<PAGE>
Evergreen
State Tax Free
Funds
(Photo of mountains and trees)
1997 Annual Report
(Evergreen tree logo)
Evergreen Funds(SM)
SINCE 1932
<PAGE>
(Evergreen graphic)
EVERGREEN
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders............................... 1
FUND AT A GLANCE
Evergreen Florida High Income Municipal Bond
Fund............................................ 2
Evergreen Florida Municipal Bond Fund.............. 3
Evergreen Georgia Municipal Bond Fund.............. 4
Evergreen North Carolina Municipal Bond Fund....... 5
Evergreen South Carolina Municipal Bond Fund....... 6
Evergreen Virginia Municipal Bond
Fund............................................ 7
FINANCIAL HIGHLIGHTS
Evergreen Florida High Income Municipal Bond
Fund............................................ 8
Evergreen Florida Municipal Bond Fund.............. 10
Evergreen Georgia Municipal Bond Fund.............. 12
Evergreen North Carolina Municipal Bond Fund....... 14
Evergreen South Carolina Municipal Bond Fund....... 16
Evergreen Virginia Municipal Bond Fund............. 18
SCHEDULES OF INVESTMENTS
Evergreen Florida High Income Municipal Bond
Fund............................................ 20
Evergreen Florida Municipal Bond Fund.............. 24
Evergreen Georgia Municipal Bond Fund.............. 27
Evergreen North Carolina Municipal Bond Fund....... 28
Evergreen South Carolina Municipal Bond Fund....... 30
Evergreen Virginia Municipal Bond
Fund............................................ 31
Statements of Assets and Liabilities................. 33
Statements of Operations............................. 34
Statements of Changes in Net Assets.................. 35
Combined Notes to Financial Statements............... 37
Independent Auditors' Report--
KPMG Peat Marwick LLP.............................. 43
Report of Independent Accountants--
Price Waterhouse LLP............................... 44
Federal Income Tax Status of Distributions........... 45
</TABLE>
ABOUT EVERGREEN KEYSTONE
Since 1971, the Evergreen Funds have been providing investors with a proven,
value-driven approach to equity investment management. For over 60 years of
changing economic conditions, Keystone has taken pride in helping investors meet
their financial goals through a broad range of financial products and services.
Combined, Evergreen Keystone offers over 70 funds designed to meet a broad range
of objectives, including fixed-income, balanced, growth and income, and
aggressive growth. Assets under management total more than $30 billion.
<PAGE>
EVERGREEN
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LETTER TO SHAREHOLDERS
October 1997
(Photo of William M. Ennis)
WILLIAM M. ENNIS
Dear Shareholders:
Investors in state tax-free mutual funds enjoyed strong performance during the
past year despite some short-term price fluctuations.
The fiscal year that ended on August 31, 1997 ultimately proved rewarding for
investors in municipal bond funds, despite some uncertainty and volatility. The
municipal bond market finished the year with a strong six months, despite some
weakness in March and April which could be attributed largely to comments from
Alan Greenspan, Chairman of the Federal Reserve Board, who warned of "irrational
exuberance" in the soaring stock market in early March. His comments were
followed up by the Federal Reserve Board's March 25 decision to raise short-term
rates by one-quarter of one percent. In the short run, this action caused
interest rates to rise rather dramatically. However, by early June the markets
were again back on track, as inflationary fears declined, despite continued
economic strength and high employment.
This sustained growth and low inflation enabled the municipal bond market to
recoup the losses sustained during the first quarter of 1997 and to climb to new
highs. In fact, rates fell through July, allowing 30-year municipal yields to
reach approximately 5.15% in July. Then, an unexpectedly sharp increase in
non-farm payrolls, accompanied by a drop in the unemployment rate, caused
municipal bond yields to rise and prices to fall. However, even in this period,
municipal bonds outperformed U.S. Treasuries, as demand for tax-free bonds
outstripped new supply.
Throughout the year, your Evergreen state tax free funds delivered healthy
returns, with income exempt both from federal income taxes and many state
taxes.(1)
I am delighted to inform you that Evergreen Keystone has successfully integrated
all service functions of Evergreen and Keystone Funds. This means that you now
have full exchange privileges among all Evergreen and Keystone America funds. In
addition, you will be receiving the top-flight service that earned Evergreen
Keystone the 1996 Dalbar Quality Tested Service Seal, the highest award for
mutual fund service presented by Dalbar, an independent mutual fund survey and
rating firm.
In the following pages, we provide specific information about each Evergreen
state tax-free fund. We present this information in a new format that makes
information easily accessible. We are very interested in hearing your thoughts
on this new format, and we welcome your suggestions.
Sincerely,
/s/ William M. Ennis
WILLIAM M. ENNIS
MANAGING DIRECTOR
(1) SOME PORTION OF THE FUND'S INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE
MINIMUM TAX.
1
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EVERGREEN
FLORIDA HIGH INCOME MUNICIPAL BOND FUND
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FUND AT A GLANCE
As of August 31, 1997
<TABLE>
<CAPTION>
PERFORMANCE
- -------------------------------------------------------------------------------------------------------------------------------
1 YEAR AVERAGE ANNUALIZED TOTAL RETURN(1)
---------------------------- ----------------------------------------------- CUMULATIVE TOTAL
SHARE INCEPTION WITHOUT SALES WITH SALES SINCE RETURN(1) SINCE
CLASS DATE CHARGE CHARGE 3 YEARS 5 YEARS INCEPTION INCEPTION
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A 6/17/92 10.77% 5.51% 6.96% 7.33% 7.34% 44.65%
B 7/10/95 9.95% 4.95% -- -- 6.24% 13.88%
Y 9/20/95 11.04% -- -- -- 8.47% 17.19%
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SHARE 12-MONTH
CLASS DISTRIBUTION
- ------
<S> <C>
A $0.62
B $0.54
Y $0.65
- ------
</TABLE>
(1) Adjusted for maximum sales charges.
CURRENT STRATEGY
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For the twelve-month period ended September 30, 1997, the Fund's
class Y and class A shares ranked number 1 and 3, respectively,
out of 63 Florida municipal debt funds tracked by Lipper
Analytical Services, an independent mutual fund rating company.(2)
One constant through the recent environment of fluctuating
interest rates has been the narrowing of spreads between higher
and lower quality bonds, as investors searched for more yield.
Since most of the Fund is comprised of lower rated and non-rated
bonds, performance was aided dramatically by this tightening of
spreads. The increased supply of higher-yielding bonds within the
market should enable us to maintain our current yield-- with the
possibility of increasing it-- even as heavy cash inflows enter
the Fund.
(Photo of Richard
K. Marrone)
RICHARD K. MARRONE
VICE PRESIDENT,
SENIOR FIXED INCOME
PORTFOLIO MANAGER
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GROWTH OF INVESTMENT
Evergreen Florida High Income Municipal Bond Fund
Comparison of a $10,000 investment in Evergreen Florida High Income Municipal
Bond Fund, Class A shares, versus a similar investment in the Lehman Brothers
Municipal Bond Index (LBMBI) and the Consumer Price Index (CPI).
(A chart appears here with the following plot points.)
In Thousands
6/92 8/92 8/93 8/94 8/95 8/96 8/97
Class A Shares 9,525 9,672 11,039 11,261 12,271 13,059 $14,465
CPI 10,000 10,085 10,364 10,664 10,943 11,258 $11,508
LMBI 10,000 10,371 11,636 11,653 12,686 13,350 $14,586
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 different classes. The Lehman Brothers Municipal Bond Index is an
unmanaged market index. The index does not include transactions costs
associated with buying and selling securities nor any management fees. The
Consumer Price Index, a measure of inflation, is through August 31, 1997.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
<S> <C>
- ----------------------------------------------------------------
Total Net Assets: $189,743,181
Average Credit Quality: BB+
Average Maturity: 23.04 years
Average Duration: 8.31 years
</TABLE>
PORTFOLIO COMPOSITION
(AS A PERCENTAGE OF PORTFOLIO ASSETS)
(A pie chart appears here with the following plot points.)
Health 2.7%
Housing 24.1%
Community Development 15.2%
Residential Care 12.5%
Industrial Development 12.5%
Hospital 9.4%
Other 8.8%
Education 5.3%
Utility 5.2%
Special Care 4.3%
PORTFOLIO QUALITY
(AS A PERCENTAGE OF PORTFOLIO ASSETS)
(A pie chart appears here with the following plot points.)
A 2.5%
AA 2.0%
AAA 11.1%
B 0.4%
BB 1.2%
BBB 16.7%
NR 66.1%
(2) THE RANKINGS ARE BASED ON TOTAL RETURN AND DO NOT INCLUDE THE EFFECT OF A
SALES CHARGE. FOR THE 5-YEAR PERIOD ENDING SEPTEMBER 30, 1997, THE FUND'S
CLASS A SHARES RANKED 1 OUT OF 19 FLORIDA MUNICIPAL DEBT FUNDS TRACKED BY
LIPPER ANALYTICAL SERVICES.
2
<PAGE>
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EVERGREEN
FLORIDA MUNICIPAL BOND FUND
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FUND AT A GLANCE
As of August 31, 1997
<TABLE>
<CAPTION>
PERFORMANCE
- -------------------------------------------------------------------------------------------------------------------------------
1 YEAR AVERAGE ANNUALIZED TOTAL RETURN(1)
---------------------------- ----------------------------------------------- CUMULATIVE TOTAL
SHARE INCEPTION WITHOUT SALES WITH SALES SINCE RETURN (1) SINCE
CLASS DATE CHARGE CHARGE 3 YEARS 5 YEARS INCEPTION INCEPTION
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A 5/11/88 9.06% 3.88% 5.81% 5.92% 7.47% 95.60%
B 6/30/95 8.06% 3.06% -- -- 5.03% 11.26%
Y 6/30/95 9.14% -- -- -- 7.38% 16.75%
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<CAPTION>
- ------
SHARE 12-MONTH
CLASS DISTRIBUTION
- ------
<S> <C>
A $0.58
B $0.49
Y $0.59
- ------
</TABLE>
(1) Adjusted for maximum sales charges.
CURRENT STRATEGY
- --------------------------------------------------------------------------------
We continue to emphasize an income-oriented approach for the Fund.
We replaced older, lower-yielding bonds with higher-yielding
securities as opportunities became available. During the Fund's
fiscal year, the BOND BUYER 20 BOND INDEX declined from 5.86% to
5.45%. Despite this decline, as the year progressed we sold
approximately $68.8 million worth of bonds yielding 5.07%, while
buying $65.1 million in bonds yielding 5.77%. Illustrating our
emphasis on higher-yielding securities, this action has added
substantial earning power to the portfolio. For the twelve- months
ended September 30, 1997, the Fund ranked in the top 25%; class Y
shares ranked 12 out of 63 and class A shares 14 out of 63 Florida
municipal debt funds tracked by Lipper Analytical Services, an
independent mutual fund rating company.(2)
(Photo of
Robert S. Drye)
ROBERT S. DRYE
VICE PRESIDENT,
FIXED INCOME
PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH OF INVESTMENT
Evergreen Florida Municipal Bond Fund
Comparison of a $10,000 investment in Evergreen Florida Municipal Bond Fund,
Class A shares, versus a similar investment in the Lehman Brothers Municipal
Bond Index (LBMBI) and the Consumer Price Index (CPI).
(A chart appears here with the following plot points.)
In Thousands
5/88 8/88 8/89 8/90 8/91 8/92 8/93 8/94 8/95 8/96 8/97
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A Shares 9,525 9,726 10,609 11,051 12,504 13,977 15,719 15,725 17,057 17,935 19,560
CPI 10,000 10,162 10,639 11,237 11,664 12,030 12,363 12,721 13,054 13,429 13,727
LBMBI 10,000 10,191 11,310 12,035 13,455 14,959 16,783 16,808 18,298 19,255 21,038
</TABLE>
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 different classes. The Lehman Brothers Municipal Bond Index is an
unmanaged market 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 August 31, 1997.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
<S> <C>
- ----------------------------------------------------------------
Total Net Assets: $161,803,570
Average Credit Quality: AA
Average Maturity: 20.68 years
Average Duration: 9.25 years
</TABLE>
PORTFOLIO COMPOSITION
(AS A PERCENTAGE OF PORTFOLIO ASSETS)
Health Care 30.9%
Housing 24.1%
Public Facilities 13.7%
Industrial Revenue Bonds 9.7%
Utilities 6.4%
Education 5.9%
Transportation 3.9%
State General Obligation 2.9%
Other 2.5%
PORTFOLIO QUALITY
(AS A PERCENTAGE OF PORTFOLIO ASSETS)
(A pie chart appears here with the following plot points.)
A 11.6%
AA 16.7%
AAA 45.7%
BBB 19.8%
NR 6.2%
(2)THE RANKINGS ARE BASED ON TOTAL RETURN AND DO NOT INCLUDE THE EFFECT OF A
SALES CHARGE.
3
<PAGE>
(logo)
EVERGREEN
GEORGIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FUND AT A GLANCE
As of August 31, 1997
<TABLE>
<CAPTION>
PERFORMANCE
- -------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUALIZED
1 YEAR TOTAL RETURN(1)
---------------------------- ------------------------------ CUMULATIVE TOTAL
SHARE INCEPTION WITHOUT SALES WITH SALES SINCE RETURN (1) SINCE 12-MONTH
CLASS DATE CHARGE CHARGE 3 YEARS INCEPTION INCEPTION DISTRIBUTION
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A 7/2/93 8.73% 3.57% 5.78% 3.63% 16.04% $0.49
B 7/2/93 7.93% 2.93% 5.83% 3.73% 16.52% $0.41
Y 2/28/94 9.00% -- 7.78% 5.73% 21.59% $0.51
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)Adjusted for maximum sales charge.
CURRENT STRATEGY
- --------------------------------------------------------------------------------
In the past several months, it has become increasingly difficult
to maneuver within the fixed income markets. We have maintained
our focus on providing strong income, a strategy which has paid
off during the volatile interest rate swings throughout the fiscal
year. The month of August was a particularly good month for the
Fund, enabling it to climb higher in its peer group rankings. For
the twelve months ended September 30, 1997, the Fund's class Y
shares ranked 10 out of 32 Georgia municipal debt funds tracked by
Lipper Analytical Services, an independent mutual fund rating
company.(2) Class A shares ranked 13 out of the 32 Georgia
municipal debt funds tracked by Lipper.
(photo of Richard K. Marrone)
RICHARD K. MARRONE
VICE PRESIDENT,
SENIOR FIXED INCOME
PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
GROWTH OF INVESTMENT
Evergreen Georgia Municipal Bond Fund
Comparison of a $10,000 investment in Evergreen Georgia Municipal Bond Fund,
Class A shares, versus a similar investment in the Lehman Brothers Georgia
Municipal Bond Index (LBGMBI) and the Consumer Price Index (CPI).
(A chart appears here with the following plot points.)
In Thousands
7/93 8/93 8/94 8/95 8/96 8/97
Class A Shares 9,525 9,703 9,338 10,047 10,672 11,604
CPI 10,000 10,028 10,318 10,589 10,293 11,113
LBGMBI 10,000 10,232 10,878 11,095 11,643 12,685
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 different classes. The Lehman Brothers Georgia Municipal Bond Index
is an unmanaged market 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 August 31, 1997.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
<S> <C>
- ----------------------------------------------------------------
Total Net Assets: $14,252,077
Average Credit Quality: AA
Average Maturity: 22 years
Average Duration: 9.47 years
</TABLE>
PORTFOLIO COMPOSITION
(AS A PERCENTAGE OF PORTFOLIO ASSETS)
(A pie chart appears here with the following plot points.)
Other 4.4%
Hospital 24.1%
General Obligation Local 23.7%
Housing 14.7%
Industrial Development 13.3%
Escrow 6.9%
Utilities 6.7%
Public Facilities 6.2%
PORTFOLIO QUALITY
(AS A PERCENTAGE OF PORTFOLIO ASSETS)
(A pie chart appears here with the following plot points.)
A 25.2%
AA 20.2%
AAA 43.3%
BBB 3.9%
NR 7.4%
(2) THE RANKINGS ARE BASED ON TOTAL RETURN AND DO NOT INCLUDE THE EFFECT OF A
SALES CHARGE.
4
<PAGE>
(logo)
EVERGREEN
NORTH CAROLINA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FUND AT A GLANCE
As of August 31, 1997
<TABLE>
<CAPTION>
PERFORMANCE
- ------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUALIZED
1 YEAR TOTAL RETURNS(1)
---------------------------- ----------------------- CUMULATIVE
SHARE INCEPTION WITHOUT SALES WITH SALES SINCE TOTAL RETURN (1) 12-MONTH
CLASS DATE CHARGE CHARGE 3 YEARS INCEPTION SINCE INCEPTION DISTRIBUTION
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A 1/11/93 9.11% 3.93% 6.03% 4.79% 24.23% $0.50
B 1/11/93 8.30% 3.30% 6.08% 4.85% 24.56% $0.42
Y 2/28/94 9.39% -- 8.03% 5.51% 20.72% $0.53
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Adjusted for maximum sales charge.
CURRENT STRATEGY
- --------------------------------------------------------------------------------
In the past several months, it has become increasingly difficult
to maneuver within the fixed income markets. The Fund began the
calendar year with great strength, outperforming most of its
competitors, only to relinquish some of that lead as the first
quarter came to a close. As the second quarter began, the Fund was
managed more defensively-- due to our concerns of rising interest
rates-- and moved back near the top of the performance rankings.
We purchased a block of high-yielding bonds in August, which we
anticipate will contribute to both income and total return. For
the twelve-month period ended September 30, 1997, the Fund's class
Y shares ranked in the top 5%, number 2 out of 37 North Carolina
municipal debt funds tracked by Lipper Analytical Services, an
independent mutual fund rating company. (2) Class A shares ranked
in the top 11%, number 4 out of 37 North Carolina municipal debt
funds tracked by Lipper.
(Photo of Richard K. Marrone)
RICHARD K. MARRONE
VICE PRESIDENT,
SENIOR FIXED INCOME
PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
GROWTH OF INVESTMENT
Evergreen North Carolina Municipal Bond Fund
Comparison of a $10,000 investment in Evergreen North Carolina Municipal Bond
Fund, Class A shares, versus a similar investment in the Lehman Brothers State
General Oglibation Bond Index (LBSGOBI) and the Consumer Price Index (CPI).
(A chart appears here with the following plot points.)
