-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Fxo2XQ337QVJZMbuFHI/teNBmB+6dnnrcs8Ld0Xp28vQjsnEqvBDYSXTBD2r9Q/Q Emwp0aKF6waHq41fdkfaRg== 0000836375-96-000020.txt : 19961106 0000836375-96-000020.hdr.sgml : 19961106 ACCESSION NUMBER: 0000836375-96-000020 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961101 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVERGREEN MUNICIPAL TRUST CENTRAL INDEX KEY: 0000836375 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: NY FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05579 FILM NUMBER: 96653299 BUSINESS ADDRESS: STREET 1: 2500 WESTCHESTER AVE CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9146942020 MAIL ADDRESS: STREET 1: 2500 WESTCHESTER AVENUE CITY: PURCHASE STATE: NY ZIP: 10577 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVERGREEN INVESTMENT TRUST CENTRAL INDEX KEY: 0000757440 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 046599663 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04154 FILM NUMBER: 96653300 BUSINESS ADDRESS: STREET 1: 2500 WESTCHESTER AVE CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9146412305 MAIL ADDRESS: STREET 1: 2500 WESTCHESTER AVE CITY: PURCHASE STATE: NY ZIP: 10577 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION FUNDS/ DATE OF NAME CHANGE: 19940628 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION HIGH GRADE TAX FREE PORT DATE OF NAME CHANGE: 19940519 FORMER COMPANY: FORMER CONFORMED NAME: FIRST UNION FUNDS DATE OF NAME CHANGE: 19921230 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVERGREEN TAX FREE TRUST /MA CENTRAL INDEX KEY: 0000784975 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04507 FILM NUMBER: 96653301 BUSINESS ADDRESS: STREET 1: C/O EVERGREEN ASSET MANAGEMENT STREET 2: 2500 WESTCHESTER AVE CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9146412234 MAIL ADDRESS: STREET 1: 2500 WESTCHESTER AVE CITY: PURCHASE STATE: NY ZIP: 10577 FORMER COMPANY: FORMER CONFORMED NAME: FFB FUNDS TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: FFB MONEY TRUST DATE OF NAME CHANGE: 19870701 FORMER COMPANY: FORMER CONFORMED NAME: BLB TAX FREE TRUST DATE OF NAME CHANGE: 19860324 N-30D 1 EVERGREEN STATE TAX-FREE FUNDS EVERGREEN STATE TAX-FREE FUNDS (Drawing of the state of Florida with a + beside it) (Drawing of the state of Florida) (Drawing of the state of Georgia) (Drawing of the state of New Jersey) (Drawing of the state of North Carolina) (Drawing of the state of South Carolina) (Drawing of the state of Virginia) (Picture of mountain scene) 1996 ANNUAL REPORT (Evergreen logo) Evergreen(sm) Funds EVERGREEN STATE TAX-FREE FUNDS TABLE OF CONTENTS A Review of the Past Year and Prospects for the Future.................... 1 A Report From Your Portfolio Manager -- Florida High Income Municipal Bond Fund....................................................... 3 A Report From Your Portfolio Manager -- New Jersey Tax-Free Income Fund............................................................... 4 A Report From Your Portfolio Managers..................................... 5 (Drawing of the FLORIDA Results to Date........................................................... 7 state of Florida HIGH INCOME Statement of Investments.................................................. 8 with a + beside it) MUNICIPAL BOND FUND Statement of Assets and Liabilities....................................... 11 Statement of Operations................................................... 12 Statement of Changes in Net Assets........................................ 13 Financial Highlights...................................................... 14 (Drawing of the FLORIDA MUNICIPAL Results to Date........................................................... 16 state of Florida) BOND FUND Statement of Investments.................................................. 17 Statement of Assets and Liabilities....................................... 20 Statement of Operations................................................... 21 Statement of Changes in Net Assets........................................ 22 Financial Highlights...................................................... 23 (Drawing of the GEORGIA Results to Date........................................................... 25 state of Georgia) MUNICIPAL BOND Statement of Investments.................................................. 26 FUND Statement of Assets and Liabilities....................................... 27 Statement of Operations................................................... 28 Statement of Changes in Net Assets........................................ 29 Financial Highlights...................................................... 30 (Drawing of the NEW JERSEY Results to Date........................................................... 33 state of New Jersey) TAX FREE Statement of Investments.................................................. 34 INCOME FUND Statement of Assets and Liabilities....................................... 37 Statement of Operations................................................... 38 Statement of Changes in Net Assets........................................ 39 Financial Highlights...................................................... 40 (Drawing of the NORTH CAROLINA Results to Date........................................................... 42 state of North Carolina) 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 (Drawing of the SOUTH CAROLINA Results to Date........................................................... 50 state of South Carolina) MUNICIPAL BOND Statement of Investments.................................................. 51 FUND Statement of Assets and Liabilities....................................... 53 Statement of Operations................................................... 54 Statement of Changes in Net Assets........................................ 55 Financial Highlights...................................................... 56 (Drawing of the VIRGINIA Results to Date........................................................... 58 state of Virginia) MUNICIPAL BOND Statement of Investments.................................................. 59 FUND Statement of Assets and Liabilities....................................... 61 Statement of Operations................................................... 62 Statement of Changes in Net Assets........................................ 63 Financial Highlights...................................................... 64 Combined Notes to Financial Statements.................................... 67 Report of Independent Accountants -- Price Waterhouse LLP................. 76 Independent Auditors' Report -- KPMG Peat Marwick LLP..................... 77 Trustees and Officers..........................................Inside Back Cover
EVERGREEN(SM) is a Service Mark of Evergreen Asset Management Corp. Copyright 1995, Evergreen Asset Management Corp. EVERGREEN STATE TAX-FREE FUNDS A REVIEW OF THE PAST YEAR AND PROSPECTS FOR THE FUTURE BY STEPHEN A. LIEBER The continued expansion of the United States (Picture of Stephen economy and the persistence of inflation at 3% or A. Lieber appears less, has evidently sent mixed signals to the here) investment markets. The equity market this year has gone from new high to new high. The willingness of American savers to put money into the hands of equity mutual funds to buy stocks in the United States and abroad is unprecedented. Even foreign investors, who have long been skeptical of the rising prices of U.S. equities and the recent relatively higher valuations than in many other industrial countries, have begun to move heavily into U.S. equities. Only the bond market has suffered negative trends this year. But, it showed no further losses when measured from the end of the second calendar quarter to the end of the third. In contrast, it yielded modest gains early in the third quarter. Evidence of slowed final demand in many sectors of the economy has begun to reduce the fears of many investors over inflationary pressures. While confidence increases that both producer and consumer price indexes will remain in a narrow range, around 3%, apprehensions of possibly renewed inflation are now focused on the trend of hourly wages. Hourly wages have moved up slightly in the last two months. The apparent consensus among business economists currently is to expect a 2% growth rate for the U.S. economy in the second half of 1996, with a similar level to continue into 1997. These views are, in part, based on historical trends, in which the late cycle characteristics of the U.S. economy typically show economic deceleration. Such a deceleration is not widely feared, in view of the fact that real income growth is likely to be sustained by a 2% to 2 1/2% employment growth, plus a 3% to 3 1/2% earnings growth, before a 3% inflation. The appearance of such decelerating trends and their continuation would likely bring bond yields down, as the inflation premium would be removed from bond market expectations. Many who dissent from the consensus view that the economy will slow, argue that the European economies and Japan's economy are likely to revive in 1997, which will create more export demand for U.S. products and, therefore, increase our growth rate. More pessimistic observers of the American economy believe that the American consumer has overspent, as evidenced by the rising rate of credit card delinquencies, and by the "wealth effect" of a stock market achieving record highs. For the bond market, we expect that fairly stable, rather than rising, inflation, and a somewhat declining overall business rate of growth, together with a narrow range currency market, should enable a gradual decline in interest rates. Tax-exempt fixed income investment in 1996 has had comparatively better returns than taxable bond investment. Much of this difference is due to the fact that the flat tax, or sharply 1 EVERGREEN STATE TAX-FREE FUNDS A REVIEW OF THE PAST YEAR AND PROSPECTS FOR THE FUTURE -- (CONTINUED) reduced income tax, advocacies of presidential candidates earlier in the year, were eliminated as concerns for tax-exempt investors. Therefore, tax-exempt bonds have risen to a normal level of relationship to taxable bonds. Further improving valuations has been the lack of major concerns over credit quality issues. Orange County California's default has fallen into memory and its credit is in the process of restoration. Other credit problems regarding certain public power facilities and the rental of municipal buildings have also been overcome. Correspondingly, the supply of new tax-exempt issues declined, especially as interest rate increases cut down the number of new issues replacing refunded bonds. The credit quality overall has been enhanced by further record gains for the use of bond insurance, while the insurers themselves have had their credit quality improved by record accumulations of earnings. In summary, the tax-exempt securities market toward the end of 1996 appears to be in a healthy condition. 2 FLORIDA HIGH INCOME MUNICIPAL BOND FUND A REPORT FROM YOUR PORTFOLIO MANAGER RICHARD K. MARRONE While interest rate movements have been volatile during the (Photo of past year, Evergreen Florida High Income Municipal Bond Fund Richard K. proved rewarding to its investors. The Fund's total return Marrone (Class A shares) ranked #1 among all 36 other Florida Municipal appears Debt Funds ranked by Lipper Analytical Services for the 12 here) months ended August 31, 1996*. The market for high yielding credits in the state of Florida has been robust during most of the past year. Florida's economy continues to remain strong, especially on the construction front, as population growth continues to outpace the rest of the nation. This rapid population growth has created a strong demand for new community development districts (CDDs) throughout the state. The residential construction part of the economy has become a large part of the Florida high yield market. Numerous bond issues have come to market over the past year to finance this growth. These CDDs assist in the development of infrastructure built around new homes which are typically centered around golf courses and various other amenities. The Fund has focused on investing in the higher end developments that are built in affluent areas. These type of developments are usually more stable and predictable and built by large, well-known developers. Spreads have continued to narrow between non-rated and higher rated credits which has contributed to the favorable performance of our lower and non-rated bonds. Investors appetite for yield has been one of the primary factors for this narrowing. The strength of the economy has also contributed to strong performance of our bonds, as several credits have exhibited improved economic fundamentals. The outlook for lower and non-rated bonds will fluctuate more with economic cycles than interest rate movements, versus higher rated bonds. During a period of declining interest rates, this Fund will not participate as fully as other funds may. However, in a rising rate environment, the Fund may well outperform its competition and exhibit better total return numbers while also providing a relatively high level of tax-exempt income. This philosophy of limited participation on the upside but giving up less on the down side in an attempt to preserve principal, while generating good income, is the main reason we believe investors place their money into the Fund. Our focus has always been, and will continue to be, to provide higher income than that available from an investment grade portfolio while also striving to maintain relatively stable net asset values. At its fiscal year-end on August 31, 1996, Evergreen Florida High Income Municipal Bond Fund's total net assets were $97.5 million. The Fund's yields at that time are illustrated in the table below. (For additional performance information, please see page 7.)
CLASS Y SHARES CLASS A SHARES CLASS B SHARES 30-Day SEC Yield 6.50% 5.94% 5.43% Tax-Equivalent Yield** 10.16% 9.28% 8.48%
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. * SOURCE: LANA -- LIPPER ANALYTICAL NEW APPLICATIONS. LIPPER ANALYTICAL SERVICES, INC., IS AN INDEPENDENT MUTUAL FUNDS PERFORMANCE MONITOR. LIPPER RANKINGS DO NOT INCLUDE SALES CHARGES. IF INCLUDED, RANKINGS MAY BE DIFFERENT. FUND'S INCEPTION DATES: CLASS Y SHARES: 9/20/95, CLASS A SHARES: 6/17/92, CLASS B SHARES: 7/10/95 INVESTMENT RETURN, PRINCIPAL VALUE AND YIELDS WILL FLUCTUATE. INVESTORS' SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE FUND'S CLASS A SHARES ARE SUBJECT TO A MAXIMUM FRONT END SALES CHARGE OF 4.75% AND CLASS B SHARES ARE SUBJECT TO A MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5%. **TAX-EQUIVALENT YIELDS ASSUMES A 36% FEDERAL TAX BRACKET. FLORIDA INTANGIBLES TAX (WHICH IS NOT REFLECTED IN TAX-EQUIVALENT YIELDS ABOVE) ON PERSONAL PROPERTY AFTER EXEMPTIONS OF $2 PER $1,000 IS GENERALLY IMPOSED ON THE VALUE OF STOCKS, BONDS, OTHER EVIDENCES OF INDEBTEDNESS AND MUTUAL FUND SHARES. DURING THE PERIOD UNDER REVIEW, THE ADVISER CONTINUED ITS POLICY OF WAIVING A PORTION OF ITS ADVISORY FEE. HAD FEE NOT BEEN WAIVED, YIELDS WOULD HAVE BEEN LOWER. FEE WAIVER MAY BE REVISED AT ANY TIME. 3 EVERGREEN NEW JERSEY TAX FREE INCOME FUND A REPORT FROM YOUR PORTFOLIO MANAGER JOCELYN TURNER Fixed income markets took a roller coaster ride during the period as economic reports continually surprised the consensus (Photo of view. Bond prices took sharp drops after strong Gross Domestic Jocelyn Product (GDP) and initial jobless claims numbers were released. Turner Increases in durable goods orders and rebounds in retail demand appears seemed to confirm that the economy was still growing at a here) healthy pace. Commodity prices started to show some signs of incipient inflation, but continued wage pressures kept it at bay. Investors prepared for Fed intervention to raise rates at any time, possibly at the upcoming November Federal Open Market Committee Meeting. With elections approaching, the Fed seems in no hurry to change course, believing that despite the upticks in economic reports, underlying inflation is still in check and the economy is not yet overheating. The market has taken some of the onus from the Fed by pricing a 25- to 50-basis point rate increase into the yield curve in response to the economic data. While bond prices dropped across the fixed income markets, municipals continued their first quarter trend of relative outperformance to Treasuries, though at the low end of the ranges. Long-term municipal bonds, as measured by the Bond Buyer 20-Year Index*, were yielding approximately 88% of Treasuries at the beginning of the Fund's fiscal year, at 5.57%. By July and August, the yield had risen to 5.86%, and 82% of Treasuries thanks to the continued low new issuance and large bond call redemptions that reduced the total outstanding supply of municipals. Municipals outperformed Treasuries due to a change in investor sentiment. Tax reform fears subsided and rising rates led individual investors to chase increased yields. This was in contrast to 1995 when investors suffered rate shock from the low absolute levels. Investors re-focused asset allocations into fixed income securities after the stock market became increasingly volatile and sold off. Municipals, especially, became attractive to individual investors and property and casualty insurance companies. Supply of municipal bonds to satisfy the increased demand continued to be a severe problem in the market. With interest rates rising, issuers were reluctant to issue refunding bonds and many other interest rate sensitive deals that had been in the pipeline. Specialty state funds, like this one, were especially hard-pressed to find new issues. Of those issues, most were priced rich and few were sizable enough for proper liquidity and diversification in mutual funds. As a result, the Fund selectively sought higher coupon bonds with defensive call protection to capture increased yields, maintain stable income, and reduce price volatility. As always, the Fund is managed to maximize total return and tax-exempt income while seeking to avoid unnecessary risk. At its fiscal year-end on August 31, 1996, Evergreen New Jersey Tax-Free Income Fund's total net assets were $44.2 million. The Fund's yields at that time are illustrated in the table below. (For additional performance information, please see page 33.)
