<PAGE>
March 31, 1998
Annual Report
[Evergreen Logo Appears here]
Evergreen Funds (SM)
SINCE 1932
Evergreen
State Municipal
Bond Funds
[Graphic appears here of metropolitan city with bond certificates in foreground]
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Letter to Shareholders ................... 1
Fund at a Glance
California Tax Free Fund .............. 2
Connecticut Municipal Bond Fund ....... 4
Massachusetts Tax Free Fund ........... 6
Missouri Tax Free Fund ................ 8
New Jersey Tax Free Income Fund ....... 10
New York Tax Free Fund ................ 12
Pennsylvania Tax Free Fund ............ 14
Financial Highlights
California Tax Free Fund .............. 16
Connecticut Municipal Bond Fund ....... 18
Massachusetts Tax Free Fund ........... 20
Missouri Tax Free Fund ................ 22
New Jersey Tax Free Income Fund ....... 24
New York Tax Free Fund ................ 26
Pennsylvania Tax Free Fund ............ 28
</TABLE>
<TABLE>
<S> <C>
Schedule of Investments
California Tax Free Fund .............. 31
Connecticut Municipal Bond Fund ....... 33
Massachusetts Tax Free Fund ........... 35
Missouri Tax Free Fund ................ 37
New Jersey Tax Free Income Fund ....... 39
New York Tax Free Fund ................ 43
Pennsylvania Tax Free Fund ............ 45
Statements of Assets and Liabilities ..... 49
Statements of Operations ................. 50
Statements of Changes in Net Assets -
Year Ended March 31, 1998 ............. 51
Year Ended March 31, 1997 ............. 52
For the Periods Indicated ............. 53
Combined Notes to Financial
Statements ............................ 54
Independent Auditors' Report:
KPMG Peat Marwick LLP ................. 63
Additional Information ................... 64
</TABLE>
- --------------------------------------------------------------------------------
Evergreen Funds
Evergreen Funds is one of the nation's fastest growing investment companies
with more than $47 billion in assets under management.
With over 80 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 annual 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.
<TABLE>
<S> <C>
Mutual Funds: ARE NOT FDIC INSURED May lose value o Are not bank guaranteed
</TABLE>
Evergreen Distributor, Inc.
Evergreen(SM) is a Service Mark of Evergreen Investment Services, Inc.
Copyright 1998.
<PAGE>
Letter to Shareholders
May 1998
Dear Shareholders:
The 12-month period that ended on March 31,
1998, proved to be an especially rewarding one
[Photograph appears here for shareholders of the Evergreen state
of William M. Ennis] municipal bond funds, as investors received
generous
returns made even more impressive on an
after-tax basis.
William M. Ennis
Managing Director
The 12 months encompassed a period when the
U.S. economy showed stubborn resilience. Despite some international market
uncertainty brought on by the Asian crisis, the economy in the United States
continued to grow at a moderate rate, with restrained inflation. These factors,
combined with a declining federal budget deficit, allowed interest rates to
fall and bond prices to increase. The yields on longer-maturity bonds tended to
decrease more than the yields on shorter-maturity bonds. For example, the yield
on the 30-year Treasury fell during the 12 months from 7.07% to 5.93%, while
the yield on the three-month Treasury remained fairly stable, declining only
from 5.14% to 4.98%.
Competitive Performance
In this favorable economic and interest rate environment, the emphasis of the
Evergreen state municipal bond funds on investments in securities with higher
yields and longer maturities proved especially rewarding on both an absolute
and after-tax basis.(1)
Positive Outlook
Going forward, Evergreen portfolio managers continue to see a generally
supportive economic environment. With this scenario, the state municipal bond
funds are emphasizing a strategy of careful security selection among
higher-yielding, longer-maturity bonds. We believe this strategy gives
continued opportunity for the funds to provide competitive performance for tax-
conscious shareholders.
The Evergreen Funds Commitment
At Evergreen Funds, we are committed to providing a broad array of funds with a
variety of investment objectives to help investors pursue goals consistent with
their needs and risk tolerances. We encourage you, if you have any questions
about this fund or any other Evergreen Fund, to consult your financial advisor
or call us at 800-343-2898.
Thank you for your continued investment with Evergreen Funds.
Sincerely,
/s/ Bill Ennis
William M. Ennis
Managing Director
Evergreen Funds
(1) Some portion of the Funds' income may be subject to the Federal Alternative
Minimum Tax (AMT).
1
<PAGE>
EVERGREEN
California Tax Free Fund
Fund at a Glance as of March 31, 1998
Portfolio
Characteristics
Total Net Assets $27,121,776
Average Credit Quality AAA
Average Maturity 17.2 years
Average Duration 8.9 years
-------------------------------------------------------
CURRENT INVESTMENT STYLE
[Graphic of Style Box Morningstar's Style Box is based on a
appears here] portfolio date as of 3/31/98.
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.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
Inception Date 2/1/94 2/1/94 2/1/94
Average Annual Returns
One year with sales charge 5.30% 4.75% 8.77%
One year w/o sales charge 10.55% 9.75% 9.77%
3 years 5.89% 5.96% 6.82%
Since Inception 4.05% 4.22% 4.56%
Maximum Sales Charge 4.75% 5.00% 1.00%
Front End CDSC CDSC
30-day SEC Yield 4.11% 3.56% 3.56%
Taxable Equivalent** 6.80% 5.89% 5.89%
12-month distributions per share $ 0.44 $ 0.36 $ 0.36
Lipper ranking out of 26 California Insured
Municipal Funds(1) (for the 1 year period
ending 3/31/98) #12 #26 #24
</TABLE>
*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.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
[Growth Chart appears here with the following plot points]
Lehman Brothers CA. Consumer Lehman Brothers
Class A Shares Municipal Bond Index Price Index Muni. Bond Index
2/94 9,525 10,000 10,000 10,000
3/94 8,963 9,344 10,068 9,285
3/95 9,463 10,039 10,356 9,996
3/96 10,220 10,880 10,638 10,865
3/97 10,671 11,474 10,944 11,469
3/98 11,797 12,702 11,094 12,772
Comparison of a $10,000 investment in Evergreen California Tax Free Fund, Class
A shares, versus a similar investment in the Lehman Brothers Municipal Bond
Index, the Lehman Brothers California Municipal Bond Index, and the Consumer
Price Index.
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 Lehman Brothers Municipal Bond Index and the
Lehman Brothers California Municipal Bond Index are unmanaged indices. These
indices do not include transaction costs associated with buying and selling
securities nor any management fees. The Consumer Price Index, a measure of
inflation, is through March 31, 1998.
2
<PAGE>
EVERGREEN
California Tax Free Fund
Portfolio
Management
[Photograph appears here of George Kimball, CFA]
George Kimball, CFA
Tenure: January 1996
For the 12 months ended March 31, 1998, your Fund's Class A shares generated a
total return of 10.55%, placing it in the top 46% of California municipal bond
funds followed by Lipper Analytical Services, an independent mutual fund rating
company.1 California municipal bondholders continued to benefit from the
state's strong economic recovery and ongoing improvement in its fiscal
operations. Demand has remained steady for California bonds, despite unusually
heavy supply in the first quarter of 1998. Going forward, we believe supply
will begin to moderate, which should be positive for prices. During the past
twelve months, we focused on quality, yield, and total return. As the reporting
period closed, 95% of the Fund was invested in securities rated "AAA". Bonds
with higher ratings provided the most attractive relative value in our opinion,
as their lower-rated counterparts typically offered little additional yield. To
build yield, we emphasized Certificates of Participation (COPs), the Health and
Hospitals sector and industrial revenue bonds, also maintaining a maximum
position in securities that are subject to the alternative minimum tax (AMT).
We increased total return potential in several ways. We invested in bonds with
maturities of at least 20 years, as well as some zero coupon bonds, which
enhanced price appreciation as interest rates declined. The Fund's substantial
position of local general obligation bonds also contributed to the Fund's total
return, by capitalizing on the state's economic and fiscal strength.
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.
----------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
[Pie chart appears here with the following values]
Lease Rental Bonds/
Municipal Leases--23.1%
Special Feature Revenue
and General Obligation Bonds--22.1%
Housing--13.6%
Hospitals/Healthcare--11.8%
General Obligation Notes/Bonds--9.1%
Utility--5.3%
Other investments and other
assets and liabilities, net--4.4%
Airport--4.1%
Industrial Development/
Pollution Control--3.8%
Transportation--2.7%
----------------------------------------------------------------
PORTFOLIO QUALITY
(as a percentage of portfolio assets)
[Pie Chart appears here with the following values]
AAA--94.6%
A--3.5%
B--1.9%
3
<PAGE>
EVERGREEN
Connecticut Municipal Bond Fund
Fund at a Glance as of March 31, 1998
Portfolio
Characteristics
Total Net Assets $68,152,241
Average Credit Quality AA+
Average Maturity 12.1 years
Average Duration 7.2 years
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 Lehman Brothers Municipal Bond Index and the
Lehman Brothers Connecticut Municipal Bond Index are unmanaged indices. The
indices do not include transaction costs associated with buying and selling
securities nor any management fees. The Consumer Price Index, a measure of
inflation, is through March 31, 1998.
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 24, 1997. Performance for the common trust fund has been
adjusted to include the effect of estimated expenses based upon the mutual fund
expense ratio as stated in the Fund's current Prospectus. 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.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class Y
<S> <C>
Inception Date 1/31/81
Average Annual Returns
One year w/o sales charge n/a
One year with sales charge 8.52%
3 years 6.26%
5 years 4.95%
10 years 5.94%
Since Inception 7.20%
Maximum Sales Charge n/a
30-day SEC Yield 4.11%
Taxable Equivalent** 6.80%
Distribution per share for the period*** $ 0.10
</TABLE>
* 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.
*** The period from the Fund's inception on November 24, 1997 through March 31,
1998.
Note: No performance data is available for Class A and Class B shares; their
inception dates were December 30, 1997 and January 9, 1998, respectively.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
[Line graph appears here with the following plot points]
Lehman Brothers
Class Y Shares Municipal Bond Index Consumer Price Index
3/88 10,000 10,000 10,000
3/90 11,159 11,583 11,047
3/92 13,004 14,239 11,957
3/94 14,206 16,394 12,635
3/96 15,928 19,089 13,350
3/98 17,814 22,285 13,923
Comparison of a $10,000 investment in Evergreen Connecticut Municipal Bond
Fund, Class Y shares, versus a similar investment in the Lehman Brothers
Municipal Bond Index and the Consumer Price Index.
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 Class B
shares would be lower.
4
<PAGE>
EVERGREEN
Connecticut Municipal Bond Fund
Portfolio
Management
[Photograph appears here of Jocelyn Turner]
Jocelyn Turner
Tenure: November 1997
Spreads - or the difference in yields -
between high-rated and low-rated securities narrowed considerably in the
municipal bond market over the last twelve months. We took advantage of this
compression of spreads by focusing security selection on higher quality issues.
Subsequently, the portfolio's weighting of AAA-rated issues increased from 59%
to 66% during the fiscal year. Likewise, the Fund's duration increased nearly
13% during the same period. Duration was lengthened in response to our belief
that rates would remain in a low and stable trading range, a forecast which
proved accurate due primarily to moderating economic growth and benign
inflation. Given our cautiously positive market outlook, we anticipate
maintaining a duration which is neutral to modestly long during the coming
months.
----------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
[Pie chart appears here with the following values]
General Obligation Notes/Bonds--35.6%
Hospitals/Healthcare--24.7%
Other investments and other assets
and liabilities, net--14.7%
Education--8.0%
Sales Tax--7.3%
Industrial Development/
Pollution Control--2.9%
Housing--2.8%
Escrow--2.5%
Water & Sewer--1.5%
----------------------------------------------------------------
PORTFOLIO QUALITY
(as a percentage of portfolio assets)
[Pie chart appears here with the following values]
AAA--66.2%
AA--21.3%
A--7.8%
BAA--4.7%
5
<PAGE>
EVERGREEN
Massachusetts Tax Free Fund
Fund at a Glance as of March 31, 1998
Portfolio
Characteristics
Total Net Assets $10,099,107
Average Credit Quality AAA
Average Maturity 14.4 years
Average Duration 7.3 years
-------------------------------------------------------
CURRENT INVESTMENT STYLE
[Graphic of Style Box Morningstar's Style Box is based on a
appears here] portfolio date as of 3/31/98.
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.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
Inception Date 2/4/94 2/4/94 2/4/94
Average Annual Returns
One year with sales charge 5.25% 4.60% 8.62%
One year w/o sales charge 10.50% 9.60% 9.62%
3 years 5.61% 5.63% 6.52%
Since Inception 3.60% 3.69% 4.06%
Maximum Sales Charge 4.75% 5.00% 1.00%
Front-End CDSC CDSC
30-day SEC Yield 3.85% 3.31% 3.31%
Taxable Equivalent** 6.37% 5.48% 5.48%
12-month distributions per share $ 0.42 $ 0.35 $ 0.35
Lipper Ranking out of 56 Massachusetts
Municipal Debt Funds(1)
(for the 1 year period ending 3/31/98) #14 #39 #38
</TABLE>
* 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 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
[Performance graph appears here with the following plot points]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Lehman Brothers Consumer Lehman Brothers
Class A Shares Municipal Bond Index Price Index Massachusetts Municipal Bond Index
2/94 9,525 10,000 10,000 10,000
3/94 8,820 9,344 10,068 9,359
3/95 9,370 10,039 10,356 10,088
3/96 9,993 10,880 10,638 10,919
3/97 10,484 11,474 10,944 11,532
3/98 11,585 12,702 11,094 12,728
</TABLE>
Comparison of a $10,000 investment in Evergreen Massachusetts Tax Free Fund,
Class A shares, versus a similar investment in the Lehman Brothers Municipal
Bond Index, the Lehman Brothers Massachusetts Municipal Bond Index, and the
Consumer Price Index.
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 Lehman Brothers Municipal Bond Index and the
Lehman Brothers Massachusetts Municipal Bond Index are unmanaged indices. These
indices do not include transaction costs associated with buying and selling
securities nor any management fees. The Consumer Price Index, a measure of
inflation, is through March 31, 1998.
6
<PAGE>
EVERGREEN
Massachusetts Tax Free Fund
Portfolio
Management
[Photograph of George Kimball appears here]
George Kimball, CFA
Tenure: January 1996
For the twelve months ended March 31, 1998, your Fund's Class A shares
produced a total return of 10.50%, placing it in the top 25% of the
Massachusetts municipal bond funds followed by Lipper Analytical
Services, an independent mutual fund rating company.1 The investment
environment in Massachusetts continued to be positive. The state's
general obligation bonds were upgraded to AA- from A+ in light of the
strength of the Massachusetts economy and improving fiscal operations.
These favorable conditions have been the driving force behind the strong
performance of Massachusetts tax-exempt bonds, as investors absorbed
heavy supply in the year's first quarter and continue to monitor the
political uncertainties associated with the upcoming election year. With
this as a background, we emphasized income, quality and total return. We
focused on bonds with 15-20 year maturities and invested in some zero
coupon bonds to increase the Fund's potential for total return. The
Fund's heaviest sector weightings were in state and local general
obligation bonds, the transportation sector, and water and sewer bonds.
This enabled us to increase liquidity and benefit from the state's
positive investment environment. We also invested in the Health and
Hospitals sector and securities issued by the Commonwealth of Puerto
Rico to increase the Fund's yield. As of the end of the reporting
period, 73% of the Fund's assets were invested in AAA-rated securities.
----------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
[Pie chart appears here with the following values]
General Obligation Notes/Bonds--34.6%
Transportation--14.9%
Water & Sewer--12.5%
Education--12.0%
Hospitals/Healthcare--10.8%
Other investments and other assets
and liabilities, net--7.9%
Industrial Development/
Pollution Control--4.1%
Housing--3.2%
----------------------------------------------------------------
PORTFOLIO QUALITY
(as a percentage of portfolio assets)
[Pie Chart appears here with the following plot points]
AAA--73.1%
AA--15.7%
A--5.7%
BAA--5.5%
7
<PAGE>
EVERGREEN
Missouri Tax Free Fund
Fund at a Glance as of March 31, 1998
Portfolio
Characteristics
Total Net Assets $25,439,198
Average Credit Quality AA
Average Maturity 17.2 years
Average Duration 7.3 years
-------------------------------------------------------
CURRENT INVESTMENT STYLE
[Graphic appears here] Morningstar's Style Box is based on a
portfolio date as of 3/31/98.
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.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
Inception Date 2/1/94 2/1/94 2/1/94
Average Annual Returns
One year with sales charge 5.73% 5.26% 9.15%
One year w/o sales charge 11.01% 10.26% 10.15%
3 years 6.37% 6.44% 7.31%
Since Inception 4.60% 4.61% 4.97%
Maximum Sales Charge 4.75% 5.00% 1.00%
Front End CDSC CDSC
30-day SEC Yield 4.33% 3.80% 3.79%
Taxable Equivalent** 7.17% 6.29% 6.27%
12-month distributions per share $ 0.47 $ 0.39 $ 0.39
Lipper Ranking out of 24 Missouri
Municipal Debt Funds(1)
(for the 1 year period ending 3/31/98) #3 #9 #11
</TABLE>
*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 with the following plot points]
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Lehman Brothers Consumer Lehman Brothers
Class A Shares Municipal Bond Index Price Index Missouri Municipal Bond Index
2/94 9,525 10,000 10,000 10,000
3/94 9,069 9,344 10,068 9,315
3/95 9,545 10,039 10,356 10,012
3/96 10,327 10,880 10,638 10,863
3/97 10,866 11,474 10,944 11,406
3/98 12,062 12,702 11,094 12,571
</TABLE>
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, the Lehman Brothers Missouri Municipal Bond Index, and the Consumer
Price Index.
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 Lehman Brothers Municipal Bond Index and the
Lehman Brothers Missouri Municipal Bond Index are unmanaged indices. These
indices do not include transaction costs associated with buying and selling
securities nor any management fees. The Consumer Price Index, a measure of
inflation, is through March 31, 1998.
8
<PAGE>
EVERGREEN
Missouri Tax Free Fund
Portfolio
Management
[Photograph appears here of George Kimball]
George Kimball, CFA
Tenure: January 1996
Your Fund's Class A shares returned 11.01% for the twelve-month period ended
March 31, 1998, ranking it in the top 13% of the Missouri municipal bond funds
followed by Lipper Analytical Services, an independent mutual fund rating
company.1 Over the past twelve months, prices of Missouri municipal bonds rose
on a combination of the State's ongoing sound fiscal and economic health, a
limited supply of new Missouri tax-exempt debt and steady demand. We expect a
similar relationship between supply and demand to exist as we head further into
1998, which should continue to be positive for Missouri bondholders. We
emphasized income, quality and total return in managing your Fund. As of March
31, 1998, 54% of net assets were invested in securities rated "AAA". To enhance
income, we held a substantial position in the Health and Hospitals sector,
Leases and Certificates of Participation (COPs) and securities issued by the
Commonwealth of Puerto Rico. We focused on bonds with 15-20 year maturities to
improve both yield and total return potential. The yields on these bonds were
higher and their prices rose faster than those with shorter maturities in the
declining interest rate environment that existed over the past year.
----------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
[Pie graph appears here with the following values]
Hospitals/Healthcare--23.5%
General Obligation Notes/Bonds--22.8%
Lease Rental Bonds/
Municipal Leases--18.5%
Utility--8.5%
Housing--8.0%
Water & Sewer--7.0%
Education--6.3%
Transportation--4.6%
Other assets and liabilities, net--0.8%
----------------------------------------------------------------
PORTFOLIO QUALITY
(as a percentage of portfolio assets)
[Pie chart appears here with the following values]
AAA--54.1%
AA--19.7%
A--15.5%
BAA--6.4%
Not Rated--4.3%
9
<PAGE>
EVERGREEN
New Jersey Tax Free Income Fund
Fund at a Glance as of March 31, 1998
Portfolio
Characteristics
Total Net Assets $150,589,731
Average Credit Quality AA+
Average Maturity 14.9 years
Average Duration 8.6 years
-------------------------------------------------------
CURRENT INVESTMENT STYLE
[Graphic appears here] Morningstar's Style Box is based on a
portfolio date as of 3/31/98.
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.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class Y
<S> <C> <C> <C>
Inception Date 7/16/91 1/30/96 2/8/96
Average Annual Returns
One year with sales charge 4.15% 3.35% n/a
One year w/o sales charge 9.34% 8.35% 9.44%
3 years 5.35% - -
5 years 4.98% - -
Since Inception 6.52% 3.34% 5.36%
Maximum Sales Charge 4.75% 5.00% n/a
Front End CDSC
30-day SEC Yield 4.27% 3.57% 4.58%
Taxable Equivalent** 7.07% 5.91% 7.58%
12-month distributions per share $ 0.62 $ 0.52 $ 0.63
</TABLE>
*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.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
[Line graph appears here with the following plot points]
Lehman Brothers Municipal
Class A Shares Bond Index Consumer Price Index
7/91 9,525 10,000 10,000
3/92 10,046 10,639 10,228
3/93 11,384 11,972 10,543
3/94 11,629 12,249 10,808
3/95 12,415 13,160 11,116
3/96 13,315 14,263 11,419
3/97 13,938 15,041 11,747
3/98 15,240 16,651 11,909
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 and the Consumer Price Index.
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 Lehman Brothers Municipal Bond Index is an
unmanaged index. The index does not include transaction costs associated with
buying and selling securities nor any management fees. The Consumer Price
Index, a measure of inflation, is through March 31, 1998.
10
<PAGE>
EVERGREEN
New Jersey Tax Free Income Fund
Portfolio
Management
[Photograph appears here of Jocelyn Turner]
Jocelyn Turner
Tenure: November 1992
Investors witnessed a relatively scarce supply of municipal bonds within the
state of New Jersey over the past twelve months.
Spreads - or the difference between yields - between high- and low-rated bonds
narrowed considerably during the same period. This compression of spreads
essentially meant that investors received less reward for assuming a greater
amount of risk associated with lower-rated securities. As a result, we shifted
our security selection to focus on higher quality issues. During the final
months of the fiscal period, a portion of new inflows were allocated into cash
as a protective measure against potentially increasing interest rates. Despite
short-term volatility, we feel that moderating economic growth and benign
inflation provide the backdrop for a low, stable trading range for interest
rates over the long term. Subsequently, we anticipate maintaining a neutral to
slightly longer duration in the coming months.
----------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
[Pie chart appears here with the following values]
General Obligation Notes/Bonds--22.9%
Other investments and other assets
and liabilities, net--19.3%
Water & Sewer--17.4%
Hospitals/Healthcare--14.0%
Transportation-13.4%
Education--5.7%
Escrow--3.7%
Industrial Development/
Pollution Control--1.8%
Lease Rental Bonds/
Municipal Leases--1.8%
----------------------------------------------------------------
PORTFOLIO QUALITY
(as a percentage of portfolio assets)
[Pie Chart Appears here with the following values]
AAA--65.9%
AA--21.9%
A--6.8%
BBB--2.1%
Not Rated--3.3%
11
<PAGE>
EVERGREEN
New York Tax Free Fund
Fund at a Glance as of March 31, 1998
Portfolio
Characteristics
Total Net Assets $22,268,608
Average Credit Quality AAA
Average Maturity 15.9 years
Average Duration 7.5 years
-------------------------------------------------------
CURRENT INVESTMENT STYLE
[Graphic appears here] Morningstar's Style Box is based on a
portfolio date as of 3/31/98.
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.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C
<S> <C> <C> <C>
Inception Date 2/4/94 2/4/94 2/4/94
Average Annual Returns
One year with sales charge 5.31% 4.80% 8.69%
One year w/o sales charge 10.56% 9.80% 9.69%
3 years 5.97% 6.04% 6.93%
Since Inception 4.46% 4.53% 4.90%
Maximum Sales Charge 4.75% 5.00% 1.00%
Front End CDSC CDSC
30-day SEC Yield 4.20% 3.66% 3.66%
Taxable Equivalent** 6.95% 6.06% 6.06%
12-month distributions per share $ 0.52 $ 0.44 $ 0.44
Lipper Ranking out of 15 New York
Insured Funds(1)
(for the 1 year period ending 3/31/98) #1 #5 #7
</TABLE>
*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
(Graph appears here. See the table below for the plot points.)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Class A Lehman Brothers Consumer Lehman Brothers
Shares Municipal Bond Index Price Index New York Municipal Bond Index
2/94 9,525 10,000 10,000 10,000
3/94 8,962 9,344 10,068 9,377
3/95 9,597 10,039 10,356 10,018
3/96 10,339 10,880 10,638 10,880
3/97 10,843 11,474 10,944 11,522
3/98 11,988 12,702 11,094 12,848
</TABLE>
Comparison of a $10,000 investment in Evergreen New York Tax Free Fund, Class A
shares, versus a similar investment in the Lehman Brothers Municipal Bond
Index, the Lehman Brothers New York Municipal Bond Index, and the Consumer
Price Index.
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 Lehman Brothers Municipal Bond Index and the
Lehman Brothers New York Municipal Bond Index are unmanaged indices. These
indices do not include transaction costs associated with buying and selling
securities nor any management fees. The Consumer Price Index, a measure of
inflation, is through March 31, 1998.
12
<PAGE>
EVERGREEN
New York Tax Free Fund
Portfolio
Management
(Photo of George Kimball)
George Kimball, CFA
Tenure: January 1996
Your Fund's Class A shares returned 10.56% for the twelve-month period ended
March 31, 1998, ranking it the #1 fund among the insured New York municipal
bond funds followed by Lipper Analytical Services, an independent mutual fund
rating company.1 New York tax-exempt bonds were among the top-performing asset
classes in the municipal bond market over the past twelve months. Economic
strength, rising tax revenues and conservative budgeting strengthened the
financial conditions of New York municipalities; and, reflecting these
improving financial conditions, the general obligations of New York City, the
state of New York and state-appropriated paper all received rating upgrades. We
capitalized on this environment by maintaining a substantial position in state
and local general obligation bonds, as well as state-appropriated debt. We
increased the portfolio's potential for yield and total return by investing in
bonds with 15-20 year maturities, many of which were non-callable. We also
boosted yield by increasing the Fund's position in uninsured bonds, emphasizing
securities rated "AA" and "BBB".
----------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
[Pie Chart Appears here with the following values]
General Obligation Notes/Bonds--36.4%
Water & Sewer--14.1%
Hospitals/Healthcare--13.8%
Other investments and other assets and liabilities, net--13.8%
Education--9.7%
Transportation--6.1%
Housing--4.2%
Variable Rate Demand Notes--0.9%
Airport--0.5%
Industrial Development/Pollution Control--0.5%
----------------------------------------------------------------
PORTFOLIO QUALITY
(as a percentage of portfolio assets)
[Pie Chart Appears here with the following values]
AAA--86.6%
AA--5.6%
A--1.3%
BAA--6.5%
13
<PAGE>
EVERGREEN
Pennsylvania Tax Free Fund
Fund at a Glance as of March 31, 1998
Portfolio
Characteristics
Total Net Assets $220,528,331
Average Credit Quality AA+
Average Maturity 14.9 years
Average Duration 8.5 years
-------------------------------------------------------
CURRENT INVESTMENT STYLE
[Graphic appears here] Morningstar's Style Box is based on a
portfolio date as of 3/31/98.
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.
Source: 1998 Morningstar, Inc.