In Thousands
1/93 8/93 8/94 8/95 8/96 8/97
Class A Shares 9,525 10,300 9,926 10,822 11,386 $12,423
CPI 10,000 10,205 10,500 10,775 11,085 $11,331
LBSGOBI 10,000 10,893 10,921 11,897 12,475 $13,529
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 different classes. The Lehman Brothers State General Obligation
Bond Index is an unmanaged market 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 August 31, 1997.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
<S> <C>
- --------------------------------------------------------------
Total Net Assets: $60,355,046
Average Credit Quality: A+
Average Maturity: 21.26 years
Average Duration: 9.5 years
</TABLE>
PORTFOLIO COMPOSITION
(AS A PERCENTAGE OF PORTFOLIO ASSETS)
(A pie chart appears here with the following plot points.)
Housing 20.1%
Escrow 13.7%
Lease 10.5%
Industrial Development 10.5%
Education 9.3%
Utility 8.6%
Hospital 8.2%
Other 6.9%
Health 6.6%
Residential Care 5.6%
PORTFOLIO QUALITY
(AS A PERCENTAGE OF PORTFOLIO ASSETS)
(A pie chart appears here with the following plot points.)
A 27.7%
AA 19.0%
AAA 27.0%
BBB 19.5%
NR 6.8%
(2) THE RANKINGS ARE BASED ON TOTAL RETURN AND DO NOT INCLUDE THE EFFECT OF A
SALES CHARGE.
5
<PAGE>
(logo)
EVERGREEN
SOUTH CAROLINA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FUND AT A GLANCE
As of August 31, 1997
<TABLE>
<CAPTION>
PERFORMANCE
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
AVERAGE ANNUALIZED
1 YEAR TOTAL RETURN(1)
---------------------------- ----------------------- CUMULATIVE
SHARE INCEPTION WITHOUT SALES WITH SALES SINCE TOTAL RETURN (1) 12-MONTH
CLASS DATE CHARGE CHARGE 3 YEARS INCEPTION SINCE INCEPTION DISTRIBUTION
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A 1/3/94 9.33% 4.14% 7.05% 4.06% 15.70% $0.49
B 1/3/94 8.52% 3.52% 7.12% 3.99% 15.41% $0.42
Y 2/28/94 9.60% -- 9.07% 6.62% 25.25% $0.52
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Adjusted for maximum sales charge.
CURRENT STRATEGY
- --------------------------------------------------------------------------------
We continue to emphasize an income-oriented approach for the Fund.
We replaced older, lower-yielding bonds with higher-yielding
securities as opportunities became available. During the Fund's
fiscal year, the BOND BUYER 20 BOND INDEX declined from 5.86% to
5.45%. Despite this decline, as the year progressed we sold
approximately $7 million worth of bonds yielding 5.83%, while
buying $9.5 million in bonds yielding 6.08%. By continuing to
structure our portfolio with higher yielding issues, a substantial
portion of the total return in the portfolio is produced by higher
income. In an ongoing effort to ensure credit quality and increase
total return, our municipal credit analysts continue to monitor
existing holdings and screen potential new acquisitions. For the
twelve-month period ended September 30, 1997, the Fund's class Y
and class A shares ranked number 2 and 3, respectively, out of 16
South Carolina municipal debt funds tracked by Lipper Analytical
Services, an independent mutual fund rating company.(2)
(Photo of
Robert S. Drye)
ROBERT S. DRYE
VICE PRESIDENT,
FIXED INCOME
PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
GROWTH OF INVESTMENT
Evergreen South Carolina Municipal Bond Fund
Comparison of a $10,000 investment in Evergreen South Carolina Municipal Bond
Fund, Class A shares, versus a similar investment in the Lehman Brothers South
Carolina Municipal Bond Index (LBSCMBI) and the Consumer Price Index (CPI).
(A chart appears here with the following plot points.)
In Thousands
1/94 8/94 8/95 8/96 8/97
Class A Shares 9,525 8,984 9,962 10,583 $11,570
CPI 10,000 10,219 10,487 10,788 $11,028
LBSCMBI 10,000 9,654 10,568 11,081 $12,076
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 different classes. The Lehman Brothers South Carolina
Municipal Bond Index is an unmanaged market 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
August 31, 1997.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
<S> <C>
- ----------------------------------------------------------------
Total Net Assets: $12,770,530
Average Credit Quality: AA
Average Maturity: 22.20 years
Average Duration: 10.31 years
</TABLE>
PORTFOLIO COMPOSITION
(AS A PERCENTAGE OF PORTFOLIO ASSETS)
(A pie chart appears here with the following plot points.)
Health Care 30.9%
Housing 24.1%
Public Facilities 13.7%
Industrial Revenue Bonds 9.7%
Utilities 6.4%
Education 5.9%
Transportation 3.9%
General Obligation 2.9%
Other 2.5%
PORTFOLIO QUALITY
(AS A PERCENTAGE OF PORTFOLIO ASSETS)
(A pie chart appears here with the following plot points.)
A 13.1%
AA 28.5%
AAA 32.8%
BBB 12.8%
NR 12.8%
(2) THE RANKINGS ARE BASED ON TOTAL RETURN AND DO NOT INCLUDE THE EFFECT OF A
SALES CHARGE.
6
<PAGE>
(logo)
EVERGREEN
VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FUND AT A GLANCE
As of August 31, 1997
<TABLE>
<CAPTION>
PERFORMANCE
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
AVERAGE ANNUALIZED
1 YEAR TOTAL RETURN(1)
---------------------------- ----------------------- CUMULATIVE TOTAL
SHARE INCEPTION WITHOUT SALES WITH SALES SINCE RETURN(1) SINCE 12-MONTH
CLASS DATE CHARGE CHARGE 3 YEARS INCEPTION INCEPTION DISTRIBUTION
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A 7/2/93 9.05% 3.87% 6.08% 3.90% 17.25% $0.50
B 7/2/93 8.24% 3.24% 6.14% 3.98% 17.71% $0.41
Y 2/28/94 9.32% -- 8.08% 6.06% 22.93% $0.51
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Adjusted for maximum sales charge.
CURRENT STRATEGY
- --------------------------------------------------------------------------------
For the twelve months ended September 30, 1997, the Fund's class Y
and class A shares ranked number 6 and 8, respectively, out of 32
Virginia municipal debt funds tracked by Lipper Analytical
Services, an independent mutual fund rating company. (2) During
the course of the fiscal year, we continued to emphasize an
income-oriented approach. In doing so, we maintained a
higher-coupon structure which allows our funds to provide tax-free
income and in the long term, produce a strong total return with
reduced volatility. A substantial portion of the total return of
the Fund is produced by the portfolio's higher coupon structure.
To ensure credit quality and increase total return, our municipal
credit analysts work in conjunction with portfolio managers to
carefully monitor existing holdings and seek out new investment
opportunities.
(Photo of
Charles E. Jeanne)
CHARLES E. JEANNE
ASSISTANT VICE PRESIDENT,
PORTFOLIO MANAGER
- --------------------------------------------------------------------------------
GROWTH OF INVESTMENT
Evergreen Virginia Municipal Bond Fund
Comparison of a $10,000 investment in Evergreen South Carolina Municipal Bond
Fund, Class A shares, versus a similar investment in the Lehman Brothers
Virginia Municipal Bond Index (LBVMBI) and the Consumer Price Index (CPI).
(A chart appears here with the following plot points.)
In Thousands
7/93 8/93 8/94 8/95 8/96 8/97
Class A Shares 9,525 9,675 9,355 10,228 10,752 $11,725
CPI 10,000 10,028 10,318 10,589 10,893 $11,113
LBVMBI 10,000 10,189 10,241 11,151 11,665 $12,695
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 different classes. The Lehman Brothers Virginia Municipal Bond
Index is an unmanaged market 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 August 31, 1997.
<TABLE>
<CAPTION>
PORTFOLIO CHARACTERISTICS
<S> <C>
- ----------------------------------------------------------------
Total Net Assets: $15,824,821
Average Credit Quality: AA
Average Maturity: 20.56 years
Average Duration: 10.96 years
</TABLE>
PORTFOLIO COMPOSITION
(AS A PERCENTAGE OF PORTFOLIO ASSETS)
(A pie chart appears here with the following plot points.)
Housing 24.9%
Lease 14.8%
Other 12.9%
Industrial Development 9.5%
Hospital 7.6%
Transportation 7.5%
Residential Care 7.2%
Public Facilities 6.4%
General Obligation Local 4.6%
Education 4.6%
PORTFOLIO QUALITY
(AS A PERCENTAGE OF PORTFOLIO ASSETS)
(A pie chart appears here with the following plot points.)
A 27.7%
AA 32.7%
AAA 19.5%
BBB 3.7%
NR 16.4%
(2) THE RANKINGS ARE BASED ON TOTAL RETURN AND DO NOT INCLUDE THE EFFECT OF A
SALES CHARGE.
7
<PAGE>
(logo)
EVERGREEN
FLORIDA HIGH INCOME MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, FOUR MONTHS YEAR ENDED APRIL 30,
----------------------- ENDED -----------------------
1997 1996 AUGUST 31, 1995* 1995 1994
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF YEAR....... $ 10.42 $ 10.40 $ 10.16 $ 10.08 $ 10.36
-------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................... 0.62 0.63 0.21 0.65 0.68
Net realized and unrealized gain (loss)
on investments........................ 0.47 0.02 0.24 0.08 (0.26)
-------- ------- ------- ------- -------
Total from investment operations........ 1.09 0.65 0.45 0.73 0.42
-------- ------- ------- ------- -------
LESS DISTRIBUTIONS FROM:
Net investment income................... (0.62) (0.63) (0.21) (0.65) (0.68)
Net realized gains on investments....... 0 0 0 0 (0.02)
-------- ------- ------- ------- -------
Total distributions..................... (0.62) (0.63) (0.21) (0.65) (0.70)
-------- ------- ------- ------- -------
NET ASSET VALUE END OF YEAR............. $ 10.89 $ 10.42 $ 10.40 $ 10.16 $ 10.08
-------- ------- ------- ------- -------
TOTAL RETURN (B)........................ 10.77% 6.42% 4.43% 7.56% 3.94%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses........................ 0.88% 0.85% 1.07%(a) 0.60% 0.14%
Total expenses excluding indirectly
paid expenses....................... 0.87% -- -- -- --
Total expenses excluding waivers and
reimbursements...................... 1.12% 1.15% 1.42%(a) 1.26% 1.12%
Net investment income................. 5.86% 6.02% 5.92%(a) 6.52% 6.16%
Portfolio turnover rate................. 32% 42% 14% 28% 31%
NET ASSETS END OF YEAR (THOUSANDS)...... $119,942 $76,267 $ 59,551 $65,043 $72,683
<CAPTION>
JUNE 17, 1992
THROUGH
APRIL 30, 1993
<S> <C>
- ----------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF YEAR....... $ 10.00
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................... 0.61
Net realized and unrealized gain (loss)
on investments........................ 0.39
-------
Total from investment operations........ 1.00
-------
LESS DISTRIBUTIONS FROM:
Net investment income................... (0.61)
Net realized gains on investments....... (0.03)
-------
Total distributions..................... (0.64)
-------
NET ASSET VALUE END OF YEAR............. $ 10.36
-------
TOTAL RETURN (B)........................ 10.33%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses........................ 0.00%(a)
Total expenses excluding indirectly
paid expenses....................... --
Total expenses excluding waivers and
reimbursements...................... 1.12%(a)
Net investment income................. 5.92%(a)
Portfolio turnover rate................. 50%
NET ASSETS END OF YEAR (THOUSANDS)...... $ 33,541
</TABLE>
* The Fund changed its fiscal year end from April 30 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.
<TABLE>
<CAPTION>
JULY 10, 1995
(COMMENCEMENT OF
CLASS
YEAR ENDED AUGUST 31, OPERATIONS)
----------------------- THROUGH
1997 1996 AUGUST 31, 1995
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF YEAR.............................................. $ 10.42 $ 10.40 $10.41
------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.......................................................... 0.54 0.55 0.08
Net realized and unrealized gain (loss) on investments......................... 0.47 0.02 (0.01)
------- ------- ------
Total from investment operations............................................... 1.01 0.57 0.07
Less distributions from net investment income.................................. (0.54) (0.55) (0.08)
------- ------- ------
NET ASSET VALUE END OF YEAR.................................................... $ 10.89 $ 10.42 $10.40
------- ------- ------
TOTAL RETURN (B)............................................................... 9.95% 5.63% 0.64%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses............................................................... 1.63% 1.59% 1.09%(a)
Total expenses excluding indirectly paid expenses............................ 1.63% -- --
Total expenses excluding waivers and reimbursements.......................... 1.87% 1.89% --
Net investment income........................................................ 5.09% 5.27% 3.40%(a)
Portfolio turnover rate........................................................ 32% 42% 14%
NET ASSETS END OF YEAR (THOUSANDS)............................................. $63,475 $19,219 $3,137
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
(logo)
EVERGREEN
FLORIDA HIGH INCOME MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
SEPTEMBER 20, 1995
(COMMENCEMENT OF
CLASS OPERATIONS)
YEAR ENDED THROUGH
AUGUST 31, 1997 AUGUST 31, 1996
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF YEAR.................................................... $ 10.42 $10.48
--------------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................................................................ 0.65 0.63
Net realized and unrealized gain (loss) on investments............................... 0.47 (0.06)
--------------- ------
Total from investment operations..................................................... 1.12 0.57
Less distributions from net investment income........................................ (0.65) (0.63)
--------------- ------
NET ASSET VALUE END OF YEAR.......................................................... $ 10.89 $10.42
--------------- ------
TOTAL RETURN......................................................................... 11.04% 5.54%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses..................................................................... 0.63% 0.59%(a)
Total expenses excluding indirectly paid expenses.................................. 0.63% --
Total expenses excluding waivers and reimbursements................................ 0.87% 0.89%(a)
Net investment income.............................................................. 6.08% 6.27%(a)
Portfolio turnover rate.............................................................. 32% 42%
NET ASSETS END OF YEAR (THOUSANDS)................................................... $ 6,326 $1,970
</TABLE>
(a) Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
(logo)
EVERGREEN
FLORIDA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
YEAR ENDED
AUGUST 31, FOUR MONTHS YEAR ENDED APRIL 30,
-------------------- ENDED -------------------------
1997 1996 AUGUST 31, 1995 (C)* 1995(C) 1994(C)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF YEAR...................... $ 9.70 $ 9.74 $ 9.61 $ 9.52 $ 9.95
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................................. 0.51 0.54 0.19 0.54 0.56
Net realized and unrealized gain (loss) on
investments.......................................... 0.35 (0.04) 0.22 0.11 (0.36)
-------- -------- -------- -------- --------
Total from investment operations....................... 0.86 0.50 0.41 0.65 0.20
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS FROM:
Net investment income.................................. (0.52) (0.54) (0.19) (0.54) (0.56)
Distributions in excess of net investment income....... 0 0 (0.03) 0 0
Net realized gains on investments...................... (0.06) 0 (0.06) (0.02) (0.07)
Paid-in capital........................................ 0 0 0 0 0
-------- -------- -------- -------- --------
Total distributions.................................... (0.58) (0.54) (0.28) (0.56) (0.63)
-------- -------- -------- -------- --------
NET ASSET VALUE END OF YEAR............................ $ 9.98 $ 9.70 $ 9.74 $ 9.61 $ 9.52
-------- -------- -------- -------- --------
TOTAL RETURN (B)....................................... 9.06% 5.15% 4.20% 7.05% 1.87%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses....................................... 0.74% 0.63% 0.82%(a) 0.61% 0.56%
Total expenses excluding indirectly paid expenses.... 0.74% -- -- -- --
Total expenses excluding waivers and reimbursements.. 0.91% 0.95% 1.05%(a) -- --
Net investment income................................ 5.22% 5.46% 4.89%(a) 5.73% 5.37%
Portfolio turnover rate................................ 41% 30% 29% 53% 32%
NET ASSETS END OF YEAR (THOUSANDS)..................... $105,673 $115,723 $136,449 $168,542 $199,612
</TABLE>
<TABLE>
<CAPTION>
MAY 11, 1988
(COMMENCEMENT OF
CLASS
OPERATIONS)
YEAR ENDED APRIL 30, THROUGH
------------------------------------------ APRIL 30,
1993(C) 1992(C) 1991(C) 1990(C) 1989(C)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES (continued)
NET ASSET VALUE BEGINNING OF YEAR................................ $ 9.35 $ 9.21 $ 8.80 $ 9.09 $ 8.82
-------- -------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................................ 0.56 0.61 0.66 0.58 0.47
Net realized and unrealized gain (loss) on investments........... 0.67 0.22 0.43 (0.24) 0.22
-------- -------- ------- ------- ------
Total from investment operations................................. 1.23 0.83 1.09 0.34 0.69
-------- -------- ------- ------- ------
LESS DISTRIBUTIONS FROM:
Net investment income............................................ (0.56) (0.61) (0.68) (0.59) (0.42)
Distributions in excess of net investment income................. 0 0 0 0 0
Net realized gains on investments................................ (0.07) (0.04) 0 (0.04) 0
Paid-in capital.................................................. 0 (0.04) 0 0 0
-------- -------- ------- ------- ------
Total distributions.............................................. (0.63) (0.69) (0.68) (0.63) (0.42)
-------- -------- ------- ------- ------
NET ASSET VALUE END OF YEAR...................................... $ 9.95 $ 9.35 $ 9.21 $ 8.80 $ 9.09
-------- -------- ------- ------- ------
TOTAL RETURN (B)................................................. 13.63% 9.30% 12.87% 3.74% 9.16%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................................. 0.58% 0.41% 0.10% 0.10% 0.30%(a)
Total expenses excluding indirectly paid expenses.............. -- -- -- -- --
Total expenses excluding waivers and reimbursements............ -- 0.68% 0.88% 5.14% 20.40%(a)
Net investment income.......................................... 5.66% 6.12% 6.55% 6.15% 5.30%(a)
Portfolio turnover rate.......................................... 24% 24% 66% 82% 30%
NET ASSETS END OF YEAR (THOUSANDS)............................... $198,286 $147,996 $75,791 $7,286 $ 717
</TABLE>
* The Fund changed its fiscal year end from April 30 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.
