EVERGREEN MUNICIPAL TRUST, N-30D, 1995-11-06

EVERGREEN MUNICIPAL TRUST
N-30D, 1995-11-06

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<PAGE>

EVERGREEN
STATE TAX-FREE
FUNDS

(Logos of South Carolina, North Carolina, Georgia,
Virginia, Florida and Florida High Income appear here)

(Photo of snow-capped mountain appears here)

1995 ANNUAL REPORT

A SHARES B SHARES Y SHARES

(Evergreen boxed logo appears here)
Evergreen
Funds
<PAGE>
EVERGREEN STATE TAX-FREE FUNDS
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
A Review of the Past Year
and Prospects for the Future.............................................. 1
A Report From Your Portfolio Managers..................................... 3
(Florida logo appears here) FLORIDA MUNICIPAL Results to Date........................................................... 4
BOND FUND Statement of Investments.................................................. 5
Statement of Assets and Liabilities....................................... 9
Statement of Operations................................................... 10
Statement of Changes in Net Assets........................................ 11
Financial Highlights...................................................... 12
(Florida High income logo appears here) FLORIDA Results to Date........................................................... 13
HIGH INCOME Statement of Investments.................................................. 14
MUNICIPAL BOND FUND Statement of Assets and Liabilities....................................... 17
Statement of Operations................................................... 18
Statement of Changes in Net Assets........................................ 19
Financial Highlights...................................................... 20
(Georgia logo appears here) GEORGIA Results to Date........................................................... 21
MUNICIPAL BOND FUND Statement of Investments.................................................. 22
Statement of Assets and Liabilities....................................... 24
Statement of Operations................................................... 25
Statement of Changes in Net Assets........................................ 26
Financial Highlights...................................................... 27
(North Carolina logo appears here)NORTH CAROLINA Results to Date........................................................... 28
MUNICIPAL BOND Statement of Investments.................................................. 29
FUND Statement of Assets and Liabilities....................................... 31
Statement of Operations................................................... 32
Statement of Changes in Net Assets........................................ 33
Financial Highlights...................................................... 34
(South Carolina logo appears here)SOUTH CAROLINA Results to Date........................................................... 35
MUNICIPAL BOND Statement of Investments.................................................. 36
FUND
Statement of Assets and Liabilities....................................... 38
Statement of Operations................................................... 39
Statement of Changes in Net Assets........................................ 40
Financial Highlights...................................................... 41
(Virginia logo appears here) VIRGINIA Results to Date........................................................... 42
MUNICIPAL BOND Statement of Investments.................................................. 43
FUND Statement of Assets and Liabilities....................................... 45
Statement of Operations................................................... 46
Statement of Changes in Net Assets........................................ 47
Financial Highlights...................................................... 48
Combined Notes to Financial Statements.................................... 49
Report of Independent Accountants -- Price Waterhouse LLP................. 58
Independent Auditors' Report -- KPMG Peat Marwick LLP..................... 59
Trustees and Officers..................................................... IBC
</TABLE>

<PAGE>
EVERGREEN STATE TAX-FREE FUNDS
A REVIEW OF THE PAST YEAR
AND PROSPECTS FOR THE FUTURE
BY STEPHEN A. LIEBER, CHAIRMAN OF
EVERGREEN ASSET MANAGEMENT CORP.
In projecting the outlook for the United States (photo of Stephen A. Lieber
economy in the final months of 1995, one central fact appears here)
dominates the discussion; inflation is being held to
the very low single digits. For a nation which has,
for over twenty-five years, been
preoccupied in all economic forecasting with apprehension over the outlook for
inflation, this is a period of remarkable calm. Instead of concerns over
inflation, the dominant anxiety with which investors look to the future, is now
that of the price level of securities; stocks and bonds. That price level,
however, is a reflection of changing perceptions of the inflation risk.
Comparison of inflation rates, interest rates, and equity valuation, at the
beginning of the long-bull market which began in the summer of 1982, clarifies
these points. The inflation rate fell from 7.2% in the second quarter of 1982,
to 2.5% in the third quarter of 1995. Thirty-year U.S. Treasury Bond yields fell
from 12.97% to 6.52%, and 90-day U.S. Treasury Bill rates from 11.91% to 5.31%,
while price/earnings ratios have risen (on the S&P 500 Stock Index) from 7.8
times to 16.6 times. Clearly, both bonds and stocks are worth more in this
environment of lowered inflation and reduced inflationary expectations.
Thus far, in 1995, the hoped for "soft landing" of the economy into a slower,
non-inflationary expansion has been achieved. The issue of its future course is,
however, open to analysis and debate. There can be little debate over today's
cautious policies. There is a broad acceptance of the need to sustain low
leverage financial policies; minimizing the build-up of debt by both government
and industry, accelerating productivity gains, and economizing resources. This
is not only an anti-inflationary mentality, but it is also a conservative,
counter-expansionary economic growth policy. Politicians are prouder of
cut-backs than of expansion in public services. Businessmen boast of "re-
engineering" which results in lay-offs, rather than of hiring. When new
facilities are built, they are described as enhancers of productivity, not just
as producers of products or services. Business and labor alike think of their
pricing as competing in the world market. Industry wants to sell in the world
markets, and labor does not want to be outpriced by alternative manufacturing
sources in low labor cost countries. These policies push productivity,
price-restraint, and wage-restraint.
Policies of restraint, evident in so many sectors of the economy, lead some
observers to apprehensions that they will be over-done. If consumer demand slows
and business inventories build, it is argued, then a cycle of manufacturing
cutbacks will lead to accelerating lay-offs and another recessionary period. The
counter-argument holds that there are enough dynamic growth potentials on the
horizon for consumer products and services, and for increasing exports, so that
this negative prediction will not be realized. This positive point of view looks
to the increasing demand for American products, particularly technologically
sophisticated consumer and capital goods products, and the output of our
multi-national corporations which sell products in developing countries to
accelerate demand for our exports. It holds that the rapid technological change,
notably in electronics and communications, is bringing enough new demand from
both the industrial and the consumer sectors to act as the catalyst for overall
consumer and industrial goods demand growth.
Whether the "soft landing" scenario continues in the next few months, and the
economy shows modest expansion, or a slowdown begins to emerge, the likelihood
is that inflation will remain under control. This provides for a continuing
pattern of the recently lowered interest rate levels. Whether long-term and
short-term interest rates move significantly lower than today's 6.3%, 30-year
U.S. Treasury Bonds, and 5.5%, 1-year U. S. Treasury Bills, depends not only on
the strengthening or weakening of the domestic economy, but also on the
comparative interest rates being paid by other major industrial nations, and the
stability of the dollar. Our interest rates must be in equilibrium with others,
when adjusted for their inflation rates and the values of our currency.
Presently, the trends in
1

<PAGE>
EVERGREEN STATE TAX-FREE FUNDS
A REVIEW OF THE PAST YEAR AND
PROSPECTS FOR THE FUTURE -- (CONTINUED)
the major industrial countries, Germany and Japan, suggest continued slower
growth than that recently experienced by the American economy, with prospective
declining inflationary trends. This should enable the United States Federal
Reserve to retain sufficient flexibility, so that rates can be brought down if
the economy slows too rapidly and, thus, to sustain our economic strength
without being pressured toward unreasonably high interest rates.
We believe that the general level of valuation of both stocks and bonds is
likely to be sustained. Individual equity issues will, of course, reflect
prevailing business conditions. Emphasis in owning equities, we believe, should
be on powerful business franchises, companies with both leadership and dynamic
growth characteristics, providing vital services or products. On average, the
level of equities valuation is in line with current interest rate trends, but,
it is apparent that large sectors of the market are priced on highly optimistic
growth expectations. These sectors and issues are subject to quick and major
downward revaluation to the extent that their businesses fail to show strong
evidence of continued high growth rates. As the economy remains slower than over
the past two years, it will evidently be more difficult to show extraordinary
growth rates. Therefore, we anticipate a renewed interest in those businesses
which are undervalued in terms of their growth potential, especially those
beginning, or, in process of, programs for profit margin improvement and profits
growth.
We continue to believe that the merger and acquisition trend will continue,
as larger companies seek to capitalize on opportunities for economies of scale
and synergies through mergers and acquisitions. This movement, already strong,
is expected to broaden as a deregulatory atmosphere continues to develop through
new legislative initiatives.
In summary, we anticipate an environment where careful selection of equities
and careful analysis of current economic trends in fixed income investing will
combine to sustain rewarding long-term investment programs.
October 20, 1995
2

<PAGE>
EVERGREEN STATE TAX-FREE FUNDS
A REPORT FROM YOUR
PORTFOLIO MANAGERS
BY ROBERT EVANS,
RICHARD MARRONE,
ROBERT DRYE,
CHARLES JEANNE
Most of last year was a difficult period for fixed income (Photo
investments, municipal securities in particular. Prices were appears here)
declining fairly quickly as mutual funds experienced cash
withdrawals and attempted to sell bonds. Broker/dealers became
reluctant buy bonds, and thus provide liquidity, as prices kept
falling. Municipal bond yields dropped to approximately 90% to
95% of those of Treasuries as we approached the last week of
November 1994.
At these ratios to taxable bonds, municipals were a real
bargain for investors on a relative and historical basis. In
anticipation of a slowdown in the economy and, therefore,
lower interest rates, we began to lengthen the average maturity
of our portfolios. Purchases were concentrated on bonds with lower coupon rates
which positioned the Funds to take advantage of the appreciation potential
afforded by declining interest rates.
This strategy proved highly rewarding as each successive (Photo
economic number revealed slower growth. Fixed income prices appears here)
climbed higher. With each advance in the price of Treasury
bonds, investors feared being left behind, which only pushed the
rally further. Municipal bonds prices kept pace with their
taxable counterparts and actually outperformed Treasuries during
the quarter.
The second quarter of 1995 started out in the same fashion.
Strong demand and talk of severe supply shortages pushed the
rally further until talk of tax reform surfaced in May. The tax
reform debate, especially the talk of a flat tax, created enough
concern among investors to stall the rally in municipal bonds.
Municipals severely underperformed taxables as June continued. Tax reform talk
succeeded in pushing tax-exempt yields up to a point where municipals were again
yielding approximately 90% of comparable taxable bonds.
We anticipated municipals to perform better going into the (Photo
summer months. This did in fact occur, but only for the short appears here)
and intermediate maturity ranges of the municipal market as
investors, concerned about tax reform, concentrated purchases in
shorter maturities. Likewise, concern about tax reform created a
demand among investors for a "tax reform premium" for longer
maturities, which caused the sector to underperform. The
outperformance by bonds of shorter maturities caused the
municipal yield curve to steepen dramatically relative to the
Treasury securities.
This new relationship between tax-exempts and taxables has
resulted in tax-exempts
being an attractive investment again. As the fiscal year came to
an end, we realized some selective profits in the portfolio in order to take
advantage of opportunities to improve call protection or overall yield. This has
left the portfolios in a position of take advantage of a potential decline in
interest rates while providing attractive current yields. The tax reform debate
is far from over; however, we believe the yields available today adequately
compensate for this risk.
3

<PAGE>
EVERGREEN FLORIDA MUNICIPAL BOND FUND
RESULTS TO DATE
PERFORMANCE OF $10,000 INVESTED IN THE
EVERGREEN FLORIDA MUNICIPAL BOND FUND
The graphs below compare a $10,000 investment in the Evergreen Florida
Municipal Bond Fund (Class A, Class B and Class Y Shares) with a similar
investment in the Lehman Brothers Municipal Bond Index ("Index").
[CHARTS TO FOLLOW.]
(Two graphs appear here with the following plot points.)

CLASS A AVERAGE ANNUAL TOTAL RETURN

1 YEAR=9.0%
SINCE INCEPTION=8.2%

6/17/92* 8/31/92 8/31/93 8/31/94 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN MUNICIPAL BOND INDEX
FLORIDA HIGH INCOME FUND

CLASS B AVERAGE ANNUAL TOTAL RETURN
SINCE INCEPTION=4.4%

6/1/95* 6/31/95 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN MUNICIPAL BOND INDEX
FLORIDA HIGH INCOME FUND

<PAGE>
EVERGREEN FLORIDA MUNICIPAL BOND FUND
(Fla. Logo appears here) STATEMENT OF INVESTMENTS
AUGUST 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
LONG-TERM MUNICIPAL SECURITIES -- 97.9%
FLORIDA -- 97.9%
$1,500 Alachua County,
Health Facility Authority RB,
7.75%, 7/1/10, (CGIC).............. $ 1,702,095
2,000 Altamonte Springs,
Adventis Health Sinbelt RB, (Series
B),
5.125%, 11/15/18, (AMBAC).......... 1,791,300
1,600 Boynton Beach,
Water & Sewer RB,
7.40%, 11/1/15, (AMBAC)............ 1,847,104
875 Brevard County,
Housing Finance Authority RB,
Single Family Mortgage,
(Series B),
7.00%, 3/1/13, (FSA)............... 927,675
1,500 Brevard County,
Utility RRB, (Series 1993),
5.25%, 3/1/14, (AMBAC)............. 1,413,630
1,375 Broward County,
Housing Finance Authority RB,
College Home Mortgage,
(Series B),
7.125%, 3/1/17, (GNMA)............. 1,460,498
205 Broward County,
Housing Finance Authority RB,
College Home Mortgage,
(Series B),
7.55%, 3/1/15, (GNMA).............. 219,590
2,925 Broward County,
Housing Finance Authority RB,
North Beach Hospital Project,
7.00%, 8/15/11, (MBIA)............. 3,229,931
105 Charlotte County,
Special Assessment,
Peachland Municipal Service Tax &
Ben. Units,
7.25%, 10/1/10, (MBIA)............. 117,469
1,000 Charlotte County,
Utility RB,
7.00%, 10/1/14, (FGIC)............. 1,149,270
500 Collier County,
Health Facility Authority, RRB,
The Moorings, Inc. Project,
7.00%, 12/1/19..................... 508,880
1,000 Cooper City,
Sales Tax RB,
7.25%, 10/1/11..................... 1,084,380
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
$1,000 Dade County,
Courthouse Center Project RB,
6.25%, 4/1/09, (MBIA).............. $ 1,043,190
2,070 Dade County,
Education Facility Authority RB,
Florida International University
N Miami Project,
7.10%, 10/1/16..................... 2,389,877
2,000 Dade County,
Education Facility Authority RB,
St. Thomas University,
6.00%, 1/1/14,
(LOC: Sun Bank Miami).............. 1,964,920
1,000 Dade County,
Education Facility Authority RB,
St. Thomas University,
6.125%, 1/1/19,
(LOC: Sun Bank Miami).............. 985,850
2,600 Dade County,
Education Facility Authority RB,
St. Thomas University,
7.65%, 1/1/14,
(LOC: Sun Bank Miami).............. 2,965,144
5,280 Dade County,
Guaranteed Entitlement RB,
Capital Appreciation, (Series A),
Zero Coupon, 2/1/08 (MBIA)......... 2,651,510
250 Dade County,
Health Facility Authority RB,
South Shore Hospital & Medical
Center,
7.60%, 8/1/24...................... 270,568
135 Dade County,
Housing Finance Authority RB,
Single Family Mortgage,
(Series A),
7.10%, 3/1/17, (GNMA).............. 144,608
275 Dade County,
Housing Finance Authority RB,
Single Family Mortgage,
(Series A),
7.50%, 9/1/13, (GNMA).............. 292,996
500 Dade County,
Housing Finance Authority RB,
Single Family Mortgage,
(Series D),
6.95%, 12/15/12, (FSA)............. 532,955
2,000 Dade County,
Miami Cerebral Palsy Service RB,
Development Authority,
8.00%, 6/1/22...................... 2,009,540
</TABLE>
5