- --------------------------------------------------------------------------------
PERFORMANCE AND RETURNS*
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
<S> <C> <C> <C> <C>
Inception Date 12/27/90 2/1/93 2/1/93 11/24/97
Average Annual Returns
One year with sales charge 4.80% 4.27% 8.34% -
One year w/o sales charge 10.02% 9.27% 9.34% -
3 years 5.92% 5.97% 6.90% -
5 years 5.04% 4.93% 5.28% -
Since Inception 7.53% 5.50% 5.68% 2.54%
Maximum Sales Charge 4.75% 5.00% 1.00% n/a
Front End CDSC CDSC
30-day SEC Yield 4.07% 3.52% 3.52% 4.52%
Taxable Equivalent** 6.74% 5.83% 5.83% 7.48%
12-month distributions per
share $ 0.54 $ 0.44 $ 0.45 $ 0.19***
</TABLE>
*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.
***Represents dividends since inception, November 24, 1997.
- --------------------------------------------------------------------------------
LONG TERM GROWTH
[Graph appears here. See the table below for plot points.]
Lehman Brothers Municipal
Class A Shares Bond Index Consumer Price Index
12/90 9,525 10,000 10,000
3/91 9,941 10,226 10,090
3/92 11,141 11,247 10,411
3/93 12,623 12,656 10,733
3/94 12,949 12,950 11,002
3/95 13,584 13,912 11,315
3/96 14,628 15,078 11,624
3/97 15,403 15,901 11,958
3/98 16,946 17,603 12,123
Comparison of a $10,000 investment in Evergreen Pennsylvania Tax Free Fund,
Class A shares, versus a similar investment in the Lehman Brothers Municipal
Bond Index and the Consumer Price Index.
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 Lehman Brothers Municipal Bond Index is an
unmanaged index. The index does not include transaction costs associated with
buying and selling securities nor any management fees. The Consumer Price
Index, a measure of inflation, is through March 31, 1998.
14
<PAGE>
EVERGREEN
Pennsylvania Tax Free Fund
Portfolio
Management
[Photo of Jocelyn Turner]
Jocelyn Turner
Tenure: November 1992
Yields between high- and low-rated municipal bonds narrowed considerably during
the twelve months ended March 31. This compression of spreads essentially meant
that investors were offered less incentive to purchase lower quality municipal
bonds. Subsequently, we shifted our focus toward higher quality issues,
prompting the portfolio's weighting of AAA-rated bonds to edge up over 69%.
Duration increased a rather substantial 38%, from 6.2 years to 8.5 years. This
move was in response to our analysis that indicated rates would remain
relatively low and range-bound through early 1998. Due to moderating economic
growth and few signs of significant inflationary pressure, we anticipate
maintaining a neutral to modestly long duration relative to the benchmark in
the coming months.
----------------------------------------------------------------
PORTFOLIO COMPOSITION
(as a percentage of net assets)
[Pie Chart Appears here with the following values]
General Obligation Notes/Bonds--31.7%
Hospitals/Healthcare--13.5%
Water & Sewer--10.8%
Industrial Development/Pollution Control--10.5%
Education--9.9%
Other investments and other assets and liabilities, net--9.5%
Transportation--4.9%
Escrow--4.4%
Housing--3.2%
Public Facilities--1.6%
----------------------------------------------------------------
PORTFOLIO QUALITY
(as a percentage of portfolio assets)
[Pie Chart Appears here with the following values]
AAA--69.2%
AA--18.6%
A--8.1%
BAA--3.6%
Not Rated--0.5%
15
<PAGE>
EVERGREEN
California Tax Free Fund
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Year Four Months
Ended Ended
March 31, 1998 March 31, 1997*
<S> <C> <C>
CLASS A SHARES
Net asset value beginning of year $ 9.44 $ 9.73
======== ==========
Income from investment operations
Net investment income 0.45 0.16
Net realized and unrealized gain (loss) on investments
and futures contracts 0.53 ( 0.28)
-------- ----------
Total from investment operations 0.98 ( 0.12)
-------- ----------
Less distributions from
Net investment income ( 0.44) ( 0.16)
In excess of net investment income 0 ( 0.01)
--------- ----------
Total distributions ( 0.44) ( 0.17)
--------- ----------
Net asset value end of year $ 9.98 $ 9.44
========= ==========
Total return (b) 10.55% ( 1.29%)
Ratios/supplemental data
Ratios to average net assets
Expenses 0.78% 0.77%(a)
Expenses excluding indirectly paid expenses 0.78% 0.75%(a)
Expenses excluding waivers and/or reimbursements 1.03% 1.24%(a)
Net investment income 4.60% 4.91%(a)
Portfolio turnover rate 74% 39%
Net assets end of year (thousands) $ 6,420 $ 4,192
<CAPTION>
February 1, 1994
Year Ended November 30, (Commencement of
----------------------- Class Operations) to
1996 1995 November 30, 1994
<S> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of year $ 9.86 $ 8.70 $ 10.00
======= ======= ===========
Income from investment operations
Net investment income 0.48 0.49 0.44
Net realized and unrealized gain (loss) on investments
and futures contracts ( 0.11) 1.17 ( 1.30)
-------- ------- -----------
Total from investment operations 0.37 1.66 ( 0.86)
-------- ------- -----------
Less distributions from
Net investment income ( 0.48) ( 0.47) ( 0.44)
In excess of net investment income ( 0.02) ( 0.03) 0
-------- -------- -----------
Total distributions ( 0.50) ( 0.50) ( 0.44)
-------- -------- -----------
Net asset value end of year $ 9.73 $ 9.86 $ 8.70
======== ======== ===========
Total return (b) 3.99% 19.63% ( 8.78%)
Ratios/supplemental data
Ratios to average net assets
Expenses 0.77% 0.72% 0.41%(a)
Expenses excluding indirectly paid expenses 0.75% 0.69% -
Expenses excluding waivers and/or reimbursements 1.19% 1.31% 1.66%(a)
Net investment income 5.06% 5.37% 5.53%(a)
Portfolio turnover rate 120% 119% 104%
Net assets end of year (thousands) $ 4,759 $ 4,555 $ 3,006
</TABLE>
<TABLE>
<CAPTION>
Year Four Months
Ended Ended
March 31, 1998 March 31, 1997*
<S> <C> <C>
CLASS B SHARES
Net asset value beginning of year $ 9.40 $ 9.69
======== ==========
Income from investment operations
Net investment income 0.37 0.13
Net realized and unrealized gain (loss) on investments
and futures contracts 0.53 ( 0.28)
-------- ----------
Total from investment operations 0.90 ( 0.15)
-------- ----------
Less distributions from
Net investment income ( 0.36) ( 0.13)
In excess of net investment income 0 ( 0.01)
--------- ----------
Total distributions ( 0.36) ( 0.14)
--------- ----------
Net asset value end of year $ 9.94 $ 9.40
========= ==========
Total return (b) 9.75% ( 1.54%)
Ratios/supplemental data
Ratios to average net assets
Expenses 1.52% 1.52%(a)
Expenses excluding indirectly paid expenses 1.52% 1.50%(a)
Expenses excluding waivers and/or reimbursements 1.77% 1.99%(a)
Net investment income 3.87% 4.16%(a)
Portfolio turnover rate 74% 39%
Net assets end of year (thousands) $ 18,967 $ 21,794
<CAPTION>
February 1, 1994
Year Ended November 30, (Commencement of
----------------------- Class Operations) to
1996 1995 November 30, 1994
<S> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of year $ 9.82 $ 8.68 $ 10.00
======= ======= ===========
Income from investment operations
Net investment income 0.41 0.44 0.40
Net realized and unrealized gain (loss) on investments
and futures contracts ( 0.11) 1.17 ( 1.28)
------- ------- -----------
Total from investment operations 0.30 1.61 ( 0.88)
------- ------- -----------
Less distributions from
Net investment income ( 0.41) ( 0.44) ( 0.40)
In excess of net investment income ( 0.02) ( 0.03) ( 0.04)
------- ------- -----------
Total distributions ( 0.43) ( 0.47) ( 0.44)
------- ------- -----------
Net asset value end of year $ 9.69 $ 9.82 $ 8.68
======= ======= ===========
Total return (b) 3.23% 18.95% ( 9.00%)
Ratios/supplemental data
Ratios to average net assets
Expenses 1.52% 1.48% 1.16%(a)
Expenses excluding indirectly paid expenses 1.50% 1.45% -
Expenses excluding waivers and/or reimbursements 1.94% 2.07% 2.36%(a)
Net investment income 4.31% 4.57% 4.83%(a)
Portfolio turnover rate 120% 119% 104%
Net assets end of year (thousands) $22,719 $22,743 $ 11,415
</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 year)
<TABLE>
<CAPTION>
Year Four Months
Ended Ended
March 31, 1998 March 31, 1997*
<S> <C> <C>
CLASS C SHARES
Net asset value beginning of year $ 9.38 $ 9.68
======== ==========
Income from investment operations
Net investment income 0.37 0.14
Net realized and unrealized gain (loss) on investments
and futures contracts 0.53 ( 0.30)
-------- ----------
Total from investment operations 0.90 ( 0.16)
-------- ----------
Less distributions from
Net investment income ( 0.36) ( 0.13)
In excess of net investment income 0 ( 0.01)
--------- ----------
Total distributions ( 0.36) ( 0.14)
--------- ----------
Net asset value end of year $ 9.92 $ 9.38
========= ==========
Total return (b) 9.77% ( 1.64%)
Ratios/supplemental data
Ratios to average net assets
Expenses 1.52% 1.52%(a)
Expenses excluding indirectly paid expenses 1.52% 1.50%(a)
Expenses excluding waivers and/or reimbursements 1.77% 1.99%(a)
Net investment income 3.87% 4.16%(a)
Portfolio turnover rate 74% 39%
Net assets end of year (thousands) $ 1,735 $ 1,849
<CAPTION>
February 1, 1994
Year Ended November 30, (Commencement of
----------------------- Class Operations) to
1996 1995 November 30, 1994
<S> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of year $ 9.80 $ 8.68 $ 10.00
======= ======= ===========
Income from investment operations
Net investment income 0.41 0.43 0.39
Net realized and unrealized gain (loss) on investments
and futures contracts ( 0.10) 1.15 ( 1.29)
-------- ------- -----------
Total from investment operations 0.31 1.58 ( 0.90)
-------- ------- -----------
Less distributions from
Net investment income ( 0.41) ( 0.43) ( 0.39)
In excess of net investment income ( 0.02) ( 0.03) ( 0.03)
-------- -------- -----------
Total distributions ( 0.43) ( 0.46) ( 0.42)
-------- -------- -----------
Net asset value end of year $ 9.68 $ 9.80 $ 8.68
======== ======== ===========
Total return (b) 3.34% 18.69% ( 9.08%)
Ratios/supplemental data
Ratios to average net assets
Expenses 1.52% 1.49% 1.16%(a)
Expenses excluding indirectly paid expenses 1.50% 1.46% -
Expenses excluding waivers and/or reimbursements 1.94% 2.07% 2.38%(a)
Net investment income 4.31% 4.51% 4.96%(a)
Portfolio turnover rate 120% 119% 104%
Net assets end of year (thousands) $ 1,521 $ 1,535 $ 624
</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 the period)
<TABLE>
<CAPTION>
December 30, 1997
(Commencement of
Class Operations)
through
March 31, 1998
<S> <C>
CLASS A SHARES
Net asset value beginning of period $ 6.40
==========
Income from investment operations
Net investment income 0.07
Net realized and unrealized loss on investments ( 0.02)
----------
Total from investment operations 0.05
----------
Less distributions from net investment income ( 0.07)
----------
Net asset value end of period $ 6.38
==========
Total return (b) 0.77%
Ratios/supplemental data
Ratios to average net assets
Total expenses 0.86%(a)
Total expenses excluding indirectly paid expenses 0.85%(a)
Total expenses excluding waivers and/or reimbursement 1.13%(a)
Net investment income 4.38%(a)
Portfolio turnover rate 17%
Net assets end of period (thousands) $ 146
</TABLE>
<TABLE>
<CAPTION>
January 9, 1998
(Commencement of
Class Operations)
through
March 31, 1998
<S> <C>
CLASS B SHARES
Net asset value beginning of period $ 6.44
==========
Income from investment operations
Net investment income 0.05
Net realized and unrealized loss on investments ( 0.06)
----------
Total from investment operations ( 0.01)
----------
Less distributions from net investment income ( 0.05)
----------
Net asset value end of period $ 6.38
==========
Total return (b) ( 0.21%)
Ratios/supplemental data
Ratios to average net assets
Total expenses 1.61%(a)
Total expenses excluding indirectly paid expenses 1.60%(a)
Total expenses excluding waivers and/or reimbursement 1.89%(a)
Net investment income 3.36%(a)
Portfolio turnover rate 17%
Net assets end of period (thousands) $ 331
</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 the period)
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of
Class Operations)
through
March 31, 1998
<S> <C>
CLASS Y SHARES
Net asset value beginning of period $ 6.32
==========
Income from investment operations
Net investment income 0.10
Net realized and unrealized gain on investments 0.05
----------
Total from investment operations 0.15
----------
Less distributions from net investment income ( 0.10)
----------
Net asset value end of period $ 6.37
==========
Total return 2.39%
Ratios/supplemental data
Ratios to average net assets
Total expenses 0.61%(a)
Total expenses excluding indirectly paid expenses 0.60%(a)
Total expenses excluding waivers and/or reimbursement 0.88%(a)
Net investment income 4.50%(a)
Portfolio turnover rate 17%
Net assets end of period (thousands) $ 67,675
</TABLE>
(a) Annualized.
See Combined Notes to Financial Statements.
19
<PAGE>
EVERGREEN
Massachusetts Tax Free Fund
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
February 4, 1994
(Commencement of
Year Ended March 31, Class Operations) to
1998 1997 1996 1995 March 31, 1994
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of year $ 9.23 $ 9.29 $ 9.19 $ 9.17 $ 10.00
======== ======== ======== ======== ==========
Income from investment operations
Net investment income 0.45 0.47 0.51 0.53 0.08
Net realized and unrealized gain (loss) on
investments and futures contracts 0.50 ( 0.03) 0.09 0.02 ( 0.82)
-------- --------- -------- -------- ----------
Total from investment operations 0.95 0.44 0.60 0.55 ( 0.74)
-------- --------- -------- -------- ----------
Less distributions from
Net investment income ( 0.42) ( 0.47) ( 0.48) ( 0.53) ( 0.08)
In excess of net investment income 0 ( 0.03) ( 0.02) 0 ( 0.01)
--------- --------- --------- --------- ----------
Total distributions ( 0.42) ( 0.50) ( 0.50) ( 0.53) ( 0.09)
--------- --------- --------- --------- ----------
Net asset value end of year $ 9.76 $ 9.23 $ 9.29 $ 9.19 $ 9.17
========= ========= ========= ========= ==========
Total return (b) 10.50% 4.92% 6.64% 6.23% ( 7.40%)
Ratios/supplemental data
Ratios to average net assets
Expenses 0.77% 0.76% 0.75% 0.46% 0.35%(a)
Expenses excluding indirectly paid expenses 0.77% 0.75% 0.74% - -
Expenses excluding waivers and/or
reimbursements 1.26% 1.58% 1.59% 1.93% 3.22%(a)
Net investment income 4.64% 5.19% 5.36% 5.90% 5.07%(a)
Portfolio turnover rate 97% 110% 165% 77% 7%
Net assets end of year (thousands) $ 2,076 $ 2,063 $ 1,786 $ 1,974 $ 1,472
</TABLE>
<TABLE>
<CAPTION>
February 4, 1994
(Commencement of
Year Ended March 31, Class Operations) to
1998 1997 1996 1995 March 31, 1994
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of year $ 9.17 $ 9.22 $ 9.15 $ 9.19 $ 10.00
======== ======== ======== ======== ==========
Income from investment operations
Net investment income 0.36 0.41 0.43 0.48 0.08
Net realized and unrealized gain (loss) on
investments and futures contracts 0.51 ( 0.03) 0.09 ( 0.01) ( 0.80)
-------- --------- -------- --------- ----------
Total from investment operations 0.87 0.38 0.52 0.47 ( 0.72)
-------- --------- -------- --------- ----------
Less distributions from
Net investment income ( 0.35) ( 0.41) ( 0.43) ( 0.47) ( 0.07)
In excess of net investment income 0 ( 0.02) ( 0.02) ( 0.04) ( 0.02)
--------- --------- --------- --------- ----------
Total distributions ( 0.35) ( 0.43) ( 0.45) ( 0.51) ( 0.09)
--------- --------- --------- --------- ----------
Net asset value end of year $ 9.69 $ 9.17 $ 9.22 $ 9.15 $ 9.19
========= ========= ========= ========= ==========
Total return (b) 9.60% 4.25% 5.77% 5.41% ( 7.20%)
Ratios/supplemental data
Ratios to average net assets
Expenses 1.52% 1.51% 1.49% 1.24% 1.10%(a)
Expenses excluding indirectly paid expenses 1.52% 1.50% 1.48% - -
Expenses excluding waivers and/or
reimbursements 2.01% 2.35% 2.38% 2.68% 4.60%(a)
Net investment income 3.89% 4.45% 4.60% 5.15% 3.23%(a)
Portfolio turnover rate 97% 110% 165% 77% 7%
Net assets end of year (thousands) $ 6,384 $ 7,803 $ 7,274 $ 6,169 $ 1,817
</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 year)
<TABLE>
<CAPTION>
February 4, 1994
(Commencement of
Year Ended March 31, Class Operations) to
1998 1997 1996 1995 March 31, 1994
<S> <C> <C> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of year $ 9.16 $ 9.22 $ 9.14 $ 9.19 $ 10.00
======== ======== ======== ======== ==========
Income from investment operations
Net investment income 0.36 0.41 0.43 0.48 0.08
Net realized and unrealized gain (loss) on
investments and futures contracts 0.51 ( 0.04) 0.10 ( 0.02) ( 0.80)
-------- --------- -------- --------- ----------
Total from investment operations 0.87 0.37 0.53 0.46 ( 0.72)
-------- --------- -------- --------- ----------
Less distributions from
Net investment income ( 0.35) ( 0.41) ( 0.43) ( 0.47) ( 0.07)
In excess of net investment income 0 ( 0.02) ( 0.02) ( 0.04) ( 0.02)
--------- --------- --------- --------- ----------
Total distributions ( 0.35) ( 0.43) ( 0.45) ( 0.51) ( 0.09)
--------- --------- --------- --------- ----------
Net asset value end of year $ 9.68 $ 9.16 $ 9.22 $ 9.14 $ 9.19
========= ========= ========= ========= ==========
Total return (b) 9.62% 4.14% 5.89% 5.20% ( 7.21%)
Ratios/supplemental data
Ratios to average net assets
Expenses 1.54% 1.51% 1.49% 1.23% 1.10%(a)
Expenses excluding indirectly paid expenses 1.53% 1.50% 1.48% - -
Expenses excluding waivers and/or
reimbursements 2.02% 2.36% 2.39% 2.68% 4.91%(a)
Net investment income 3.94% 4.46% 4.60% 5.11% 4.28%(a)
Portfolio turnover rate 97% 110% 165% 77% 7%
Net assets end of year (thousands) $ 1,639 $ 2,066 $ 2,303 $ 1,971 $ 369
</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 year)
<TABLE>
<CAPTION>
Year Four Months
Ended Ended
March 31, 1998 March 31, 1997*
<S> <C> <C>
CLASS A SHARES
Net asset value beginning of year $ 9.64 $ 9.86
======== ==========
Income from investment operations
Net investment income 0.46 0.16
Net realized and unrealized gain (loss) on investments
and futures contracts 0.58 ( 0.22)
-------- ----------
Total from investment operations 1.04 ( 0.06)
-------- ----------
Less distributions from
Net investment income ( 0.47) ( 0.16)
In excess of net investment income 0 0(c)
--------- ----------
Total distributions ( 0.47) ( 0.16)
--------- ----------
Net asset value end of year $ 10.21 $ 9.64
========= ==========
Total return (b) 11.01% ( 0.57%)
Ratios/supplemental data
Ratios to average net assets
Expenses 0.78% 0.76%(a)
Expenses excluding indirectly paid expenses 0.78% 0.75%(a)
Expenses excluding waivers and/or reimbursements 1.16% 1.31%(a)
Net investment income 4.83% 5.05%(a)
Portfolio turnover rate 42% 12%
Net assets end of year (thousands) $ 4,897 $ 2,627
<CAPTION>
February 1, 1994
Year Ended November 30, (Commencement of
----------------------- Class Operations) to
1996 1995 November 30, 1994
<S> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of year $ 9.91 $ 8.72 $ 10.00
======= ======= ===========
Income from investment operations
Net investment income 0.50 0.50 0.44
Net realized and unrealized gain (loss) on investments
and futures contracts ( 0.06) 1.19 ( 1.28)
-------- ------- -----------
Total from investment operations 0.44 1.69 ( 0.84)
-------- ------- -----------
Less distributions from
Net investment income ( 0.47) ( 0.47) ( 0.44)
In excess of net investment income ( 0.02) ( 0.03) 0(c)
-------- -------- -----------
Total distributions ( 0.49) ( 0.50) ( 0.44)
-------- -------- -----------
Net asset value end of year $ 9.86 $ 9.91 $ 8.72
======== ======== ===========
Total return (b) 4.66% 19.86% ( 8.55%)
Ratios/supplemental data
Ratios to average net assets
Expenses 0.76% 0.72% 0.43%(a)
Expenses excluding indirectly paid expenses 0.75% 0.69% -
Expenses excluding waivers and/or reimbursements 1.22% 1.32% 1.54%(a)
Net investment income 4.93% 5.26% 5.38%(a)
Portfolio turnover rate 126% 74% 25%
Net assets end of year (thousands) $ 2,610 $ 4,848 $ 3,581
</TABLE>
<TABLE>
<CAPTION>
Year Four Months
Ended Ended
March 31, 1998 March 31, 1997*
<S> <C> <C>
CLASS B SHARES
Net asset value beginning of year $ 9.52 $ 9.74
======== ==========
Income from investment operations
Net investment income 0.40 0.13
Net realized and unrealized gain (loss) on investments
and futures contracts 0.56 ( 0.21)
-------- ----------
Total from investment operations 0.96 ( 0.08)
-------- ----------
Less distributions from
Net investment income ( 0.39) ( 0.14)
In excess of net investment income 0 0(c)
--------- ----------
Total distributions ( 0.39) ( 0.14)
--------- ----------
Net asset value end of year $ 10.09 $ 9.52
========= ==========
Total return (b) 10.26% ( 0.83%)
Ratios/supplemental data
Ratios to average net assets
Expenses 1.53% 1.51%(a)
Expenses excluding indirectly paid expenses 1.52% 1.50%(a)
Expenses excluding waivers and/or reimbursements 1.90% 2.06%(a)
Net investment income 4.12% 4.31%(a)
Portfolio turnover rate 42% 12%
Net assets end of year (thousands) $ 19,552 $ 20,127
<CAPTION>
February 1, 1994
Year Ended November 30, (Commencement of
----------------------- Class Operations) to
1996 1995 November 30, 1994
<S> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of year $ 9.80 $ 8.67 $ 10.00
======= ======= ===========
Income from investment operations
Net investment income 0.40 0.44 0.40
Net realized and unrealized gain (loss) on investments
and futures contracts ( 0.04) 1.15 ( 1.29)
------- ------- -----------
Total from investment operations 0.36 1.59 ( 0.89)
------- ------- -----------
Less distributions from
Net investment income ( 0.40) ( 0.43) ( 0.40)
In excess of net investment income ( 0.02) ( 0.03) ( 0.04)
------- ------- -----------
Total distributions ( 0.42) ( 0.46) ( 0.44)
------- ------- -----------
Net asset value end of year $ 9.74 $ 9.80 $ 8.67
======= ======= ===========
Total return (b) 3.83% 18.79% ( 9.06%)
Ratios/supplemental data
Ratios to average net assets
Expenses 1.52% 1.47% 1.16%(a)
Expenses excluding indirectly paid expenses 1.50% 1.44% -
Expenses excluding waivers and/or reimbursements 2.00% 2.08% 2.49%(a)
Net investment income 4.20% 4.56% 4.70%(a)
Portfolio turnover rate 126% 74% 25%
Net assets end of year (thousands) $21,925 $21,231 $ 12,906
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
(c) Amount represents less than $0.01 per share.
* 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 year)
<TABLE>
<CAPTION>
Year Four Months
Ended Ended
March 31, 1998 March 31, 1997*
<S> <C> <C>
CLASS C SHARES
Net asset value beginning of year $ 9.52 $ 9.73
======== ==========
Income from investment operations
Net investment income 0.38 0.13
Net realized and unrealized gain (loss) on investments
and futures contracts 0.57 ( 0.20)
-------- ----------
Total from investment operations 0.95 ( 0.07)
-------- ----------
Less distributions from
Net investment income ( 0.39) ( 0.14)
In excess of net investment income 0 0(c)
--------- ----------
Total distributions ( 0.39) ( 0.14)
--------- ----------
Net asset value end of year $ 10.08 $ 9.52
========= ==========
Total return (b) 10.15% ( 0.73%)
Ratios/supplemental data
Ratios to average net assets
Expenses 1.52% 1.51%(a)
Expenses excluding indirectly paid expenses 1.51% 1.50%(a)
Expenses excluding waivers and/or reimbursements 1.90% 2.06%(a)
Net investment income 4.10% 4.30%(a)
Portfolio turnover rate 42% 12%
Net assets end of year (thousands) $ 990 $ 1,306
<CAPTION>
February 1, 1994
Year Ended November 30, (Commencement of
----------------------- Class Operations) to
1996 1995 November 30, 1994
<S> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of year $ 9.79 $ 8.66 $ 10.00
======= ======= ===========
Income from investment operations
Net investment income 0.39 0.43 0.39
Net realized and unrealized gain (loss) on investments
and futures contracts ( 0.03) 1.16 ( 1.29)
-------- ------- -----------
Total from investment operations 0.36 1.59 ( 0.90)
-------- ------- -----------
Less distributions from
Net investment income ( 0.40) ( 0.43) ( 0.39)
In excess of net investment income ( 0.02) ( 0.03) ( 0.05)
-------- -------- -----------
Total distributions ( 0.42) ( 0.46) ( 0.44)
-------- -------- -----------
Net asset value end of year $ 9.73 $ 9.79 $ 8.66
======== ======== ===========
Total return (b) 3.83% 18.78% ( 9.25%)
Ratios/supplemental data
Ratios to average net assets
Expenses 1.52% 1.46% 1.15%(a)
Expenses excluding indirectly paid expenses 1.50% 1.44% -
Expenses excluding waivers and/or reimbursements 1.99% 2.07% 2.60%(a)
Net investment income 4.18% 4.56% 4.72%(a)
Portfolio turnover rate 126% 74% 25%
Net assets end of year (thousands) $ 1,387 $ 1,788 $ 1,045
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
(c) Amount represents less than $0.01 per share.