CLASS Y SHARES CLASS A SHARES CLASS B SHARES 30-Day SEC Yield 5.17% 4.87% 4.17% Tax-Equivalent Yield* 8.65% 8.15% 6.98%
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. * UNMANAGED INDEXES OF SELECTED SECURITIES. AN INVESTMENT CAN NOT BE MADE IN AN INDEX. THE FUNDS' INVESTMENT RETURN, PRINCIPAL VALUE AND YIELDS WILL FLUCTUATE. INVESTORS' SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE FUND'S CLASS A SHARES ARE SUBJECT TO A MAXIMUM FRONT END SALES CHARGE OF 4.75% AND CLASS B SHARES ARE SUBJECT TO A MAXIMUM CONTINGENT DEFERRED SALES CHARGE OF 5%. ** TAX-EQUIVALENT YIELD ASSUMES A 36% FEDERAL TAX BRACKET AND A 6.65% NEW JERSEY STATE TAX BRACKET. DURING THE PERIOD UNDER REVIEW, THE ADVISER CONTINUED ITS POLICY OF WAIVING A PORTION OF ITS ADVISORY FEE. HAD FEE NOT BEEN WAIVED, YIELD WOULD HAVE BEEN LOWER. FEE WAIVER MAY BE REVISED AT ANY TIME. SOME OF THE FUND'S INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX FOR CERTAIN INVESTORS. 4 EVERGREEN STATE MUNICIPAL BOND FUNDS A REPORT FROM YOUR PORTFOLIO MANAGERS ROBERT EVANS RICHARD MARRONE ROBERT S. DRYE CHARLES JEANNE As the Funds' fiscal year began, municipal bonds were in the (Photo of midst of the bond rally of 1995. The yield on the Bond Buyer 20 Robert Evans Year Government Obligation (GO) Index* dropped 54 basis points, appears from 5.98% at the end of August, 1995, to 5.44% at 1995 here) year-end. The new year brought no January effect to municipals due to historically high levels of new issuance. Prices were cheap but demand remained tepid with individual investors suffering rate shock. Municipal yields continued their drop but not as severely as with Treasuries because of an unusually flat yield curve. There was little advantage to extending out into longer maturities since 20-year bonds at 5.46% traded only 10 basis points higher than 11-year bonds at 5.36% as measured by the Bond Buyer 20-Year GO* and 11-Year GO* Index, respectively. Investors demanded short-term paper or discount bonds that provided good structure (i.e. call protection). Fixed income markets reversed direction in the second quarter (Photo of of 1996 as economic reports continually surprised consensus. Richard Marrone Bond prices dropped after strong Gross Domestic Product (GDP) appears here) and initial jobless claims numbers were released. Increases in durable goods orders and rebounds in retail demand seemed to confirm that the economy was still growing at a healthy pace. Commodity prices started to show some signs of incipient inflation, but continued wage pressures kept it at bay. Investors remain prepared for Federal Reserve intervention to raise rates at any time, possibly even at the upcoming November (Photo of Federal Open Market Committee Meeting. With elections Robert S. Drye approaching, the Fed seems in no hurry to change course, appears here) believing that despite the upticks in economic reports, underlying inflation is still in check and the economy is not yet overheating. The market has taken some of the onus from the Fed by pricing a 25- to 50-basis point rate increase into the yield curve in response to the economic data. While bond prices dropped across the fixed income markets, (Photo of municipals continued their first quarter trend of relative Charles Jeanne outperformance to Treasuries, though at the low end of the appears here) ranges. Long-term municipals, as measured by the Bond Buyer 20-Year Index*, were yielding approximately 88% of Treasuries at the beginning of the Fund's fiscal year, at 5.57%. By July and August, the yield had risen to 5.86%, and 82% of Treasuries thanks to the continued low new issuance, regular interest payments, and large bond call redemptions that reduced the total outstanding supply of municipals. * UNMANAGED INDEXES OF SELECTED SECURITIES. AN INVESTMENT CAN NOT BE MADE IN AN INDEX. THE FUNDS' INVESTMENT RETURNS, PRINCIPAL VALUES AND YIELDS WILL FLUCTUATE. INVESTORS' SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. SOME OF THE FUNDS' INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM TAX FOR CERTAIN INVESTORS. 5 EVERGREEN STATE MUNICIPAL BOND FUNDS A REPORT FROM YOUR PORTFOLIO MANAGERS -- (CONTINUED) Municipals' outperformance of Treasuries was due to a change in investor sentiment. Tax reform fears subsided and rising rates led individual investors to chase increased yields. This was in contrast to 1995 when investors suffered rate shock from the low absolute levels. Investors re-focused asset allocations into fixed income securities after the stock market became increasingly volatile and sold off. Municipals, especially, became attractive to individual investors as well as property and casualty insurance companies. Supply of municipal bonds to satisfy the increased demand continued to be a severe problem in the market. With interest rates rising, issuers were reluctant to issue refunding bonds and many other interest rate sensitive deals that had been in the pipeline. Specialty state funds were particularly hard-pressed to find new issues. Of those issues, most were priced rich and few were sizable enough for proper liquidity and diversification in mutual funds. As a result, the Funds selectively sought higher coupon bonds with defensive call protection to capture increased yields, maintain stable income, and reduce price volatility. As always, the Funds are managed to maximize total return and tax-exempt income while seeking to avoid unnecessary risk. (For fund-specific performance information, please see the pages entitled "Results To Date".) 6 EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND (Drawing of the state of Florida with a + beside it) 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 Florida High Income Municipal Bond Fund (Class A, Class B and Class Y Shares) with a similar investment in the Lehman Brothers Municipal Bond Index ("Index"). CLASS A ONE YEAR TOTAL RETURN = 1.4% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 6.5% (Class A chart appears here. Plot points are below.) 6/17/92* 8/31/92 8/31/93 8/31/94 8/31/95 8/31/96 (Customers to fill in plot points.) CLASS B ONE YEAR TOTAL RETURN = 0.6% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 3.2% (Class B chart appears here. Plot points are below.) 7/10/95* 8/31/95 2/28/96 8/31/96 (Customers to fill in plot points.) CLASS Y AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 6.3% (Class Y chart appears here. Plot points are below.) 9/20/95* 2/28/96 8/31/96 (Customers to fill in plot points.) - - - EVERGREEN HIGH INCOME MUNICIPAL BOND FUND ______ LEHMAN BROTHERS MUNICIPAL BOND INDEX * 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, 1996; (c) all recurring fees (including investment advisory fees) were deducted; and (d) all dividends and distributions were reinvested. The investment adviser is currently waiving a portion of the Fund's expenses. Had expenses not been waived, returns would have been lower. 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. 7 EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND STATEMENT OF INVESTMENTS AUGUST 31, 1996 (Drawing of the state of Florida with a + beside it)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- 98.4% FLORIDA -- 93.7% $ 785 Alachua Cnty. Hlth. Facs. RB, Beverly Enterprises Proj., 10.125%, 4/1/10....................... $ 858,468 3,000 Alliance Arpt. Auth. Inc. Federal Express Corp. Proj., 6.375%, 4/1/21........................ 2,945,040 1,000 Bay Cnty. Hosp. Sys. RB, Bay Med. Ctr. Proj., 8.00%, 10/1/12........................ 1,094,620 200 Baytree Cmnty. Dev. Dist. Spl. Assmt. RB, 8.75%, 5/1/12......................... 211,630 750 Boynton Beach Hsg. Mtg. Clipper Cove Apts., 6.35%, 7/1/16......................... 748,245 990 Brevard Cnty. Hlth. Facs. Auth. RB, Courtenay Springs Vlg., 7.375%, 11/15/04...................... 1,000,019 1,875 Brevard Cnty. Hlth. Facs. Auth. RB, Courtenay Springs Vlg., 7.50%, 11/15/12....................... 1,887,019 1,000 Brevard Cnty. Tourist Dev. Tax RB, Marlins Spring, 6.875%, 3/1/13........................ 1,046,240 1,000 Broward Cnty. Hsg. Fin. Auth. RB, (Ser. A), 7.35%, 3/1/23, (GNMA)................. 1,041,280 1,125 Crossings At Fleming Is. Cmnty. Dev. Dist. Util. RB, 7.375%, 10/1/19....................... 1,107,743 2,310 Duval Cnty. Hsg. Fin. Auth. RB, St. Augustine Apts. Proj., 6.00%, 3/1/21......................... 2,246,498 1,500 Eastlake Oaks Cmnty. Dev. Dist., 7.75%, 5/1/17......................... 1,516,500 505 Escambia Cnty. Hlth. Facs. Auth. RB, Azalea Trace Inc., 8.50%, 1/1/19......................... 518,074 535 Escambia Cnty. Hlth. Facs. Auth. RB, Azalea Trace Inc., 9.25%, 1/1/06......................... 566,383 235 Escambia Cnty. Hlth. Facs. Auth. RB, Azalea Trace Inc., 9.25%, 1/1/12......................... 248,785 1,500 Escambia Cnty. Hlth. Facs. Auth. RB, Baptist Hosp. Inc., (Ser. B), 6.00%, 10/1/14........................ 1,418,205 PRINCIPAL AMOUNT (000) VALUE $ 2,000 Escambia Cnty. PCR, Champion Intl. Corp. Proj., 6.90%, 8/1/22......................... $ 2,073,500 1,000 Florida Hsg. Fin. Agy. RB, The Vinyards Proj., (Ser. H), 6.50%, 11/1/25........................ 998,580 2,580 Hernando Cnty. IDR, Florida Crushed Stone Co., 8.50%, 12/1/14........................ 2,811,890 1,545 Hialeah Gardens, IDR, Waterford Convalscent-A, 7.875%, 12/1/07....................... 1,594,100 600 Hillsborough Cnty. Aviation Auth. RB, US Air Proj. (Ser. 2), 8.60%, 1/15/22........................ 649,764 3,430 Homestead IDR, Cmnty. Rehab. Providers Prog.-A, 7.95%, 11/1/18........................ 3,456,651 2,500 Indian Trace Cmnty. GO Wtr. Mgmt. Spl. Benefit Sub-B, 8.25%, 5/1/11 (a)..................... 2,662,400 1,000 Jacksonville, Hlth. Facs. Auth. IDR, Cypress Vlg. Proj., 7.00%, 12/1/22........................ 1,017,560 750 Jacksonville, Hlth. Facs. Auth. RB, Cypress Vlg. Proj., 7.00%, 12/1/14........................ 765,548 2,500 Lake Bernadette Cmnty. Dev. Dist. Florida Special (Ser. A), 8.00%, 5/1/17......................... 2,478,375 2,000 Lee Cnty. Hsg. Fin. Auth. Multi-Cnty. Prog. (Ser. A), 7.50%, 9/1/27......................... 2,163,860 1,000 Lee Cnty. Hsg. Fin Auth. Single Family Mtg. RB, Multi-Cnty. Prog. (Ser. A), 7.45%, 9/1/27 -- WI................... 1,092,960 850 Lee Cnty. IDA, Encore Nursing Center Partner, 8.125%, 12/1/07....................... 906,610 2,860 Leon Cnty. Ed. Facs. Auth. RB, (Ser. A), 8.25%, 5/1/14......................... 2,862,660 1,000 Manatee Cnty. Hsg. Fin. Auth. Mtg. RB, 7.45%, 5/1/27......................... 1,090,620 1,175 Martin Cnty. IDR, Indiantown Cogeneration PJ-A, 7.875%, 12/15/25...................... 1,313,638
8 EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996 (Drawing of the state of Florida with a + beside it)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- CONTINUED FLORIDA -- CONTINUED $ 1,245 Meadow Point II, Cmnty. Dev. Dist. Cap. Impt. RB, 7.75%, 5/1/18 (a)..................... $ 1,266,526 1,000 Miami Beach City Center Historic Convention, 6.25%, 12/1/16........................ 976,340 500 Miami Beach City Center Historic Convention, 6.35%, 12/1/22........................ 486,870 1,300 North Springs, Impt. Dist. Wtr. Mgmt. Spl. Assmt. (Ser. A), 8.20%, 5/1/24......................... 1,366,235 2,500 Northern Palm Beach Cnty. Wtr. Ctl. & Impt. Unit Dev., 7.20%, 8/1/16 -- WI................... 2,500,000 500 Northern Palm Beach Cnty. Wtr. Ctl. Dist. Spl. Assmt., 6.875%, 11/1/13....................... 526,495 500 Northern Palm Beach Cnty. Wtr. Ctl. Dist. Spl. Assmt., 7.00%, 8/1/15......................... 529,160 1,500 Northwood Cmnty. Dev. Dist., 7.60%, 5/1/17......................... 1,499,955 1,040 Orange Cnty. Hlth Facs. Auth. RB, Lakeside Alts. Inc., 6.50%, 7/1/13......................... 1,027,634 395 Orange Cnty. Hlth. Facs. Auth. RB, Orlando Lutheran Tower, 8.40%, 7/1/14......................... 387,183 2,000 Osceola Cnty. IDA, Cmnty. Provider Pooled Ln. Proj. A, 7.75%, 7/1/17......................... 2,017,840 565 Overoaks Cmnty. Dev. Dist. Cap. Impt. RB, 8.25%, 5/1/17......................... 566,571 1,500 Palm Beach Cnty. IDR, Geriatric Care Inc. Proj., 6.55%, 12/1/16........................ 1,514,910 685 Pinellas Cnty. Edl. Facs. Auth. RB, Eckerd College, 7.75%, 7/1/14......................... 731,005 5,000 Polk Cnty. IDA, 7.525%, 1/1/15........................ 5,237,000 1,000 Port Everglades, RB, (Ser. A), 7.50%, 9/1/12......................... 1,053,460 1,710 Quantum Cmnty. Dev. Dist. Spl. Assmt. 7.75%, 3/1/14......................... 1,727,699 PRINCIPAL AMOUNT (000) VALUE $ 2,100 Riverwood Cmnty. Sys. RB, 7.75%, 10/1/14........................ $ 2,134,251 1,000 Sarasota Cnty. Hlth. Fac. Auth. RB, Jewish Housing Council, 7.375%, 7/1/16........................ 980,890 1,500 Sarasota Cnty. Hlth. Fac. Auth. RB, Manatee Jewish Housing Council, 6.70%, 7/1/25......................... 1,387,560 1,000 Sarosota Cnty. Hlth. Fac. Auth. RB, Sunnyside Pptys., 6.00%, 5/15/10........................ 935,190 1,500 South Indian River, Wtr. Ctl. Dist. RB, Egret Landing Phase I, 7.50%, 11/1/18........................ 1,538,805 2,500 St. Johns Ctny. IDA, Vicars Landing Proj. (Ser. A), 6.75%, 2/15/12........................ 2,432,925 3,000 Tampa, RB, Aquarium Inc. Proj., 7.75%, 5/1/27......................... 3,213,990 1,000 Tarpon Springs, Hlth. Facs. Auth. RB, Helen Ellis Mem. Hosp. Proj., 7.50%, 5/1/11......................... 1,031,130 500 Volusia Cnty. Edl. Facs. Auth. RB, 6.125%,10/15/16....................... 492,855 4,000 Volusia Cnty. Edl. Facs. Auth. RB, 6.125%, 10/15/26...................... 3,945,520 1,775 Westchase East Cmnty. Dev. Dist. Cap. Impt. RB, 7.50%, 5/1/17......................... 1,759,096 1,000 Winter Garden, IDR, Beverly Enterprises, 8.75%, 7/1/12......................... 1,093,650 250 Winter Haven Hsg. Auth. Abbey Lane Apts. (Ser. C), 7.00%, 7/1/12, (FNMA)................. 262,870 250 Winter Haven Hsg. Auth. Abbey Lane Apts. (Ser. C), 7.00%, 7/1/24, (FNMA)................. 259,412 91,276,492 PUERTO RICO -- 2.5% 1,475 Puerto Rico Ports. Auth. RB, American Airlines Proj., (Ser. A), 6.25%, 6/1/26......................... 1,463,392
9 EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996 (Drawing of the state of Florida with a + beside it)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- CONTINUED PUERTO RICO -- CONTINUED $ 1,000 Puerto Rico Indl. Tourist Edl. Med. & Envir. Ctl. Facs. RB, Mennonite Gen. Hosp. Proj. (Ser. A), 6.50%, 7/1/12......................... $ 995,290 2,458,682 VIRGIN ISLANDS -- 2.2% 2,000 Virgin Islands, Wtr. & Pwr. Auth. RB, (Ser. B), 7.60%, 1/1/12......................... 2,143,800 TOTAL LONG-TERM MUNICIPAL SECURITIES (COST $94,915,484).................... 95,878,974 SHARES VALUE MUTUAL FUND SHARES -- 1.9% 1,863,000 Lehman Municipal Money Market Fund (COST $1,863,000).................... $ 1,863,000 TOTAL INVESTMENTS -- (COST $96,778,484)............. 100.3% 97,741,974 OTHER ASSETS AND LIABILITIES -- NET............. (.3) (286,813) NET ASSETS --.................. 100.0% $97,455,161
Summary of Abbreviations: FNMA -- Insured by Federal National Mortgage Association GNMA -- Insured by Government National Mortgage Association GO -- General Obligation Bond IDA -- Industrial Development Authority IDR -- Industrial Development Revenue Bond PCR -- Pollution Control Revenue Bond RB -- Revenue Bond WI -- When Issued (a) Security which was segregated as collateral for When Issued securities. See accompanying notes to financial statements. 10 EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996 (Drawing of the state of Florida with a + beside it) ASSETS: Investments at value (identified cost $96,778,484)............................................................ $ 97,741,974 Cash.......................................................................................................... 97 Interest receivable........................................................................................... 1,963,955 Receivable for Fund shares sold............................................................................... 1,850,767 Deferred organization expenses and other assets............................................................... 17,987 Total assets............................................................................................ 101,574,780 LIABILITIES: Payable for securities purchased.............................................................................. 3,616,400 Dividends payable............................................................................................. 271,014 Payable for Fund shares redeemed.............................................................................. 101,964 Accrued expenses.............................................................................................. 58,548 Distribution fee payable...................................................................................... 46,039 Accrued advisory fee.......................................................................................... 25,654 Total liabilities....................................................................................... 4,119,619 NET ASSETS....................................................................................................... $ 97,455,161 NET ASSETS CONSIST OF: Paid-in capital............................................................................................... $ 97,923,777 Distributions in excess of net investment income.............................................................. (7,223) Accumulated net realized loss on investment transactions...................................................... (1,424,883) Net unrealized appreciation of investments.................................................................... 963,490 Net assets.............................................................................................. $ 97,455,161 CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE: Class A Shares ($76,266,753 (division sign) 7,318,419 shares of beneficial interest outstanding).............. $ 10.42 Sales charge -- 4.75% of offering price....................................................................... .52 Maximum offering price.................................................................................. $ 10.94 Class B Shares ($19,218,795 (division sign) 1,844,017 shares of beneficial interest outstanding).............. $ 10.42 Class Y Shares ($1,969,613 (division sign) 189,005 shares of beneficial interest outstanding)................. $ 10.42
See accompanying notes to financial statements. 11 EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1996 (Drawing of the state of Florida with a + beside it) INVESTMENT INCOME: Interest........................................................................................... $5,460,025 EXPENSES: Advisory fee....................................................................................... $477,128 Administrative personnel and service fees.......................................................... 40,295 Distribution fee -- Class A Shares................................................................. 169,651 Distribution fee -- Class B Shares................................................................. 80,050 Shareholder services fee -- Class B Shares......................................................... 26,683 Custodian fee...................................................................................... 57,131 Transfer agent fee................................................................................. 55,460 Registration and filing fees....................................................................... 30,624 Reports and notices to shareholders................................................................ 23,722 Professional fees.................................................................................. 18,493 Amortization of organizational expense............................................................. 3,543 Trustees' fees and expenses........................................................................ 2,763 Insurance.......................................................................................... 1,958 Miscellaneous...................................................................................... 2,950 990,451 Less: Fee waivers..................................................................................... (238,564) Net Expenses....................................................................................... 751,887 Net investment income................................................................................. 4,708,138 NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS: Net realized loss on investment transactions....................................................... (67,136) Net change in unrealized appreciation of investments............................................... (42,880) Net loss on investments............................................................................ (110,016) NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................................. $4,598,122
See accompanying notes to financial statements. 12 EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND STATEMENT OF CHANGES IN NET ASSETS (Drawing of the state of Florida with a + beside it)
FOUR MONTHS YEAR ENDED ENDED AUGUST 31, AUGUST 31, 1996 1995 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income....................................................................... $ 4,708,138 $ 1,225,081 Net realized gain (loss) on investment transactions......................................... (67,136) 150,049 Net change in unrealized appreciation (depreciation) of investments......................... (42,880) 1,449,591 Net increase in net assets resulting from operations..................................... 4,598,122 2,824,721 DISTRIBUTIONS TO SHAREHOLDERS: FROM NET INVESTMENT INCOME: Class A Shares.............................................................................. (4,083,337) (1,214,190) Class B Shares.............................................................................. (562,849) (10,891) Class Y Shares.............................................................................. (61,952) -- Total distributions to shareholders from net investment income.............................. (4,708,138) (1,225,081) IN EXCESS OF NET INVESTMENT INCOME: Class A Shares.............................................................................. -- (8,411) Class B Shares.............................................................................. -- (76) Total distributions to shareholders in excess of net investment income...................... -- (8,487) Total distributions to shareholders...................................................... (4,708,138) (1,233,568) FUND SHARE TRANSACTIONS: Proceeds from shares sold................................................................... 51,887,683 10,600,090 Proceeds from reinvestment of distributions................................................. 1,815,929 307,200 Payment for shares redeemed................................................................. (18,826,666) (14,853,087) Net increase (decrease) from Fund share transactions..................................... 34,876,946 (3,945,797) Net increase (decrease) in net assets.................................................... 34,766,930 (2,354,644) NET ASSETS: Beginning of period......................................................................... 62,688,231 65,042,875 End of period (includes distributions in excess of net investment income of $7,223 for the periods ending August 31, 1996 and August 31, 1995)....................................... $ 97,455,161 $ 62,688,231
See accompanying notes to financial statements. 13 EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS (Drawing of the state of Florida with a + beside it)
CLASS A SHARES FOUR MONTHS ENDED YEAR ENDED YEAR ENDED AUGUST 31, APRIL 30, AUGUST 31, 1996 1995# 1995 1994 PER SHARE DATA: Net asset value, beginning of period............................ $10.40 $10.16 $10.08 $10.36 Income (loss) from investment operations: Net investment income......................................... .63 .21 .65 .68 Net realized and unrealized gain (loss) on investments........ .02 .24 .08 (.26) Total from investment operations............................ .65 .45 .73 .42 Less distributions to shareholders from: Net investment income......................................... (.63) (.21) (.65) (.68) Net realized gain on investments.............................. -- -- -- (.02) Total distributions......................................... (.63) (.21) (.65) (.70) Net asset value, end of period.................................. $10.42 $10.40 $10.16 $10.08 TOTAL RETURN+................................................... 6.4% 4.4% 7.6% 3.3% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)....................... $76,267 $59,551 $65,043 $72,683 Ratios to average net assets: Expenses**.................................................... .85% 1.07%++ .60% .14% Net investment income**....................................... 6.02% 5.92%++ 6.52% 6.16% Portfolio turnover rate......................................... 42% 14% 28% 31% JUNE 17, 1992* THROUGH APRIL 30, 1993 PER SHARE DATA: Net asset value, beginning of period............................ $10.00 Income (loss) from investment operations: Net investment income......................................... .61 Net realized and unrealized gain (loss) on investments........ .39 Total from investment operations............................ 1.00 Less distributions to shareholders from: Net investment income......................................... (.61) Net realized gain on investments.............................. (.03) Total distributions......................................... (.64) Net asset value, end of period.................................. $10.36 TOTAL RETURN+................................................... 10.3% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)....................... $33,541 Ratios to average net assets: Expenses**.................................................... .00% Net investment income**....................................... 5.92%++ Portfolio turnover rate......................................... 50%