<PAGE>
EVERGREEN FLORIDA MUNICIPAL BOND FUND
(Florida logo appears here) STATEMENT OF INVESTMENTS -- (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
LONG-TERM MUNICIPAL SECURITIES -- CONTINUED
$3,815 Dade County,
Public Facility RB,
Jackson Memorial Hospital,
4.875%, 6/1/15, (MBIA)............. $ 3,333,852
6,500 Dade County,
Public Facility RB,
Jackson Memorial Hospital,
5.25%, 6/1/23, (MBIA).............. 5,844,280
1,000 Dade County,
Water & Sewer Systems RB,
Allegany Health Systems,
St. Mary's,
5.00%, 10/1/13, (FGIC)............. 910,020
840 Duval County,
Single Family Mortgage RB,
Housing Finance Authority,
7.35%, 7/1/24, (FGIC).............. 901,790
215 Duval County,
Single Family Mortgage RB,
Housing Finance Authority,
7.50%, 6/1/15, (GNMA).............. 230,362
1,000 Escambia County,
Health Facility Authority RB,
Baptist Hospital, Inc.,
6.00%, 10/1/14..................... 925,140
4,615 Escambia County,
Pollution Control RB,
Champion International Corp.
Project,
5.875%, 6/1/22..................... 4,339,715
3,000 Escambia County,
Pollution Control RB,
Gulf Power Co. Project,
8.25%, 6/1/17...................... 3,244,530
2,000 FSU Financial Assistance, Inc.,
Education & Athletic Facility RB,
(Series A),
Prerefunded @ $102
6.75%, 10/1/01..................... 2,274,460
3,820 Florida Housing Finance Agency,
College Homeownership
Mortgage RB,
8.00%, 12/1/20, (GNMA)............. 4,144,815
1,895 Florida Housing Finance Agency,
Multi-Family Housing RB, (Series
A),
6.875%, 10/1/12.................... 1,959,828
2,000 Florida State,
Board Finance Department RB,
General Service Department,
6.75%, 7/1/13 (AMBAC).............. 2,154,320
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
$3,000 Florida State,
Board of Education, (Series B),
Prerefunded @ $102
7.00%, 6/1/99...................... $ 3,329,760
1,000 Florida State,
Board of Education Capital Outlay
RB, Public Education, (Series A),
5.00%, 6/1/09...................... 963,320
2,000 Florida State,
Board of Education Capital Outlay
RB, Public Education, (Series E),
5.25%, 6/1/23...................... 1,805,740
2,500 Florida State,
Board University Systems RB,
6.70%, 7/1/12, (AMBAC)............. 2,668,000
6,350 Florida State,
Municipal Power Agency RB,
Stanton II Project,
4.50%, 10/1/27, (AMBAC)............ 5,015,420
1,500 Gainesville,
Utility System RRB, (Series B),
5.50%, 10/1/13..................... 1,446,660
1,235 Hialeah,
Capital Improvement RB,
5.50%, 10/1/13..................... 1,127,925
1,000 Hillsborough County,
Florida Aviation RB,
Tampa International Airport,
(Series A),
6.90%, 10/1/11 (FGIC).............. 1,083,350
2,000 Hillsborough County,
Industrial Development Authority,
RRB,
(University Community Hospital),
6.50%, 8/15/19, (MBIA)............. 2,185,400
1,000 Hillsborough County,
Port Distribution RB,
(Tampa Port Authority)
5.75%, 6/1/13, (FSA)............... 992,210
1,000 Homestead,
Excise Tax RB,
7.15%, 10/1/11, (MBIA)............. 1,113,820
2,135 Jacksonville,
Electric Authority RB,
Bulk Power Supply Scherer,
Prerefunded @ $101.5
7.00%, 10/1/12..................... 2,413,532
</TABLE>
6

<PAGE>
EVERGREEN FLORIDA MUNICIPAL BOND FUND
(Florida logo appears here) STATEMENT OF INVESTMENTS -- (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
LONG-TERM MUNICIPAL SECURITIES -- CONTINUED
$4,085 Jacksonville,
Electric Authority RB,
Electric System, (Series 3-A),
5.25%, 10/1/28..................... $ 3,662,448
2,000 Jacksonville,
Health Facility Authority RB,
Prerefunded @ $102 (Series B),
7.50%, 11/1/00..................... 2,318,020
1,500 Jacksonville,
Health Facility Authority RB,
St. Lukes Hospital Association
Project,
6.75%, 11/15/13.................... 1,583,805
1,500 Jacksonville,
Health Facility Authority RB,
St. Lukes Hospital Association
Project,
7.125%, 11/15/20................... 1,616,685
1,025 Leon County,
Housing Finance Authority,
Multi-County Program, (Series B),
6.25%, 7/1/19, (GNMA).............. 1,021,115
1,000 Manatee County,
Community Redevelopment,
Administration Center Project,
7.00%, 4/1/08, (MBIA).............. 1,099,940
1,510 Manatee County,
Public Utilities RB, GO,
4.75%, 10/1/13, (FGIC)............. 1,316,916
3,500 Manatee County,
Public Utilities RB,
(Series A),
6.75%, 10/1/13, (MBIA)............. 3,980,305
1,500 Martin County,
Health Facility Authority RB,
(Series B),
7.10%, 11/15/20 (MBIA)............. 1,653,465
3,000 Miami Beach,
Redevelopment Agency,
Tax Increment RB,
City Center-Historic Convention,
5.80%, 12/1/13..................... 2,801,340
2,400 Miami Beach,
Sports & Exhibit Authority RB,
Prerefunded @ $102
7.20%, 10/1/00, (FGIC)............. 2,718,024
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
$1,000 North Tampa,
Housing Development Corp. RB,
Multi-Family Mortgage,
Country Oaks Apartments, (Series
A),
6.90%, 1/1/24, (FNMA).............. $ 1,039,020
1,000 Okaloosa County,
Water & Sewer RB,
6.00%, 7/1/11, (AMBAC)............. 1,044,760
3,000 Orange County,
Health Facility Authority RB,
Lakeside Alternatives, Inc.,
6.50%, 7/1/13...................... 2,960,700
1,000 Orlando,
Utility Commission Water & Electric
RRB, (Series D),
6.75%, 10/1/17..................... 1,128,170
3,000 Palm Beach County,
Criminal Justice Facility RB,
7.20%, 6/1/15, (FGIC).............. 3,558,780
2,195 Palm Beach County,
Health Facility Authority RB,
Good Samaritan Health Systems,
6.20%, 10/1/11..................... 2,212,845
6,000 Palm Beach County,
Health Facility Authority RB,
Good Samaritan Health Systems,
6.30%, 10/1/22..................... 6,052,920
6,250 Palm Beach County,
Health Facility Authority RB,
Jupiter Medical Center, Inc.,
5.25%, 8/1/23, (FSA)............... 5,618,312
1,000 Palm Beach County,
Single Family Mortgage RB,
6.50%, 10/1/21, (GNMA)............. 1,014,980
4,440 Palm Beach County,
Single Family Mortgage RB, (Series
B),
7.60%, 3/1/23, (GNMA).............. 4,764,120
5,000 Pensacola,
Health Facility Authority RB,
Daughters Charity National Health,
5.25%, 1/1/11...................... 4,617,600
860 Polk County,
Housing Finance Authority,
Single Family Mortgage RB,
(Series A),
7.00%, 9/1/15...................... 891,381
</TABLE>

SHARES VALUE
<C> <S> <C>
MUTUAL FUND SHARES .4%
695,000 Lehman Municipal Money
Market Fund
(COST $695,000)............ $ 695,000
TOTAL INVESTMENTS
(COST $155,584,758)... 98.3% 164,603,846
OTHER ASSETS AND
LIABILITIES -- NET.... 1.7 2,798,325
NET ASSETS............... 100.0% $167,402,171
</TABLE>

Summary of Abbreviations
AMBAC -- Insured by American Municipal Bond Assurance Corporation
CGIC -- Insured by Capital Guaranty Insurance Company
FGIC -- Insured by Financial Guaranty Insurance Company
FNMA -- Federal National Mortgage Association
FSA -- Insured by Financial Security Assurance
GNMA -- Insured by Governmental National Mortgage Association
GO -- General Obligation Bonds
LOC -- Letter of Credit
MBIA -- Insured by Municipal Bond Investors Assurance
RB -- Revenue Bonds
RRB -- Revenue Refunding Bonds
See accompanying notes to financial statements.
8

<PAGE>
EVERGREEN FLORIDA MUNICIPAL BOND FUND
(Florida logo appears here) STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1995
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $155,584,758)........................................................... $164,603,846
Cash.......................................................................................................... 181
Receivable for securities sold................................................................................ 3,376,137
Interest receivable........................................................................................... 3,105,832
Receivable for Fund shares sold............................................................................... 123,000
Prepaid expenses.............................................................................................. 14,631
Total assets............................................................................................ 171,223,627
LIABILITIES:
Payable for securities purchased.............................................................................. 2,911,980
Dividends payable............................................................................................. 518,008
Payable for Fund shares redeemed.............................................................................. 297,264
Accrued expenses.............................................................................................. 94,204
Total liabilities....................................................................................... 3,821,456
NET ASSETS....................................................................................................... $167,402,171
NET ASSETS CONSIST OF:
Paid-in capital............................................................................................... $159,743,806
Undistributed net investment income........................................................................... 22,662
Net unrealized appreciation of investments.................................................................... 9,019,088
Accumulated net realized loss on investment transactions...................................................... (1,383,385)
Net assets.............................................................................................. $167,402,171
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($136,449,133 14,007,733 shares of beneficial interest outstanding)............................ $ 9.74
Sales charge -- 4.75% of offering price....................................................................... .49
Maximum offering price.................................................................................. $ 10.23
Class B Shares ($27,350,734 2,808,102 shares of beneficial interest outstanding).............................. $ 9.74
Class Y Shares ($3,602,304 369,836 shares of beneficial interest outstanding)................................. $ 9.74
</TABLE>

See accompanying notes to financial statements.
9

<PAGE>
EVERGREEN FLORIDA MUNICIPAL BOND FUND
(Florida logo appears here) STATEMENT OF OPERATIONS
FOUR MONTHS ENDED AUGUST 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest........................................................................................... $3,467,384
EXPENSES:
Advisory fee....................................................................................... $243,413
Administrative personnel and service fees.......................................................... 38,751
Distribution fee -- Class A Shares................................................................. 59,721
Distribution fee -- Class B Shares................................................................. 28,054
Shareholder services fees.......................................................................... 9,351
Transfer agent fee................................................................................. 77,655
Insurance expense.................................................................................. 54,997
Custodian fee...................................................................................... 32,224
Professional fees.................................................................................. 29,473
Registration and filing fees....................................................................... 17,371
Trustees' fees and expenses........................................................................ 8,879
Reports and notices to shareholders................................................................ 6,576
Miscellaneous...................................................................................... 5,074
611,539
Less: Fee waivers and expense reimbursements....................................................... (120,525)
Net expenses................................................................................. 491,014
Net investment income................................................................................. 2,976,370
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments................................................................... 865,584
Net change in unrealized appreciation of investments............................................... 2,620,594
Net gain on investments............................................................................ 3,486,178
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................................. $6,462,548
</TABLE>

See accompanying notes to financial statements.
10

<PAGE>
EVERGREEN FLORIDA MUNICIPAL BOND FUND
(Florida logo appears here) STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOUR MONTHS
ENDED YEAR ENDED
AUGUST 31, 1995 APRIL 30, 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income...................................................................... $ 2,976,370 $ 10,603,619
Net realized gain on investments........................................................... 865,584 911,219
Net change in unrealized appreciation of investments....................................... 2,620,594 658,645
Net increase in net assets resulting from operations.................................... 6,462,548 12,173,483
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A Shares............................................................................. (2,733,700) (10,603,619)
Class B Shares............................................................................. (211,396) --
Class Y Shares............................................................................. (31,274) --
Total distributions from net investment income....................................... (2,976,370) (10,603,619)
DISTRIBUTIONS TO SHAREHOLDERS IN EXCESS OF NET INVESTMENT INCOME:
Class A Shares............................................................................. (210,099) --
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAINS:
Class A Shares............................................................................. (820,461) (372,640)
Total distributions to shareholders..................................................... (4,006,930) (10,976,259)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold.................................................................. 4,227,591 10,432,999
Proceeds from shares issued in acquisition of First Union
Florida Municipal Bond Portfolio........................................................ 38,045,323 --
Proceeds from reinvestment of distributions................................................ 1,604,983 3,441,954
Payment for shares redeemed................................................................ (47,473,841) (46,142,147)
Net decrease resulting from Fund share transactions..................................... (3,595,944) (32,267,194)
Net decrease in net assets.............................................................. (1,140,326) (31,069,970)
NET ASSETS:
Beginning of period........................................................................ 168,542,497 199,612,467
End of period (includes undistributed net investment income of $22,662 at August 31,
1995).................................................................................... $ 167,402,171 $ 168,542,497
</TABLE>

See accompanying notes to financial statements.
11

<PAGE>
(Florida logo appears here) THE EVERGREEN FLORIDA MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS(Stacked Crosses)
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS Y SHARES
FOUR MONTHS
ENDED JUNE 30, 1995* JUNE 30, 1995*
AUGUST 31, YEAR ENDED APRIL 30, THROUGH THROUGH
1995# 1995 1994 1993 1992 AUGUST 31, 1995# AUGUST 31, 1995#
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period.. $9.61 $9.52 $9.95 $9.35 $9.21 $9.67 $9.67
Income (loss) from investment
operations:
Net investment income................. .25 .54 .56 .56 .61 .07 .09
Net realized and unrealized gain
(loss on investments............... .22 .11 (.36) .67 .22 .10 .10
Total from investment operations.. .47 .65 .20 1.23 .83 .17 .19
Less distributions to shareholders
from:
Net investment income................. (.25) (.54) (.56) (.56) (.61) (.07) (.09)
Distributions in excess of net
investment income................... (.03) -- -- -- -- (.03) (.03)
Net realized gains.................... (.06) (.02) (.07) (.07) (.04)
Distributions from paid-in capital.... -- -- -- -- (.04) -- --
Total distributions............... (.34) (.56) (.63) (.63) (.69) (.10) (.12)
Net asset value, end of period........ $9.74 $9.61 $9.52 $9.95 $9.35 $9.74 $9.74
TOTAL RETURN(|).............. 4.2% 7.1% 1.9% 13.6% 9.3% 1.5% 1.7%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted)..................... $136,449 $168,542 $199,612 $198,286 $147,996 $27,351 $3,602

Ratios to average net assets:
Expenses.............................. .82%(+)(+)** .61% .56% .58% .41%** 1.44%(+)(+) .59%(+)(+)
Net investment income................. 4.89%(+)(+)** 5.73% 5.37% 5.66% 6.12%** 3.22%(+)(+) 4.93%(+)(+)
Portfolio turnover rate................. 29% 53% 32% 24% 24% 29% 29%

</TABLE>

# The Fund changed its fiscal year end from April 30 to August 31.
* Commencement of class operations.
(+) Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Initial sales charge or contingent
deferred sales charges are not reflected.
(+)(+) Annualized
** Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were reimbursed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets would have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES
FOUR MONTHS
ENDED YEAR ENDED
AUGUST 31, APRIL 30,
1995# 1992
<S> <C> <C>
Expenses.......................................................................... 1.05% .68%
Net investment income............................................................. 4.66% 5.85%
</TABLE>

(Stacked On June 30, 1995, ABT Florida Tax-Free Fund sold its net assets
Crosses) to First Union Florida Municipal Bond Portfolio which was
subsequently renamed Evergreen Florida Municipal Bond Fund.
ABT Florida Tax-Free Fund was the accounting survivor in the
combination. Accordingly, the information stated in the above
table prior to the combination reflects the results of ABT
Florida Tax-Free Fund. The net asset values per share and
related per share data have been restated to reflect the
conversion of shares.
See accompanying notes to financial statements.
12

<PAGE>
EVERGREEN FLORIDA HIGH INCOME
(Florida Plus Logo appears here) MUNICIPAL BOND FUND
RESULTS TO DATE
PERFORMANCE OF $10,000 INVESTED IN THE
EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND
The graphs below compare a $10,000 investment in the Evergreen Fund (Class
A and Class B Shares) with a similar investment in the Lehman Brothers Municipal
Bond Index ("Index").

(Three graphs appear here with the following plot points.)

