SUPPLEMENT TO THE CLASS A AND B PROSPECTUS
OF
EVERGREEN STATE SPECIFIC TAX-FREE FUNDS
THE CLASS A AND B PROSPECTUS OF THE FUNDS IS HEREBY SUPPLEMENTED AS FOLLOWS:
Evergreen New Jersey Tax-Free Income Fund is no longer offered through
this Prospectus. The Fund is now offered through a prospectus dated July 21,
1997, as amended from time to time.
At a joint special meeting of shareholders held on December 15, 1997, the
shareholders approved each Fund's reorganization as a separate series of the
Evergreen Municipal Trust, which was organized on September 17, 1997. In
connection with the reorganization, the investment objective(s) of each Fund is
now "nonfundamental" (i.e., changeable by vote of the Board of Trustees without
a shareholder vote). In addition, each Fund is now subject to certain
standardized investment restrictions as set forth in the Funds' Statement of
Additional Information.
EXPENSE INFORMATION
The "Expense Information" section is replaced entirely by the following:
The tables below summarize the shareholder transaction costs, which are
fees paid directly from your account when you buy or sell shares of a Fund,
associated with an investment in Class A and Class B shares of each Fund. For
further information see "Purchase and Redemption of Fund Shares" and "General
Information -- Other Classes of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES Class A Shares Class B Shares
--------------- ---------------------------------------------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases 4.75%(1) None
(as a % of offering price)
Contingent Deferred Sales Charge (as a % of original purchase None 5.00%(2)(3)
price or redemption proceeds, whichever is lower)
</TABLE>
(1) The Funds do not charge a front-end sales charge on purchase of $1 million
or more, but they do charge a contingent deferred sales charge of 1.00% if
you redeem those shares within one year after your purchase.
(2) The deferred sales charge on Class B shares declines from 5.00% to 1.00% of
amounts redeemed within six years after the month of purchase. The Funds do
not charge a contingent deferred sales charge on redemptions made after
that. See "Shareholder Information" for more information.
(3) Long-term shareholders may pay more than the economic equivalent front-end
sales charges permitted by the National Association of Securities Dealers,
Inc. See "Purchase and Redemption of Shares" for more information.
Annual operating expenses reflect the normal operating expenses of a
Fund, and include costs such as management, distribution and other fees. The
tables below show each Fund's actual annual operating expenses for the fiscal
year ended August 31, 1997. The example shows what you would pay if you invested
$1,000 over periods indicated. The example assumes that you reinvest all of your
dividends and that each Fund's average annual return will be 5%. THE EXAMPLES
ARE FOR ILLUSTRATION PURPOSES ONLY AND SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES OR ANNUAL RETURN. EACH FUND'S ACTUAL EXPENSES AND
RETURNS WILL VARY. For a more complete description of the various costs and
expenses borne by each Fund see "Purchase and Redemption of Shares" and "General
Information -- Other Classes of Shares."
1
<PAGE>
EVERGREEN FLORIDA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
EXAMPLES
--------------------------------
ANNUAL OPERATING Assuming Assuming
EXPENSES(2) Redemption no
(AFTER REIMBURSEMENTS) at End of Period Redemption
--------------------------- ------------------ ----------
Class A Class B Class A Class B Class B
------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.45% 0.45%
After 1 Year $ 55 $ 67 $ 17
12b-1 Fees(1) 0.08% 1.00%
After 3 Years $ 70 $ 82 $ 52
Other Expenses 0.21% 0.21%
After 5 Years $ 87 $ 110 $ 90
------- -------
After 10 Years $ 135 $ 160 $160
Total 0.74% 1.66%
------- -------
------- -------
</TABLE>
EVERGREEN GEORGIA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
EXAMPLES
--------------------------------
ANNUAL OPERATING Assuming Assuming
EXPENSES(2) Redemption no
(AFTER REIMBURSEMENTS) at End of Period Redemption
--------------------------- ------------------ ----------
Class A Class B Class A Class B Class B
------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.00% 0.00%
After 1 Year $ 57 $ 67 $ 17
12b-1 Fees(1) 0.25% 1.00%
After 3 Years $ 76 $ 83 $ 53
Other Expenses 0.70% 0.70%
After 5 Years $ 98 $ 112 $ 92
------- -------
After 10 Years $ 159 $ 171 $171
Total 0.95% 1.70%
------- -------
------- -------
</TABLE>
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
EXAMPLES
--------------------------------
Assuming Assuming
Redemption no
ANNUAL OPERATING EXPENSES at End of Period Redemption
--------------------------- ------------------ ----------
Class A Class B Class A Class B Class B
------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.50% 0.50%
.50% After 1 Year $ 58 $ 69 $ 19
12b-1 Fees 0.25% 1.00%
After 3 Years $ 81 $ 88 $ 58
Other Expenses 0.36% 0.36%
After 5 Years $ 106 $ 121 $101
------- -------
After 10 Years $ 176 $ 189 $189
Total 1.11% 1.86%
------- -------
------- -------
</TABLE>
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
EXAMPLES
--------------------------------
ANNUAL OPERATING Assuming Assuming
EXPENSES(2) Redemption no
(AFTER REIMBURSEMENTS) at End of Period Redemption
--------------------------- ------------------ ----------
Class A Class B Class A Class B Class B
------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.00% 0.00%
After 1 Year $ 57 $ 68 $ 18
12b-1 Fees(1) 0.25% 1.00%
After 3 Years $ 77 $ 84 $ 54
Other Expenses 0.73% 0.73%
After 5 Years $ 99 $ 114 $ 94