* 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 year)
<TABLE>
<CAPTION>
Seven Months Six Months Year
Year Ended Ended Ended Ended
March 31, 1998 March 31, 1997** August 31, 1996* February 29, 1996
<S> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of year $ 10.74 $ 10.75 $ 11.01 $ 10.53
========= =========== =========== =========
Income from investment operations
Net investment income 0.53 0.31 0.28 0.56
Net realized and unrealized gain (loss) on investments 0.46 ( 0.01) ( 0.26) 0.48
---------- ----------- ----------- ---------
Total from investment operations 0.99 0.30 0.02 1.04
---------- ----------- ----------- ---------
Less distributions from
Net investment income ( 0.53) ( 0.31) ( 0.28) ( 0.56)
Net realized gain on investments (0.09) 0 0 0
---------- ----------- ----------- ----------
Total distributions (0.62) ( 0.31) ( 0.28) ( 0.56)
---------- ----------- ----------- ----------
Net asset value end of year $ 11.11 $ 10.74 $ 10.75 $ 11.01
========== =========== =========== ==========
Total return (b) 9.34% 2.83% 0.19% 10.08%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.50% 0.44%(a) 0.34%(a) 0.36%
Expenses excluding indirectly paid expenses 0.50% 0.44%(a) - -
Expenses excluding waivers and/or reimbursements 1.01% 1.13%(a) 1.11%(a) 1.03%
Net investment income 4.77% 5.02%(a) 5.08%(a) 5.15%
Portfolio turnover rate 37% 15% 0% 4%
Net assets end of year (thousands) $ 31,614 $ 31,434 $ 32,377 $ 41,762
</TABLE>
<TABLE>
<CAPTION>
July 16, 1991
Year Ended February 28, (Commencement of
----------------------------------------- Class Operations) to
1995 1994 1993 February 29, 1992
<S> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of year $ 10.99 $ 11.01 $ 10.22 $ 10.00
========= ========= ========= ==========
Income from investment operations
Net investment income 0.57 0.60 0.63 0.38
Net realized and unrealized gain (loss) on investments ( 0.46) ( 0.02) 0.79 0.22
---------- ---------- --------- ----------
Total from investment operations 0.11 0.58 1.42 0.60
---------- ---------- --------- ----------
Less distributions from net investment income ( 0.57) ( 0.60) ( 0.63) ( 0.38)
---------- ---------- ---------- ----------
Net asset value end of year $ 10.53 $ 10.99 $ 11.01 $ 10.22
========== ========== ========== ==========
Total return (b) 1.41% 5.30% 14.39% 6.03%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.25% 0.14% 0.00% 0.01%(a)
Expenses excluding indirectly paid expenses - - - -
Expenses excluding waivers and/or reimbursements 1.04% 1.05% 1.16% 1.20%(a)
Net investment income 5.52% 5.31% 5.97% 5.89%(a)
Portfolio turnover rate 8% 2% 5% 5%
Net assets end of year (thousands) $ 34,852 $ 42,783 $ 30,863 $ 13,129
</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 year)
<TABLE>
<CAPTION>
Seven Months
Year Ended Ended
March 31, 1998 March 31, 1997**
<S> <C> <C>
CLASS B SHARES
Net asset value beginning of year $ 10.74 $ 10.75
========= ===========
Income from investment operations
Net investment income 0.43 0.25
Net realized and unrealized gain (loss) on investments 0.46 0
--------- -----------
Total from investment operations 0.89 0.25
--------- -----------
Less distributions from
Net investment income ( 0.43) ( 0.26)
Net realized gain on investments ( 0.09) 0
---------- -----------
Total distributions ( 0.52) ( 0.26)
---------- -----------
Net asset value end of year $ 11.11 $ 10.74
========== ===========
Total return (b) 8.35% 2.29%
Ratios/supplemental data
Ratios to average net assets
Expenses 1.41% 1.36%(a)
Expenses excluding indirectly paid expenses 1.41% 1.36%(a)
Expenses excluding waivers and/or reimbursements 1.76% 1.88%(a)
Net investment income 3.85% 4.07%(a)
Portfolio turnover rate 37% 15%
Net assets end of year (thousands) $ 13,645 $ 7,847
<CAPTION>
January 30, 1996
Six Months (Commencement of
Ended Class Operations) to
August 31, 1996* February 29, 1996
<S> <C> <C>
CLASS B SHARES
Net asset value beginning of year $ 11.01 $ 11.08
=========== ===========
Income from investment operations
Net investment income 0.24 0.05
Net realized and unrealized gain (loss) on investments ( 0.26) ( 0.07)
----------- -----------
Total from investment operations ( 0.02) ( 0.02)
----------- -----------
Less distributions from
Net investment income ( 0.24) ( 0.05)
Net realized gain on investments 0 0
----------- -----------
Total distributions ( 0.24) ( 0.05)
----------- -----------
Net asset value end of year $ 10.75 $ 11.01
=========== ===========
Total return (b) ( 0.20%) ( 0.22%)
Ratios/supplemental data
Ratios to average net assets
Expenses 1.28%(a) 0.31%(a)
Expenses excluding indirectly paid expenses - -
Expenses excluding waivers and/or reimbursements 1.85%(a) 1.66%(a)
Net investment income 4.14%(a) 5.23%(a)
Portfolio turnover rate 0% 4%
Net assets end of year (thousands) $ 2,709 $ 186
</TABLE>
<TABLE>
<CAPTION>
Seven Months
Year Ended Ended
March 31, 1998 March 31, 1997**
<S> <C> <C>
CLASS Y SHARES
Net asset value beginning of year $ 10.74 $ 10.75
========= ===========
Income from investment operations
Net investment income 0.54 0.32
Net realized and unrealized gain (loss) on investments 0.46 ( 0.01)
--------- -----------
Total from investment operations 1.00 0.31
--------- -----------
Less distributions from
Net investment income ( 0.54) ( 0.32)
Net realized gain on investments ( 0.09) 0
---------- -----------
Total distributions ( 0.63) ( 0.32)
---------- -----------
Net asset value end of year $ 11.11 $ 10.74
========== ===========
Total return 9.44% 2.88%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.41% 0.36%(a)
Expenses excluding indirectly paid expenses 0.41% 0.36%(a)
Expenses excluding waivers and/or reimbursements 0.76% 0.88%(a)
Net investment income 4.79% 5.08%(a)
Portfolio turnover rate 37% 15%
Net assets end of year (thousands) $ 105,331 $ 9,436
<CAPTION>
February 8, 1996
Six Months (Commencement of
Ended Class Operations) to
August 31, 1996* February 29, 1996
<S> <C> <C>
CLASS Y SHARES
Net asset value beginning of year $ 11.01 $ 11.14
=========== ===========
Income from investment operations
Net investment income 0.28 0.03
Net realized and unrealized gain (loss) on investments ( 0.26) ( 0.13)
----------- -----------
Total from investment operations 0.02 ( 0.10)
----------- -----------
Less distributions from
Net investment income ( 0.28) ( 0.03)
Net realized gain on investments 0 0
----------- -----------
Total distributions ( 0.28) ( 0.03)
----------- -----------
Net asset value end of year $ 10.75 $ 11.01
=========== ===========
Total return 0.20% ( 0.87%)
Ratios/supplemental data
Ratios to average net assets
Expenses 0.31%(a) 0.31%(a)
Expenses excluding indirectly paid expenses - -
Expenses excluding waivers and/or reimbursements 0.87%(a) 0.88%(a)
Net investment income 5.12%(a) 5.28%(a)
Portfolio turnover rate 0% 4%
Net assets end of year (thousands) $ 9,076 $ 18
</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 York Tax Free Fund
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
February 4, 1994
Year Ended March 31, (Commencement of
--------------------------------------------------- Class Operations) to
1998 1997 1996 1995 March 31, 1994
<S> <C> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of year $ 9.64 $ 9.67 $ 9.44 $ 9.32 $ 10.00
======== ======== ======== ======== ===========
Income from investment operations
Net investment income 0.48 0.49 0.48 0.52 0.09
Net realized and unrealized gain (loss) on investments
and futures contracts 0.52 ( 0.03) 0.24 0.12 ( 0.68)
-------- --------- -------- -------- -----------
Total from investment operations 1.00 0.46 0.72 0.64 ( 0.59)
-------- --------- -------- -------- -----------
Less distributions from
Net investment income ( 0.46) ( 0.48) ( 0.47) ( 0.52) ( 0.08)
In excess of net investment income 0 ( 0.01) ( 0.02) 0 ( 0.01)
Net realized gain on investments ( 0.06) 0 0 0 0
--------- --------- --------- --------- -----------
Total distributions ( 0.52) ( 0.49) ( 0.49) ( 0.52) ( 0.09)
--------- --------- --------- --------- -----------
Net asset value end of year $ 10.12 $ 9.64 $ 9.67 $ 9.44 $ 9.32
========= ========= ========= ========= ===========
Total return (b) 10.56% 4.87% 7.73% 7.08% ( 5.91%)
Ratios/supplemental data
Ratios to average net assets
Expenses 0.77% 0.76% 0.75% 0.50% 0.35%(a)
Expenses excluding indirectly paid expenses 0.77% 0.75% 0.74% - -
Expenses excluding waivers and/or reimbursements 1.01% 1.19% 1.31% 1.59% 4.44%(a)
Net investment income 4.78% 5.00% 4.95% 5.48% 3.85%(a)
Portfolio turnover rate 41% 62% 53% 77% 14%
Net assets end of year (thousands) $ 3,559 $ 3,693 $ 3,947 $ 3,323 $ 680
</TABLE>
<TABLE>
<CAPTION>
February 4, 1994
Year Ended March 31, (Commencement of
--------------------------------------------------- Class Operations) to
1998 1997 1996 1995 March 31, 1994
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of year $ 9.55 $ 9.59 $ 9.38 $ 9.32 $ 10.00
======== ======== ======== ======== ===========
Income from investment operations
Net investment income 0.40 0.41 0.41 0.47 0.08
Net realized and unrealized gain (loss) on investments
and futures contracts 0.52 ( 0.03) 0.24 0.09 ( 0.67)
-------- --------- -------- -------- -----------
Total from investment operations 0.92 0.38 0.65 0.56 ( 0.59)
-------- --------- -------- -------- -----------
Less distributions from
Net investment income ( 0.38) ( 0.41) ( 0.42) ( 0.45) ( 0.06)
In excess of net investment income 0 ( 0.01) ( 0.02) ( 0.05) ( 0.03)
Net realized gain on investments ( 0.06) 0 0 0 0
--------- --------- --------- --------- -----------
Total distributions ( 0.44) ( 0.42) ( 0.44) ( 0.50) ( 0.09)
--------- --------- --------- --------- -----------
Net asset value end of year $ 10.03 $ 9.55 $ 9.59 $ 9.38 $ 9.32
========= ========= ========= ========= ===========
Total return (b) 9.80% 4.03% 7.02% 6.28% ( 5.91%)
Ratios/supplemental data
Ratios to average net assets
Expenses 1.52% 1.51% 1.50% 1.25% 1.10%(a)
Expenses excluding indirectly paid expenses 1.52% 1.50% 1.49% - -
Expenses excluding waivers and/or reimbursements 1.76% 1.94% 2.05% 2.35% 5.60%(a)
Net investment income 4.04% 4.25% 4.19% 4.78% 3.01%(a)
Portfolio turnover rate 41% 62% 53% 77% 14%
Net assets end of year (thousands) $ 17,245 $ 19,064 $ 17,151 $ 11,907 $ 2,276
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
See Combined Notes to Financial Statements.
26
<PAGE>
EVERGREEN
New York Tax Free Fund
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
February 4, 1994
Year Ended March 31, (Commencement of
--------------------------------------------------- Class Operations) to
1998 1997 1996 1995 March 31, 1994
<S> <C> <C> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of year $ 9.55 $ 9.58 $ 9.37 $ 9.31 $ 10.00
======== ======== ======== ======== ===========
Income from investment operations
Net investment income 0.39 0.40 0.41 0.48 0.07
Net realized and unrealized gain (loss) on investments
and futures contracts 0.52 ( 0.01) 0.24 0.07 ( 0.67)
-------- --------- -------- -------- -----------
Total from investment operations 0.91 0.39 0.65 0.55 ( 0.60)
-------- --------- -------- -------- -----------
Less distributions from
Net investment income ( 0.38) ( 0.41) ( 0.42) ( 0.46) ( 0.07)
In excess of net investment income 0 ( 0.01) ( 0.02) ( 0.03) ( 0.02)
Net realized gain on investments ( 0.06) 0 0 0 0
--------- --------- --------- --------- -----------
Total distributions ( 0.44) ( 0.42) ( 0.44) ( 0.49) ( 0.09)
--------- --------- --------- --------- -----------
Net asset value end of year $ 10.02 $ 9.55 $ 9.58 $ 9.37 $ 9.31
========= ========= ========= ========= ===========
Total return (b) 9.69% 4.14% 7.02% 6.18% ( 6.02%)
Ratios/supplemental data
Ratios to average net assets
Expenses 1.52% 1.51% 1.50% 1.26% 1.10%(a)
Expenses excluding indirectly paid expenses 1.52% 1.50% 1.48% - -
Expenses excluding waivers and/or reimbursements 1.77% 1.93% 2.07% 2.32% 5.13%(a)
Net investment income 4.05% 4.25% 4.24% 4.88% 3.71%(a)
Portfolio turnover rate 41% 62% 53% 77% 14%
Net assets end of year (thousands) $ 1,465 $ 1,871 $ 2,296 $ 2,890 $ 255
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
See Combined Notes to Financial Statements.
27
<PAGE>
EVERGREEN
Pennsylvania Tax Free Fund
Financial Highlights
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
Year Ended March 31,
-------------------------------------------------------
1998 1997 1996 1995
<S> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of year $ 11.14 $ 11.15 $ 10.91 $ 11.01
========= ========= ========= =========
Income from investment operations
Net investment income 0.55 0.59 0.60 0.61
Net realized and unrealized gain (loss) on investments
and futures contracts 0.55 ( 0.01) 0.23 ( 0.09)
--------- ---------- --------- ----------
Total from investment operations 1.10 0.58 0.83 0.52
--------- ---------- --------- ----------
Less distributions from
Net investment income ( 0.54) ( 0.59) ( 0.57) ( 0.61)
In excess of net investment income 0 0 ( 0.02) ( 0.01)
---------- ---------- ---------- ----------
Total distributions ( 0.54) ( 0.59) ( 0.59) ( 0.62)
---------- ---------- ---------- ----------
Net asset value end of year $ 11.70 $ 11.14 $ 11.15 $ 10.91
========== ========== ========== ==========
Total return (b) 10.02% 5.30% 7.66% 4.91%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.76% 0.76% 0.76% 0.75%
Expenses excluding indirectly paid expenses 0.76% 0.75% 0.75% -
Expenses excluding waivers and/or reimbursements 0.96% 0.99% 0.99% 1.05%
Net investment income 4.79% 5.26% 5.29% 5.65%
Portfolio turnover rate 54% 84% 55% 97%
Net assets end of year (thousands) $ 24,119 $ 24,535 $ 28,710 $ 30,450
</TABLE>
<TABLE>
<CAPTION>
December 27, 1990
Year Ended March 31, (Commencement of
----------------------------------------- Class Operations) to
1994 1993 1992 March 31, 1991
<S> <C> <C> <C> <C>
CLASS A SHARES
Net asset value beginning of year $ 11.42 $ 10.71 $ 10.25 $ 10.00
========= ========= ========= ===========
Income from investment operations
Net investment income 0.62 0.63 0.74 0.18
Net realized and unrealized gain (loss) on investments
and futures contracts ( 0.30) 0.75 0.46 0.25
---------- --------- --------- -----------
Total from investment operations 0.32 1.38 1.20 0.43
---------- --------- --------- -----------
Less distributions from
Net investment income ( 0.62) ( 0.63) ( 0.74) ( 0.18)
In excess of net investment income ( 0.04) ( 0.02) 0 0
Net realized gain on investments ( 0.06) ( 0.02) 0 0
In excess of net realized gain on investments ( 0.01) 0 0 0
---------- ---------- ---------- -----------
Total distributions ( 0.73) ( 0.67) ( 0.74) ( 0.18)
---------- ---------- ---------- -----------
Net asset value end of year $ 11.01 $ 11.42 $ 10.71 $ 10.25
========== ========== ========== ===========
Total return (b) 2.58% 13.30% 12.07% 4.37%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.75% 0.68% 0.65% 0.65%(a)
Expenses excluding indirectly paid expenses - - - -
Expenses excluding waivers and/or reimbursements 1.06% 1.16% 1.68% 3.19%(a)
Net investment income 5.27% 5.66% 6.92% 6.84%(a)
Portfolio turnover rate 37% 20% 13% 8%
Net assets end of year (thousands) $ 30,560 $ 35,502 $ 12,914 $ 2,979
</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 year)
<TABLE>
<CAPTION>
Year Ended March 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
Net asset value beginning of year $ 10.99 $ 11.00 $ 10.81 $ 10.98 $ 11.42
======== ======== ======== ======== ========
Income from investment operations
Net investment income 0.46 0.49 0.51 0.54 0.56
Net realized and unrealized gain (loss) on
investments and futures contracts 0.54 ( 0.01) 0.22 ( 0.10) ( 0.34)
-------- --------- -------- --------- ---------
Total from investment operations 1.00 0.48 0.73 0.44 0.22
-------- --------- -------- --------- ---------
Less distributions from
Net investment income ( 0.44) ( 0.49) ( 0.52) ( 0.53) ( 0.52)
In excess of net investment income 0 0 ( 0.02) ( 0.08) ( 0.07)
Net realized gain on investments 0 0 0 0 ( 0.03)
In excess of net realized gain on investments 0 0 0 0 ( 0.04)
--------- --------- --------- --------- ---------
Total distributions ( 0.44) ( 0.49) ( 0.54) ( 0.61) ( 0.66)
--------- --------- --------- --------- ---------
Net asset value end of year $ 11.55 $ 10.99 $ 11.00 $ 10.81 $ 10.98
========= ========= ========= ========= =========
Total return (b) 9.27% 4.50% 6.84% 4.15% 1.70%
Ratios/supplemental data
Ratios to average net assets
Expenses 1.52% 1.51% 1.48% 1.50% 1.50%
Expenses excluding indirectly paid expenses 1.51% 1.50% 1.47% - -
Expenses excluding waivers and/or
reimbursements 1.71% 1.74% 1.74% 1.80% 1.81%
Net investment income 4.04% 4.50% 4.55% 4.89% 4.32%
Portfolio turnover rate 54% 84% 55% 97% 37%
Net assets end of year (thousands) $ 37,036 $ 37,215 $ 37,719 $ 30,657 $ 21,958
<CAPTION>
February 1, 1993
(Commencement of
Class Operations) to
March 31, 1993
<S> <C>
CLASS B SHARES
Net asset value beginning of year $ 11.20
============
Income from investment operations
Net investment income 0.08
Net realized and unrealized gain (loss) on
investments and futures contracts 0.24
------------
Total from investment operations 0.32
------------
Less distributions from
Net investment income ( 0.08)
In excess of net investment income ( 0.02)
Net realized gain on investments 0
In excess of net realized gain on investments 0
------------
Total distributions ( 0.10)
------------
Net asset value end of year $ 11.42
============
Total return (b) 2.82%
Ratios/supplemental data
Ratios to average net assets
Expenses 1.50%(a)
Expenses excluding indirectly paid expenses -
Expenses excluding waivers and/or
reimbursements 1.69%(a)
Net investment income 3.44%(a)
Portfolio turnover rate 20%
Net assets end of year (thousands) $ 2,543
</TABLE>
<TABLE>
<CAPTION>
Year Ended March 31,
---------------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
CLASS C SHARES
Net asset value beginning of year $ 11.02 $ 11.03 $ 10.83 $ 11.00 $ 11.42
========= ========= ========= ========= =========
Income from investment operations
Net investment income 0.45 0.47 0.51 0.53 0.54
Net realized and unrealized gain (loss) on
investments and futures contracts 0.57 0.01 0.23 ( 0.10) ( 0.32)
--------- --------- --------- ---------- ----------
Total from investment operations 1.02 0.48 0.74 0.43 0.22
--------- --------- --------- ---------- ----------
Less distributions from
Net investment income ( 0.45) ( 0.49) ( 0.52) ( 0.53) ( 0.52)
In excess of net investment income 0 0 ( 0.02) ( 0.07) ( 0.05)
Net realized gain on investments 0 0 0 0 ( 0.03)
In excess of net realized gain on investments 0 0 0 0 ( 0.04)
---------- ---------- ---------- ---------- ----------
Total distributions ( 0.45) ( 0.49) ( 0.54) ( 0.60) ( 0.64)
---------- ---------- ---------- ---------- ----------
Net asset value end of year $ 11.59 $ 11.02 $ 11.03 $ 10.83 $ 11.00
========== ========== ========== ========== ==========
Total return (b) 9.34% 4.49% 6.92% 4.05% 1.78%
Ratios/supplemental data
Ratios to average net assets
Expenses 1.52% 1.51% 1.48% 1.50% 1.50%
Expenses excluding indirectly paid expenses 1.51% 1.50% 1.47% - -
Expenses excluding waivers and/or
reimbursements 1.71% 1.74% 1.74% 1.80% 1.90%
Net investment income 4.05% 4.52% 4.57% 4.90% 4.33%
Portfolio turnover rate 54% 84% 55% 97% 37%
Net assets end of year (thousands) $ 6,414 $ 6,830 $ 9,675 $ 9,559 $ 9,385
<CAPTION>
February 1, 1993
(Commencement of
Class Operations) to
March 31, 1993
<S> <C>
CLASS C SHARES
Net asset value beginning of year $ 11.20
============
Income from investment operations
Net investment income 0.07
Net realized and unrealized gain (loss) on
investments and futures contracts 0.24
------------
Total from investment operations 0.31
------------
Less distributions from
Net investment income ( 0.07)
In excess of net investment income ( 0.02)
Net realized gain on investments 0
In excess of net realized gain on investments 0
------------
Total distributions ( 0.09)
------------
Net asset value end of year $ 11.42
============
Total return (b) 2.81%
Ratios/supplemental data
Ratios to average net assets
Expenses 1.50%(a)
Expenses excluding indirectly paid expenses -
Expenses excluding waivers and/or
reimbursements 1.60%(a)
Net investment income 2.50%(a)
Portfolio turnover rate 20%
Net assets end of year (thousands) $ 952
</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 through the period)
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of
Class Operations) to
March 31, 1998
<S> <C>
CLASS Y SHARES
Net asset value beginning of period $ 11.60
============
Income from investment operations
Net investment income 0.19
Net realized and unrealized gain on investments and futures contracts 0.10
------------
Total from investment operations 0.29
------------
Less distributions from net investment income ( 0.19)
------------
Net asset value end of period $ 11.70
============
Total return 2.54%
Ratios/supplemental data
Ratios to average net assets
Expenses 0.59%(a)
Expenses excluding indirectly paid expenses 0.58%(a)
Expenses excluding waivers and/or reimbursements 0.66%(a)
Net investment income 4.75%(a)
Portfolio turnover rate 54%
Net assets end of period (thousands) $ 152,960
</TABLE>
(a) Annualized.
See Combined Notes to Financial Statements.
30
<PAGE>
EVERGREEN
California Tax Free Fund
Schedule of Investments
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - 96.0%
California - 87.4%
$ 500,000 Anaheim, California,
Public Finance Authority, Lease
Revenue, Public Improvements
Project, Series C
6.00%, 9/1/16, (FSA) .............. $ 559,060
500,000 Bakersfield, California,
Certificates of Participation,
Convention Center Expansion Project
5.80%, 4/1/17, (MBIA) ............. 530,535
1,000,000 California State Health Facilities
Finance Authority, Revenue, Series A
5.75%, 7/1/15, (AMBAC) ............ 1,057,430
1,000,000 California State Health Facilities
Finance Authority, Cedars Sinai
Center, Series A
5.13%, 8/1/17, (MBIA) ............. 989,600
California State Housing Finance
Agency Revenue:
1,000,000 Multi-Family Housing, Series B
6.05%, 8/1/16, (AMBAC/FHA) ........ 1,055,660
1,000,000 Single Family Mortgage,
Series A-1, Class III
5.70%, 8/1/11, (MBIA) ............. 1,049,420
California State Housing Finance
Agency Revenue, Home Mortgage:
1,000,000 Series A
5.05%, 8/1/17, (AMBAC/FHA/VA) ..... 988,650
500,000 Series L
6.40%, 8/1/27, (MBIA)(c) .......... 536,655
500,000 California State Pollution Control
Financing Authority and Solid Waste
Disposal Revenue, Browning Ferris
Industries Inc., Series A
5.80%, 12/1/16 .................... 521,150
California State Public Works Board,
Lease Revenue, California State
University Project:
Series A:
1,000,000 5.35%, 12/1/15, (AMBAC) .......... 1,024,870
400,000 5.38%, 10/1/17, (AMBAC) .......... 408,676
350,000 Series B
5.50%, 6/1/19 ..................... 357,004
500,000 California Statewide
Communities Development
Authority, Special Facilities, United
Air Lines Inc.,
5.63%, 10/1/34 .................... 501,680
500,000 Elk Grove, California,
Unified School District, Special Tax
Refunding Community Facilities,
District No. 1
6.50%, 12/1/24, (AMBAC) ........... 600,740
1,000,000 Los Angeles County,
California, Community Facilities
District No. 3 Special Tax,
Refunding, Series A
5.50%, 9/1/14, (FSA) .............. 1,055,150
700,000 Los Angeles County,
California, Metropolitan
Transportation Authority, Sales Tax
Revenue First Tier, Series A
5.25%, 7/1/13, (MBIA) ............. 718,613
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - continued
California - continued
$ 500,000 Los Angeles, California,
Community Redevelopment
Agency, Refunding Revenue, Tax
Allocation, Bunker Hill, Series H
6.50%, 12/1/16, (FSA) ............. $ 552,620
1,000,000 Los Angeles, California,
Convention and Exhibition Center
Authority, Lease Refunding, Series A
6.00%, 8/15/10, (MBIA) ............ 1,127,580
400,000 MSR Public Power Agency,
California, San Juan Project,
Series E
6.75%, 7/1/11, (MBIA) ............. 435,040
1,000,000 Rio Linda, California,
Unified School District, Series A
7.40%, 8/1/10, (AMBAC) ............ 1,146,340
1,000,000 Sacramento County,
California, Airport System
Revenue, Series A
6.00%, 7/1/11 ..................... 1,093,100
San Francisco, California,
State Building Authority,
Lease Revenue, San Francisco
Civic Center Complex, Series A:
1,300,000 5.25%, 12/1/16, (AMBAC) .......... 1,308,840
500,000 6.00%, 12/1/09, (AMBAC) .......... 563,415
1,100,000 San Jose, California,
Redevelopment Tax Allocation,
Merged Area Redevelopment
Project
6.00%, 8/1/15, (MBIA) ............. 1,231,857
100,000 San Mateo, Foster City,
California, School District,
Capital Appreciation, Series C
(Eff. Yield 5.60%) (b)
0.00%, 9/1/03, (FGIC) ............. 79,522
300,000 Santa Ana, California,
Financing Authority, Lease
Revenue, Police Administration and
Holding Facility, Series A
6.25%, 7/1/15, (MBIA) ............. 344,478
1,000,000 South Orange County,
California, Public Finance Authority,
Special Tax Revenue, Senior Lien,
Series A
7.00%, 9/1/09, (MBIA) ............. 1,209,920
1,000,000 Southern California Public
Power Authority, Mead Adelanto
Project Revenue, Series A
5.00%, 7/1/17, (AMBAC) ............ 980,490
1,000,000 Southern California Public
Power Authority, Transmission
Project, Revenue Refunding,
Southern Transmission
(Eff. Yield 7.30%) (b)
0.00%, 7/1/14, (FGIC) ............. 444,940
625,000 Vista, California, Community
Development, Community Tax
Allocation Revenue, Vista
Redevelopment Project Area
6.00%, 9/1/10, (MBIA) ............. 708,131
500,000 Watsonville, California,
Solid Waste Revenue
5.50%, 5/15/16, (MBIA) ............ 519,005
==========
23,700,171
==========
</TABLE>
31
<PAGE>
EVERGREEN
California Tax Free Fund
Schedule of Investments (continued)
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
MUNICIPAL OBLIGATIONS - continued
Puerto Rico - 8.6%
$ 2,700,000 Commonwealth of Puerto Rico,
Capital Appreciation, General
Obligation,
(Eff. Yield 4.85%)(b)
0.00%, 7/1/14, (MBIA/IBC) ........ $ 1,218,645
Commonwealth of Puerto Rico
Industrial, Tourist, Educational,
Medical & Environmental Control
Facilities, Hospital Auxilio
Mutuo Obligation Group,
Series A:
650,000 5.50%, 7/1/17, (MBIA) ........... 674,557
400,000 6.25%, 7/1/24, (MBIA) ........... 438,352
-----------
2,331,554
-----------
Total Municipal Obligations
(cost $24,735,496) .............. 26,031,725
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
SHORT-TERM INVESTMENTS - 1.1% (cost $310,000)
California - 1.1%
$ 310,000 Irvine Ranch, California,
Water District Revenue,
Consolidated Bonds
(LOC: Landesbank Hessen)
3.80%, 10/1/10, (a) .............. $ 310,000
-----------
Total Investments -
(cost $25,045,496) ..... 97.1% 26,341,725
Other Assets and
Liabilities - net ...... 2.9 780,051
----- -----------
Net Assets - ........... 100.0% $27,121,776
===== ===========
</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.