CLASS A AVERAGE ANNUAL TOTAL RETURN

1 YEAR=2.5%
SINCE INCEPTION=0.2%

6/1/93* 8/31/93 8/31/94 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN GEORGIA MUNICIPAL BOND INDEX
GEORGIA MUNICIPAL BOND FUND

CLASS B AVERAGE ANNUAL TOTAL RETURN
1 YEAR=1.8%
SINCE INCEPTION=0.6%

6/1/93* 8/31/93 8/31/94 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN GEORGIA MUNICIPAL BOND INDEX
GEORGIA MUNICIPAL BOND FUND

CLASS Y AVERAGE ANNUAL TOTAL RETURN
1 YEAR=7.9%
SINCE INCEPTION=3.1%

2/28/94* 8/31/94 2/28/95 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN GEORGIA MUNICIPAL BOND INDEX
GEORGIA MUNICIPAL BOND FUND

* Commencement of class operations.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE RESULTS. MUTUAL FUNDS
ARE
NOT OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK AND ARE NOT FEDERALLY INSURED.
For the purposes of the graphs and the accompanying tables, it has been
assumed that (a) the maximum sales charge of 4.75% was deducted from the initial
$10,000 investment in Class A Shares; (b) the maximum applicable contingent
deferred sales charge was deducted from the value of the investment in Class B
Shares, assuming full redemption on August 31, 1995; (c) all recurring fees
(including investment advisory fees) were deducted; and (d) all dividends and
distributions were reinvested.
The Index is an unmanaged index and includes the reinvestment of income,
but does not reflect the payment of transaction costs and advisory fees
associated with an investment in the Fund.
13
<PAGE>
<PAGE>
EVERGREEN FLORIDA HIGH INCOME
MUNICIPAL BOND FUND
(SUCCESSOR TO ABT FLORIDA HIGH INCOME MUNICIPAL BOND FUND)
(Florida Plus logo appears here) STATEMENT OF INVESTMENTS
AUGUST 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
LONG-TERM MUNICIPAL SECURITIES -- 97.5%
FLORIDA -- 97.5%
$ 660 Alachua County,
Health Facility Authority RB,
Mental Health Service Project,
7.60%, 11/15/13..................... $ 705,520
1,000 Bay County,
Hospital Systems RB,
Bay Medical Center Project,
8.00%, 10/1/12...................... 1,080,930
400 Baytree Community,
Development District RB,
Special Assessment,
8.75%, 5/1/12....................... 421,444
1,875 Brevard County,
Health Facility Authority RB,
Courtney Springs Village,
7.50%, 11/15/12..................... 1,885,969
1,000 Brevard County,
Tourist Authority RB,
Marlins Spring,
6.875%, 3/1/13...................... 1,031,970
1,000 Broward County,
Housing Finance Authority RB,
(Series A),
7.35%, 3/1/23, (GNMA)............... 1,061,380
1,695 Collier County,
Special Assessment RB,
Pine Ridge Industrial Park/
Naples Production Park,
5.375%, 11/1/07..................... 1,685,152
1,125 Crossing At Fleming Island,
Community Development RB,
District Utility,
7.375%, 10/1/19..................... 1,067,434
1,240 Dade County,
IDA, Miami Health Facility
Authority RB, Miami
Cerebral Palsy Service Project,
8.00%, 6/1/22....................... 1,245,915
485 Escambia County,
Health Facility Authority RB,
Azalea Trace, Inc.,
8.50%, 1/1/19....................... 507,970
535 Escambia County,
Health Facility Authority RB,
Azalea Trace, Inc.,
9.25%, 1/1/06....................... 582,149
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
$ 125 Escambia County,
Health Facility Authority RB,
Azalea Trace, Inc.,
9.25%, 1/1/12....................... $ 135,664
1,500 Escambia County,
Health Facility Authority RB,
Baptist Hospital and Baptist Manor,
Inc.,
6.00%, 10/1/14...................... 1,387,710
2,000 Escambia County,
Pollution Control RB,
Champion International Corp.
Project,
6.90%, 8/1/22....................... 2,093,540
1,545 Hialeah Gardens,
IDA, Waterford Convalescent, (Series
A),
7.875%, 12/1/07..................... 1,570,940
1,150 Hillsborough County,
Capital Improvement RB,
County Center Project, (Series 2),
6.75%, 7/1/22....................... 1,224,555
3,500 Homestead,
IDR, RB,
Community Rehabilitation Providers
Program,
7.95%, 11/1/18...................... 3,517,535
2,500 Indian Trace Community,
GO Limited, Special Assessment,
Water Management Special Benefit,
8.25%, 5/1/11....................... 2,568,350
750 Jacksonville,
Health Facility Authority RB,
Cypress Village Project,
7.00%, 12/1/14...................... 764,700
1,000 Jacksonville,
Health Facility Authority RB,
Cypress Village Project,
7.00%, 12/1/22...................... 1,009,320
2,920 Leon County,
Education Facility Authority RB,
Student Housing, (Series A),
8.25%, 5/1/14....................... 2,974,224
675 Martin County,
IDA, RB,
Indiantown Cogeneration,
7.875%, 12/15/25.................... 747,812
</TABLE>
14

<PAGE>
EVERGREEN FLORIDA HIGH INCOME
MUNICIPAL BOND FUND
(SUCCESSOR TO ABT FLORIDA HIGH INCOME MUNICIPAL BOND FUND)
(Florida Plus logo appears here) STATEMENT OF INVESTMENTS -- (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
LONG-TERM MUNICIPAL SECURITIES -- CONTINUED
$1,310 North Springs,
Improvement District,
Special Assessment,
District Water Management,
(Series A),
8.20%, 5/1/24....................... $ 1,428,647
500 Northern Palm Beach County,
Water Control District RB,
Special Assessment,
Unit Development #18,
6.875%, 11/1/13..................... 513,730
500 Northern Palm Beach County,
Water Control District RB,
Special Assessment,
Unit Development #3A-1,
7.00%, 8/1/15....................... 519,505
1,040 Orange County,
Health Facility Authority RB,
Lakeside Alternatives, Inc.,
6.50%, 7/1/13-WI.................... 1,026,376
500 Pace Property Finance Authority,
Utility RB,
6.25%, 9/1/13....................... 489,440
1,500 Palm Beach County,
Health Facility Authority RB,
6.20%, 10/1/11...................... 1,512,195
400 Palm Beach County,
Health Facility Authority RB,
Waterford Project,
7.75%, 10/1/15...................... 401,056
1,000 Palm Beach County,
Osceola Power Project,
6.95%, 1/1/22....................... 982,100
2,000 Palm Beach County,
Solid Waste, Okeelanta
Power LP Project, (Series A),
6.85%, 2/15/21...................... 1,941,400
685 Pinellas County,
Education Facility Authority RB,
Eckerd College,
7.75%, 7/1/14....................... 736,067
5,000 Polk County,
IDA, RB,
IMC Global, Inc.,
7.525%, 1/1/15...................... 5,214,700
1,000 Port Everglades Authority RB,
Improvement Revenue, (Series A),
7.50%, 9/1/12....................... 1,043,990
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
$1,755 Quantum Community,
Development District RB,
Special Assessment,
7.75%, 3/1/14....................... $ 1,737,959
2,100 Riverwood Community,
Development District RB,
7.75%, 10/1/14...................... 2,079,126
2,150 St. Johns County,
Industrial Development Authority,
RB, Vicar's Landing Project,
(Series A),
6.75%, 2/15/12...................... 2,145,657
1,500 South Indian River,
Water Control District RB,
Special Assessment,
Egret Landing Phase I,
7.50%, 11/1/18...................... 1,580,445
3,000 Tampa,
Aquarium Project RB,
7.75%, 5/1/27....................... 3,149,100
1,500 Tampa,
Capital Improvement Progress RB,
(Series B),
8.375%, 10/1/18..................... 1,603,140
1,000 Tarpon Springs,
Health Facility Authority RB,
Helen Ellis Hospital,
7.50%, 5/1/11....................... 1,030,910
2,000 Virgin Islands,
Water & Sewer Authority RB, (Series
B),
7.60%, 1/1/12....................... 2,166,140
250 Winter Haven,
Housing Authority,
Abbey Lane Apartments,
(Series C),
7.00%, 7/1/12, (FNMA)............... 263,240
250 Winter Haven,
Housing Authority,
Abbey Lane Apartments,
(Series C),
7.00%, 7/1/24, (FNMA)............... 260,825
TOTAL LONG-TERM MUNICIPAL
SECURITIES
(COST $60,089,561)............. 61,095,931
</TABLE>

<PAGE>
EVERGREEN FLORIDA HIGH INCOME
MUNICIPAL BOND FUND
(SUCCESSOR TO ABT FLORIDA HIGH INCOME MUNICIPAL BOND FUND)
(Florida logo appears here) STATEMENT OF INVESTMENTS -- (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
MUTUAL FUND SHARES 7.0%
2,584,000 Lehman Municipal Money
Market Fund......................... $ 2,584,000
1,822,000 Lehman Tax Free Money
Market Fund......................... 1,822,000
TOTAL MUTUAL FUND SHARES
(COST $4,406,000)................. 4,406,000
</TABLE>

<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS
(COST $64,495,561)...... 104.5%.. 65,501,931
OTHER ASSETS AND
LIABILITIES -- NET...... (4.5) (2,813,700)
NET ASSETS................. 100.0% $62,688,231
</TABLE>

Summary of Abbreviations
FNMA -- Federal National Mortgage Association
GNMA -- Governmental National Mortgage Association
GO -- General Obligation Bonds
IDA -- Industrial Development Authority
IDR -- Industrial Development Revenue
RB -- Revenue Bonds
WI -- When Issued
See accompanying notes to financial statements.
16

<PAGE>
EVERGREEN FLORIDA HIGH INCOME
MUNICIPAL BOND FUND
(SUCCESSOR TO ABT FLORIDA HIGH INCOME MUNICIPAL BOND FUND)
(Florida Plus logo appears here) STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1995
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $64,495,561)............................................................. $65,501,931
Cash........................................................................................................... 441
Interest receivable............................................................................................ 1,278,637
Receivable for Fund shares sold................................................................................ 261,916
Deferred organization expenses and other assets................................................................ 18,791
Total assets............................................................................................. 67,061,716
LIABILITIES:
Payable for securities purchased............................................................................... 3,638,078
Payable for Fund shares redeemed............................................................................... 441,378
Dividends payable.............................................................................................. 217,739
Accrued expenses............................................................................................... 61,178
Accrued advisory fee........................................................................................... 15,112
Total liabilities........................................................................................ 4,373,485
NET ASSETS........................................................................................................ $62,688,231
NET ASSETS CONSIST OF:
Paid-in capital................................................................................................ $63,046,831
Net unrealized appreciation of investments..................................................................... 1,006,370
Distributions in excess of net investment income............................................................... (7,223)
Accumulated net realized loss on investment transactions....................................................... (1,357,747)
Net assets............................................................................................... $62,688,231
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($59,550,816 5,724,891 shares of beneficial interest outstanding)............................... $ 10.40
Sales charge -- 4.75% of offering price........................................................................ .52
Maximum offering price................................................................................... $ 10.92
Class B Shares ($3,137,314 301,651 shares of beneficial interest outstanding).................................. $ 10.40
Class Y Shares ($101 9.71 shares of beneficial interest outstanding)........................................... $ 10.40
</TABLE>

See accompanying notes to financial statements.
17
<PAGE>
<PAGE>
EVERGREEN FLORIDA HIGH INCOME
MUNICIPAL BOND FUND
(SUCCESSOR TO ABT FLORIDA HIGH INCOME MUNICIPAL BOND FUND)
(Florida Plus logo appears here) STATEMENT OF OPERATIONS
FOUR MONTHS ENDED AUGUST 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest........................................................................................... $1,447,979
EXPENSES:
Advisory fee....................................................................................... $123,320
Administrative personnel and service fees.......................................................... 13,835
Distribution fee -- Class A Shares................................................................. 41,690
Distribution fee -- Class B Shares................................................................. 1,565
Shareholder services fees -- Class B Shares........................................................ 522
Transfer agent fee................................................................................. 29,410
Insurance expense.................................................................................. 21,407
Custodian fee...................................................................................... 19,369
Registration and filing fees....................................................................... 12,131
Amortization of deferred organization expense...................................................... 11,464
Professional fees.................................................................................. 10,597
Trustees' fees and expenses........................................................................ 5,625
Reports and notices to shareholders................................................................ 3,000
Miscellaneous...................................................................................... 653
294,588
Less: Advisory fee waiver.......................................................................... (71,690)
Net expenses................................................................................. 222,898
Net investment income................................................................................. 1,225,081
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments................................................................... 150,049
Net change in unrealized appreciation (depreciation) of investments................................ 1,449,591
Net gain on investments............................................................................ 1,599,640
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................................. $2,824,721
</TABLE>

See accompanying notes to financial statements.
18

<PAGE>
EVERGREEN FLORIDA HIGH INCOME
MUNICIPAL BOND FUND
(SUCCESSOR TO ABT FLORIDA HIGH INCOME MUNICIPAL BOND FUND)
(Florida Plus logo appears here) STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOUR MONTHS
ENDED YEAR ENDED
AUGUST 31, 1995 APRIL 30, 1995
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income.................................................................... $ 1,225,081 $ 4,534,494
Net realized gain (loss) on investments.................................................. 150,049 (1,288,520)
Net change in unrealized appreciation (depreciation) of investments...................... 1,449,591 1,557,790
Net increase in net assets resulting from operations.................................. 2,824,721 4,803,764
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A Shares........................................................................... (1,214,190) (4,533,890)
Class B Shares........................................................................... (10,891) --
Total distributions from net investment income........................................... (1,225,081) (4,533,890)
DISTRIBUTIONS TO SHAREHOLDERS IN EXCESS OF NET INVESTMENT INCOME:
Class A Shares........................................................................... (8,411) --
Class B Shares........................................................................... (76) --
Total distributions in excess of net investment income................................... (8,487) --
Total distributions to shareholders................................................... (1,233,568) (4,533,890)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold................................................................ 10,600,090 12,266,977
Proceeds from reinvestment of distributions.............................................. 307,200 1,069,096
Payment for shares redeemed.............................................................. (14,853,087) (21,245,986)
Net decrease resulting from Fund share transactions................................... (3,945,797) (7,909,913)
Net decrease in net assets............................................................ (2,354,644) (7,640,039)
NET ASSETS:
Beginning of period...................................................................... 65,042,875 72,682,914
End of period (includes undistributed net investment income (distributions in excess of
net investment income) of ($7,223) and $604 at August 31, 1995 and April 30, 1995,
respectively).......................................................................... $62,688,231 $65,042,875
</TABLE>

See accompanying notes to financial statements.
19

<PAGE>
EVERGREEN FLORIDA HIGH INCOME
MUNICIPAL BOND FUND
(SUCCESSOR TO ABT FLORIDA HIGH INCOME MUNICIPAL BOND FUND)
(Florida Plus logo appears here) FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A SHARES
FOUR MONTHS
ENDED JUNE 17, 1992*
AUGUST 31, YEAR ENDED APRIL 30, THROUGH
1995# 1995 1994 APRIL 30, 1993
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period............... $10.16 $10.08 $10.36 $10.00
Income (loss) from investment operations:
Net investment income.............................. .21 .65 .68 .61
Net realized and unrealized gain (loss) on
investments...................................... .24 .08 (.26) .39
Total from investment operations............... .45 .73 .42 1.00
Less distributions to shareholders from:
Net investment income.............................. (.21) (.65) (.68) (.61)
Net realized gains................................. -- -- (.02) (.03)
Total distributions............................ (.21) (.65) (.70) (.64)
Net asset value, end of period..................... $10.40 $10.16 $10.08 $10.36
TOTAL RETURN(|).................................... 4.4% 7.6% 3.3% 10.3%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted).......... $59,551 $65,043 $72,683 $33,541
Ratios to average net assets:
Expenses......................................... 1.07%(+)(+)** .60%** .14%** .00%**
Net investment income............................ 5.92%(+)(+)** 6.52%** 6.16%** 5.92%(+)(+)**
Portfolio turnover rate............................ 14% 28% 31% 50%
<CAPTION>

CLASS B SHARES
JULY 10, 1995*
THROUGH
AUGUST 31, 1995
<S> <C><C>
PER SHARE DATA:
Net asset value, beginning of period............... $10.41
Income (loss) from investment operations:
Net investment income.............................. .08
Net realized and unrealized gain (loss) on
investments...................................... (.01)
Total from investment operations............... .07
Less distributions to shareholders from:
Net investment income.............................. (.08)
Net realized gains................................. --
Total distributions............................ (.08)
Net asset value, end of period..................... $10.40
TOTAL RETURN(|).................................... .6%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted).......... $3,137
Ratios to average net assets:
Expenses......................................... 1.09%(+)(+)
Net investment income............................ 3.40%(+)(+)
Portfolio turnover rate............................ 14%
</TABLE>

# The Fund changed its fiscal year end from April 30 to August 31. (See Note 3)
* Commencement of class operations.
(+) Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Initial sales charges or contingent
deferred sales charges are not reflected.
(+)(+) Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were reimbursed or waived by the investment adviser, the annualized
ratios of expenses and net investment income to average net assets would have
been the following:
<TABLE>
<CAPTION>
CLASS A SHARES
FOUR MONTHS
ENDED YEARS ENDED APRIL JUNE 17, 1992*
AUGUST 31, 30, THROUGH
1995# 1995 1994 APRIL 30, 1993
<S> <C> <C> <C> <C>
Expenses............................................. 1.42% 1.26% 1.12% 1.12%(+)(+)
Net investment income................................ 5.57% 5.86% 5.18% 4.80%(+)(+)
</TABLE>

See accompanying notes to financial statements.
20

<PAGE>
EVERGREEN GEORGIA MUNICIPAL BOND FUND
(Georgia logo appears here)
RESULTS TO DATE
PERFORMANCE OF $10,000 INVESTED IN THE
EVERGREEN GEORGIA MUNICIPAL BOND FUND
The graphs below compare a $10,000 investment in the Evergreen Georgia
Municipal Bond Fund (Class A, Class B and Class Y Shares) with a similar
investment in the Lehman Brothers Georgia Municipal Bond Index ("Index").
[CHARTS TO FOLLOW.]

(Three graphs appear here with the following plot points.)