------- -------
After 10 Years $ 162 $ 175 $175
Total 0.98% 1.73%
------- -------
------- -------
</TABLE>
EVERGREEN VIRGINIA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
EXAMPLES
--------------------------------
ANNUAL OPERATING Assuming Assuming
EXPENSES(2) Redemption no
(AFTER REIMBURSEMENTS) at End of Period Redemption
--------------------------- ------------------ ----------
Class A Class B Class A Class B Class B
------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.00% 0.00%
After 1 Year $ 58 $ 68 $ 18
12b-1 Fees(1) 0.25% 1.00%
After 3 Years $ 79 $ 86 $ 56
Other Expenses 0.78% 0.78%
After 5 Years $ 102 $ 117 $ 97
------- -------
After 10 Years $ 167 $ 179 $179
Total 1.03% 1.78%
------- -------
------- -------
</TABLE>
2
<PAGE>
EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
EXAMPLES
--------------------------------
ANNUAL OPERATING Assuming Assuming
EXPENSES(2) Redemption no
(AFTER REIMBURSEMENTS) at End of Period Redemption
--------------------------- ------------------ ----------
Class A Class B Class A Class B Class B
------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Management Fees 0.36% 0.36%
After 1 Year $ 56 $ 67 $ 17
12b-1 Fees(1) 0.25% 1.00%
After 3 Years $ 74 $ 81 $ 51
Other Expenses 0.27% 0.27%
After 5 Years $ 94 $ 109 $ 89
------- -------
After 10 Years $ 151 $ 163 $163
Total 0.88% 1.63%
------- -------
------- -------
</TABLE>
(1) Although Class A shares can pay up to 0.75% of average net assets as a 12b-1
fee, for the foreseeable future such fees have been limited to 0.25% of
average net assets. For Class B shares, a portion of the 12b-1 fees
equivalent to 0.25% of average annual assets will be shareholder
servicing-related. Distribution-related 12b-1 fees will be limited to 0.75%
of average annual assets as permitted under the rules of the National
Association of Securities Dealers, Inc. ("NASD"). In addition, a portion of
FLORIDA MUNICIPAL BOND FUND'S 12b-1 fees are currently being waived. Absent
such waivers, the Fund's 12b-1 fees would have been 0.25%.
(2) First Union National Bank ("FUNB") has agreed to reimburse each Fund to the
extent that each Fund's aggregate annual operating expenses exceed 1.00% of
average net assets for any fiscal year. FUNB may cease these voluntary
expense reimbursements at any time. For the fiscal year ended August 31,
1997, FUNB reimbursed and/or waived certain other expenses and/or management
fees of the Funds. Absent such reimbursements and/or waivers, each Fund
would have paid the expenses equal to the following percentages of net
assets:
<TABLE>
<CAPTION>
OTHER EXPENSES TOTAL FUND OPERATING
(WITHOUT WAIVERS EXPENSES (WITHOUT
MANAGEMENT FEES AND/OR WAIVERS AND/OR
FUND (WITHOUT WAIVER) REIMBURSEMENT) REIMBURSEMENT)
----- ---------------- ---------------- --------------------
<S> <C> <C> <C>
Evergreen Florida Municipal Bond Fund
Class A........................................................ 0.50% -- 0.96%
Class B........................................................ 0.50% -- 1.71%
Evergreen Georgia Municipal Bond Fund
Class A........................................................ 0.50% 1.08% 1.83%
Class B........................................................ 0.50% 1.08% 2.58%
Evergreen South Carolina Municipal Bond Fund
Class A........................................................ 0.50% 1.41% 2.16%
Class B........................................................ 0.50% 1.41% 2.91%
Evergreen Virginia Municipal Bond Fund
Class A........................................................ 0.50% 1.09% 1.84%
Class B........................................................ 0.50% 1.09% 2.59%
Evergreen Florida High Income Municipal Bond Fund
Class A........................................................ 0.60% -- 1.12%
Class B........................................................ 0.60% -- 1.87%
</TABLE>
FINANCIAL HIGHLIGHTS
The "Financial Highlights" section is replaced entirely by the following:
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the ten most recent fiscal years or the life of
the Fund if shorter for EVERGREEN GEORGIA MUNICIPAL BOND FUND, EVERGREEN NORTH
CAROLINA MUNICIPAL BOND FUND, EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND and
EVERGREEN VIRGINIA MUNICIPAL BOND FUND has been audited by KPMG Peat Marwick
LLP, each Fund's independent auditors. The information in the tables for
EVERGREEN FLORIDA MUNICIPAL BOND FUND for the periods ended August 31, 1997,
August 31, 1996 and August 31, 1995 has been audited by KPMG Peat Marwick LLP,
the Fund's current independent auditors. The information in the tables for each
of the years in the three-year period ended April 30, 1995 was audited by the
Fund's prior independent auditors. The information in the tables for EVERGREEN
FLORIDA HIGH INCOME MUNICIPAL BOND FUND for each of the periods from May 1, 1995
through August 31, 1997 has been audited by Price Waterhouse LLP, the Fund's
current independent auditors. The information in the tables for EVERGREEN
FLORIDA HIGH INCOME MUNICIPAL BOND FUND for each of the years in the two-year
period ended April 30, 1995 and for the period June 17, 1992 (commencement of
operations) through April 30, 1993 was audited by the Fund's prior independent
auditors. A report of KPMG Peat Marwick LLP or Price Waterhouse LLP, as the case
may be, on the audited information with respect to each Fund is incorporated by
reference in the Funds' Statement of Additional Information. The following
information for each Fund should be read in conjunction with the financial
statements and related notes which are incorporated by reference in the Funds'
Statement of Additional Information.