(c) At March 31, 1998, $200,000 principal amount of this security was pledged
to cover margin requirements for open futures contracts.
Legend of Portfolio Abbreviations:
AMBAC Insured by American Municipal Bond Assurance Corporation
FGIC Insured by Federal Guaranty Insurance Company
FHA Insured by Federal Housing Authority
FSA Insured by Financial Security Assurance Corporation
IBC Insured Bond Certification
LOC Line of Credit
MBIA Insured by Municipal Bond Investors Assurance Corporation
VA Guaranteed by Veteran's Authority
FUTURES CONTRACTS - SHORT POSITIONS
<TABLE>
<S> <C> <C> <C> <C> <C>
Number Initial Contract Value at Unrealized
Expiration of Contracts Amount March 31, 1998 Appreciation
- ------------ -------------- ---------------- -------------- ------------
June '98 6 Municipal Bond Index $ 735,501 $ 736,001 $ 500
June '98 17 U.S. Treasury Bond Index 2,046,613 2,048,976 2,363
</TABLE>
See Combined Notes to Financial Statements.
32
<PAGE>
EVERGREEN
Connecticut Municipal Bond Fund
Schedule of Investments
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
LONG-TERM INVESTMENTS - 93.2%
Connecticut - 78.2%
Bristol, Connecticut, General Obligation:
$ 130,000 5.00%, 6/15/05 ....................... $ 136,071
355,000 5.25%, 6/15/08 ....................... 378,970
275,000 Cheshire, Connecticut, General Obligation
5.75%, 8/15/09 ........................ 298,147
245,000 Connecticut Regional School
District #14, General Obligation
5.70%, 12/15/99 ....................... 252,938
290,000 Connecticut Regional School
District #14, General Obligation,
Woodbury and Bethlehem School
Improvements
5.70%, 12/15/98 ....................... 294,330
1,450,000 Connecticut State Clean Water
Fund Revenue
6.00%, 3/1/08 ......................... 1,624,855
500,000 Connecticut State Development
Authority Revenue, Series A
5.00%, 11/15/05 ....................... 516,585
Connecticut State Development
Authority Revenue, Church
Homes, Inc. Project:
710,000 4.80%, 4/1/01 ........................ 716,908
425,000 4.90%, 4/1/02 ........................ 430,538
1,000,000 5.80%, 4/1/21 ........................ 1,028,260
890,000 Connecticut State Development
Authority Revenue, Special
Revenue, State General Fund,
Series A
5.50%, 5/1/08, (FGIC) ................. 957,729
Connecticut State, General Obligation:
Series A:
1,000,000 5.65%, 3/15/12 ....................... 1,055,180
1,000,000 6.00%, 3/1/06 ........................ 1,106,650
3,000,000 6.25%, 5/15/06 ....................... 3,377,610
500,000 Series B
6.00%, 11/15/02 ...................... 540,040
Series C:
400,000 5.70%, 11/15/99 ...................... 412,548
200,000 5.88%, 8/15/09 ....................... 218,908
170,000 Connecticut State Health &
Educational Facilities Revenue:
6.00%, 7/1/99 ......................... 174,806
225,000 Choate Rosemary Hall, Series A
6.50%, 7/1/09 ......................... 253,584
300,000 Connecticut College, Issue E
5.88%, 7/1/99 ......................... 307,620
500,000 Greenwich Hospital Assn., Series A
5.40%, 7/1/09 ......................... 530,260
1,000,000 Hospital for Special Care, Series B
5.13%, 7/1/07 ......................... 1,009,830
1,000,000 Hospital of St. Raphael, Series H
5.00%, 7/1/06, (AMBAC) ................ 1,038,260
1,000,000 Kent School Corp., Series B
5.50%, 7/1/15 ......................... 1,036,590
625,000 Lawrence & Memorial Hospital,
Series D
4.88%, 7/1/07 ......................... 638,544
190,000 Mansfield Nursing Center, Series C
4.40%, 11/1/98 ........................ 190,686
2,000,000 Middlesex Health Services, Series I
5.13%, 7/1/27 ......................... 1,959,740
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
LONG-TERM INVESTMENTS - continued
Connecticut - continued
Connecticut State Health &
Educational Facilities Revenue (cont.):
$ 250,000 New Britain General Hospital,
Series B
5.88%, 7/1/08, (AMBAC) ................ $ 272,670
Newington Childrens' Hospital:
Series A:
1,000,000 5.90%, 7/1/08, (MBIA) ................ 1,092,210
250,000 6.05%, 7/1/10, (MBIA) ................ 272,097
1,345,000 St. Mary's Hospital Corp., Series E
6.00%, 7/1/08 ......................... 1,474,349
1,000,000 Stamford Hospital, Series F
5.25%, 7/1/11 ......................... 1,023,810
1,500,000 Suffield Academy, Series A
5.40%, 7/1/27 ......................... 1,527,735
Veterans Memorial Medical Center:
Series A:
1,000,000 5.38%, 7/1/14 ........................ 1,016,860
2,000,000 5.50%, 7/1/26 ........................ 2,055,040
250,000 Waterbury Hospital, Series B
6.40%, 7/1/98 ......................... 251,655
1,500,000 Westminster School, Series A
5.50%, 7/1/16 ......................... 1,557,015
1,000,000 Yale New Haven Hospital
5.63%, 7/1/16 ......................... 1,038,990
335,000 Connecticut State Higher Education
Loan Authority Revenue, Series A
7.00%, 11/15/00 ....................... 346,765
Connecticut State Housing Finance
Authority Revenue, Housing
Mortgage Finance Project:
Series A:
860,000 7.20%, 11/15/98 ...................... 870,965
985,000 7.40%, 11/15/99 ...................... 1,005,675
Subseries C-1
100,000 5.75%, 5/15/05 ....................... 105,359
1,000,000 Connecticut State Special
Assessment Unemployment
Compensation Refunding, Series A
5.50%, 5/15/01 ........................ 1,043,570
500,000 Connecticut State Special Tax
Obligation, Series A
7.13%, 6/1/07 ......................... 549,100
Connecticut State Special Tax
Obligation, Transportation
Infrastructure Project:
1,000,000 Series A
6.00%, 6/1/06, (FGIC) ................. 1,105,810
2,000,000 Series B
5.38%, 10/1/09, (MBIA) ................ 2,114,380
260,000 East Lyme, Connecticut,
General Obligation
4.60%, 8/1/98 ......................... 260,848
1,000,000 Fairfield, Connecticut,
General Obligation
4.70%, 1/1/11 ......................... 994,430
525,000 Guilford, Connecticut,
General Obligation
5.00%, 11/15/07 ....................... 543,512
Hamdem, Connecticut,
General Obligation:
1,000,000 5.38%, 8/15/10, (MBIA) ............... 1,053,000
1,275,000 5.40%, 8/15/11, (MBIA) ............... 1,337,883
</TABLE>
33
<PAGE>
EVERGREEN
Connecticut Municipal Bond Fund
Schedule of Investments (continued)
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
LONG-TERM INVESTMENTS - continued
Connecticut - continued
$ 170,000 Hartford County, Connecticut,
Metropolitan District,
General Obligation
5.40%, 11/15/99 ......................... $ 174,537
Middletown, Connecticut,
General Obligation:
445,000 5.60%, 4/15/00 ......................... 460,450
1,000,000 6.00%, 4/15/07 ......................... 1,115,090
500,000 Milford, Connecticut,
General Obligation
5.20%, 1/15/13 .......................... 519,890
Montville, Connecticut, General Obligation:
250,000 5.15%, 12/1/07 ......................... 265,022
300,000 5.25%, 12/1/08 ......................... 320,712
250,000 Naugatuck, Connecticut,
General Obligation
5.40%, 3/15/08 .......................... 265,470
335,000 New Fairfield, Connecticut,
General Obligation
4.40%, 3/15/99, (MBIA) .................. 337,623
500,000 New Haven, Connecticut,
General Obligation
6.50%, 8/1/00, (FSA) .................... 527,775
1,100,000 Newtown, Connecticut,
General Obligation
5.13%, 6/15/15, (MBIA) .................. 1,101,914
100,000 Pomfret, Connecticut,
General Obligation
6.50%, 8/1/99 ........................... 103,613
385,000 Putnam, Connecticut,
General Obligation
5.60%, 11/15/00, (MBIA) ................. 401,466
100,000 South Windsor, Connecticut,
General Obligation
6.60%, 12/15/99 ......................... 104,747
185,000 Stamford, Connecticut,
General Obligation
6.25%, 1/15/00 .......................... 192,781
University of Connecticut Revenue:
Series A:
1,350,000 5.00%, 2/1/14, (FGIC) .................. 1,344,060
500,000 5.00%, 2/1/15, (FGIC) .................. 494,920
1,090,000 Student Fee Program, Series A
5.13%, 11/15/14, (MBIA) ................. 1,097,597
Wallingford, Connecticut,
General Obligation:
295,000 4.40%, 6/1/98 .......................... 295,380
Lot B:
170,000 5.50%, 6/15/08 ......................... 182,818
170,000 5.60%, 6/15/09 ......................... 182,764
150,000 Wilton, Connecticut, General Obligation
5.60%, 9/1/99 ........................... 154,046
250,000 Woodstock, Connecticut,
General Obligation
6.00%, 2/15/10, (FGIC) .................. 272,593
-----------
53,315,183
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
LONG-TERM INVESTMENTS - continued
Guam - 0.4%
$ 250,000 Guam Power Authority
Revenue, Series A
5.90%, 10/1/08, (AMBAC) ................. $ 273,935
-----------
U. S. Virgin Islands - 1.6%
1,000,000 Virgin Islands, Public Finance Authority
Revenue
7.00%, 10/1/99 .......................... 1,047,570
-----------
Puerto Rico - 13.0%
Commonwealth of Puerto Rico,
General Obligation:
550,000 5.00%, 7/1/98 .......................... 551,848
1,000,000 5.38%, 7/1/25 .......................... 1,008,250
2,255,000 5.38%, 7/1/25, (MBIA) .................. 2,296,763
1,250,000 5.40%, 7/1/25 .......................... 1,265,600
205,000 5.50%, 7/1/08, (MBIA) .................. 222,021
1,000,000 6.50%, 7/1/14, (MBIA) .................. 1,182,710
1,000,000 Commonwealth of Puerto Rico,
General Obligation, Aqueduct
Sewer Project
5.20%, 7/1/08, (MBIA) ................... 1,058,590
250,000 Puerto Rico Electric Power
Authority Revenue, Series V
5.60%, 7/1/03, (FSA) .................... 266,805
25,000 Puerto Rico Housing Finance
Authority Revenue, Single
Family Housing Revenue
5.80%, 10/15/00 ......................... 25,698
1,000,000 Puerto Rico Public Buildings
Authority Revenue, Government
Facilities, Series B
5.00%, 7/1/15, (MBIA) ................... 996,490
-----------
8,874,775
-----------
Total Long-Term Investments
(cost $61,563,715) ..................... 63,511,463
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares
<S> <C> <C> <C>
MUTUAL FUND SHARES - 5.7%
1,917,772 Federated Connecticut
Municipal Cash Trust ............. 1,917,772
2,000,000 Federated Tax-Free Obligation Fund . 2,000,000
---------
Total Mutual Fund Shares
(cost $3,917,772) ................ 3,917,772
---------
Total Investments -
(cost $65,481,487) ..... 98.9% 67,429,235
Other Assets and
Liabilities - net ...... 1.1 723,006
----- ----------
Net Assets - ............ 100.0% $68,152,241
===== ===========
</TABLE>
Legend of Portfolio 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.
34
<PAGE>
EVERGREEN
Massachusetts Tax Free Fund
Schedule of Investments
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
MUNICIPAL OBLIGATIONS - 98.0%
Massachusetts - 86.7%
$ 300,000 Lawrence, Massachusetts,
School Improvements
6.25%, 2/15/09, (AMBAC) ................ $ 330,051
250,000 Lowell, Massachusetts,
School Improvements
5.50%, 12/15/15, (AMBAC) ............... 259,508
Massachusetts Bay Transportation
Authority, General Transportation
Systems, Series A:
100,000 6.25%, 3/1/12 ......................... 114,133
750,000 7.00%, 3/1/11, (MBIA) ................. 911,302
270,000 Massachusetts Education Loan
Authority, Issue E, Series B
6.00%, 1/1/12, (AMBAC) ................. 283,970
250,000 Massachusetts State, General
Obligation, Series A
5.25%, 2/1/08 .......................... 259,843
500,000 Massachusetts State College,
Building Authority Project,
Series A
7.50%, 5/1/08 .......................... 617,520
Massachusetts State Health
and Education Facility Authority:
300,000 Brigham & Women's Hospital
6.75%, 7/1/24, (MBIA) .................. 329,154
400,000 McLean Hospital, Series C
6.50%, 7/1/10, (FGIC) .................. 437,660
100,000 Milton Hospital, Series B
7.25%, 7/1/05 .......................... 108,370
500,000 North Adams Regional
Hospital, Series C
6.75%, 7/1/09 .......................... 544,325
300,000 Partners Healthcare Systems,
Series A
5.38%, 7/1/24 .......................... 301,992
Massachusetts State
Industrial Finance Agency:
300,000 Single Family Housing, Series 52
6.00%, 6/1/14, (MBIA) (d) .............. 317,739
300,000 WGBH Educational Foundation
5.20%, 3/1/18 .......................... 300,138
400,000 Massachusetts State Port
Authority Revenue, Special
Facilities, Boston Fuel Project
5.30%, 7/1/08 .......................... 418,804
300,000 Massachusetts State Turnpike
Authority Revenue, Series A
5.55%, 1/1/17 .......................... 304,107
375,000 Massachusetts State Water
Pollution, Series 2
6.13%, 2/1/08 .......................... 430,185
Massachusetts State Water
Pollution, Abatement Trust:
400,000 New Bedford Loan Program,
Series A
5.70%, 2/1/12 .......................... 426,840
125,000 South Essex, Sewer District
Loan Program, Series A
6.38%, 2/1/15 .......................... 136,701
275,000 Massachusetts State Water
Resources Authority, Series B
5.25%, 3/1/13 .......................... 279,744
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
MUNICIPAL OBLIGATIONS - continued
Massachusetts - continued
$ 500,000 Methuen, Massachusetts,
General Obligation
5.63%, 11/15/15, (FSA) ................. $ 525,265
400,000 North Attleborough, Massachusetts,
General Obligation
5.25%, 3/1/14 .......................... 409,844
400,000 Springfield, Massachusetts,
Municipal Purpose Loan
5.00%, 9/1/12 .......................... 400,516
300,000 Worcester, Massachusetts,
Municipal Purpose Loan, Series A
5.25%, 8/1/12, (AMBAC) ................. 309,261
-----------
8,756,972
-----------
Puerto Rico - 11.3%
800,000 Commonwealth of Puerto Rico,
Capital Appreciation,
General Obligation
(Eff. Yield 4.85%) (b)
0.00%, 7/1/14, (MBIA) .................. 361,080
170,000 Commonwealth of Puerto Rico,
Highway and Transportation
Authority
5.50%, 7/1/15 .......................... 180,125
200,000 Commonwealth of Puerto Rico,
Linked Bond Payment Obligation
7.00%, 7/1/10, (MBIA) (c) .............. 245,306
100,000 Commonwealth of Puerto Rico,
Public Improvement
5.50%, 7/1/11 .......................... 107,177
250,000 Puerto Rico Public Buildings
Authority Revenue, Government
Facilities, Series B
5.00%, 7/1/12 .......................... 252,455
-----------
1,146,143
-----------
Total Municipal Obligations
(cost $9,445,261) ..................... 9,903,115
===========
SHORT-TERM MUNICIPAL SECURITIES - 1.1% (cost $110,000)
Massachusetts - 1.1%
110,000 Massachusetts State Health
and Education Facility,
Capital Assets Program, Series D
3.80%, 1/1/35 (a) ...................... 110,000
-----------
Total Investments -
(cost $9,555,261) .......... 99.1% 10,013,115
Other Assets and
Liabilities - net .......... 0.9 85,992
----- -----------
Net Assets - ................ 100.0% $10,099,107
===== ===========
</TABLE>
35
<PAGE>
EVERGREEN
Massachusetts Tax Free Fund
Schedule of Investments (continued)
March 31, 1998
(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.
(c) At the discretion of the portfolio manager, these securities may be
separated into securities with interest or principal payments that are
linked to another rate or index and therefore would be considered
derivative securities.
(d) At March 31, 1998, $100,000 principal amount of this security was pledged
to cover margin requirements for open futures contracts.
Legend of Portfolio 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
FUTURES CONTRACTS - SHORT POSITIONS
<TABLE>
<S> <C> <C> <C> <C> <C>
Number Initial Contract Value at Unrealized
Expiration of Contracts Amount March 31, 1998 Appreciation
- ------------ -------------- -------- ---------------- ---
June '98 2 Municipal Bond Index $245,167 $245,334 $ 167
June '98 4 U.S. Treasury Bond Index 461,556 462,111 555
</TABLE>
See Combined Notes to Financial Statements.
36
<PAGE>
EVERGREEN
Missouri Tax Free Fund
Schedule of Investments
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - 98.2%
Missouri - 80.0%
$ 1,105,000 Butler County, Missouri,
Public Facilities Authority,
Butler County Jail Project
6.50%, 12/1/14, (FGIC) ............ $1,219,478
830,000 Chesterfield, Missouri,
General Obligation
6.30%, 2/15/13 .................... 908,111
1,000,000 Clay County, Missouri,
Public Building Authority
7.00%, 5/15/14, (FGIC) ............ 1,138,510
200,000 Joplin, Missouri
Industrial Development Authority
Revenue, Catholic Health Facilities
Initiatives, Series A
5.13%, 12/1/15 .................... 198,472
1,000,000 Mehlville, Missouri,
School District Number R9, General
Obligation
5.13%, 2/15/11 .................... 1,019,760
1,000,000 Missouri Higher Education
Loan Authority, Student Loan,
Series F
6.75%, 2/15/09 .................... 1,074,120
500,000 Missouri State Certificates of
Participation, Rehabilitation Center
Project, Series A
6.00%, 11/1/15 .................... 535,780
Missouri State Environmental
Improvement and Energy Resource
Authority, Water Pollution Control,
State Revolving Fund:
1,000,000 Series A
5.75%, 1/1/16 ..................... 1,058,440
600,000 Series B
7.20%, 7/1/16 ..................... 693,834
Missouri State Health and
Educational Facilities Authority:
825,000 Barnes Jewish, Inc., Series A
5.15%, 5/15/10 .................... 858,693
1,000,000 Bethesda Health Group,
Project A
7.50%, 8/15/12 .................... 1,094,550
500,000 BJC Health Systems, Series A
6.50%, 5/15/20 .................... 561,915
250,000 Jefferson Memorial Hospital
Obligation Group
6.80%, 5/15/25 .................... 272,610
300,000 Lake of Ozarks General Hospital
6.50%, 2/15/21 .................... 324,267
500,000 Maryville University of St. Louis
Project
5.75%, 6/15/17 .................... 518,150
1,500,000 SSM Health Care, Series AA
6.25%, 6/1/16, (MBIA) ............. 1,616,190
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - continued
Missouri - continued
Missouri State Housing Development
Commission, Single Family:
$ 250,000 Series A
7.13%, 12/1/14, (GNMA) ............ $ 276,270
Series B:
470,000 6.25%, 9/1/15, (GNMA) ............ 500,296
1,170,000 6.45%, 9/1/27, (GNMA) (d) ........ 1,254,217
Sikeston, Missouri, Electric Revenue:
500,000 5.00%, 6/1/22, (MBIA) ............ 488,360
950,000 6.00%, 6/1/13, (MBIA) ............ 1,069,434
500,000 6.00%, 6/1/15, (MBIA) ............ 562,050
495,000 St. Louis, Missouri,
Industrial Development Authority,
Health Facilities Revenue Mother of
Perpetual Help
6.40%, 8/1/35, (GNMA) ............. 545,990
700,000 St. Louis, Missouri, Land
Clearance Redevelopment
Authority Revenue, Refunding
Revenue, Kiel Site Lease, Series B
5.13%, 7/1/13, (MBIA) ............. 707,728
950,000 St. Louis, Missouri,
Municipal Finance Corp.,
Leasehold Revenue
Improvement, City Justice
Center, Series A
5.75%, 2/15/11, (AMBAC) ........... 1,024,442
300,000 Wentzville, Missouri,
School District, Series A
5.60%, 3/1/11, (FSA) .............. 317,073
500,000 West Plains, Missouri,
Industrial Development Authority,
Hospital Revenue, Ozarks Medical
Center
5.65%, 11/15/22 ................... 499,760
----------
20,338,500
----------
Puerto Rico - 18.2%
1,000,000 Commonwealth of Puerto Rico,
Aqueduct & Sewer Authority
Revenue
6.25%, 7/1/12 ..................... 1,135,910
1,800,000 Commonwealth of Puerto Rico,
Capital Appreciation,
General Obligation
(Eff. Yield 4.85%) (b)
0.00%, 7/1/14, (MBIA/IBC) ......... 812,430
500,000 Commonwealth of Puerto Rico,
General Obligation
6.45%, 7/1/17 ..................... 568,450
1,000,000 Commonwealth of Puerto Rico,
Highway and Transportation
Authority Revenue, Series Y
6.25%, 7/1/14 ..................... 1,142,600
</TABLE>
37
<PAGE>
EVERGREEN
Missouri Tax Free Fund
Schedule of Investments (continued)
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
MUNICIPAL OBLIGATIONS - continued
Puerto Rico - continued
$ 800,000 Commonwealth of Puerto Rico,
Linked Bond Payment Obligation
7.00%, 7/1/10, (MBIA/IBC) (c) .... $ 981,224
-----------
4,640,614
-----------
Total Municipal Obligations
(cost $23,273,568) .............. 24,979,114
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES - 1.0% (cost $255,000)
Missouri - 1.0%
$ 255,000 Kansas City, Missouri, Industrial
Development Hospital Revenue,
Insured Research Health Services
Systems
3.90%, 12/1/19, (MBIA) (a) ....... $ 255,000
-----------
Total Investments -
(cost $23,528,568) ..... 99.2% 25,234,114
Other Assets and
Liabilities - net ...... 0.8 205,084
----- -----------
Net Assets - ........... 100.0% $25,439,198
===== ===========
</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.
(c) At the discretion of the portfolio manager, these securities may be
separated into securities with interest or principal payments that are
linked to another rate or index and therefore would be considered
derivative securities.
(d) At March 31, 1998, $100,000 principal amount of this security was pledged
to cover margin requirements for open futures contracts.
Legend of Portfolio Abbreviations:
AMBAC Insured by American Municipal Bond Assurance Corporation
FGIC Insured by Federal Guaranty Insurance Company
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
FUTURES CONTRACTS - SHORT POSITIONS
<TABLE>
<S> <C> <C> <C> <C> <C>
Number Initial Contract Value at Unrealized
Expiration of Contracts Amount March 31, 1998 Appreciation
- ------------ -------------- --------- ---------------- ----
June '98 4 Municipal Bond Index $ 490,334 $ 490,668 $ 334
June '98 11 U.S. Treasury Bond Index 1,324,279 1,325,808 1,529
</TABLE>
See Combined Notes to Financial Statements.
