1.00%.
For these Funds, EDI intends, but is not obligated, to continue to pay
distribution costs that exceed the current annual payments from the Funds. EDI
intends to seek full payment of such distribution costs from each Fund at such
time in the future as, and to the extent that, payment thereof by the Class B or
Class C shares would be within permitted limits.
Each of the Distribution Plans may be terminated at any time by vote of the
Independent Trustees or by vote of a majority of the outstanding voting shares
of the respective class. However, for each Fund except the Connecticut Fund and
New Jersey Fund, after the termination of any Distribution Plan and subject to
the discretion of the Independent Trustees, payments to EDI may continue as
compensation for services which had been provided while the Distribution Plan
was in effect.
61
<PAGE>
[GRAPHIC APPEARS HERE]
COMBINED NOTES TO FINANCIAL STATEMENTS(Unaudited) (continued)
6. INVESTMENT MANAGEMENT AGREEMENT AND OTHER AFFILIATED TRANSACTIONS
Evergreen Investment Management Company ("EIMC"), a subsidiary of First Union,
is the investment advisor for the California Fund, Massachusetts Fund, Missouri
Fund, New York Fund and Pennsylvania Fund. In return for providing investment
management and administrative services, the Funds pay EIMC a management fee
that is calculated daily and paid monthly. The management fee is calculated by
applying percentage rates, which start at 0.55% and decline to 0.25% per annum
as net assets increase, to the average daily net asset value of each Fund.
The Capital Management Group ("CMG") of First Union National Bank of North
Carolina, a subsidiary of First Union, serves as the investment advisor to the
Connecticut Fund and New Jersey Fund and is paid a management fee that is
computed daily and paid monthly. The Connecticut Fund pays CMG an annual fee for
its services equal to 0.60% of the average daily net assets of the Fund. The New
Jersey Fund pays CMG a fee for its services which is calculated by applying
percentage rates, which start at 0.50% and decline to 0.35% per annum as net
assets increase, to the average daily net assets of the Fund.
For the six months ended September 30, 1998, the investment advisor waived its
fee as follows:
<TABLE>
<CAPTION>
Fees
Waived
--------
<S> <C>
California Fund.......................... $ 1,170
Connecticut Fund......................... 40,631
Massachusetts Fund....................... 21,321
Missouri Fund............................ 39,707
New Jersey Fund.......................... 188,705
New York Fund............................ 40,585
Pennsylvania Fund........................ 28,776
</TABLE>
For each of the Funds, Evergreen Investment Services, Inc. ("EIS"), a subsidiary
of First Union, is the administrator and BISYS serves as the subadministrator
for each Fund.
As administrator for the Connecticut Fund and the New Jersey Fund, EIS is
entitled to an annual fee based on the average daily net assets of the funds
administered by EIS for which First Union or its investment advisory
subsidiaries are also the investment advisors. The administration fee for the
Connecticut Fund and the New Jersey Fund is calculated by applying percentage
rates, which start at 0.05% and decline to 0.01% per annum as net assets
increase, to the average daily net asset value of the Fund. As administrator for
the California Fund, Massachusetts Fund, Missouri Fund, New York Fund and
Pennsylvania Fund, EIS also provides facilities, equipment and personnel on
behalf of the Fund's investment advisor and is reimbursed by the Fund for its
services.
The sub-administration fee for each Fund is calculated by applying percentage
rates, which start at 0.01% and decline to 0.004% as net assets increase, to the
average daily net asset value of the Fund. For the California Fund,
Massachusetts Fund, Missouri Fund, New York Fund and Pennsylvania Fund, the
sub-administration fee is paid by the investment manager and is not a fund
expense.
During the six months ended September 30, 1998, the Funds paid or accrued to
EIS the following amounts for certain administrative services:
<TABLE>
<S> <C>
California Fund........................... $ 1,941
Connecticut Fund.......................... 7,583
Massachusetts Fund........................ 632
Missouri Fund............................. 1,492
New Jersey Fund........................... 17,390
New York Fund............................. 1,523
Pennsylvania Fund......................... 16,742
</TABLE>
Evergreen Service Company ("ESC"), an indirect, wholly-owned subsidiary of
First Union, serves as the transfer and dividend disbursing agent for the
Funds.
62
<PAGE>
[GRAPHIC APPEARS HERE]
COMBINED NOTES TO FINANCIAL STATEMENTS(Unaudited) (continued)
Officers of the Funds and affiliated Trustees receive no compensation directly
from the Funds. BISYS as sub-administrator provides the officers of the Funds.
7. EXPENSE OFFSET ARRANGEMENT
The Funds have entered into an expense offset arrangement with their custodian.
The assets deposited with the custodian under this expense offset arrangement
could have been invested in income-producing assets.