(c) On June 30, 1995, ABT Florida Tax-Free Fund sold substantially all of its
net assets to Evergreen Florida Municipal Bond Fund. As ABT Florida Tax-Free
Fund is the accounting survivor, its basis of accounting for assets and
liabilities and its operating results for periods prior to June 30, 1995
have been carried forward in these financial highlights.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
(logo)
EVERGREEN
FLORIDA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
JUNE 30, 1995
(COMMENCEMENT OF
CLASS
YEAR ENDED AUGUST 31, OPERATIONS)
----------------------- THROUGH
1997 1996 AUGUST 31, 1995
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF YEAR................................................. $ 9.70 $ 9.74 $ 9.67
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................................................. 0.42 0.44 0.07
Net realized and unrealized gain (loss) on investments............................ 0.35 (0.04) 0.10
------- ------- -------
Total from investment operations.................................................. 0.77 0.40 0.17
------- ------- -------
LESS DISTRIBUTIONS FROM:
Net investment income............................................................. (0.43) (0.44) (0.07)
Net realized gains on investments................................................. (0.06) 0 (0.03)
------- ------- -------
Total distributions............................................................... (0.49) (0.44) (0.10)
------- ------- -------
NET ASSET VALUE END OF YEAR....................................................... $ 9.98 $ 9.70 $ 9.74
------- ------- -------
TOTAL RETURN (B).................................................................. 8.06% 4.17% 1.49%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.................................................................. 1.66% 1.56% 1.44%(a)
Total expenses excluding indirectly paid expenses............................... 1.66% -- --
Total expenses excluding waivers and reimbursements............................. 1.84% 1.76% 1.64%(a)
Net investment income........................................................... 4.29% 4.52% 3.22%(a)
Portfolio turnover rate........................................................... 41% 30% 29%
NET ASSETS END OF YEAR (THOUSANDS)................................................ $31,281 $28,849 $ 27,351
</TABLE>
(a) Annualized.
(b) Excluding applicable sales charges.
<TABLE>
<CAPTION>
JUNE 30, 1995
(COMMENCEMENT OF
CLASS
YEAR ENDED AUGUST 31, OPERATIONS)
----------------------- THROUGH
1997 1996 AUGUST 31, 1995
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF YEAR................................................. $ 9.70 $ 9.74 $ 9.67
------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................................................. 0.52 0.53 0.09
Net realized and unrealized gain (loss) on investments............................ 0.35 (0.03) 0.10
------- ------- ------
Total from investment operations.................................................. 0.87 0.50 0.19
------- ------- ------
LESS DISTRIBUTIONS FROM:
Net investment income............................................................. (0.53) (0.54) (0.09)
Net realized gains on investments................................................. (0.06) 0 (0.03)
------- ------- ------
Total distributions............................................................... (0.59) (0.54) (0.12)
------- ------- ------
NET ASSET VALUE END OF YEAR....................................................... $ 9.98 $ 9.70 $ 9.74
------- ------- ------
TOTAL RETURN...................................................................... 9.14% 5.22% 1.67%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses.................................................................. 0.67% 0.57% 0.59%(a)
Total expenses excluding indirectly paid expenses............................... 0.67% -- --
Total expenses excluding waivers and reimbursements............................. 0.84% 0.77% 0.79%(a)
Net investment income........................................................... 5.27% 5.55% 4.93%(a)
Portfolio turnover rate........................................................... 41% 30% 29%
NET ASSETS END OF YEAR (THOUSANDS)................................................ $24,850 $12,259 $3,602
</TABLE>
(a) Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
(logo)
EVERGREEN
GEORGIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
JULY 2, 1993
(COMMENCEMENT OF
CLASS
YEAR ENDED OPERATIONS)
AUGUST 31, EIGHT MONTHS THROUGH
---------------- ENDED YEAR ENDED DECEMBER 31,
1997 1996 AUGUST 31, 1995* DECEMBER 31, 1994 1993
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF YEAR................ $ 9.57 $ 9.47 $ 8.74 $ 10.19 $10.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................ 0.49 0.48 0.33 0.48 0.20
Net realized and unrealized gain (loss) on
investments.................................... 0.33 0.10 0.73 (1.45) 0.19
------ ------ ------ ------ ------
Total from investment operations................. 0.82 0.58 1.06 (0.97) 0.39
------ ------ ------ ------ ------
Less distributions from net investment income.... (0.49) (0.48) (0.33) (0.48) (0.20)
------ ------ ------ ------ ------
NET ASSET VALUE END OF YEAR...................... $ 9.90 $ 9.57 $ 9.47 $ 8.74 $10.19
------ ------ ------ ------ ------
TOTAL RETURN (B)................................. 8.73% 6.22% 12.28% (9.64%) 3.96%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................. 0.94% 0.88% 0.71%(a) 0.53% 0.25%(a)
Total expenses excluding indirectly paid
expenses..................................... 0.94% -- -- -- --
Total expenses excluding waivers and
reimbursements............................... 1.83% 2.82% 2.83%(a) 3.61% 6.82%(a)
Net investment income.......................... 5.00% 4.96% 5.39%(a) 5.26% 4.71%(a)
Portfolio turnover rate.......................... 32% 21% 91% 147% 15%
NET ASSETS END OF YEAR (THOUSANDS)............... $2,201 $1,954 $2,098 $ 1,387 $ 817
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.
<TABLE>
<CAPTION>
JULY 2, 1993
(COMMENCEMENT OF
CLASS
YEAR ENDED OPERATIONS)
AUGUST 31, EIGHT MONTHS THROUGH
----------------- ENDED YEAR ENDED DECEMBER 31,
1997 1996 AUGUST 31, 1995* DECEMBER 31, 1994 1993
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF YEAR............... $ 9.57 $ 9.47 $ 8.74 $ 10.19 $10.00
------- ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................... 0.41 0.41 0.28 0.43 0.18
Net realized and unrealized gain (loss) on
investments................................... 0.33 0.10 0.73 (1.45) 0.19
------- ------ ------ ------ ------
Total from investment operations................ 0.74 0.51 1.01 (1.02) 0.37
------- ------ ------ ------ ------
Less distributions from net investment income... (0.41) (0.41) (0.28) (0.43) (0.18)
------- ------ ------ ------ ------
NET ASSET VALUE END OF YEAR..................... $ 9.90 $ 9.57 $ 9.47 $ 8.74 $10.19
------- ------ ------ ------ ------
TOTAL RETURN (B)................................ 7.93% 5.44% 11.72% (10.15%) 3.74%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................ 1.69% 1.63% 1.46%(a) 1.13% 0.75%(a)
Total expenses excluding indirectly paid
expenses.................................... 1.69% -- -- -- --
Total expenses excluding waivers and
reimbursements.............................. 2.58% 3.54% 3.58%(a) 4.21% 7.32%(a)
Net investment income......................... 4.25% 4.21% 4.64%(a) 4.66% 4.15%(a)
Portfolio turnover rate......................... 32% 21% 91% 147% 15%
NET ASSETS END OF YEAR (THOUSANDS).............. $10,870 $9,271 $7,538 $ 6,912 $3,692
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
(logo)
EVERGREEN
GEORGIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
FEBRUARY 28,
1994
(COMMENCEMENT OF
CLASS
YEAR ENDED OPERATIONS)
AUGUST 31, EIGHT MONTHS THROUGH
---------------- ENDED DECEMBER 31,
1997 1996 AUGUST 31, 1995* 1994
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF YEAR.................................... $ 9.57 $ 9.47 $ 8.74 $ 9.83
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................................................ 0.51 0.50 0.35 0.42
Net realized and unrealized gain (loss) on investments............... 0.33 0.10 0.73 (1.09)
------ ------ ------ ------
Total from investment operations..................................... 0.84 0.60 1.08 (0.67)
------ ------ ------ ------
Less distributions from net investment income........................ (0.51) (0.50) (0.35) (0.42)
------ ------ ------ ------
NET ASSET VALUE END OF YEAR.......................................... $ 9.90 $ 9.57 $ 9.47 $ 8.74
------ ------ ------ ------
TOTAL RETURN......................................................... 9.00% 6.48% 12.47% (6.86%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses..................................................... 0.69% 0.63% 0.46%(a) 0.31%(a)
Total expenses excluding indirectly paid expenses.................. 0.69% -- -- --
Total expenses excluding waivers and reimbursements................ 1.58% 2.51% 2.58%(a) 3.39%(a)
Net investment income.............................................. 5.25% 5.21% 5.64%(a) 5.68%(a)
Portfolio turnover rate.............................................. 32% 21% 91% 147%
NET ASSETS END OF YEAR (THOUSANDS)................................... $1,180 $1,620 $1,339 $ 284
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
(logo)
EVERGREEN
NORTH CAROLINA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
JANUARY 11, 1993
(COMMENCEMENT OF
CLASS
YEAR ENDED OPERATIONS)
AUGUST 31, EIGHT MONTHS THROUGH
---------------------- ENDED YEAR ENDED DECEMBER 31,
1997 1996 AUGUST 31, 1995* DECEMBER 31, 1994 1993
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF YEAR.......... $ 9.98 $ 9.95 $ 9.16 $ 10.61 $ 10.00
------ ------ ------ ------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.49 0.49 0.33 0.49 0.46
Net realized and unrealized gain (loss) on
investments.............................. 0.40 0.02 0.79 (1.45) 0.64
------ ------ ------ ------ -------
Total from investment operations........... 0.89 0.51 1.12 (0.96) 1.10
------ ------ ------ ------ -------
LESS DISTRIBUTIONS FROM:
Net investment income...................... (0.50) (0.48) (0.33) (0.49) (0.46)
Net realized gains on investments.......... 0 0 0 0 (0.03)
------ ------ ------ ------ -------
Total distributions........................ (0.50) (0.48) (0.33) (0.49) (0.49)
------ ------ ------ ------ -------
NET ASSET VALUE END OF YEAR................ $10.37 $ 9.98 $ 9.95 $ 9.16 $ 10.61
------ ------ ------ ------ -------
TOTAL RETURN (B)........................... 9.11% 5.21% 12.34% (9.12%) 11.28%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses........................... 1.11% 1.08% 0.92%(a) 0.79% 0.32%(a)
Total expenses excluding indirectly paid
expenses............................... 1.11% -- -- -- --
Total expenses excluding waivers and
reimbursements......................... 1.11% 1.35% 1.27%(a) 1.18% 1.25%(a)
Net investment income.................... 4.77% 4.81% 5.09%(a) 5.11% 4.91%(a)
Portfolio turnover rate.................... 50% 86% 117% 126% 57%
NET ASSETS END OF YEAR (THOUSANDS)......... $8,115 $7,989 $8,279 $ 7,979 $ 12,739
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.
<TABLE>
<CAPTION>
JANUARY 11, 1993
(COMMENCEMENT OF
CLASS
YEAR ENDED OPERATIONS)
AUGUST 31, EIGHT MONTHS THROUGH
------------------------ ENDED YEAR ENDED DECEMBER 31,
1997 1996 AUGUST 31, 1995* DECEMBER 31, 1994 1993
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF YEAR........ $ 9.98 $ 9.95 $ 9.16 $ 10.61 $ 10.00
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................... 0.41 0.42 0.28 0.44 0.42
Net realized and unrealized gain (loss)
on investments......................... 0.40 0.02 0.79 (1.45) 0.64
------- ------- ------- ------- -------
Total from investment operations......... 0.81 0.44 1.07 (1.01) 1.06
------- ------- ------- ------- -------
LESS DISTRIBUTIONS FROM:
Net investment income.................... (0.42) (0.41) (0.28) (0.44) (0.42)
Net realized gains on investments........ 0 0 0 0 (0.03)
------- ------- ------- ------- -------
Total distributions...................... (0.42) (0.41) (0.28) (0.44) (0.45)
------- ------- ------- ------- -------
NET ASSET VALUE END OF YEAR.............. $ 10.37 $ 9.98 $ 9.95 $ 9.16 $ 10.61
------- ------- ------- ------- -------
TOTAL RETURN (B)......................... 8.30% 4.42% 11.78% (9.64%) 10.80%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses......................... 1.86% 1.83% 1.67%(a) 1.37% 0.79%(a)
Total expenses excluding indirectly
paid expenses........................ 1.86% -- -- -- --
Total expenses excluding waivers and
reimbursements....................... 1.86% 2.10% 2.02%(a) 1.76% 1.74%(a)
Net investment income.................. 4.02% 4.06% 4.34%(a) 4.53% 4.47%(a)
Portfolio turnover rate.................. 50% 86% 117% 126% 57%
NET ASSETS END OF YEAR (THOUSANDS)....... $48,198 $49,382 $ 49,040 $44,616 $ 45,168
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
(logo)
EVERGREEN
NORTH CAROLINA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
FEBRUARY 28,
1994
(COMMENCEMENT OF
CLASS
YEAR ENDED OPERATIONS)
AUGUST 31, EIGHT MONTHS THROUGH
---------------- ENDED DECEMBER 31,
1997 1996 AUGUST 31, 1995* 1994
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF YEAR.................................... $ 9.98 $ 9.95 $ 9.16 $10.31
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................................................ 0.51 0.51 0.35 0.43
Net realized and unrealized gain (loss) on investments............... 0.41 0.03 0.79 (1.15)
------ ------ ------ ------
Total from investment operations..................................... 0.92 0.54 1.14 (0.72)
------ ------ ------ ------
Less distributions from net investment income........................ (0.53) (0.51) (0.35) (0.43)
------ ------ ------ ------
NET ASSET VALUE END OF YEAR.......................................... $10.37 $ 9.98 $ 9.95 $ 9.16
------ ------ ------ ------
TOTAL RETURN......................................................... 9.39% 5.47% 12.52% (7.01%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses..................................................... 0.86% 0.84% 0.67%(a) 0.59%(a)
Total expenses excluding indirectly paid expenses.................. 0.86% -- -- --
Total expenses excluding waivers and reimbursements................ 0.86% 1.07% 1.02%(a) 0.98%(a)
Net investment income.............................................. 5.02% 5.05% 5.34%(a) 5.58%(a)
Portfolio turnover rate.............................................. 50% 86% 117% 126%
NET ASSETS END OF YEAR (THOUSANDS)................................... $4,042 $3,771 $1,006 $ 642
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
(logo)
EVERGREEN
SOUTH CAROLINA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
JANUARY 3, 1994
(COMMENCEMENT OF
CLASS
YEAR ENDED OPERATIONS)
AUGUST 31, EIGHT MONTHS THROUGH
--------------- ENDED DECEMBER 31,
1997 1996 AUGUST 31, 1995* 1994
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF YEAR..................................... $ 9.69 $9.59 $ 8.62 $10.00
------ ----- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................................................. 0.48 0.49 0.34 0.46
Net realized and unrealized gain (loss) on investments................ 0.40 0.10 0.97 (1.38)
------ ----- ------ ------
Total from investment operations...................................... 0.88 0.59 1.31 (0.92)
------ ----- ------ ------
LESS DISTRIBUTIONS FROM:
Net investment income................................................. (0.48) (0.49) (0.34) (0.46)
Net realized gains on investments..................................... (0.01) 0 0 0
------ ----- ------ ------
Total distributions................................................... (0.49) (0.49) (0.34) (0.46)
------ ----- ------ ------
NET ASSET VALUE END OF YEAR........................................... $10.08 $9.69 $ 9.59 $ 8.62
------ ----- ------ ------
TOTAL RETURN (B)...................................................... 9.33% 6.23% 15.35% (9.32%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses...................................................... 0.98% 0.86% 0.53%(a) 0.25%(a)
Total expenses excluding indirectly paid expenses................... 0.98% -- -- --
Total expenses excluding waivers and reimbursements................. 2.16% 4.00% 6.50%(a) 10.71%(a)
Net investment income............................................... 4.87% 4.98% 5.41%(a) 5.57%(a)
Portfolio turnover rate............................................... 62% 37% 66% 23%
NET ASSETS END OF YEAR (THOUSANDS).................................... $1,025 $ 841 $ 610 $ 312
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.
<TABLE>
<CAPTION>
JANUARY 3, 1994
(COMMENCEMENT OF
CLASS
YEAR ENDED OPERATIONS)
AUGUST 31, EIGHT MONTHS THROUGH
---------------- ENDED DECEMBER 31,
1997 1996 AUGUST 31, 1995* 1994
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF YEAR.................................... $ 9.69 $ 9.59 $ 8.62 $10.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................................................ 0.41 0.41 0.29 0.41
Net realized and unrealized gain (loss) on investments............... 0.40 0.10 0.97 (1.38)
------ ------ ------ ------
Total from investment operations..................................... 0.81 0.51 1.26 (0.97)
------ ------ ------ ------
LESS DISTRIBUTIONS FROM:
Net investment income................................................ (0.41) (0.41) (0.29) (0.41)
Net realized gains on investments.................................... (0.01) 0 0 0
------ ------ ------ ------
Total distributions.................................................. (0.42) (0.41) (0.29) (0.41)
------ ------ ------ ------
NET ASSET VALUE END OF YEAR.......................................... $10.08 $ 9.69 $ 9.59 $ 8.62
------ ------ ------ ------
TOTAL RETURN (B)..................................................... 8.52% 5.43% 14.77% (9.83%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses..................................................... 1.73% 1.61% 1.28%(a) 0.87%(a)
Total expenses excluding indirectly paid expenses.................. 1.73% -- -- --
Total expenses excluding waivers and reimbursements................ 2.91% 4.76% 7.25%(a) 11.33%(a)
Net investment income.............................................. 4.13% 4.23% 4.66%(a) 4.88%(a)
Portfolio turnover rate.............................................. 62% 37% 66% 23%
NET ASSETS END OF YEAR (THOUSANDS)................................... $4,734 $4,282 $3,542 $2,456
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
(logo)
EVERGREEN
SOUTH CAROLINA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
FEBRUARY 28,
1994
(COMMENCEMENT OF
CLASS
YEAR ENDED OPERATIONS)
AUGUST 31, EIGHT MONTHS THROUGH
---------------- ENDED DECEMBER 31,
1997 1996 AUGUST 31, 1995* 1994
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF YEAR.................................... $ 9.69 $ 9.59 $ 8.62 $ 9.74
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................................................ 0.51 0.51 0.35 0.43
Net realized and unrealized gain (loss) on investments............... 0.40 0.10 0.97 (1.12)
------ ------ ------ ------
Total from investment operations..................................... 0.91 0.61 1.32 (0.69)
------ ------ ------ ------
LESS DISTRIBUTIONS FROM:
Net investment income................................................ (0.51) (0.51) (0.35) (0.43)
Net realized gains on investments.................................... (0.01) 0 0 0
------ ------ ------ ------
Total distributions.................................................. (0.52) (0.51) (0.35) (0.43)
------ ------ ------ ------
NET ASSET VALUE END OF YEAR.......................................... $10.08 $ 9.69 $ 9.59 $ 8.62
------ ------ ------ ------
TOTAL RETURN......................................................... 9.60% 6.49% 15.54% (7.12%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses..................................................... 0.73% 0.62% 0.28%(a) 0.00%(a)
Total expenses excluding indirectly paid expenses.................. 0.73% -- -- --
Total expenses excluding waivers and reimbursements................ 1.91% 3.70% 6.25%(a) 10.46%(a)
Net investment income.............................................. 5.12% 5.22% 5.66%(a) 5.92%(a)
Portfolio turnover rate.............................................. 62% 37% 66% 23%
NET ASSETS END OF YEAR (THOUSANDS)................................... $7,012 $4,555 $1,673 $ 92
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
(logo)
EVERGREEN
VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
JULY 2, 1993
(COMMENCEMENT OF
CLASS
YEAR ENDED OPERATIONS)
AUGUST 31, EIGHT MONTHS THROUGH
---------------- ENDED YEAR ENDED DECEMBER 31,
1997 1996 AUGUST 31, 1995* DECEMBER 31, 1994 1993
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES
NET ASSET VALUE BEGINNING OF YEAR................ $ 9.68 $ 9.67 $ 8.85 $ 10.19 $10.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................ 0.50 0.48 0.33 0.47 0.20
Net realized and unrealized gain (loss) on
investments.................................... 0.37 0.01 0.82 (1.34) 0.19
------ ------ ------ ------ ------
Total from investment operations................. 0.87 0.49 1.15 (0.87) 0.39
------ ------ ------ ------ ------
Less distributions from net investment income.... (0.50) (0.48) (0.33) (0.47) (0.20)
------ ------ ------ ------ ------
NET ASSET VALUE END OF YEAR...................... $10.05 $ 9.68 $ 9.67 $ 8.85 $10.19
------ ------ ------ ------ ------
TOTAL RETURN (B)................................. 9.05% 5.12% 13.09% (8.60%) 3.89%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................. 1.03% 0.93% 0.72%(a) 0.53% 0.25%(a)
Total expenses excluding indirectly paid
expenses..................................... 1.02% -- -- -- --
Total expenses excluding waivers and
reimbursements............................... 1.84% 3.47% 3.83%(a) 5.14% 7.75%(a)
Net investment income.......................... 4.95% 4.83% 5.17%(a) 5.11% 4.64%(a)
Portfolio turnover rate.......................... 72% 68% 87% 59% 0%
NET ASSETS END OF YEAR (THOUSANDS)............... $2,934 $2,892 $1,983 $ 1,606 $1,306
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.