CLASS A AVERAGE ANNUAL TOTAL RETURN

1 YEAR=2.5%
SINCE INCEPTION=0.2%

6/1/93* 8/31/93 8/31/94 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN GEORGIA MUNICIPAL BOND INDEX
GEORGIA MUNICIPAL BOND FUND

CLASS B AVERAGE ANNUAL TOTAL RETURN
1 YEAR=1.8%
SINCE INCEPTION=0.6%

6/1/93* 8/31/93 8/31/94 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN GEORGIA MUNICIPAL BOND INDEX
GEORGIA MUNICIPAL BOND FUND

CLASS Y AVERAGE ANNUAL TOTAL RETURN
1 YEAR=7.9%
SINCE INCEPTION=3.1%

2/28/94* 8/31/94 2/28/95 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN GEORGIA MUNICIPAL BOND INDEX
GEORGIA MUNICIPAL BOND FUND

<PAGE>
EVERGREEN GEORGIA MUNICIPAL BOND FUND
(Georgia logo appears here) STATEMENT OF INVESTMENTS
AUGUST 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
LONG-TERM MUNICIPAL SECURITIES -- 97.6%
GEORGIA -- 95.0%
$ 500 Appling County, Development Authority,
PCR Bonds,
7.15%, 1/1/21, (MBIA)................. $ 553,795
1,750 Atlanta,
Urban Residential
Financial RB, Zero Coupon,
4/1/15, (FNMA)........................ 456,715
500 Burke County,
Development Authority,
8.00%, 1/1/22 (MBIA).................. 600,155
300 Butts County, COP,
6.75%, 12/1/14, (MBIA)................ 325,080
350 Cartersville,
Development Authority RB,
7.40%, 11/1/10........................ 407,103
120 Cartersville, GO,
6.70%, 1/1/12......................... 131,021
500 Cherokee County,
Water & Sewer,
Refunding & Improvement RB,
5.50%, 8/1/18, (MBIA)................. 479,860
500 Clayton County,
Housing Authority Mortgage, RRB,
(Multi-Family Mortgage)
7.125%, 12/1/25, (FNMA/FHA)........... 527,860
200 Columbia County,
School District, RRB,
5.20%, 4/1/10......................... 191,128
500 DeKalb County,
Multi-Family Housing RB,
7.15%, 1/1/25, (FSA).................. 524,075
500 DeKalb County,
School District, (Series A), GO,
6.25%, 7/1/11......................... 538,150
345 Douglasville County,
Water & Sewer Authority RRB,
5.625%, 6/1/15, (AMBAC)............... 339,114
500 Forsyth County,
School District, GO,
6.75%, 7/1/16......................... 555,660
400 Fulton County,
School District, GO,
5.625%, 1/1/21........................ 382,556
400 Fulton County,
Water & Sewer RB, GO,
6.375%, 1/1/14........................ 429,476
$ 500 George L. Smith, World
Congress Center Authority RB,
7.875%, 7/1/20........................ $ 549,820
400 Georgia State,
Housing & Finance
Authority, RB, (SFM), (Series A),
6.55%, 12/1/27, (FHA/VA).............. 403,856
250 Georgia State,
Municipal Electric Power
Authority, RRB, (Series V),
6.60%, 1/1/18......................... 263,847
400 Georgia State,
Municipal Electric Power
Authority, RRB, (Series EE)
7.25%, 1/1/24, (AMBAC)................ 478,888
500 Hall County,
Georgia School District, GO,
6.70%, 12/1/14 (AMBAC)................ 539,745
330 Metro Atlanta Rapid Transit,
7.00%, 7/1/11, (FGIC) (ETM)........... 382,226
500 Putnam County,
School District, GO,
6.90%, 2/1/14, (AMBAC)................ 547,955
500 Savannah County,
Georgia Hospital
Authority RB,
(St. Joseph's Hospital Project),
6.20%, 7/1/23......................... 487,026
300 Washington County,
School District, GO,
6.875%, 1/1/14, (AMBAC)............... 328,074
10,423,185
</TABLE>

<PAGE>
EVERGREEN GEORGIA MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS -- (CONTINUED)
(Georgia logo appears here) AUGUST 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
LONG-TERM MUNICIPAL SECURITIES
PUERTO RICO -- 2.6%
$ 265 Puerto Rico Commonwealth, GO,
6.25%, 7/1/11, (MBIA)................. $ 287,565
TOTAL LONG-TERM
MUNICIPAL SECURITIES
(COST $10,290,614)............... 10,710,750
</TABLE>

<TABLE>
<C> <S> <C> <C>
MUTUAL FUND SHARES -- 1.0%
110,000 Lehman Municipal
Money Market Fund
(COST $110,000)............ 110,000
TOTAL INVESTMENTS (COST
$10,400,614).......... 98.6% 10,820,750
OTHER ASSETS AND
LIABILITIES-NET....... 1.4 153,841
NET ASSETS............... 100.0% $10,974,591
</TABLE>

Summary of Abbreviations
AMBAC -- Insured by American Municipal Bond Assurance
Corporation
COP -- Certificate of Participation
ETM -- Escrowed to Maturity
FGIC -- Insured by Financial Guaranty Insurance Company
FHA/VA -- Insured by Federal Housing Authority/Veteran
Administration
FNMA/FHA -- Insured by Federal National Mortgage
Association/Federal Housing Authority
FSA -- Insured by Financial Security Assurance
GO -- General Obligation Bonds
MBIA -- Insured by Municipal Bond Investors Assurance
RB -- Revenue Bonds
RRB -- Revenue Refunding Bonds
SFM -- Single Family Mortgage
See accompanying notes to financial statements.
23

<PAGE>
EVERGREEN GEORGIA MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
(Georgia logo appears here) AUGUST 31, 1995
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $10,400,614)............................................................. $10,820,750
Cash........................................................................................................... 701
Interest receivable............................................................................................ 132,234
Receivable for Fund shares sold................................................................................ 21,285
Prepaid expenses............................................................................................... 9,693
Due from Adviser............................................................................................... 9,350
Total assets............................................................................................. 10,994,013
LIABILITIES:
Dividends payable.............................................................................................. 16,462
Accrued expenses............................................................................................... 2,960
Total liabilities........................................................................................ 19,422
NET ASSETS........................................................................................................ $10,974,591
NET ASSETS CONSIST OF:
Paid-in capital................................................................................................ $11,263,718
Undistributed net investment income............................................................................ 3,407
Accumulated net realized loss on investment transactions....................................................... (712,670)
Net unrealized appreciation of investments..................................................................... 420,136
Net assets............................................................................................... $10,974,591
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($2,098,080 221,538 shares of beneficial interest outstanding).................................. $ 9.47
Sales charge -- 4.75% of offering price........................................................................ .47
Maximum offering price................................................................................... $ 9.94
Class B Shares ($7,537,605 795,654 shares of beneficial interest outstanding).................................. $ 9.47
Class Y Shares ($1,338,906 141,325 shares of beneficial interest outstanding).................................. $ 9.47
</TABLE>

See accompanying notes to financial statements.
24

<PAGE>
EVERGREEN GEORGIA MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS
(Georgia logo appears here) EIGHT MONTHS ENDED AUGUST 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest.......................................................................................... $ 398,373
EXPENSES:
Advisory fee...................................................................................... $32,646
Administrative personnel and services fees........................................................ 4,209
Distribution fee -- Class A Shares................................................................ 2,856
Distribution fee -- Class B Shares................................................................ 37,476
Shareholder services fees -- Class B Shares....................................................... 12,492
Custodian fee..................................................................................... 38,966
Transfer agent fee................................................................................ 27,438
Registration and filing fees...................................................................... 26,025
Reports and notices to shareholders............................................................... 17,591
Professional fees................................................................................. 15,475
Insurance expense................................................................................. 990
Miscellaneous..................................................................................... 4,955
221,119
Less: Fee waivers and expense reimbursements...................................................... (138,055)
Net expenses................................................................................ 83,064
Net investment income................................................................................ 315,309
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.................................................................. 178,194
Net change in unrealized appreciation (depreciation) of investments............................... 571,056
Net gain on investments.............................................................................. 749,250
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................. $1,064,559
</TABLE>

See accompanying notes to financial statements.
25

<PAGE>
EVERGREEN GEORGIA MUNICIPAL BOND FUND
(Georgia logo appears here) STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EIGHT MONTHS
ENDED YEAR ENDED
AUGUST 31, 1995 DECEMBER 31, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................................................ $ 315,309 $ 350,830
Net realized gain (loss) on investments.............................................. 178,194 (887,457)
Net change in unrealized appreciation (depreciation) of investments.................. 571,056 (185,649)
Net increase (decrease) in net assets resulting from operations................... 1,064,559 (722,276)
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A Shares....................................................................... (61,558) (64,118)
Class B Shares....................................................................... (232,039) (278,937)
Class Y Shares....................................................................... (21,712) (7,775)
Total distributions to shareholders............................................... (315,309) (350,830)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold............................................................ 2,941,604 6,753,905
Proceeds from reinvestment of distributions.......................................... 212,632 253,659
Payment for shares redeemed.......................................................... (1,511,506) (1,860,821)
Net increase resulting from Fund share transactions............................... 1,642,730 5,146,743
Net increase in net assets........................................................ 2,391,980 4,073,637
NET ASSETS:
Beginning of period.................................................................. 8,582,611 4,508,974
End of period (includes undistributed net investment income of $3,407 at August 31,
1995).............................................................................. $10,974,591 $ 8,582,611
</TABLE>

See accompanying notes to financial statements.
26

<PAGE>
EVERGREEN GEORGIA MUNICIPAL BOND FUND
(Georgia logo appears here) FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
JULY 2, JULY 2, CLASS Y SHARES
EIGHT MONTHS 1993* EIGHT MONTHS 1993* EIGHT MONTHS
ENDED YEAR ENDED THROUGH ENDED YEAR ENDED THROUGH ENDED
AUGUST 31, DECEMBER 31, DECEMBER 31, AUGUST 31, DECEMBER 31, DECEMBER 31, AUGUST 31,
1995# 1994 1993 1995# 1994 1993 1995#
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period..................... $ 8.74 $10.19 $10.00 $ 8.74 $10.19 $10.00 $ 8.74
Income (loss) from investment
operations:
Net investment income........ .33 .48 .20 .28 .43 .18 .35
Net realized and unrealized
gain (loss) on
investments................ .73 (1.45) .19 .73 (1.45) .19 .73
Total from investment
operations............... 1.06 (.97) .39 1.01 (1.02) .37 1.08
Less distributions to
shareholders from net
investment income.......... (.33) (.48) (.20) (.28) (.43) (.18) (.35)
Net asset value, end of
period..................... $ 9.47 $ 8.74 $10.19 $ 9.47 $ 8.74 $10.19 $ 9.47
TOTAL RETURN(|).............. 12.3% (9.6%) 4.0% 11.7% (10.2%) 3.7% 12.5%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted)............ $2,098 $1,387 $817 $7,538 $6,912 $3,692 $1,339
Ratios to average net assets:
Expenses **................ .71%(|)(|) .53% .25%(|)(|) 1.46%(|)(|) 1.13% .75%(|)(|) .46%(|)(|)
Net investment
income **................ 5.39%(|)(|) 5.26% 4.71%(|)(|) 4.64%(|)(|) 4.66% 4.15%(|)(|) 5.64%(|)(|)
Portfolio turnover rate...... 91% 147% 15% 91% 147% 15% 91%
<CAPTION>

FEBRUARY 28,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
PER SHARE DATA:
Net asset value, beginning of
period..................... $ 9.83
Income (loss) from investment
operations:
Net investment income........ .42
Net realized and unrealized
gain (loss) on
investments................ (1.09)
Total from investment
operations............... (.67)
Less distributions to
shareholders from net
investment income.......... (.42)
Net asset value, end of
period..................... $ 8.74
TOTAL RETURN(|).............. (6.9%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted)............ $284
Ratios to average net assets:
Expenses **................ .31%(+)(+)
Net investment
income **................ 5.68%(+)(+)
Portfolio turnover rate...... 147%
</TABLE>

# The Fund changed its fiscal year end from December 31 to August 31.
* Commencement of class operations.
(+) Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Initial sales charge or contingent
deferred sales charges are not reflected.
(+)(+) Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were reimbursed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to
average net assets, exclusive of any applicable state expense
limitations, would have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
JULY 2, JULY 2, CLASS Y SHARES
EIGHT MONTHS 1993* EIGHT MONTHS 1993* EIGHT MONTHS FEBRUARY 28,
ENDED YEAR ENDED THROUGH ENDED YEAR ENDED THROUGH ENDED 1994* THROUGH
AUGUST 31, DECEMBER 31, DECEMBER 31, AUGUST 31, DECEMBER 31, DECEMBER 31, AUGUST 31, DECEMBER 31,
1995# 1994 1993 1995# 1994 1993 1995# 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Expenses........ 2.83% 3.61% 6.82% 3.58% 4.21% 7.32% 2.58% 3.39%
Net investment
income
(loss)........ 3.27% 2.18% (1.86%) 2.52% 1.58% (2.42%) 3.52% 2.60%
</TABLE>

See accompanying notes to financial statements.
27

<PAGE>
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND
(North Carolina logo appears here)
RESULTS TO DATE
PERFORMANCE OF $10,000 INVESTED IN THE
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND
The graphs below compare a $10,000 investment in the Evergreen North
Carolina Municipal Bond Fund (Class A, Class B and Class Y Shares) with a
similar investment in the Lehman Brothers State General Obligation Bond Index
("Index").
[CHARTS TO FOLLOW.]

(Three graphs appear here with the following plot points.)

CLASS A AVERAGE ANNUAL TOTAL RETURN

1 YEAR=3.9%
SINCE INCEPTION=3.0%

1/12/93* 8/31/93 8/31/94 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN STATE GENERAL OBLIGATION BOND INDEX
NORTH CAROLINA FUND

CLASS B AVERAGE ANNUAL TOTAL RETURN
1 YEAR=3.2%
SINCE INCEPTION=3.3%

1/12/93* 8/31/93 8/31/94 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN STATE GENERAL OBLIGATION BOND INDEX
NORTH CAROLINA FUND

CLASS Y AVERAGE ANNUAL TOTAL RETURN
1 YEAR=9.3%
SINCE INCEPTION=3.0%

2/28/94* 8/31/94 2/28/95 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN STATE GENERAL OBLIGATION BOND INDEX
NORTH CAROLINA FUND

<PAGE>
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS
(North Carolina logo appears here) AUGUST 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
LONG-TERM MUNICIPAL SECURITIES -- 97.9%
NORTH CAROLINA -- 93.2%
$1,000 Chapel Hill,
Parking Facility
Refinancing Package,
6.35%, 12/1/18........................ $ 1,026,390
1,000 Charlotte,
Airport RB,
8.50%, 7/1/07......................... 1,082,420
5,000 Charlotte,
Convention Facility Project, (Series
C),
COP, 5.25%, 12/1/20 (AMBAC)........... 4,624,800
1,000 Charlotte,
Water & Sewer GO,
5.90%, 2/1/19......................... 1,019,110
1,000 Concord,
Utilities System RB,
5.50%, 12/1/14 (MBIA)................. 978,990
2,390 Cumberland County,
Civic Center Project, (Series A), COP,
6.40%, 12/1/24 (AMBAC)................ 2,498,960
980 Fremont,
Housing Development Corp.,
First Lien RB,
Torhunta Apartments,
6.75%, 7/15/22, (FHA)................. 1,007,548
1,000 Gastonia,
Combined Utility System RB,
6.00%, 5/1/14, (MBIA)................. 1,009,700
3,000 Greensboro,
Enterprise Systems RB, (Series A), COP,
5.30%, 6/1/15, (MBIA)................. 2,817,960
1,000 Harnett County,
6.40%, 12/1/14 (AMBAC)................ 1,050,630
1,235 Haywood County,
Industrial Facility,
Champion International Corp. Project,
5.50%, 10/1/18........................ 1,112,784
4,750 Martin County,
Industrial Facilities Authority,
(Solid Waste Weyerhaeuser Co.),
6.80%, 5/1/24......................... 5,003,507
360 Monroe,
Combined Enterprise System,
6.00%, 3/1/14......................... 360,832
$2,500 North Carolina Eastern Municipal Power
Systems Agency,
Electric RRB, (Series C), COP,
6.00%, 1/1/18, (AMBAC)................ $ 2,546,175
4,000 North Carolina Eastern Municipal Power
Systems Agency,
(Series A),
5.00%, 1/1/21......................... 3,592,160
3,750 North Carolina Eastern Municipal Power
Systems Agency,
(Series A),
6.50%, 1/1/18 (ETM)................... 3,749,550
500 North Carolina Medical Care
Commission,
Health Care Facility RB,
Southminster,
6.875%, 10/1/09....................... 514,045
2,000 North Carolina Medical Care
Commission,
Hospital Revenue,
Presbyterian Hospital Project,
5.50%, 10/1/20........................ 1,905,840
1,350 North Carolina Medical Care
Commission,
Hospital Revenue,
Rex Hospital Project,
6.25%, 6/1/17......................... 1,387,017
3,000 North Carolina Municipal Power Agency,
No. 1 Catawba Electric RB,
5.00%, 1/1/20 (ETM)................... 2,692,500
1,145 North Carolina Municipal Power Agency,
Electric RRB,
5.50%, 1/1/13 (ETM)................... 1,132,302
2,200 North Carolina State,
GO, (Series 1994 A),
4.75%, 2/1/12......................... 1,998,612
1,000 Onslow County,
Combined Enterprise System RB,
(Series 1994),
6.00%, 6/1/15, (MBIA)................. 1,009,750
3,000 Raleigh Durham,
Airport Authority Facilities RB,
American Airlines Project,
9.625%, 11/1/15....................... 3,089,880
730 Rowan County, GO,
5.60%, 4/1/15......................... 712,166
</TABLE>
29