# 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 is 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:
CLASS A SHARES FOUR MONTHS ENDED YEAR ENDED YEAR ENDED AUGUST 31, APRIL 30, AUGUST 31, 1996 1995# 1995 1994 Expenses....................................................... 1.15% 1.42% 1.26% 1.12% Net investment income.......................................... 5.72% 5.57% 5.86% 5.18% JUNE 17, 1992* THROUGH APRIL 30, 1993 Expenses....................................................... 1.12% Net investment income.......................................... 4.80%
See accompanying notes to financial statements. 14 EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS -- (CONTINUED) (Drawing of the state of Florida with a + beside it)
CLASS B SHARES JULY 10, 1995* YEAR ENDED THROUGH AUGUST 31, 1996 AUGUST 31, 1995 PER SHARE DATA: Net asset value, beginning of period................................................. $10.40 $10.41 Income (loss) from investment operations: Net investment income.............................................................. .55 .08 Net realized and unrealized gain (loss) on investments............................. .02 (.01) Total from investment operations................................................. .57 .07 Less distributions to shareholders from net investment income........................ (.55) (.08) Net asset value, end of period....................................................... $10.42 $10.40 TOTAL RETURN+........................................................................ 5.6% .6% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)............................................ $19,219 $3,137 Ratios to average net assets: Expenses........................................................................... 1.59%** 1.09%++ Net investment income.............................................................. 5.27%** 3.40%++ Portfolio turnover rate.............................................................. 42% 14% CLASS Y SHARES SEPTEMBER 20, 1995* THROUGH AUGUST 31, 1996 PER SHARE DATA: Net asset value, beginning of period................................................. $10.48 Income (loss) from investment operations: Net investment income.............................................................. .63 Net realized and unrealized gain (loss) on investments............................. (.06) Total from investment operations................................................. .57 Less distributions to shareholders from net investment income........................ (.63) Net asset value, end of period....................................................... $10.42 TOTAL RETURN+........................................................................ 6.3% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)............................................ $1,970 Ratios to average net assets: Expenses........................................................................... .59%++** Net investment income.............................................................. 6.27%++** Portfolio turnover rate.............................................................. 42%
* Commencement of class operations. + Total return is calculated on net asset value per share for the periods indicated and is not annualized. Contingent deferred sales charge is 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:
CLASS Y SHARES CLASS B SHARES SEPTEMBER 20, 1995* YEAR ENDED THROUGH AUGUST 31, 1996 AUGUST 31, 1996 Expenses............................................................................... 1.89% .89% Net investment income.................................................................. 4.97% 5.97%
See accompanying notes to financial statements. 15 EVERGREEN FLORIDA MUNICIPAL BOND FUND (Drawing of the state of Florida) 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"). CLASS A ONE YEAR TOTAL RETURN = 0.2% FIVE YEAR TOTAL RETURN = 6.4% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 7.3% (Class A chart appears here. Plot points are below.) 5/1/88* 8/31/88 8/31/89 8/31/90 8/31/91 8/31/92 8/31/93 8/31/94 8/31/95 8/31/96 (Customer to fill in plot points.) CLASS B ONE YEAR TOTAL RETURN = 0.8% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 1.5% (Class B chart appears here. Plot points are below.) 6/30/95* 8/31/95 2/29/96 8/31/96 (Customer to fill in plot points.) CLASS Y ONE YEAR TOTAL RETURN = 5.2% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 5.9% (Class Y chart appears here. Plot points are below.) 6/30/95* 8/31/95 2/29/96 8/31/96 (Customer to fill in plot points.) - - - EVERGREEN FLORIDA MUNICIPAL BOND FUND ______ LEHMAN BROTHERS MUNICIPAL BOND INDEX *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, 1996; (c) all recurring fees (including investment advisory fees) were deducted; and (d) all dividends and distributions were reinvested. The investment adviser is currently waving a portion of the Fund's expenses. Had expenses not been waived, returns would have been lower. 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. 16 EVERGREEN FLORIDA MUNICIPAL BOND FUND STATEMENT OF INVESTMENTS AUGUST 31, 1996 (Drawing of the state of Florida)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- 97.0% FLORIDA -- 97.0% $ 1,500 Alachua Cnty. Hlth. Fac. RB, Mental Hlth. Svcs. Proj. A, 7.75%, 7/1/10 (FSA)................... $ 1,664,265 2,000 Altamonte Springs Hlth. Fac. Auth. Hosp. RB, Adventist Hlth./Sunbelt (Ser. B), 5.125%, 11/15/18 (AMBAC).............. 1,804,760 750 Brevard Cnty. Hsg. Fin. Auth. RB, (Ser. B), 7.00%, 3/1/13 (FSA)................... 788,003 2,925 Broward Cnty. Hlth. Care Facs. RB, North Beach Hosp. Proj., 7.00%, 8/15/11 (MBIA)................. 3,224,813 1,375 Broward Cnty. Hsg. Fin. Auth. RB, GNMA Coll Home Mtg. (Ser. B), 7.125%, 3/1/17 (GNMA)................. 1,442,966 200 Broward Cnty. Hsg. Fin. Auth. RB, GNMA Coll Home Mtg. (Ser. B), 7.55%, 3/1/15 (GNMA).................. 210,632 1,000 Charlotte Cnty. Util. RB, Prefunded @ $102, 7.00%, 10/1/14 (FGIC)................. 1,120,650 105 Charlotte Cnty Spec. Assessment RB, Peachland mun. Svc. Tax & Ben. Unit, 7.25%, 10/1/10 (MBIA)................. 116,084 500 Collier Cnty. Hlth. Facs. Auth. RB (The Moorings, Inc. Proj.,) 7.00%, 12/1/19........................ 517,410 1,000 Cooper City Sales Tax RB, 7.25%, 10/1/11........................ 1,095,010 1,000 Dade Cnty. Spec. Oblig. RB, Courthouse Ctr. Proj., 6.25%, 4/1/09......................... 1,043,880 2,070 Dade Cnty. Edl. Facs. Auth. RB, Florida Intl. Univ. (N. Miami Proj.), 7.10%, 10/1/16 (MBIA)................. 2,329,019 2,000 Dade Cnty. Edl. Facs. Auth. RB, St. Thomas Univ., 6.00%, 1/1/14 (LOC: Sun Bank Miami)................. 1,978,580 1,000 Dade Cnty. Edl. Facs. Auth. RB, St. Thomas Univ., 6.125%, 1/1/19 (LOC: Sun Bank Miami)................. 1,002,360 5,280 Dade Cnty. Gtd. Entitlement RB, Cap Apprec. (Ser. A), Zero Coupon, 2/1/08 (MBIA)............ 2,825,750 PRINCIPAL AMOUNT (000) VALUE $ 240 Dade Cnty. Hlth. Fac. Auth. Hosp. RB, South Shore Hosp. & Med. Center (Ser. A) (FHA), 7.60%, 8/1/24......................... $ 259,644 135 Dade Cnty. Hsg. Fin. Auth. Sngl. Fam. Mtg. RB, (Ser. A), 7.10%, 3/1/17 (GNMA).................. 141,502 255 Dade Cnty. Hsg. Fin. Auth. Sngl. Fam. Mtg. RB, (Ser. A), 7.50%, 9/1/13 (GNMA).................. 268,750 455 Dade Cnty. Hsg. Fin. Auth. Sngl. Fam. Mtg. RB, (Ser. D), 6.95%, 12/15/12 (FSA)................. 478,255 4,000 Dade Cnty. Prof. Sports, Franchise Fac. Tax RB, Zero Coupon, 10/1/27 (MBIA)........... 636,720 3,815 Dade Cnty. Pub. Fac. RB, Jackson Mem. Hosp. Proj. (Ser. A), 4.875%, 6/1/15 (MBIA)................. 3,354,949 4,000 Dade Cnty. Seaport, Fitch Light Rtg., 5.125%, 10/1/21 (MBIA)................ 3,620,760 840 Duval Cnty. Hsg. Fin. Auth. Sngl. Fam. Mtg. RB, 7.35%, 7/1/24 (GNMA).................. 884,528 215 Duval Cnty. Hsg. Fin. Auth. Sngl. Fam. Mtg. RB, 7.50%, 6/1/15 (FGIC).................. 226,563 1,000 Escambia Cnty. Hlth. Facs. Auth. RB, Baptist Hosp. Inc. (Ser. B), 6.00%, 10/1/14........................ 945,470 5,230 Escambia Cnty. PCR Champion Intl. Corp. Proj., 5.875%, 6/1/22........................ 4,882,571 3,000 Escambia Cnty. PCR, Gulf Pwr. Co. Proj., 8.25%, 6/1/17......................... 3,131,460 1,925 Florida Hsg. Fin. Agcy. RB, Multi. Fam. Hsg. 6.35%, 5/1/26......................... 1,924,788 3,260 Florida Hsg. Fin. Agcy. RB, 8.00%, 12/1/20 (GNMA)................. 3,448,069 1,895 Florida Hsg. Fin. Agcy. RB, (Ser. A), 6.875%, 10/1/12....................... 1,959,923 2,000 Florida St. Muni. Pwr. Agcy. RB, Stanton II Proj., 4.50%, 10/1/27 (AMBAC)................ 1,577,160 2,000 Florida St. Brd. of Ed. Cap. Outlay, (Ser. E), 5.25%, 6/1/23......................... 1,806,140
17 EVERGREEN FLORIDA MUNICIPAL BOND FUND STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996 (Drawing of the state of Florida)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- CONTINUED FLORIDA -- CONTINUED $ 2,500 Florida St. Brd. of Regt. Univ. Sys. RB, 6.70%, 7/1/12 (AMBAC)................. $ 2,715,225 2,000 Florida St. Div. Bd. Fin. Dept. RB, 6.75%, 7/1/13 (AMBAC)................. 2,185,460 2,000 FSU Finl. Assist., Inc. Edl. & Athletic Facs. RB, (Ser. A), 6.75%, 10/1/16 (LOC: Sun Bank Orlando)............... 2,214,080 1,235 Hialeah, Cap. Impt. RB, 5.50%, 10/1/13........................ 1,149,538 1,000 Hillsborough Cnty. Aviation Auth. RB, Tampa Intl. Airport, (Ser. A), 6.90%, 10/1/11 (FGIC)................. 1,073,510 3,250 Hillsborough Cnty. Indl. Dev. Auth. IDR, Univ. Cmnty. Hosp. (Ser. 1994), 6.50%, 8/15/19 (MBIA)................. 3,532,230 1,000 Homestead Excise Tax RB, 7.15%, 10/1/11 (MBIA)................. 1,101,110 1,500 Jacksonville Hlth. Facs. Auth. Hosp. RB, St. Lukes Hosp. Assn. Proj., 6.75%, 11/15/13....................... 1,601,445 1,500 Jacksonville Hlth. Facs. Auth. Hosp. RB, St. Lukes Hosp. Assn. Proj., 7.125%, 11/15/20...................... 1,623,015 2,000 Jacksonville Hlth. Facs. Auth. RB, 7.50%, 11/1/15........................ 2,252,320 4,370 Lee Cnty. Hsg. Fin. Auth. Multi-Cnty. Prog., (Ser. A), 7.50%, 9/1/27......................... 4,728,034 1,700 Lee Cnty. Hsg. Fin. Auth. Sngl. Fam. Mtg. RB, Multi-Cnty. Prog. (Ser. A), 7.45%, 9/1/27......................... 1,858,032 1,025 Leon Cnty. Hsg. Fin. Auth. Sngl. Fam. Mtg. RB, Multi-Cnty. Prog. (Ser. B), 6.25%, 7/1/19 (GNMA).................. 1,021,187 1,000 Manatee Cnty. Cmnty. Redev. RB, Admin. Center Proj., 7.00%, 4/1/08 (MBIA).................. 1,088,500 1,510 Manatee Cnty. GO, 4.75%, 10/1/13 (FGIC)................. 1,321,628 1,500 Manatee Cnty. Hsg. Fin. Auth. Mtg. RB, 7.45%, 5/1/27......................... 1,635,930 3,500 Manatee Cnty. Pub. Utils. RB, (Ser. 1991A), 6.75%, 10/1/13 (MBIA)................. 3,883,075 PRINCIPAL AMOUNT (000) VALUE $ 1,500 Martin Cnty. Hlth. Fac. Auth. Hosp. RB, Martin Mem. Hosp. South Proj. (Ser. B), 7.10%, 11/15/20 (MBIA)................ $ 1,637,040 2,000 Miami Beach Redev. Agcy. Tax Increment RB, City Center-Historic Convention Vlg., 5.625%, 12/1/09....................... 1,928,360 3,000 Miami Beach Redev. Agcy. Tax Increment RB, City Center-Historic Convention Vlg., 5.80%, 12/1/13........................ 2,837,190 2,000 Miami Beach Redev. Agcy., Tax Increment, RB, City Center-Historic Convention Vlg., 5.875%, 12/1/22....................... 1,862,300 1,500 North Miami Hlth. Fac. Auth. RB, Catholic Hlth. Svc. Oblig. Group, 6.00%, 8/15/16 (LOC: Suntrust Bank).................. 1,469,220 1,000 North Tampa Hsg. Dev. Corp. RB, Cnty Oaks Apts. (Ser. A), 6.90%, 1/1/24 (FNMA).................. 1,034,480 1,300 Northern Palm Beach Cnty. Impt. RB, Wtr. Ctl. & Impt. Unit Dev. 9A-A, 7.20%, 8/1/16......................... 1,300,000 1,000 Okaloosa Cnty. Wtr. & Swr. RB, 6.00%, 7/1/11 (AMBAC)................. 1,054,340 3,000 Orange Cnty. Hlth. Facs. Auth. RB, Lakeside Alts. Inc., 6.50%, 7/1/13......................... 2,964,330 3,000 Palm Beach Cnty. Criminal Justice Facs. RB, 7.20%, 6/1/15 (FGIC).................. 3,521,580 3,695 Palm Beach Cnty. Hlth. Facs. Auth. RB, Good Samaritan Hlth. Sys., 6.20%, 10/1/11........................ 3,740,781 6,000 Palm Beach Cnty. Hlth. Facs. Auth. Sngl. Fam. Mtg. RB, Good Samaritan Hlth. Sys., 6.30%, 10/1/22........................ 6,086,520 1,000 Palm Beach Cnty. Hsg. Fin. Auth. Sngl. Fam. Mtg. RB, (Ser. A), 6.50%, 10/1/21 (GNMA)................. 1,018,910 4,440 Palm Beach Cnty. Hsg. Fin. Auth. RB, (Ser. B), 7.60%, 3/1/23 (GNMA).................. 4,678,162
18 EVERGREEN FLORIDA MUNICIPAL BOND FUND STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996 (Drawing of the state of Florida)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- CONTINUED FLORIDA -- CONTINUED $ 2,000 Palm Beach Cnty. IDR, Geriatric Care Inc. Proj., 6.55%, 12/1/16 (LOC: Allied Irish Banks)............. $ 2,019,880 5,000 Pensacola Hlth. Facs. Auth. RB, Daughters Charity Natl. Hlth., 5.25%, 1/1/11......................... 4,771,800 860 Polk Cnty Hsg. Fin. Auth. Sngl. Fam. Mtg. RB, (Ser. A), 7.00%, 9/1/15......................... 887,554 1,500 Reedy Creek Impt. Dist. Util., RB, (Ser. 1), 5.00%, 10/1/19 (MBIA)................. 1,336,065 1,955 Sanford Wtr. & Swr. RB, 4.50%, 10/1/21 (AMBAC)................ 1,592,308 1,740 Sanford Wtr. & Swr. RB, 4.75%, 10/1/18 (AMBAC)................ 1,488,918 1,800 Sarasota Cnty. Hlth. Fac. Auth. RB, Sunnyside Pptys., 6.00%, 5/15/10........................ 1,683,342 1,000 Sarasota Cnty. Util. Sys. RB, 6.50%, 10/1/14 (FGIC)................. 1,121,380 3,590 Seacoast Util. Auth. Wtr. & Swr. RB, (Ser. A), 5.50%, 3/1/18 (FGIC).................. 3,488,654 750 St. Johns Cnty. Solid Waste Disp. RB, 7.25%, 11/1/10 (FGIC)................. 829,725 1,000 St. Petersburg Hlth. Facs. Auth. RB, St. Mary's Allegheny Hlth. Sys., 7.00%, 12/1/21 (MBIA)................. 1,088,780 750 Tampa Gtd. Entitlement RB,, 7.05%, 10/1/07 (AMBAC)................ 830,640 1,500 Tampa Sports Auth. RB, Sales Tax Tampa Bay Arena Proj., 5.75%, 10/1/25 (MBIA)................. 1,499,910 3,500 Volusia Cnty. Edl. Facs. Auth. RB, Embry-Riddle Aero-A 6.125%, 10/15/16...................... 3,449,985 2,600 Volusia Cnty. Edl. Facs. Auth. RB, Embry-Riddle Aero-A 6.125%, 10/15/26...................... 2,564,588 PRINCIPAL AMOUNT (000) VALUE $ 850 Winter Haven Hsg. Auth. Multi-Fam. Mtg. RB, Abbey Lane Apts. (Ser. C), 7.00%, 7/1/12 (FNMA).................. $ 893,758 1,750 Winter Haven Hsg. Auth. Multi-Fam. Mtg. RB, Abbey Lane Apts. (Ser. C), 7.00%, 7/1/24 (FNMA).................. 1,815,887 TOTAL LONG-TERM MUNICIPAL SECURITIES (COST $145,336,387).............. 152,192,140
SHARES MUTUAL FUND SHARES -- 2.7% 4,249,000 Lehman Municipal Money Market Fund (cost $4,249,000)........... 4,249,000 TOTAL INVESTMENTS -- (COST $149,585,387).... 99.7% 156,441,140 OTHER ASSETS AND LIABILITIES -- NET..... .3 389,582 NET ASSETS --............. 100.0% $156,830,722
Summary of Abbreviations: AMBAC -- Insured by American Municipal Bond Assurance Corporation FGIC -- Insured by Financial Guaranty Insurance Company FNMA -- Insured by Federal National Mortgage Association FHA -- Insured by Federal Housing Authority FSA -- Insured by Financial Security Assurance GNMA -- Insured by Government National Mortgage Association GO -- General Obligation Bond IDR -- Industrial Development Revenue Bond LOC -- Letter of Credit MBIA -- Insured by Municipal Bond Investors Assurance PCR -- Pollution Control Revenue Bond RB -- Revenue Bond See accompanying notes to financial statements. 19 EVERGREEN FLORIDA MUNICIPAL BOND FUND STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996 (Drawing of the state of Florida) ASSETS: Investments at value (identified cost $149,585,387)........................................................... $156,441,140 Cash.......................................................................................................... 709 Interest receivable........................................................................................... 2,801,347 Receivable for securities sold................................................................................ 1,611,060 Receivable for Fund shares sold............................................................................... 70,289 Prepaid expenses.............................................................................................. 5,237 Total assets............................................................................................ 160,929,782 LIABILITIES: Payable for securities purchased.............................................................................. 3,170,740 Dividends payable............................................................................................. 483,495 Payable for Fund shares redeemed.............................................................................. 279,924 Accrued advisory fee.......................................................................................... 95,440 Distribution fee payable...................................................................................... 42,042 Accrued expenses.............................................................................................. 27,419 Total liabilities....................................................................................... 4,099,060 NET ASSETS....................................................................................................... $156,830,722 NET ASSETS CONSIST OF: Paid-in capital............................................................................................... $149,709,292 Undistributed net investment income........................................................................... 98,832 Accumulated net realized gain on investment transactions...................................................... 166,845 Net unrealized appreciation of investments.................................................................... 6,855,753 Net assets.............................................................................................. $156,830,722 CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE: Class A Shares ($115,723,258 (division sign) 11,934,283 shares of beneficial interest outstanding)............ $ 9.70 Sales charge -- 4.75% of offering price....................................................................... .48 Maximum offering price.................................................................................. $ 10.18 Class B Shares ($28,848,699 (division sign) 2,975,000 shares of beneficial interest outstanding).............. $ 9.70 Class Y Shares ($12,258,765 (division sign) 1,264,156 shares of beneficial interest outstanding).............. $ 9.70
See accompanying notes to financial statements. 20 EVERGREEN FLORIDA MUNICIPAL BOND FUND STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1996 (Drawing of the state of Florida) INVESTMENT INCOME: Interest........................................................................................ $9,791,218 EXPENSES: Advisory fee.................................................................................... $ 803,741 Administrative personnel and service fees....................................................... 81,881 Distribution fee -- Class A Shares.............................................................. 240,978 Distribution fee -- Class B Shares.............................................................. 215,869 Shareholder services fee -- Class B Shares...................................................... 71,956 Transfer agent fee.............................................................................. 78,665 Custodian fee................................................................................... 71,899 Registration and filing fees.................................................................... 68,201 Reports and notices to shareholders............................................................. 56,346 Professional fees............................................................................... 33,347 Insurance expense............................................................................... 5,503 Trustees' fees and expenses..................................................................... 3,941 Miscellaneous................................................................................... 22,740 1,755,067 Less: Fee waivers and expense reimbursements.................................................... (473,830) Net expenses.............................................................................. 1,281,237 Net investment income.............................................................................. 8,509,981 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investment transactions.................................................... 1,550,230 Net change in unrealized appreciation of investments............................................ (2,163,335) Net loss on investments......................................................................... (613,105) NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................... $7,896,876
See accompanying notes to financial statements. 21 EVERGREEN FLORIDA MUNICIPAL BOND FUND STATEMENT OF CHANGES IN NET ASSETS (Drawing of the state of Florida)
YEAR FOUR MONTHS ENDED ENDED AUGUST 31, AUGUST 31, 1996 1995 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income.................................................................... $ 8,509,981 $ 2,976,370 Net realized gain on investment transactions............................................. 1,550,230 865,584 Net change in unrealized appreciation of investments..................................... (2,163,335) 2,620,594 Net increase in net assets resulting from operations.................................. 7,896,876 6,462,548 DISTRIBUTIONS TO SHAREHOLDERS: FROM NET INVESTMENT INCOME: Class A Shares........................................................................... (6,726,492) (2,733,700) Class B Shares........................................................................... (1,290,196) (211,396) Class Y Shares........................................................................... (417,123) (31,274) Total distributions from net investment income..................................... (8,433,811) (2,976,370) IN EXCESS OF NET INVESTMENT INCOME: Class A Shares........................................................................... -- (210,099) FROM NET REALIZED GAINS: Class A Shares........................................................................... -- (820,461) Total distributions to shareholders................................................... (8,433,811) (4,006,930) FUND SHARE TRANSACTIONS: Proceeds from shares sold................................................................ 23,857,675 4,227,591 Proceeds from shares issued in acquisition of First Union Florida Municipal Bond Portfolio...................................................... -- 38,045,323 Proceeds from reinvestment of distributions.............................................. 2,678,816 1,604,983 Payment for shares redeemed.............................................................. (36,571,005) (47,473,841) Net decrease resulting from Fund share transactions................................... (10,034,514) (3,595,944) Net decrease in net assets............................................................ (10,571,449) (1,140,326) NET ASSETS: Beginning of period...................................................................... 167,402,171 168,542,497 End of period (includes undistributed net investment income of $98,832 and $22,662, respectively).......................................................................... $ 156,830,722 $ 167,402,171
See accompanying notes to financial statements. 22 EVERGREEN FLORIDA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS (Drawing of the state of Florida)