Further information about each Fund's performance is contained in the
Funds' Annual Report to shareholders, which may be obtained without charge.
3
<PAGE>
EVERGREEN FLORIDA MUNICIPAL BOND FUND -- CLASS A SHARES
<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>
PER SHARE DATA:
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, 1989
1993 (C) 1992 (C) 1991 (C) 1990 (C) (C)
-------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
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.
4
<PAGE>
EVERGREEN FLORIDA MUNICIPAL BOND FUND -- CLASS B SHARES
<TABLE>
<CAPTION>
JUNE 30, 1995
(COMMENCEMENT OF
CLASS
YEAR ENDED AUGUST 31, OPERATIONS)
----------------------- THROUGH
1997 1996 AUGUST 31, 1995
------- ------- ----------------
<S> <C> <C> <C>
PER SHARE DATA:
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.
5
<PAGE>
EVERGREEN GEORGIA MUNICIPAL BOND FUND -- CLASS A AND B SHARES
<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>
PER SHARE DATA:
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>
PER SHARE DATA:
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.
6
<PAGE>
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND -- CLASS A AND B SHARES
<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>
PER SHARE DATA:
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>
PER SHARE DATA:
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.
7
<PAGE>
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND -- CLASS A AND B SHARES
<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>
PER SHARE DATA:
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>
PER SHARE DATA:
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.
8
<PAGE>
EVERGREEN VIRGINIA MUNICIPAL BOND FUND -- CLASS A AND B SHARES
<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>
PER SHARE DATA:
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>
PER SHARE DATA:
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.
9
<PAGE>
EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND -- CLASS A AND B SHARES
<TABLE>
<CAPTION>
JUNE 17, 1992
(COMMENCEMENT OF
CLASS
YEAR ENDED AUGUST 31, FOUR MONTHS YEAR ENDED APRIL 30, OPERATIONS)
----------------------- ENDED ----------------------- THROUGH
1997 1996 AUGUST 31, 1995* 1995 1994 APRIL 30, 1993
-------- ------- ---------------- ------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value beginning of year.... $10.42 $10.40 $10.16 $10.08 $10.36 $10.00
-------- ------- -------- ------- ------- --------
Income from investment operations:
Net investment income................ 0.62 0.63 0.21 0.65 0.68 0.61
Net realized and unrealized gain
(loss) on investments.............. 0.47 0.02 0.24 0.08 (0.26) 0.39
-------- ------- -------- ------- ------- --------
Total from investment operations... 1.09 0.65 0.45 0.73 0.42 1.00
-------- ------- -------- ------- ------- --------
Less distributions from:
Net investment income................ (0.62) (0.63) (0.21) (0.65) (0.68) (0.61)
Net realized gains on investments.... 0 0 0 0 (0.02) (0.03)
-------- ------- -------- ------- ------- --------
Total distributions................ (0.62) (0.63) (0.21) (0.65) (0.70) (0.64)
-------- ------- -------- ------- ------- --------
Net asset value end of year........ $10.89 $10.42 $10.40 $10.16 $10.08 $10.36
-------- ------- -------- ------- ------- --------
-------- ------- -------- ------- ------- --------
TOTAL RETURN (B)..................... 10.77% 6.42% 4.43% 7.56% 3.94% 10.33%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net assets:
Total expenses..................... 0.88% 0.85% 1.07%(a) 0.60% 0.14% 0.00%(a)
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% 1.12%(a)
Net investment income.............. 5.86% 6.02% 5.92%(a) 6.52% 6.16% 5.92%(a)
Portfolio turnover rate.............. 32% 42% 14% 28% 31% 50%
Net assets end of year (thousands)... $119,942 $76,267 $ 59,551 $65,043 $72,683 $ 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>
PER SHARE DATA:
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.
10
<PAGE>
NAME CHANGES
The name of the distributor of the Funds has been changed to Evergreen
Distributor, Inc.; the name of the administrator has been changed to Evergreen
Investment Services, Inc.; and the name of the transfer agent for the Funds has
been changed to Evergreen Service Company.
INVESTMENT OBJECTIVES AND POLICIES
The Funds are permitted to make taxable investments, and may from time to
time generate income subject to federal regular income tax.
Each Fund will invest at least 80% of its assets in bonds that, at the
date of investment, are rated within the four highest categories by Standard &
Poor's Rating Group ("S&P") (AAA, AA, A and BBB) or, if not rated or rated under
a different system, are of comparable quality to obligations so rated as
determined by another nationally recognized statistical ratings organization (an
"SRO") or by the Fund's investment adviser. A Fund may invest the remaining 20%
of its assets in lower rated bonds, but it will not invest in bonds rated below
B. A Fund is not required to sell or otherwise dispose of any security that
loses its rating or has its rating reduced after the Fund has purchased it.
During the fiscal year ended August 31, 1997, EVERGREEN FLORIDA HIGH
INCOME MUNICIPAL BOND FUND'S holdings had the following average credit quality
characteristics:
<TABLE>
<CAPTION>
Percent of
Rating Net Assets
- ---------- ----------
<S> <C>
Aaa or AAA 11.10%
Aa or AA 2.00%
A 2.50%
Baa or BBB 16.70%
Ba or BB 1.20%
B 0.40%
Non-rated 66.10%
Total 100.00%
</TABLE>
PORTFOLIO MANAGERS
The portfolio manager for EVERGREEN GEORGIA MUNICIPAL BOND FUND and
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND is Charles E. Jeanne. Since joining
First Union in 1993, Mr. Jeanne has been an Assistant Vice President and
Portfolio Manager. In addition to the Fund, Mr. Jeanne also manages the
Evergreen Virginia Municipal Bond Fund. Prior to joining First Union, Mr. Jeanne
served as a trader/portfolio manager for First American Bank.