<PAGE>
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS -- (CONTINUED)
(North Carolina logo appears here) AUGUST 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>

LONG-TERM MUNICIPAL SECURITIES -- CONTINUED
$ 1,500 Thomasville, Cityhall &
Utilities Improvements Project, COP,
6.00%, 6/1/17, (FSA).................. $ 1,515,240
3,100 Wake County,
Hospital RB,
5.125%, 10/1/26, (MBIA)............... 2,769,509
2,000 Wake County,
Industrial Facility & Pollution,
Control Financing Authority RB,
6.90%, 4/1/09......................... 2,153,240
54,361,617
PUERTO RICO -- 4.7%
2,000 Puerto Rico Commonwealth, GO,
6.25%, 7/1/11, (MBIA)................. 2,170,300
600 Puerto Rico Commonwealth,
Highway & Transit Authority, Series
1993
5.50%, 7/1/15......................... 564,097
2,734,397
TOTAL LONG-TERM MUNICIPAL SECURITIES
(COST $55,157,010).................. 57,096,014
MUTUAL FUND SHARES -- .7%
$392,000 Lehman Municipal Money
Market Fund
(COST $392,000)............ $ 392,000
TOTAL INVESTMENTS
(COST $55,549,010)....... 98.6% 57,488,014
OTHER ASSETS AND
LIABILITIES -- NET.... 1.4 836,484
NET ASSETS............... 100.0% $58,324,498

Summary of Abbreviations
AMBAC -- Insured by American Municipal Bond Assurance Corporation
COP -- Certificates of Participation
ETM -- Escrowed to Maturity
FHA -- Insured by Federal Housing Authority
FSA -- Insured by Financial Security Assurance
GO -- General Obligation Bonds
MBIA -- Insured by Municipal Bond Investors Assurance
RB -- Revenue Bonds
RRB -- Revenue Refunding Bonds
See accompanying notes to financial statements.
30

<PAGE>
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
(North Carolina logo appears here) AUGUST 31, 1995

</TABLE>
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $55,549,010)............................................................. $57,488,014
Cash........................................................................................................... 421
Receivable for securities sold................................................................................. 1,090,992
Interest receivable............................................................................................ 939,313
Receivable for Fund shares sold................................................................................ 146,781
Prepaid expenses............................................................................................... 23,170
Total assets............................................................................................. 59,688,691
LIABILITIES:
Payable for securities purchased............................................................................... 1,127,032
Payable for Fund shares redeemed............................................................................... 99,159
Dividends payable.............................................................................................. 67,746
Accrued expenses............................................................................................... 66,903
Accrued advisory fee........................................................................................... 3,353
Total liabilities........................................................................................ 1,364,193
NET ASSETS........................................................................................................ $58,324,498
NET ASSETS CONSIST OF:
Paid-in capital................................................................................................ $60,630,531
Undistributed net investment income............................................................................ 50,135
Accumulated net realized loss on investment transactions....................................................... (4,295,172)
Net unrealized appreciation of investments..................................................................... 1,939,004
Net assets............................................................................................... $58,324,498
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($8,279,279 832,233 shares of beneficial interest outstanding).................................. $ 9.95
Sales charge -- 4.75% of offering price........................................................................ .50
Maximum offering price................................................................................... $ 10.45
Class B Shares ($49,039,649 4,929,547 shares of beneficial interest outstanding)............................... $ 9.95
Class Y Shares ($1,005,570 101,079 shares of beneficial interest outstanding).................................. $ 9.95
</TABLE>

See accompanying notes to financial statements.
31

<PAGE>
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND
(North Carolina logo appears here) STATEMENT OF OPERATIONS
EIGHT MONTHS ENDED AUGUST 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest.......................................................................................... $2,285,000
EXPENSES:
Advisory fee...................................................................................... $ 190,284
Administrative personnel and service fees......................................................... 28,483
Distribution fee -- Class A Shares................................................................ 13,739
Distribution fee -- Class B Shares................................................................ 239,789
Shareholder services fees -- Class B Shares....................................................... 79,930
Custodian fee..................................................................................... 44,365
Transfer agent fee................................................................................ 40,308
Reports and notices to shareholders............................................................... 31,591
Professional fees................................................................................. 17,515
Registration and filing fees...................................................................... 17,179
Trustees' fees and expenses....................................................................... 1,089
Insurance expense................................................................................. 1,043
Miscellaneous..................................................................................... 14,656
719,971
Less: Advisory fee waiver......................................................................... (132,051)
Net expenses................................................................................... 587,920
Net investment income................................................................................ 1,697,080
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.................................................................. 668,311
Net change in unrealized appreciation (depreciation) of investments............................... 3,902,872
Net gain on investments.............................................................................. 4,571,183
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................. $6,268,263
</TABLE>

See accompanying notes to financial statements.
32

<PAGE>
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND
(North Carolina logo appears here) STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EIGHT
MONTHS
ENDED YEAR ENDED
AUGUST 31, DECEMBER 31,
1995 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income........................................................................ $ 1,697,080 $ 2,665,427
Net realized gain (loss) on investments...................................................... 668,311 (4,913,456)
Net change in unrealized appreciation (depreciation) of investments.......................... 3,902,872 (3,925,063)
Net increase (decrease) in net assets resulting from operations........................... 6,268,263 (6,173,092)
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A Shares............................................................................... (279,937) (503,283)
Class B Shares............................................................................... (1,389,260) (2,144,310)
Class Y Shares............................................................................... (27,883) (17,834)
Total distributions to shareholders....................................................... (1,697,080) (2,665,427)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold.................................................................... 6,832,112 20,561,838
Proceeds from reinvestment of distributions.................................................. 1,191,861 1,917,225
Payment for shares redeemed.................................................................. (7,507,588) (18,310,260)
Net increase resulting from Fund share transactions....................................... 516,385 4,168,803
Net increase (decrease) in net assets..................................................... 5,087,568 (4,669,716)
NET ASSETS:
Beginning of period.......................................................................... 53,236,930 57,906,646
End of period (includes undistributed net investment income of $50,135 at August 31, 1995)... $58,324,498 $ 53,236,930
</TABLE>

See accompanying notes to financial statements.
33

<PAGE>
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND
(North Carolina logo appears here) FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
EIGHT MONTHS JANUARY 11, EIGHT MONTHS
ENDED YEAR ENDED 1993* THROUGH ENDED YEAR ENDED
AUGUST 31, DECEMBER 31, DECEMBER 31, AUGUST 31, DECEMBER 31,
1995# 1994 1993 1995# 1994
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period..................... $ 9.16 $10.61 $ 10.00 $ 9.16 $ 10.61
Income (loss) from investment
operations:
Net investment income........ .33 .49 .46 .28 .44
Net realized and unrealized
gain (loss) on
investments................ .79 (1.45) .64 .79 (1.45)
Total from investment
operations............... 1.12 (.96) 1.10 1.07 (1.01)
Less distributions to
shareholders from:
Net investment income........ (.33) (.49) (.46) (.28) (.44)
Net realized gains........... -- -- (.03) -- --
Total distributions........ (.33) (.49) (.49) (.28) (.44)
Net asset value, end of
period..................... $ 9.95 $ 9.16 $ 10.61 $9.95 $9.16
TOTAL RETURN(|).............. 12.3% (9.1%) 11.3% 11.8% (9.6%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted)............ $8,279 $7,979 $12,739 $49,040 $44,616
Ratios to average net assets:
Expenses **................ .92%(|)(|) .79% .32%(|)(|) 1.67%(|)(|) 1.37%
Net investment income **... 5.09%(|)(|) 5.11% 4.91%(|)(|) 4.34%(|)(|) 4.53%
Portfolio turnover rate...... 117% 126% 57% 117% 126%
<CAPTION>
CLASS Y SHARES
JANUARY 11, EIGHT MONTHS FEBRUARY 28,
1993* THROUGH ENDED 1994* THROUGH
DECEMBER 31, AUGUST 31, DECEMBER 31,
1993 1995# 1994
<S> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period..................... $ 10.00 $9.16 $10.31
Income (loss) from investment
operations:
Net investment income........ .42 .35 .43
Net realized and unrealized
gain (loss) on
investments................ .64 .79 (1.15)
Total from investment
operations............... 1.06 1.14 (.72)
Less distributions to
shareholders from:
Net investment income........ (.42) (.35) (.43)
Net realized gains........... (.03) -- --
Total distributions........ (.45) (.35) (.43)
Net asset value, end of
period..................... $ 10.61 $9.95 $9.16
TOTAL RETURN(|).............. 10.8% 12.5% (7.0%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted)............ $45,168 $1,006 $642
Ratios to average net assets:
Expenses **................ .79%(+)(+) .67%(+)(+) .59%(+)(+)
Net investment income **... 4.47%(+)(+) 5.34%(+)(+) 5.58%(+)(+)
Portfolio turnover rate...... 57% 117% 126%
</TABLE>

CLASS A SHARES CLASS B SHARES CLASS Y SHARES
EIGHT JANUARY 11, EIGHT JANUARY 11, EIGHT
MONTHS 1993* MONTHS 1993* MONTHS
ENDED YEAR ENDED THROUGH ENDED YEAR ENDED THROUGH ENDED
AUGUST 31, DECEMBER 31, DECEMBER 31, AUGUST 31, DECEMBER 31, DECEMBER 31, AUGUST 31,
1995# 1994 1993 1995# 1994 1993 1995#
<S> <C> <C> <C> <C> <C> <C> <C>
Expenses.......................... 1.27% 1.18% 1.25% 2.02% 1.76% 1.74% 1.02%
Net investment income............. 4.74% 4.72% 3.98% 3.99% 4.14% 3.52% 4.99%
<CAPTION>

FEBRUARY 28,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
Expenses.......................... .98%
Net investment income............. 5.19%
</TABLE>

See accompanying notes to financial statements.
34

<PAGE>
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND
(South Carolina logo appears here)
RESULTS TO DATE
PERFORMANCE OF $10,000 INVESTED IN THE
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND
The graphs below compare a $10,000 investment in the Evergreen South
Carolina Municipal Bond Fund (Class A, Class B and Class Y Shares) with a
similar investment in the Lehman Brothers South Carolina Municipal Bond Index
("Index")

(Three graphs appear here with the following plot points.)

CLASS A AVERAGE ANNUAL TOTAL RETURN

1 YEAR=5.6%
SINCE INCEPTION=0.2%

1/3/94* 2/28/94 8/31/94 2/28/95 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN SOUTH CAROLINA
MUNICIPAL BOND INDEX
SOUTH CAROLINA FUND

CLASS B AVERAGE ANNUAL TOTAL RETURN
1 YEAR=5.1%
SINCE INCEPTION=0.2%

1/1/94* 2/28/94 8/31/94 2/28/95 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN SOUTH CAROLINA
MUNICIPAL BOND INDEX
SOUTH CAROLINA FUND

CLASS Y AVERAGE ANNUAL TOTAL RETURN
1 YEAR=11.2%
SINCE INCEPTION=4.8%

2/28/94* 8/31/94 2/28/95 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN SOUTH CAROLINA
MUNICIPAL BOND INDEX
SOUTH CAROLINA FUND

*COMMENCEMENT OF CLASS OPERATIONS
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE RESULTS. MUTUAL FUNDS
ARE NOT OBLIGATIONS OF, OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
For the purposes of the graphs and the accompanying tables, it has been
assumed that: (a) the maximum sales charge of 4.75% was deducted from the
initial $10,000 investment in Class A Shares; (b) the maximum applicable
contingent deferred sales charge was deducted from the value of the investment
in Class B Shares, assuming full redemption on August 31, 1995; (c) all
recurring fees, (including, investment advisory fees) were deducted; and (d) all
dividends and distributions were reinvested.
The Index is an unmanaged index and includes the reinvestment of income,
but does not reflect the payment of transaction costs and advisory fees
associated with an investment in the Fund.
35

<PAGE>
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND
(South Carolina logo appears here) STATEMENT OF INVESTMENTS
AUGUST 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
LONG-TERM MUNICIPAL SECURITIES -- 96.3%
SOUTH CAROLINA -- 94.6%
$250 Aiken County,
RB, Beloit Corp. Project,
6.00%, 12/1/11....................... $ 246,153
200 Barnwell County,
GO, School District #45,
5.50%, 2/1/11, (AMBAC)............... 195,320
200 Bennettsville,
Combined Utility System RB, (Series
B),
6.00%, 7/1/09, (MBIA)................ 208,394
300 Charleston County,
Health Facility RRB,
(1st Mortgage Episcopal
Church Project),
7.125%, 4/1/20....................... 303,027
200 Citadel Military College,
Student & Facility Housing RB,
5.50%, 10/1/14,
(Connie Lee Insured)................. 190,460
100 Coastal Carolina University, RB,
6.80%, 6/1/19, (MBIA)................ 107,242
100 Colleton County, GO,
5.60%, 3/1/09........................ 99,532
100 Columbia County,
Water & Sewer RB,
5.70%, 2/1/10........................ 100,581
500 Darlington County,
IDR, RB, (Nucor Corp. Project)
5.75%, 8/1/23........................ 468,395
300 Darlington County,
IDR RB, (Sonoco
Production Project),
6.125%, 6/1/25....................... 298,539
200 Georgetown County, Water
& Sewer District, Jr. Lien,
6.50%, 6/1/15........................ 197,114
200 Lancaster County,
Water & Sewer District RB,
5.25%, 5/1/21, (FGIC)................ 182,902
250 Laurens County,
Utility Systems RB, (Series 1994),
5.00%, 1/1/18, (FGIC)................ 223,390
215 Lexington County,
School District #1, Red Bank/White
Knoll Elementary Project, COP 7.00%,
9/1/05, (MBIA)....................... 238,712
$200 Medical University,
Hospital Facility RB, (Series A),
7.00%, 7/1/01, (MBIA)................ $ 218,314
100 Piedmont Municipal Power
Agency RB, (Series 1993),
5.50%, 1/1/12........................ 98,091
350 Piedmont Municipal Power
Agency RB,
6.05%, 1/1/04........................ 354,529
100 Richland County,
Solid Waste Disposal Facility RB,
(Union Camp Corp. Project)
6.75%, 5/1/22........................ 103,160
250 South Carolina State, Education
Assistant Authority RB, Guaranteed
Student Loan Sub Lien C,
5.875%, 9/1/07....................... 252,317
100 South Carolina State, Housing Finance
& Development Authority Mortgage RB,
(Series A),
6.55%, 7/1/15........................ 102,026
200 South Carolina State, Housing Finance
& Development Authority RB,
Homeownership Mortgage, (Series A),
7.55%, 7/1/11........................ 211,644
200 South Carolina State,
Job Economics Development Authority
Hospital Facility RB., Oconee
Memorial Hospital, Inc.,
6.15%, 3/1/16,
(Connie Lee Insured)................. 201,308
265 South Carolina State, Multi-Family
Housing RB, Mortgage Hunting Ridge
Apartments,
6.75%, 6/1/25........................ 267,531
200 South Carolina State, Public
Service Authority RB,
BDS Santee Cooper, (Series C),
5.125%, 1/1/21....................... 176,864
500 York City,
Industrial RB, (Exempt Facility
Hoechst Celanese) 5.70%, 1/1/24...... 464,885
5,510,430
PUERTO RICO -- 1.7%
100 Puerto Rico Commonwealth, GO,
5.65%, 7/1/15 (MBIA)................. 99,401
TOTAL LONG-TERM MUNICIPAL
SECURITIES (COST $5,499,351).... 5,609,831
</TABLE>

<PAGE>
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND
(South Carolina logo appears here) STATEMENT OF INVESTMENTS -- (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C> <C>
MUTUAL FUND SHARES -- .4%
24,000 Lehman Municipal Money
Market Fund (cost $24,000)... $ 24,000
TOTAL INVESTMENTS
(COST $5,523,351)....... 96.7% 5,633,831
OTHER ASSETS AND
LIABILITIES -- NET...... 3.3 191,261
NET ASSETS................... 100.0% $5,825,092
</TABLE>

Summary of Abbreviations
AMBAC -- Insured by American Municipal Bond
Assurance Corp.
COP -- Certificates of Participation
FGIC -- Insured by Financial Guaranty Insurance Co.
GO -- General Obligation Bonds
IDR -- Industrial Development Revenue
MBIA -- Insured by Municipal Bond Investors Assurance
RB -- Revenue Bonds
RRB -- Revenue Refunding Bonds
See accompanying notes to financial statements.
37