38
<PAGE>
EVERGREEN
New Jersey Tax Free Income Fund
Schedule of Investments
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - 98.3%
Delaware - 2.7%
Delaware River and Bay
Authority Revenue:
$ 2,000,000 4.80%, 1/1/07 .................. $2,040,080
1,000,000 5.00%, 1/1/17, (MBIA) .......... 977,320
1,000,000 5.40%, 1/1/16, (FGIC) .......... 1,027,070
----------
4,044,470
----------
New Jersey - 77.5%
500,000 Atlantic City, New Jersey,
Improvement Authority, Luxury
Tax Revenue
6.90%, 7/1/00 ................... 531,615
1,000,000 Bergen County, New Jersey,
General Obligation
5.25%, 10/1/10 .................. 1,048,790
Bergen County, New Jersey,
Utilities Authority, Water
Pollution Control Revenue:
1,000,000 Series A
5.50%, 12/15/06, (FGIC) ......... 1,077,270
500,000 Series B
5.63%, 12/15/04, (FGIC) ......... 539,110
400,000 Bridgewater Township, New Jersey,
General Obligation
6.40%, 7/15/01 .................. 428,604
500,000 Brigantine, New Jersey,
General Obligation
6.35%, 8/1/04, (MBIA) ........... 544,670
Burlington County, New Jersey,
Bridge Commission
Systems Revenue:
1,000,000 5.20%, 10/1/06 ................. 1,043,650
500,000 5.30%, 10/1/13 ................. 513,255
1,270,000 Camden County, New Jersey,
Improvement Authority, Lease
Revenue, Series A
5.00%, 12/1/08 .................. 1,318,882
500,000 Camden County, New Jersey,
Lease Authority Revenue
5.63%, 10/1/15, (MBIA) .......... 525,720
1,500,000 Camden County, New Jersey,
Municipal Utilities Authority
5.50%, 7/15/08 .................. 1,617,210
2,500,000 Camden County, New Jersey,
Municipal Utilities
Authority, Sewer Revenue
5.13%, 7/15/17, (FGIC) .......... 2,489,500
500,000 Camden County, New Jersey,
Property and Equipment Program
5.60%, 12/1/04 .................. 533,035
500,000 Cape May County, New Jersey,
Improvement Authority
5.85%, 4/15/02 .................. 531,835
500,000 Cape May County, New Jersey,
Municipal Utilities Authority,
Sewer Revenue, Series A
5.75%, 1/1/16, (MBIA) ........... 523,840
500,000 Cherry Hill Township, New Jersey,
General Obligation
6.00%, 6/1/06 ................... 540,850
1,500,000 Egg Harbor Township, New Jersey,
School District
4.75%, 2/15/11, (FSA) ........... 1,487,100
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - continued
New Jersey - continued
$ 325,000 Essex County, New Jersey,
General Obligation, Lease Revenue
6.65%, 12/1/00, (AMBAC) ......... $ 347,405
500,000 Essex County, New Jersey,
Improvement Authority
Revenue, Series A
5.80%, 11/1/07 .................. 548,900
Essex County, New Jersey,
Utilities Authority, Solid
Waste Revenue, Series A:
250,000 5.50%, 4/1/11, (FSA) ........... 263,973
250,000 5.60%, 4/1/16, (FSA) ........... 262,133
500,000 Franklin Township, Somerset
County, New Jersey, School District
6.20%, 4/1/05 ................... 555,310
500,000 Gloucester County, New Jersey,
General Obligation
6.25%, 2/1/08, (MBIA) ........... 545,555
1,600,000 Gloucester County, New Jersey,
Solid Waste Revenue,
Series A
6.20%, 9/1/07 ................... 1,722,368
Gloucester County, New Jersey,
Utilities Authority,
Sewer Revenue:
1,300,000 5.45%, 1/1/24, (MBIA) .......... 1,324,336
500,000 6.50%, 1/1/21 .................. 536,015
Gloucester Township, New Jersey,
General Obligation:
500,000 5.45%, 7/15/07, (AMBAC) ........ 537,670
500,000 6.38%, 9/15/04, (AMBAC) ........ 543,125
1,000,000 Gloucester Township, New Jersey,
Municipal Utilities
Authority
5.55%, 3/1/09, (AMBAC) .......... 1,079,880
1,000,000 Hamilton Township, Atlantic
County, New Jersey, School District
5.88%, 12/15/06, (FGIC) ......... 1,078,300
500,000 Hunterdon County, New Jersey,
General Obligation
5.50%, 12/1/02 .................. 529,210
1,500,000 Jersey City, New Jersey,
School District
5.50%, 3/15/16, (MBIA) .......... 1,557,510
225,000 Kearny, New Jersey,
General Obligation
6.30%, 2/1/02 ................... 242,521
3,000,000 Lacey, New Jersey Municipal
Utility Authority, Water Revenue
5.10%, 12/1/21 .................. 2,955,180
400,000 Lakewood Township, New Jersey,
School District
6.25%, 2/15/12, (AMBAC) ......... 459,544
500,000 Mercer County, New Jersey,
School District, Series A
5.40%, 12/15/03 ................. 530,390
</TABLE>
39
<PAGE>
EVERGREEN
New Jersey Tax Free Income Fund
Schedule of Investments (continued)
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - continued
New Jersey - continued
Middlesex County, New Jersey,
Utilites Authority, Sewer
Revenue, Series A:
$ 975,000 5.00%, 12/1/12, (FGIC) ........... $ 981,796
1,150,000 5.38%, 9/15/15, (FGIC) ........... 1,178,669
500,000 Monmouth County, New Jersey,
General Obligation
5.10%, 7/1/03 ..................... 518,300
Monmouth County, New Jersey
Improvement Authority,
General Obligation:
1,000,000 6.40%, 8/1/07 .................... 1,088,710
800,000 6.40%, 8/1/08 .................... 870,968
200,000 6.40%, 8/1/09 .................... 217,742
1,000,000 Morris County, New Jersey,
General Obligation
6.00%, 7/15/04 .................... 1,099,670
320,000 New Brunswick, New Jersey,
Parking Authority Revenue
6.65%, 9/1/99, (FGIC) ............. 332,541
New Jersey Economic
Development Authority Revenue:
530,000 5.20%, 1/1/09 .................... 531,691
2,000,000 5.50%, 1/1/18 .................... 1,998,860
585,000 5.30%, 1/1/10 .................... 586,983
785,000 6.00%, 10/1/22 ................... 807,671
4,000,000 Series A,
(Eff. Yield 5.63%) (a)
0.00%, 7/1/25 .................... 990,880
2,000,000 New Jersey Economic
Development Authority
Revenue, Liberty State
Parking Project
6.80%, 3/15/22 .................... 2,225,940
500,000 New Jersey Economic
Development Authority
Revenue, New Jersey
Performing Arts Center Project
5.50%, 6/15/13, (AMBAC) ........... 524,235
1,000,000 New Jersey Economic
Development Authority
Revenue, Public Schools Small
Project Loan Program
5.40%, 8/15/13 .................... 1,026,210
New Jersey Health Care Facilities,
Financing Authority Revenue:
2,375,000 AHS Hospital Corporation, Series A
5.00%, 7/1/27 ..................... 2,296,886
1,690,000 Berkeley Heights Convalescent
5.00%, 7/1/26, (AMBAC) ............ 1,637,678
750,000 Hackensack Medical Center
6.63%, 7/1/17, (FGIC) ............. 810,600
1,950,000 Holy Name Hospital
5.25%, 7/1/20, (AMBAC) ............ 1,947,289
500,000 Shore Memorial Hospital
Health Care Systems
5.00%, 7/1/12, (MBIA) ............. 501,640
500,000 New Jersey State Building
Authority Revenue
5.00%, 6/15/18 .................... 489,995
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - continued
New Jersey - continued
New Jersey State Economic
Development Authority Revenue:
$3,100,000 First Mortgage, Franciscan
Oaks Project
5.75%, 10/1/23 .................... $3,133,480
1,000,000 First Mortgage, Keswick Pines
5.70%, 1/1/18 ..................... 999,430
300,000 Series A
6.60%, 8/1/21 ..................... 322,704
New Jersey State Educational
Facilities Authority Revenue:
2,000,000 Higher Education Facilities
Trust Fund, Series A
5.13%, 9/1/10 ..................... 2,062,460
500,000 Princeton University, Series A
6.40%, 7/1/98 ..................... 503,325
1,500,000 Series C
6.38%, 7/1/22 ..................... 1,654,515
500,000 Series D
6.20%, 7/1/17, (AMBAC) ............ 542,405
Trenton State College, Series A
1,575,000 5.10%, 7/1/21, (MBIA) ............ 1,549,595
Union County College, Series B
200,000 6.90%, 7/1/99 .................... 207,702
New Jersey State General Obligation:
3,000,000 5.13%, 7/15/08 ................... 3,147,180
500,000 6.25%, 8/1/06 .................... 545,610
1,000,000 Series D
5.75%, 2/15/06 .................... 1,091,730
New Jersey State Health Care
Facilities Financing Authority
Revenue:
1,345,000 AHS Hospital Corporation,
Series A
6.00%, 7/1/11, (AMBAC) ............ 1,505,997
1,000,000 Community Medical Center
4.75%, 7/1/19 ..................... 946,150
200,000 Medical Center Princeton,
Series D
6.60%, 7/1/99 ..................... 206,832
1,000,000 St. Joseph's Hospital and
Medical Center, Series D
5.70%, 7/1/11 ..................... 1,062,280
1,000,000 New Jersey State Higher
Education Student Loan,
Series A
5.80%, 6/1/16 ..................... 1,035,680
1,500,000 New Jersey State Highway
Authority Revenue
6.25%, 1/1/14 ..................... 1,623,585
New Jersey State Sports and
Exposition Authority Revenue,
Series A:
1,000,000 5.38%, 9/1/15 .................... 1,019,230
1,000,000 6.00%, 3/1/21 .................... 1,051,810
300,000 New Jersey State Transit Corporation,
Certificates of Partnership
6.50%, 10/1/16, (FSA) ............. 340,998
</TABLE>
40
<PAGE>
EVERGREEN
New Jersey Tax Free Income Fund
Schedule of Investments (continued)
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - continued
New Jersey - continued
New Jersey State
Transportation Trust Fund
Authority Revenue:
Series A:
$ 1,000,000 4.75%, 12/15/16 ................... $ 956,890
3,000,000 5.25%, 6/15/08 .................... 3,172,230
1,000,000 6.00%, 6/15/02 .................... 1,069,450
Series B:
3,175,000 5.00%, 6/15/04 .................... 3,296,475
2,750,000 5.25%, 6/15/15 .................... 2,787,015
1,000,000 6.50%, 6/15/10, (MBIA) ............ 1,170,740
2,000,000 New Jersey State Wastewater
Treatment, Trust Loan Revenue
6.00%, 7/1/11 ...................... 2,122,960
New Jersey University of
Medicine and Dentistry Revenue:
Series C
300,000 6.90%, 12/1/99 .................... 314,856
Series E:
400,000 5.75%, 12/1/21 .................... 421,952
500,000 6.50%, 12/1/18 .................... 548,690
1,000,000 North Bergen Township, New Jersey,
Municipal Utility Authority,
Sewer Revenue
5.38%, 12/15/12, (FGIC) ............ 1,030,100
1,000,000 North Brunswick Township,
New Jersey,
New Jersey Board of Education
5.00%, 2/1/15, (FGIC) .............. 989,840
1,000,000 North Hudson, New Jersey,
Sewage Authority, Sewer Revenue
5.50%, 8/1/06, (FGIC) .............. 1,073,820
350,000 North Jersey District Water
Supply Revenue, Wanaque North
Project, Series B
6.25%, 11/15/17, (MBIA) ............ 378,032
1,000,000 Northwest Bergen County, New Jersey,
Utility Authority Systems Revenue
6.00%, 7/15/09, (MBIA) ............. 1,096,050
500,000 Ocean City, New Jersey,
General Obligation
5.90%, 3/15/03, (MBIA) ............. 537,660
500,000 Ocean County, New Jersey,
Utilities Authority, General
Obligation, Series A
5.75%, 1/1/18 ...................... 520,775
300,000 Ocean Township, New Jersey,
Municipal Utilities Authority Revenue
5.20%, 8/1/05, (MBIA) .............. 313,122
Old Bridge Township, New Jersey,
Municipal Utilities Authority Revenue:
285,000 5.75%, 11/1/00, (FGIC) ............ 297,899
500,000 6.25%, 11/1/16, (FGIC) ............ 545,750
500,000 Orange Township, New Jersey,
General Obligation
6.60%, 2/1/07, (FSA) ............... 550,255
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - continued
New Jersey - continued
Passaic County, New Jersey,
General Obligation:
$ 500,000 5.40%, 12/1/02, (MBIA) ............ $ 527,105
Series A
1,295,000 6.00%, 9/1/07 ..................... 1,447,991
500,000 Passiac Valley, New Jersey,
Sewage Commissioners Revenue,
Series D
5.75%, 12/1/13, (AMBAC) ............ 531,085
500,000 Patterson, New Jersey,
General Obligation
6.20%, 2/15/02, (FSA) .............. 536,380
500,000 Princeton, New Jersey,
Regional School District
6.05%, 4/15/07 ..................... 563,355
500,000 Randolph Township, New Jersey,
School District
6.30%, 3/15/06, (FSA) .............. 563,175
500,000 Rutgers State University,
College and University Revenue,
Series 1
5.25%, 5/1/12 ...................... 510,645
785,000 Somerset County, New Jersey,
General Obligation
5.90%, 8/1/99 ...................... 807,027
1,100,000 Sparta Township, New Jersey,
General Obligation
5.80%, 9/1/23, (MBIA) .............. 1,154,945
Stafford, New Jersey,
Municipal Utilities Authority:
500,000 6.20%, 6/1/07 ..................... 546,106
375,000 6.25%, 6/1/14 ..................... 406,631
240,000 Sewer Revenue
7.10%, 6/1/99, (MBIA) ............. 246,132
500,000 Stony Brook, New Jersey,
Regional Sewage Authority
Revenue, Series B
5.45%, 12/1/12 ..................... 534,450
1,000,000 Sussex County, New Jersey
Municipal Utilities Authority,
Solid Waste Revenue,
Series B
5.50%, 12/1/13, (MBIA) ............. 1,023,850
1,095,000 Toms River, New Jersey, Board
of Education, School Bond
Reserve Act
5.75%, 7/15/19, (FGIC) ............. 1,156,167
500,000 Trenton, New Jersey,
General Obligation
6.55%, 8/15/09, (MBIA) ............. 556,070
395,000 West Caldwell Township, New Jersey,
General Obligation
6.10%, 3/1/00 ...................... 411,278
200,000 West Morris, New Jersey,
Regional High School District
5.88%, 1/15/01 ..................... 210,070
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) ............ 1,225,046
</TABLE>
41
<PAGE>
EVERGREEN
New Jersey Tax Free Income Fund
Schedule of Investments (continued)
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - continued
New Jersey - continued
$ 1,000,000 West Windsor, New Jersey,
General Obligation
5.50%, 12/1/10, (FGIC) ......... $ 1,063,910
500,000 Willingboro, New Jersey,
Municipal Utilities Authority,
Water and Sewer Revenue
6.30%, 1/1/06, (FGIC) .......... 509,305
500,000 Winslow Township, New Jersey,
General Obligation
6.50%, 10/1/18, (FGIC) ......... 556,315
285,000 Woodbridge Township, New Jersey,
Sewer Utility Revenue
6.75%, 8/1/99 .................. 295,904
------------
116,709,416
------------
New York - 6.6%
Port Authority of New York and
New Jersey, Port Airport
and Marine Revenue:
Series 104:
1,525,000 4.75%, 1/15/26 ................ 1,424,609
1,500,000 5.00%, 7/15/11, (AMBAC) ....... 1,519,605
1,000,000 5.20%, 7/15/15, (AMBAC) ....... 1,007,400
2,000,000 5.20%, 7/15/17, (AMBAC) ....... 2,009,900
Series 111
3,000,000 5.00%, 10/1/27 ................ 2,914,410
1,000,000 Port Authority of New York and
New Jersey, Special Obligation,
JFK International Airport Terminal
5.75%, 12/1/25 ................. 1,045,160
------------
9,921,084
------------
Pennsylvania - 4.1%
475,000 Delaware River, Joint Toll Bridge,
Commission Revenue
6.25%, 7/1/12 .................. 508,687
Delaware River, Port Authority of
Pennsylvania and New Jersey
Revenue:
2,500,000 5.40%, 1/1/15, (FGIC) ......... 2,569,625
2,000,000 5.50%, 1/1/26 ................. 2,059,140
Series 1995
1,000,000 5.40%, 1/1/16, (FGIC) ......... 1,021,810
------------
6,159,262
------------
Puerto Rico - 7.4%
1,000,000 Commonwealth of Puerto Rico,
Capital Guaranty Certificates
6.50%, 7/1/23 .................. 1,135,590
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - continued
Puerto Rico - continued
$ 500,000 Commonwealth of Puerto Rico,
Electric Power Authority Revenue,
Series P
7.00%, 7/1/21 .................. $ 553,070
Commonwealth of Puerto Rico,
General Obligation:
500,000 5.50%, 7/1/13 ................. 511,650
1,115,000 6.50%, 7/1/08, (MBIA) ......... 1,297,403
1,000,000 6.50%, 7/1/14 ................. 1,182,710
4,520,000 Commonwealth of Puerto Rico,
Highway and Transportation
Authority, Highway Revenue,
Series A,
(Eff. Yield 4.50%) (a)
0.00%, 7/1/18 .................. 1,835,346
2,000,000 Commonwealth of Puerto Rico,
Highway and Transportation
Authority, Series Y
5.00%, 7/1/36 .................. 1,936,940
250,000 Commonwealth of Puerto Rico,
Public Buildings Authority,
Guaranted Revenue
6.25%, 7/1/09, (AMBAC) ......... 286,840
2,500,000 Commonwealth of Puerto Rico,
Public Imporovement Revenue
5.38%, 7/1/25 .................. 2,520,625
------------
11,260,174
------------
Total Municipal Obligations
(cost $142,565,084) ........... 148,094,406
------------
</TABLE>
<TABLE>
<CAPTION>
Shares
<S> <C> <C> <C>
MUTUAL FUND SHARES - 1.0%
101,178 Dreyfus Municipal Money
Market Fund ...................... 101,178
1,379,790 Federated Municipal Cash Trust ... 1,379,790
---------
Total Mutual Fund Shares
(cost $1,480,968) ............... 1,480,968
---------
Total Investments -
(cost $144,046,052)..... 99.3% 149,575,374
Other Assets and
Liabilities - net ...... 0.7 1,014,357
----- -----------
Net Assets - ............ 100.0% $150,589,731
===== ============
</TABLE>
(a) Effective yield (calculated at date of purchase) is the annual yield at
which the bond accretes until its maturity date.
Legend of Portfolio 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.
42
<PAGE>
EVERGREEN
New York Tax Free Fund
Schedule of Investments
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - 97.9%
New York - 80.7%
$ 400,000 Albany County, New York,
Public Improvements, Series B
5.60%, 3/15/14, (FGIC) ......... $ 418,000
465,000 Buffalo, New York,
General Obligation, Series E
6.50%, 12/1/22 ................. 532,137
500,000 Buffalo, New York, Municipal
Water Finance Authority, Series B
5.00%, 7/1/18 .................. 487,515
770,000 Erie County, New York, Water
Authority, Fourth Resolution,
(Eff. Yield 7.30%) (b)
0.00%, 12/1/17, (AMBAC) ........ 188,042
550,000 Hempstead Town, New York,
General Obligation, Series B
5.63%, 2/1/15, (FGIC) .......... 577,010
100,000 Islip, New York, Resources
Recovery Agency, Electric
Light & Power Improvements,
Series B
7.25%, 7/1/11, (AMBAC) ......... 122,895
695,000 Nassau County, New York,
Combined Sewer District, Series B
6.00%, 5/1/14, (FGIC) .......... 770,262
600,000 New Rochelle, New York,
General Obligation, Series B
6.15%, 8/15/17 ................. 649,650
100,000 New York City, New York,
Industrial Development Agency,
Japan Airlines
6.00%, 11/1/15 ................. 107,388
New York City, New York,
Municipal Water Finance
Authority, Water and Sewer
Systems Revenue, Series A:
600,000 7.00%, 6/15/15, (FGIC) (d) .... 656,904
400,000 7.00%, 6/15/15 ................ 432,800
250,000 New York City, New York,
Unrefunded Balance, Series A
7.75%, 8/15/15 ................. 278,410
New York State Dormitory
Authority Revenue:
City University Systems:
500,000 7.00%, 7/1/09, (FGIC) ......... 603,270
450,000 Series 2
6.25%, 7/1/19, (MBIA) .......... 480,987
250,000 State University Educational
Facilities
5.88%, 5/15/11, (AMBAC) ........ 277,152
250,000 New York State Environmental
Facilities Revenue, Riverbank
State Park
5.50%, 4/1/16 .................. 260,160
875,000 New York State Housing
Finance Agency Revenue,
Multifamily Mortgage, Series B
6.25%, 8/15/14, (AMBAC) ........ 933,205
New York State Medical Care
Facilities Finance Agency
Revenue:
250,000 Health Center Projects
6.38%, 11/15/19 ................ 274,320
1,000,000 Mental Health Services
6.38%, 8/15/14, (FGIC) ......... 1,108,890
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - continued
New York - continued
New York State Medical Care
Facilities Finance Agency
Revenue (cont.):
New York Hospital:
$ 400,000 6.75%, 8/15/14 ................ $ 463,680
300,000 6.80%, 8/15/24 ................ 348,642
700,000 New York State Thruway
Authority, Service Contract,
Local Highway and Bridge Revenue
5.75%, 4/1/16 .................. 731,052
New York State Urban Development
Corporation, Correctional Capital
Facilities Revenue:
500,000 (Eff. Yield 5.63%) (b)
0.00%, 1/1/10, (AMBAC) ......... 286,140
500,000 7.50%, 4/1/11 ................. 556,300
600,000 Series A;
6.50%, 1/1/09 .................. 680,256
1,000,000 6.50%, 1/1/10, (FSA) .......... 1,167,890
500,000 New York State Urban
Development Corporation,
Higher Education Technology Grants
6.00%, 4/1/10, (MBIA) .......... 544,025
100,000 Niagara Falls, New York,
Frontier Transportation
Authority, Greater Buffalo
International Airport
6.13%, 4/1/14, (AMBAC) ......... 107,343
Niagara Falls, New York,
Public Improvements:
500,000 7.50%, 3/1/14, (MBIA) ......... 640,540
750,000 7.50%, 3/1/16, (MBIA) ......... 969,172
250,000 St. Lawrence County, New York,
Industrial Development
Civic Facilities Revenue, St.
Lawrence University Project,
Series A
5.63%, 7/1/13, (MBIA) .......... 261,308
1,000,000 Suffolk County, New York,
Industrial Development
Agency, Southwest Sewer
Systems Revenue
6.00%, 2/1/08, (FGIC) .......... 1,118,440
805,000 Triborough Bridge and Tunnel
Authority, New York, General
Purpose Revenue, Series X
6.63%, 1/1/12 .................. 946,938
----------
17,980,723
----------
Puerto Rico - 17.2%
2,000,000 Commonwealth of Puerto Rico,
Capital Appreciation,
General Obligation
(Eff. Yield 4.85%) (b)
0.00%, 7/1/14, (MBIA) .......... 902,700
1,550,000 Commonwealth of Puerto Rico,
Industrial, Tourist,
Educational, Medical &
Environmental Control Facilities,
Hospital Auxilio Mutuo Obligation
Group, Series A,
6.25%, 7/1/24 (MBIA) ........... 1,698,614
</TABLE>
43
<PAGE>
EVERGREEN
New York Tax Free Fund
Schedule of Investments (continued)
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
MUNICIPAL OBLIGATIONS - continued
Puerto Rico - continued
$ 1,000,000 Commonwealth of Puerto Rico,
Linked Bond Payment Obligation
7.00%, 7/1/10, (MBIA) (c) ....... $ 1,226,530
-----------
3,827,844
-----------
Total Municipal Obligations
(cost $20,260,387) .............. 21,808,567
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES - 1.0% (cost $220,000)
$ 220,000 New York City, New York,
Municipal Water Finance
Authority, Water and Sewer
Systems Revenue, Series G
3.85%, 6/15/24 (a) .............. $ 220,000
-----------
Total Investments -
(cost $20,480,387)..... 98.9% 22,028,567
Other Assets and
Liabilities - net ..... 1.1 240,041
----- -----------
Net Assets ............. 100.0% $22,268,608
===== ===========
</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.
(c) At the discretion of the portfolio manager, these securities may be
separated into securities with interest or principal payments that are
linked to another rate or index and therefore would be considered
derivative securities.
(d) At March 31, 1998, $100,000 principal amount of this security was pledged
to cover margin requirements for open futures contracts.
Summary of Abbreviations:
AMBAC Insured by American Municipal Bond Assurance Corporation
FGIC Insured by Federal Guaranty Insurance Company
FSA Insured by Financial Security Assurance Company
MBIA Insured by Municipal Bond Investors Assurance Corporation
FUTURES CONTRACTS - SHORT POSITIONS
<TABLE>
<S> <C> <C> <C> <C> <C>
Number Initial Contract Value at Unrealized
Expiration of Contracts Amount March 31, 1998 Appreciation
- ------------ -------------- --------- ---------------- -------------
June '98 4 Municipal Bond Index $ 490,334 $ 490,668 $ 334
June '98 10 U.S. Treasury Bond Index 1,203,890 1,205,279 1,389
</TABLE>
See Combined Notes to Financial Statements.
44
<PAGE>
EVERGREEN
Pennsylvania Tax Free Fund
Schedule of Investments
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - 97.2%
Pennsylvania - 88.0%
$ 2,000,000 Albert Gallatin, Pennsylvania,
Area School District
5.30%, 9/1/17 ................... $2,031,480
Allegheny County, Pennsylvania:
955,000 Finance Authority, Single
Family Mortgage, Series Y
6.60%, 11/1/14 .................. 1,033,176
2,000,000 Industrial Development
Authority, USX Corporation,
Series A
6.70%, 12/1/20 .................. 2,176,240
Allegheny County, Pennsylvania,
Hospital Development:
1,000,000 Children's Hospital of Pittsburgh,
5.38%, 7/1/17 ................... 1,014,810
1,000,000 Health Center, University of
Pittsburgh
6.00%, 4/1/05 ................... 1,086,650
2,000,000 Pittsburgh Mercy Health Systems
5.63%, 8/15/18 .................. 2,170,140
1,000,000 South Hills Health System
5.13%, 5/1/23 ................... 970,460
Allegheny County, Pennsylvania,
Hospital Development, University of
Pittsburgh Medical Center:
3,000,000 5.13%, 7/1/22 .................. 2,940,870
1,000,000 5.30%, 12/1/12 ................. 1,019,900
1,250,000 Beaver County, Pennsylvania,
Industrial Development Authority,
Pollution Control, Ohio Edison Co.
Project, Series A
7.75%, 9/1/24 ................... 1,316,337
Bradford, Pennsylvania,
Area School District:
1,525,000 5.50%, 10/1/14 ................. 1,592,252
2,000,000 5.75%, 10/1/15 ................. 2,177,420
Bucks County, Pennsylvania,
General Obligation:
1,000,000 5.50%, 5/1/07 .................. 1,066,240
2,095,000 5.50%, 12/1/10 ................. 2,207,858
1,000,000 Bucks County, Pennsylvania, Water
and Sewer Revenue
6.20%, 12/1/03 .................. 1,062,960
4,485,000 Cambria County, Pennsylvania,
General Obligation, Series A
6.63%, 8/15/12 .................. 4,989,832
1,000,000 Central Bucks, Pennsylvania,
School District, Series A
6.90%, 11/15/13 ................. 1,145,180
1,000,000 Central Dauphin, Pennsylvania,
School District
5.90%, 6/1/00 ................... 1,039,740
1,000,000 Council Rock, Pennsylvania,
School District
6.50%, 3/1/02 ................... 1,062,640
1,500,000 Crawford Central, Pennsylvania,
School District
5.55%, 2/15/08 .................. 1,581,120
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - continued
Pennsylvania - continued
$ 1,600,000 Dauphin County, Pennsylvania,
General Obligation
5.40%, 8/1/06 ................... $1,665,424
1,000,000 Dauphin County, Pennsylvania,
General Authority Health System,
Pinnacle Health System Project
5.50%, 5/15/17 .................. 1,028,030
1,350,000 Delaware County, Pennsylvania,
Industrial Development Authority,
Pollution Control, Philadelphia
Electric Co., Series A
7.38%, 4/1/21 ................... 1,468,516
1,500,000 Delaware County, Pennsylvania,
General Obligation
5.50%, 10/1/15 .................. 1,547,355
Delaware River Port Authority,
Pennsylvania and New Jersey:
1,000,000 5.30%, 1/1/10 .................. 1,041,170
1,400,000 5.45%, 1/1/12 .................. 1,462,748
1,000,000 Delaware State, River and Bay
Authority Revenue
5.40%, 1/1/16 (FGIC) ............ 1,026,890
2,140,000 East Stroudsburg, Pennsylvania,
Area School District
5.00%, 11/15/09 ................. 2,189,755
1,485,000 Elizabeth Forward, Pennsylvania,
Area School District,
(Eff. Yield 6.70%)(a)
0.00%, 9/1/15 ................... 619,200
500,000 Erie County, Pennsylvania,
Industrial Development Authority,
Environmental Improvement,
International Paper Co. Project,
Series A
7.63%, 11/1/18 .................. 583,680
1,000,000 Fox Chapel, Pennsylvania,
Area School District
5.50%, 8/15/09 .................. 1,043,960
3,030,000 Fox Chapel, Pennsylvania, Authority
Waterworks Revenue
5.13%, 5/15/28 .................. 2,955,583
Greene County, Pennsylvania,
Industrial Development Authority:
3,000,000 Monongahela Power Co., Series B
4.75%, 2/1/07 ................... 2,989,620
1,500,000 West Pennsylvania Power Co.