Richard K. Marrone is the portfolio manager for EVERGREEN FLORIDA
MUNICIPAL BOND FUND. Since joining First Union in 1993, Mr. Marrone has been a
Vice President and Senior Fixed Income Portfolio Manager, with over 15 years of
investment and market experience. Prior to joining First Union, Mr. Marrone was
employed at Woodbridge Capital Management where he served as a portfolio manager
for mutual and common trust funds from 1982-1993.
INVESTMENT ADVISER
Disclosure regarding the Funds' subadministrator is hereby deleted.
11
<PAGE>
EXCHANGE PRIVILEGES
You may exchange shares of a Fund for shares of another Evergreen fund by
calling or writing to Evergreen Service Company or by using the Evergreen
Express Line. If the shares being tendered for exchange are still subject to a
contingent deferred sales charge or are eligible for conversion in a specified
time, such remaining charge or remaining time will carry over to the shares
being acquired in the exchange transaction.
PERFORMANCE INFORMATION
The Funds may quote their "total return" or "yield" for specified periods
in advertisements, reports, or other communications to shareholders. Total
return and yield are computed separately for each Class of shares. Performance
data for one or more classes may be included in any advertisement or sales
literature using performance data of a Fund.
January 1, 1998
536336-SK98
12
<PAGE>
SUPPLEMENT TO THE CLASS Y PROSPECTUS
OF
EVERGREEN STATE SPECIFIC TAX-FREE FUNDS
THE CLASS Y PROSPECTUS OF THE FUNDS IS HEREBY SUPPLEMENTED AS FOLLOWS:
Evergreen New Jersey Tax-Free Income Fund is no longer offered through
this Prospectus. The Fund is now offered through a prospectus dated July 21,
1997, as amended from time to time.
At a joint special meeting of shareholders held on December 15, 1997, the
shareholders approved each Fund's reorganization as a separate series of the
Evergreen Municipal Trust, which was organized on September 17, 1997. In
connection with the reorganization, the investment objective(s) of each Fund is
now "nonfundamental" (i.e., changeable by vote of the Board of Trustees without
a shareholder vote). In addition, each Fund is now subject to certain
standardized investment restrictions as set forth in the Funds' Statement of
Additional Information.
EXPENSE INFORMATION
The "Expense Information" section is replaced entirely by the following:
The tables below are designed to help you understand the various expenses
that you will bear, directly or indirectly, when you invest in a Fund.
Shareholder transaction expenses are fees paid directly from your account when
you buy or sell shares. THERE ARE NO SHAREHOLDER TRANSACTION EXPENSES.
Annual operating expenses reflect the normal operating expenses of a
Fund, and include costs such as management, distribution and other fees. The
tables below show each Fund's actual annual operating expenses for the fiscal
year ended August 31, 1997. The example shows what you would pay if you invested
$1,000 over periods indicated. The example assumes that you reinvest all of your
dividends and that each Fund's average annual return will be 5%. THE EXAMPLES
ARE FOR ILLUSTRATION PURPOSES ONLY AND SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES OR ANNUAL RETURN. EACH FUND'S ACTUAL EXPENSES AND
RETURNS WILL VARY. For a more complete description of the various costs and
expenses borne by each Fund see "Purchase and Redemption of Shares" and "General
Information -- Other Classes of Shares."
EVERGREEN FLORIDA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING EXAMPLE
EXPENSES(1) -------
(AFTER REIMBURSEMENTS) Class Y
---------------------- -------
<S> <C> <C> <C>
Management Fees 0.45%
After 1 Year $ 7
12b-1 Fees --
After 3 Years $ 21
Other Expenses 0.21%
After 5 Years $ 37
------
After 10 Years $ 83
Total 0.66%
------
------
</TABLE>
EVERGREEN GEORGIA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING EXAMPLE
EXPENSES(1) -------
(AFTER REIMBURSEMENTS) Class Y
---------------------- -------
<S> <C> <C> <C>
Management Fees 0.00%
After 1 Year $ 7
12b-1 Fees --
After 3 Years $ 22
Other Expenses 0.70%
After 5 Years $ 38
------
After 10 Years $ 86
Total 0.70%
------
------
</TABLE>
1
<PAGE>
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
EXAMPLE
ANNUAL OPERATING -------
EXPENSES Class Y
---------------- -------
<S> <C> <C> <C>
Management Fees 0.50%
After 1 Year $ 9
12b-1 Fees --
After 3 Years $ 27
Other Expenses 0.36%
After 5 Years $ 48
------
After 10 Years $ 106
Total 0.86%
------
------
</TABLE>
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING EXAMPLE
EXPENSES(1) -------
(AFTER REIMBURSEMENTS) Class Y
---------------------- -------
<S> <C> <C> <C>
Management Fees 0.00%
After 1 Year $ 7
12b-1 Fees --
After 3 Years $ 23
Other Expenses 0.73%
After 5 Years $ 41
------
After 10 Years $ 91
Total 0.73%
------
------
</TABLE>
EVERGREEN VIRGINIA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING EXAMPLE
EXPENSES(1) -------
(AFTER REIMBURSEMENTS) Class Y
---------------------- -------
<S> <C> <C> <C>
Management Fees 0.00%
After 1 Year $ 8
12b-1 Fees --
After 3 Years $ 25
Other Expenses 0.78%
After 5 Years $ 44
------
After 10 Years $ 98
Total 0.78%
------
------
</TABLE>
EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING EXAMPLE
EXPENSES(1) -------
(AFTER REIMBURSEMENTS) Class Y
---------------------- -------
<S> <C> <C> <C>
Management Fees 0.36%
After 1 Year $ 6
12b-1 Fees --
After 3 Years $ 20
Other Expenses 0.27%
After 5 Years $ 35