CLASS A SHARES YEAR FOUR MONTHS ENDED ENDED AUGUST 31, AUGUST 31, YEAR ENDED APRIL 30, 1996 1995*|| 1995|| 1994|| PER SHARE DATA: Net asset value, beginning of period................................. $9.74 $9.61 $9.52 $9.95 Income (loss) from investment operations: Net investment income.............................................. .54 .19 .54 .56 Net realized and unrealized gain (loss) on investments............. (.04) .22 .11 (.36) Total from investment operations................................. .50 .41 .65 .20 Less distributions to shareholders from: Net investment income.............................................. (.54) (.19) (.54) (.56) In excess of net investment income................................. -- (.03) -- -- Net realized gain on investments................................... -- (.06) (.02) (.07) Paid-in capital.................................................... -- -- -- -- Total distributions.............................................. (.54) (.28) (.56) (.63) Net asset value, end of period....................................... $9.70 $9.74 $9.61 $9.52 TOTAL RETURN+........................................................ 5.1% 4.2% 7.1% 1.9% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)............................ $115,723 $136,449 $168,542 $199,612 Ratios to average net assets: Expenses........................................................... .63%** .82%++** .61% .56% Net investment income.............................................. 5.46%** 4.89%++** 5.73% 5.37% Portfolio turnover rate.............................................. 30% 29% 53% 32% 1993|| PER SHARE DATA: Net asset value, beginning of period................................. $9.35 Income (loss) from investment operations: Net investment income.............................................. .56 Net realized and unrealized gain (loss) on investments............. .67 Total from investment operations................................. 1.23 Less distributions to shareholders from: Net investment income.............................................. (.56) In excess of net investment income................................. -- Net realized gain on investments................................... (.07) Paid-in capital.................................................... -- Total distributions.............................................. (.63) Net asset value, end of period....................................... $9.95 TOTAL RETURN+........................................................ 13.6% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)............................ $198,286 Ratios to average net assets: Expenses........................................................... .58% Net investment income.............................................. 5.66% Portfolio turnover rate.............................................. 24%
* The Fund changed its fiscal year end from April 30 to August 31. + Total return is calculated on net asset value per share for the periods indicated and is not annualized. Initial sale charge is 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:
CLASS A SHARES YEAR FOUR MONTHS ENDED ENDED AUGUST 31, AUGUST 31, 1996 1995 Expenses.......................................................................... .95% 1.05% Net investment income............................................................. 5.14% 4.66%
|| On June 30, 1995, ABT Florida Tax-Free Fund sold its net assets 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. 23 EVERGREEN FLORIDA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS -- (CONTINUED) (Drawing of the state of Florida)
CLASS Y CLASS B SHARES SHARES YEAR JUNE 30, 1995* YEAR ENDED THROUGH ENDED AUGUST 31, AUGUST 31, AUGUST 31, 1996 1995 1996 PER SHARE DATA: Net asset value, beginning of period.................................... $9.74 $9.67 $9.74 Income from investment operations: Net investment income................................................. .44 .07 .53 Net realized and unrealized gain (loss) on investments................ (.04) .10 (.03) Total from investment operations.................................... .40 .17 .50 Less distributions to shareholders from: Net investment income................................................. (.44) (.07) (.54) In excess of net investment income.................................... -- (.03) -- Total distributions................................................. (.44) (.10) (.54) Net asset value, end of period.......................................... $9.70 $9.74 $9.70 TOTAL RETURN+........................................................... 4.2% 1.5% 5.2% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)............................... $28,849 $27,351 $12,259 Ratios to average net assets: Expenses**............................................................ 1.56% 1.44%++ .57% Net investment income**............................................... 4.52% 3.22%++ 5.55% Portfolio turnover rate................................................. 30% 29% 30% JUNE 30, 1995* THROUGH AUGUST 31, 1995 PER SHARE DATA: Net asset value, beginning of period.................................... $9.67 Income from investment operations: Net investment income................................................. .09 Net realized and unrealized gain (loss) on investments................ .10 Total from investment operations.................................... .19 Less distributions to shareholders from: Net investment income................................................. (.09) In excess of net investment income.................................... (.03) Total distributions................................................. (.12) Net asset value, end of period.......................................... $9.74 TOTAL RETURN+........................................................... 1.7% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)............................... $3,602 Ratios to average net assets: Expenses**............................................................ .59%++ Net investment income**............................................... 4.93%++ Portfolio turnover rate................................................. 29%
* Commencement of class operations. + Total return is calculated on net asset value per share for the periods indicated and is not annualized. Contingent deferred sales charge is 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:
CLASS B SHARES CLASS Y SHARES YEAR JUNE 30, 1995* YEAR JUNE 30, 1995* ENDED THROUGH ENDED THROUGH AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31, 1996 1995 1996 1995 Expenses............................................................. 1.76% 1.64% .77% .79% Net investment income................................................ 4.32% 3.02% 5.35% 4.73%
See accompanying notes to financial statements. 24 EVERGREEN GEORGIA MUNICIPAL BOND FUND (Drawing of the state of Georgia) 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"). CLASS A ONE YEAR TOTAL RETURN = 1.2% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 2.1% (Class A chart appears here. Plot points are below.) 7/2/93* 8/31/93 8/31/94 8/31/95 8/31/96 (Customer to fill in plot points.) CLASS B ONE YEAR TOTAL RETURN = 0.4% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 2.1% (Class B chart appears here. Plot points are below.) 7/2/93* 8/31/93 8/31/94 8/31/95 8/31/96 (Customer to fill in plot points.) CLASS Y ONE YEAR TOTAL RETURN = 6.5% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 4.5% (Class Y chart appears here. Plot points are below.) 2/28/94* 8/31/94 8/31/95 8/31/96 (Customer to fill in plot points.) - - EVERGREEN GEORGIA MUNICIPAL BOND FUND _____ LEHMAN BROTHERS GEORGIA MUNICIPAL BOND INDEX *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, 1996; (c) all recurring fees (including investment advisory fees) were deducted; and (d) all dividends and distributions were reinvested. The investment adviser is currently waiving a portion of the Fund's expenses. Had expenses not been waived, returns would have been lower. 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. 25 EVERGREEN GEORGIA MUNICIPAL BOND FUND STATEMENT OF INVESTMENTS AUGUST 31, 1996 (Drawing of the state of Georgia)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- 98.4% GEORGIA -- 96.2% $500 Appling Cnty. Dev. Auth. PCR, 7.15%, 1/1/21, (MBIA)................. $ 557,365 160 Atlanta, Arpt. Facs. RB, 7.25%, 1/1/17, (AMBAC)................ 172,990 500 Burke Cnty. Dev. Auth. PCR, 8.00%, 1/1/22, (MBIA)................. 593,935 300 Butts Cnty. COP, 6.75%, 12/1/14, (MBIA)................ 331,152 350 Cartersville, Dev. Auth. RB, Wtr. & Waste Facs., 7.40%, 11/1/10........................ 407,719 120 Cartersville, GO, 6.70%, 1/1/12......................... 133,324 500 Cherokee Cnty. Wtr. & Swr. Auth. Ref. & Impt. RB, 5.50%, 8/1/18, (MBIA)................. 484,510 500 Clayton Cnty. Hsg. Auth. Mtg. RB, 7.125%, 12/1/25, (FHA/VA)............. 522,675 500 Columbia Cnty. Wtr. & Swr. RB, 6.25%, 6/1/12......................... 522,010 500 DeKalb Cnty. Sch. Dist. (Ser. A), 6.25%, 7/1/11......................... 539,765 500 DeKalb Cnty. Hsg. Auth. RB, The Lakes at Indian Creek Proj., 7.15%, 1/1/25, (FSA).................. 519,925 345 Douglasville Cnty. Wtr. & Swr. Auth. RB, 5.625%, 6/1/15, (AMBAC)............... 342,795 600 Fayette Cnty. Sch. Dist., 6.125%, 3/1/15........................ 616,296 500 Forsyth Cnty. Sch. Dist. GO, 6.75%, 7/1/16......................... 561,205 400 Fulton Cnty. Wtr. & Swr. RB, 6.375%, 1/1/14, (FGIC)................ 430,368 500 George L. Smith II, World Congress Ctr. Auth. RB, Domed Stadium Proj., 7.875%, 7/1/20........................ 546,090 400 Georgia State, Hsg. & Fin. Auth. RB, (Ser. A), 6.55%, 12/1/27........................ 406,064 400 Georgia State, Muni. Elec. Auth. Pwr. RB, (Ser. EE), 7.25%, 1/1/24, (AMBAC)................ 480,884 500 Glynn-Brunswick Mem. Hosp. Auth. RB 6.00%, 8/1/16, (MBIA)................. 499,970 500 Hall Cnty. Sch. Dist. GO, 6.70%, 12/1/14........................ 548,510 PRINCIPAL AMOUNT (000) VALUE $ 330 Metro Atlanta Rapid Tran. Auth. Sales Tax RB, 7.00%, 7/1/11, (FGIC)................. $ 377,190 500 Putnam Cnty. Sch. Dist. GO, 6.90%, 2/1/14 (AMBAC)................. 558,365 800 Savannah, Eco. Dev. Auth. IDR, Hershey Foods Corp. Proj., 6.60%, 6/1/12......................... 864,408 500 Savannah, Hosp. Auth. RB, St. Josephs Hosp. Proj., 6.125%, 7/1/12........................ 508,300 500 Savannah, Hosp. Auth. RB, St. Josephs Hosp. Proj., 6.20%, 7/1/23......................... 488,455 300 Washington Cnty. Sch. Dist. GO, 6.875%, 1/1/14, (AMBAC)............... 334,281 12,348,551 PUERTO RICO -- 2.2% 265 Puerto Rico Commonwealth, GO, 6.25%, 7/1/11, (MBIA)................. 286,356 TOTAL LONG-TERM MUNICIPAL SECURITIES (COST $12,157,736).................... 12,634,907
SHARES MUTUAL FUND SHARES -- .8% 101,000 Lehman Municipal Money Market Fund (COST $101,000)...................... 101,000 TOTAL INVESTMENTS -- (COST $12,258,736)............ 99.2% 12,735,907 OTHER ASSETS AND LIABILITIES -- NET............ .8 108,481 NET ASSETS --................. 100.0% $12,844,388
Summary of Abbreviations: AMBAC -- Insured by American Municipal Bond Assurance Corporation COP -- Certificate of Participation FGIC -- Insured by Financial Guaranty Insurance Company FHA/VA -- Insured by Federal Housing Authority/Veteran Administration FSA -- Insured by Financial Security Assurance GO -- General Obligation Bond IDR -- Industrial Development Revenue Bond MBIA -- Insured by Municipal Bond Investors Assurance PCR -- Pollution Control Revenue Bond RB -- Revenue Bond See accompanying notes to financial statements. 26 EVERGREEN GEORGIA MUNICIPAL BOND FUND STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996 (Drawing of the state of Georgia) ASSETS: Investments at value (identified cost $12,258,736)............................................................. $12,735,907 Cash........................................................................................................... 421 Interest receivable............................................................................................ 158,152 Receivable for Fund shares sold................................................................................ 84,959 Prepaid expenses............................................................................................... 4,589 Total assets............................................................................................. 12,984,028 LIABILITIES: Accrued expenses............................................................................................... 114,556 Dividends payable.............................................................................................. 14,325 Distribution fee payable....................................................................................... 7,059 Payable for Funds shares repurchased........................................................................... 3,700 Total liabilities........................................................................................ 139,640 NET ASSETS........................................................................................................ $12,844,388 NET ASSETS CONSIST OF: Paid-in capital................................................................................................ $13,049,634 Undistributed net investment income............................................................................ 1,349 Accumulated net realized loss on investment transactions....................................................... (683,766) Net unrealized appreciation of investments..................................................................... 477,171 Net assets............................................................................................... $12,844,388 CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE: Class A Shares ($1,953,549 (division sign) 204,081 shares of beneficial interest outstanding).................. $ 9.57 Sales charge -- 4.75% of offering price........................................................................ .48 Maximum offering price................................................................................... $ 10.05 Class B Shares ($9,271,159 (division sign) 968,330 shares of beneficial interest outstanding).................. $ 9.57 Class Y Shares ($1,619,680 (division sign) 169,158 shares of beneficial interest outstanding).................. $ 9.57
See accompanying notes to financial statements. 27 EVERGREEN GEORGIA MUNICIPAL BOND FUND STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1996 (Drawing of the state of Georgia) INVESTMENT INCOME: Interest............................................................................................ $734,247 EXPENSES: Advisory fee........................................................................................ $ 63,102 Administrative personnel and services fees.......................................................... 4,159 Distribution fee -- Class A Shares.................................................................. 5,047 Distribution fee -- Class B Shares.................................................................. 63,447 Shareholder services fee -- Class B Shares.......................................................... 21,149 Transfer agent fee.................................................................................. 72,480 Registration and filing fees........................................................................ 64,358 Custodian fee....................................................................................... 56,623 Professional fees................................................................................... 25,128 Reports and notices to shareholders................................................................. 19,578 Insurance expense................................................................................... 3,956 Miscellaneous....................................................................................... 9,632 408,659 Less: Fee waivers and expense reimbursements........................................................ (239,934) Net expenses.................................................................................. 168,725 Net investment income.................................................................................. 565,522 NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on investment transactions........................................................ 28,904 Net change in unrealized appreciation of investments................................................ 57,035 Net gain on investments................................................................................ 85,939 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................... $651,461
See accompanying notes to financial statements. 28 EVERGREEN GEORGIA MUNICIPAL BOND FUND STATEMENT OF CHANGES IN NET ASSETS (Drawing of the state of Georgia)
EIGHT MONTHS YEAR ENDED ENDED AUGUST 31, AUGUST 31, 1996 1995 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income........................................................................ $ 565,522 $ 315,309 Net realized gain on investment transactions................................................. 28,904 178,194 Net change in unrealized appreciation of investments......................................... 57,035 571,056 Net increase in net assets resulting from operations...................................... 651,461 1,064,559 DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A Shares............................................................................... (100,626) (61,558) Class B Shares............................................................................... (357,853) (232,039) Class Y Shares............................................................................... (109,101) (21,712) Total distributions to shareholders....................................................... (567,580) (315,309) FUND SHARE TRANSACTIONS: Proceeds from shares sold.................................................................... 5,651,629 2,941,604 Proceeds from reinvestment of distributions.................................................. 366,974 212,632 Payment for shares redeemed.................................................................. (4,232,687) (1,511,506) Net increase resulting from Fund share transactions....................................... 1,785,916 1,642,730 Net increase in net assets................................................................ 1,869,797 2,391,980 NET ASSETS: Beginning of period.......................................................................... 10,974,591 8,582,611 End of period (includes undistributed net investment income of $1,349 and $3,407, respectively).............................................................................. $12,844,388 $ 10,974,591
See accompanying notes to financial statements. 29 EVERGREEN GEORGIA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS (Drawing of the state of Georgia)
CLASS A SHARES EIGHT MONTHS YEAR YEAR ENDED ENDED ENDED AUGUST 31, AUGUST 31, DECEMBER 31, 1996 1995# 1994 PER SHARE DATA: Net asset value, beginning of period............................................... $9.47 $8.74 $10.19 Income (loss) from investment operations: Net investment income............................................................ .48 .33 .48 Net realized and unrealized gain (loss) on investments........................... .10 .73 (1.45) Total from investment operations............................................... .58 1.06 (.97) Less distributions to shareholders from net investment income...................... (.48) (.33) (.48) Net asset value, end of period..................................................... $9.57 $9.47 $8.74 TOTAL RETURN+...................................................................... 6.2% 12.3% (9.6%) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted).......................................... $1,954 $2,098 $1,387 Ratios to average net assets: Expenses**....................................................................... .88% .71%++ .53% Net investment income**.......................................................... 4.96% 5.39%++ 5.26% Portfolio turnover rate............................................................ 21% 91% 147% JULY 2, 1993* THROUGH DECEMBER 31, 1993 PER SHARE DATA: Net asset value, beginning of period............................................... $10.00 Income (loss) from investment operations: Net investment income............................................................ .20 Net realized and unrealized gain (loss) on investments........................... .19 Total from investment operations............................................... .39 Less distributions to shareholders from net investment income...................... (.20) Net asset value, end of period..................................................... $10.19 TOTAL RETURN+...................................................................... 4.0% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted).......................................... $817 Ratios to average net assets: Expenses**....................................................................... .25%++ Net investment income**.......................................................... 4.71%++ Portfolio turnover rate............................................................ 15%
# 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 is 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:
CLASS A SHARES JULY 2, EIGHT MONTHS YEAR 1993* YEAR ENDED ENDED ENDED THROUGH AUGUST 31, AUGUST 31, DECEMBER 31, DECEMBER 31, 1996 1995# 1994 1993 Expenses............................................................... 2.82% 2.83% 3.61% 6.82% Net investment income (loss)........................................... 3.02% 3.27% 2.18% (1.86%)
See accompanying notes to financial statements. 30 EVERGREEN GEORGIA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS -- (CONTINUED) (Drawing of the state of Georgia)
CLASS B SHARES EIGHT MONTHS YEAR YEAR ENDED ENDED ENDED AUGUST 31, AUGUST 31, DECEMBER 31, 1996 1995# 1994 PER SHARE DATA: Net asset value, beginning of period........................................ $9.47 $8.74 $10.19 Income (loss) from investment operations: Net investment income..................................................... .41 .28 .43 Net realized and unrealized gain (loss) on investments.................... .10 .73 (1.45) Total from investment operations........................................ .51 1.01 (1.02) Less distributions to shareholders from net investment income............... (.41) (.28) (.43) Net asset value, end of period.............................................. $9.57 $9.47 $8.74 TOTAL RETURN+............................................................... 5.4% 11.7% (10.2%) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)................................... $9,271 $7,538 $6,912 Ratios to average net assets: Expenses**................................................................ 1.63% 1.46%++ 1.13% Net investment income**................................................... 4.21% 4.64%++ 4.66% Portfolio turnover rate..................................................... 21% 91% 147% JULY 2, 1993* THROUGH DECEMBER 31, 1993 PER SHARE DATA: Net asset value, beginning of period........................................ $10.00 Income (loss) from investment operations: Net investment income..................................................... .18 Net realized and unrealized gain (loss) on investments.................... .19 Total from investment operations........................................ .37 Less distributions to shareholders from net investment income............... (.18) Net asset value, end of period.............................................. $10.19 TOTAL RETURN+............................................................... 3.7% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)................................... $3,692 Ratios to average net assets: Expenses**................................................................ .75%++ Net investment income**................................................... 4.15%++ Portfolio turnover rate..................................................... 15%
# 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. Contingent deferred sales charge is 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:
CLASS B SHARES JULY 2, EIGHT MONTHS YEAR 1993* YEAR ENDED ENDED ENDED THROUGH AUGUST 31, AUGUST 31, DECEMBER 31, DECEMBER 31, 1996 1995# 1994 1993 Expenses............................................................... 3.54% 3.58% 4.21% 7.32% Net investment income (loss)........................................... 2.30% 2.52% 1.58% (2.42%)
See accompanying notes to financial statements. 31 EVERGREEN GEORGIA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS -- (CONTINUED) (Drawing of the state of Georgia)