5.10%, 2/1/12 ................... 1,493,595
5,205,000 Harrisburg, Pennsylvania,
General Obligation,
(Eff. Yield 5.35%) (a)
0.00%, 3/15/13 .................. 2,448,641
1,000,000 Harrisburg, Pennsylvania,
Authority Lease Revenue,
Green County Prison Project
6.25%, 6/1/01 ................... 1,065,810
2,000,000 Hempfield, Pennsylvania,
Area School District
5.30%, 10/15/14 ................. 2,038,360
2,500,000 Indiana County, Pennsylvania,
Industrial Development Authority,
Pennsylvania Electric Co. Project
5.35%, 11/1/10 .................. 2,647,325
</TABLE>
45
<PAGE>
EVERGREEN
Pennsylvania Tax Free Fund
Schedule of Investments (continued)
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - continued
Pennsylvania - continued
Lehigh County, Pennsylvania,
General Purpose Authority:
$ 1,000,000 Good Shepherd Rehabilitation
Hospital
7.50%, 11/15/21 ................. $1,126,800
1,250,000 Lehigh Valley Hospital, Series A
7.00%, 7/1/16 ................... 1,528,175
1,000,000 Lower Merion Township,
Pennsylvania, General Obligation
5.75%, 8/1/09 ................... 1,046,930
1,780,000 Mars, Pennsylvania,
Area School District,
(Eff. Yield 6.60%) (a)
0.00%, 9/1/26 ................... 414,064
4,000,000 McKeesport, Pennsylvania,
Area School District
6.00%, 10/1/25 .................. 4,449,520
1,305,000 Mon Valley, Pennsylvania,
Sewer Revenue
6.55%, 11/1/19 (MBIA) ........... 1,443,213
Montgomery County, Pennsylvania:
1,340,000 General Obligation
5.35%, 10/15/16 ................. 1,385,600
3,000,000 Industrial Development
Revenue, Hill School Project
5.35%, 8/15/27 .................. 3,033,510
950,000 Industrial Development,
Pollution Control,
Philadelphia Electric Co.
7.60%, 4/1/21 ................... 1,039,291
Montgomery County, Pennsylvania,
Education and Health, Abington
Memorial Hospital:
2,000,000 5.13%, 6/1/14 .................. 1,998,000
1,000,000 6.40%, 6/1/02 .................. 1,059,860
1,025,000 Montgomery County, Pennsylvania,
Higher Education and Health, County
Community College Project
6.75%, 11/1/02 .................. 1,089,462
500,000 Mount Pleasant, Pennsylvania,
Business Authority, Frick Hospital
5.75%, 12/1/27 .................. 504,410
1,510,000 New Wilmington, Pennsylvania,
Municipal Authority, Westminster
College
5.05%, 3/1/12 ................... 1,497,603
1,280,000 North Pennsylvania, School District
5.50%, 3/1/05 ................... 1,364,608
1,000,000 North Pennsylvania, Water Authority
6.00%, 11/1/07 .................. 1,070,010
4,890,000 North Wales, Pennsylvania,
Water Authority
5.00%, 11/1/13 .................. 4,867,946
4,000,000 Northampton County, Pennsylvania,
Higher Education Authority,
Lafayette College Project
5.00%, 11/1/27 .................. 3,833,880
2,035,000 Northampton County, Pennsylvania,
Industrial Development, Citizen
Utility Co. Project
4.75%, 8/1/15, VRDN (d) ......... 2,035,000
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - continued
Pennsylvania - continued
$ 3,000,000 Northeastern Pennsylvania, Hospital
and Education Authority, Wyoming
Valley Health Care
5.25%, 1/1/26 ................... $2,995,980
2,000,000 Owen J. Roberts School District,
Pennsylvania
5.38%, 5/15/18 .................. 2,029,780
1,325,000 Parkland, Pennsylvania,
School District
5.75%, 9/1/14 ................... 1,407,110
1,000,000 Penn Hills, Pennsylvania,
General Obligation
5.60%, 12/1/05 .................. 1,058,640
1,000,000 Pennridge, Pennsylvania,
School District
6.15%, 2/15/03 .................. 1,065,920
Pennsylvania Convention Center,
Authority Revenue, Capital
Appreciation:
1,000,000 6.60%, 9/1/00 .................. 1,057,970
2,000,000 (Eff. Yield 9.58%) (a)
0.00%, 9/1/08 ................... 1,229,280
1,000,000 Series A
6.75%, 9/1/19 ................... 1,134,830
Pennsylvania Housing Finance
Agency, Single Family Mortgage:
790,000 Series 33
6.90%, 4/1/17 ................... 850,743
2,000,000 Series 34A
6.85%, 4/1/16 ................... 2,125,620
750,000 Series 40
6.80%, 10/1/15 .................. 811,380
1,840,000 Series 50A
6.00%, 10/1/13 .................. 1,957,852
1,650,000 Pennsylvania Intragovernmental
Cooperation Authority, Special Tax,
Philadelphia Funding Program
6.75%, 6/15/21 (FGIC) ........... 1,897,896
Pennsylvania State University:
1,000,000 6.25%, 3/1/11 .................. 1,065,490
1,000,000 6.60%, 7/1/02 .................. 1,089,480
1,080,000 Pennsylvania State, Certificates of
Participation
5.90%, 5/1/99 ................... 1,103,684
5,000,000 Pennsylvania State, Finance
Authority Revenue
6.60%, 11/1/09 .................. 5,469,500
2,000,000 Pennsylvania State, Higher
Education Facility, University of
Pennsylvania
5.40%, 9/1/07 ................... 2,114,940
1,000,000 Pennsylvania State, Higher
Educational Facility, University of
Pennsylvania and Presbyterian
Medical Center of Pennsylvania
6.00%, 1/1/07 ................... 1,107,770
Pennsylvania State, Higher
Educational Revenue:
2,025,000 5.00%, 12/15/09 ................ 2,071,089
2,950,000 5.25%, 6/15/17 ................. 2,984,722
485,000 6.63%, 8/15/09 ................. 534,625
</TABLE>
46
<PAGE>
EVERGREEN
Pennsylvania Tax Free Fund
Schedule of Investments (continued)
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - continued
Pennsylvania - continued
Pennsylvania State, Higher
Educational Revenue, Thomas
Jefferson University:
$ 1,000,000 5.15%, 11/1/10 ..................... $ 1,046,648
2,000,000 5.80%, 8/15/99 ..................... 2,051,722
1,115,000 6.63%, 8/15/09 ..................... 1,238,007
Pennsylvania State, Industrial
Development Authority:
2,000,000 6.00%, 7/1/06 ...................... 2,206,420
2,000,000 7.00%, 1/1/06 ...................... 2,318,380
1,000,000 7.00%, 7/1/06 ...................... 1,167,760
875,000 Series 1994
6.00%, 1/1/12 ....................... 945,761
Pennsylvania State, Turnpike
Commission Revenue:
1,000,000 6.45%, 6/1/03 ...................... 1,079,700
3,000,000 6.50%, 12/1/13 ..................... 3,256,500
4,000,000 Philadelphia, Pennsylvania, Water
and Waste Revenue
6.25%, 8/1/12 (MBIA) ................ 4,595,080
1,000,000 Philadelphia, Pennsylvania, Airport
Parking Authority Revenue
5.75%, 9/1/08 ....................... 1,095,590
Philadelphia, Pennsylvania,
Hospital and Higher Education
Facilities Authority:
500,000 Albert Einstein Medical Center,
7.63%, 4/1/11 ....................... 524,995
280,000 Community College, Series B
6.50%, 5/1/07 ....................... 318,307
500,000 Temple University Hospital
5.50%, 11/15/15 ..................... 505,355
3,000,000 Pittsburgh, Pennsylvania, Water and
Sewer Systems Revenue
5.00%, 9/1/21 ....................... 2,899,620
1,000,000 Pleasant Valley, Pennsylvania,
School District
5.60%, 11/15/14 ..................... 1,035,660
1,000,000 Pocono Mountain, Pennsylvania,
School District
6.10%, 10/1/03 ...................... 1,066,170
6,460,000 Radnor Township, Pennsylvania,
School District
5.00%, 3/15/26 ...................... 6,262,389
2,865,000 Solanco, Pennsylvania, School
District
5.20%, 2/15/14 ...................... 2,895,713
1,500,000 Southeastern Pennsylvania,
Transportation Authority
5.63%, 3/1/07 ....................... 1,606,515
2,000,000 Titusville, Pennsylvania,
Area School District
5.25%, 7/1/17 ....................... 2,019,220
1,000,000 Tredyffrin Township, Pennsylvania,
General Obligation
5.45%, 11/15/13 ..................... 1,029,880
1,000,000 Unionville-Chadds Ford,
Pennsylvania, School District
5.80%, 6/1/13 ....................... 1,068,700
University of Pittsburgh, Pennsylvania:
1,000,000 5.00%, 6/1/17 ...................... 987,740
1,000,000 5.90%, 6/1/03 ...................... 1,078,375
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
MUNICIPAL OBLIGATIONS - continued
Pennsylvania - continued
$ 3,060,000 Upper Dublin, Pennsylvania,
School District
5.00%, 11/15/08 ..................... $ 3,143,079
Upper Merion, Pennsylvania,
Municipal Utilities Authority:
1,000,000 6.00%, 8/15/12 ..................... 1,053,890
2,325,000 6.00%, 8/15/16 ..................... 2,436,856
1,000,000 Wallenpaupack, Pennsylvania,
Area School District
6.00%, 9/1/03 ....................... 1,039,190
1,000,000 West Mifflin, Pennsylvania, Sewer
Municipal Authority, Sewer Revenue
5.70%, 8/1/15 ....................... 1,045,870
1,000,000 York County, Pennsylvania,
General Obligation,
6.00%, 10/1/04 ...................... 1,060,270
York County, Pennsylvania, Hospital
Authority Revenue, York Hospital:
3,000,000 5.25%, 7/1/23 ...................... 2,991,810
2,000,000 5.25%, 7/1/17 ...................... 2,007,440
-----------
194,031,762
-----------
Puerto Rico - 9.2%
Commonwealth of Puerto Rico,
Highway and Transportation
Authority, Highway Revenue:
9,000,000 Series A,
(Eff. Yield 5.50%)(a)
0.00%, 7/1/16 ....................... 3,579,660
1,000,000 Series W
5.50%, 7/1/13 ....................... 1,069,250
100,000 Series Y
5.25%, 7/1/15 ....................... 101,691
3,250,000 Commonwealth of Puerto Rico
Industrial, Tourist, Educational,
Medical & Environmental Control
Facilities, Hospital Auxilio Mutuo
Obligation Group, Series A
6.25%, 7/1/24 (MBIA) ................ 3,561,610
3,950,000 Commonwealth of Puerto Rico,
Linked Bond Payment Obligation,
7.00%, 7/1/10 (MBIA)(b) ............. 4,844,794
1,000,000 Commonwealth of Puerto Rico,
Municipal Finance Agency, Series A
6.00%, 7/1/11 ....................... 1,125,760
2,900,000 Commonwealth of Puerto Rico, Public
Buildings Authority, Guaranteed
Government Facilities, Series B
5.25%, 7/1/21 ....................... 2,899,768
1,800,000 Commonwealth of Puerto Rico, Public
Buildings Authority, Guaranteed
Public Education and Health
Facilities, Series M
5.70%, 7/1/09 ....................... 1,969,920
1,000,000 University of Puerto Rico,
University Revenue, Series N
6.25%, 6/1/07 ....................... 1,140,170
-----------
20,292,623
-----------
Total Municipal Obligations
(cost $206,219,952) ................. 214,324,385
-----------
</TABLE>
47
<PAGE>
EVERGREEN
Pennsylvania Tax Free Fund
Schedule of Investments (continued)
March 31, 1998
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES - 0.9% (cost $2,140,000)
Pennsylvania - 0.9%
$ 2,140,000 Philadelphia, Pennsylvania,
Hospital and Higher Educational
Facilities Authority Revenue,
Children's Hospital of
Philadelphia, Series B,
(SPA: Morgan Guaranty)
3.75%, 3/1/27 (c) ........... $2,140,000
----------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C> <C>
MUTUAL FUND SHARES - 1.4%
3,000,000 Federated Tax Free O bligation .... $ 3,000,000
59,738 Pennsylvania Municip al Cash Trust,
Institutional Service Shares ...... 59,738
------------
Total Mutual Fund Shares
(cost $3,059,738) ................. 3,059,738
------------
Total Investments -
(cost $211,419,690) ..... 99.5% 219,524,123
Other Assets and
Liabilities - net ....... 0.5 1,004,208
----- ------------
Net Assets - ............ 100.0% $220,528,331
===== ============
</TABLE>
(a) Effective yield (calculated at date of purchase) is the annual yield at
which the bond accretes until its maturity date.
(b) At the discretion of the portfolio manager, these securities may be
separated into securities with interest or principal payments that are
linked to another rate or index and therefore would be considered
derivative securities.
(c) 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.
(d) 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 March
31, 1998.
Legend of Portfolio Abbreviations:
FGIC Insured by Federal Guaranty Insurance Company
MBIA Insured by Municipal Bond Investors Assurance Corporation
SPA Security Purchase Agreement
VRDN Variable Rate Demand Notes
See Combined Notes to Financial Statements.
48
<PAGE>
EVERGREEN
Municipal Bond Funds
Statements of Assets and Liabilities
March 31, 1998
<TABLE>
<CAPTION>
California Connecticut Massachusetts
Fund Fund Fund
--------------- ---------------- ----------------
<S> <C> <C> <C>
Assets
Investments at market value
(identified cost-$25,045,496,
$65,481,487, $9,555,261,
$23,528,568, $144,046,052
$20,480,387 and $211,419,690,
respectively) ............................ $26,341,725 $ 67,429,235 $10,013,115
Cash ...................................... 3,188 0 549
Receivable for Fund shares sold ........... 680,808 5,000 0
Interest receivable ....................... 307,233 1,020,789 113,018
Receivable for investments sold ........... 0 0 0
Prepaid expenses and other assets ......... 20,934 8,952 5,364
- -------------------------------------------- ----------- ------------ -----------
Total assets ............................. 27,353,888 68,463,976 10,132,046
- -------------------------------------------- ----------- ------------ -----------
Liabilities
Payable for Fund shares redeemed .......... 122,430 0 5,667
Dividends payable ......................... 52,551 248,596 6,541
Due to related parties .................... 28,880 36,603 4,774
Payable for daily variation margin on
open futures contracts ................... 10,594 0 2,750
Distribution fee payable .................. 9,765 264 6,096
Accrued Trustees' fees and expenses ....... 404 198 298
Accrued registration and filing fees ...... 23 20,760 0
Payable for investments purchased ......... 0 0 0
Accrued expenses and other liabilities..... 7,465 5,314 6,813
- -------------------------------------------- ----------- ------------ -----------
Total liabilities ........................ 232,112 311,735 32,939
- -------------------------------------------- ----------- ------------ -----------
Net assets ................................. $27,121,776 $ 68,152,241 $10,099,107
============================================ =========== ============ ===========
Net assets represented by
Paid-in capital ........................... $25,744,776 $ 65,779,367 $ 9,594,520
Undistributed net investment income
(accumulated distributions in excess
of net investment income) ................ (52,878) 0 (6,750)
Accumulated net realized gain on
investments and closed futures
contracts ................................ 130,786 425,126 52,761
Net unrealized appreciation on
investments and open futures
contracts ................................ 1,299,092 1,947,748 458,576
- -------------------------------------------- ----------- ------------ -----------
Total net assets ......................... $27,121,776 $ 68,152,241 $10,099,107
============================================ =========== ============ ===========
Net assets consist of
Class A ................................... $ 6,419,855 $ 146,151 $ 2,076,481
Class B ................................... 18,966,876 331,130 6,383,946
Class C ................................... 1,735,045 0 1,638,680
Class Y ................................... 0 67,674,960 0
- -------------------------------------------- ----------- ------------ -----------
$27,121,776 $ 68,152,241 $10,099,107
=========== ============ ===========
Shares outstanding
Class A ................................... 643,160 22,925 212,751
Class B ................................... 1,908,772 51,933 658,769
Class C ................................... 174,887 0 169,219
Class Y ................................... 0 10,616,012 0
- -------------------------------------------- ----------- ------------ -----------
Net asset value per share
Class A ................................... $ 9.98 $ 6.38 $ 9.76
============================================ =========== ============ ===========
Class A - Offering price (based on
sales charge of 4.75%) ................... $ 10.48 $ 6.70 $ 10.25
============================================ =========== ============ ===========
Class B ................................... $ 9.94 $ 6.38 $ 9.69
============================================ =========== ============ ===========
Class C ................................... $ 9.92 - $ 9.68
============================================ =========== ============ ===========
Class Y ................................... - $ 6.37 -
============================================ =========== ============ ===========
<CAPTION>
Missouri New Jersey New York Pennsylvania
Fund Fund Fund Fund
-------------- ----------------- -------------- ----------------
<S> <C> <C> <C> <C>
Assets
Investments at market value
(identified cost-$25,045,496,
$65,481,487, $9,555,261,
$23,528,568, $144,046,052
$20,480,387 and $211,419,690,
respectively) ............................ $25,234,114 $ 149,575,374 $22,028,567 $219,524,123
Cash ...................................... 3,194 0 1,584 19
Receivable for Fund shares sold ........... 565 55,636 460 714,105
Interest receivable ....................... 337,653 1,914,117 283,996 3,017,170
Receivable for investments sold ........... 0 2,834,063 0 0
Prepaid expenses and other assets ......... 36,820 4,873 5,071 3,937
- --------------------------------------------- ----------- ------------- ----------- ------------
Total assets ............................. 25,612,346 154,384,063 22,319,678 223,259,354
- --------------------------------------------- ----------- ------------- ----------- ------------
Liabilities
Payable for Fund shares redeemed .......... 12,074 130,978 0 225,254
Dividends payable ......................... 55,421 457,457 28,837 1,382,787
Due to related parties .................... 53,214 28,504 1,320 49,380
Payable for daily variation margin on
open futures contracts ................... 6,906 0 6,438 0
Distribution fee payable .................. 12,994 947 11,106 31,615
Accrued Trustees' fees and expenses ....... 370 6,612 257 0
Accrued registration and filing fees ...... 1,429 14,895 15 44,474
Payable for investments purchased ......... 0 3,122,960 0 972,453
Accrued expenses and other liabilities..... 30,740 31,979 3,097 25,060
- --------------------------------------------- ----------- ------------- ----------- ------------
Total liabilities ........................ 173,148 3,794,332 51,070 2,731,023
- --------------------------------------------- ----------- ------------- ----------- ------------
Net assets ................................. $25,439,198 $ 150,589,731 $22,268,608 $220,528,331
============================================= =========== ============= =========== ============
Net assets represented by
Paid-in capital ........................... $23,667,371 $ 144,667,683 $20,553,591 $211,180,842
Undistributed net investment income
(accumulated distributions in excess
of net investment income) ................ (46,006) 1,977 (14,383) (106,253)
Accumulated net realized gain on
investments and closed futures
contracts ................................ 110,424 390,749 179,497 1,349,309
Net unrealized appreciation on
investments and open futures
contracts ................................ 1,707,409 5,529,322 1,549,903 8,104,433
- --------------------------------------------- ----------- ------------- ----------- ------------
Total net assets ......................... $25,439,198 $ 150,589,731 $22,268,608 $220,528,331
============================================= =========== ============= =========== ============
Net assets consist of
Class A ................................... $ 4,897,029 $ 31,614,432 $ 3,559,242 $ 24,118,585
Class B ................................... 19,552,404 13,644,760 17,244,821 37,035,655
Class C ................................... 989,765 0 1,464,545 6,414,002
Class Y ................................... 0 105,330,539 0 152,960,089
- --------------------------------------------- ----------- ------------- ----------- ------------
$25,439,198 $ 150,589,731 $22,268,608 $220,528,331
=========== ============= =========== ============
Shares outstanding
Class A ................................... 479,612 2,844,866 351,689 2,060,980
Class B ................................... 1,938,595 1,227,877 1,720,078 3,205,942
Class C ................................... 98,157 0 146,106 553,629
Class Y ................................... 0 9,478,550 0 13,072,063
- --------------------------------------------- ----------- ------------- ----------- ------------
Net asset value per share
Class A ................................... $ 10.21 $ 11.11 $ 10.12 $ 11.70
============================================= =========== ============= =========== ============
Class A - Offering price (based on
sales charge of 4.75%) ................... $ 10.72 $ 11.66 $ 10.62 $ 12.28
============================================= =========== ============= =========== ============
Class B ................................... $ 10.09 $ 11.11 $ 10.03 $ 11.55
============================================= =========== ============= =========== ============
Class C ................................... $ 10.08 - $ 10.02 $ 11.59
============================================= =========== ============= =========== ============
Class Y ................................... - $ 11.11 - $ 11.70
============================================= =========== ============= =========== ============
</TABLE>
See Combined Notes to Financial Statements.
49
<PAGE>
EVERGREEN
Municipal Bond Funds
Statements of Operations
Year Ended March 31, 1998
<TABLE>
<CAPTION>
California Connecticut Massachusetts
Fund Fund* Fund
------------- -------------- ----------------
<S> <C> <C> <C>
Investment income
Interest ................................ $1,471,400 $1,197,743 $ 611,380
- ------------------------------------------ ---------- ---------- ----------
Expenses
Distribution Plan expenses .............. 216,952 466 87,863
Management fee .......................... 150,177 141,059 62,171
Transfer agent fees ..................... 22,765 138 11,610
Professional fees ....................... 19,859 16,017 17,372
Shareholder reports expense ............. 19,605 8,546 15,585
Custodian fees .......................... 9,628 8,053 3,882
Registration and filing fees ............ 4,412 23,632 6,697
Administrative services fees ............ 1,621 7,220 2,145
Trustees' fees and expenses ............. 1,363 545 750
Other ................................... 2,504 1,768 2,527
Fee waivers ............................. (67,381) (64,322) (54,590)
- ------------------------------------------ ---------- ---------- ----------
Total expenses ......................... 381,505 143,122 156,012
Less: Indirectly paid expenses .......... (724) (1,595) (299)
- ------------------------------------------ ---------- ---------- ----------
Net expenses ........................... 380,781 141,527 155,713
- ------------------------------------------ ---------- ---------- ----------
Net investment income ................... 1,090,619 1,056,216 455,667
- ------------------------------------------ ---------- ---------- ----------
Net realized and unrealized gain on
investments and futures contracts
Net realized gain (loss) on:
Investments ............................ 364,453 425,126 389,235
Closed futures contracts ............... (128,095) 0 (19,681)
- ------------------------------------------ ---------- ---------- ----------
Net realized gain on investments and
closed futures contracts ............... 236,358 425,126 369,554
Net change in unrealized appreciation
(depreciation) on investments and
open futures contracts ................. 1,295,323 55,361 258,124
- ------------------------------------------ ---------- ---------- ----------
Net realized and unrealized gain on
investments and futures contracts ...... 1,531,681 480,487 627,678
- ------------------------------------------ ---------- ---------- ----------
Net increase in net assets resulting
from operations ........................ $2,622,300 $1,536,703 $1,083,345
========================================== ========== ========== ==========
<CAPTION>
Missouri New Jersey New York Pennsylvania
Fund Fund Fund Fund
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Investment income
Interest ................................ $1,416,417 $4,501,640 $1,336,801 $ 6,642,239
- ------------------------------------------- ---------- ---------- ---------- -----------
Expenses
Distribution Plan expenses .............. 201,944 188,017 194,402 453,804
Management fee .......................... 138,262 429,995 132,245 610,824
Transfer agent fees ..................... 27,177 35,990 23,201 79,966
Professional fees ....................... 18,094 23,810 16,561 20,069
Shareholder reports expense ............. 42,956 63,236 12,837 53,279
Custodian fees .......................... 7,623 31,179 8,340 43,161
Registration and filing fees ............ 2,080 22,039 421 47,640
Administrative services fees ............ 4,811 27,450 3,109 25,291
Trustees' fees and expenses ............. 1,252 4,687 1,066 3,359
Other ................................... 4,270 12,280 5,278 10,728
Fee waivers ............................. (94,233) (347,511) (58,744) (174,928)
- ------------------------------------------- ---------- ---------- ---------- -----------
Total expenses ......................... 354,236 491,172 338,716 1,173,193
Less: Indirectly paid expenses .......... (1,449) (1,640) (739) (2,649)
- ------------------------------------------- ---------- ---------- ---------- -----------
Net expenses ........................... 352,787 489,532 337,977 1,170,544
- ------------------------------------------- ---------- ---------- ---------- -----------
Net investment income ................... 1,063,630 4,012,108 998,824 5,471,695
- ------------------------------------------- ---------- ---------- ---------- -----------
Net realized and unrealized gain on
investments and futures contracts
Net realized gain (loss) on:
Investments ............................ 322,259 1,015,421 518,579 3,540,109
Closed futures contracts ............... (86,830) 0 (29,466) (132,120)
- ------------------------------------------- ---------- ---------- ---------- -----------
Net realized gain on investments and
closed futures contracts ............... 235,429 1,015,421 489,113 3,407,989
Net change in unrealized appreciation
(depreciation) on investments and
open futures contracts ................. 1,157,948 1,915,701 822,112 1,218,774
- ------------------------------------------- ---------- ---------- ---------- -----------
Net realized and unrealized gain on
investments and futures contracts ...... 1,393,377 2,931,122 1,311,225 4,626,763
- ------------------------------------------- ---------- ---------- ---------- -----------
Net increase in net assets resulting
from operations ........................ $2,457,007 $6,943,230 $2,310,049 $10,098,458
=========================================== ========== ========== ========== ===========
</TABLE>
* The Fund commenced operations on November 24, 1997.
See Combined Notes to Financial Statements.