------
After 10 Years $ 79
Total 0.63%
------
------
</TABLE>
(1) First Union National Bank ("FUNB") has agreed to reimburse each Fund to the
extent that each Fund's aggregate annual operating expenses exceed 1.00% of
average net assets for any fiscal year. FUNB may cease these voluntary
expense reimbursements at any time. For the fiscal year ended August 31,
1997, FUNB reimbursed and/or waived certain other expenses and/or management
fees of the Funds. Absent such reimbursements and/or waivers, each Fund
would have paid the expenses equal to the following percentages of net
assets:
<TABLE>
<CAPTION>
MANAGEMENT OTHER EXPENSES TOTAL FUND OPERATING
FEES (WITHOUT WAIVERS EXPENSES (WITHOUT
(WITHOUT AND/OR WAIVERS AND/OR
FUND WAIVER) REIMBURSEMENT) REIMBURSEMENT)
- ----------------------------------------------------------------- ---------- ---------------- --------------------
<S> <C> <C> <C>
Evergreen Florida Municipal Bond Fund
Class Y........................................................ 0.50% -- 0.71%
Evergreen Georgia Municipal Bond Fund
Class Y........................................................ 0.50% 1.08% 1.58%
Evergreen South Carolina Municipal Bond Fund
Class Y........................................................ 0.50% 1.41% 1.91%
Evergreen Virginia Municipal Bond Fund
Class Y........................................................ 0.50% 1.09% 1.59%
Evergreen Florida High Income Municipal Bond Fund
Class Y........................................................ 0.60% -- 0.87%
</TABLE>
2
<PAGE>
FINANCIAL HIGHLIGHTS
The "Financial Highlights" section is replaced entirely by the following:
The tables on the following pages present, for each Fund, financial
highlights for a Class Y share outstanding throughout each period indicated. The
information in the tables for the ten most recent fiscal years or the life of
the Fund if shorter for EVERGREEN GEORGIA MUNICIPAL BOND FUND, EVERGREEN NORTH
CAROLINA MUNICIPAL BOND FUND, EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND and
EVERGREEN VIRGINIA MUNICIPAL BOND FUND has been audited by KPMG Peat Marwick
LLP, each Fund's independent auditors. The information in the tables for
EVERGREEN FLORIDA MUNICIPAL BOND FUND for the periods ended August 31, 1997,
August 31, 1996 and August 31, 1995 has been audited by KPMG Peat Marwick LLP,
the Fund's current independent auditors. The information in the tables for each
of the years in the three-year period ended April 30, 1995 was audited by the
Fund's prior independent auditors. The information in the tables for EVERGREEN
FLORIDA HIGH INCOME MUNICIPAL BOND FUND for each of the periods from May 1, 1995
through August 31, 1997 has been audited by Price Waterhouse LLP, the Fund's
current independent auditors. The information in the tables for EVERGREEN
FLORIDA HIGH INCOME MUNICIPAL BOND FUND for each of the years in the two-year
period ended April 30, 1995 and for the period June 17, 1992 (commencement of
operations) through April 30, 1993 was audited by the Fund's prior independent
auditors. A report of KPMG Peat Marwick LLP or Price Waterhouse LLP, as the case
may be on the audited information with respect to each Fund is incorporated by
reference in the Funds' Statement of Additional Information. The following
information for each Fund should be read in conjunction with the financial
statements and related notes which are incorporated by reference in the Funds'
Statement of Additional Information.
Further information about each Fund's performance is contained in the
Fund's Annual Report to shareholders, which may be obtained without charge.
EVERGREEN FLORIDA MUNICIPAL BOND FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
JUNE 30, 1995
(COMMENCEMENT OF
CLASS
YEAR ENDED AUGUST 31, OPERATIONS)
------------------------ THROUGH
1997 1996 AUGUST 31, 1995
------- ------- ----------------
<S> <C> <C> <C>
PER SHARE DATA:
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.
3
<PAGE>
EVERGREEN GEORGIA MUNICIPAL BOND FUND -- CLASS Y SHARES
<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>
PER SHARE DATA:
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.
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND -- CLASS Y SHARES
<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>
PER SHARE DATA:
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.
4
<PAGE>
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND -- CLASS Y SHARES
<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>
PER SHARE DATA:
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.
EVERGREEN VIRGINIA MUNICIPAL BOND FUND -- CLASS Y SHARES
<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>
PER SHARE DATA:
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.
5
<PAGE>
EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SEPTEMBER 20, 1995
(COMMENCEMENT OF
CLASS OPERATIONS)
YEAR ENDED THROUGH
AUGUST 31, 1997 AUGUST 31, 1996
--------------- ------------------
<S> <C> <C>
PER SHARE DATA:
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.
NAME CHANGES
The name of the distributor of the Funds has been changed to Evergreen
Distributor, Inc.; the name of the administrator has been changed to Evergreen
Investment Services, Inc.; and the name of the transfer agent for the Funds has
been changed to Evergreen Service Company.
INVESTMENT OBJECTIVES AND POLICIES
The Funds are permitted to make taxable investments, and may from time to
time generate income subject to federal regular income tax.