CLASS Y SHARES EIGHT MONTHS YEAR ENDED ENDED AUGUST 31, AUGUST 31, 1996 1995# PER SHARE DATA: Net asset value, beginning of period.................................................. $9.47 $8.74 Income (loss) from investment operations: Net investment income............................................................... .50 .35 Net realized and unrealized gain (loss) on investments.............................. .10 .73 Total from investment operations.................................................. .60 1.08 Less distributions to shareholders from net investment income......................... (.50) (.35) Net asset value, end of period........................................................ $9.57 $9.47 TOTAL RETURN+......................................................................... 6.5% 12.5% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)............................................. $1,620 $1,339 Ratios to average net assets: Expenses**.......................................................................... .63% .46%++ Net investment income**............................................................. 5.21% 5.64%++ Portfolio turnover rate............................................................... 21% 91% FEBRUARY 28, 1994* THROUGH DECEMBER 31, 1994 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%
# 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. ++ 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, exclusive of any applicable state expense limitations, would have been the following:
CLASS Y SHARES EIGHT MONTHS FEBRUARY 28, 1994* YEAR ENDED ENDED THROUGH AUGUST 31, AUGUST 31, DECEMBER 31, 1996 1995# 1994 Expenses........................................................................ 2.51% 2.58% 3.39% Net investment income........................................................... 3.33% 3.52% 2.60%
See accompanying notes to financial statements. 32 EVERGREEN NEW JERSEY TAX FREE INCOME FUND (Drawing of the state of New Jersey) RESULTS TO DATE PERFORMANCE OF $10,000 INVESTED IN THE EVERGREEN NEW JERSEY TAX FREE INCOME FUND The graphs below compare a $10,000 investment in the Evergreen New Jersey Tax Free Income Fund (Class A, Class B and Class Y Shares) with a similar investment in the Lehman Brothers Municipal Bond Index ("Index"). CLASS A ONE YEAR TOTAL RETURN = 0.2% FIVE YEAR TOTAL RETURN = 6.0% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 6.2% (Class A chart appears here. Plot points are below.) 7/16/91* 2/29/92 2/28/93 2/28/94 2/28/95 2/29/96 8/31/96* (Customer to fill in plot points.) CLASS B AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 5.2% (Class B chart appears here. Plot points are below.) 1/30/96* 2/28/96 5/31/96 8/31/96 (Customer to fill in plot points.) CLASS Y AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 0.2% (Class Y chart appears here. Plot points are below.) 2/8/96* 2/28/96 5/31/96 8/31/96 (Customer to fill in plot points.) - - EVERGREEN NEW JERSEY TAX FREE INCOME FUND ____ LEHMAN BROTHERS MUNICIPAL BOND INDEX *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, 1996; (c) all recurring fees (including investment advisory fees) were deducted; and (d) all dividends and distributions were reinvested. The investment adviser is currently waiving a portion of the Fund's expenses. Had expenses not been waived, returns would have been lower. 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. 33 EVERGREEN NEW JERSEY TAX FREE INCOME STATEMENT OF INVESTMENTS AUGUST 31, 1996 (Drawing of the state of New Jersey)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- 93.3% NEW JERSEY -- 86.8% $250 Bayshore Regional Swr. Auth. RB, Subordinated Swr., 5.50%, 4/1/12 (MBIA)................... $ 246,388 1,000 Bergen Cnty. Utils. Auth. Wtr., (Ser. B), 5.75%, 12/15/05........................ 1,053,590 500 Burlington Cnty. Bridge Commission Sys. RB, 5.30%, 10/1/13......................... 484,145 750 Burlington Cnty. GO, (Ser. A), 4.40%, 3/15/01......................... 742,688 500 Burlington Cnty. GO, 4.875%, 11/15/09....................... 469,105 1,000 Burlington Cnty. GO, 6.95%, 9/15/97......................... 1,029,620 500 Camden Cnty. Impt. Auth. Lease RB, 5.625%, 10/1/15 (MBIA)................. 490,515 500 Camden Cnty. Impt. Auth. Lease RB, 6.00%, 12/1/12......................... 502,950 500 Camden Cnty. Muni. Utils. Auth. Swr. RB, 5.125%, 7/15/17 (FGIC)................. 461,690 500 Cape May Cnty. Muni. Utils. Auth. Swr. RB, (Ser. A), 5.75%, 1/1/16 (MBIA)................... 494,780 1,000 Delaware River & Bay Auth. RB, 5.00%, 1/1/17 (MBIA)................... 901,800 475 Delaware River Joint Toll Bridge Commission RB, 6.25%, 7/1/12.......................... 492,775 500 Delaware River Port Auth. of PA & NJ, RB, 5.40%, 1/1/15 (FGIC)................... 478,650 200 Edison Township, GO, 6.50%, 6/1/09.......................... 218,522 250 Essex Cnty. Utils. Auth. Solid Waste, 5.50%, 4/1/11 (FSA).................... 246,050 250 Essex Cnty. Utils. Auth. Solid Waste, 5.60%, 4/1/16 (FSA).................... 244,178 600 Gloucester Cnty. GO, 6.30%, 2/1/12 (MBIA)................... 626,658 500 Gloucester Cnty. Utils. Auth. Swr. RB, 6.50%, 1/1/21.......................... 517,490 PRINCIPAL AMOUNT (000) VALUE $200 Hoboken, GO, 6.65%, 8/1/11.......................... $ 217,128 250 Hudson Cnty. GO, 5.125%, 8/1/08, (AMBAC)................ 244,863 685 Jersey City Swr. Auth. GO, 7.00%, 1/1/19.......................... 702,392 400 Lakewood Township, School District, GO, 6.25%, 2/15/12, (AMBAC)................ 430,520 500 Manalapan Regl. Brd. Ed. GO, 5.00%, 5/1/05.......................... 500,665 305 Mercer Cnty. Imp. Auth. RB, 6.05%, 1/1/11.......................... 304,973 500 Middlesex Cnty. GO, 5.80%, 10/1/10......................... 511,100 150 Millburn Township, GO, 6.00%, 7/15/99......................... 156,819 800 Monmouth Cnty. Impt. Auth. GO, Correctional Facs. Monmouth Proj., 6.40%, 8/1/08.......................... 848,568 500 New Jersey Bldg. Auth. RB, 5.00%, 6/15/13......................... 458,905 500 New Jersey Bldg. Auth. RB, 5.00%, 6/15/18......................... 445,730 300 New Jersey Bldg. Auth. RB, 6.25%, 6/15/13......................... 318,984 225 New Jersey Bldg. Auth. RB, 7.20%, 6/15/13......................... 238,862 300 New Jersey Eco. Dev. Auth. RB, (Ser. A), 6.60%, 8/1/21.......................... 310,911 400 New Jersey Eco. Dev. Auth. RB, NJ American Wtr. Co. Proj.-A, 5.35%, 6/1/23, (FGIC).................. 375,136 500 New Jersey Eco. Dev. Auth. RB, NJ Performing Arts Ctr. Proj., 5.50%, 6/15/13, (AMBAC)................ 489,235 1,000 New Jersey Eco. Dev. Auth. RB, Public Schs. Small Proj. Loan Prog., 5.40%, 8/15/13......................... 972,500 400 New Jersey Edl. Facs. Auth. RB, 6.375%, 7/1/11, (MBIA)................. 417,724 325 New Jersey Edl. Facs. Auth. RB, (Ser. A), 5.70%, 7/1/97.......................... 329,927
34 EVERGREEN NEW JERSEY TAX FREE INCOME STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996 (Drawing of the state of New Jersey)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- CONTINUED NEW JERSEY -- CONTINUED $250 New Jersey Edl. Facs. Auth. RB, (Ser. B), 6.50%, 7/1/11.......................... $ 267,065 500 New Jersey Edl. Facs. Auth. RB, (Ser. C), 6.375%, 7/1/22......................... 522,005 300 New Jersey Edl. Facs. Auth. RB, (Ser. C), 6.50%, 7/1/11, (MBIA).................. 328,023 500 New Jersey Edl. Facs. Auth. RB, (Ser. D), 6.20%, 7/1/17, (AMBAC)................. 517,170 600 New Jersey Edl. Facs. Auth. RB, Seton Hall Proj., (Ser. A), 6.25%, 7/1/10.......................... 628,428 400 New Jersey Health Care Facs. Financing Auth. RB, 6.50%, 7/1/12.......................... 425,888 750 New Jersey Health Care Facs. Financing Auth. Atlantic City Med. Center RB, 6.80%, 7/1/05.......................... 806,243 750 New Jersey Health Care Facs. Financing Auth. RB Hackensack Medical Center, 6.625%, 7/1/17, (FGIC)................. 797,858 300 New Jersey Health Care Facs. Financing Auth. RB, Mercer Medical Center, (Ser. E), 6.45%, 7/1/05, (MBIA).................. 322,110 500 New Jersey Health Care Facs. Financing Auth. RB, Overlook Hosp. Assn. Robert Wood Johnson Univ. Hosp., (Ser E), 6.70%, 7/1/13, (MBIA).................. 519,110 185 New Jersey Health Care Facs. Financing Auth. Robert Wood Johnson Univ. Hosp., 6.625%, 7/1/16......................... 196,805 500 New Jersey Health Care Facs. Financing Auth. Shore Mem. Hosp. Health Care Sys. RB, 5.00%, 7/1/12, (MBIA).................. 462,790 500 New Jersey Hwy. Auth. RB, 6.25%, 1/1/14.......................... 515,950 1,000 New Jersey Sports & Exposition RB, (Ser. A), 6.00%, 3/1/21.......................... 1,006,040 190 New Jersey State Turnpike RB, 6.75%, 1/1/09.......................... 213,505 PRINCIPAL AMOUNT (000) VALUE $200 New Jersey Trans. Trust Fund Auth., 4.40%, 6/15/99......................... $ 200,040 300 New Jersey Transit Corp. COP, 6.50%, 10/1/16, (FSA).................. 323,247 300 New Jersey Turnpike Auth. RB, (Ser. A), 6.40%, 1/1/02.......................... 316,989 200 New Jersey St. (Ser. A) GO, 6.80%, 9/15/10......................... 221,218 500 New Jersey St. (Ser. D) GO, 5.25%, 2/15/01......................... 513,360 400 New Jersey St. (Ser. E) GO, 6.00%, 7/15/07......................... 427,328 350 North Jersey Dist. Wtr. Supply RB, Wanaque North Proj., (Ser. B), 6.25%, 11/15/17, (MBIA)................ 362,047 500 North Jersey Dist. Wtr. Supply RB, Wanque South Proj., 6.00%, 7/1/12, (MBIA).................. 515,150 400 North Jersey Dist. Wtr. Supply RB, Wanque South Proj., 6.50%, 7/1/21, (MBIA).................. 433,624 500 Ocean Cnty. GO Utils. Auth. (Ser. A), 5.75%, 1/1/18.......................... 495,710 500 Ocean Cnty. GO, 5.80%, 9/1/10.......................... 510,385 200 Old Bridge Township GO, 6.55%, 7/15/09, (FGIC)................. 217,590 500 Old Bridge Township Muni. Utils. Auth. RB, 6.25%, 11/1/16, (FGIC)................. 522,695 500 Passaic Valley Sewage Commissioners RB, (Ser. D), 5.75%, 12/1/13, (AMBAC)................ 501,905 500 Pennsauken Township, School Dist. GO, 5.00%, 3/1/10.......................... 467,790 500 Port Auth. NY & NJ, RB, 5.00%, 7/15/11, (AMBAC)................ 469,955 500 Port Auth. NY & NJ, RB, (Ser. 102), 5.625%, 10/15/13, (MBIA)............... 493,480 900 Port Auth. NY & NJ, RB, (Ser. 102), 6.75%, 8/1/26.......................... 961,560 500 Rutgers St University RB, (Ser. 1), 5.25%, 5/1/12.......................... 480,350 100 South Plainfield GO, 6.625%, 8/1/12, (AMBAC)................ 107,004
35 EVERGREEN NEW JERSEY TAX FREE INCOME STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996 (Drawing of the state of New Jersey)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- CONTINUED NEW JERSEY -- CONTINUED $500 Stafford Muni. Utils. Auth. Wtr. & Swr. RB, 6.25%, 6/1/14, (MBIA).................. $ 521,755 500 Stony Brook Regional Sewage Auth. RB, (Ser. B), 5.45%, 12/1/12......................... 487,644 500 Trenton GO, 6.55%, 8/15/09, (MBIA)................. 543,974 400 University Medicine & Dentistry RB, (Ser. E), 5.75%, 12/1/21......................... 419,127 500 University Medicine & Dentistry RB, (Ser. E), 6.50%, 12/1/18......................... 549,494 200 Washington Township Muni. Utils. Auth. Sys. RB, (Ser. A), 6.70%, 2/1/11, (AMBAC)................. 216,455 1,000 West Windsor, GO, 5.50%, 12/1/10, (FGIC)................. 996,000 500 Winslow Township GO, 6.50%, 10/1/18, (FGIC)................. 537,300 38,318,702 PUERTO RICO -- 6.5% 500 Puerto Rico Commonwealth GO, 5.50%, 7/1/13.......................... 474,195 300 Puerto Rico Commonwealth GO, 6.80%, 7/1/21.......................... 335,727 500 Puerto Rico Commonwealth GO, (Ser. A), 6.00%, 7/1/14.......................... 497,785 275 Puerto Rico Elec. Pwr. Auth. RB, 6.50%, 7/1/05, (MBIA).................. 306,020 500 Puerto Rico Elec. Pwr. Auth. RB, (Ser. P), 7.00%, 7/1/21.......................... 559,485 400 Puerto Rico Pub. Bldgs. Auth. Gtd. Hlth. Facs. RB, (Ser. J), 7.00%, 7/1/19.......................... 426,000 PRINCIPAL AMOUNT (000) VALUE $250 Puerto Rico Pub. Bldgs. Auth. Gtd. RB, 6.25%, 7/1/09, (AMBAC)................. $ 271,163 2,870,375 TOTAL LONG-TERM MUNICIPAL SECURITIES (COST $40,146,982)................ 41,189,077
SHARES MUTUAL FUND SHARES -- 5.9% 773,051 Dreyfus New Jersey Municipal Money Market Fund...................... 773,051 1,810,178 Federated New Jersey Municipal Cash Trust................... 1,810,178 TOTAL MUTUAL FUND SHARES (COST $2,583,229)......... 2,583,229 TOTAL INVESTMENTS -- (COST $42,730,211)........ 99.1% 43,772,306 OTHER ASSETS AND LIABILITIES -- NET........ .9 390,065 NET ASSETS --................ 100.0% $44,162,371
Summary of Abbreviations: AMBAC -- Insured by American Municipal Bond Assurance Corporation COP -- Certificate of Participation FGIC -- Insured by Federal Guaranty Insurance Corporation FSA -- Insured by Financial Security Assurance GO -- General Obligation Bond MBIA -- Insured by Municipal Bond Investors Assurance RB -- Revenue Bond See accompanying notes to financial statements. 36 EVERGREEN NEW JERSEY TAX FREE INCOME FUND STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996 (Drawing of the state of New Jersey) ASSETS: Investments at value (identified cost $42,730,211)............................................................. $43,772,306 Interest receivable............................................................................................ 544,652 Receivable for Fund shares sold................................................................................ 11,476 Prepaid expenses............................................................................................... 1,292 Total assets............................................................................................. 44,329,726 LIABILITIES: Dividends payable.............................................................................................. 93,696 Accrued expenses............................................................................................... 68,070 Distribution fee payable....................................................................................... 5,589 Total liabilities........................................................................................ 167,355 NET ASSETS........................................................................................................ $44,162,371 NET ASSETS CONSIST OF: Paid-in capital................................................................................................ $43,505,944 Undistributed net investment income............................................................................ 15,515 Accumulated net realized loss on investment transactions....................................................... (401,183) Net unrealized appreciation of investments..................................................................... 1,042,095 Net assets............................................................................................... $44,162,371 CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE: Class A Shares ($32,377,124 (division sign) 3,010,604 shares of beneficial interest outstanding)............... $ 10.75 Sales charge -- 4.75% of offering price........................................................................ .54 Maximum offering price................................................................................... $ 11.29 Class B Shares ($2,709,358 (division sign) 251,931 shares of beneficial interest outstanding).................. $ 10.75 Class Y Shares ($9,075,889 (division sign) 843,932 shares of beneficial interest outstanding).................. $ 10.75
See accompanying notes to financial statements. 37 EVERGREEN NEW JERSEY TAX FREE INCOME FUND STATEMENT OF OPERATIONS SIX MONTHS ENDED AUGUST 31, 1996 (Drawing of the state of New Jersey) INVESTMENT INCOME: Interest.......................................................................................... $1,158,964 EXPENSES: Advisory fee...................................................................................... $ 107,212 Administrative personnel and service fees......................................................... 9,468 Distribution fee -- Class A Shares................................................................ 42,308 Distribution fee -- Class B Shares................................................................ 5,856 Shareholder services fee -- Class B Shares........................................................ 1,949 Custodian fee..................................................................................... 28,357 Transfer agent fee................................................................................ 12,666 Reports and notices to shareholders............................................................... 9,453 Professional fees................................................................................. 6,238 Insurance expense................................................................................. 5,511 Trustees' fees and expenses....................................................................... 3,592 Miscellaneous..................................................................................... 1,323 233,933 Less: Fee waivers and expense reimbursements...................................................... (154,885) Net expenses................................................................................... 79,048 Net investment income................................................................................ 1,079,916 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investment transactions...................................................... 56 Net change in unrealized appreciation of investments.............................................. (955,855) Net loss on investments.............................................................................. (955,799) NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................. $ 124,117
See accompanying notes to financial statements. 38 EVERGREEN NEW JERSEY TAX FREE INCOME FUND STATEMENT OF CHANGES IN NET ASSETS (Drawing of the state of New Jersey)
SIX MONTHS ENDED YEAR ENDED AUGUST 31, FEBRUARY 29, 1996 1996 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income........................................................................ $ 1,079,916 $ 1,964,872 Net realized gain on investment transactions................................................. 56 10,000 Net change in unrealized appreciation of investments......................................... (955,855) 1,701,539 Net increase in net assets resulting from operations...................................... 124,117 3,676,411 DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A Shares............................................................................... (862,288) (1,964,372) Class B Shares............................................................................... (32,289) (451) Class Y Shares............................................................................... (185,339) (56) Total distributions to shareholders....................................................... (1,079,916) (1,964,879) FUND SHARE TRANSACTIONS: Proceeds from shares sold.................................................................... 13,167,830 11,064,767 Proceeds from reinvestment of distributions.................................................. 522,912 959,013 Payment for shares redeemed.................................................................. (10,539,031) (6,620,815) Net increase resulting from Fund share transactions....................................... 3,151,711 5,402,965 Net increase in net assets................................................................ 2,195,912 7,114,497 NET ASSETS: Beginning of period.......................................................................... 41,966,459 34,851,962 End of period (includes undistributed net investment income of $15,515 at August 31, 1996 and February 29, 1996.)........................................................................ $ 44,162,371 $ 41,966,459
See accompanying notes to financial statements. 39 EVERGREEN NEW JERSEY TAX FREE INCOME FUND FINANCIAL HIGHLIGHTS (Drawing of the state of New Jersey)
CLASS A SHARES SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 31, FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, 1996# 1996 1995 1994 PER SHARE DATA: Net asset value, beginning of period............................. $11.01 $10.53 $10.99 $11.01 Income (loss) from investment operations: Net investment income.......................................... .28 .56 .57 .60 Net realized and unrealized gain (loss) on investments......... (.26) .48 (.46) (.02) Total from investment operations............................. .02 1.04 .11 .58 Less distributions to shareholders from net investment income.... (.28) (.56) (.57) (.60) Net asset value, end of period................................... $10.75 $11.01 $10.53 $10.99 TOTAL RETURN+.................................................... .2% 10.1% 1.4% 5.3% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)........................ $32,377 $41,762 $34,852 $42,783 Ratios to average net assets: Expenses**..................................................... .34%++ .36% .25% .14% Net investment income**........................................ 5.08%++ 5.15% 5.52% 5.31% Portfolio turnover rate.......................................... 0% 4% 8% 2% YEAR ENDED FEBRUARY 28, 1993 PER SHARE DATA: Net asset value, beginning of period............................. $10.22 Income (loss) from investment operations: Net investment income.......................................... .63 Net realized and unrealized gain (loss) on investments......... .79 Total from investment operations............................. 1.42 Less distributions to shareholders from net investment income.... (.63) Net asset value, end of period................................... $11.01 TOTAL RETURN+.................................................... 14.5% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)........................ $30,863 Ratios to average net assets: Expenses**..................................................... .00% Net investment income**........................................ 5.97% Portfolio turnover rate.......................................... 5%
# The Fund changed its fiscal year end from February 28 to August 31. + Total return is calculated on net asset value per share for the periods indicated and is not annualized. Initial sales charge is 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:
CLASS A SHARES SIX MONTHS ENDED YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 31, FEBRUARY 29, FEBRUARY 28, FEBRUARY 28, 1996# 1996 1995 1994 Expenses......................................................... 1.11% 1.03% 1.04% 1.05% Net investment income............................................ 4.31% 4.48% 4.73% 4.40% YEAR ENDED FEBRUARY 28, 1993 Expenses......................................................... 1.16% Net investment income............................................ 4.81%
See accompanying notes to financial statements. 40 EVERGREEN NEW JERSEY TAX FREE INCOME FUND FINANCIAL HIGHLIGHTS -- (CONTINUED) (Drawing of the state of New Jersey)
CLASS B SHARES CLASS Y SHARES JANUARY 30, 1996* SIX MONTHS ENDED THROUGH SIX MONTHS ENDED AUGUST 31, 1996# FEBRUARY 29, 1996 AUGUST 31, 1996# PER SHARE DATA: Net asset value, beginning of period........................ $11.01 $11.08 $11.01 Income (loss) from investment operations: Net investment income..................................... .24 .05 .28 Net realized and unrealized gain (loss) on investments.... (.26) (.07) (.26) Total from investment operations........................ (.02) (.02) .02 Less distributions to shareholders from net investment income.................................................... (.24) (.05) (.28) Net asset value, end of period.............................. $10.75 $11.01 $10.75 TOTAL RETURN+............................................... (.2%) (.2%) .2% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)................... $2,709 $186 $9,076 Ratios to average net assets: Expenses**++.............................................. 1.28% .31% .31% Net investment income**++................................. 4.14% 5.23% 5.12% Portfolio turnover rate..................................... 0% 4% 0% FEBRUARY 8, 1996* THROUGH FEBRUARY 29, 1996 PER SHARE DATA: Net asset value, beginning of period........................ $11.14 Income (loss) from investment operations: Net investment income..................................... .03 Net realized and unrealized gain (loss) on investments.... (.13) Total from investment operations........................ (.10) Less distributions to shareholders from net investment income.................................................... (.03) Net asset value, end of period.............................. $11.01 TOTAL RETURN+............................................... (.9%) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)................... $18 Ratios to average net assets: Expenses**++.............................................. .31% Net investment income**++................................. 5.28% Portfolio turnover rate..................................... 4%