50
<PAGE>
EVERGREEN
Municipal Bond Funds
Statements of Changes in Net Assets
Year Ended March 31, 1998
<TABLE>
<CAPTION>
California Connecticut Massachusetts
Fund Fund* Fund
--------------- -------------- ----------------
<S> <C> <C> <C>
Operations
Net investment income ............... $ 1,090,619 $ 1,056,216 $ 455,667
Net realized gain on investments
and closed futures contracts ....... 236,358 425,126 369,554
Net change in unrealized
appreciation (depreciation) on
investments and open futures
contracts .......................... 1,295,323 55,361 258,124
- -------------------------------------- ------------ ------------ ------------
Net increase in net assets
resulting from operations ......... 2,622,300 1,536,703 1,083,345
- -------------------------------------- ------------ ------------ ------------
Distributions to shareholders from
Net investment income
Class A ............................ (205,595) (953) (93,495)
Class B ............................ (781,308) (1,377) (270,195)
Class C ............................ (68,869) 0 (68,044)
Class Y ............................ 0 (1,053,886) 0
Net realized gains on investments
Class A ............................ 0 0 0
Class B ............................ 0 0 0
Class C ............................ 0 0 0
Class Y ............................ 0 0 0
- -------------------------------------- ------------ ------------ ------------
Total distributions to
shareholders ...................... (1,055,772) (1,056,216) (431,734)
- -------------------------------------- ------------ ------------ ------------
Capital share transactions
Proceeds from shares sold ........... 4,372,062 6,576,391 1,120,126
Proceeds from shares issued in
connection with the acquisition
of Common Trust funds .............. 0 65,325,420 0
Proceeds from reinvestment of
distributions ...................... 475,762 2,057 281,994
Payment for shares redeemed ......... (7,127,357) (4,232,114) (3,887,027)
- -------------------------------------- ------------ ------------ ------------
Net increase (decrease) in net
assets resulting from capital
share transactions ................ (2,279,533) 67,671,754 (2,484,907)
- -------------------------------------- ------------ ------------ ------------
Total increase (decrease) in
net assets ....................... (713,005) 68,152,241 (1,833,296)
Net assets
Beginning of year ................... 27,834,781 0 11,932,403
- -------------------------------------- ------------ ------------ ------------
End of year ......................... $ 27,121,776 $ 68,152,241 $ 10,099,107
====================================== ============ ============ ============
Undistributed net investment
income (accumulated
distributions in excess of net
investment income) .................. $ (52,878) $ 0 $ (6,750)
====================================== ============ ============ ============
<CAPTION>
Missouri New Jersey New York Pennsylvania
Fund Fund Fund Fund
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Operations
Net investment income ............... $ 1,063,630 $ 4,012,108 $ 998,824 $ 5,471,695
Net realized gain on investments
and closed futures contracts ....... 235,429 1,015,421 489,113 3,407,989
Net change in unrealized
appreciation (depreciation) on
investments and open futures
contracts .......................... 1,157,948 1,915,701 822,112 1,218,774
- --------------------------------------- ------------ ------------- ------------ -------------
Net increase in net assets
resulting from operations ......... 2,457,007 6,943,230 2,310,049 10,098,458
- --------------------------------------- ------------ ------------- ------------ -------------
Distributions to shareholders from
Net investment income
Class A ............................ (185,708) (1,518,372) (163,491) (1,141,904)
Class B ............................ (792,663) (419,808) (725,698) (1,487,712)
Class C ............................ (47,861) 0 (60,327) (258,914)
Class Y ............................ 0 (2,083,453) 0 (2,490,364)
Net realized gains on investments
Class A ............................ 0 (240,378) (21,835) 0
Class B ............................ 0 (86,039) (118,363) 0
Class C ............................ 0 0 (9,455) 0
Class Y ............................ 0 (81,674) 0 0
- --------------------------------------- ------------ ------------- ------------ -------------
Total distributions to
shareholders ...................... (1,026,232) (4,429,724) (1,099,169) (5,378,894)
- --------------------------------------- ------------ ------------- ------------ -------------
Capital share transactions
Proceeds from shares sold ........... 6,597,008 16,729,270 2,516,417 17,158,377
Proceeds from shares issued in
connection with the acquisition
of Common Trust funds .............. 0 93,692,061 0 147,227,043
Proceeds from reinvestment of
distributions ...................... 456,051 1,561,654 691,411 1,719,493
Payment for shares redeemed ......... (7,105,076) (12,623,869) (6,778,220) (18,876,225)
- --------------------------------------- ------------ ------------- ------------ -------------
Net increase (decrease) in net
assets resulting from capital
share transactions ................ (52,017) 99,359,116 (3,570,392) 147,228,688
- --------------------------------------- ------------ ------------- ------------ -------------
Total increase (decrease) in
net assets ....................... 1,378,758 101,872,622 (2,359,512) 151,948,252
Net assets
Beginning of year ................... 24,060,440 48,717,109 24,628,120 68,580,079
- --------------------------------------- ------------ ------------- ------------ -------------
End of year ......................... $ 25,439,198 $ 150,589,731 $ 22,268,608 $ 220,528,331
======================================= ============ ============= ============ =============
Undistributed net investment
income (accumulated
distributions in excess of net
investment income) .................. $ (46,006) $ 1,977 $ (14,383) $ (106,253)
======================================= ============ ============= ============ =============
</TABLE>
* The Fund commenced operations on November 24, 1997.
See Combined Notes to Financial Statements.
51
<PAGE>
EVERGREEN
Municipal Bond Funds
Statements of Changes in Net Assets
Year Ended March 31, 1997
<TABLE>
<CAPTION>
California Massachusetts
Fund* Fund
--------------- ----------------
<S> <C> <C>
Operations
Net investment income ......................... $ 401,538 $ 530,147
Net realized gain (loss) on investments and
closed futures contracts ..................... 86,025 (193,010)
Net change in unrealized appreciation
(depreciation) on investments ................ (917,121) 153,528
- ------------------------------------------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations ................... (429,558) 490,665
- ------------------------------------------------ ------------ ------------
Distributions to shareholders from
Net investment income
Class A ...................................... (72,534) (99,998)
Class B ...................................... (305,849) (333,403)
Class C ...................................... (22,898) (96,745)
Class Y ...................................... 0 0
In excess of net investment income
Class A ...................................... (6,198) (5,743)
Class B ...................................... (26,136) (19,147)
Class C ...................................... (1,957) (5,556)
- ------------------------------------------------ ------------ ------------
Total distributions to shareholders .......... (435,572) (560,592)
- ------------------------------------------------ ------------ ------------
Capital share transactions
Proceeds from shares sold ..................... 2,275,677 1,800,934
Proceeds from reinvestment of
distributions ................................ 180,206 326,680
Payment for shares redeemed ................... (2,755,667) (1,488,605)
- ------------------------------------------------ ------------ ------------
Net increase (decrease) in net assets
resulting from capital share
transactions ................................ (299,784) 639,009
- ------------------------------------------------ ------------ ------------
Total increase (decrease) in net assets...... (1,164,914) 569,082
Net assets
Beginning of period ........................... 28,999,695 11,363,321
- ------------------------------------------------ ------------ ------------
End of period ................................. $ 27,834,781 $ 11,932,403
================================================ ============ ============
Undistributed net investment income
(accumulated distributions in excess of net
investment income) ............................ $ (104,425) $ (33,200)
================================================ ============ ============
<CAPTION>
Missouri New Jersey New York Pennsylvania
Fund* Fund** Fund Fund
--------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Operations
Net investment income ......................... $ 370,919 $ 1,334,734 $ 1,078,808 $ 3,503,269
Net realized gain (loss) on investments and
closed futures contracts ..................... 178,889 186,579 (61,528) 292,860
Net change in unrealized appreciation
(depreciation) on investments ................ (736,014) (302,716) 15,124 (321,053)
- ------------------------------------------------- ------------ ------------ ------------ --------------
Net increase (decrease) in net assets
resulting from operations ................... (186,206) 1,218,597 1,032,404 3,475,076
- ------------------------------------------------- ------------ ------------ ------------ --------------
Distributions to shareholders from
Net investment income
Class A ...................................... (43,242) (951,954) (194,146) (1,419,449)
Class B ...................................... (308,467) (106,102) (790,549) (1,723,506)
Class C ...................................... (18,770) 0 (94,113) (359,246)
Class Y ...................................... 0 (282,668) 0 0
In excess of net investment income
Class A ...................................... (1,048) 0 (5,112) 0
Class B ...................................... (7,475) 0 (20,815) 0
Class C ...................................... (455) 0 (2,478) 0
- ------------------------------------------------- ------------ ------------ ------------ --------------
Total distributions to shareholders .......... (379,457) (1,340,724) (1,107,213) (3,502,201)
- ------------------------------------------------- ------------ ------------ ------------ --------------
Capital share transactions
Proceeds from shares sold ..................... 1,090,088 7,756,737 5,762,104 8,865,701
Proceeds from reinvestment of
distributions ................................ 187,633 667,765 686,200 1,992,715
Payment for shares redeemed ................... (2,572,965) (3,747,637) (5,139,895) (18,355,282)
- ------------------------------------------------- ------------ ------------ ------------ --------------
Net increase (decrease) in net assets
resulting from capital share
transactions ................................ (1,295,244) 4,676,865 1,308,409 (7,496,866)
- ------------------------------------------------- ------------ ------------ ------------ --------------
Total increase (decrease) in net assets...... (1,860,907) 4,554,738 1,233,600 (7,523,991)
Net assets
Beginning of period ........................... 25,921,347 44,162,371 23,394,520 76,104,070
- ------------------------------------------------- ------------ ------------ ------------ --------------
End of period ................................. $ 24,060,440 $ 48,717,109 $ 24,628,120 $ 68,580,079
================================================= ============ ============ ============ ==============
Undistributed net investment income
(accumulated distributions in excess of net
investment income) ............................ $ (87,930) $ 9,525 $ (64,926) $ (218,513)
================================================= ============ ============ ============ ==============
</TABLE>
* Four months ended March 31, 1997. During the period, the California Fund and
the Missouri Fund changed their fiscal year end from November 30 to March
31.
** Seven months ended March 31, 1997. During the period, the New Jersey Fund
changed its fiscal year end from August 31 to March 31.
See Combined Notes to Financial Statements.
52
<PAGE>
EVERGREEN
Municipal Bond Funds
Statements of Changes in Net Assets
For the Periods Indicated
<TABLE>
<CAPTION>
California
Fund*
---------------
<S> <C>
Operations
Net investment income ................................................................... $ 1,311,162
Net realized gain on investments and closed futures contracts ........................... 250,535
Net change in unrealized appreciation (depreciation) on investments ..................... (615,669)
- ------------------------------------------------------------------------------------------ ------------
Net increase in net assets resulting from operations ................................... 946,028
- ------------------------------------------------------------------------------------------ ------------
Distributions to shareholders from
Net investment income
Class A ................................................................................ (235,059)
Class B ................................................................................ (1,007,294)
Class C ................................................................................ (68,809)
Class Y ................................................................................ 0
In excess of net investment income
Class A ................................................................................ (10,964)
Class B ................................................................................ (46,983)
Class C ................................................................................ (3,209)
- ------------------------------------------------------------------------------------------ ------------
Total distributions to shareholders .................................................... (1,372,318)
- ------------------------------------------------------------------------------------------ ------------
Capital share transactions
Proceeds from shares sold ............................................................... 7,461,155
Proceeds from reinvestment of distributions ............................................. 527,147
Payment for shares redeemed ............................................................. (7,394,896)
- ------------------------------------------------------------------------------------------ ------------
Net increase (decrease) in net assets resulting from capital share transactions ........ 593,406
- ------------------------------------------------------------------------------------------ ------------
Total increase (decrease) in net assets ............................................... 167,116
Net assets
Beginning of period ..................................................................... 28,832,579
- ------------------------------------------------------------------------------------------ ------------
End of period ........................................................................... $ 28,999,695
========================================================================================== ============
Undistributed net investment income (accumulated distributions in excess of net investment
income) ................................................................................. $ (84,575)
========================================================================================== ============
<CAPTION>
Missouri New Jersey
Fund* Fund**
--------------- ----------------
<S> <C> <C>
Operations
Net investment income ................................................................... $ 1,144,334 $ 1,079,916
Net realized gain on investments and closed futures contracts ........................... 408,522 56
Net change in unrealized appreciation (depreciation) on investments ..................... (559,081) (955,855)
- ------------------------------------------------------------------------------------------- ------------ --------------
Net increase in net assets resulting from operations ................................... 993,775 124,117
- ------------------------------------------------------------------------------------------- ------------ --------------
Distributions to shareholders from
Net investment income
Class A ................................................................................ (180,167) (862,288)
Class B ................................................................................ (901,652) (32,289)
Class C ................................................................................ (62,515) 0
Class Y ................................................................................ 0 (185,339)
In excess of net investment income
Class A ................................................................................ (7,679) 0
Class B ................................................................................ (38,432) 0
Class C ................................................................................ (2,665) 0
- ------------------------------------------------------------------------------------------- ------------ --------------
Total distributions to shareholders .................................................... (1,193,110) (1,079,916)
- ------------------------------------------------------------------------------------------- ------------ --------------
Capital share transactions
Proceeds from shares sold ............................................................... 4,860,517 13,167,830
Proceeds from reinvestment of distributions ............................................. 610,269 522,912
Payment for shares redeemed ............................................................. (7,217,824) (10,539,031)
- ------------------------------------------------------------------------------------------- ------------ --------------
Net increase (decrease) in net assets resulting from capital share transactions ........ (1,747,038) 3,151,711
- ------------------------------------------------------------------------------------------- ------------ --------------
Total increase (decrease) in net assets ............................................... (1,946,373) 2,195,912
Net assets
Beginning of period ..................................................................... 27,867,720 41,966,459
- ------------------------------------------------------------------------------------------- ------------ --------------
End of period ........................................................................... $ 25,921,347 $ 44,162,371
=========================================================================================== ============ ==============
Undistributed net investment income (accumulated distributions in excess of net investment
income) ................................................................................. $ (78,953) $ 15,515
=========================================================================================== ============ ==============
</TABLE>
* Year ended November 30, 1996.
** Six months ended August 31, 1996. The Fund changed its fiscal year end from
February 29 to August 31.
See Combined Notes to Financial Statements.
53
<PAGE>
Combined Notes to Financial Statements
1. ORGANIZATION
The Evergreen Municipal Bond Funds consist of Evergreen California Tax Free
Fund ("California Fund"), Evergreen Connecticut Municipal Bond Fund
("Connecticut Fund"), Evergreen Massachusetts Tax Free Fund ("Massachusetts
Fund"), Evergreen 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"), (collectively, the "Funds"). Each Fund is a non-diversified series of
Evergreen Municipal Trust (the "Trust"), a Delaware business trust organized on
September 17, 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
distribution fee than Class A. Class B shares are sold subject to a contingent
deferred 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
automatically 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
asset value and are not subject to contingent deferred sales charges or
distribution fees. Class Y shares are sold only to investment advisory clients
of First Union Corporation ("First Union") and its affiliates, certain
institutional investors 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
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles, which
require 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
restricted securities, are valued at fair value as determined in good faith
according 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
transaction 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
illiquid 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.
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
investment 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
54
<PAGE>
Combined Notes to Financial Statements (continued)
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 distributions under the Code. Accordingly,
no provision for federal taxes is required. 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
accordance with income tax regulations, which may differ from generally
accepted accounting 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 discount 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
relative 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 with a par
value of $0.001 authorized. Shares of beneficial interest of the Funds are
currently divided into Class A, Class B, Class C and/or Class Y. Transactions
in shares of the Funds were as follows:
- --------------------------------------------------------------------------------
CALIFORNIA FUND
<TABLE>
<CAPTION>
Four Months
Year Ended Ended
March 31, 1998 March 31, 1997
---------------------------- ----------------------------
Shares Amount Shares Amount
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Class A
Shares sold ....................................... 271,096 $ 2,691,837 44,393 $ 425,634
Shares issued in reinvestment of distributions .... 7,540 73,883 2,798 26,973
Shares redeemed ................................... (79,526) (784,304) (92,045) (882,895)
- --------------------------------------------------- ---------- ------------- ---------- --------------
Net increase (decrease) ........................... 199,110 $ 1,981,416 (44,854) $ (430,288)
- --------------------------------------------------- ---------- ------------- ---------- --------------
Class B
Shares sold ....................................... 153,832 $ 1,498,219 141,390 $ 1,345,990
Shares issued in reinvestment of distributions .... 38,537 374,672 14,653 140,579
Shares redeemed ................................... (603,156) (5,920,355) (181,037) (1,731,633)
- --------------------------------------------------- ---------- ------------- ---------- --------------
Net increase (decrease) ........................... (410,787) $ (4,047,464) (24,994) $ (245,064)
- --------------------------------------------------- ---------- ------------- ---------- --------------
Class C
Shares sold ....................................... 18,602 $ 182,006 53,270 $ 504,053
Shares issued in reinvestment of distributions .... 2,804 27,207 1,321 12,654
Shares redeemed ................................... (43,562) (422,698) (14,740) (141,139)
- --------------------------------------------------- ---------- ------------- ---------- --------------
Net increase (decrease) ........................... (22,156) $ (213,485) 39,851 $ 375,568
=================================================== ========== ============= ========== ==============
<CAPTION>
Year Ended
November 30, 1996
-----------------------------
Shares Amount
------------- ---------------
<S> <C> <C>
Class A
Shares sold ....................................... 140,002 $ 1,349,960
Shares issued in reinvestment of distributions .... 8,643 83,004
Shares redeemed ................................... (121,799) (1,165,388)
- --------------------------------------------------------------- --------------
Net increase (decrease) ........................... 26,846 $ 267,576
- --------------------------------------------------------------- --------------
Class B
Shares sold ....................................... 597,313 $ 5,739,529
Shares issued in reinvestment of distributions .... 42,516 406,441
Shares redeemed ................................... (612,458) (5,834,556)
- --------------------------------------------------------------- --------------
Net increase (decrease) ........................... 27,371 $ 311,414
- --------------------------------------------------------------- --------------
Class C
Shares sold ....................................... 38,530 $ 371,666
Shares issued in reinvestment of distributions .... 3,949 37,702
Shares redeemed ................................... (41,822) (394,952)
- --------------------------------------------------------------- --------------
Net increase (decrease) ........................... 657 $ 14,416
=============================================================== ==============
</TABLE>
55
<PAGE>
Combined Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
CONNECTICUT FUND
<TABLE>
<CAPTION>
December 30, 1998
(Commencement
of Class Operations)
through March 31,
1998
--------------------
Shares Amount
-------- -----------
<S> <C> <C>
Class A
Shares sold ................................... 22,857 $145,836
Shares issued in reinvestment of distributions 68 433
Shares redeemed ............................... 0 0
- ----------------------------------------------- ------- ---------
Net increase .................................. 22,925 $146,269
=============================================== ======= =========
</TABLE>
<TABLE>
<CAPTION>
January 9, 1998
(Commencement
of Class Operations)
through March 31,
1998
--------------------
Shares Amount
-------- -----------
<S> <C> <C>
Class B
Shares sold ................................... 51,780 $331,966
Shares issued in reinvestment of distributions 153 980
Shares redeemed ............................... 0 0
- ----------------------------------------------- ------- ---------
Net increase .................................. 51,933 $332,946
=============================================== ======= =========
</TABLE>
<TABLE>
<CAPTION>
November 24, 1997
(Commencement
of Class Operations)
through March 31, 1998
-----------------------------
Shares Amount
------------- ---------------
<S> <C> <C>
Class Y
Shares sold .......................................................... 948,480 $ 6,098,589
Shares issued in connection with the acquisition of common trust fund 10,328,861 65,325,420
Shares issued in reinvestment of distributions ....................... 101 644
Shares redeemed ...................................................... (661,430) (4,232,114)
- ---------------------------------------------------------------------- ----------- -------------
Net increase ......................................................... 10,616,012 $ 67,192,539
====================================================================== =========== =============
</TABLE>
- --------------------------------------------------------------------------------
MASSACHUSETTS FUND
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1998 March 31, 1997
---------------------------- --------------------------
Shares Amount Shares Amount
------------ --------------- ------------ -------------
<S> <C> <C> <C> <C>
Class A
Shares sold ................................... 48,781 $ 474,420 90,822 $ 839,815
Shares issued in reinvestment of distributions 5,660 53,489 5,823 53,822
Shares redeemed ............................... (65,265) (628,762) (65,408) (609,383)
- ----------------------------------------------- ---------- ------------- ---------- -----------
Net increase (decrease) ....................... (10,824) $ (100,853) 31,237 $ 284,254
- ----------------------------------------------- ---------- ------------- ---------- -----------
Class B
Shares sold ................................... 64,229 $ 606,090 100,024 $ 918,193
Shares issued in reinvestment of distributions 19,310 182,827 23,389 214,508
Shares redeemed ............................... (276,117) (2,637,724) (60,790) (556,450)
- ----------------------------------------------- ---------- ------------- ---------- -----------
Net increase (decrease) ....................... (192,578) $ (1,848,807) 62,623 $ 576,251
- ----------------------------------------------- ---------- ------------- ---------- -----------
Class C
Shares sold ................................... 4,224 $ 39,616 4,630 $ 42,926
Shares issued in reinvestment of distributions 4,814 45,678 6,372 58,350
Shares redeemed ............................... (65,364) (620,541) (35,362) (322,772)
- ----------------------------------------------- ---------- ------------- ---------- -----------
Net decrease .................................. (56,326) $ (535,247) (24,360) $ (221,496)
=============================================== ========== ============= ========== ===========
</TABLE>
56
<PAGE>
Combined Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
MISSOURI FUND
<TABLE>
<CAPTION>
Year Ended Four Months Ended
March 31, 1998 March 31, 1997
---------------------------- ----------------------------
Shares Amount Shares Amount
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Class A
Shares sold ........................................ 262,047 $ 2,625,674 30,205 $ 296,198
Shares issued in reinvestment of distributions ..... 6,523 65,281 2,110 20,672
Shares redeemed .................................... (61,382) (621,096) (24,613) (240,124)
- ---------------------------------------------------- ---------- ------------- ---------- -------------
Net increase (decrease) ............................ 207,188 $ 2,069,859 7,702 $ 76,746
- ---------------------------------------------------- ---------- ------------- ---------- -------------
Class B
Shares sold ........................................ 366,631 $ 3,635,733 78,288 $ 754,590
Shares issued in reinvestment of distributions ..... 36,382 359,093 15,900 153,879
Shares redeemed .................................... (577,779) (5,726,750) (231,593) (2,229,437)
- ---------------------------------------------------- ---------- ------------- ---------- -------------
Net increase (decrease) ............................ (174,766) $ (1,731,924) (137,405) $ (1,320,968)
- ---------------------------------------------------- ---------- ------------- ---------- -------------
Class C
Shares sold ........................................ 33,594 $ 335,601 4,028 $ 39,300
Shares issued in reinvestment of distributions ..... 3,210 31,677 1,352 13,082
Shares redeemed .................................... (75,805) (757,230) (10,736) (103,404)
- ---------------------------------------------------- ---------- ------------- ---------- -------------
Net decrease ....................................... (39,001) $ (389,952) (5,356) $ (51,022)
==================================================== ========== ============= ========== =============
<CAPTION>
Year Ended
November 30, 1996
-----------------------------
Shares Amount
------------- ---------------
<S> <C> <C>
Class A
Shares sold ........................................ 156,363 $ 1,540,859
Shares issued in reinvestment of distributions ..... 12,216 119,315
Shares redeemed .................................... (392,880) (3,827,386)
- ---------------------------------------------------------------- -------------
Net increase (decrease) ............................ (224,301) $ (2,167,212)
- ---------------------------------------------------------------- -------------
Class B
Shares sold ........................................ 330,193 $ 3,156,266
Shares issued in reinvestment of distributions ..... 46,792 448,603
Shares redeemed .................................... (292,558) (2,803,559)
- ---------------------------------------------------------------- -------------
Net increase (decrease) ............................ 84,427 $ 801,310
- ---------------------------------------------------------------- -------------
Class C
Shares sold ........................................ 17,038 $ 163,392
Shares issued in reinvestment of distributions ..... 4,411 42,351
Shares redeemed .................................... (61,550) (586,879)
- ---------------------------------------------------------------- -------------
Net decrease ....................................... (40,101) $ (381,136)
================================================================ =============
</TABLE>
- --------------------------------------------------------------------------------
NEW JERSEY FUND
<TABLE>
<CAPTION>
Year Ended Seven Months Ended
March 31, 1998 March 31, 1997
----------------------------- -----------------------------
Shares Amount Shares Amount
------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
Class A
Shares sold ........................................ 252,683 $ 2,784,238 152,942 $ 1,664,228
Shares issued in reinvestment of distributions ..... 96,743 1,066,743 50,115 545,271
Shares redeemed .................................... (431,044) (4,741,631) (287,177) (3,122,729)
- ---------------------------------------------------- ----------- ------------- ----------- --------------
Net decrease ....................................... (81,618) $ (890,650) (84,120) $ (913,230)
- ---------------------------------------------------- ----------- ------------- ----------- --------------
Class B
Shares sold ........................................ 559,918 $ 6,159,394 488,639 $ 5,322,261
Shares issued in reinvestment of distributions ..... 35,078 387,261 7,360 79,993
Shares redeemed .................................... (97,634) (1,079,382) (17,415) (190,302)
- ---------------------------------------------------- ----------- ------------- ----------- --------------
Net increase ....................................... 497,362 $ 5,467,273 478,584 $ 5,211,952
- ---------------------------------------------------- ----------- ------------- ----------- --------------
Class Y
Shares sold ........................................ 700,533 $ 7,785,638 70,718 $ 770,248
Shares issued in connection with the acquisition of
common trust fund ................................. 8,501,660 93,692,061 0 0
Shares issued in reinvestment of distributions ..... 9,734 107,650 3,909 42,501
Shares redeemed .................................... (611,893) (6,802,856) (40,043) (434,606)
- ---------------------------------------------------- ----------- ------------- ----------- --------------
Net increase ....................................... 8,600,034 $ 94,782,493 34,584 $ 378,143
==================================================== =========== ============= =========== ==============
<CAPTION>
Six Months Ended
August 31, 1996
------------------------------
Shares Amount
------------- ----------------
<S> <C> <C>
Class A
Shares sold ........................................ 124,249 $ 1,339,667
Shares issued in reinvestment of distributions ..... 42,586 457,685
Shares redeemed .................................... (949,514) (10,244,991)
- ---------------------------------------------------------------- --------------
Net decrease ....................................... (782,679) $ (8,447,639)
- ---------------------------------------------------------------- --------------
Class B
Shares sold ........................................ 234,035 $ 2,509,436
Shares issued in reinvestment of distributions ..... 2,234 24,017
Shares redeemed .................................... (1,239) (13,260)
- ---------------------------------------------------------------- --------------
Net increase ....................................... 235,030 $ 2,520,193
- ---------------------------------------------------------------- --------------
Class Y
Shares sold ........................................ 864,470 $ 9,318,727
Shares issued in connection with the acquisition of
common trust fund ................................. 0 0
Shares issued in reinvestment of distributions ..... 3,838 41,210
Shares redeemed .................................... (26,045) (280,780)
- ---------------------------------------------------------------- --------------
Net increase ....................................... 842,263 $ 9,079,157
================================================================ ==============
</TABLE>
57
<PAGE>
Combined Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
NEW YORK FUND
<TABLE>
<S> <C> <C> <C> <C>
Year Ended Year Ended
March 31, 1998 March 31, 1997
----------------------------- ------------------------------
Shares Amount Shares Amount
-------- ------- -------- -------
Class A
Shares sold ................................... 101,515 $ 1,028,467 66,697 $ 643,405
Shares issued in reinvestment of distributions 10,952 109,667 11,528 111,722
Shares redeemed ............................... (143,942) (1,442,196) (103,151) (998,464)
- ----------------------------------------------- ----------- ------------- ----------- -------------
Net decrease .................................. (31,475) $ (304,062) (24,926) $ (243,337)
- ----------------------------------------------- ----------- ------------- ----------- -------------
Class B
Shares sold ................................... 139,740 $ 1,373,251 514,292 $ 4,923,516
Shares issued in reinvestment of distributions 53,507 527,679 52,129 500,919
Shares redeemed ............................... (469,593) (4,681,031) (359,121) (3,452,277)
- ----------------------------------------------- ----------- ------------- ----------- -------------
Net increase (decrease) ....................... (276,346) $ (2,780,101) 207,300 $ 1,972,158
- ----------------------------------------------- ----------- ------------- ----------- -------------
Class C
Shares sold ................................... 11,612 $ 114,699 20,357 $ 195,183
Shares issued in reinvestment of distributions 5,472 54,065 7,661 73,559
Shares redeemed ............................... (66,958) (654,993) (71,587) (689,154)
- ----------------------------------------------- ----------- ------------- ----------- -------------
Net decrease .................................. (49,874) $ (486,229) (43,569) $ (420,412)
=============================================== =========== ============= =========== =============
</TABLE>
- --------------------------------------------------------------------------------
PENNSYLVANIA FUND
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1998 March 31, 1997
----------------------------- -----------------------------
Shares Amount Shares Amount
------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
Class A
Shares sold ................................... 216,700 $ 2,503,060 185,067 $ 2,073,195
Shares issued in reinvestment of distributions 52,116 598,085 65,422 730,217
Shares redeemed ............................... (410,639) (4,743,895) (622,861) (6,962,533)
- ----------------------------------------------- ----------- ------------- ----------- -------------
Net decrease .................................. (141,823) $ (1,642,750) (372,372) $ (4,159,121)
- ----------------------------------------------- ----------- ------------- ----------- -------------
Class B
Shares sold ................................... 365,986 $ 4,145,693 542,771 $ 5,968,801
Shares issued in reinvestment of distributions 82,460 937,245 91,329 1,006,535
Shares redeemed ............................... (627,854) (7,165,289) (677,087) (7,472,808)
- ----------------------------------------------- ----------- ------------- ----------- -------------
Net decrease .................................. (179,408) $ (2,082,351) (42,987) $ (497,472)
- ----------------------------------------------- ----------- ------------- ----------- -------------
Class C
Shares sold ................................... 47,797 $ 554,828 75,398 $ 823,705
Shares issued in reinvestment of distributions 16,198 184,137 23,192 255,963
Shares redeemed ............................... (129,911) (1,487,976) (356,046) (3,919,941)
- ----------------------------------------------- ----------- ------------- ----------- -------------
Net decrease .................................. (65,916) $ (749,011) (257,456) $ (2,840,273)
=============================================== =========== ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
November 24, 1997
(Commencement of
Class Operations)
through March 31, 1998
-----------------------------
Shares Amount
------------- ---------------
<S> <C> <C>
Class Y
Shares sold .......................................................... 848,662 $ 9,954,796
Shares issued in connection with the acquisition of common trust fund 12,689,439 147,227,043
Shares issued in reinvestment of distributions ....................... 2 26
Shares redeemed ...................................................... (466,040) (5,479,065)
- ---------------------------------------------------------------------- ----------- -------------
Net increase ......................................................... 13,072,063 $151,702,800
====================================================================== =========== =============
</TABLE>
58
<PAGE>
Combined Notes to Financial Statements (continued)
4. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) were as follows for the year ended March 31, 1998:
<TABLE>
<CAPTION>
Cost of Proceeds
Purchases from Sales
-------------- --------------
<S> <C> <C>
California Fund ............ $19,670,099 $22,773,422
Connecticut Fund* .......... 11,001,095 11,008,931
Massachusetts Fund ......... 10,714,519 13,119,082
Missouri Fund .............. 10,375,883 10,640,912
New Jersey Fund ............ 42,822,951 31,570,484
New York Fund .............. 9,588,890 13,314,020
Pennsylvania Fund .......... 67,028,825 74,607,429
</TABLE>
* For the period from November 24, 1997 through March 31, 1998.