Each Fund will invest at least 80% of its assets in bonds that, at the
date of investment, are rated within the four highest categories by Standard &
Poor's Rating Group ("S&P") (AAA, AA, A and BBB) or, if not rated or rated under
a different system, are of comparable quality to obligations so rated as
determined by another nationally recognized statistical ratings organization (an
"SRO") or by the Fund's investment adviser. A Fund may invest the remaining 20%
of its assets in lower rated bonds, but it will not invest in bonds rated below
B. A Fund is not required to sell or otherwise dispose of any security that
loses its rating or has its rating reduced after the Fund has purchased it.
6
<PAGE>
During the fiscal year ended August 31, 1997, EVERGREEN FLORIDA HIGH
INCOME MUNICIPAL BOND FUND'S holdings had the following average credit quality
characteristics:
<TABLE>
<CAPTION>
Percent of
Rating Net Assets
- ---------- ----------
<S> <C>
Aaa or AAA 11.10%
Aa or AA 2.00%
A 2.50%
Baa or BBB 16.70%
Ba or BB 1.20%
B 0.40%
Non-rated 66.10%
Total 100.00%
</TABLE>
PORTFOLIO MANAGERS
The portfolio manager for EVERGREEN GEORGIA MUNICIPAL BOND FUND EVERGREEN
SOUTH CAROLINA MUNICIPAL BOND FUND is Charles E. Jeanne. Since joining First
Union in 1993, Mr. Jeanne has been an Assistant Vice President and Portfolio
Manager. In addition to the Fund, Mr. Jeanne also manages the Evergreen Virginia
Municipal Bond Fund. Prior to joining First Union, Mr. Jeanne served as a
trader/portfolio manager for First American Bank.
Richard K. Marrone is the portfolio manager for EVERGREEN FLORIDA
MUNICIPAL BOND FUND. Since joining First Union in 1993, Mr. Marrone has been a
Vice President and Senior Fixed Income Portfolio Manager, with over 15 years of
investment and market experience. Prior to joining First Union, Mr. Marrone was
employed at Woodbridge Capital Management where he served as a portfolio manager
for mutual and common trust funds from 1982-1993.
INVESTMENT ADVISER
Disclosure regarding the Funds' subadministrator is hereby deleted.
EXCHANGE PRIVILEGES
You may exchange shares of a Fund for shares of another Evergreen fund
identified above by calling or writing to Evergreen Service Company or by using
the Evergreen Express Line. If the shares being tendered for exchange are still
subject to a contingent deferred sales charge or are eligible for conversion in
a specified time, such remaining charge or remaining time will carry over to the
shares being acquired in the exchange transaction.
PERFORMANCE INFORMATION
The Funds may quote their "total return" or "yield" for specified periods
in advertisements, reports, or other communications to shareholders. Total
return and yield are computed separately for each Class of shares. Performance
data for one or more classes may be included in any advertisement or sales
literature using performance data of a Fund.
January 1, 1998
7
<PAGE>
SUPPLEMENT TO THE STATEMENT OF ADDITIONAL INFORMATION OF
EVERGREEN FLORIDA MUNICIPAL BOND FUND (THE "FLORIDA FUND"), EVERGREEN GEORGIA
MUNICIPAL BOND FUND (THE "GEORGIA FUND"), EVERGREEN NORTH CAROLINA MUNICIPAL
BOND FUND (THE "NORTH CAROLINA FUND"), EVERGREEN SOUTH CAROLINA MUNICIPAL BOND
FUND (THE "SOUTH CAROLINA FUND"), EVERGREEN VIRGINIA MUNICIPAL BOND FUND (THE
"VIRGINIA FUND"), EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND (THE
"FLORIDA HIGH INCOME FUND") (EACH A "FUND"; TOGETHER, THE "FUNDS")
The Statement of Additional Information of each of the Funds is hereby
supplemented as follows:
FINANCIAL INFORMATION
Expenses
The table below shows the total dollar amounts paid by each Fund for
services rendered during the fiscal periods specified. For more information on
specific expenses, see "Investment Advisory and Other Services," "Distribution
Plans and Agreements," "Principal Underwriter" and "Purchase, Redemption and
Pricing of Shares."
<TABLE>
<CAPTION>
Aggregate
Dollar
Aggregate Amount of
Dollar Underwriting
Amount of Commissions
Advisory Class A Class B Underwriting Retained by
Fees 12b-1 Fees 12b-1 Fees Commissions EIS or EDI
====================== ============ ============ ============ ============= ==============
<S> <C> <C> <C> <C> <C>
1997 FUND EXPENSES
Florida $791,322 $275,983* $298,114 $236,607 $22,335
Georgia $66,245 $5,499 $96,055 $22,854 $2,488
North Carolina $305,634 $20,523 $490,164 $35,137 $2,377
South Carolina $58,299 $2,271 $45,393 $5,744 $710
Virginia $70,972 $7,230 $61,471 $14,653 $1,596
Florida High Income $813,790 $235,662 $383,197 $757,824 $34,454
- ----------------------
1996 FUND EXPENSES
- ----------------------
Florida $803,741 $240,978 $287,825 $49,589 $5,996
Georgia $63,102 $5,047 $84,596 $7,300 $875
North Carolina $306,892 $20,833 $500,469 $16,557 $154
South Carolina $40,781 $1,917 $39,896 $1,447 $2,228
Virginia $51,952 $6,048 $57,906 $20,400 $2,033
Florida High Income $477,128 $169,651 $106,733 $276,615 $29,467
- ----------------------
1995 FUND EXPENSES
- ----------------------
Florida $243,413 $59,721 $37,405 $87,755 $4,301
Georgia $32,646 $2,856 $49,968 $56,210 $4,220
North Carolina $190,284 $13,739 $319,719 $123,175 $7,843
South Carolina $13,154 $788 $20,125 $35,241 $3,595
Virginia $23,156 $3,127 $30,267 $45,713 $2,320
Florida High Income $123,320 $41,690 $2,087 $196,614 $24,672
====================== ============ ============ ============ ============= ==============
</TABLE>
*Of this amount, $191,541 was waived by the Distributor.