<TABLE>
<CAPTION>
JULY 2, 1993
(COMMENCEMENT OF
CLASS
YEAR ENDED OPERATIONS)
AUGUST 31, EIGHT MONTHS THROUGH
---------------- ENDED YEAR ENDED DECEMBER 31,
1997 1996 AUGUST 31, 1995* DECEMBER 31, 1994 1993
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS B SHARES
NET ASSET VALUE BEGINNING OF YEAR................ $ 9.68 $ 9.67 $ 8.85 $ 10.19 $10.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................ 0.41 0.41 0.28 0.42 0.17
Net realized and unrealized gain (loss) on
investments.................................... 0.37 0.01 0.82 (1.34) 0.19
------ ------ ------ ------ ------
Total from investment operations................. 0.78 0.42 1.10 (0.92) 0.36
------ ------ ------ ------ ------
Less distributions from net investment income.... (0.41) (0.41) (0.28) (0.42) (0.17)
------ ------ ------ ------ ------
NET ASSET VALUE END OF YEAR...................... $10.05 $ 9.68 $ 9.67 $ 8.85 $10.19
------ ------ ------ ------ ------
TOTAL RETURN (B)................................. 8.24% 4.34% 12.53% (9.13%) 3.66%
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses................................. 1.79% 1.68% 1.47%(a) 1.12% 0.75%(a)
Total expenses excluding indirectly paid
expenses..................................... 1.78% -- -- -- --
Total expenses excluding waivers and
reimbursements............................... 2.59% 4.23% 4.58%(a) 5.73% 8.25%(a)
Net investment income.......................... 4.21% 4.09% 4.42%(a) 4.54% 4.25%(a)
Portfolio turnover rate.......................... 72% 68% 87% 59% 0%
NET ASSETS END OF YEAR (THOUSANDS)............... $6,695 $5,963 $5,083 $ 3,817 $2,235
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
(b) Excluding applicable sales charges.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
(logo)
EVERGREEN
VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
FEBRUARY 28,
1994
(COMMENCEMENT OF
CLASS
YEAR ENDED OPERATIONS)
AUGUST 31, EIGHT MONTHS THROUGH
---------------- ENDED DECEMBER 31,
1997 1996 AUGUST 31, 1995* 1994
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
CLASS Y SHARES
NET ASSET VALUE BEGINNING OF YEAR.................................... $ 9.68 $ 9.67 $ 8.85 $ 9.83
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................................................ 0.51 0.50 0.34 0.41
Net realized and unrealized gain (loss) on investments............... 0.37 0.01 0.82 (0.98)
------ ------ ------ ------
Total from investment operations..................................... 0.88 0.51 1.16 (0.57)
------ ------ ------ ------
Less distributions from net investment income........................ (0.51) (0.50) (0.34) (0.41)
------ ------ ------ ------
NET ASSET VALUE END OF YEAR.......................................... $10.05 $ 9.68 $ 9.67 $ 8.85
------ ------ ------ ------
TOTAL RETURN......................................................... 9.32% 5.38% 13.28% (5.80%)
RATIOS/SUPPLEMENTAL DATA
RATIOS TO AVERAGE NET ASSETS:
Total expenses..................................................... 0.79% 0.70% 0.47%(a) 0.28%(a)
Total expenses excluding indirectly paid expenses.................. 0.78% -- -- --
Total expenses excluding waivers and reimbursements................ 1.60% 3.24% 3.58%(a) 4.89%(a)
Net investment income.............................................. 5.27% 5.05% 5.42%(a) 5.54%(a)
Portfolio turnover rate.............................................. 72% 68% 87% 59%
NET ASSETS END OF YEAR (THOUSANDS)................................... $6,195 $4,266 $ 965 $ 344
</TABLE>
* The Fund changed its fiscal year end from December 31 to August 31.
(a) Annualized.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
(logo)
EVERGREEN
FLORIDA HIGH INCOME MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
August 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------------------------------------------------------
LONG-TERM INVESTMENTS-- 97.5%
CALIFORNIA-- 1.9%
$3,500,000 Valley Hlth. Sys. Hosp. RB, Ser. A
6.50%, 5/15/25.................... $ 3,703,070
------------
FLORIDA-- 88.3%
745,000 Alachua Cnty. Hlth. Facs. RB,
Beverly Enterprises Proj.
10.13%, 4/1/10.................... 804,354
1,000,000 Bay Cnty. Hosp. Sys. RB, Bay
Med. Ctr. Proj.
8.00%, 10/1/12.................... 1,178,930
100,000 Baytree Cmnty. Dev. Dist.
Special Assmt. RB
8.75%, 5/1/12..................... 108,061
750,000 Boynton Beach Hsg. Mtg.
Clipper Cove Apts.
6.35%, 7/1/16..................... 773,430
Brevard Cnty. Hlth. Facs.
Auth. RB, Courtenay Springs Vlg.:
910,000 7.38%, 11/15/04..................... 977,367
1,875,000 7.50%, 11/15/12..................... 2,007,188
1,000,000 Brevard Cnty. Tourist Dev.
Tax RB, Marlins Spring
6.88%, 3/1/13..................... 1,073,860
1,000,000 Broward Cnty. Hsg. Fin. Auth.
RB, Ser. A
7.35%, 3/1/23, (GNMA)............. 1,059,020
2,000,000 Clay County Hsg. Fin. Auth.
RB, Single Family Mortgage
Multi-Cnty. Prog.
5.95%, 10/1/19.................... 2,043,560
2,850,000 Cory Lakes Florida Cmnty.
Dev. Dist. RB
8.38%, 5/1/17..................... 2,929,344
1,080,000 Crossings At Fleming Island
Cmnty. Dev. Dist. Util. RB
7.38%, 10/1/19.................... 1,116,666
4,000,000 Dade Cnty. Single Family Mtg.
RB, Ser. B 1
5.60%, 4/1/27..................... 4,200,000
2,310,000 Duval Cnty. Hsg. Fin. Auth.
RB, St. Augustine Apts. Proj.
6.00%, 3/1/21..................... 2,318,917
1,500,000 Eastlake Oaks Cmnty. Dev. Dist.
7.75%, 5/1/17..................... 1,559,550
Escambia Cnty. Hlth. Facs.
Auth. RB, Azalea Trace Inc.:
2,905,000 6.00%, 1/1/15....................... 2,930,419
2,250,000 6.10%, 1/1/19....................... 2,279,362
515,000 8.50%, 1/1/19....................... 544,139
535,000 9.25%, 1/1/06....................... 580,416
235,000 9.25%, 1/1/12....................... 254,949
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------
<C> <S> <C>
LONG-TERM INVESTMENTS-- CONTINUED
FLORIDA-- CONTINUED
$1,500,000 Escambia Cnty. Hlth. Facs.
Auth. RB, Baptist Hosp. Inc., Ser.
B
6.00%, 10/1/14.................... $ 1,531,470
Escambia Cnty. PCR Champion
Intl. Corp. Proj.:
3,000,000 6.40%, 9/1/30....................... 3,205,350
2,000,000 6.90%, 8/1/22....................... 2,202,580
Florida Hsg. Fin. Agy. RB:
Glen Oaks Apts. Proj.
1,600,000 5.80%, 8/1/17....................... 1,613,616
Mar Lago Village Apts. Proj., Ser. F
2,945,000 6.00%, 6/1/39....................... 2,982,931
St. Cloud Village Proj., Ser. D
4,905,000 5.95%, 2/1/30....................... 4,965,577
The Vineyards Proj., Ser. H
1,000,000 6.50%, 11/1/25...................... 1,030,640
Grand Haven Cmnty. Dev.
Special Assmt., Ser. A:
2,000,000 6.30%, 5/1/02....................... 2,023,940
3,000,000 6.90%, 5/1/19....................... 2,963,430
3,610,000 Hernando Cnty. IDR, Florida
Crushed Stone Co.
8.50%, 12/1/14.................... 4,084,859
1,545,000 Hialeah Gardens, IDR,
Waterford Convalescent, Ser. A
7.88%, 12/1/07.................... 1,645,301
600,000 Hillsborough Cnty. Aviation
Auth. RB, US Air Proj., Ser. 2
8.60%, 1/15/22.................... 666,516
1,000,000 Hillsborough Cnty. Hsg. Fin.
5.88%, 10/1/30.................... 998,490
3,245,000 Homestead IDR, Cmnty. Rehab.
Providers Prog., Ser. A
7.95%, 11/1/18.................... 3,450,506
2,500,000 Indian Trace Cmnty. GO Wtr.
Mgmt. Special Benefit,
Subser. B
8.25%, 5/1/11..................... 2,789,125
Jacksonville Hlth. Facs.
Auth. RB, Natl. Benevolent
Assoc., Cypress Vlg. Proj.:
750,000 7.00%, 12/1/14...................... 809,438
1,020,000 7.00%, 12/1/22...................... 1,096,000
500,000 8.00%, 12/1/15...................... 574,950
2,500,000 Lake Bernadette Cmnty. Dev.
Dist. Florida Special, Ser. A
8.00%, 5/1/17..................... 2,595,975
3,200,000 Lake County Resources
Recreation IDR., Ser. A
5.85%, 10/1/09.................... 3,243,392
2,295,000 Largo Sun Coast Hlth. Sys.
RB, Refunding Hospital
6.20%, 3/1/13..................... 2,269,571
</TABLE>
(CONTINUED)
20
<PAGE>
(logo)
EVERGREEN
FLORIDA HIGH INCOME MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
August 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------
<C> <S> <C>
LONG-TERM INVESTMENTS-- CONTINUED
FLORIDA-- CONTINUED
Lee Cnty. Hsg. Fin. Auth. RB,
Single Family Mtg.,
Multi-Cnty. Prog., Ser. A:
$1,000,000 7.20%, 3/1/27....................... $ 1,103,980
Subser. 2:
2,780,000 5.60%, 3/19/29...................... 3,047,519
1,685,000 7.50%, 9/1/27....................... 1,875,843
Subser. 3
1,000,000 7.45%, 9/1/27....................... 1,114,430
850,000 Lee Cnty. IDA, Encore Nursing
Center Partner
8.13%, 12/1/07.................... 937,899
2,790,000 Leon Cnty. Ed. Facs. Auth.
RB, Ser. A
8.25%, 5/1/14..................... 2,867,953
950,000 Manatee Cnty. Hsg. Fin. Auth.
RB, Single Family Mtg., Subser. 1
7.45%, 5/1/27..................... 1,055,763
1,125,000 Manatee Cnty. Hsg. Fin. Auth.
RB, Multi-Family Hsg.,
Conquistador, Ser. A
6.25%, 10/1/22.................... 1,183,185
Martin Cnty. IDR, Indiantown
Cogeneration Proj.:
Ser. A
2,175,000 7.88%, 12/15/25..................... 2,507,710
Ser. B
650,000 8.05%, 12/15/25..................... 755,885
1,245,000 Meadow Point II Cmnty. Dev.
Dist. Cap. Impt. RB
7.75%, 5/1/18..................... 1,300,353
Miami Beach City Center
Historic Convention:
1,000,000 6.25%, 12/1/16...................... 1,033,370
500,000 6.35%, 12/1/22...................... 517,010
1,285,000 North Springs Impt. Dist.
Wtr. Mgmt. Special Assmt., Ser. A
8.20%, 5/1/24..................... 1,391,359
2,500,000 Northern Palm Beach Cnty.
Impt. RB, Wtr. Ctl. & Impt.,
Unit Dev., Ser. A
7.20%, 8/1/16..................... 2,627,175
Northern Palm Beach Cnty.
Wtr. Ctl. Dist. Special
Assmt.:
500,000 6.88%, 11/1/13...................... 544,045
500,000 7.00%, 8/1/15....................... 546,290
1,500,000 Northwood Cmnty. Dev. Dist.
7.60%, 5/1/17..................... 1,553,415
2,605,000 Ocean Highway & Port Auth.
PCR, Solid Waste, Jefferson
Smurfit Corp.
6.50%, 11/1/06.................... 2,653,297
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------
<C> <S> <C>
LONG-TERM INVESTMENTS-- CONTINUED
FLORIDA-- CONTINUED
Orange Cnty. Hlth. Facs.
Auth. RB:
Lakeside Apts. Inc.
$1,040,000 6.50%, 7/1/13....................... $ 1,112,426
Orlando Lutheran Tower
395,000 8.40%, 7/1/14....................... 434,069
2,250,000 Orange Cnty. Hsg. Fin. Auth.
Mtg. RB, Ser. B
8.10%, 11/1/21.................... 2,380,523
Orange Cnty. Hsg. Fin. Auth.
Mtg. RB, Single Family Mtg.:
1,000,000 6.85%, 10/1/27...................... 1,035,100
Ser. B:
1,000,000 5.80%, 9/1/17....................... 1,013,810
2,500,000 5.88%, 3/1/28....................... 2,528,975
1,050,000 Osceola Cnty. Hsg. Fin.
Auth., Tierra Vista Apts.
Proj., Ser. A
5.75%, 12/1/22.................... 1,053,780
2,000,000 Osceola Cnty. IDA, Cmnty.
Provider Pooled Ln. Proj.,
Ser. A
7.75%, 7/1/17..................... 2,098,980
565,000 Overoaks Cmnty. Dev. Dist.
Cap. Impt. RB
8.25%, 5/1/17..................... 578,165
1,500,000 Palm Beach Cnty. IDR,
Geriatric Care Inc. Proj.
6.55%, 12/1/16.................... 1,599,540
3,695,000 Pasco Cnty. Hsg. Fin. Auth.,
Oak Trail Apts. Proj., Ser. A
5.35%, 6/1/27..................... 3,728,580
3,100,000 Pinellas Cnty. Edl. Facs.
Auth. RB, Clearwater
Christian College
8.00%, 2/1/11..................... 3,215,630
685,000 Pinellas Cnty. Edl. Facs.
Auth. RB, Eckerd College
7.75%, 7/1/14..................... 743,828
Pinellas Cnty. Hlth. Facs.
Auth. RB:
150,000 6.75%, 10/1/00...................... 151,777
100,000 7.00%, 10/1/01...................... 101,515
200,000 7.25%, 10/1/02...................... 203,636
1,100,000 8.00%, 10/1/08...................... 1,125,520
5,000,000 Polk Cnty. IDA, IMC
Fertilizer, Ser. A
7.53%, 1/1/15..................... 5,407,500
1,000,000 Port Everglades RB, Ser. A
7.50%, 9/1/12..................... 1,066,050
</TABLE>
(CONTINUED)
21
<PAGE>
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EVERGREEN
FLORIDA HIGH INCOME MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
August 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------
<C> <S> <C>
LONG-TERM INVESTMENTS-- CONTINUED
FLORIDA-- CONTINUED
$1,705,000 Quantum Cmnty. Dev. Dist.
Special Assmt.
7.75%, 3/1/14..................... $ 1,811,256
2,045,000 Riverwood Cmnty. Sys. RB
7.75%, 10/1/14.................... 2,148,068
1,000,000 Sarasota Cnty. Hlth. Fac.
Auth. RB, Jewish Hsg. Council
7.38%, 7/1/16..................... 1,060,320
1,500,000 Sarasota Cnty. Hlth. Fac.
Auth. RB, Manatee Jewish Hsg.
6.70%, 7/1/25..................... 1,542,885
1,000,000 Sarasota Cnty. Hlth. Fac.
Auth. RB, Sunnyside Properties
6.00%, 5/15/10.................... 1,013,380
1,830,000 Seminole Wtr. Ctl Unit of
Dev. No. 2
7.25%, 8/1/22..................... 1,872,236
1,500,000 South Indian River, Wtr. Ctl.
Dist. RB, Egret Landing, Phase I
7.50%, 11/1/18.................... 1,586,550
2,500,000 St. John's Cnty. IDA, Bayview
Proj., Ser. A
7.10%, 10/1/26.................... 2,551,875
2,500,000 St. John's Ctny. IDA, Vicars
Landing Proj., Ser. A
6.75%, 2/15/12.................... 2,548,875
3,000,000 Tampa, RB Aquarium Inc. Proj.