# The Fund changed its fiscal year end from February 28 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. Contingent deferred sales charge is 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:
CLASS B SHARES CLASS Y SHARES JANUARY 30, 1996* SIX MONTHS ENDED THROUGH SIX MONTHS ENDED AUGUST 31, 1996# FEBRUARY 29, 1996 AUGUST 31, 1996# Expenses.......................................................... 1.85% 1.66% .87% Net investment income............................................. 3.57% 3.88% 4.56% FEBRUARY 8, 1996* THROUGH FEBRUARY 29, 1996 Expenses.......................................................... .88% Net investment income............................................. 4.71%
See accompanying notes to financial statements. 41 EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND (Drawing of the state of North Carolina) 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"). CLASS A ONE YEAR TOTAL RETURN = 0.2% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 3.6% (Class A chart appears here. Plot points are below.) 1/11/93* 8/31/93 8/31/94 8/31/95 8/31/96 (Customer to fill in plot points.) CLASS B ONE YEAR TOTAL RETURN = 0.6% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 3.6% (Class B chart appears here. Plot points are below.) 1/11/93* 8/31/93 8/31/94 8/31/95 8/31/96 (Customer to fill in plot points.) CLASS Y ONE YEAR TOTAL RETURN = 5.4% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 4.0% (Class Y chart appears here. Plot points are below.) 2/28/94* 8/31/94 8/31/95 8/31/96 (Customer to fill in plot points.) - - - EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND ____ LEHMAN BROTHERS STATE GENERAL OBLIGATION BOND INDEX *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, 1996; (c) all recurring fees (including investment advisory fees) were deducted; and (d) all dividends and distributions were reinvested. The investment adviser is currently waiving a portion of the Fund's expenses. Had expenses not been waived, returns would have been lower. 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. 42 EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND STATEMENT OF INVESTMENTS AUGUST 31, 1996 (Drawing of the state of North Carolina)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- 96.0% NORTH CAROLINA -- 89.0% $1,380 Burlington Hsg. Auth. Mtg. RB, Burlington Homes, Sec. 8-A, 6.00%, 8/1/09......................... $ 1,373,914 1,000 Chapel Hill Parking Fac., COP, 6.35%, 12/1/18........................ 1,025,170 1,470 Charlotte Hsg. Dev. Corp. Mtg. RB, Vantage 78 Apts., 6.60%, 7/15/21 (FHA).................. 1,490,683 1,000 Coastal Regional Solid Waste Mgmt. Auth. RB, Disp. Sys., 6.50%, 6/1/08......................... 1,041,830 2,000 Craven Cnty. Indl. Facs. & Poll. Ctrl. Fing. Auth. RB, Weyerhaeuser Co. Proj., 6.35%, 1/1/10......................... 2,083,780 2,390 Cumberland Cnty., Civic Center Proj., COP (Ser. A), 6.40%, 12/1/24 (AMBAC)................ 2,533,519 930 Fremont Hsg. Dev. Corp. First Lien RB, Torhunta Apts., 6.75%, 7/15/22 (FHA).................. 951,409 1,000 Gastonia Combined Util. Sys. RB, 6.00%, 5/1/14 (MBIA).................. 1,014,550 1,000 Harnett Cnty., COP, 6.40%, 12/1/14 (AMBAC)................ 1,060,850 1,000 Haywood Cnty. Indl. Facs. & Poll. Ctrl. Fin. Auth. RB, Champion Intl. Corp. Proj., 6.25%, 9/1/25......................... 983,960 4,750 Martin Cnty. Indl. Facs. & Poll. Ctrl. Fin. Auth. RB, Solid Waste Disp. Weyerhaeuser Co., 6.80%, 5/1/24......................... 5,055,710 4,000 North Carolina Eastn. Muni. Pwr. Sys. Agcy. RB (Ser. A), 5.00%, 1/1/21......................... 3,594,800 3,750 North Carolina Eastn. Muni. Pwr. Sys. Agcy. RB (Ser. A), 6.50%, 1/1/18 (ETM)................... 3,877,200 2,500 North Carolina Eastn. Muni. Pwr. Sys. Agcy., RB 6.00%, 1/1/18 (AMBAC)................. 2,569,800 1,300 North Carolina Eastn. Muni. Pwr. Sys. Agcy. RB (Ser. A), 7.00%, 1/1/24......................... 1,348,152 PRINCIPAL AMOUNT (000) VALUE $ 1,000 North Carolina Hsg. Fin. & Dev. Auth. RB, Single Family (Ser. HH), 6.20%, 3/1/18......................... $ 996,470 3,950 North Carolina Hsg. Fin. & Dev. Auth. RB, Single Family (Ser. JJ), 6.15%, 3/1/11 (FHA)................... 4,005,261 1,440 North Carolina Hsg. Fin. & Dev. Auth. RB, Single Family (Ser. T), 7.05%, 9/1/20 (FHA)................... 1,496,030 500 North Carolina Med. Care Cmnty. Hlth. Care Fac. RB, 1st Mtg Southminster, 6.875%, 10/1/09....................... 513,285 1,000 North Carolina Med. Care Cmnty. Hosp. RB, Alamance Health Svcs. Inc., 6.375%, 8/15/12 (FSA)................. 1,056,410 2,000 North Carolina Med. Care Cmnty. Hosp. RB, Rex Hosp. Proj., 6.25%, 6/1/17......................... 2,013,140 1,500 North Carolina Med. Care Cmnty. Hosp. RB, Gaston Mem. Hosp. Proj., 5.50%, 2/15/19........................ 1,397,610 3,000 North Carolina Med. Care Cmnty. Hosp. RB, Grace Hosp. Inc., 5.25%, 10/1/13........................ 2,779,530 3,000 North Carolina Muni. Pwr. Agcy. RB, No. 1 Catawba Elec. (Ser. B), 5.00%, 1/1/20......................... 2,691,420 1,000 North Carolina Stud. Ed. Assist. Auth. RB, 1st Mtg. Southminster (Ser. A), 6.05%, 7/1/10......................... 998,970 2,000 North Carolina Stud. Ed. Assist. Auth. RB (Ser. A), 6.30%, 7/1/15......................... 2,001,340 2,375 North Carolina Stud. Ed. Assist. Auth. RB (Ser. C), 6.35%, 7/1/16......................... 2,388,490 1,000 Onslow Cnty. Combined Enterprise Sys. RB, 6.00%, 6/1/15 (MBIA).................. 1,010,920 1,000 Rowan Cnty. Justice Center Proj., COP, 6.25%, 12/1/07 (FSA).................. 1,071,750 54,425,953
43 EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996 (Drawing of the state of North Carolina)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- CONTINUED PUERTO RICO -- 7.0% $2,000 Puerto Rico Commonwealth GO, 6.25%, 7/1/11 (MBIA).................. $ 2,161,180 1,000 Puerto Rico Ports Auth. RB, American Airlines Proj. (Ser. A), 6.25%, 6/1/26......................... 992,130 1,000 Puerto Rico Univ. RB (Ser. N), 6.25%, 6/1/06......................... 1,093,850 4,247,160 TOTAL LONG-TERM MUNICIPAL SECURITIES (COST $57,150,541)............... 58,673,113
SHARES VALUE MUTUAL FUND SHARES -- 6.1% 3,000,000 Lehman Municipal Money Market Fund......................... $ 3,000,000 755,000 Lehman Tax Free Money Market Fund......................... 755,000 TOTAL MUTUAL FUND SHARES (COST $3,755,000).............. 3,755,000 TOTAL INVESTMENTS -- (COST $60,905,541).... 102.1% 62,428,113 OTHER ASSETS AND LIABILITIES -- NET.... (2.1) (1,285,712) NET ASSETS --............ 100.0% $61,142,401
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 Bond MBIA -- Insured by Municipal Bond Investors Assurance RB -- Revenue Bond See accompanying notes to financial statements. 44 EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996 (Drawing of the state of North Carolina) ASSETS: Investments at value (identified cost $60,905,541)............................................................. $62,428,113 Cash........................................................................................................... 69 Receivable for securities sold................................................................................. 967,861 Interest receivable............................................................................................ 763,574 Receivable for Fund shares sold................................................................................ 98,736 Prepaid expenses............................................................................................... 11,237 Total assets............................................................................................. 64,269,590 LIABILITIES: Payable for securities purchased............................................................................... 2,842,908 Accrued expenses............................................................................................... 130,904 Dividends payable.............................................................................................. 67,884 Distribution fee payable....................................................................................... 54,187 Payable for Fund shares redeemed............................................................................... 18,663 Accrued advisory fee........................................................................................... 12,643 Total liabilities........................................................................................ 3,127,189 NET ASSETS........................................................................................................ $61,142,401 NET ASSETS CONSIST OF: Paid-in capital................................................................................................ $63,343,738 Undistributed net investment income............................................................................ 88,212 Accumulated net realized loss on investment transactions....................................................... (3,812,121) Net unrealized appreciation of investments..................................................................... 1,522,572 Net assets............................................................................................... $61,142,401 CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE: Class A Shares ($7,989,384 (division sign) 800,876 shares of beneficial interest outstanding).................. $ 9.98 Sales charge -- 4.75% of offering price........................................................................ .50 Maximum offering price................................................................................... $ 10.48 Class B Shares ($49,382,186 (division sign) 4,950,160 shares of beneficial interest outstanding)............... $ 9.98 Class Y Shares ($3,770,831 (division sign) 377,749 shares of beneficial interest outstanding).................. $ 9.98
See accompanying notes to financial statements. 45 EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1996 (Drawing of the state of North Carolina) INVESTMENT INCOME: Interest.......................................................................................... $3,613,797 EXPENSES: Advisory fee...................................................................................... $ 306,892 Administrative personnel and service fees......................................................... 31,447 Distribution fee -- Class A Shares................................................................ 20,833 Distribution fee -- Class B Shares................................................................ 375,352 Shareholder services fee -- Class B Shares........................................................ 125,117 Custodian fee..................................................................................... 75,846 Reports and notices to shareholders............................................................... 63,428 Registration and filing fees...................................................................... 62,826 Transfer agent fee................................................................................ 50,839 Professional fees................................................................................. 35,599 Insurance expense................................................................................. 5,479 Trustees' fees and expenses....................................................................... 2,446 Miscellaneous..................................................................................... 35,952 1,192,056 Less: Fee waivers................................................................................. (164,001) Net expenses................................................................................... 1,028,055 Net investment income................................................................................ 2,585,742 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain on investment transactions...................................................... 483,051 Net change in unrealized appreciation of investments.............................................. (416,432) Net gain on investments.............................................................................. 66,619 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................. $2,652,361
See accompanying notes to financial statements. 46 EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND STATEMENT OF CHANGES IN NET ASSETS (Drawing of the state of North Carolina)
EIGHT MONTHS YEAR ENDED ENDED AUGUST 31, AUGUST 31, 1996 1995 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income........................................................................ $ 2,585,742 $ 1,697,080 Net realized gain on investment transactions................................................. 483,051 668,311 Net change in unrealized appreciation of investments......................................... (416,432) 3,902,872 Net increase in net assets resulting from operations...................................... 2,652,361 6,268,263 DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A Shares............................................................................... (396,192) (279,937) Class B Shares............................................................................... (2,003,550) (1,389,260) Class Y Shares............................................................................... (147,923) (27,883) Total distributions to shareholders....................................................... (2,547,665) (1,697,080) FUND SHARE TRANSACTIONS: Proceeds from shares sold.................................................................... 10,964,230 6,832,112 Proceeds from reinvestment of distributions.................................................. 1,752,076 1,191,861 Payment for shares redeemed.................................................................. (10,003,099) (7,507,588) Net increase resulting from Fund share transactions....................................... 2,713,207 516,385 Net increase in net assets................................................................ 2,817,903 5,087,568 NET ASSETS: Beginning of period.......................................................................... 58,324,498 53,236,930 End of period (includes undistributed net investment income of $88,212 and $50,135, respectively).............................................................................. $61,142,401 $ 58,324,498
See accompanying notes to financial statements. 47 EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS (Drawing of the state of North Carolina)
CLASS A SHARES EIGHT MONTHS YEAR YEAR ENDED ENDED ENDED AUGUST 31, AUGUST 31, DECEMBER 31, 1996 1995# 1994 PER SHARE DATA: Net asset value, beginning of period....................................... $9.95 $9.16 $10.61 Income (loss) from investment operations: Net investment income.................................................... .49 .33 .49 Net realized and unrealized gain (loss) on investments................... .02 .79 (1.45) Total from investment operations....................................... .51 1.12 (.96) Less distributions to shareholders from: Net investment income.................................................... (.48) (.33) (.49) Net realized gain on investments......................................... -- -- -- Total distributions.................................................... (.48) (.33) (.49) Net asset value, end of period............................................. $9.98 $9.95 $9.16 TOTAL RETURN+.............................................................. 5.2% 12.3% (9.1%) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted).................................. $7,989 $8,279 $7,979 Ratios to average net assets: Expenses**............................................................... 1.08% .92%++ .79% Net investment income**.................................................. 4.81% 5.09%++ 5.11% Portfolio turnover rate.................................................... 86% 117% 126% JANUARY 11, 1993* THROUGH DECEMBER 31, 1993 PER SHARE DATA: Net asset value, beginning of period....................................... $10.00 Income (loss) from investment operations: Net investment income.................................................... .46 Net realized and unrealized gain (loss) on investments................... .64 Total from investment operations....................................... 1.10 Less distributions to shareholders from: Net investment income.................................................... (.46) Net realized gain on investments......................................... (.03) Total distributions.................................................... (.49) Net asset value, end of period............................................. $10.61 TOTAL RETURN+.............................................................. 11.3% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted).................................. $12,739 Ratios to average net assets: Expenses**............................................................... .32%++ Net investment income**.................................................. 4.91%++ Portfolio turnover rate.................................................... 57%
# 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 is 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:
CLASS A SHARES EIGHT MONTHS YEAR YEAR ENDED ENDED ENDED AUGUST 31, AUGUST 31, DECEMBER 31, 1996 1995# 1994 Expenses................................................................... 1.35% 1.27% 1.18% Net investment income...................................................... 4.54% 4.74% 4.72% JANUARY 11, 1993* THROUGH DECEMBER 31, 1993 Expenses................................................................... 1.25% Net investment income...................................................... 3.98%
See accompanying notes to financial statements. 48 EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS -- (CONTINUED) (Drawing of the state of North Carolina)
CLASS B SHARES CLASS Y SHARES EIGHT MONTHS YEAR JANUARY 11, YEAR EIGHT MONTHS YEAR ENDED ENDED ENDED 1993* THROUGH ENDED ENDED AUGUST 31, AUGUST 31, DECEMBER 31, DECEMBER 31, AUGUST 31, AUGUST 31, 1996 1995# 1994 1993 1996 1995# PER SHARE DATA: Net asset value, beginning of period.......... $9.95 $9.16 $10.61 $10.00 $9.95 $9.16 Income (loss) from investment operations: Net investment income....................... .42 .28 .44 .42 .51 .35 Net realized and unrealized gain (loss) on investments............................... .02 .79 (1.45) .64 .03 .79 Total from investment operations.......... .44 1.07 (1.01) 1.06 .54 1.14 Less distributions to shareholders from: Net investment income....................... (.41) (.28) (.44) (.42) (.51) (.35) Net realized gain on investments............ -- -- -- (.03) -- -- Total distributions....................... (.41) (.28) (.44) (.45) (.51) (.35) Net asset value, end of period................ $9.98 $9.95 $9.16 $10.61 $9.98 $9.95 TOTAL RETURN+................................. 4.4% 11.8% (9.6%) 10.8% 5.4% 12.5% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)..... $49,382 $49,040 $44,616 $45,168 $3,771 $1,006 Ratios to average net assets: Expenses**.................................. 1.83% 1.67%++ 1.37% .79%++ .84% .67%++ Net investment income**..................... 4.06% 4.34%++ 4.53% 4.47%++ 5.05% 5.34%++ Portfolio turnover rate....................... 86% 117% 126% 57% 86% 117% FEBRUARY 28, 1994* THROUGH DECEMBER 31, 1994 PER SHARE DATA: Net asset value, beginning of period.......... $10.31 Income (loss) from investment operations: Net investment income....................... .43 Net realized and unrealized gain (loss) on investments............................... (1.15) Total from investment operations.......... (.72) Less distributions to shareholders from: Net investment income....................... (.43) Net realized gain on investments............ -- Total distributions....................... (.43) Net asset value, end of period................ $9.16 TOTAL RETURN+................................. (7.0%) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)..... $642 Ratios to average net assets: Expenses**.................................. .59%++ Net investment income**..................... 5.58%++ Portfolio turnover rate....................... 126%
# 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. Contingent deferred sales charge is 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:
CLASS B SHARES CLASS Y SHARES EIGHT MONTHS YEAR JANUARY 11, YEAR EIGHT MONTHS YEAR ENDED ENDED ENDED 1993* THROUGH ENDED ENDED AUGUST 31, AUGUST 31, DECEMBER 31, DECEMBER 31, AUGUST 31, AUGUST 31, 1996 1995# 1994 1993 1996 1995# Expenses................................... 2.10% 2.02% 1.76% 1.74% 1.07% 1.02% Net investment income...................... 3.79% 3.99% 4.14% 3.52% 4.82% 4.99% FEBRUARY 28, 1994* THROUGH DECEMBER 31, 1994 Expenses................................... .98% Net investment income...................... 5.19%
See accompanying notes to financial statements. 49 EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND (Drawing of the state of South Carolina) 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"). CLASS A ONE YEAR TOTAL RETURN = 1.2% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 2.2% (Class A chart appears here. Plot points are below.) 1/3/94* 8/31/94 8/31/95 8/31/96 (Customer to fill in plot points.) CLASS B ONE YEAR TOTAL RETURN = 0.4% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 2.3% (Class B chart appears here. Plot points are below.) 1/3/94* 8/31/94 8/31/95 8/31/96 (Customer to fill in plot points.) CLASS Y ONE YEAR TOTAL RETURN = 6.5% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 5.5% (Class Y chart appears here. Plot points are below.) 2/28/94* 8/31/94 8/31/95 8/31/96 (Customer to fill in plot points.) __ EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND ______ LEHMAN BROTHERS SOUTH CAROLINA MUNICIPAL BOND INDEX *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, 1996; (c) all recurring fees, (including, investment advisory fees) were deducted; and (d) all dividends and distributions were reinvested. The investment adviser is currently waiving a portion of the Fund's expenses. Had expenses not been waived, returns would have been lower. 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. 50 EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND STATEMENT OF INVESTMENTS AUGUST 31, 1996 (Drawing of the state of South Carolina)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- 96.7% SOUTH CAROLINA -- 96.7% $540 Aiken Cnty. IDR, Beloit Corp. Proj., 6.00%, 12/1/11......................... $ 537,808 200 Bennettsville Combined. Util. Sys. RB, (Ser. B), 6.00%, 7/1/09 (MBIA)................... 207,964 400 Calhoun Cnty. Solid Waste Disp. Facs. RB, Eastman Kodak Co. Proj., 6.75%, 5/1/17.......................... 438,740 300 Charleston Cnty. Hlth Facs. RB, First Mtg. Episcopal Church, 7.125%, 4/1/20......................... 306,243 200 Citadel Military College RB, Stud. & Fac. Hsg., 5.50%, 10/1/14......................... 193,758 100 Coastal Carolina Univ. RB, 6.80%, 6/1/19 (MBIA)................... 109,285 100 Colleton Cnty. GO, 5.60%, 3/1/09.......................... 97,029 100 Columbia Wtr. & Swr. Sys. RB, 5.375%, 2/1/12......................... 97,239 500 Darlington Cnty. IDR, Nucor Corp. Proj. (Ser. A), 5.75%, 8/1/23.......................... 479,970 300 Darlington Cnty. IDR, Sonoco Products Co. Proj., 6.00%, 4/1/26.......................... 293,562 200 Georgetown Cnty. Wtr. & Swr. Dist. RB, 6.50%, 6/1/1........................... 199,748 600 Greenville Hosp. Sys. RB, Hosp. Facs. (Ser. B), 5.70%, 5/1/12.......................... 590,070 400 Greenville Memorial Auditorium Dist. GO, Bi Lo Center Proj., 5.75%, 4/1/18 (AMBAC).................. 394,144 250 Laurens Pub. Util. Sys. RB, 5.00%, 1/1/18 (FGIC)................... 221,213 650 Marion Cnty. RB, Hosp. Dist., 5.50%, 11/1/15......................... 613,918 100 Medical Univ. Hosp. Facs. RB (Ser. A), 7.00%, 7/1/01.......................... 108,310 200 Oconee Cnty. Sch. Dist. GO, 5.10%, 9/1/12 (MBIA)................... 187,054 100 Piedmont Muni. Pwr. Agcy. Elec. RB, 5.50%, 1/1/12 (MBIA)................... 98,366 PRINCIPAL AMOUNT (000) VALUE $350 Piedmont Muni. Pwr. Agcy. Elec. RB, 6.05%, 1/1/04.......................... $ 355,551 350 Richland Cnty. Solid Waste Disp. Facs. RB, Union Camp Corp. Proj. (Ser. A), 6.75%, 5/1/22.......................... 365,911 300 South Carolina Jobs Eco. Dev. Auth. Hosp. Facs. RB, Anderson Area Med. Center Inc., 5.25%, 2/1/15 (MBIA)................... 280,173 200 South Carolina Jobs Eco. Dev. Auth. Hosp. Facs. RB, Oconee Mem. Hosp., 6.15%, 3/1/15.......................... 202,002 200 South Carolina Jobs Eco. Dev. Auth. Hosp. Facs. RB, Tuomey Regl. Med. Center (Ser. A), 5.75%, 11/1/15 (MBIA).................. 195,890 250 South Carolina St. Ed. Assist. Auth. RB, Gtd. Stud. Ln.-Sub Lien (Ser. C), 5.875%, 9/1/07......................... 249,700 400 South Carolina St. Hsg. Fin. & Dev. Auth. Mtg. RB, (Ser. A), 6.35%, 7/1/25 (FHA).................... 403,236 100 South Carolina St. Hsg. Fin. & Dev. Auth. Mtg. RB, (Ser. A), 6.55%, 7/1/15.......................... 102,213 595 South Carolina St. Hsg. Fin. & Dev. Auth. Mtg. RB, Heritage Crt. Apt. (Ser. A), 6.15%, 7/1/25 (FHA).................... 594,941 100 South Carolina St. Hsg. Fin. & Dev. Auth. RB, (Ser. A), 6.80%, 11/15/11........................ 104,304 200 South Carolina St. Hsg. Fin. & Dev. Auth. RB, Homeownership Mtg. (Ser. A), 7.55%, 7/1/11.......................... 209,696 265 South Carolina St. Hsg. Fin. & Dev. Auth. RB, Hunting Ridge Apts., 6.75%, 6/1/25.......................... 272,107 300 South Carolina St. Hsg. Fin. & Dev. Auth. RB, Runaway Bay Apts. Proj., 6.125%, 12/1/15........................ 297,789