8. DEFERRED TRUSTEES' FEES
Each Independent Trustee of each Fund may defer any or all compensation related
to performance of their duties as Trustees. The Trustees' deferred balances are
allocated to deferral accounts, which are included in the accrued expenses for
the Fund. The investment performance of the deferral accounts are based on the
investment performance of certain Evergreen Funds. Any gains earned or losses
incurred in the deferral accounts are reported in the Fund's Trustees' fees and
expenses. Trustees will be paid either in one lump sum or in quarterly
installments for up to ten years at their election, not earlier than either the
year in which the Trustee ceases to be a member of the Board of Trustees or
January 1, 2000.
9. ACQUISITIONS
On November 24, 1997, the Connecticut Fund commenced operations of its Class Y
shares as a result of the conversion of common trust funds managed by First
Union National Bank, a subsidiary of First Union. Also, as a result of this
conversion, the New Jersey Fund and Pennsylvania Fund each acquired
substantially all of the net assets of comparable common trusts in exchange for
Class Y shares of the respective Funds.
On July 27, 1998, the New Jersey Fund acquired substantially all of the assets
and assumed certain liabilities of CoreFund New Jersey Municipal Bond Fund in
an exchange for Class A and Class Y shares of New Jersey Fund. Also, the
Pennsylvania Fund acquired substantially all of the assets and assumed certain
liabilities of CoreFund Pennsylvania Municipal Bond Fund in an exchange for
Class A and Class Y shares of Pennsylvania Fund.
These conversions and acquisitions were accomplished by a tax-free exchange of
the respective shares of each Fund. The value of net assets acquired, number of
shares issued, unrealized appreciation acquired and the aggregate net assets of
each fund immediately after the acquisition are as follows:
<TABLE>
<CAPTION>
Value of Net Number of Unrealized
Acquiring Fund Acquired Fund Assets Acquired Shares Issued Appreciation
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Connecticut
Fund........... Common Trust Fund -- Connecticut Tax Exempt Bond Fund $ 65,325,420 10,328,861 $1,892,387
New Jersey
Fund........... Common Trust Fund -- New Jersey Tax Exempt Bond Fund 93,692,061 8,501,660 2,874,242
New Jersey
Fund........... CoreFund New Jersey Municipal Bond Fund 2,289,826 205,814 104,332
Pennsylvania
Fund........... Common Trust Fund -- Pennsylvania Tax Exempt Bond Fund 147,227,043 12,689,439 4,980,000
Pennsylvania
Fund........... CoreFund Pennsylvania Municipal Bond Fund 19,628,667 1,676,246 443,113
<CAPTION>
Net Assets
Acquiring Fund After Acquisition
- ----------------------------------
<S> <C>
Connecticut
Fund........... $ 65,325,420
New Jersey
Fund........... 147,179,376
New Jersey
Fund........... 160,691,863
Pennsylvania
Fund........... 216,012,549
Pennsylvania
Fund........... 242,223,339
</TABLE>
10. FINANCING AGREEMENT
On December 22, 1997, a financing agreement among all of the Evergreen Funds,
State Street Bank and Trust Company ("State Street") and a group of banks
(collectively, the "Banks") became effective. Under this agreement, the Banks
provide an unsecured credit facility in the aggregate amount of $400 million
($275 million committed and $125 million uncommitted). The credit facility is
allocated, under the terms of the financing agreement, among the Banks. The
credit facility is to be accessed by the Funds for temporary or emergency
purposes only and is subject to each Fund's borrowing restrictions. Borrowings
under this facility bear interest at 0.50% per annum above the Federal Funds
rate. A commitment fee of 0.065% per annum will be incurred on the unused
portion of the committed facility, which will be allocated to all Funds. For its
assistance in arranging this financing agreement, the Capital Market Group of
First Union was paid a one-time arrangement fee of $27,500. State Street serves
as administrative agent for the Banks, and as administrative agent is entitled
to a fee of $20,000 per annum which is allocated to all of the Funds.
63
<PAGE>
[GRAPHIC APPEARS HERE]
COMBINED NOTES TO FINANCIAL STATEMENTS(Unaudited) (continued)
During the six months ended September 30, 1998, the Funds had no borrowings
under these agreements.
11. CONCENTRATION OF CREDIT RISK
Each Fund invests a substantial portion of its assets in issuers located in a
single state, therefore, it may be more affected by economic and political
developments in a specific state or region than would be a comparable general
tax-exempt mutual fund.
12. YEAR 2000
Like other investment companies, the Funds could be adversely affected if the
computer systems used by the Funds' investment advisors and the Funds' other
service providers are not able to perform their intended functions effectively
after 1999 because of the inability of computer software to distinguish the
year 2000 from the year 1900. The Funds' investment advisors are taking steps to
address this potential year 2000 problem with respect to the computer systems
that they use and to obtain satisfactory assurances that comparable steps are
being taken by the Funds' other major service providers. At this time, however,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on the Funds from this problem.
64
<PAGE>
Evergreen Funds
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Tax Exempt
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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
Tax Strategic Equity Fund
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Stock Selector Fund
Evergreen Fund
Omega Fund
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Aggressive Growth Fund
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Global Leaders Fund
International Growth Fund
Global Opportunities Fund
Precious Metals Fund
Emerging Markets Growth Fund
Latin America Fund
Express Line
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