7.75%, 5/1/27..................... 3,446,940
1,000,000 Tarpon Springs, Hlth. Facs.
Auth. RB, Helen Ellis Mem.
Hosp. Proj.
7.50%, 5/1/11..................... 1,065,100
Volusia Cnty. Edl. Facs.
Auth. RB, Embry-Riddle, Ser. A:
1,025,000 6.13%, 10/15/16..................... 1,063,878
5,000,000 6.13%, 10/15/26..................... 5,168,750
2,000,000 Volusia Cnty. IDA, RB,
Bishops Glen Proj.
7.63%, 11/1/26.................... 2,085,240
Westchase East Cmnty. Dev.
Dist. Cap. Impt. RB:
1,350,000 7.30%, 5/1/18....................... 1,378,877
1,775,000 7.50%, 5/1/17....................... 1,827,806
1,000,000 Winter Garden, IDR, Beverly
Enterprises
8.75%, 7/1/12..................... 1,124,160
Winter Haven Hsg. Auth. RB,
Multi-Family Mtg., Abbey Lane
Apts., Ser. C:
250,000 7.00%, 7/1/12, (FNMA)............... 265,285
250,000 7.00%, 7/1/24, (FNMA)............... 263,828
------------
167,504,383
------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------
<C> <S> <C>
LONG-TERM INVESTMENTS-- CONTINUED
GEORGIA-- 1.4%
Coffee Cnty. Hosp. Auth. RB:
$1,100,000 6.75%, 12/1/16...................... $ 1,107,689
1,500,000 6.75%, 12/1/26...................... 1,504,245
------------
2,611,934
------------
NEW YORK-- 1.7%
3,000,000 Port Auth. NY & NJ
6.75%, 10/1/11.................... 3,248,400
------------
TEXAS-- 1.6%
2,860,000 Lufkin Hlth. Facs. Dev. Corp.
RB, Memorial Hlth. Sys. of
East Texas
6.88%, 2/15/26.................... 3,069,495
------------
U. S. VIRGIN ISLANDS-- 1.2%
2,000,000 Virgin Islands, Wtr. & Pwr.
Auth. RB, Ser. B
7.60%, 1/1/12..................... 2,229,480
------------
PUERTO RICO-- 1.4%
1,000,000 Puerto Rico Indl. Tourist
Edl. Med. Envir. Ctl. Facs.
RB, Mennonite Gen. Hosp.
Proj., Ser. A
6.50%, 7/1/12..................... 1,056,550
1,475,000 Puerto Rico Ports Auth. RB,
American Airlines Proj., Ser. A
6.25%, 6/1/26..................... 1,563,766
------------
2,620,316
------------
TOTAL LONG-TERM INVESTMENTS
(COST $178,015,116)............... 184,987,078
------------
SHORT-TERM INVESTMENTS-- 0.4%
(COST $700,000)
FLORIDA
700,000 Remington Cmnty. Dev. Dist.,
Bond Anticipation Notes
7.50%, 10/31/97................... 700,000
------------
SHARES
- ----------
MUTUAL FUND SHARES-- 3.3%
(COST $6,310,000)
6,310,000 Federated Municipal
Obligations Fund.................. 6,310,000
------------
TOTAL INVESTMENTS--
(COST $185,025,116)....... 101.2% 191,997,078
OTHER ASSETS AND
LIABILITIES-- NET......... (1.2) (2,253,897)
------- ------------
NET ASSETS--................ 100.0% $189,743,181
------- ------------
</TABLE>
(CONTINUED)
22
<PAGE>
(logo)
EVERGREEN
FLORIDA HIGH INCOME MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
August 31, 1997
SUMMARY OF ABBREVIATIONS:
FNMA Insured by Federal National Mortgage Association
GNMA Insured by Government National Mortgage Association
GO General Obligation
IDA Industrial Development Authority
IDR Industrial Development Revenue Bond
PCR Pollution Control Revenue Bond
RB Revenue Bond
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
(logo)
EVERGREEN
FLORIDA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
August 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------------------------------------------------------
LONG-TERM INVESTMENTS-- 94.7%
FLORIDA-- 94.7%
$2,000,000 Altamonte Springs Hlth. Fac.
Auth. RB, Adventist
Hlth./Sunbelt, Ser. B
5.13%, 11/15/18, (AMBAC)........... $ 1,897,020
3,750,000 Brevard Cnty. Hsg. Fin. Auth.
RB, Multi-Family Hsg.
Windover Oaks, Ser. A
6.90%, 2/1/27, (FNMA).............. 4,155,750
600,000 Brevard Cnty. Hsg. Fin.,
Auth. RB, Single Family Mtg.,
Refunding, Ser. B
7.00%, 3/1/13, (FSA)............... 635,394
Broward Cnty. Hsg. Fin. Auth.
RB, Ser. B:
180,000 7.55%, 3/1/15, (GNMA)................ 189,936
1,375,000 7.13%, 3/1/17, (GNMA)................ 1,450,955
105,000 Charlotte Cnty. Spec. Assmt.,
Peachland Muni. Svc. Tax &
Ben. Unit
7.25%, 10/1/10, (MBIA)............. 115,257
500,000 Collier Cnty. Hlth. Facs.
Auth. RB, The Moorings, Inc. Proj.
7.00%, 12/1/19..................... 544,340
Dade Cnty. Edl. Facs. Auth.
RB, St. Thomas Univ.:
2,000,000 6.00%, 1/1/14, (LOC: Sun Bank
Miami)........................... 2,059,260
1,000,000 6.13%, 1/1/19, (LOC: Sun Bank
Miami)........................... 1,046,710
230,000 Dade Cnty. Hlth. Fac. Auth.
RB, South Shore Hosp. & Med.
Center, Ser. A
7.60%, 8/1/24...................... 247,059
3,815,000 Dade Cnty. Pub. Fac. RB,
Jackson Mem. Hosp. Proj., Ser. A
4.88%, 6/1/15, (MBIA).............. 3,526,243
Dade Cnty. Single Family Mtg.
RB, Ser. A:
230,000 7.50%, 9/1/13........................ 243,016
135,000 7.10%, 3/1/17........................ 142,176
340,000 Dade Cnty. Single Family Mtg.
RB, Ser. D
6.95%, 12/15/12.................... 360,621
1,000,000 Dade Cnty. Spec. Oblig.
RB, Courthouse Ctr. Proj.
6.25%, 4/1/09...................... 1,077,390
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------
<C> <S> <C>
LONG-TERM INVESTMENTS-- CONTINUED
FLORIDA-- CONTINUED
Duval Cnty. Hsg. Fin. Auth.
RB, Single Family Mtg.:
$ 200,000 7.50%, 6/1/15, (FGIC)................ $ 211,044
840,000 7.35%, 7/1/24, (GNMA)................ 896,288
Escambia Cnty. Hlth. Facs.
Auth. RB:
2,560,000 6.00%, 1/1/15........................ 2,582,400
1,250,000 6.10%, 1/1/19........................ 1,266,313
2,750,000 Escambia Cnty. Hlth. Facs.
Auth. RB, Baptist Hosp. Inc., Ser.
B
6.00%, 10/1/14..................... 2,807,695
Escambia Cnty. PCR, Champion
Int'l. Corp. Proj.:
5,230,000 5.88%, 6/1/22........................ 5,285,647
1,650,000 6.40%, 9/1/30........................ 1,762,942
Florida Hsg. Fin. Agcy. RB:
2,810,000 8.00%, 12/1/20, (GNMA)............... 2,950,641
1,860,000 6.35%, 5/1/26, (GNMA) Ser. A......... 1,925,398
1,895,000 6.88%, 10/1/12....................... 1,969,170
Florida Hsg. Fin. Agcy. RB,
Landings At Sea Forest:
560,000 5.85%, 12/1/18, (AMBAC).............. 569,178
805,000 6.05%, 12/1/36, (AMBAC).............. 821,382
Florida Ports. Fin.
Commission RB, St. Trans.
Trust Fund:
2,000,000 5.38%, 6/1/16, (MBIA)................ 1,950,240
6,500,000 5.38%, 6/1/27, (MBIA)................ 6,270,485
4,000,000 Florida St. Div. of Bond Fin.,
Dept. Genl. Svcs. RB, Dept.
Envir.-Preserv. 2000, Ser. A
5.75%, 7/1/13, (AMBAC)............. 4,145,400
1,000,000 Hialeah Cap. Impt. RB
5.50%, 10/1/13..................... 986,300
3,250,000 Hillsborough Cnty. Indl. Dev.
Auth. IDR, Univ. Cmnty.
Hosp., Ser. 1994
6.50%, 8/15/19, (MBIA)............. 3,738,605
Jacksonville Hlth. Indl.
Dev., Nat'l. Benevolent-Cypress
Vlg., Ser. A:
345,000 6.13%, 12/1/16....................... 354,022
1,245,000 6.25%, 12/1/26....................... 1,304,349
1,250,000 Lee Cnty. Hsg. Fin. Auth.
7.20%, 3/1/27...................... 1,379,975
</TABLE>
(CONTINUED)
24
<PAGE>
(logo)
EVERGREEN
FLORIDA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
August 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------
<C> <S> <C>
LONG-TERM INVESTMENTS-- CONTINUED
FLORIDA-- CONTINUED
Lee Cnty. Hsg. Fin. Auth. RB,
Single Family Mtg.,
Multi-Cnty. Prog., Ser. A:
$1,700,000 7.45%, 9/1/27........................ $ 1,894,531
3,685,000 7.50%, 9/1/27........................ 4,102,363
4,890,000 Leesburg Hosp. RB, Leesburg
Regl. Med. Ctr. Proj., Ser. B
5.70%, 7/1/18...................... 4,937,531
770,000 Leon Cnty. Hsg. Fin. Auth.
RB, Single Family Mtg.,
Multi-Cnty. Prog., Ser. B
6.25%, 7/1/19, (GNMA).............. 797,458
1,425,000 Manatee Cnty. Hsg. Fin. Auth.
Mtg. RB
7.45%, 5/1/27...................... 1,583,645
1,750,000 Manatee Cnty. Hsg. Fin. Auth.
Mtg. RB, Single Family
Subser. 1
7.20%, 5/1/28...................... 1,933,593
5,000,000 Miami Hlth. Fac. Auth. RB
5.25%, 8/15/15, (AMBAC)............ 4,819,750
Miami Beach Redev. Agency Tax
Increment RB, City Center-Historic
Convention Vlg.:
2,000,000 5.63%, 12/1/09....................... 1,998,920
3,000,000 5.80%, 12/1/13....................... 2,980,980
2,000,000 5.88%, 12/1/22....................... 1,982,880
1,500,000 North Miami Hlth. Fac. Auth. RB,
Catholic Hlth. Svc. Oblig. Group
6.00%, 8/15/16..................... 1,539,960
1,000,000 North Tampa Hsg. Dev. Corp. RB,
Cntry. Oaks Apts., Ser. A
6.90%, 1/1/24, (FNMA).............. 1,052,620
1,300,000 Northern Palm Beach Cnty. Impt. RB,
Wtr. Ctl. & Impt.,
Unit Dev. 9A, Ser. A
7.20%, 8/1/16...................... 1,366,131
1,000,000 Okaloosa Cnty. Wtr. & Swr. RB
6.00%, 7/1/11, (AMBAC)............. 1,095,790
3,000,000 Orange Cnty. Hlth. Facs. Auth. RB,
Lakeside Apts. Inc.
6.50%, 7/1/13...................... 3,208,920
4,000,000 Orlando Utils. Commission Wtr. &
Elec. RB, Linked SAVRs/RIBs (a)
5.60%, 10/6/17..................... 3,990,200
3,000,000 Palm Beach Cnty. Criminal
Justice Facs. RB
7.20%, 6/1/15, (FGIC).............. 3,681,810
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------
LONG-TERM INVESTMENTS-- CONTINUED
<C> <S> <C>
FLORIDA-- CONTINUED
Palm Beach Cnty. Hlth. Facs. Auth.
RB, Good Samaritan Hlth. Sys.:
$3,695,000 6.20%, 10/1/11....................... $ 3,874,133
6,000,000 6.30%, 10/1/22....................... 6,301,680
4,440,000 Palm Beach Cnty. Hsg. Fin. Auth. RB,
Daughters of Charity, Ser. B
7.60%, 3/1/23, (GNMA).............. 4,718,921
1,000,000 Palm Beach Cnty. Hsg. Fin. Auth. RB,
Single Family Mtg., Ser. A
6.50%, 10/1/21, (GNMA)............. 1,052,830
2,000,000 Palm Beach Cnty. IDR,
Geriatric Care Inc. Proj.
6.55%, 12/1/16..................... 2,132,720
5,000,000 Pensacola Hlth. Facs. Auth. RB,
Daughters of Charity Natl. Hlth.
5.25%, 1/1/11...................... 4,943,000
860,000 Polk Cnty Hsg. Fin. Auth.
RB, Single Family Mtg., Ser. A
7.00%, 9/1/15...................... 893,703
8,350,000 Polk Cnty. Indl. Dev. Auth.,
Tampa Elec. Co. Proj.
5.85%, 12/1/30..................... 8,459,803
1,500,000 Reedy Creek Impt. Dist.
Util. RB, Ser. 1
5.00%, 10/1/19, (MBIA)............. 1,415,670
1,800,000 Sarasota Cnty. Hlth. Fac.
Auth. RB, Sunnyside Properties
6.00%, 5/15/10..................... 1,824,084
3,590,000 Seacoast Util. Auth. RB,
Wtr. & Swr. Sys., Ser. A
5.50%, 3/1/18, (FGIC).............. 3,683,663
1,000,000 St. John's Cnty. Indl. Dev. Auth.,
Bayview Proj., Ser. A
7.00%, 10/1/12..................... 1,025,880
Volusia Cnty. Ed. Facs. Auth. RB,
Embry-Riddle Aero, Ser. A:
3,500,000 6.13%, 10/15/16...................... 3,632,755
2,600,000 6.13%, 10/15/26...................... 2,687,750
Winter Haven Hsg. Auth. RB,
Multi-Family Mtg., Abbey Lane
Apts., Ser. C:
850,000 7.00%, 7/1/12, (FNMA)................ 901,969
1,750,000 7.00%, 7/1/24, (FNMA)................ 1,846,793
-----------
TOTAL LONG-TERM INVESTMENTS
(COST $145,060,611)................ 153,231,037
-----------
</TABLE>
(CONTINUED)
25
<PAGE>
(logo)
EVERGREEN
FLORIDA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
August 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ---------------------------------------------------------------
<C> <S> <C>
MUTUAL FUND SHARES-- 3.6%
(COST $5,881,000)
5,881,000 Federated Municipal
Obligations Fund.................... $ 5,881,000
-----------
</TABLE>
<TABLE>
<CAPTION>
<C> <S> <C> <C>
TOTAL INVESTMENTS--
(COST $150,941,611)...... 98.3% 159,112,037
OTHER ASSETS AND
LIABILITIES-- NET........ 1.7 2,691,533
--------- ------------
NET ASSETS--............... 100.0% $161,803,570
--------- ------------
--------- ------------
</TABLE>
SUMMARY OF ABBREVIATIONS:
AMBAC Insured by American Municipal Bond
Assurance Corporation
FGIC Insured by Federal Guaranty Insurance Company
FNMA Insured by Federal National Mortgage Association
FSA Insured by Financial Security Assurance Company
GNMA Insured by Government National Mortgage
Association
IDR Industrial Development Revenue Bond
LOC Line of Credit
MBIA Insured by Municipal Bond Investors Assurance
Corporation
PCR Pollution Control Revenue Bond
RIBs Residual Interest Bonds
RB Revenue Bond
SAVRs Select Auction Variable Rate Securities
(a) 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.
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
(logo)
EVERGREEN
GEORGIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
August 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
LONG-TERM INVESTMENTS-- 95.5%
<C> <S> <C>
GEORGIA-- 91.8%
$ 500,000 Appling Cnty. Dev. Auth. PCR
7.15%, 1/1/21, (MBIA).............. $ 562,730
300,000 Butts Cnty. COP
6.75%, 12/1/14, (MBIA)............. 335,394
1,100,000 Cartersville, Dev. Auth. RB, Wtr. &
Waste Facs.
7.40%, 11/1/10..................... 1,328,954
120,000 Cartersville, GO
6.70%, 1/1/12...................... 138,420
500,000 Clayton Cnty. Hsg. Auth. Mtg. RB
7.13%, 12/1/25, (FHA/VA)........... 533,950
1,000,000 Coffee Cnty. Hosp. Auth. RB
6.75%, 12/1/16..................... 1,006,990
500,000 DeKalb Cnty. Hsg. Auth. RB, The Lakes
at Indian Creek Proj.
7.15%, 1/1/25, (FSA)............... 537,270
500,000 DeKalb Cnty. Sch. Dist., Ser. A
6.25%, 7/1/11...................... 558,655
600,000 Fayette Cnty. Sch. Dist.
6.13%, 3/1/15...................... 636,912
500,000 Forsyth Cnty. Sch. Dist. GO
6.75%, 7/1/16...................... 586,345
600,000 Fulton Cnty. Hsg. Auth. RB, Ser. C
6.90%, 1/1/28...................... 606,768
400,000 Fulton Cnty. Wtr. & Swr. RB
6.38%, 1/1/14, (FGIC).............. 452,228
500,000 George L. Smith II, World Congress
Ctr. Auth. RB, Domed Stadium Proj.
7.88%, 7/1/20...................... 547,085
395,000 Georgia State, Hsg. & Fin. Auth. RB,
Ser. A
6.55%, 12/1/27..................... 414,063
400,000 Georgia State, Muni. Elec. Auth. Pwr.
RB, Ser. EE
7.25%, 1/1/24, (AMBAC)............. 505,984
500,000 Glynn-Brunswick Mem. Hosp.