51 EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996 (Drawing of the state of South Carolina)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- CONTINUED SOUTH CAROLINA -- CONTINUED $585 York Cnty. IDR, Exempt Fac. Hoechst Celanese, 5.70%, 1/1/24.......................... $ 552,895 TOTAL LONG-TERM MUNICIPAL SECURITIES (COST $9,230,684)................. 9,360,829 SHARES MUTUAL FUND SHARES -- 3.0% 293,000 Lehman Municipal Money Market Fund (COST $293,000)........................ 293,000 TOTAL INVESTMENTS -- (COST $9,523,684).......... 99.7% 9,653,829 OTHER ASSETS AND LIABILITIES -- NET......... .3 23,802 NET ASSETS --................. 100.0% $9,677,631
Summary of abbreviations: AMBAC -- Insured by American Municipal Bond Assurance Corporation FGIC -- Insured by Financial Guaranty Insurance Co. FHA -- Insured by Federal Housing Authority GO -- General Obligation Bond IDR -- Industrial Development Revenue Bond MBIA -- Insured by Municipal Bond Investors Assurance RB -- Revenue Bond See accompanying notes to financial statements. 52 EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996 (Drawing of the state of South Carolina) ASSETS: Investments at value (identified cost $9,523,684)................................................................ $9,653,829 Cash............................................................................................................. 760 Interest receivable.............................................................................................. 151,840 Receivable for Fund shares sold.................................................................................. 310 Prepaid expenses................................................................................................. 9,491 Total assets............................................................................................... 9,816,230 LIABILITIES: Accrued expenses................................................................................................. 120,601 Dividends payable................................................................................................ 13,091 Distribution fee payable......................................................................................... 4,907 Total liabilities.......................................................................................... 138,599 NET ASSETS.......................................................................................................... $9,677,631 NET ASSETS CONSIST OF: Paid-in capital.................................................................................................. $9,541,880 Undistributed net investment income.............................................................................. 477 Accumulated net realized gain on investment transactions......................................................... 5,129 Net unrealized appreciation of investments....................................................................... 130,145 Net assets................................................................................................. $9,677,631 CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE: Class A Shares ($840,823 (division sign) 86,817 shares of beneficial interest outstanding)....................... $ 9.69 Sales charge -- 4.75% of offering price.......................................................................... .48 Maximum offering price..................................................................................... $ 10.17 Class B Shares ($4,282,239 (division sign) 442,011 shares of beneficial interest outstanding).................... $ 9.69 Class Y Shares ($4,554,569 (division sign) 470,121 shares of beneficial interest outstanding).................... $ 9.69
See accompanying notes to financial statements. 53 EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1996 (Drawing of the state of South Carolina) INVESTMENT INCOME: Interest............................................................................................ $476,083 EXPENSES: Advisory fee........................................................................................ $ 40,781 Administrative personnel and service fees........................................................... 4,123 Distribution fee -- Class A Shares.................................................................. 1,917 Distribution fee -- Class B Shares.................................................................. 29,922 Shareholder services fee -- Class B Shares.......................................................... 9,974 Custodian fee....................................................................................... 84,241 Transfer agent fee.................................................................................. 64,328 Professional fees................................................................................... 39,767 Registration and filing fees........................................................................ 32,506 Reports and notices to shareholders................................................................. 19,747 Insurance expense................................................................................... 1,735 Trustees' fees and expenses......................................................................... 516 Miscellaneous....................................................................................... 16,672 346,229 Less: Fee waivers and expense reimbursements........................................................ (254,601) Net expenses.................................................................................. 91,628 Net investment income.................................................................................. 384,455 NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on investment transactions........................................................ 10,377 Net change in unrealized appreciation of investments................................................ 19,665 Net gain on investments................................................................................ 30,042 NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................... $414,497
See accompanying notes to financial statements. 54 EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND STATEMENT OF CHANGES IN NET ASSETS (Drawing of the state of South Carolina)
EIGHT MONTHS YEAR ENDED ENDED AUGUST 31, AUGUST 31, 1996 1995 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income....................................................................... $ 384,455 $ 128,517 Net realized gain on investment transactions................................................ 10,377 29,060 Net change in unrealized appreciation of investments........................................ 19,665 330,261 Net increase in net assets resulting from operations..................................... 414,497 487,838 DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A Shares.............................................................................. (38,206) (17,293) Class B Shares.............................................................................. (168,950) (94,373) Class Y Shares.............................................................................. (177,721) (16,851) Total distributions to shareholders...................................................... (384,877) (128,517) FUND SHARE TRANSACTIONS: Proceeds from shares sold................................................................... 4,780,175 2,853,928 Proceeds from reinvestment of distributions................................................. 251,384 83,256 Payment for shares redeemed................................................................. (1,208,640) (332,153) Net increase resulting from Fund share transactions................................... 3,822,919 2,605,031 Net increase in net assets............................................................ 3,852,539 2,964,352 NET ASSETS: Beginning of period......................................................................... 5,825,092 2,860,740 End of period (includes undistributed net investment income of $477 and $899, respectively)............................................................................. $9,677,631 $ 5,825,092
See accompanying notes to financial statements. 55 EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS (Drawing of the state of South Carolina)
CLASS A SHARES CLASS B SHARES EIGHT MONTHS JANUARY 3, EIGHT MONTHS YEAR ENDED ENDED 1994* THROUGH YEAR ENDED ENDED AUGUST 31, AUGUST 31, DECEMBER 31, AUGUST 31, AUGUST 31, 1996 1995# 1994 1996 1995# PER SHARE DATA: Net asset value, beginning of period......................... $9.59 $8.62 $10.00 $9.59 $8.62 Income (loss) from investment operations: Net investment income...................................... .49 .34 .46 .41 .29 Net realized and unrealized gain (loss) on investments..... .10 .97 (1.38) .10 .97 Total from investment operations......................... .59 1.31 (.92) .51 1.26 Less distributions to shareholders from net investment income..................................................... (.49) (.34) (.46) (.41) (.29) Net asset value, end of period............................... $9.69 $9.59 $8.62 $9.69 $9.59 TOTAL RETURN+................................................ 6.2% 15.4% (9.3%) 5.4% 14.8% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted).................... $841 $610 $312 $4,282 $3,542 Ratios to average net assets: Expenses**................................................. .86% .53%++ .25%++ 1.61% 1.28%++ Net investment income**.................................... 4.98% 5.41%++ 5.57%++ 4.23% 4.66%++ Portfolio turnover rate...................................... 37% 66% 23% 37% 66% JANUARY 3, 1994* THROUGH DECEMBER 31, 1994 PER SHARE DATA: Net asset value, beginning of period......................... $10.00 Income (loss) from investment operations: Net investment income...................................... .41 Net realized and unrealized gain (loss) on investments..... (1.38) Total from investment operations......................... (.97) Less distributions to shareholders from net investment income..................................................... (.41) Net asset value, end of period............................... $8.62 TOTAL RETURN+................................................ (9.8%) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted).................... $2,456 Ratios to average net assets: Expenses**................................................. .87%++ Net investment income**.................................... 4.88%++ Portfolio turnover rate...................................... 23%
# 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 charge is 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:
CLASS A SHARES CLASS B SHARES EIGHT MONTHS JANUARY 3, EIGHT MONTHS YEAR ENDED ENDED 1994* THROUGH YEAR ENDED ENDED AUGUST 31, AUGUST 31, DECEMBER 31, AUGUST 31, AUGUST 31, 1996 1995# 1994 1996 1995# Expenses.................................................. 4.00% 6.50% 10.71% 4.76% 7.25% Net investment income (loss).............................. 1.84% (.56%) (4.89%) 1.08% (1.31%) JANUARY 3, 1994* THROUGH DECEMBER 31, 1994 Expenses.................................................. 11.33% Net investment income (loss).............................. (5.58%)
See accompanying notes to financial statements. 56 EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS -- (CONTINUED) (Drawing of the state of South Carolina)
CLASS Y SHARES YEAR ENDED EIGHT MONTHS AUGUST 31, ENDED 1996 AUGUST 31, 1995# PER SHARE DATA: Net asset value, beginning of period............................................... $9.59 $8.62 Income (loss) from investment operations: Net investment income............................................................ .51 .35 Net realized and unrealized gain (loss) on investments........................... .10 .97 Total from investment operations............................................... .61 1.32 Less distributions to shareholders from net investment income...................... (.51) (.35) Net asset value, end of period..................................................... $9.69 $9.59 TOTAL RETURN+...................................................................... 6.5% 15.5% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted).......................................... $4,555 $1,673 Ratios to average net assets: Expenses**....................................................................... .62% .28%++ Net investment income**.......................................................... 5.22% 5.66%++ Portfolio turnover rate............................................................ 37% 66% FEBRUARY 28, 1994* THROUGH DECEMBER 31, 1994 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%
# 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. ++ 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:
CLASS Y SHARES YEAR ENDED EIGHT MONTHS AUGUST 31, ENDED 1996 AUGUST 31, 1995# Expenses.............................................................................. 3.70% 6.25% Net investment income (loss).......................................................... 2.14% (.31%) FEBRUARY 28, 1994* THROUGH DECEMBER 31, 1994 Expenses.............................................................................. 10.46% Net investment income (loss).......................................................... (4.54%)
See accompanying notes to financial statements. 57 EVERGREEN VIRGINIA MUNICIPAL BOND FUND (Drawing of the state of Virginia) 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"). CLASS A ONE YEAR TOTAL RETURN = 0.1% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 2.3% (Class A chart appears here. Plot points are below.) 7/2/93* 8/31/93 8/31/94 8/31/95 8/31/96 (Customer to fill in plot points.) CLASS B ONE YEAR TOTAL RETURN = 0.7% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 2.4% (Class B chart appears here. Plot points are below.) 7/2/93* 8/31/93 8/31/94 8/31/95 8/31/96 (Customer to fill in plot points.) CLASS Y ONE YEAR TOTAL RETURN = 5.4% AVERAGE ANNUAL COMPOUND RETURN SINCE INCEPTION = 4.8% (Class Y chart appears here. Plot points are below.) 2/28/94* 8/31/94 8/31/95 8/31/96 (Customer to fill in plot points.) - - - EVERGREEN VIRGINIA MUNICIPAL BOND FUND _____ LEHMAN BROTHERS VIRGINIA MUNICIPAL BOND INDEX *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, 1996; (c) all recurring fees (including investment advisory fees) were deducted; and (d) all dividends and distributions were reinvested. The investment adviser is currently waiving a portion of the Fund's expenses. Had expenses not been waived, returns would have been lower. 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. 58 EVERGREEN VIRGINIA MUNICIPAL BOND FUND STATEMENT OF INVESTMENTS AUGUST 31, 1996 (Drawing of the state of Virginia)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- 97.7% VIRGINIA -- 94.0% $ 100 Albemarle Cnty. Res. Care Fac. IDA, 6.45%, 7/1/15....................... $ 97,995 145 Albemarle Cnty. Res. Care Fac. IDA, 6.625%, 7/1/21...................... 141,840 465 Brunswick Cnty. IDA 5.65%, 7/1/09, (MBIA)............... 466,953 390 Buena Vista, Wtr. & Swr. Fac. RB 6.25%, 7/15/11...................... 378,230 250 Charlottesville Albemarle, Arpt. Auth. RB, 6.125%, 12/1/13..................... 242,090 500 Chesapeake Redev. & Hsg. Auth. Multi-Family Hsg. RB, 7.75%, 6/1/20....................... 498,830 370 Fairfax Cnty. IDA, RB, Health Care Inova Sys. Proj., 5.875%, 8/15/16..................... 367,625 250 Fairfax Cnty. Inova Health Sys. Proj. IDA, 5.25%, 8/15/19...................... 231,175 500 Fairfax Cnty. Redev. & Hsg. Auth. Mtg. RB, 6.00%, 9/1/16, (FHA)................ 492,565 200 Fairfax Cnty. Redev. & Hsg. Auth. Multi-Family Hsg. RB, 6.625%, 9/20/20, (GNMA)............. 207,130 700 Fairfax Cnty. Wtr. Auth. RB, 6.00%, 4/1/22....................... 692,734 500 Giles Cnty. IDA, RB, 6.45%, 5/1/26....................... 503,900 500 Hanover Cnty. IDA, Bon Secours Health Sys. Proj., 6.00%, 8/15/08, (MBIA).............. 527,520 500 Hanover Cnty, IDA, RB, Mem. Regl. Med. Center Proj., (Ser. 1995), 6.375%, 8/15/18, (MBIA)............. 534,135 500 Henrico Cnty. IDA, RB, Solid Waste Browning Ferris Proj., 5.30%, 12/1/11...................... 494,345 400 Henrico Cnty. Pub. Fac. Lease IDA, 7.00%, 8/1/13....................... 439,308 350 Isle Wright Cnty. Solid Waste Disp. Facs. IDA, 6.55%, 4/1/24....................... 362,695 PRINCIPAL AMOUNT (000) VALUE $ 500 King George Cnty. IDA Lease King George Cnty. School Proj., 6.40%, 8/1/16....................... $ 485,740 300 Metropolitan Washington D.C. Arpts. Auth. RB, (Ser. A), 7.60%, 10/1/14...................... 325,494 500 Prince William Cnty. IDA, 6.00%, 2/1/14....................... 496,665 250 Prince William Cnty. Park Auth. RB, 6.875%, 10/15/16.................... 265,035 300 Prince William Cnty. 6.75%, 10/1/15...................... 310,149 400 Riverside, Regl. Jail Auth. Fac. RB, 6.00%, 7/1/25, (MBIA)............... 403,768 500 Suffolk Virginia, GO, 5.90%, 6/1/13, (AMBAC).............. 510,925 175 Virginia Beach, Dev. Auth. Hosp. Fac. RB, 6.00%, 2/15/09, (AMBAC)............. 184,590 100 Virginia Beach, Dev. Auth. Hosp. Fac. RB, 6.00%, 2/15/12, (AMBAC)............. 104,521 100 Virginia College, Bldg. Auth. Edl. Facs. RB, 5.75%, 1/1/14....................... 98,057 200 Virginia College, Bldg. Auth. Edl. Facs. RB, 5.75%, 4/1/14....................... 192,710 100 Virginia St. Hsg. Dev. Auth. Commonwealth Mtg. RB, (Ser. A), 6.95%, 1/1/10....................... 103,215 100 Virginia St. Hsg. Dev. Auth. Commonwealth Mtg. RB, (Ser. A), 7.10%, 1/1/17....................... 105,470 300 Virginia St. Hsg. Dev. Auth. RB, (Ser. D), 6.10%, 1/1/19....................... 299,970 300 Virginia St. Hsg. Dev. Auth. RB, (Ser. F), 6.25%, 7/1/12....................... 302,877 255 Virginia St. Hsg. Dev. Auth. RB Multi-Family Hsg. (Ser. K), 5.90%, 5/1/11....................... 254,727 300 Virginia St. Multi-Family Hsg. RB, (Ser. H), 6.35%, 11/1/11...................... 306,501
59 EVERGREEN VIRGINIA MUNICIPAL BOND FUND STATEMENT OF INVESTMENTS -- (CONTINUED) AUGUST 31, 1996 (Drawing of the state of Virginia)
PRINCIPAL AMOUNT (000) VALUE LONG-TERM MUNICIPAL SECURITIES -- CONTINUED VIRGINIA -- CONTINUED $ 300 Virginia St. Pub. School Auth. RB, (Ser. A), 6.20%, 8/1/13....................... $ 312,150 100 Virginia St. Pub. School Auth. RB, (Ser. B), 6.50%, 8/1/15....................... 105,759 200 Virginia St. Res. Auth. Wtr. & Swr. Sys. RB 5.25%, 10/1/14...................... 188,622 300 West Point Solid Waste Disp. IDA, (Ser. B), 6.25%, 3/1/19....................... 298,028 12,334,043 PUERTO RICO -- 3.7% 300 Puerto Rico Commonwealth GO, 6.25%, 7/1/13, (MBIA)............... 322,755 150 Puerto Rico Commonwealth GO, 6.45%, 7/1/17....................... 157,790 480,545 TOTAL LONG-TERM MUNICIPAL SECURITIES (COST $12,609,510).................. 12,814,588 SHARES VALUE MUTUAL FUND SHARES -- 4.4% 486,000 Lehman Municipal Money Market Fund............................... $ 486,000 100,000 Lehman Tax Free Money Market Fund............................... 100,000 TOTAL MUTUAL FUND SHARES (COST $586,000).................... 586,000 TOTAL INVESTMENTS (COST $13,195,510)............. 102.1% 13,400,588 OTHER ASSETS AND LIABILITIES -- NET............. (2.1) (279,261) NET ASSETS --.................. 100.0% $13,121,327
Summary of Abbreviations: AMBAC -- Insured by American Municipal Bond Assurance Corporation FHA -- Insured by Federal Housing Authority GNMA -- Insured by Government National Mortgage Association GO -- General Obligations Bond IDA -- Industrial Development Authority MBIA -- Insured by Municipal Bond Investors Assurance RB -- Revenue Bond See accompanying notes to financial statements. 60 EVERGREEN VIRGINIA MUNICIPAL BOND FUND STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996 (Drawing of the state of Virginia) ASSETS: Investments at value (identified cost $13,195,510)............................................................. $13,400,588 Cash........................................................................................................... 553 Interest receivable............................................................................................ 176,701 Receivable for securities sold................................................................................. 149,192 Receivable for Fund shares sold................................................................................ 5,478 Prepaid expenses............................................................................................... 7,291 Total assets............................................................................................. 13,739,803 LIABILITIES: Payable for securities purchased............................................................................... 448,752 Accrued expenses............................................................................................... 137,942 Dividends payable.............................................................................................. 21,587 Distribution fee payable....................................................................................... 8,482 Payable for Fund shares redeemed............................................................................... 1,713 Total liabilities........................................................................................ 618,476 NET ASSETS........................................................................................................ $13,121,327 NET ASSETS CONSIST OF: Paid-in capital................................................................................................ $13,290,721 Undistributed net investment income............................................................................ 1,382 Accumulated net realized loss on investment transactions....................................................... (375,854) Net unrealized appreciation of investments..................................................................... 205,078 Net assets............................................................................................... $13,121,327 CALCULATION OF NET ASSET VALUE AND MAXIMUM OFFERING PRICE PER SHARE: Class A Shares ($2,892,094 (division sign) 298,718 shares of beneficial interest outstanding).................. $ 9.68 Sales charge -- 4.75% of offering price........................................................................ .48 Maximum offering price................................................................................... $ 10.16 Class B Shares ($5,963,332 (division sign) 615,947 shares of beneficial interest outstanding).................. $ 9.68 Class Y Shares ($4,265,901 (division sign) 440,615 shares of beneficial interest outstanding).................. $ 9.68
See accompanying notes to financial statements. 61 EVERGREEN VIRGINIA MUNICIPAL BOND FUND STATEMENT OF OPERATIONS YEAR ENDED AUGUST 31, 1996 (Drawing of the state of Virginia) INVESTMENT INCOME: Interest............................................................................................. $592,490 EXPENSES: Advisory fee......................................................................................... $ 51,952 Administrative personnel and service fees............................................................ 5,136 Distribution fee -- Class A Shares................................................................... 6,048 Distribution fee -- Class B Shares................................................................... 43,430 Shareholder services fee -- Class B Shares........................................................... 14,476 Registration and filing fees......................................................................... 71,759 Transfer agent fee................................................................................... 61,548 Custodian fee........................................................................................ 61,305 Professional fees.................................................................................... 35,558 Reports and notices to shareholders.................................................................. 24,425 Trustees' fees and expenses.......................................................................... 802 Insurance expense.................................................................................... 762 Miscellaneous........................................................................................ 18,628 395,829 Less: Fee waivers and expense reimbursements......................................................... (261,619) Net expenses................................................................................... 134,210 Net investment income................................................................................... 458,280 NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized loss on investment transactions......................................................... (98,854) Net change in unrealized appreciation of investments................................................. 47,564 Net loss on investments................................................................................. (51,290) NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................................... $406,990