Advisory Fee Waivers
In accordance with voluntary expense limitations in effect during the
fiscal year or period ended August 31, 1997, CMG voluntarily reimbursed or
waived advisory fees, as follows:
Florida $81,274
Georgia $66,245
North Carolina $0
South Carolina $58,299
Virginia $70,972
Florida High Income $330,629
===================== ==========
Brokerage Commissions
The Funds paid no brokerage commissions during the fiscal year or period
ended August 31, 1997, 1996 and 1995.
Total Return
Total return quotations for a class of shares of a Fund as they may appear
from time to time in advertisements are calculated by finding the average annual
compounded rates of return over one, five and ten year periods, or the time
periods for which such class of shares has been effective, whichever is
relevant, on a hypothetical $1,000 investment that would equate the initial
amount invested in the class to the ending redeemable value. To the initial
investment all dividends and distributions are added, and all recurring fees
charged to all shareholder accounts are deducted.
The ending redeemable value assumes a complete redemption at the end of the
relevant periods.
The annual total returns for each class of shares of the Funds (including
applicable sales charges) are as follows:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS FIVE YEARS SINCE INCEPTION INCEPTION DATE
<S> <C> <C> <C> <C> <C>
FLORIDA
Class A 3.88% 5.81% 5.92% 7.47% 5/11/88
Class B 3.06% - - 5.03% 6/30/95
Class Y 9.14% - - 7.38% 6/30/95
GEORGIA
Class A 3.57% 5.78% - 3.63% 7/2/93
Class B 2.93% 5.83% - 3.73% 7/2/93
Class Y 9.00% 7.78% - 5.73% 2/28/94
NORTH CAROLINA
Class A 3.93% 6.03% - 4.79% 1/11/93
Class B 3.30% 6.08% - 4.85% 1/11/93
Class Y 9.39% 8.03% - 5.51% 2/28/94
SOUTH CAROLINA
Class A 4.14% 7.05% - 4.06% 1/3/94
Class B 3.52% 7.12% - 3.99% 1/3/94
Class Y 9.60% 9.07% - 6.62% 2/28/94
VIRGINIA
Class A 3.87% 6.08% - 3.90% 7/2/93
Class B 3.24% 6.14% - 3.98% 7/2/93
Class Y 9.32% 8.08% - 6.06% 2/28/94
FLORIDA HIGH INCOME
Class A 5.51% 6.96% 7.33% 7.34% 6/17/92
Class B 4.95% - - 6.24% 7/10/95
Class Y 11.04% - - 8.47% 9/20/95
==================== ========= ======== ========= ============= ==============
</TABLE>
Current and Tax Equivalent Yields
Current yield quotations as they may appear from time to time in
advertisements will consist of a quotation based on a 30-day period ended on the
date of the most recent balance sheet of a Fund, computed by dividing the net
investment income per share earned during the period by the maximum offering
price per share on the last day of the base period. Such yield will include
income from sources other than municipal obligations, if any. Tax equivalent
yield is, in general, the current yield divided by a factor equal to one minus a
stated income tax rate and reflects the yield a taxable investment would have to
achieve in order to equal on an after-tax basis a tax-exempt yield. For the
30-day period ended August 31, 1997, the current and tax-equivalent yields of
the Funds are shown below. Any given yield or total return quotation should not
be considered representative of the Fund's yield or total return for any future
period.
<TABLE>
<CAPTION>
30-DAY YIELD TAX-EQUIVALENT YIELD
================================= ============================================ ============================================
FUND COMBINED CLASS A CLASS B CLASS Y CLASS A CLASS B CLASS Y
FEDERAL &
STATE TAX
RATE (1)
================== ============= ============ =========== =========== =========== =========== ==============
<S> <C> <C> <C> <C> <C> <C> <C>
Florida 28% 4.94% 4.02% 5.02% 6.86% 5.58% 6.97%
Georgia 34% 4.80% 4.04% 5.05% 7.27% 6.12% 7.65%
North Carolina 28% 4.67% 3.92% 4.92% 6.49% 5.44% 6.83%
South Carolina 35% 4.65% 3.90% 4.90% 7.15% 6.00% 7.54%
Virginia 33.25% 4.78% 4.03% 5.03% 7.16% 6.04% 7.54%
Florida High 28% 5.48% 4.73% 5.73% 7.61% 6.57% 7.96%
Income
================== ============= ============= =========== =============== ============ ============ ==============
(1) Assumed for purposes of this chart. Your tax may vary.
</TABLE>
Method of Computing Offering Price for Class A Shares
Class A shares are sold at the NAV plus a sales charge. Below is an example
of the method of computing the offering price of the Class A shares of each
Fund. The example assumes a purchase of Class A shares of each Fund aggregating
less than $100,000 based upon the NAV of each Fund's Class A shares at the end
of each Fund's latest fiscal period.
<TABLE>
<CAPTION>
FUND DATE NET ASSET VALUE PER SHARE SALES OFFERING PRICE PER
CHARGE SHARE
<S> <C> <C> <C> <C>
Florida 8/31/97 $9.98 4.75% $10.48
Georgia 8/31/97 $9.90 4.75% $10.39
North Carolina 8/31/97 $10.37 4.75% $10.89
South Carolina 8/31/97 $10.08 4.75% $10.58
Virginia 8/31/97 $10.05 4.75% $10.55
Florida High Income 8/31/97 $10.89 4.75% $11.43
</TABLE>
Trustee Compensation
Listed below is the Trustee compensation for the fiscal year ended August
31, 1997.