Auth. RB
6.00%, 8/1/16, (MBIA).............. 526,595
500,000 Hall Cnty. Sch. Dist. GO
6.70%, 12/1/14..................... 563,025
330,000 Metro Atlanta Rapid Tran. Auth.,
Sales Tax RB
7.00%, 7/1/11, (FGIC).............. 392,033
500,000 Putnam Cnty. Sch. Dist. GO
6.90%, 2/1/14, (AMBAC)............. 568,555
1,500,000 Richmond Cnty. Dev. Auth. RB,
Southern Care, Ser. C, (effective
yield 5.72%) (a)
0.00%, 12/1/21..................... 381,945
<CAPTION>
LONG-TERM INVESTMENTS-- CONTINUED
<C> <S> <C>
GEORGIA-- CONTINUED
$ 775,000 Savannah Eco. Dev. Auth. RB,
Southern Care, Ser. C, (effective
yield 5.72%) (a)
0.00%, 12/1/21..................... $ 197,338
Savannah Hosp. Auth. RB, St. Joseph's
Hosp. Proj.:
800,000 6.13%, 7/1/12........................ 846,024
500,000 6.20%, 7/1/23........................ 514,625
300,000 Washington Cnty. Sch. Dist. GO 6.88%,
1/1/14, (AMBAC).................... 340,335
-----------
13,082,223
-----------
TEXAS-- 3.7%
500,000 Lufkin Hlth. Facs. Dev. Corp. RB
6.88%, 2/15/26..................... 536,625
-----------
TOTAL LONG-TERM INVESTMENTS
(COST $12,787,033)................. 13,618,848
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
- ----------
MUTUAL FUND SHARES-- 3.5%
(COST $494,000)
<C> <S> <C>
494,000 Federated Municipal
Obligations Fund................... 494,000
-----------
</TABLE>
<TABLE>
<CAPTION>
<C> <S> <C> <C>
TOTAL INVESTMENTS--
(COST $13,281,033)........ 99.0% 14,112,848
OTHER ASSETS AND
LIABILITIES-- NET......... 1.0 139,229
--------- -----------
NET ASSETS--................ 100.0% $14,252,077
--------- -----------
--------- -----------
</TABLE>
(a) Effective yield (calculated at the date of purchase) is the yield at which
the bond accretes on an annual basis until maturity date.
SUMMARY OF ABBREVIATIONS:
AMBAC Insured by American Municipal Bond Assurance
Corporation
COP Certificate of Participation
FGIC Insured by Federal Guaranty Insurance Company
FHA/VA Insured by Federal Housing Authority/Veterans
Administration
FSA Insured by Financial Security Assurance Company
GO General Obligation Bond
MBIA Insured by Municipal Bond Investors Assurance
Corporation
PCR Pollution Control Revenue Bond
RB Revenue Bond
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
(logo) EVERGREEN
NORTH CAROLINA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
August 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------------------------------------------------------
LONG-TERM INVESTMENTS-- 94.5%
NEW JERSEY-- 2.5%
$1,430,000 Western Monmouth Util. Auth.
RB, Sewer Revenue
6.80%, 2/1/14...................... $ 1,494,636
-----------
NORTH CAROLINA-- 76.6%
1,315,000 Burlington Hsg. Auth. Mtg. RB,
Burlington Homes, Sec. 8-A
6.00%, 8/1/09...................... 1,354,226
1,000,000 Chapel Hill Parking Fac., COP
6.35%, 12/1/18..................... 1,053,660
1,455,000 Charlotte Hsg. Dev. Corp.
Mtg. RB, Vantage 78 Apts.
6.60%, 7/15/21, (FHA).............. 1,493,514
1,475,000 Charlotte Stadium Parking
Facs. Proj., COP, Ser. C
6.00%, 6/1/14...................... 1,521,418
2,390,000 Cumberland Cnty. Civic Center
Proj., COP, Ser. A
6.40%, 12/1/24, (AMBAC)............ 2,612,437
920,000 Fremont Hsg. Dev. Corp. First
Lien RB, Torhunta Apts.
6.75%, 7/15/22, (FHA).............. 953,212
1,000,000 Gastonia Combined Util. Sys. RB
6.00%, 5/1/14, (MBIA).............. 1,053,050
1,000,000 Harnett Cnty., COP
6.40%, 12/1/14, (AMBAC)............ 1,093,070
1,000,000 Haywood Cnty. Indl. Facs. &
Poll. Ctrl. Fin. Auth. RB,
Champion Int'l. Corp. Proj.
6.25%, 9/1/25...................... 1,043,820
4,750,000 Martin Cnty. Indl. Facs. &
Poll. Ctrl. Fin. Auth. RB,
Solid Waste Disp.,
Weyerhauser Co.
6.80%, 5/1/24...................... 5,218,825
North Carolina Hsg. Fin. &
Dev. Auth. RB, Single Family:
3,890,000 Ser. JJ
6.15%, 3/1/11, (FHA)................. 4,061,316
1,390,000 Ser. T
7.05%, 9/1/20, (FHA)................. 1,470,425
500,000 North Carolina Med. Care
Cmnty. Hlth. Care Fac. RB,
First Mtg. Southminster
6.88%, 10/1/09..................... 529,180
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------------------------------------------------------
LONG-TERM INVESTMENTS-- CONTINUED
NORTH CAROLINA-- CONTINUED
North Carolina Med. Care
Cmnty. Hosp. RB:
$1,100,000 6.13%, 6/1/10........................ $ 1,164,152
1,000,000 Duke University Hosp.
Project, Ser. C
5.25%, 6/1/17........................ 984,220
1,350,000 Rex Hosp. Proj.
6.25%, 6/1/17........................ 1,430,555
3,000,000 North Carolina Muni. Pwr.
Agcy. RB, No. 1 Catawba
Elec., Ser. B
5.00%, 1/1/20...................... 2,883,900
North Carolina Stud. Ed.
Assist. Auth. RB:
2,000,000 Ser. A
6.30%, 7/1/15........................ 2,078,540
2,375,000 Ser. C
6.35%, 7/1/16........................ 2,476,840
1,000,000 North Carolina Stud. Ed.
Assist. Auth. RB, First Mtg.
Southminister, Ser. A
6.05%, 7/1/10...................... 1,031,310
North Carolina Muni. Pwr.
Sys. Agcy. RB, Ser. A:
3,750,000 6.50%, 1/1/18, (ETM)................. 4,098,600
4,000,000 5.00%, 1/1/21........................ 3,825,640
3,000,000 Univ. North Carolina Chapel
Hill Hosp. RB
5.00%, 2/15/29..................... 2,772,480
-----------
46,204,390
-----------
TEXAS-- 7.4%
1,500,000 Dallas Fort Worth Int'l. Arpt.
Facs. Impt. Corp. RB,
American Airlines Inc.
6.00%, 11/1/14..................... 1,542,390
2,750,000 Lufkin Hlth. Facs. Dev. Corp.
RB, Mem. Hlth. Sys. of East Texas
6.88%, 2/15/26..................... 2,951,437
-----------
4,493,827
-----------
VIRGINIA-- 5.5%
James City Cnty. Indl. Dev.
Auth. RB, Residential Care
Facs., First Mtg. Williamsburg
Landing:
1,750,000 6.63%, 3/1/19........................ 1,794,573
1,500,000 6.63%, 3/1/23........................ 1,534,980
-----------
3,329,553
-----------
</TABLE>
(CONTINUED)
28
<PAGE>
(logo)
EVERGREEN
NORTH CAROLINA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
August 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------
<C> <S> <C>
LONG-TERM INVESTMENTS-- CONTINUED
PUERTO RICO-- 2.5%
$1,400,000 Puerto Rico Ports Auth. RB,
American Airlines Proj., Ser. A
6.25%, 6/1/26...................... $ 1,484,252
-----------
TOTAL LONG-TERM INVESTMENTS
(COST $53,335,912)................. 57,006,658
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
- ----------
<C> <S> <C> <C>
MUTUAL FUND SHARES-- 4.5%
(COST-- $2,739,000)
2,739,000 Federated Municipal
Obligations Fund................... 2,739,000
-----------
TOTAL INVESTMENTS--
(COST $56,074,912)......... 99.0% 59,745,658
OTHER ASSETS AND
LIABILITIES-- NET.......... 1.0 609,388
------- -----------
NET ASSETS--................. 100.0% $60,355,046
------- -----------
------- -----------
</TABLE>
SUMMARY OF ABBREVIATIONS:
<TABLE>
<S> <C>
AMBAC Insured by American Municipal Bond Assurance Corporation
COP Certificates of Participation
ETM Escrowed to Maturity
FHA Insured by Federal Housing Authority
MBIA Insured by Municipal Bond Investors Assurance Corporation
RB Revenue Bond
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
(logo)
EVERGREEN
SOUTH CAROLINA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
August 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------------------------------------------------------
LONG-TERM INVESTMENTS-- 97.3%
SOUTH CAROLINA-- 97.3%
$ 400,000 Calhoun Cnty. Solid Waste
Disp. Facs. RB, Eastman Kodak
Co. Proj.
6.75%, 5/1/17...................... $ 463,836
400,000 Camden Pub. Util. RB,
Refunding & Imp.
5.50%, 3/1/17...................... 403,052
Charleston Cnty. Hlth. Facs.
RB, First Mtg. Episcopal
Church:
300,000 7.13%, 4/1/20........................ 313,836
500,000 Ser. A
6.25%, 4/1/19........................ 502,510
Darlington Cnty. IDR:
500,000 Nucor Corp. Proj., Ser. A
5.75%, 8/1/23...................... 502,180
750,000 Sonoco Products. Co. Proj.
6.00%, 4/1/26...................... 774,885
200,000 Georgetown Cnty. Wtr. & Swr.
Dist. RB
6.50%, 6/1/17...................... 203,148
600,000 Greenville Hosp. Sys. RB,
Hosp. Facs., Ser. B
5.70%, 5/1/12...................... 614,604
400,000 Greenville Mem. Auditorium
Dist. GO, Bi Lo Center Proj.
5.75%, 4/1/18, (AMBAC)............. 411,156
300,000 Horry County Arpt. RB, Ser. A
5.60%, 7/1/17...................... 299,262
400,000 Marion Cnty. RB, Hosp. Rev.
5.38%, 11/1/25..................... 383,464
Piedmont Muni. Pwr. Agcy.
Elec. RB:
800,000 6.55%, 1/1/16........................ 802,616
Refunding, Ser. A
500,000 5.75%, 1/1/24........................ 495,935
South Carolina Jobs Eco. Dev.
Auth. RB:
200,000 Oconee Mem. Hosp.
6.15%, 3/1/16...................... 208,322
400,000 Plasti Line Inc. Proj.
6.25%, 7/1/17...................... 400,620
250,000 South Carolina State Ed.
Assist. Auth. RB, Gtd. Stud.
Ln., Sub. Lien
5.88%, 9/1/07...................... 262,013
250,000 South Carolina State Ed. Facs.
Auth. RB, Furman Univ. Proj.,
Ser. A
5.50%, 10/1/16..................... 250,810
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------------------------------------------------------
LONG-TERM INVESTMENTS-- CONTINUED
SOUTH CAROLINA-- CONTINUED
South Carolina St. Hsg. Fin.
& Dev. Auth. Mtg. RB:
$ 100,000 6.55%, 7/1/15........................ $ 105,601
595,000 Heritage Crt. Apts.
6.15%, 7/1/25........................ 608,167
675,000 Ser. A
6.35%, 7/1/25........................ 700,360
South Carolina St. Hsg. Fin.
& Dev. Auth. RB:
500,000 5.95%, 7/1/29........................ 506,250
200,000 Homeownership Mtg., Ser. A
7.55%, 7/1/11........................ 211,698
265,000 Hunting Ridge Apts. RB
6.75%, 6/1/25........................ 275,931
300,000 Runaway Bay Apts. Proj.
6.13%, 12/1/15....................... 304,644
100,000 Ser. A
6.80%, 11/15/11...................... 106,098
500,000 South Carolina St. Refunding,
Ser. A
5.75%, 1/1/22, (MBIA).............. 510,110
500,000 Spartanburg County Hlth.
Facs. RB, Ser. B
5.50%, 4/15/27..................... 494,200
Three Rivers Solid Waste
Auth. RB, Capital
Appreciation:
(effective yield 5.61%) (a)
1,015,000 0.00%, 1/1/16........................ 367,968
(effective yield 5.66%) (a)
1,015,000 0.00%, 1/1/17........................ 344,907
585,000 York Cnty. IDR,
Hoechst Celanese Corp.
5.70%, 1/1/24...................... 591,248
-----------
TOTAL LONG-TERM INVESTMENTS
(COST $11,892,323)................. 12,419,431
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
- ----------
<C> <S> <C> <C>
MUTUAL FUND SHARES-- 5.1%
(COST $652,000)
652,000 Federated Municipal
Obligations Fund................... 652,000
-----------
TOTAL INVESTMENTS--
(COST $12,544,323)......... 102.4% 13,071,431
OTHER ASSETS AND
LIABILITIES-- NET.......... (2.4) (300,901)
------- -----------
NET ASSETS--................. 100.0% $12,770,530
------- -----------
------- -----------
</TABLE>
(a) Effective yield (calculated at the date of purchase) is the yield at which
the bond accretes on an annual basis until maturity date.
SUMMARY OF ABBREVIATIONS:
AMBAC Insured by American Municipal Bond Assurance Corporation
GO General Obligation Bond
IDR Industrial Development Revenue Bond
MBIA Insured by Municipal Bond Investors Assurance Corporation
RB Revenue Bond
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
(logo)
EVERGREEN
VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
August 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------
LONG-TERM INVESTMENTS-- 96.9%
<C> <S> <C>
DISTRICT OF COLUMBIA-- 1.5%
$ 250,000 Metro. Washington DC Arpt.
Auth. RB, Ser. B
5.50%, 10/1/23..................... $ 244,900
-----------
VIRGINIA-- 95.4%
Albemarle Cnty. Indl. Dev.
Auth. RB, Residential Care
Fac. Our Lady of Peace Inc.:
100,000 6.45%, 7/1/15........................ 102,953
145,000 6.63%, 7/1/21........................ 149,301
350,000 Arlington Cnty. Indl. Dev.
Auth. RB, The Nature
Conservancy, Ser. A
5.40%, 7/1/17...................... 346,612
390,000 Buena Vista Indl. Dev. Auth.
RB, Wtr. & Swr. Fac. Route 60 Proj.
6.25%, 7/15/11..................... 391,283
250,000 Charlottesville-Albemarle
Arpt. Auth. RB
6.13%, 12/1/13....................... 255,588
500,000 Chesapeake Redev. & Hsg.
Auth. RB, Multi-Family Hsg.,
Cedar Assoc., Ser. A
7.75%, 6/1/20...................... 515,730
500,000 Chesterfield Cnty. Hlth. Ctr.
Cmnty. Mtg. RB, Lucy Corr.
Nursing Home Proj.
5.88%, 12/1/21..................... 511,315
370,000 Fairfax Cnty. Indl. Dev.
Auth. RB, Hlth. Care, Inova
Hlth. Sys. Proj.
5.88%, 8/15/16..................... 381,300
500,000 Fairfax Cnty. Redev. & Hsg.
Auth. RB, Hsg. for the Elderly
6.00%, 9/1/16, (FHA)............... 514,195
Giles Cnty. Indl. Dev. Auth.
RB, Hoechst Celanese Proj.:
250,000 5.95%, 12/1/25....................... 256,632
500,000 6.45%, 5/1/26........................ 537,745
500,000 Harrisonburg Redev. & Hsg.
Auth. RB, Greens of Salem Run Proj.
6.20%, 4/1/17...................... 517,530
350,000 Isle Wright Cnty. Indl. Dev.
Auth. RB, Solid Waste Disp.
Fac. Union Camp Corp. Proj.
6.55%, 4/1/24...................... 376,873
600,000 James City Cnty. Indl. Dev.
Auth. RB, Williamsburg Landing
6.63%, 3/1/23...................... 613,992
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------
<C> <S> <C>
LONG-TERM INVESTMENTS-- CONTINUED
VIRGINIA-- CONTINUED
$1,000,000 King & Queen Cnty. Indl. Dev.
Auth. RB, King & Queen Cnty.
Courts Complex, Ser. A
5.63%, 7/15/17..................... $ 994,600
700,000 King George Cnty. Indl. Dev.
Auth. RB, King George Cnty.
School Proj.
6.40%, 8/1/16...................... 722,722
640,000 Portsmouth Redev. & Hsg.
Auth. RB, Multi-Family Hsg., Ser. A
6.30%, 9/1/26, (FNMA).............. 667,878
Prince William Cnty. Indl.
Dev. Auth. RB:
500,000 ATCC Proj.
6.00%, 2/1/14...................... 518,400
500,000 Potomac Hosp. Corp.
6.75%, 10/1/15....................... 542,675
1,250,000 Prince William Cnty. Park
Auth. RB
6.88%, 10/15/16.................... 1,366,325
400,000 Riverside Regl. Jail Auth. RB
6.00%, 7/1/25, (MBIA).............. 420,908
750,000 Virginia Port Auth. RB,
Comwlth. Port Fund
5.90%, 7/1/16...................... 769,260
400,000 Virginia Port Auth. RB, Port Fac.
5.60%, 7/1/27, (MBIA).............. 396,528
700,000 Virginia College Bldg. Auth.
RB, Hampton Univ. Proj.
5.75%, 4/1/14...................... 715,925
Virginia St. Hsg. Dev. Auth.
RB, Comwlth. Mtg.:
Ser. A
100,000 7.10%, 1/1/17........................ 105,503
Ser. A, Subser. A-6
100,000 6.95%, 1/1/10........................ 103,957
Ser. B, Subser. B-2
500,000 6.65%, 1/1/13........................ 536,675
Ser. D, Subser. D-1
300,000 6.10%, 1/1/19........................ 311,202
Ser. F, Subser. F-1
300,000 6.25%, 7/1/12........................ 314,148
Virginia St. Hsg. Dev. Auth.
RB, Multi-Family Hsg.:
Ser. H
300,000 6.35%, 11/1/11....................... 313,749
Ser. O
500,000 6.05%, 11/1/17....................... 507,330
</TABLE>
(CONTINUED)
31
<PAGE>
(logo)
EVERGREEN
VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
August 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------------------------------------------------------------
LONG-TERM INVESTMENTS-- CONTINUED
<C> <S> <C>
VIRGINIA-- CONTINUED
$ 300,000 West Point Indl. Dev. Auth.