On March 31, 1998, the composition of unrealized appreciation and depreciation
of investment securities based on the aggregate cost of investments for federal
income tax purposes was as follows:
<TABLE>
<CAPTION>
Gross Gross Net Unrealized
Tax Unrealized Unrealized Appreciation
Cost Appreciation Depreciation (Depreciation)
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
California Fund ........... $ 25,050,371 $1,303,301 $ (11,947) $1,291,354
Connecticut Fund .......... 65,481,487 2,109,627 (161,879) 1,947,748
Massachusetts Fund ........ 9,557,776 456,609 (1,270) 455,339
Missouri Fund ............. 23,541,609 1,702,071 (9,566) 1,692,505
New Jersey Fund ........... 144,046,052 5,636,907 (107,585) 5,529,322
New York Fund ............. 20,500,136 1,546,770 (18,339) 1,528,431
Pennsylvania Fund ......... 211,419,690 8,467,294 (362,861) 8,104,433
</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") (formerly, Evergreen Keystone Distributor,
Inc.), 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 0.25% of the
average daily net asset of the class. Class B and Class C also pay distribution
fees equal to 0.75% of the average daily net assets of the class. Distribution
Plan expenses are calculated daily and paid monthly.
Prior to January 1, 1997, for the California Fund, Massachusetts Fund, Missouri
Fund, New York Fund and Pennsylvania Fund, the Class A Distribution Plan
provided for expenditures, which were limited to 0.15% annually of the average
daily net assets of the Class A shares, to pay expenses related to the
distribution of Class A shares. The Class B and Class C Distribution Plans for
these Funds paid a distribution fee which did not exceed 0.90% annually of the
average daily net assets of Class B and Class C shares, respectively. Of that
amount, 0.75% was used to pay distribution expenses and 0.15% was used to pay
service fees.
59
<PAGE>
Combined Notes to Financial Statements (continued)
During the year ended March 31, 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 ............ $ 8,075 $191,945 $16,932 -
Connecticut Fund ........... 51 415 N/A -
Massachusetts Fund ......... 3,513 67,467 16,883 -
Missouri Fund .............. 7,025 183,796 11,123 -
New Jersey Fund ............ 79,247 108,770 N/A $50,718
New York Fund .............. 6,072 173,914 14,416 -
Pennsylvania Fund .......... 41,755 351,011 61,038 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
12b-1 fees greater than the allowable annual amounts the Fund is permitted to
pay. The Fund 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.
6. INVESTMENT MANAGEMENT AGREEMENT AND OTHER AFFILIATED TRANSACTIONS
Keystone Investment Management Company ("Keystone"), a subsidiary of First
Union, is the investment adviser 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 Keystone 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 adviser 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.
CMG has voluntarily agreed to limit the Connecticut Fund's management fee to
0.50% 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.
Currently, the investment manager of each Fund has voluntarily limited the
expenses of each class of shares, excluding indirectly paid expenses, to the
following percentage of the average daily net assets of the respective class.
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
California Fund ............ 0.85% 1.60% 1.60% -
Connecticut Fund ........... 0.85% 1.60% 1.60% 0.60%
Massachusetts Fund ......... 0.85% 1.60% 1.60% -
Missouri Fund .............. 0.85% 1.60% 1.60% -
New Jersey Fund ............ 0.50% 1.41% - 0.41%
New York Fund .............. 0.85% 1.60% 1.60% -
Pennsylvania Fund .......... 0.85% 1.60% 1.60% -
</TABLE>
Prior to January 1, 1998, the investment adviser for these Funds had
voluntarily limited the expenses of Class A, excluding indirectly paid
expenses, to 0.75% of their average daily net assets and the expenses of Class
B and C, excluding indirectly paid expenses, to 1.50% of the average daily net
assets of each respective class.
60
<PAGE>
Combined Notes to Financial Statements (continued)
For the year ended March 31, 1998, the investment adviser waived its fee for
the Funds as follows:
<TABLE>
<CAPTION>
Fees
Waived
----------
<S> <C>
California Fund ............ $ 67,381
Connecticut Fund ........... 64,322
Massachusetts Fund ......... 54,590
Missouri Fund .............. 94,233
New Jersey Fund ............ 296,793
New York Fund .............. 58,744
Pennsylvania Fund .......... 174,928
</TABLE>
For each of the Funds, Evergreen Investment Services, Inc. ("EIS"), a
subsidiary of First Union, is the administrator and BISYS serves as the
sub-administrator 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 advisers. 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 adviser 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 .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 year ended March 31, 1998, the Funds paid or accrued to EIS the
following amounts for certain administrative services:
<TABLE>
<S> <C>
California Fund ............ $ 1,621
Connecticut Fund ........... 5,776
Massachusetts Fund ......... 2,145
Missouri Fund .............. 4,811
New Jersey Fund ............ 22,519
New York Fund .............. 3,109
Pennsylvania Fund .......... 25,291
</TABLE>
Evergreen Service Company ("ESC") (formerly, Evergreen Keystone Service
Company), a wholly-owned subsidiary of Keystone, serves as the transfer and
dividend disbursing agent for each Fund. Prior to May 5, 1997, State Street
Bank and Trust Company ("State Street") served as the transfer and dividend
disbursing agent for the New Jersey Fund. As of March 31, 1998, the New Jersey
Fund accrued or paid to ESC $30,968 for these services.
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 the Funds 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
each 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 each 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.
61
<PAGE>
Combined Notes to Financial Statements (continued)
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.
These conversions 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>
Acquiring Fund Acquired Common Trust Fund
- --------------------- -----------------------------------------------------
<S> <C>
Connecticut Fund Common Trust Fund-Connecticut Tax Exempt Bond Fund
New Jersey Fund Common Trust Fund-New Jersey Tax Exempt Bond Fund
Pennsylvania Fund Common Trust Fund-Pennsylvania Tax Exempt Bond Fund
<CAPTION>
Value of Net Number of Unrealized Net Assets
Acquiring Fund Assets Acquired Shares Issued Appreciation After Acquisition
- --------------------- ----------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C>
Connecticut Fund $ 65,325,420 10,328,861 $1,892,387 $ 65,325,420
New Jersey Fund 93,692,061 8,501,660 2,874,242 147,179,376
Pennsylvania Fund 147,227,043 12,689,439 4,980,000 216,012,549
</TABLE>
10. FINANCING AGREEMENT
On October 31, 1996, a financing agreement among certain of the Evergreen
Funds, State Street and a group of banks (collectively, the "Banks") became
effective . Under this agreement, the Banks provided an unsecured credit
facility in the aggregate amount of $225 million ($112.5 million committed and
$112.5 million uncommitted) allocated evenly among the Banks. Borrowings under
this facility bore interest at 0.75% per annum above the Federal Funds rate. A
commitment fee of 0.10% per annum was incurred on the unused portion of the
committed facility, which was allocated to all participating funds. State
Street served as agent for the Banks, and as agent was entitled to a fee of
$15,000 which was allocated to all of the participating Funds. This agreement
was terminated on October 31, 1997.
On October 31, 1997, a temporary financing agreement between the participating
Funds and First Union became effective. Under this agreement, First Union
provided a fully committed unsecured credit facility in the aggregate amount of
$300 million. Borrowings under this facility bore interest at 1.00% per annum
above the Federal Funds rate. State Street served as administrative agent under
this agreement, but received no compensation for its services. This agreement
was terminated on December 22, 1997.
On December 22, 1997, a financing agreement among all of the Evergreen Funds,
State Street and a group of 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.
During the year ended March 31, 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.
62
<PAGE>
Independent Auditors' Report
The Trustees and Shareholders
Evergreen Municipal Trust
We have audited the accompanying statements of assets and liabilities,
including schedules of investments, of the Evergreen California Tax Free Fund,
Evergreen Connecticut Municipal Bond Fund, Evergreen Massachusetts Tax Free
Fund, Evergreen Missouri Tax Free Fund, Evergreen New Jersey Tax Free Income
Fund, Evergreen New York Tax Free Fund and Evergreen Pennsylvania Tax Free Fund
of the Evergreen Municipal Trust listed below as of March 31, 1998, and the
related statements of operations, statements of changes in net assets, and
financial highlights for each of the years or periods presented below:
Evergreen California Tax Free Fund - statement of operations for the year
ended March 31, 1998, statements of changes in net assets for the year
ended March 31, 1998, the four months ended March 31, 1997 and the year
ended November 30, 1996, and the financial highlights for the periods
presented on pages 16 and 17.
Evergreen Connecticut Municipal Bond Fund - statement of operations for the
period from November 24, 1997 (commencement of operations) to March 31,
1998, statement of changes in net assets for the period from November 24,
1997 (commencement of operations) to March 31, 1998 and the financial
highlights for the periods presented on pages 18 and 19.
Evergreen Massachusetts Tax Free Fund - statement of operations for the
year ended March 31, 1998, statements of changes in net assets for each of
the years in the two-year period ended March 31, 1998, and the financial
highlights for the periods presented on pages 20 and 21.
Evergreen Missouri Tax Free Fund - statement of operations for the year
ended March 31, 1998, statements of changes in net assets for the year
ended March 31, 1998, the four months ended March 31, 1997, and the year
ended November 30, 1996, and the financial highlights for the periods
presented on pages 22 and 23.
Evergreen New Jersey Tax Free Income Fund - statement of operations for the
year ended March 31, 1998, statements of changes in net assets for the year
ended March 31, 1998, the seven months ended March 31, 1997, and the six
months ended August 31, 1996, and the financial highlights for the periods
presented on pages 24 and 25.
Evergreen New York Tax Free Fund - statement of operations for the year
ended March 31, 1998, statements of changes in net assets for each of the
years in the two-year period ended March 31, 1998, and the financial
highlights for the periods presented on pages 26 and 27.
Evergreen Pennsylvania Tax Free Fund - statement of operations for the year
ended March 31, 1998, statements of changes in net assets for each of the
years in the two-year period ended March 31, 1998, and the financial
highlights for the periods presented on pages 28, 29 and 30.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial highlights are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of March 31, 1998 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Evergreen California Tax Free Fund, Evergreen Connecticut Municipal Bond Fund,
Evergreen Massachusetts Tax Free Fund, Evergreen Missouri Tax Free Fund,
Evergreen New Jersey Tax Free Income Fund, Evergreen New York Tax Free Fund and
Evergreen Pennsylvania Tax Free Fund as of March 31, 1998, the results of their
operations, changes in their net assets, and financial highlights for each of
the years or periods specified in the first paragraph above in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
May 1, 1998
63
<PAGE>
ADDITIONAL INFORMATION (Unaudited)
On December 15, 1997, a special meeting of shareholders for the Funds was held
to consider a number of proposals with the following number of shares
represented at the meeting. On October 16, 1997, the record date for the
meeting, the Funds had the following shares outstanding with the following
number of shares represented at the meeting:
<TABLE>
<CAPTION>
California Massachusetts
Fund Fund
------------ ---------------
<S> <C> <C>
Record Date Shares Outstanding ................................... 2,725,854 1,162,735
Shares represented at meeting .................................... 1,669,919 659,204
Percentage of record date shares represented at meeting .......... 61.26% 56.69%
Proposal 1 - The proposed reorganization of the Fund
as a series of the Evergreen Municipal Trust, a
Delaware business trust:
Shares voted "For" ......................................... 1,436,739 638,568
Shares voted "Against" ..................................... 29,607 5,280
Shares voted "Abstain" ..................................... 203,573 15,356
Proposal 2 - Reclassification as non-fundamental
investment objective of this Fund whose
investment objective is currently classified as
fundamental:
Shares voted "For" ......................................... 1,443,782 634,466
Shares voted "Against" ..................................... 14,315 8,287
Shares voted "Abstain" ..................................... 211,822 16,451
Proposal 3 - Changes to fundamental investment
restrictions:
To amend the fundamental restriction concerning
diversification of investments:
Shares voted "For" ......................................... 1,437,849 630,876
Shares voted "Against" ..................................... 6,701 5,527
Shares voted "Abstain" ..................................... 225,369 22,801
To amend the fundamental restriction concerning
concentration of a Fund's assets in a particular
industry:
Shares voted "For" ......................................... 1,437,849 630,876
Shares voted "Against" ..................................... 6,701 5,527
Shares voted "Abstain" ..................................... 225,369 22,801
To amend the fundamental restriction concerning the
issuance of senior securities:
Shares voted "For" ......................................... 1,437,849 630,876
Shares voted "Against" ..................................... 6,701 5,527
Shares voted "Abstain" ..................................... 225,369 22,801
To amend the fundamental restriction concerning
borrowing:
Shares voted "For" ......................................... 1,437,849 630,876
Shares voted "Against" ..................................... 6,701 5,527
Shares voted "Abstain" ..................................... 225,369 22,801
To amend the fundamental restriction concerning
underwriting:
Shares voted "For" ......................................... 1,437,849 630,876
Shares voted "Against" ..................................... 6,701 5,527
Shares voted "Abstain" ..................................... 225,369 22,801
To amend the fundamental restriction concerning
investments in Real Estate:
Shares voted "For" ......................................... 1,437,849 630,876
Shares voted "Against" ..................................... 6,701 5,527
Shares voted "Abstain" ..................................... 225,369 22,801
To amend the fundamental restriction concerning
commodities:
Shares voted "For" ......................................... 1,437,849 630,876
Shares voted "Against" ..................................... 6,701 5,527
Shares voted "Abstain" ..................................... 225,369 22,801
To amend the fundamental restriction concerning lending:
Shares voted "For" ......................................... 1,437,849 630,876
Shares voted "Against" ..................................... 6,701 5,527
Shares voted "Abstain" ..................................... 225,369 22,801
<CAPTION>
Missouri New Jersey New York Pennsylvania
Fund Fund Fund Fund
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Record Date Shares Outstanding ................................... 2,662,041 4,750,550 2,405,964 6,015,030
Shares represented at meeting .................................... 1,511,261 3,612,044 1,477,585 3,531,532
Percentage of record date shares represented at meeting .......... 56.77% 76.03% 61.41% 58.71%
Proposal 1 - The proposed reorganization of the Fund
as a series of the Evergreen Municipal Trust, a
Delaware business trust:
Shares voted "For" ......................................... 1,331,497 3,324,309 1,337,045 3,265,059
Shares voted "Against" ..................................... 67,555 90,049 25,766 105,186
Shares voted "Abstain" ..................................... 112,209 197,686 114,774 161,287
Proposal 2 - Reclassification as non-fundamental
investment objective of this Fund whose
investment objective is currently classified as
fundamental:
Shares voted "For" ......................................... 1,312,757 3,302,663 1,329,138 3,208,155
Shares voted "Against" ..................................... 79,833 111,295 32,956 148,116
Shares voted "Abstain" ..................................... 118,671 198,086 115,491 175,261
Proposal 3 - Changes to fundamental investment
restrictions:
To amend the fundamental restriction concerning
diversification of investments:
Shares voted "For" ......................................... 1,295,088 3,310,503 1,324,832 3,190,900
Shares voted "Against" ..................................... 75,182 99,760 37,261 108,621
Shares voted "Abstain" ..................................... 140,991 201,781 115,492 232,011
To amend the fundamental restriction concerning
concentration of a Fund's assets in a particular
industry:
Shares voted "For" ......................................... 1,295,088 3,310,503 1,324,832 3,191,933
Shares voted "Against" ..................................... 75,182 99,760 37,261 107,588
Shares voted "Abstain" ..................................... 140,991 201,781 115,492 232,011
To amend the fundamental restriction concerning the
issuance of senior securities:
Shares voted "For" ......................................... 1,295,088 3,310,503 1,324,832 3,191,933
Shares voted "Against" ..................................... 75,182 99,760 37,261 107,588
Shares voted "Abstain" ..................................... 140,991 201,781 115,492 232,011
To amend the fundamental restriction concerning
borrowing:
Shares voted "For" ......................................... 1,295,088 3,305,441 1,324,832 3,178,556
Shares voted "Against" ..................................... 75,182 104,822 37,261 120,965
Shares voted "Abstain" ..................................... 140,991 201,781 115,492 232,011
To amend the fundamental restriction concerning
underwriting:
Shares voted "For" ......................................... 1,295,088 3,310,503 1,327,265 3,180,299
Shares voted "Against" ..................................... 75,182 99,760 34,828 119,222
Shares voted "Abstain" ..................................... 140,991 201,781 115,492 232,011
To amend the fundamental restriction concerning
investments in Real Estate:
Shares voted "For" ......................................... 1,295,088 3,310,503 1,327,265 3,180,754
Shares voted "Against" ..................................... 75,182 99,760 34,828 118,767
Shares voted "Abstain" ..................................... 140,991 201,781 115,492 232,011
To amend the fundamental restriction concerning
commodities:
Shares voted "For" ......................................... 1,295,088 3,310,503 1,324,832 3,180,754
Shares voted "Against" ..................................... 75,182 99,760 37,261 118,767
Shares voted "Abstain" ..................................... 140,991 201,781 115,492 232,011
To amend the fundamental restriction concerning lending:
Shares voted "For" ......................................... 1,295,088 3,310,503 1,324,832 3,191,933
Shares voted "Against" ..................................... 75,182 99,760 37,261 107,588
Shares voted "Abstain" ..................................... 140,991 201,781 115,492 232,011
</TABLE>
64
<PAGE>
ADDITIONAL INFORMATION (Unaudited) (continued)
<TABLE>
<CAPTION>
California Massachusetts
Fund Fund
------------ ---------------
<S> <C> <C>
To amend the fundamental restriction concerning
investment in federally tax exempt securities:
Shares voted "For" .......................................... 1,437,849 630,876
Shares voted "Against" ...................................... 6,701 5,527
Shares voted "Abstain" ...................................... 225,369 22,801
To amend the fundamental restriction concerning control
or management:
Shares voted "For" .......................................... 1,437,849 630,876
Shares voted "Against" ...................................... 6,701 5,527
Shares voted "Abstain" ...................................... 225,369 22,801
To amend the fundamental restriction concerning margin
purchases:
Shares voted "For" .......................................... 1,437,849 630,876
Shares voted "Against" ...................................... 6,701 5,527
Shares voted "Abstain" ...................................... 225,369 22,801
To amend the fundamental restriction concerning oil, gas
or other mineral exploration or development program:
Shares voted "For" .......................................... 1,437,849 630,876
Shares voted "Against" ...................................... 6,701 5,527
Shares voted "Abstain" ...................................... 225,369 22,801
To amend the fundamental restriction concerning state tax
exempt securities:
Shares voted "For" .......................................... 1,451,039 630,876
Shares voted "Against" ...................................... 6,701 5,527
Shares voted "Abstain" ...................................... 212,179 22,801
To amend the fundamental restriction concerning other
investment companies:
Shares voted "For" .......................................... N/A N/A
Shares voted "Against" ...................................... N/A N/A
Shares voted "Abstain" ...................................... N/A N/A
To amend the fundamental restriction concerning illiquid
securities:
Shares voted "For" .......................................... N/A N/A
Shares voted "Against" ...................................... N/A N/A
Shares voted "Abstain" ...................................... N/A N/A
To amend the fundamental restriction concerning options:
Shares voted "For" .......................................... N/A N/A
Shares voted "Against" ...................................... N/A N/A
Shares voted "Abstain" ...................................... N/A N/A
To amend the fundamental restriction concerning
investment in equity securities:
Shares voted "For" .......................................... N/A N/A
Shares voted "Against" ...................................... N/A N/A
Shares voted "Abstain" ...................................... N/A N/A
To amend the fundamental restriction concerning
investment in restricted securities:
Shares voted "For" .......................................... N/A N/A
Shares voted "Against" ...................................... N/A N/A
Shares voted "Abstain" ...................................... N/A N/A
<CAPTION>
Missouri New Jersey New York Pennsylvania
Fund Fund Fund Fund
----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
To amend the fundamental restriction concerning
investment in federally tax exempt securities:
Shares voted "For" .......................................... 1,295,088 3,310,503 1,324,832 3,191,933
Shares voted "Against" ...................................... 75,182 99,760 37,261 107,588
Shares voted "Abstain" ...................................... 140,991 201,781 115,492 232,011
To amend the fundamental restriction concerning control
or management:
Shares voted "For" .......................................... 1,295,572 3,310,503 1,327,265 N/A
Shares voted "Against" ...................................... 74,697 99,760 34,828 N/A
Shares voted "Abstain" ...................................... 140,992 201,781 115,495 N/A
To amend the fundamental restriction concerning margin
purchases:
Shares voted "For" .......................................... 1,295,572 3,310,503 1,327,265 3,181,407
Shares voted "Against" ...................................... 74,697 99,760 34,828 118,114
Shares voted "Abstain" ...................................... 140,992 201,781 115,495 232,011
To amend the fundamental restriction concerning oil, gas
or other mineral exploration or development program:
Shares voted "For" .......................................... 1,295,572 N/A 1,327,265 N/A
Shares voted "Against" ...................................... 74,697 N/A 34,828 N/A
Shares voted "Abstain" ...................................... 140,992 N/A 115,495 N/A
To amend the fundamental restriction concerning state tax
exempt securities:
Shares voted "For" .......................................... 1,296,077 N/A 1,327,265 3,192,641
Shares voted "Against" ...................................... 74,697 N/A 34,828 117,114
Shares voted "Abstain" ...................................... 140,487 N/A 115,495 221,777
To amend the fundamental restriction concerning other
investment companies:
Shares voted "For" .......................................... N/A N/A N/A 3,181,407
Shares voted "Against" ...................................... N/A N/A N/A 118,114
Shares voted "Abstain" ...................................... N/A N/A N/A 232,011
To amend the fundamental restriction concerning illiquid
securities:
Shares voted "For" .......................................... N/A N/A N/A 3,181,407
Shares voted "Against" ...................................... N/A N/A N/A 118,114
Shares voted "Abstain" ...................................... N/A N/A N/A 232,011
To amend the fundamental restriction concerning options:
Shares voted "For" .......................................... N/A 3,310,503 N/A N/A
Shares voted "Against" ...................................... N/A 99,760 N/A N/A
Shares voted "Abstain" ...................................... N/A 201,781 N/A N/A
To amend the fundamental restriction concerning
investment in equity securities:
Shares voted "For" .......................................... N/A 3,310,503 N/A N/A
Shares voted "Against" ...................................... N/A 99,760 N/A N/A
Shares voted "Abstain" ...................................... N/A 201,781 N/A N/A
To amend the fundamental restriction concerning
investment in restricted securities:
Shares voted "For" .......................................... N/A 3,310,503 N/A N/A
Shares voted "Against" ...................................... N/A 99,760 N/A N/A
Shares voted "Abstain" ...................................... N/A 201,781 N/A N/A
</TABLE>
65
<PAGE>
FEDERAL INCOME TAX STATUS OF DISTRIBUTIONS (Unaudited)
Pursuant to section 852 of the Internal Revenue Code, the Funds have designated
the following per share amounts as long-term 28% capital
gain distributions and long-term 20% capital gain distributions for the fiscal
year ended March 31, 1998:
<TABLE>
<CAPTION>
Per Share Aggregate
28% 20% 28% 20%
----------- ----------- ----- -----------
<S> <C> <C> <C> <C>
New Jersey Fund ......... $ 0.000 $ 0.085 $0 $408,091
New York Fund ........... 0.000 0.062 0 149,653
</TABLE>
For the fiscal year ended March 31, 1998, the following percentages represent
the portion of dividends from net investment income which
are exempt from federal income tax, other than alternative minimum tax:
<TABLE>
<S> <C>
California Fund ............ 98.23%
Connecticut Fund ........... 99.90%
Massachusetts Fund ......... 98.96%
Missouri Fund .............. 99.77%
New Jersey Fund ............ 99.95%
New York Fund .............. 99.94%
Pennsylvania Fund .......... 99.66%
</TABLE>
66
<PAGE>
Evergreen Funds
Money Market
Treasury Money Market Fund
Money Market Fund
Municipal Money Market Fund
Pennsylvania Municipal Money Market Fund
Tax Exempt
Short Intermediate Municipal Fund
High Grade Tax Free Fund
Tax Free Fund
California Tax Free Fund
Connecticut Municipal Bond Fund
Florida 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
Evergreen Fund
Omega Fund
Small Company Growth Fund
Strategic Growth Fund
Aggressive Growth Fund
Micro Cap Fund
Global International
Global Leaders Fund
International Growth Fund
International Equity Fund
Global Opportunities Fund
Natural Resources Fund
Precious Metals Fund
Emerging Markets Growth Fund
Latin America Fund
Express Line
800-346-3858
Investor Services
800-343-2898
Retirement Plan Services
800-247-4075
www.evergreenfunds.com
543688 RV0 5/98
BULK RATE
U.S. POSTAGE
PAID
CHARLOTTE, NC
PERMIT NO. 136
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Evergreen Funds
201 South College St.
Charlotte, NC 28288
Evergreen
Balanced
Funds
March 31, 1998
Annual Report
<PAGE>