<PAGE>
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
(South Carolina logo appears here) AUGUST 31, 1995
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $5,523,351)................................................................ $5,633,831
Cash............................................................................................................. 113
Receivable for securities sold................................................................................... 313,143
Interest receivable.............................................................................................. 87,864
Due from Adviser................................................................................................. 43,719
Prepaid expenses................................................................................................. 14,003
Receivable for Fund shares sold.................................................................................. 24
Total assets............................................................................................... 6,092,697
LIABILITIES:
Payable for securities purchased................................................................................. 250,709
Accrued expenses................................................................................................. 9,978
Dividends payable................................................................................................ 6,918
Total liabilities.......................................................................................... 267,605
NET ASSETS.......................................................................................................... $5,825,092
NET ASSETS CONSIST OF:
Paid-in capital.................................................................................................. $5,718,961
Undistributed net investment income.............................................................................. 899
Accumulated net realized loss on investment transactions......................................................... (5,248)
Net unrealized appreciation of investments....................................................................... 110,480
Net assets................................................................................................. $5,825,092
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($609,799 63,618 shares of beneficial interest outstanding)....................................... $ 9.59
Sales charge -- 4.75% of offering price.......................................................................... .48
Maximum offering price..................................................................................... $ 10.07
Class B Shares ($3,542,229 369,557 shares of beneficial interest outstanding).................................... $ 9.59
Class Y Shares ($1,673,064 174,547 shares of beneficial interest outstanding).................................... $ 9.59
</TABLE>

See accompanying notes to financial statements.
38

<PAGE>
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS
(South Carolina logo appears here) EIGHT MONTHS ENDED AUGUST 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................................................................ $156,750
EXPENSES:
Advisory fee........................................................................................ $ 13,154
Administrative personnel and service fees........................................................... 1,930
Distribution fee -- Class A Shares.................................................................. 788
Distribution fee -- Class B Shares.................................................................. 15,094
Shareholder services fees -- Class B Shares......................................................... 5,031
Reports and notices to shareholders................................................................. 39,077
Transfer agent fee.................................................................................. 33,491
Custodian fee....................................................................................... 26,752
Professional fees................................................................................... 14,025
Registration and filing fees........................................................................ 13,481
Insurance expense................................................................................... 6,193
Trustees' fees and expenses......................................................................... 205
Miscellaneous....................................................................................... 16,596
185,817
Less: Fee waivers and expense reimbursements........................................................ (157,584)
Net expenses.................................................................................. 28,233
Net investment income.................................................................................. 128,517
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments.................................................................... 29,060
Net change in unrealized appreciation (depreciation) of investments................................. 330,261
Net gain on investments................................................................................ 359,321
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................... $487,838
</TABLE>

See accompanying notes to financial statements.
39

<PAGE>
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND
(South Carolina logo appears here) STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EIGHT MONTHS JANUARY 3, 1994*
ENDED THROUGH
AUGUST 31, 1995 DECEMBER 31, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................................................ $ 128,517 $ 88,479
Net realized gain (loss) on investments.............................................. 29,060 (33,409)
Net change in unrealized appreciation (depreciation) of investments.................. 330,261 (219,781)
Net increase (decrease) in net assets resulting from operations................... 487,838 (164,711)
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A Shares....................................................................... (17,293) (9,315)
Class B Shares....................................................................... (94,373) (76,164)
Class Y Shares....................................................................... (16,851) (3,000)
Total distributions to shareholders............................................... (128,517) (88,479)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold............................................................ 2,853,928 3,326,606
Proceeds from reinvestment of distributions.......................................... 83,256 57,330
Payment for shares redeemed.......................................................... (332,153) (270,006)
Net increase resulting from Fund share transactions............................ 2,605,031 3,113,930
Net increase in net assets..................................................... 2,964,352 2,860,740
NET ASSETS:
Beginning of period.................................................................. 2,860,740 --
End of period (includes undistributed net investment income of $899 at August 31,
1995).............................................................................. $ 5,825,092 $ 2,860,740
</TABLE>

* Commencement of operations.
See accompanying notes to financial statements.
40

<PAGE>
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND
(South Carolina appears here) FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS Y SHARES
EIGHT MONTHS JANUARY 3, 1994* EIGHT MONTHS JANUARY 3, 1994* EIGHT MONTHS
ENDED THROUGH ENDED THROUGH ENDED
AUGUST 31, 1995# DECEMBER 31, 1994 AUGUST 31, 1995# DECEMBER 31, 1994 AUGUST 31, 1995#
<S> <C> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of
period....................... $ 8.62 $ 10.00 $ 8.62 $ 10.00 $ 8.62
Income (loss) from investment
operations:
Net investment income.......... .34 .46 .29 .41 .35
Net realized and unrealized
gain (loss) on investments... .97 (1.38) .97 (1.38) .97
Total from investment
operations............... 1.31 (.92) 1.26 (.97) 1.32
Less distributions to
shareholders from net
investment income............ (.34) (.46) (.29) (.41) (.35)
Net asset value, end of
period....................... $ 9.59 $ 8.62 $ 9.59 $ 8.62 $ 9.59
TOTAL RETURN(+)................ 15.4% (9.3%) 14.8% (9.8%) 15.5%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted).............. $ 610 $ 312 $3,542 $ 2,456 $1,673
Ratios to average net assets:
Expenses**................... .53%(+)(+) .25%(+)(+) 1.28%(+)(+) .87%(+)(+) .28%(+)(+)
Net investment income**...... 5.41%(+)(+) 5.57%(+)(+) 4.66%(+)(+) 4.88%(+)(+) 5.66%(+)(+)
Portfolio turnover rate........ 66% 23% 66% 23% 66%
<CAPTION>

FEBRUARY 28,
1994* THROUGH
DECEMBER 31, 1994
<S> <C>
PER SHARE DATA:
Net asset value, beginning of
period....................... $9.74
Income (loss) from investment
operations:
Net investment income.......... .43
Net realized and unrealized
gain (loss) on investments... (1.12)
Total from investment
operations............... (.69)
Less distributions to
shareholders from net
investment income............ (.43)
Net asset value, end of
period....................... $8.62
TOTAL RETURN(+)................ (7.1%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted).............. $ 92
Ratios to average net assets:
Expenses**................... .00%(+)(+)
Net investment income**...... 5.92%(+)(+)
Portfolio turnover rate........ 23%
</TABLE>

# The Fund changed its fiscal year end from December 31 to August 31.
* Commencement of class operations.
(+) Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Initial sales charge or contingent
deferred sales charges are not reflected.
(+)(+) Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were reimbursed or waived by the investment adviser, the annualized
ratios of expenses and net investment income (loss) to average net assets,
exclusive of any applicable state expense limitations, would have been the
following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS Y SHARES
EIGHT MONTHS JANUARY 3, 1994* EIGHT MONTHS JANUARY 3, 1994* EIGHT MONTHS
ENDED THROUGH ENDED THROUGH ENDED
AUGUST 31, 1995# DECEMBER 31, 1994 AUGUST 31, 1995# DECEMBER 31, 1994 AUGUST 31, 1995#
<S> <C> <C> <C> <C> <C>
Expenses.................... 6.50% 10.71% 7.25% 11.33% 6.25%
Net investment income
(loss).................... (.56%) (4.89%) (1.31%) (5.58%) (.31%)
<CAPTION>

FEBRUARY 28,
1994* THROUGH
DECEMBER 31, 1994
<S> <<C>
Expenses.................... 10.46%
Net investment income
(loss).................... (4.54%)
</TABLE>

See accompanying notes to financial statements.
41

<PAGE>
EVERGREEN VIRGINIA MUNICIPAL BOND FUND

(Virginia logo appears here)
RESULTS TO DATE
PERFORMANCE OF $10,000 INVESTED IN THE
EVERGREEN VIRGINIA MUNICIPAL BOND FUND
The graphs below compare a $10,000 investment in the Evergreen Virginia
Municipal Bond Fund (Class A, Class B and Class Y Shares) with a similar
investment in the Lehman Brothers Virginia Municipal Bond Index ("Index").
[CHARTS TO FOLLOW.]

(Three graphs appear here with the following plot points.)

CLASS A AVERAGE ANNUAL TOTAL RETURN

1 YEAR=4.1%
SINCE INCEPTION=1.1%

6/7/93* 8/31/94 8/31/94 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN VIRGINIA MUNICIPAL BOND INDEX
VIRGINIA MUNICIPAL BOND FUND

CLASS B AVERAGE ANNUAL TOTAL RETURN
1 YEAR=3.5%
SINCE INCEPTION=1.1%

6/1/93* 8/31/93 8/31/94 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN VIRGINIA MUNICIPAL BOND INDEX
VIRGINIA MUNICIPAL BOND FUND

CLASS Y AVERAGE ANNUAL TOTAL RETURN
1 YEAR=9.6%
SINCE INCEPTION=4.4%

2/28/94* 8/31/94 2/28/94 8/31/95
(CUSTOMER PLEASE FILL IN)
LEHMAN VIRGINIA MUNICIPAL BOND INDEX
VIRGINIA MUNICIPAL BOND FUND

<PAGE>
EVERGREEN VIRGINIA MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS
(Virginia logo appears here) AUGUST 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
LONG-TERM MUNICIPAL SECURITIES -- 96.6%
VIRGINIA -- 85.4%
$ 100 Arlington County,
IDA Hospital Facility RB,
5.30%, 9/1/15......................... $ 90,934
300 Chesapeake, GO,
5.50%, 5/1/14......................... 289,461
250 Fairfax County, IDA,
Inova Health System Hospital RB,
5.25%, 8/15/19........................ 219,990
200 Fairfax County,
Redevelopment & Housing Authority,
Multi-Family Housing,
Mt. Vernon Apts.,
6.625%, 9/20/20, (GNMA)............... 206,260
700 Fairfax County,
Water Authority RB,
6.00%, 4/1/22......................... 698,103
500 Hanover County,
IDA Memorial Medical Center RB,
6.375%, 8/15/18, (MBIA)............... 533,560
400 Henrico County,
IDA Regional Jail Project RB,
7.00%, 8/1/13......................... 449,052
100 Isle Wright County, GO,
5.10%, 8/1/09......................... 96,611
250 Isle Wright County,
Solid Waste Disposal Authority RB,
Union Camp Corp. Project,
(Series 1994),
6.55%, 4/1/24......................... 257,480
100 James Madison
University RRB, Series 1993
5.25%, 6/1/13, (AMBAC)................ 93,210
300 Prince William County,
IDA, Hospital RB,
6.75%, 10/1/15........................ 315,822
250 Prince William County,
Park Authority RB,
6.875%, 10/15/16...................... 264,835
400 Richmond, GO,
Public Improvement,
(Series A),
5.50%, 1/15/22........................ 371,648
380 Riverside, Regional Jail
Authority RB,
6.00%, 7/1/25, (MBIA)................. 379,438
200 Virginia Beach, GO,
5.45%, 7/15/10........................ 200,390
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
$ 175 Virginia Beach,
Virginia Developmental Authority,
Hospital Facility First Mortgage RB,
6.00%, 2/15/09, (AMBAC)............... $ 184,259
100 Virginia Beach,
Virginia Developmental Authority,
Hospital Facility First Mortgage RB,
6.00%, 2/15/12, (AMBAC)............... 103,280
200 Virginia College Building Authority,
Hampton University Project,
5.75%, 4/1/14......................... 194,212
100 Virginia Guaranteed
Student Loan, RB, (Series C),
5.75%, 9/1/10......................... 97,548
100 Virginia State,
Housing Development Authority,
Commonwealth Meeting Bonds, (Series
A),
6.95%, 1/1/10......................... 104,026
100 Virginia State,
Housing Development Authority,
Commonwealth Meeting Bonds, (Series A)
7.10%, 1/1/17......................... 104,322
300 Virginia State,
Housing Development Authority RB,
(Series F),
Commonwealth Mortgage,
6.25%, 7/1/12......................... 301,863
300 Virginia State,
Multi-Family RB,
(Series H),
6.35%, 11/1/11........................ 306,366
100 Virginia State,
Public Building Authority,
(Series B),
5.40%, 8/1/13......................... 95,358
300 Virginia State,
Public School Authority, (Series A)
6.20%, 8/1/13......................... 311,802
100 Virginia State,
Public School Authority, (Series B),
6.50%, 8/1/15......................... 104,977
200 Virginia State,
Resident Authority
Water & Sewer,
Reference Washington County Service
Lot 21,
5.25%, 10/1/14........................ 184,574
</TABLE>
43

<PAGE>
EVERGREEN VIRGINIA MUNICIPAL BOND FUND
STATEMENT OF INVESTMENTS -- (CONTINUED)
(Virginia logo appears here) AUGUST 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(000) VALUE
<C> <S> <C>
LONG-TERM MUNICIPAL SECURITIES -- CONTINUED
$ 300 West Point,
IDA, Chesapeake Corp.,
6.25%, 3/1/19......................... $ 297,081
6,856,462
PUERTO RICO -- 5.9%
300 Puerto Rico Commonwealth, GO,
6.25%, 7/1/13, (MBIA)................. 322,491
150 Puerto Rico Commonwealth, GO,
6.45%, 7/1/17......................... 155,062
477,553
WASHINGTON, D.C. -- 5.3%
100 Metropolitan Airport Authority,
General Airport RRB, Series A
5.375%, 10/1/13, (MBIA)............... 94,523
300 Metropolitan Airport Authority,
General Airport RRB, Series A
7.60%, 10/1/14........................ 328,500
423,023
TOTAL LONG-TERM MUNICIPAL
SECURITIES (COST $7,599,524)..... 7,757,038
</TABLE>

<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C> <C>
MUTUAL FUND SHARES -- 5.2%
362,000 Lehman Municipal Money Market
Fund......................... $ 362,000
59,000 Lehman Tax Free Money
Market....................... 59,000
Total Mutual Fund Shares
(COST $421,000).............. 421,000
TOTAL INVESTMENTS..........
(COST $8,020,524) 101.8% 8,178,038
OTHER ASSETS AND
LIABILITIES -- NET...... (1.8) (146,031)
NET ASSETS................. 100.0% $8,032,007
</TABLE>

Summary of Abbreviations
AMBAC -- Insured by American Municipal Bond Assurance
Corporation
GNMA -- Government National Mortgage Association
GO -- General Obligation Bonds
IDA -- Industrial Development Authority
MBIA -- Insured by Municipal Bond Investors Assurance
RB -- Revenue Bonds
RRB -- Revenue Refunding Bonds
See accompanying notes to financial statements.
44

<PAGE>
EVERGREEN VIRGINIA MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
(Virginia logo appears here) AUGUST 31, 1995
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $8,020,524)................................................................ $8,178,038
Cash............................................................................................................. 688
Interest receivable.............................................................................................. 132,892
Receivable for Fund shares sold.................................................................................. 10,676
Prepaid expenses................................................................................................. 9,712
Due from Adviser................................................................................................. 7,179
Total assets............................................................................................... 8,339,185
LIABILITIES:
Payable for securities purchased................................................................................. 298,688
Dividends payable................................................................................................ 5,644
Accrued expenses................................................................................................. 2,846
Total liabilities.......................................................................................... 307,178
NET ASSETS.......................................................................................................... $8,032,007
NET ASSETS CONSIST OF:
Paid-in capital.................................................................................................. $8,146,997
Undistributed net investment income.............................................................................. 4,496
Accumulated net realized loss on investment transactions......................................................... (277,000)
Net unrealized appreciation of investments....................................................................... 157,514
Net assets................................................................................................. $8,032,007
CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares ($1,983,460 205,181 shares of beneficial interest outstanding).................................... $ 9.67
Sales charge -- 4.75% of offering price.......................................................................... .48
Maximum offering price..................................................................................... $ 10.15
Class B Shares ($5,083,339 525,841 shares of beneficial interest outstanding).................................... $ 9.67
Class Y Shares ($965,208 99,846 shares of beneficial interest outstanding)....................................... $ 9.67
</TABLE>

See accompanying notes to financial statements.
45

<PAGE>
EVERGREEN VIRGINIA MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS
(Virginia logo appears here) EIGHT MONTHS ENDED AUGUST 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................................................................. $273,155
EXPENSES:
Advisory fee......................................................................................... $ 23,156
Administrative personnel and service fees............................................................ 3,423
Distribution fee -- Class A Shares................................................................... 3,127
Distribution fee -- Class B Shares................................................................... 22,700
Shareholder services fee -- Class B Shares........................................................... 7,567
Custodian fee........................................................................................ 39,436
Transfer agent fee................................................................................... 28,780
Reports and notices to shareholders.................................................................. 28,370
Registration and filing fees......................................................................... 21,936
Professional fees.................................................................................... 15,055
Insurance expense.................................................................................... 1,012
Trustees' fees and expenses.......................................................................... 119
Miscellaneous........................................................................................ 4,454
199,135
Less: Fee waivers and expense reimbursements......................................................... (144,032)
Net expenses................................................................................... 55,103
Net investment income................................................................................... 218,052
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments..................................................................... (13,951)
Net change in unrealized appreciation (depreciation) of investments.................................. 567,181
Net gain on investments................................................................................. 553,230
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................................... $771,282
</TABLE>