RB, Solid Waste Disp. Fac.,
Chesapeake Corp. Proj., Ser. B
6.25%, 3/1/19...................... $ 314,955
-----------
15,093,789
-----------
TOTAL LONG-TERM INVESTMENTS
(COST $14,771,682)................. 15,338,689
-----------
</TABLE>
<TABLE>
<CAPTION>
<C> <S> <C> <C>
SHARES VALUE
- ---------------------------------------------------------------
MUTUAL FUND SHARES-- 1.5%
(COST $232,000)
232,000 Federated Municipal
Obligations Fund................... $ 232,000
-----------
TOTAL INVESTMENTS--
(COST $15,003,682)......... 98.4% 15,570,689
OTHER ASSETS AND
LIABILITIES-- NET.......... 1.6 254,132
------- -----------
NET ASSETS--................. 100.0% $15,824,821
------- -----------
------- -----------
</TABLE>
SUMMARY OF ABBREVIATIONS:
<TABLE>
<S> <C>
FHA Insured by Federal Housing Authority
FNMA Insured by Federal National Mortgage Association
MBIA Insured by Municipal Bond Investors Assurance Corporation
RB Revenue Bond
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
(logo)
EVERGREEN
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
August 31, 1997
<TABLE>
<CAPTION>
(logo) (logo) (logo) (logo) (logo)
FLORIDA NORTH SOUTH
HIGH INCOME FLORIDA GEORGIA CAROLINA CAROLINA
FUND FUND FUND FUND FUND
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at market value (identified cost--
$185,025,116, $150,941,611, $13,281,033,
$56,074,912, $12,544,323 and $15,003,682,
respectively).................................. $191,997,078 $159,112,037 $14,112,848 $59,745,658 $13,071,431
Cash............................................. 0 464 465 0 146
Interest receivable.............................. 3,392,928 2,577,016 166,405 854,839 187,334
Receivable for Fund shares sold.................. 1,875,061 784,613 0 7,000 38,500
Unamortized organization expenses................ 14,443 0 0 0 0
Prepaid expenses and other assets................ 25,818 7,850 11,190 2,228 7,165
- --------------------------------------------------------------------------------------------------------------------------
Total assets................................... 197,305,328 162,481,980 14,290,908 60,609,725 13,304,576
- --------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased................ 6,805,891 0 0 0 502,865
Dividends payable................................ 427,507 432,405 12,954 56,887 17,691
Distribution fee payable......................... 109,586 45,272 8,737 53,518 5,495
Payable for Fund shares redeemed................. 96,254 78,460 10,000 86,192 0
Due to related parties........................... 43,008 83,649 463 27,909 66
Accrued custodian fees........................... 9,000 13,200 1,300 9,715 960
Due to custodian................................. 3,970 0 0 0 0
Accrued expenses and other liabilities........... 66,931 25,424 5,377 20,458 6,969
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities.............................. 7,562,147 678,410 38,831 254,679 534,046
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS......................................... $189,743,181 $161,803,570 $14,252,077 $60,355,046 $12,770,530
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS REPRESENTED BY
Paid-in capital.................................. $183,979,565 $150,128,843 $14,019,261 $60,199,042 $12,209,433
Undistributed net investment income.............. 71,079 102,244 3,588 0 2,439
Accumulated net realized gain (loss) on
investments.................................... (1,279,425 ) 3,402,057 (602,587) (3,514,742) 31,550
Net unrealized appreciation on investments....... 6,971,962 8,170,426 831,815 3,670,746 527,108
- --------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS............................... $189,743,181 $161,803,570 $14,252,077 $60,355,046 $12,770,530
- --------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Class A.......................................... $119,942,452 $105,672,609 $ 2,201,213 $ 8,114,829 $ 1,024,797
Class B.......................................... 63,474,546 31,281,385 10,870,454 48,197,720 4,734,195
Class Y.......................................... 6,326,183 24,849,576 1,180,410 4,042,497 7,011,538
- --------------------------------------------------------------------------------------------------------------------------
$189,743,181 $161,803,570 $14,252,077 $60,355,046 $12,770,530
- --------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING
Class A.......................................... 11,013,506 10,589,864 222,411 782,431 101,700
Class B.......................................... 5,828,551 3,134,781 1,098,398 4,647,049 469,801
Class Y.......................................... 580,894 2,490,213 119,266 389,762 695,799
- --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Class A.......................................... $ 10.89 $ 9.98 $ 9.90 $ 10.37 $ 10.08
- --------------------------------------------------------------------------------------------------------------------------
Class A-- Offering price (based on sales charge
of 4.75%)...................................... $ 11.43 $ 10.48 $ 10.39 $ 10.89 $ 10.58
- --------------------------------------------------------------------------------------------------------------------------
Class B.......................................... $ 10.89 $ 9.98 $ 9.90 $ 10.37 $ 10.08
- --------------------------------------------------------------------------------------------------------------------------
Class Y.......................................... $ 10.89 $ 9.98 $ 9.90 $ 10.37 $ 10.08
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(logo)
VIRGINIA
FUND
- ---------------------------------------------------
<S> <C>
ASSETS
Investments at market value (identified cost--
$185,025,116, $150,941,611, $13,281,033,
$56,074,912, $12,544,323 and $15,003,682,
respectively).................................. $15,570,689
Cash............................................. 617
Interest receivable.............................. 262,744
Receivable for Fund shares sold.................. 36,370
Unamortized organization expenses................ 0
Prepaid expenses and other assets................ 6,723
- ---------------------------------------------------
Total assets................................... 15,877,143
- ---------------------------------------------------
LIABILITIES
Payable for investments purchased................ 0
Dividends payable................................ 25,082
Distribution fee payable......................... 9,602
Payable for Fund shares redeemed................. 0
Due to related parties........................... 10,951
Accrued custodian fees........................... 1,500
Due to custodian................................. 0
Accrued expenses and other liabilities........... 5,187
- ---------------------------------------------------
Total liabilities.............................. 52,322
- ---------------------------------------------------
NET ASSETS......................................... $15,824,821
- ---------------------------------------------------
NET ASSETS REPRESENTED BY
Paid-in capital.................................. $15,456,526
Undistributed net investment income.............. 6,150
Accumulated net realized gain (loss) on
investments.................................... (204,862)
Net unrealized appreciation on investments....... 567,007
- ---------------------------------------------------
TOTAL NET ASSETS............................... $15,824,821
- ---------------------------------------------------
NET ASSETS CONSIST OF
Class A.......................................... $ 2,933,967
Class B.......................................... 6,695,383
Class Y.......................................... 6,195,471
- ---------------------------------------------------
$15,824,821
- ---------------------------------------------------
SHARES OUTSTANDING
Class A.......................................... 291,836
Class B.......................................... 665,945
Class Y.......................................... 616,230
- ---------------------------------------------------
NET ASSET VALUE PER SHARE
Class A.......................................... $ 10.05
- ---------------------------------------------------
Class A-- Offering price (based on sales charge
of 4.75%)...................................... $ 10.55
- ---------------------------------------------------
Class B.......................................... $ 10.05
- ---------------------------------------------------
Class Y.......................................... $ 10.05
- ---------------------------------------------------
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
33
<PAGE>
(logo)
EVERGREEN
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
Year Ended August 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
(logo) (logo) (logo) (logo) (logo) (logo)
FLORIDA NORTH SOUTH
HIGH INCOME FLORIDA GEORGIA CAROLINA CAROLINA VIRGINIA
FUND FUND FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest......................................... $9,126,685 $ 9,416,396 $ 786,503 $3,595,558 $ 682,195 $ 848,887
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Management fee................................... 813,790 791,322 66,245 305,634 58,299 70,972
Distribution Plan expenses....................... 618,859 574,097 101,554 510,687 47,664 68,701
Transfer agent fees.............................. 108,023 105,456 29,963 58,241 29,051 38,992
Custodian fees................................... 64,433 68,109 39,566 52,247 40,242 39,704
Administrative services fees..................... 52,864 65,916 5,267 24,354 4,596 9,900
Professional fees................................ 26,226 17,894 16,979 16,902 16,082 15,516
Registration and filing fees..................... 73,818 24,152 23,623 23,925 21,552 21,315
Trustees' fees and expenses...................... 3,268 4,827 1,308 1,833 700 888
Organization expenses............................ 3,544 10,301 9,791 26,702 26,658 8,886
Other............................................ 35,761 42,017 16,209 16,423 25,879 18,370
Fee waivers and/or expense reimbursements........ (330,629) (272,815) (117,219) 0 (137,607) (114,180)
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses................................. 1,469,957 1,431,276 193,286 1,036,948 133,116 179,064
Less: Indirectly paid expenses................... (3,474) (81) (281) (298) (37) (596)
- -----------------------------------------------------------------------------------------------------------------------------------
Net expenses................................... 1,466,483 1,431,195 193,005 1,036,650 133,079 178,468
- -----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME............................ 7,660,202 7,985,201 593,498 2,558,908 549,116 670,419
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments................. 145,751 4,253,020 84,767 297,379 42,822 177,142
Net change in unrealized appreciation
(depreciation) on investments.................. 6,008,472 1,314,673 354,644 2,148,174 396,963 361,929
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on
investments.................................... 6,154,223 5,567,693 439,411 2,445,553 439,785 539,071
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS..................................... $13,814,425 $13,552,894 $1,032,909 $5,004,461 $ 988,901 $1,209,490
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
(logo)
EVERGREEN
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended August 31, 1997
<TABLE>
<CAPTION>
(logo) (logo) (logo) (logo) (logo)
FLORIDA NORTH SOUTH
HIGH INCOME FLORIDA GEORGIA CAROLINA CAROLINA
FUND FUND FUND FUND FUND
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income............................ $ 7,660,202 $ 7,985,201 $ 593,498 $ 2,558,908 $ 549,116
Net realized gain on investments................. 145,751 4,253,020 84,767 297,379 42,822
Net change in unrealized appreciation
(depreciation) on investments.................. 6,008,472 1,314,673 354,644 2,148,174 396,963
- --------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations................................... 13,814,425 13,552,894 1,032,909 5,004,461 988,901
- --------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income:
Class A........................................ (5,491,178) (5,824,608) (110,152) (403,703) (44,289)
Class B........................................ (1,956,616) (1,295,519) (408,815) (2,042,140) (187,294)
Class Y........................................ (212,408) (960,612) (75,880) (201,277) (318,010)
Net realized gains on investments:
Class A........................................ 0 (665,344) 0 0 (1,178)
Class B........................................ 0 (171,649) 0 0 (5,778)
Class Y........................................ 0 (81,865) 0 0 (7,006)
- --------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders............ (7,660,202) (8,999,597) (594,847) (2,647,120) (563,555)
- --------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold........................ 102,384,802 27,824,216 3,285,353 5,860,717 4,936,067
Proceeds from reinvestment of distributions...... 3,354,164 2,877,333 422,287 1,817,312 346,366
Payment for shares redeemed...................... (19,605,169) (30,281,998) (2,738,013) (10,822,725) (2,614,880)
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from capital share transactions.............. 86,133,797 419,551 969,627 (3,144,696) 2,667,553
- --------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets...... 92,288,020 4,972,848 1,407,689 (787,355) 3,092,899
NET ASSETS
- --------------------------------------------------------------------------------------------------------------------------
Beginning of year................................ 97,455,161 156,830,722 12,844,388 61,142,401 9,677,631
- --------------------------------------------------------------------------------------------------------------------------
END OF YEAR...................................... $189,743,181 $161,803,570 $14,252,077 $60,355,046 $12,770,530
- --------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income................ $ 71,079 $ 102,244 $ 3,588 $ 0 $ 2,439
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(logo)
VIRGINIA
FUND
- ---------------------------------------------------
<S> <C>
OPERATIONS
Net investment income............................ $ 670,419
Net realized gain on investments................. 177,142
Net change in unrealized appreciation
(depreciation) on investments.................. 361,929
- ---------------------------------------------------
Net increase in net assets resulting from
operations................................... 1,209,490
- ---------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income:
Class A........................................ (142,824)
Class B........................................ (257,414)
Class Y........................................ (271,563)
Net realized gains on investments:
Class A........................................ 0
Class B........................................ 0
Class Y........................................ 0
- ---------------------------------------------------
Total distributions to shareholders............ (671,801)
- ---------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold........................ 4,600,357
Proceeds from reinvestment of distributions...... 369,743
Payment for shares redeemed...................... (2,804,295)
- ---------------------------------------------------
Net increase (decrease) in net assets resulting
from capital share transactions.............. 2,165,805
- ---------------------------------------------------
Total increase (decrease) in net assets...... 2,703,494
NET ASSETS
- ---------------------------------------------------
Beginning of year................................ 13,121,327
- ---------------------------------------------------
END OF YEAR...................................... $15,824,821
- ---------------------------------------------------
Undistributed net investment income................ $ 6,150
- ---------------------------------------------------
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
35
<PAGE>
(logo)
EVERGREEN
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended August 31, 1996
<TABLE>
<CAPTION>
(logo) (logo) (logo) (logo) (logo)
FLORIDA NORTH SOUTH
HIGH INCOME FLORIDA GEORGIA CAROLINA CAROLINA
FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income............................ $4,708,138 $ 8,509,981 $ 565,522 $ 2,585,742 $ 384,455
Net realized gain (loss) on investments.......... (67,136) 1,550,230 28,904 483,051 10,377
Net change in unrealized appreciation
(depreciation) on investments.................. (42,880) (2,163,335) 57,035 (416,432) 19,665
- -------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from
operations................................... 4,598,122 7,896,876 651,461 2,652,361 414,497
- -------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income
Class A........................................ (4,083,337) (6,726,492) (100,626) (396,192) (38,206)
Class B........................................ (562,849) (1,290,196) (357,853) (2,003,550) (168,950)
Class Y........................................ (61,952) (417,123) (109,101) (147,923) (177,721)
- -------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders............ (4,708,138) (8,433,811) (567,580) (2,547,665) (384,877)
- -------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold........................ 51,887,683 23,857,675 5,651,629 10,964,230 4,780,175
Proceeds from reinvestment of distributions...... 1,815,929 2,678,816 366,974 1,752,076 251,384
Payment for shares redeemed...................... (18,826,666) (36,571,005) (4,232,687) (10,003,099) (1,208,640)
- -------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from capital share transactions.............. 34,876,946 (10,034,514) 1,785,916 2,713,207 3,822,919
- -------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets...... 34,766,930 (10,571,449) 1,869,797 2,817,903 3,852,539
NET ASSETS
Beginning of year................................ 62,688,231 167,402,171 10,974,591 58,324,498 5,825,092
- -------------------------------------------------------------------------------------------------------------------------
END OF YEAR...................................... $97,455,161 $156,830,722 $12,844,388 $61,142,401 $9,677,631
- -------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (distributions
in excess of net investment income).............. $ (7,223) $ 98,832 $ 1,349 $ 88,212 $ 477
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(logo)
VIRGINIA
FUND
- ---------------------------------------------------
<S> <C>
OPERATIONS
Net investment income............................ $ 458,280
Net realized gain (loss) on investments.......... (98,854)
Net change in unrealized appreciation
(depreciation) on investments.................. 47,564
- ---------------------------------------------------
Net increase in net assets resulting from
operations................................... 406,990
- ---------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income
Class A........................................ (117,625)
Class B........................................ (238,415)
Class Y........................................ (105,354)
- ---------------------------------------------------
Total distributions to shareholders............ (461,394)
- ---------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold........................ 6,625,000
Proceeds from reinvestment of distributions...... 309,870
Payment for shares redeemed...................... (1,791,146)
- ---------------------------------------------------
Net increase (decrease) in net assets resulting
from capital share transactions.............. 5,143,724
- ---------------------------------------------------
Total increase (decrease) in net assets...... 5,089,320
NET ASSETS
Beginning of year................................ 8,032,007
- ---------------------------------------------------
END OF YEAR...................................... $13,121,327
- ---------------------------------------------------
Undistributed net investment income (distributions
in excess of net investment income).............. $ 1,382
- ---------------------------------------------------
</TABLE>
SEE COMBINED NOTES TO FINANCIAL STATEMENTS.
36
<PAGE>
(logo)
EVERGREEN
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Evergreen State Tax Free Funds consist of Evergreen Florida High Income
Municipal Bond Fund ("Florida High Income Fund"), Evergreen Florida Municipal
Bond Fund ("Florida Fund"), Evergreen Georgia Municipal Bond Fund ("Georgia
Fund"), Evergreen North Carolina Municipal Bond Fund ("North Carolina Fund"),
Evergreen South Carolina Municipal Bond Fund ("South Carolina Fund") and
Evergreen Virginia Municipal Bond Fund ("Virginia Fund"), (collectively, the
"Funds"). The Funds are registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as non-diversified, open-end management investment
companies. Each Fund, except Florida High Income Fund, is a separate series of
Evergreen Investment Trust. Florida High Income Fund is a series of Evergreen
Municipal Trust.
The Funds offer Class A, Class B and Class Y shares. Class A shares are sold
with a maximum front-end sales charge of 4.75%. Class B 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. 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.
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. 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.
C. FEDERAL INCOME 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 income tax liability since
they are expected to distribute all of their net investment company taxable
income, net tax-exempt income and net capital gains, if any, to their
shareholders. The Funds also intend to avoid any excise tax liability by making
the required distributions under the Code. Accordingly, no provision for federal
income 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.
D. DISTRIBUTIONS
Distributions from net investment income for each Fund 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.
E. 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.
F. ORGANIZATION EXPENSES
Organization expenses for the Florida High Income Fund are amortized to
operations over a five-year period beginning June 30, 1995 on a straight-line
basis. In the event any of the initial shares of the Fund are redeemed by any
holder during the five-year amortization period, redemption proceeds will be
reduced by any unamortized organization expenses in the same proportion as the
number of initial shares being redeemed bears to the number of initial shares
outstanding at the time of the redemption.