TRUSTEE COMPENSATION FROM COMPENSATION FROM
TRUST TRUST AND FUND
COMPLEX
Laurence B. Ashkin $3,176 $56,200
Charles A.Austin III * -0- $48,200
K. Dun Gifford* -0- $39,600
James S. Howell $3,979 $89,229
Leroy Keith Jr.* -0- $45,200
Gerald M. McDonnell $3,154 $81,001
Thomas L. McVerry $3,820 $81,468
William Walt Pettit $3,483 $79,009
David M. Richardson* -0- $48,200
Russell A. Salton,III $3,501 $81,601
Michael S. Scofield $5,572 $77,501
Richard J. Shima $4,180 $58,667
*Not a Trustee of the Trust during the relevant fiscal period.
PRINCIPAL HOLDERS OF FUND SHARES
As of the date of this SAI, the officers and Trustees of the Trust owned as
a group less than 1% of the outstanding of any class of each Fund. As of the
same date, no person, to any Fund's knowledge, owned beneficially or of record
more than 5% of a class of a Fund's outstanding shares.
Set forth below is information with respect to each person who, to each
Fund's knowledge, owned beneficially or of record more than 5% of a class of a
Fund's outstanding shares as of November 30, 1997.
FLORIDA FUND CLASS A
None
FLORIDA FUND CLASS B
None
FLORIDA FUND CLASS Y
First Union National Bank 98.79%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
FLORIDA HIGH INCOME FUND CLASS A
MLPF&S 9.63%
Attn: Fund Administration
4800 Deer Lake Dr. E 3rd Fl
Jacksonville, FL 32246-6484
FLORIDA HIGH INCOME FUND CLASS B
MLPF&S 10.31%
Attn: Fund Administration
4800 Deer Lake Dr. E 3rd Fl
Jacksonville, FL 32246-6484
FLORIDA HIGH INCOME FUND CLASS Y
First Union National Bank 68.58%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
First Union National Bank 19.69%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
GEORGIA FUND CLASS A
FUBS & Co. FEBO 10.09%
Lee R. Meadows and
Mary Lee Meadows
1270 Hicks Cir SW
Conyers, GA 30207-4221
FUBS & Co. FEBO 6.03%
William F. Hill Jr. and Marvin Hill
P O Box 554 Silver Creek, GA 30173-0554
FUBS & Co. FEBO 5.46%
Samuel A Barber
Velma H Barber
4852 Banner Elk Drive
Stone Mountain, GA 30083
FUBS & Co. FEBO 5.18%
Larry N Merritt
Ann C Merritt
310 Chinquapin Drive
Marietta, GA 30064-3506
FUBS & Co. FEBO 5.13%
Raiden W Dellinger
710 River Ave.
Rome, GA 30161-4773
GEORGIA FUND CLASS B
None
GEORGIA FUND CLASS Y
First Union National Bank 98.61%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
NORTH CAROLINA FUND CLASS A
None
NORTH CAROLINA FUND CLASS B
None
NORTH CAROLINA FUND CLASS Y
First Union National Bank 99.64%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
SOUTH CAROLINA FUND CLASS A
FUBS & Co. FEBO 21.96%
Charles W. Lombard Trust
Charlotte Lombard and
Warren Prout Co-tees
U/A/D 5/4/94
Boone, NC 28607
FUBS & Co. FEBO 11.87%
Warren A. Ransom Jr.
Laurie P. Ransom
1162 East Parkview Place
Mount Pleasant, SC 29464-7909
First Union Brokerage Services 10.82%
Ann D. Schwab
A/C 7448-7777
2189 Windy Oaks Rd.
Ft. Mills, SC 29715
FUBS & Co. FEBO 6.91%
Charles Dean Turner
103 Carolina Club Drive
Spartanburg, SC 29306-6601
FUBS & Co. FEBO 5.79%
Virginia C. Thomas
330 Concord St. No 7G
Charleston, SC 29401-2731
FUBS & Co. FEBO 5.05%
Virginia S. Herring
Oren L. Herring Jr. JTWROS
107 Bennett Street
Mt. Pleasant, SC 29464-4382
SOUTH CAROLINA FUND CLASS B
FUBS & Co. FEBO 5.99%
Ruby B. Motsinger and
Joseph G. Motsinger JTTENCOM
550 Brandon Rd.
Clover, SC 29710-9667
SOUTH CAROLINA FUND CLASS Y
First Union National Bank 93.13%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
First Union National Bank 6.16%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
VIRGINIA FUND CLASS A
Duff M Green 7.97%
638 Kings Highway
Fredericksburg, VA 22405-3156
FUBS & Co. FEBO 6.34%
David A. Hetzer and Iris L. Hetzer
5009 Laburch Lane
Annandale, VA 22003-6019
VIRGINIA FUND CLASS B
FUBS & Co. FEBO 6.13%
Patsy B. Williams and
Harry S. Williams
P O Box 888
Marion, VA 24354
VIRGINIA FUND CLASS Y
First Union National Bank 98.34%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon St.
Charlotte, NC 28288-0002
Financial Statements
The audited financial statements and the reports thereon are hereby
incorporated by reference to each Fund's Annual Report, a copy of which may be
obtained without charge from ESC, P.O. Box 2121, Boston, Massachusetts
02106-2121.
January 1, 1998