See accompanying notes to financial statements.
46

<PAGE>
EVERGREEN VIRGINIA MUNICIPAL BOND FUND
(Virginia logo appears here) STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
EIGHT MONTHS
ENDED
AUGUST 31, YEAR ENDED
1995 DECEMBER 31, 1994
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................................................... $ 218,052 $ 236,912
Net realized loss on investments........................................................ (13,951) (258,553)
Net change in unrealized appreciation (depreciation) of investments..................... 567,181 (435,700)
Net increase (decrease) in net assets resulting from operations...................... 771,282 (457,341)
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class A Shares.......................................................................... (64,808) (82,301)
Class B Shares.......................................................................... (133,946) (148,091)
Class Y Shares.......................................................................... (19,298) (6,520)
Total distributions to shareholders..................................................... (218,052) (236,912)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold............................................................... 2,276,843 3,657,110
Proceeds from reinvestment of distributions............................................. 172,095 190,012
Payment for shares redeemed............................................................. (737,002) (926,664)
Net increase resulting from Fund share transactions............................... 1,711,936 2,920,458
Net increase in net assets........................................................ 2,265,166 2,226,205
NET ASSETS:
Beginning of period..................................................................... 5,766,841 3,540,636
End of period (includes undistributed net investment income of $4,496 at August 31,
1995)................................................................................. $ 8,032,007 $ 5,766,841
</TABLE>

See accompanying notes to financial statements.
47

<PAGE>
<TABLE>
<CAPTION>
EVERGREEN VIRGINIA MUNICIPAL BOND FUND
(Virginia logo appears here) FINANCIAL HIGHLIGHTS

CLASS A SHARES CLASS B SHARES CLASS Y
JULY 2, JULY 2, SHARES
EIGHT MONTHS 1993* EIGHT MONTHS 1993* EIGHT MONTHS
ENDED YEAR ENDED THROUGH ENDED YEAR ENDED THROUGH ENDED
AUGUST 31, DECEMBER 31, DECEMBER 31, AUGUST 31, DECEMBER 31, DECEMBER 31, AUGUST 31,
1995# 1994 1993 1995# 1994 1993 1995#
<S> <C> <C> <C> <C> <C> <C> <C>

PER SHARE DATA:
Net asset value, beginning
of period................ $ 8.85 $10.19 $10.00 $ 8.85 $10.19 $10.00 $8.85
Income (loss) from
investment operations:
Net investment income...... .33 .47 .20 .28 .42 .17 .34
Net realized and unrealized
gain (loss) on
investments.............. .82 (1.34) .19 .82 (1.34) .19 .82
Total from investment
operations............. 1.15 (.87) .39 1.10 (.92) .36 1.16
Less distributions to
shareholders from net
investment income........ (.33) (.47) (.20) (.28) (.42) (.17) (.34)
Net asset value, end of
period................... $ 9.67 $ 8.85 $ 10.19 $ 9.67 $ 8.85 $ 10.19 $9.67
TOTAL RETURN(+)............ 13.1% (8.6%) 3.9% 12.5% (9.1%) 3.7% 13.3%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted).......... $1,983 $1,606 $1,306 $5,083 $3,817 $2,235 $965
Ratios to average net
assets:
Expenses**............... .72%(+)(+) .53% .25%(+)(+) 1.47%(+)(+) 1.12% .75%(+)(+) .47%(+)(+)
Net investment
income**............... 5.17%(+)(+) 5.11% 4.64%(+)(+) 4.42%(+)(+) 4.54% 4.25%(+)(+) 5.42%(+)(+)
Portfolio turnover rate.... 87% 59% 0% 87% 59% 0% 87%

FEBRUARY 28,
1994*
THROUGH
DECEMBER 31,
1994
<S> <C>
PER SHARE DATA:
Net asset value, beginning
of period................ $9.83
Income (loss) from
investment operations:
Net investment income...... .41
Net realized and unrealized
gain (loss) on
investments.............. (.98)
Total from investment
operations............. (.57)
Less distributions to
shareholders from net
investment income........ (.41)
Net asset value, end of
period................... $8.85
TOTAL RETURN(+)............ (5.8%)
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted).......... $344
Ratios to average net
assets:
Expenses**............... .28%(+)(+)
Net investment
income**............... 5.54%(+)(+)
Portfolio turnover rate.... 59%
</TABLE>

# The Fund changed its fiscal year end from December 31 to August 31.
* Commencement of class operations.
(+) Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Initial sales charge or contingent
deferred sales charges are not reflected.
(+)(+) Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were reimbursed or waived by the investment adviser, the annualized
ratios of expenses and net investment income (loss) to average net assets,
exclusive of any applicable state expense limitations, would have been the
following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS Y SHARES
JULY 2, JULY 2,
EIGHT MONTHS 1993* EIGHT MONTHS 1993* EIGHT MONTHS FEBRUARY 28,
ENDED YEAR ENDED THROUGH ENDED YEAR ENDED THROUGH ENDED 1994* THROUGH
AUGUST 31, DECEMBER 31, DECEMBER 31, AUGUST 31, DECEMBER 31, DECEMBER 31, AUGUST 31, DECEMBER 31,
1995# 1994 1993 1995# 1994 1993 1995# 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Expenses.......... 3.83% 5.14% 7.75% 4.58% 5.73% 8.25% 3.58% 4.89%
Net investment
income (loss)... 2.06% .50% (2.86%) 1.31% (.07%) (3.25%) 2.31% .93%
</TABLE>

See accompanying notes to financial statements.
48

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS

NOTE 1 -- ORGANIZATION AND NAME CHANGES
The Evergreen State Tax-Free Funds (the "Funds") are separate series of
Evergreen Investment Trust except for Evergreen Florida High Income Municipal
Bond Fund, which is a series of Evergreen Municipal Trust, both open-end
management companies registered under the Investment Company Act of 1940, as
amended (the "Act"). The Evergreen State Tax-Free Funds consist of Evergreen
Florida Municipal Bond Fund ("Florida"), Evergreen Florida High Income Municipal
Bond Fund ("Florida High Income"), Evergreen Georgia Municipal Bond Fund
("Georgia"), Evergreen North Carolina Municipal Bond Fund ("North Carolina"),
Evergreen South Carolina Municipal Bond Fund ("South Carolina") and Evergreen
Virginia Municipal Bond Fund ("Virginia"), known collectively as the Funds.
Effective July 7, 1995, the Funds changed their names as follows:
<TABLE>
<CAPTION>
FORMER NAME CURRENT NAME
<S> <C>
First Union Florida Municipal Bond Portfolio Evergreen Florida Municipal Bond Fund
First Union Georgia Municipal Bond Portfolio Evergreen Georgia Municipal Bond Fund
First Union North Carolina Municipal Bond Portfolio Evergreen North Carolina Municipal Bond Fund
First Union South Carolina Municipal Bond Portfolio Evergreen South Carolina Municipal Bond Fund
First Union Virginia Municipal Bond Portfolio Evergreen Virginia Municipal Bond Fund
</TABLE>

NOTE 2 -- CHANGE IN FISCAL YEARS
On March 15, 1995, the Trustees approved a change in Florida's, Georgia's,
North Carolina's, South Carolina's, and Virginia's fiscal year end from December
31 to August 31. These financial statements are as of and for the eight months
ended August 31, 1995.
NOTE 3 -- ACQUISITION INFORMATION
Effective June 30,1995, Florida acquired substantially all of the net
assets of ABT Florida Tax-Free Fund ("ABT Florida's net assets") through the
issuance of 15,518,259 of its Class A shares in exchange for ABT Florida's net
assets valued at $150,061,560. The aggregate net assets immediately after the
acquisition was $188,106,885. The acquired net assets, in this non-taxable
transaction, consisted primarily of portfolio securities with unrealized
appreciation of $8,245,724. ABT Florida Tax-Free Fund's fiscal year ended April
30. Since both Florida and ABT Florida Tax-Free Fund were similar funds, and ABT
Florida Tax-Free Fund contributed the majority of the net assets and
shareholders, its basis of accounting for assets and liabilities and its
operating results for prior periods have been carried forward in the
accompanying financial statements and financial highlights as the accounting
survivor. Accordingly the accompanying financial statements of Florida for the
four months ended August 31, 1995 include ABT Florida Tax-Free Fund's results of
operations for the period May 1, 1995 through June 30, 1995.
Effective June 30, 1995, Florida High Income, a new series of the Evergreen
Municipal Trust formed for the purpose of acquiring substantially all of ABT
Florida High Income Municipal Bond Fund's net assets ("ABT's net assets"),
issued 5,728,125 of its Class A shares at $10.30 per share in exchange for ABT's
net assets valued at $59,053,062. The acquired net assets, in this nontaxable
transaction, primarily consisted of portfolio securities with an identified cost
basis of $58,111,824 and unrealized appreciation of $367,404. ABT Florida High
Income Municipal Bond Fund's fiscal year ended April 30. Because ABT Florida
High Income Municipal Bond Fund contributed substantially all of Florida High
Income's net assets and shareholders, its basis of accounting for assets and
liabilities and its operating results for prior periods are carried forward in
the accompanying financial statements and financial highlights as the accounting
survivor. Accordingly, the accompanying financial statements of Florida High
Income for the four months ended August 31, 1995 include ABT Florida High Income
Municipal Bond Fund's results of operations for the period May 1, 1995 through
June 30, 1995.
49

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 4 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements. These policies are
in conformity with generally accepted accounting principles.
SECURITY VALUATIONS -- Municipal bonds are valued by an independent pricing
service taking into consideration yield, liquidity, risk, credit quality,
coupon, maturity, type of issue and any other factors or market data it deems
relevant in determining valuations for normal institutional size trading units
of debt securities which it believes to reflect the fair value of securities.
The independent pricing service does not rely exclusively on quoted prices.
Short term securities purchased with remaining maturities of sixty days or less
are stated at amortized cost which approximates market value.
SECURITY TRANSACTIONS -- Security transactions are accounted for on the
date purchased or sold. Net realized gains or losses are determined on the
identified cost basis.
INVESTMENT INCOME AND EXPENSES -- Interest income and expenses are accrued
daily. Premiums and discounts paid on securities are amortized or accreted into
interest income.
WHEN ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Funds record
when-issued or delayed delivery transactions on the trade date and maintain
security positions such that sufficient liquid assets will be available to make
payment for the securities purchased. Securities purchased on a when-issued or
delayed delivery basis are marked to market daily and begin earning interest on
the settlement date.
DIVIDENDS TO SHAREHOLDERS -- Dividends from net investment income are
declared daily and paid monthly. Dividends from net realized capital gains on
investments, if any, will be distributed at least annually. Income distributions
and capital gain distributions are determined in accordance with income tax
regulations which may differ from the amounts available for distribution under
generally accepted accounting principles. To the extent these differences are
permanent in nature, such amounts are reclassified within the components of net
assets.
As of August 31, 1995, the following reclassifications have been made to
increase (decrease) such accounts with offsetting adjustments made to paid in
capital:
<TABLE>
<CAPTION>
UNDISTRIBUTED ACCUMULATED
NET INVESTMENT INCOME LOSS ON INVESTMENTS
<S> <C> <C>
Florida $22,662 $22,662
Florida High Income 660 621
Georgia 3,407 3,407
North Carolina 50,135 50,029
South Carolina 899 899
Virginia 4,496 4,496
</TABLE>

INCOME TAXES -- It is each Fund's policy to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable and other net income to its
shareholders. Accordingly, no provisions for Federal income or excise taxes are
necessary. To the extent that realized net capital gains can be offset by
capital loss carryforwards, it is each Fund's policy not to distribute such
gains.
50

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 4 -- SIGNIFICANT ACCOUNTING POLICIES -- continued
At August 31, 1995, the Funds had capital loss carryforwards as follows:
<TABLE>
<CAPTION>
EXPIRATION
2002 2003
<S> <C> <C>
Florida $1,383,385 --
Florida High Income 723,137 $634,610
Georgia 712,670 --
North Carolina 3,831,798 --
South Carolina 5,094 --
Virginia 258,553 --
</TABLE>

Capital losses incurred after October 31, within each Fund's fiscal year,
are deemed to arise on the first business day of the following fiscal year. The
following Fund's incurred and will elect to defer such capital losses at August
31, 1995 as follows:
<TABLE>
<S> <C>
North Carolina $463,374
South Carolina 154
Virginia 18,447
</TABLE>

DEFERRED EXPENSES -- The costs incurred by Florida, Georgia, North
Carolina, South Carolina and Virginia with respect to registration of their
shares in their first fiscal year, excluding the initial expense of registering
the shares, have been deferred and are being amortized using the straight-line
method not to exceed a period of five years from the Fund's commencement.
ALLOCATION OF EXPENSES -- Expenses specifically identifiable to a class of
shares are charged to that class. Expenses common to a Trust as a whole are
allocated to the funds in that Trust. Net investment income (other than class
specific expenses) and realized and unrealized gains and losses are allocated
daily to each class of shares based upon the relative proportion of net assets
of each class.
DEFERRED ORGANIZATION EXPENSES -- The expenses of Florida High Income
incurred in connection with its organization are being deferred and amortized
over a period of benefit not to exceed 60 months from June 30, 1995.
NOTE 5 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENTS -- First Union National Bank of North
Carolina ("First Union") is entitled to an annual fee of .50 of 1% of Georgia's,
North Carolina's, South Carolina's and Virginia's average daily net assets
pursuant to each Funds investment advisory agreement. First Union is entitled to
an annual fee of .60 of 1% of average daily net assets of Florida and Florida
High Income pursuant to their agreements. First Union has agreed to voluntarily
limit its advisory fee for Florida and Florida High Income to an annual fee of
.30 of 1%. This voluntary waiver can be modified or terminated at any time. In
addition, First Union voluntarily waived its advisory fee and reimbursed
operating expenses for the eight months (except for Florida and Florida High
Income which is for the four months) ended August 31, 1995 as noted below:
<TABLE>
<CAPTION>
ADVISORY FEE EXPENSE
WAIVERS REIMBURSEMENTS
<S> <C> <C>
Florida $ 73,661 $ 46,864
Florida High Income 30,271 --
Georgia 32,646 105,409
North Carolina 132,051 --
South Carolina 13,154 144,430
Virginia 23,156 120,876
</TABLE>

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 5 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES -- continued
Prior to June 30, 1995, Palm Beach Capital Management, Ltd. ("Palm Beach")
was entitled to an investment advisor fee for Florida at an annual rate of .30
of 1% of Florida's average daily net assets up to $200 million and .25 of 1% of
average daily net assets in excess of $200 million. Pursuant to this
arrangement, Florida paid $81,519 to Palm Beach for the two-month period ended
June 30, 1995. Palm Beach was entitled to an investment advisory fee for Florida
High Income at an annual rate of .60 of 1% of Florida High Income's average
daily net assets which totaled $62,778 for the two-month period ended June 30,
1995. Palm Beach voluntarily waived advisory fees for Florida High Income
totaling $41,419.
ADMINISTRATION AGREEMENT -- Until July 7, 1995, Federated Investor Services
("FAS") provided Georgia, North Carolina, South Carolina and Virginia with
certain administrative personnel and services including certain clerical and
recordkeeping services. In addition, certain of the Fund's officers and Trustees
were officers or directors of FAS. FAS' fee was based on the level of average
net assets of the Trust for the period, subject to a minimum fee. Effective July
7, 1995, Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly owned
subsidiary of First Union, became the Funds' Administrator and Furman Selz,
Incorporated ("Furman Selz") became the sub-administrator. Officers of Furman
Selz became officers of the Funds. Evergreen Asset's fee and Furman Selz' fee is
based on the average daily net assets of all the funds administered by Evergreen
Asset for which First Union or Evergreen Asset is also investment adviser. Such
fee is calculated at the following annual rates:
<TABLE>
<CAPTION>
ADMINISTRATION FEE AVERAGE DAILY NET ASSETS
<C> <S>
0.050% on the first $7 billion
0.035% on the next $3 billion
0.030% on the next $5 billion
0.020% on the next $10 billion
0.015% on the next $5 billion
0.010% in excess of $30 billion
</TABLE>

<TABLE>
<CAPTION>
SUB-ADMINISTRATION FEE AVERAGE DAILY NET ASSETS
<C> <S>
0.0100% on the first $7 billion
0.0075% on the next $3 billion
0.0050% on the next $15 billion
0.0040% in excess of $25 billion
</TABLE>

At August 31, 1995, assets for which Evergreen Asset was the administrator
for which either Evergreen Asset or First Union was investment adviser totaled
approximately $9.8 billion.
Prior to June 30, 1995, Palm Beach was the Administrator for Florida and
Florida High Income. Pursuant to an administration agreement, Florida and
Florida High Income paid $21,443 and $8,153, respectively. Subsequent to June
30, 1995, Evergreen Asset became Florida's and Florida High Income's
Administrator and was compensated in accordance with the above schedule.
PLANS OF DISTRIBUTION -- The Funds have adopted for their Class A shares
and Class B shares, Distribution Plans (the "Plans") pursuant to Rule 12b-1
under the Act. Under the terms of the Plans, the Funds may incur
distribution-related and shareholder servicing expenses which may not exceed an
annual fee of .75 of 1% for Class A and Class B shares. For each of the Funds
except Florida, the payments for Class A were voluntarily limited to an annual
fee of .25 of 1% of average daily net assets. For Florida, effective June 30,
1995, Rule 12b-1 fees for Class A shares were limited to the extent such payment
would make Florida's ratio of expenses to average daily net assets for Class A
shares exceed .61 of 1%. For the two-month period ended August 31, 1995, Rule
12b-1 fees charged to Florida were approximately an annual fee of .06 of 1%.
Rule 12b-1 fees are accrued daily and paid monthly. In connection with their
Plans, Georgia, North Carolina, South Carolina and Virginia had entered into
distribution agreements with Federated Securities Corp. ("FSC") whereby they
compensated FSC for its services at a rate which did not exceed an annual fee of
.25 of 1% of Class A average daily net assets and an annual fee
52