37
<PAGE>
(logo)
EVERGREEN
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Organization expenses of the Florida, Georgia, North Carolina, South Carolina
and Virginia Funds were initially borne by the Funds' prior administrator. As a
result of a change in the administration agreement, First Union purchased the
remaining unreimbursed organizational expenses from the prior administrator. As
of, and for the year ended August 31, 1997, the Funds paid and have a remaining
liability to First Union as follows:
<TABLE>
<CAPTION>
REMAINING
PAYMENTS LIABILITY
<S> <C> <C>
- -----------------------------------------------------------------------
Florida Fund................................... $10,301 $11,093
Georgia Fund................................... 9,791 9,520
North Carolina Fund............................ 26,702 0
South Carolina Fund............................ 26,658 30,466
Virginia Fund.................................. 8,886 9,569
</TABLE>
2. CAPITAL SHARE TRANSACTIONS
Each of the Funds has an unlimited number of shares of beneficial interest with
a par value of $0.0001 authorized. Shares of beneficial interest of the Funds
are currently divided into Class A, Class B and Class Y. Transactions in shares
of the Funds were as follows:
<TABLE>
<CAPTION> YEAR ENDED AUGUST 31,
1997 1996
-------------------------- --------------------------
FLORIDA HIGH INCOME FUND SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
Shares sold............................................................ 4,908,227 $ 52,353,817 3,124,792 $ 32,820,683
Shares issued in reinvestment of distributions......................... 218,163 2,333,137 141,897 1,492,720
Shares redeemed........................................................ (1,431,303) (15,236,336) (1,673,161) (17,673,622)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase........................................................... 3,695,087 $ 39,450,618 1,593,528 $ 16,639,781
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold............................................................ 4,247,193 $ 45,291,821 1,606,756 $ 16,929,901
Shares issued in reinvestment of distributions......................... 89,841 961,874 29,466 309,488
Shares redeemed........................................................ (352,500) (3,764,886) (93,856) (985,765)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase........................................................... 3,984,534 $ 42,488,809 1,542,366 $ 16,253,624
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold............................................................ 443,071 $ 4,739,164 203,571 $ 2,137,099
Shares issued in reinvestment of distributions......................... 5,518 59,153 1,303 13,721
Shares redeemed........................................................ (56,700) (603,947) (15,879) (167,279)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase........................................................... 391,889 $ 4,194,370 188,995 $ 1,983,541
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FLORIDA FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
Shares sold............................................................ 680,065 $ 6,676,415 647,176 $ 6,349,216
Shares issued in reinvestment of distributions......................... 200,942 1,980,889 198,575 1,954,093
Shares redeemed........................................................ (2,225,426) (21,851,674) (2,919,201) (28,758,982)
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease........................................................... (1,344,419) $(13,194,370) (2,073,450) $(20,455,673)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold............................................................ 586,099 $ 5,756,602 720,789 $ 7,109,005
Shares issued in reinvestment of distributions......................... 77,038 759,420 67,958 668,617
Shares redeemed........................................................ (503,356) (4,943,204) (621,849) (6,110,433)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase........................................................... 159,781 $ 1,572,818 166,898 $ 1,667,189
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold............................................................ 1,566,132 $ 15,391,199 1,061,203 $ 10,399,454
Shares issued in reinvestment of distributions......................... 13,894 137,024 5,711 56,106
Shares redeemed........................................................ (353,969) (3,487,120) (172,594) (1,701,590)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase........................................................... 1,226,057 $ 12,041,103 894,320 $ 8,753,970
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
(logo)
EVERGREEN
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION> YEAR ENDED AUGUST 31,
1997 1996
-------------------------- --------------------------
GEORGIA FUND SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
Shares sold............................................................ 58,988 $ 571,356 37,924 $ 365,163
Shares issued in reinvestment of distributions......................... 7,041 68,727 7,779 75,126
Shares redeemed........................................................ (47,699) (464,268) (63,160) (605,087)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)................................................ 18,330 $ 175,815 (17,457) $ (164,798)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold............................................................ 234,534 $ 2,292,070 268,620 $ 2,600,226
Shares issued in reinvestment of distributions......................... 30,017 293,086 26,313 253,826
Shares redeemed........................................................ (134,483) (1,307,027) (122,257) (1,183,493)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase........................................................... 130,068 $ 1,278,129 172,676 $ 1,670,559
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold............................................................ 43,212 $ 421,927 280,783 $ 2,686,240
Shares issued in reinvestment of distributions......................... 6,202 60,474 3,963 38,022
Shares redeemed........................................................ (99,306) (966,718) (256,913) (2,444,107)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)................................................ (49,892) $ (484,317) 27,833 $ 280,155
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NORTH CAROLINA FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
Shares sold............................................................ 104,597 $ 1,069,375 118,007 $ 1,198,058
Shares issued in reinvestment of distributions......................... 27,845 283,991 27,147 275,346
Shares redeemed........................................................ (150,887) (1,540,570) (176,511) (1,780,168)
- ----------------------------------------------------------------------------------------------------------------------------------
Net decrease........................................................... (18,445) $ (187,204) (31,357) $ (306,764)
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold............................................................ 387,839 $ 3,937,543 635,229 $ 6,447,862
Shares issued in reinvestment of distributions......................... 148,184 1,511,443 144,603 1,466,473
Shares redeemed........................................................ (839,134) (8,524,353) (759,219) (7,700,019)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)................................................ (303,111) $ (3,075,367) 20,613 $ 214,316
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold............................................................ 84,295 $ 853,799 327,111 $ 3,318,310
Shares issued in reinvestment of distributions......................... 2,138 21,878 1,016 10,257
Shares redeemed........................................................ (74,420) (757,802) (51,457) (522,912)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase........................................................... 12,013 $ 117,875 276,670 $ 2,805,655
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SOUTH CAROLINA FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
Shares sold............................................................ 41,892 $ 414,564 31,170 $ 305,932
Shares issued in reinvestment of distributions......................... 2,239 22,308 1,829 17,842
Shares redeemed........................................................ (29,248) (286,768) (9,800) (95,582)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase........................................................... 14,883 $ 150,104 23,199 $ 228,192
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold............................................................ 55,162 $ 544,288 109,335 $ 1,062,828
Shares issued in reinvestment of distributions......................... 14,381 142,689 12,969 126,461
Shares redeemed........................................................ (41,753) (410,305) (49,850) (485,446)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase........................................................... 27,790 $ 276,672 72,454 $ 703,843
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold............................................................ 400,553 $ 3,977,215 349,743 $ 3,411,415
Shares issued in reinvestment of distributions......................... 18,276 181,369 10,998 107,081
Shares redeemed........................................................ (193,151) (1,917,807) (65,167) (627,612)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase........................................................... 225,678 $ 2,240,777 295,574 $ 2,890,884
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
(logo)
EVERGREEN
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION> YEAR ENDED AUGUST 31,
1997 1996
-------------------------- --------------------------
VIRGINIA FUND SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS A
Shares sold............................................................ 52,270 $ 516,653 105,025 $ 1,032,730
Shares issued in reinvestment of distributions......................... 12,391 122,884 10,186 99,877
Shares redeemed........................................................ (71,543) (705,708) (21,674) (211,176)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)................................................ (6,882) $ (66,171) 93,537 $ 921,431
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold............................................................ 127,982 $ 1,276,030 145,062 $ 1,427,003
Shares issued in reinvestment of distributions......................... 18,384 182,440 19,108 187,592
Shares redeemed........................................................ (96,368) (959,225) (74,064) (721,093)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase........................................................... 49,998 $ 499,245 90,106 $ 893,502
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold............................................................ 284,030 $ 2,807,674 425,577 $ 4,165,267
Shares issued in reinvestment of distributions......................... 6,490 64,419 2,286 22,401
Shares redeemed........................................................ (114,905) (1,139,362) (87,094) (858,877)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase........................................................... 175,615 $ 1,732,731 340,769 $ 3,328,791
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities (excluding
short-term securities) were as follows for the year ended August 31, 1997:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
<S> <C> <C>
- -------------------------------------------------------------------------
Florida High Income Fund................... $127,507,828 $43,933,866
Florida Fund............................... 62,562,977 67,138,568
Georgia Fund............................... 4,761,178 4,200,233
North Carolina Fund........................ 29,901,470 34,034,440
South Carolina Fund........................ 9,501,226 6,901,828
Virginia Fund.............................. 12,133,746 10,145,848
</TABLE>
On August 31, 1997, the tax cost and composition of gross 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
TAX UNREALIZED UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION APPRECIATION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Florida High Income Fund................... $185,025,116 $7,034,248 $(62,286) $6,971,962
Florida Fund............................... 150,941,611 8,172,823 (2,397) 8,170,426
Georgia Fund............................... 13,281,033 831,815 0 831,815
North Carolina Fund........................ 56,074,912 3,670,746 0 3,670,746
South Carolina Fund........................ 12,544,323 527,108 0 527,108
Virginia Fund.............................. 15,003,682 568,192 (1,185) 567,007
</TABLE>
As of August 31, 1997, the Funds had capital loss carryovers for federal income
tax purposes as follows:
<TABLE>
<CAPTION>
EXPIRATION
---------------------------------
2002 2003 2004
---------- -------- -------
<S> <C> <C> <C>
Florida High Income Fund............................................ $ 577,000 $635,000 $64,000
Georgia Fund........................................................ -- 603,000 --
North Carolina Fund................................................. 3,515,000 -- --
Virginia Fund....................................................... 175,000 30,000 --
</TABLE>
40
<PAGE>
(logo)
EVERGREEN
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. DISTRIBUTION PLANS
Evergreen Keystone Distributor, Inc. ("EKD"), a wholly-owned subsidiary of The
BISYS Group Inc. ("BISYS") serves as the principal underwriter for each of the
Funds.
Each Fund has adopted a distribution plan for each class of shares as allowed by
Rule 12b-1 of the 1940 Act. Distribution plans permit each 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
services fees to broker-dealers who sell shares of the Fund, are paid by
shareholders through expenses called "Distribution Plan expenses." Each class,
except Class Y, currently pays an annual service fee equal to 0.25% of the
average daily net assets of the class. Class B also presently pays an annual
distribution fee equal to 0.75% of the average daily net assets of the class.
Distribution Plan expenses are calculated daily and paid monthly.
The Funds have entered into a Shareholder Services Agreement with First Union
Brokerage Services ("FUBS"), an affiliate of First Union, whereby they will
compensate FUBS up to an annual fee of 0.25% of Class B average daily net
assets, as referred to above, for certain services provided to shareholders
and/or maintenance of shareholder accounts relating to each of the Fund's Class
B shares.
During the year ended August 31, 1997, amounts paid or accrued to EKD and fees
waived, if any, pursuant to each Fund's Class A and Class B Distribution Plans
were as follows:
<TABLE>
<CAPTION>
FEES
WAIVED
CLASS A CLASS B CLASS A
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Florida High Income Fund............................................ $235,662 $383,197 $ 0
Florida Fund........................................................ 275,983 298,114 191,541
Georgia Fund........................................................ 5,499 96,055 0
North Carolina Fund................................................. 20,523 490,164 0
South Carolina Fund................................................. 2,271 45,393 0
Virginia Fund....................................................... 7,230 61,471 0
</TABLE>
EKD intends, but is not obligated, to continue to pay distribution costs that
exceed the current annual payments from the Fund. EKD intends to seek full
payment of such distribution costs from the Fund at such time in the future as,
and to the extent that, payment thereof by the Class B shares would be within
permitted limits.
EKD has advised the Funds that it has retained front-end sales charges resulting
from the sales of Class A shares during the year ended August 31, 1997 as
follows:
<TABLE>
<S> <C>
Florida High Income Fund................................ $34,454
Florida Fund............................................ 22,335
Georgia Fund............................................ 2,488
North Carolina Fund..................................... 2,377
South Carolina Fund..................................... 710
Virginia Fund........................................... 1,596
</TABLE>
Contingent deferred sales charges paid by redeeming shareholders are paid to
EKD.
5. INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT AND OTHER AFFILIATED
TRANSACTIONS
The Capital Management Group of First Union National Bank of North Carolina
("CMG"), a subsidiary of First Union, serves as the investment adviser to each
Fund and is paid a management fee that is computed daily and paid monthly. CMG
is paid at an annual rate of 0.50% of the average daily net assets of the
Florida Fund, Georgia Fund, North Carolina Fund, South Carolina Fund and
Virginia Fund. CMG is paid at an annual rate of 0.60% of the average daily net
assets of the Florida High Income Fund.
For each Fund, Evergreen Keystone Investment Services, Inc. ("EKIS"), a
subsidiary of First Union, is the administrator. Prior to March 11, 1997,
Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly-owned subsidiary
of First Union, was the administrator. Furman Selz LLC ("Furman Selz") was the
sub-administrator through December 31, 1996. Effective January 1, 1997, BISYS
acquired Furman Selz' mutual fund unit and accordingly BISYS Fund Services
became sub-administrator to each of the Funds. The administrator and
sub-administrator for each Fund are entitled to an annual fee based on the
average daily net assets of the funds administered by EKIS for which First Union
or its investment advisory subsidiaries are also the investment advisers. The
administration fee 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 each Fund. The sub-administration fee is calculated by
applying percentage rates, which start at 0.01% and decline to 0.004% per annum
as net assets increase, to the average daily net asset value of each Fund.
BISYS, as sub-administrator, compensates the officers of each Fund.
41
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EVERGREEN
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COMBINED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For the year ended August 31, 1997, investment management fees and
administration fees were waived and/or expenses reimbursed as follows:
<TABLE>
<CAPTION>
MANAGEMENT
FEES ADMINISTRATION EXPENSES
WAIVED FEES WAIVED REIMBURSED
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Florida High Income Fund............................... $330,629 $ 0 $ 0
Florida Fund........................................... 81,274 0 0
Georgia Fund........................................... 66,245 4,027 46,947
South Carolina Fund.................................... 58,299 3,810 75,498
Virginia Fund.......................................... 70,972 4,281 38,927
</TABLE>
During the year ended August 31, 1997, the Funds paid or accrued to EKIS the
following amounts for certain administrative services:
<TABLE>
<CAPTION>
<S> <C>
Florida High Income Fund................................ $43,778
Florida Fund............................................ 52,171
Georgia Fund............................................ 4,368
North Carolina Fund..................................... 20,199
South Carolina Fund..................................... 3,810
Virginia Fund........................................... 8,940
</TABLE>
Effective May 5, 1997, Evergreen Keystone Service Company ("EKSC"), a
wholly-owned subsidiary of Keystone Investment Management Company ("Keystone"),
a subsidiary of First Union, began providing transfer and dividend disbursing
agent services for the Funds that were formerly provided by State Street Bank
and Trust Company ("State Street").
Officers of the Funds and affiliated Trustees receive no compensation directly
from the Funds.
6. 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.
7. DEFERRED TRUSTEES' FEES
Each Independent Trustee of each Fund may defer any or all compensation related
to performance of their duties as Trustees. The Trustees' deferred balances are
allocated to deferral accounts which are included in the accrued expenses for
the Fund. The investment performance of the deferral accounts is based on the
investment performance of certain Evergreen Funds. Any gains earned or losses
incurred in the deferral accounts are reported in the Funds' 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. As of August 31, 1997, the value of the Trustees deferral
account for each Fund was as follows:
<TABLE>
<S> <C>
Florida High Income Fund................................. $6,242
Florida Fund............................................. 6,265
Georgia Fund............................................. 512
North Carolina Fund...................................... 2,436
South Carolina Fund...................................... 388
Virginia Fund............................................ 480
</TABLE>
8. FINANCING AGREEMENT
On October 31, 1996, a financing agreement between all of the Evergreen Funds
and State Street, Societe Generale and ABN Amro Bank N.V. (collectively, the
"Banks") became effective. Under this agreement, the Banks provide 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 bear interest at 0.75% per annum above the
Federal Funds rate. A commitment fee of 0.10% per annum will be incurred on the
unused portion of the committed facility which will be allocated to all
participating funds. State Street acts as agent for the Banks, and as agent is
entitled to a fee of $15,000 which is allocated to all of the Evergreen Funds.
During the year ended August 31, 1997, the Funds had no borrowings under this
agreement.
9. 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 that state or region than would be a comparable general
tax-exempt mutual fund.
42
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EVERGREEN
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INDEPENDENT AUDITORS' REPORT
The Trustees and Shareholders
Evergreen Investment Trust
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of the Evergreen State Tax Free Funds listed below
as of August 31, 1997, and the related statements of operations, statements of
changes in net assets, and financial highlights for each of the years or periods
listed below:
EVERGREEN FLORIDA MUNICIPAL BOND FUND-- statement of operations for the year
ended August 31, 1997, statements of changes in net assets for each of the
years in the two-year period ended August 31, 1997 and the financial
highlights for the periods presented on pages 10 and 11.
EVERGREEN GEORGIA MUNICIPAL BOND FUND-- statement of operations for the year
ended August 31, 1997, statements of changes in net assets for each of the
years in the two-year period ended August 31, 1997 and the financial
highlights for the periods presented on pages 12 and 13.
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND-- statement of operations for
the year ended August 31, 1997, statements of changes in net assets for each
of the years in the two-year period ended August 31, 1997 and the financial
highlights for the periods presented on pages 14 and 15.
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND-- statement of operations for
the year ended August 31, 1997, statements of changes in net assets for each
of the years in the two-year period ended August 31, 1997 and the financial
highlights for the periods presented on pages 16 and 17.
EVERGREEN VIRGINIA MUNICIPAL BOND FUND-- statement of operations for the
year ended August 31, 1997, statements of changes in net assets for each of
the years in the two-year period ended August 31, 1997 and the financial
highlights for the periods presented on pages 18 and 19.
These financial statements and financial highlights are the responsibility of
the Funds' 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 our audit to obtain
reasonable assurance about whether the financial statements and 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. Our procedures included confirmation of securities owned as of
August 31, 1997 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 Florida Municipal Bond Fund, Evergreen Georgia Municipal Bond Fund,
Evergreen North Carolina Municipal Bond Fund, Evergreen South Carolina Municipal
Bond Fund and Evergreen Virginia Municipal Bond Fund as of August 31, 1997, the
results of their operations, the 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
October 10, 1997
43
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EVERGREEN
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REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES AND SHAREHOLDERS OF
EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Evergreen Florida High Income
Municipal Bond Fund (the "Fund"), one of the Evergreen Municipal Trust
Portfolios, at August 31, 1997, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for the two years in the period ended
August 31, 1997 and for the four month period ended August 31, 1995, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 1997 by
correspondence with the custodian and the application of alternative auditing
procedures where securities purchased had not been received, provide a
reasonable basis for the opinion expressed above. The financial statements of
the Fund for the year ended and indicated periods prior to, April 30, 1995 were
audited by other independent accountants whose report dated June 2, 1995
expressed an unqualified opinion.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York
October 14, 1997
44
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EVERGREEN
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FEDERAL INCOME TAX STATUS OF DIVIDENDS (UNAUDITED)
100% of the dividends distributed by Florida High Income Fund, Georgia Fund and
the North Carolina Fund and 99% of the dividends distributed by Florida Fund,
South Carolina Fund and the Virginia Fund for the year ended August 31, 1997 are
exempt from federal income tax, other than alternative minimum tax.
45
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This brochure 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.
________________________________________
| NOT May lose value |
| FDIC No bank guarantee |
| INSURED |
|________________________________________|
Evergreen Funds Distributor, Inc.
62544 540712 Rev. 01
10/97
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