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 5 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES -- continued
of .75 of 1% of Class B average daily net assets. Effective July 7, 1995,
Georgia, North Carolina, South Carolina and Virginia entered into a distribution
agreement with EFD whereby they will compensate EFD for its services at a rate
which may not exceed an annual fee of .25 of 1% of Class A average daily net
assets and an annual fee of .75 of 1% of Class B average daily net assets.
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 .25 of 1% for certain services
provided to shareholders and/or maintenance of shareholder accounts relating to
each of the Fund's Class B shares. At August 31, 1995 the following amounts
remain payable related to each Fund's shareholder services plan:
<TABLE>
<S> <C>
Florida $ 2,959
Florida High Income 292
Georgia 761
North Carolina 5,272
South Carolina 381
Virginia 549
</TABLE>

ORGANIZATIONAL EXPENSES -- Organizational expenses of Florida, Georgia,
North Carolina, South Carolina and Virginia were initially borne by FAS. Such
expenses will be reimbursed during the five-year period following each Funds'
commencement of operations. As a result of the change in the administration
agreement, First Union purchased the remaining unreimbursed organizational
expenses from FAS. At August 31, 1995, the Funds have a remaining liability as
follows:
<TABLE>
<S> <C>
Florida $28,526
Georgia 26,749
North Carolina 50,977
South Carolina 74,261
Virginia 26,607
</TABLE>

NOTE 6 -- SHARES OF BENEFICIAL INTEREST
The Funds have an unlimited number of no par value shares of beneficial
interest authorized. The shares are divided into classes which are designated
Class Y, Class A and Class B shares. Class Y shares are available only to
investment advisory clients of 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 classes
have identical voting, dividend, liquidation and other rights, except that Class
A and Class B shares bear distribution expenses (see Note 5) and have exclusive
voting rights with respect to their distribution plans.
53

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 6 -- SHARES OF BENEFICIAL INTEREST -- continued
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOUR MONTHS ENDED YEAR ENDED
AUGUST 31, 1995 APRIL 30, 1995
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
FLORIDA
CLASS A
Shares sold................................................... 148,921 $ 1,551,451 984,064 $ 10,432,999
Shares issued in acquisition of First Union Florida Municipal
Bond Portfolio.............................................. 876,413 8,475,749
Shares issued on reinvestment of distributions................ 136,011 1,447,315 323,930 3,441,954
Shares redeemed............................................... (4,679,881) (45,809,078) (4,338,794) (46,142,147)
Net decrease.................................................. (3,518,536) (34,334,563) (3,030,800) (32,267,194)
CLASS B**
Shares sold................................................... 179,340 1,737,203 -- --
Shares issued in acquisition of First Union Florida Municipal
Bond Portfolio.............................................. 2,722,202 26,328,175
Shares issued on reinvestment of distributions................ 15,662 151,941 -- --
Shares redeemed............................................... (109,102) (1,054,568) -- --
Net increase.................................................. 2,808,102 27,162,751 -- --
CLASS Y*
Shares sold................................................... 97,604 938,937 -- --
Shares issued in acquisition of First Union Florida Municipal
Bond Portfolio.............................................. 335,151 3,241,399
Shares issued on reinvestment of distributions................ 591 5,727 -- --
Shares redeemed............................................... (63,509) (610,195) -- --
Net increase.................................................. 369,837 3,575,868 -- --
Total net decrease resulting from Fund share transactions..... (340,597) ($3,595,944) (3,030,800) ($32,267,194)
</TABLE>

* For Class Y shares, the Fund share transaction activity is for the
period June 30, 1995 (commencement of class operations) through August 31, 1995.
** For Class B shares, the Fund share transaction activity is for the
period June 30, 1995 (commencement of class operations) through August 31, 1995.
<TABLE>
<CAPTION>
FOUR MONTHS ENDED YEAR ENDED
AUGUST 31, 1995 APRIL 30, 1995
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
FLORIDA HIGH INCOME
CLASS A
Shares sold................................................... 730,828 $ 7,497,799 1,229,625 $ 12,266,977
Shares issued on reinvestment of distributions................ 29,262 301,952 107,271 1,069,096
Shares redeemed............................................... (1,434,175) (14,852,986) (2,147,860) (21,245,986)
Net decrease.................................................. (674,085) (7,053,235) (810,964) (7,909,913)
CLASS B*
Shares sold................................................... 301,146 3,102,089 -- --
Shares issued on reinvestment of distributions................ 505 5,248 -- --
Net increase.................................................. 301,651 3,107,337 -- --
CLASS Y*
Shares sold................................................... 10 101 -- --
Total net decrease resulting from Fund share transactions..... (372,424) ($3,945,797) (810,964) ($ 7,909,913)
</TABLE>

* For Class B shares, the Fund share transaction activity is for the period July
11, 1995 (commencement of class operations) through August 31, 1995. Class Y
Shares have not yet commenced operations.
54

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 6 -- SHARES OF BENEFICIAL INTEREST -- continued
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED YEAR ENDED*
AUGUST 31, 1995 DECEMBER 31, 1994
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
GEORGIA
CLASS A
Shares sold.......................................................... 76,707 $ 721,680 100,861 $ 940,685
Shares issued on reinvestment of distributions....................... 4,524 42,316 5,104 46,518
Shares redeemed...................................................... (18,364) (172,931) (27,500) (247,702)
Net increase......................................................... 62,867 591,065 78,465 739,501
CLASS B
Shares sold.......................................................... 128,136 1,196,824 586,440 5,520,982
Shares issued on reinvestment of distributions....................... 17,586 164,250 22,504 204,561
Shares redeemed...................................................... (140,930) (1,336,278) (180,297) (1,612,750)
Net increase......................................................... 4,792 24,796 428,647 4,112,793
CLASS Y
Shares sold.......................................................... 108,389 1,023,100 32,285 292,238
Shares issued on reinvestment of distributions....................... 647 6,066 289 2,580
Shares redeemed...................................................... (244) (2,297) (41) (369)
Net increase......................................................... 108,792 1,026,869 32,533 294,449
Total net increase resulting from Fund share transactions............ 176,451 $ 1,642,730 539,645 $ 5,146,743
</TABLE>

* For Class Y shares, the Fund share transaction activity is for the period
February 28, 1994 (commencement of class operations) through December 31, 1994.
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED YEAR ENDED*
AUGUST 31, 1995 DECEMBER 31, 1994
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
NORTH CAROLINA
CLASS A
Shares sold...................................................... 125,332 $ 1,232,452 417,470 $ 4,151,733
Shares issued on reinvestment of distributions................... 19,270 189,699 36,125 349,098
Shares redeemed.................................................. (183,513) (1,800,044) (782,865) (7,703,364)
Net decrease..................................................... (38,911) (377,893) (329,270) (3,202,533)
CLASS B
Shares sold...................................................... 521,981 5,146,189 1,588,728 15,705,181
Shares issued on reinvestment of distributions................... 101,358 997,747 163,431 1,564,184
Shares redeemed.................................................. (565,861) (5,555,413) (1,136,420) (10,565,842)
Net increase..................................................... 57,478 588,523 615,739 6,703,523
CLASS Y
Shares sold...................................................... 45,992 453,471 74,100 704,924
Shares issued on reinvestment of distributions................... 448 4,415 420 3,943
Shares redeemed.................................................. (15,523) (152,131) (4,358) (41,054)
Net increase..................................................... 30,917 305,755 70,162 667,813
Total net increase resulting from Fund share transactions........ 49,484 $ 516,385 356,631 $ 4,168,803
</TABLE>

* For Class Y shares, the Fund share transaction activity is for the period
February 28, 1994 (commencement of class operations) through December 31, 1994.
55

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 6 -- SHARES OF BENEFICIAL INTEREST -- continued
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED YEAR ENDED*
AUGUST 31, 1995 DECEMBER 31, 1994
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
SOUTH CAROLINA
CLASS A
Shares sold............................................................. 28,494 $ 267,216 41,168 $ 382,655
Shares issued on reinvestment of distributions.......................... 754 7,119 246 2,190
Shares redeemed......................................................... (1,851) (17,235) (5,193) (48,887)
Net increase............................................................ 27,397 257,100 36,221 335,958
CLASS B
Shares sold............................................................. 100,143 941,168 304,136 2,846,537
Shares issued on reinvestment of distributions.......................... 7,356 69,043 6,194 55,132
Shares redeemed......................................................... (22,831) (214,174) (25,441) (220,905)
Net increase............................................................ 84,668 796,037 284,889 2,680,764
CLASS Y
Shares sold............................................................. 173,778 1,645,544 10,721 97,414
Shares issued on reinvestment of distributions.......................... 745 7,094 1 7
Shares redeemed......................................................... (10,674) (100,744) (24) (214)
Net increase............................................................ 163,849 1,551,894 10,698 97,207
Total net increase resulting from Fund share transactions............... 275,914 $2,605,031 331,808 $3,113,929
</TABLE>

* For Class A and B shares, the Fund share transaction activity is for the
period January 3, 1994 (commencement of class operations) through December 31,
1994. For Class Y shares, the Fund share transaction activity is for the period
February 28, 1994 (commencement of class operations) through December 31, 1994.
<TABLE>
<CAPTION>
EIGHT MONTHS ENDED YEAR ENDED*
AUGUST 31, 1995 DECEMBER 31, 1994
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
VIRGINIA
CLASS A
Shares sold............................................................ 48,742 $ 465,071 86,681 $ 821,129
Shares issued on reinvestment of distributions......................... 5,890 56,155 7,518 68,995
Shares redeemed........................................................ (30,945) (295,864) (40,827) (366,090)
Net increase........................................................... 23,687 225,362 53,372 524,034
CLASS B
Shares sold............................................................ 105,642 1,013,607 259,308 2,456,021
Shares issued on reinvestment of distributions......................... 11,096 105,855 13,100 120,183
Shares redeemed........................................................ (22,448) (212,617) (60,204) (530,916)
Net increase........................................................... 94,290 906,845 212,204 2,045,288
CLASS Y
Shares sold............................................................ 83,741 798,165 42,022 379,970
Shares issued on reinvestment of distributions......................... 1,057 10,084 93 824
Shares redeemed........................................................ (23,858) (228,520) (3,209) (29,658)
Net increase........................................................... 60,940 579,729 38,906 351,136
Total net increase resulting from Fund share transactions.............. 178,917 $ 1,711,936 304,482 $2,920,458
</TABLE>

* For Class Y shares, the Fund share transaction activity is for the period
February 28, 1994 (commencement of class operations) through December 31, 1994.
56

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
NOTE 7 -- INVESTMENT TRANSACTIONS
The cost of purchases and proceeds from sales of investments, excluding
short-term securities for the period ended August 31, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
<S> <C> <C>
Florida.................................................. $47,227,865 $55,441,528
Florida High Income...................................... 8,599,127 12,446,228
Georgia.................................................. 10,688,598 8,635,728
North Carolina........................................... 65,307,333 68,884,323
South Carolina........................................... 4,972,745 2,538,357
Virginia................................................. 7,327,813 5,833,025
</TABLE>

On August 31, 1995, the aggregate cost of investments for federal tax
purposes is the same as for financial reporting purposes. The composition of
unrealized appreciation and depreciation of investment securities was as
follows:
<TABLE>
<CAPTION>
APPRECIATION DEPRECIATION NET
<S> <C> <C> <C>
Florida............................. $9,824,154 $805,066 $9,019,088
Florida High Income................. 1,332,091 325,721 1,006,370
Georgia............................. 451,334 31,198 420,136
North Carolina...................... 2,019,595 80,591 1,939,004
South Carolina...................... 132,550 22,070 110,480
Virginia............................ 198,384 40,870 157,514
</TABLE>

NOTE 8 -- CONCENTRATION OF CREDIT RISK
Since the Funds invest a substantial portion of their assets in issuers
located in a single state, they may be more affected by economic and political
developments in a specific state or region than would be a comparable general
tax-exempt mutual fund. Certain debt obligations held by each of the Funds are
entitled to the benefit of insurance, standby letters of credit or other
guarantees of banks or other financial institutions.
57

<PAGE>
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 Statement 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, 1995, the results of its operations, the changes in
its net assets, and the financial highlights for the four months in the period
then ended, 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 audit. We conducted our audit 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 audit, which included confirmation of securities at August
31, 1995 by correspondence with the custodian and brokers, provides a reasonable
basis for the opinion expressed above. The statement of changes in net assets
for the year ended April 30, 1995 and the financial highlights for each of the
two years in the period ended April 30, 1995 and the financial highlights for
the period June 17, 1992 (commencement of operations) through April 30, 1993
were audited by other independent accountants, whose opinion thereon, dated June
2, 1995 was unqualified.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
October 24, 1995
58

<PAGE>
INDEPENDENT AUDITORS' REPORT
THE TRUSTEES AND SHAREHOLDERS OF
EVERGREEN FLORIDA MUNICIPAL BOND FUND
EVERGREEN GEORGIA MUNICIPAL BOND FUND
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND
EVERGREEN VIRGINIA MUNICIPAL BOND FUND
We have audited the accompanying statements of assets and liabilities,
including the statements of investments, for the Evergreen State Tax-Free Funds
listed below, as of August 31, 1995 and the related statements of operations,
the changes in net assets, and the financial highlights for each of the period
listed below:
EVERGREEN FLORIDA MUNICIPAL BOND FUND (formerly First Union Florida
Municipal Bond Portfolio) -- statement of operations, statement of changes
in net assets and the financial highlights for the four-month period ended
August 31, 1995. The statement of changes in net assets for the year ended
April 30, 1995 and the financial highlights each of for each of the years
or periods in the four-year period ended April 30, 1995 were audited by
other auditors, whose opinion thereon, dated June 2, 1995 was unqualified;
EVERGREEN GEORGIA MUNICIPAL BOND FUND (formerly First Union Georgia
Municipal Bond Portfolio) -- statement of operations for the eight-month
period ended August 31, 1995, statements of changes in net assets for the
eight-month period ended August 31, 1995 and the year ended December 31,
1994, and the financial highlights for each of the years or periods from
July 2, 1993 (commencement of operations) through August 31, 1995;
EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND (formerly First Union North
Carolina Municipal Bond Portfolio) -- statement of operations for the
eight-month period ended August 31, 1995, statements of changes in net
assets for the eight-month period ended August 31, 1995 and the year ended
December 31, 1994, and the financial highlights for each of the years or
periods from January 11, 1993 (commencement of operations) through August
31, 1995;
EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND (formerly First Union South
Carolina Municipal Bond Portfolio) -- statement of operations for the
eight-month period ended August 31, 1995, statements of changes in net
assets for the eight-month period ended August 31, 1995 and the period
ended December 31, 1994, and the financial highlights for each of the years
or periods from January 3, 1994 (commencement of operations) through August
31, 1995;
EVERGREEN VIRGINIA MUNICIPAL BOND FUND (formerly First Union Virginia
Municipal Bond Portfolio) -- statement of operations for the eight-month
period ended August 31, 1995, statements of changes in net assets for the
eight-month period ended August 31, 1995 and the year ended December 31,
1994, and the financial highlights for July 2, 1993 (commencement of
operations) through August 31, 1995.
These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the overall accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provides a reasonable basis
for our opinion.
59

<PAGE>
INDEPENDENT AUDITORS' REPORT -- (CONTINUED)
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, 1995, and
the results of their operations, changes in their net assets and the financial
highlights for each of the periods listed above, in conformity with generally
accepted accounting principles.
KPMG PEAT MARWICK LLP
Pittsburgh, Pennsylvania
October 16, 1995
FEDERAL INCOME TAX STATUS OF DIVIDENDS (UNAUDITED)
100% of the dividends distributed by Florida, Florida High Income, Georgia,
North Carolina South Carolina and Virginia for the year ended August 31, 1995
are exempt from federal income tax, other than alternative minimum tax.
60

<PAGE>
TRUSTEES AND OFFICERS
TRUSTEES:
Mr. Laurence B. Ashkin*
Mr. Foster Bam*
Mr. James S. Howell, Chairman
Mr. Robert J. Jeffries*
Mr. Gerald M. McDonnell
Mr. Thomas L. McVerry
Mr. William W. Pettit
Mr. Russell A. Salton, III M.D.
Mr. Michael S. Scofield
OFFICERS:
John J. Pileggi
President and Treasurer
Joan V. Fiore
Secretary
Sheryl Hirschfeld
Assistant Secretary
Donald E. Brostrom
Assistant Treasurer
Stephen W. St. Clair
Assistant Treasurer
* Trustees for Florida High Income
Municipal Bond Fund only.
<PAGE>

NOT May lose value
FDIC No bank guarantee

Evergreen Funds Distributor, Inc.

536900
11/95