See accompanying notes to financial statements. 62 EVERGREEN VIRGINIA MUNICIPAL BOND FUND STATEMENT OF CHANGES IN NET ASSETS (Drawing of the state of Virginia)
EIGHT MONTHS YEAR ENDED ENDED AUGUST 31, AUGUST 31, 1996 1995 INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income......................................................................... $ 458,280 $ 218,052 Net realized loss on investment transactions.................................................. (98,854) (13,951) Net change in unrealized appreciation of investments.......................................... 47,564 567,181 Net increase in net assets resulting from operations....................................... 406,990 771,282 DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A Shares................................................................................ (117,625) (64,808) Class B Shares................................................................................ (238,415) (133,946) Class Y Shares................................................................................ (105,354) (19,298) Total distributions to shareholders........................................................ (461,394) (218,052) FUND SHARE TRANSACTIONS: Proceeds from shares sold..................................................................... 6,625,000 2,276,843 Proceeds from reinvestment of distributions................................................... 309,870 172,095 Payment for shares redeemed................................................................... (1,791,146) (737,002) Net increase resulting from Fund share transactions..................................... 5,143,724 1,711,936 Net increase in net assets.............................................................. 5,089,320 2,265,166 NET ASSETS: Beginning of period........................................................................... 8,032,007 5,766,841 End of period (includes undistributed net investment income of $1,382 and $4,496, respectively................................................................................ $13,121,327 $8,032,007
See accompanying notes to financial statements. 63 EVERGREEN VIRGINIA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS (Drawing of the state of Virginia)
CLASS A SHARES EIGHT MONTHS YEAR ENDED ENDED YEAR ENDED AUGUST 31, AUGUST 31, DECEMBER 31, 1996 1995# 1994 PER SHARE DATA: Net asset value, beginning of period.............................................. $9.67 $8.85 $10.19 Income (loss) from investment operations: Net investment income........................................................... .48 .33 .47 Net realized and unrealized gain (loss) on investments.......................... .01 .82 (1.34) Total from investment operations.............................................. .49 1.15 (.87) Less distributions to shareholders from net investment income..................... (.48) (.33) (.47) Net asset value, end of period.................................................... $9.68 $9.67 $8.85 TOTAL RETURN+..................................................................... 5.1% 13.1% (8.6%) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)......................................... $2,892 $1,983 $1,606 Ratios to average net assets: Expenses**...................................................................... .93% .72%++ .53% Net investment income**......................................................... 4.83% 5.17%++ 5.11% Portfolio turnover rate........................................................... 68% 87% 59% 1993* THROUGH DECEMBER 31, 1993 PER SHARE DATA: Net asset value, beginning of period.............................................. $10.00 Income (loss) from investment operations: Net investment income........................................................... .20 Net realized and unrealized gain (loss) on investments.......................... .19 Total from investment operations.............................................. .39 Less distributions to shareholders from net investment income..................... (.20) Net asset value, end of period.................................................... $10.19 TOTAL RETURN+..................................................................... 3.9% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)......................................... $1,306 Ratios to average net assets: Expenses**...................................................................... .25%++ Net investment income**......................................................... 4.64%++ Portfolio turnover rate........................................................... 0% JULY 2,
# 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 is 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:
CLASS A SHARES JULY 2, EIGHT MONTHS 1993* YEAR ENDED ENDED YEAR ENDED THROUGH AUGUST 31, AUGUST 31, DECEMBER 31, DECEMBER 31, 1996 1995# 1994 1993 Expenses................................................................ 3.47% 3.83% 5.14% 7.75% Net investment income (loss)............................................ 2.29% 2.06% .50% (2.86%)
See accompanying notes to financial statements. 64 EVERGREEN VIRGINIA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS -- (CONTINUED) (Drawing of the state of Virginia)
CLASS B SHARES EIGHT MONTHS YEAR YEAR ENDED ENDED ENDED AUGUST 31, AUGUST 31, DECEMBER 31, 1996 1995# 1994 PER SHARE DATA: Net asset value, beginning of period.............................................. $9.67 $8.85 $10.19 Income (loss) from investment operations: Net investment income........................................................... .41 .28 .42 Net realized and unrealized gain (loss) on investments.......................... .01 .82 (1.34) Total from investment operations.............................................. .42 1.10 (.92) Less distributions to shareholders from net investment income..................... (.41) (.28) (.42) Net asset value, end of period.................................................... $9.68 $9.67 $8.85 TOTAL RETURN+..................................................................... 4.3% 12.5% (9.1%) RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)......................................... $5,963 $5,083 $3,817 Ratios to average net assets: Expenses**...................................................................... 1.68% 1.47%++ 1.12% Net investment income**......................................................... 4.09% 4.42%++ 4.54% Portfolio turnover rate........................................................... 68% 87% 59% 1993* THROUGH DECEMBER 31, 1993 PER SHARE DATA: Net asset value, beginning of period.............................................. $10.00 Income (loss) from investment operations: Net investment income........................................................... .17 Net realized and unrealized gain (loss) on investments.......................... .19 Total from investment operations.............................................. .36 Less distributions to shareholders from net investment income..................... (.17) Net asset value, end of period.................................................... $10.19 TOTAL RETURN+..................................................................... 3.7% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)......................................... $2,235 Ratios to average net assets: Expenses**...................................................................... .75%++ Net investment income**......................................................... 4.25%++ Portfolio turnover rate........................................................... 0%
# 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. Contingent deferred sales charge is 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:
CLASS B SHARES JULY 2, EIGHT MONTHS YEAR 1993* YEAR ENDED ENDED ENDED THROUGH AUGUST 31, AUGUST 31, DECEMBER 31, DECEMBER 31, 1996 1995# 1994 1993 Expenses................................................................ 4.23% 4.58% 5.73% 8.25% Net investment income (loss)............................................ 1.54% 1.31% (.07%) (3.25%)
See accompanying notes to financial statements. 65 EVERGREEN VIRGINIA MUNICIPAL BOND FUND FINANCIAL HIGHLIGHTS -- (CONTINUED) (Drawing of the state of Virginia)
CLASS Y SHARES EIGHT MONTHS YEAR ENDED ENDED AUGUST 31, AUGUST 31, 1996 1995# PER SHARE DATA: Net asset value, beginning of period........................................................... $9.67 $8.85 Income (loss) from investment operations: Net investment income........................................................................ .50 .34 Net realized and unrealized gain (loss) on investments....................................... .01 .82 Total from investment operations........................................................... .51 1.16 Less distributions to shareholders from net investment income.................................. (.50) (.34) Net asset value, end of period................................................................. $9.68 $9.67 TOTAL RETURN+.................................................................................. 5.4% 13.3% RATIOS & SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)...................................................... $4,266 $965 Ratios to average net assets: Expenses**................................................................................... .70% .47%++ Net investment income**...................................................................... 5.05% 5.42%++ Portfolio turnover rate........................................................................ 68% 87% FEBRUARY 28, 1994* THROUGH DECEMBER 31, 1994 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%
# 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. ++ 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, exclusive of any applicable state expense limitations, would have been the following:
CLASS Y SHARES FEBRUARY 28, EIGHT MONTHS 1994* YEAR ENDED ENDED THROUGH AUGUST 31, AUGUST 31, DECEMBER 31, 1996 1995# 1994 Expenses............................................................................ 3.24% 3.58% 4.89% Net investment income............................................................... 2.51% 2.31% .93%
See accompanying notes to financial statements. 66 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 1 -- ORGANIZATION AND NATURE OF OPERATIONS 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 included herein 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 New Jersey Tax Free Income Fund ("New Jersey"), 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. The investment objective of Florida, Georgia, New Jersey, North Carolina, South Carolina and Virginia is to seek current income exempt from federal income tax and where applicable, state income taxes, consistent with the preservation of capital. Florida High Income seeks to provide a high level of current income which is exempt from federal income tax. Effective January 1, 1996, First Union Corporation, the corporate parent of First Union National Bank of North Carolina ("First Union"), the Funds' current investment adviser, consummated a merger (the "Bank Merger") with First Fidelity Bancorporation, the corporate parent of First Fidelity Bank, N.A. ("FFB"), New Jersey's prior investment adviser. Effective January 19, 1996, each of the funds in FFB Funds Trust, an open-end management company registered under the Act, including the FFB New Jersey Tax-Free Income Fund (the "FFB Fund"), joined the Evergreen Funds (the "Fund Combinations"). The FFB Fund was renamed Evergreen New Jersey Tax Free Income Fund. Shares of the FFB Fund were redesignated the New Jersey's Class A Shares. New Jersey subsequently changed its fiscal year end to August 31. 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 $188,106,883. 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 as the accounting survivor. 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 as the accounting survivor. NOTE 2 -- 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 current 67 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES -- continued 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. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income are declared daily and paid monthly. Distributions 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. 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. At August 31, 1996, the Funds had capital loss carryforwards as follows:
EXPIRATION 2002 2003 2004 Florida High Income $ 723,137 $634,610 $64,454 Georgia 683,766 -- -- New Jersey 266,381 134,802 -- North Carolina 3,812,121 -- -- Virginia 258,553 -- 30,043
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 Fund's incurred and have selected to defer the following capital losses at August 31, 1996: Florida High Income $ 2,682 South Carolina 7,144 Virginia 87,258
ALLOCATION OF EXPENSES -- Expenses specifically identifiable to a class of shares or a specific fund are charged to that class or fund. 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. 68 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES -- continued USE OF ESTIMATES -- The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. NOTE 3 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES First Union is each Fund's investment adviser and accordingly is entitled to an annual fee as a percentage of each Fund's average daily net assets. Florida's, Georgia's, North Carolina's, South Carolina's and Virginia's investment advisory fee is .50 of 1% of average daily net assets. Florida High Income's annual fee is .60 of 1% of average daily net assets. New Jersey's annual fee is based on the following schedule:
ADVISORY FEE AVERAGE DAILY NET ASSETS 0.500% on the first $500 million 0.450% on the next $500 million 0.400% on the next $500 million 0.350% in excess of $1.5 billion
First Union voluntarily waived the advisory fee and reimbursed expenses for the period end August 31, 1996 as described below:
ADVISORY FEE EXPENSE WAIVERS REIMBURSEMENTS Florida High Income $238,564 $ 0 Florida 321,496 152,334 Georgia 63,102 176,832 New Jersey 107,212 47,673 North Carolina 164,001 0 South Carolina 40,781 213,820 Virginia 51,952 209,667
First Union may discontinue these voluntary waivers and reimbursements at any time. ADMINISTRATION AGREEMENT -- Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly owned subsidiary of First Union, is the Funds' Administrator and Furman Selz LLC ("Furman Selz") is the sub-administrator. Officers of Furman Selz are officers of the Funds. Evergreen Asset's and Furman Selz' fees are 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. These fees are calculated at the following annual rates:
ADMINISTRATION FEE AVERAGE DAILY NET ASSETS 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
SUB-ADMINISTRATION FEE AVERAGE DAILY NET ASSETS 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
69 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 3 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES -- continued At August 31, 1996, assets for which Evergreen Asset was the administrator for which either Evergreen Asset or First Union was investment adviser totaled approximately $15.7 billion. For the Funds listed below, Evergreen Asset waived the following amounts of its administration fee for the period ended August 31, 1996: Georgia $3,139 New Jersey 9,181 South Carolina 3,441 Virginia 4,333
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 and New Jersey, the payments for Class A were voluntarily limited to an annual fee of .25 of 1% of average daily net assets. For the period ended August 31, 1996, Rule 12b-1 fees, net of reimbursement, charged to Florida and New Jersey were approximately an annual fee of .07 and .02 of 1%, respectively, of average daily net assets. The Funds have entered into distribution agreements with Evergreen Funds Distributor ("EFD"), a subsidiary of Furman Selz, 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. ORGANIZATIONAL EXPENSES -- Organizational expenses of Florida, Georgia, North Carolina, South Carolina and Virginia were initially borne by the Funds' prior administrator. These Funds agreed to reimburse such expenses during the five-year period following each Funds' commencement of operations. As a result of a change in the administration agreement, First Union purchased the remaining unreimbursed organizational expenses from the prior administrator. As of, and for the year end August 31, 1996, the Funds paid and have a remaining liability to First Union as follows:
REMAINING PAYMENTS LIABILITY Florida $ 4,754 $21,394 Georgia 4,291 19,311 North Carolina 16,992 26,702 South Carolina 11,425 57,124 Virginia 4,101 18,455
SALES CHARGES -- EFD has advised the Funds that it has retained the following amounts from front-end sales charges resulting from sales of Class A Shares during the period ended August 31, 1996:
Florida High Income $29,467 Florida 5,996 Georgia 875 New Jersey 2,316 North Carolina 154 South Carolina 2,228 Virginia 2,033
70 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 4 -- SHARES OF BENEFICIAL INTEREST Each of the Funds has an unlimited number of $0.0001 par shares authorized. Each of the Funds' shares are divided into classes which are designated Class A, Class B and Class Y 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 3) and have exclusive voting rights with respect to their distribution plans. Transactions in shares of beneficial interest were as follows:
YEAR ENDED FOUR MONTHS ENDED AUGUST 31, 1996 AUGUST 31, 1995 SHARES AMOUNT SHARES DOLLARS FLORIDA HIGH INCOME CLASS A Shares sold................................................ 3,124,792 $ 32,820,683 730,828 $ 7,497,799 Shares issued on reinvestment of distributions............. 141,897 1,492,720 29,262 301,952 Shares redeemed............................................ (1,673,161) (17,673,622) (1,434,175) (14,852,986) Net increase (decrease).................................... 1,593,528 16,639,781 (674,085) (7,053,235) CLASS B* Shares sold................................................ 1,606,756 16,929,901 301,146 3,102,089 Shares issued on reinvestment of distributions............. 29,466 309,488 505 5,248 Shares redeemed............................................ (93,856) (985,765) -- -- Net increase............................................... 1,542,366 16,253,624 301,651 3,107,337 CLASS Y** Shares sold................................................ 203,571 2,137,099 10 101 Shares issued on reinvestment of distributions............. 1,303 13,721 -- -- Shares redeemed............................................ (15,879) (167,279) -- -- Net increase............................................... 188,995 1,983,541 10 101 Total net increase (decrease) resulting from Fund share transactions............................................. 3,324,889 $ 34,876,946 (372,424) ($ 3,945,797)
*For Class B shares, the Fund share transaction activity is for the period July 10, 1995 (commencement of operations) through August 31, 1995. **For Class Y shares, the Fund share transaction activity is for the period September 20, 1995 (commencement of operations) through August 31, 1996. For the four months ended August 31, 1995, the Fund share transaction activity reflects the initial purchase of 10 shares. 71 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 4 -- SHARES OF BENEFICIAL INTEREST -- continued
YEAR ENDED FOUR MONTHS ENDED AUGUST 31, 1996 AUGUST 31, 1995* SHARES AMOUNT SHARES AMOUNT FLORIDA CLASS A Shares sold....................................................... 647,176 $ 6,349,216 148,921 $ 1,551,451 Shares issued in acquisition of First Union Florida Municipal Bond Portfolio....................................................... -- -- 876,413 8,475,749 Shares issued on reinvestment of distributions.................... 198,575 1,954,093 136,011 1,447,315 Shares redeemed................................................... (2,919,201) (28,758,982) (4,679,881) (45,809,078) Net decrease...................................................... (2,073,450) (20,455,673) (3,518,536) (34,334,563) CLASS B Shares sold....................................................... 720,789 7,109,005 179,340 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.................... 67,958 668,617 15,662 151,941 Shares redeemed................................................... (621,849) (6,110,433) (109,102) (1,054,568) Net increase...................................................... 166,898 1,667,189 2,808,102 27,162,751 CLASS Y Shares sold....................................................... 1,061,203 10,399,454 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.................... 5,711 56,106 591 5,727 Shares redeemed................................................... (172,594) (1,701,590) (63,509) (610,195) Net increase...................................................... 894,320 8,753,970 369,837 3,575,868 Total net decrease resulting from Fund share transactions......... (1,012,232) ($10,034,514) (340,597) ($ 3,595,944)
*For Class B and Y shares, the Fund share transaction activity is for the period June 30, 1995 (commencement of class operations) through August 31, 1995.
YEAR ENDED EIGHT MONTHS ENDED AUGUST 31, 1996 AUGUST 31, 1995 SHARES AMOUNT SHARES DOLLARS GEORGIA CLASS A Shares sold.......................................................... 37,924 $ 365,163 76,707 $ 721,680 Shares issued on reinvestment of distributions....................... 7,779 75,126 4,524 42,316 Shares redeemed...................................................... (63,160) (605,087) (18,364) (172,931) Net increase (decrease).............................................. (17,457) (164,798) 62,867 591,065 CLASS B Shares sold.......................................................... 268,620 2,600,226 128,136 1,196,824 Shares issued on reinvestment of distributions....................... 26,313 253,826 17,586 164,250 Shares redeemed...................................................... (122,257) (1,183,493) (140,930) (1,336,278) Net increase......................................................... 172,676 1,670,559 4,792 24,796 CLASS Y Shares sold.......................................................... 280,783 2,686,240 108,389 1,023,100 Shares issued on reinvestment of distributions....................... 3,963 38,022 647 6,066 Shares redeemed...................................................... (256,913) (2,444,107) (244) (2,297) Net increase......................................................... 27,833 280,155 108,792 1,026,869 Total net increase resulting from Fund share transactions............ 183,052 $ 1,785,916 176,451 $ 1,642,730
72 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 4 -- SHARES OF BENEFICIAL INTEREST -- continued
SIX-MONTHS ENDED YEAR ENDED AUGUST 31, 1996 FEBRUARY 29, 1996* SHARES AMOUNT SHARES DOLLARS NEW JERSEY CLASS A Shares sold............................................................ 124,249 $ 1,339,667 1,008,145 $ 10,858,775 Shares issued on reinvestment of distributions......................... 42,586 457,685 88,801 958,593 Shares redeemed........................................................ (949,514) (10,244,991) (614,448) (6,620,815) Net increase (decrease)................................................ (782,679) (8,447,639) 482,498 5,196,553 CLASS B Shares sold............................................................ 234,035 2,509,436 16,868 187,450 Shares issued on reinvestment of distributions......................... 2,234 24,017 33 364 Shares redeemed........................................................ (1,239) (13,260) -- -- Net increase........................................................... 235,030 2,520,193 16,901 187,814 CLASS Y Shares sold............................................................ 864,470 9,318,727 1,664 18,542 Shares issued on reinvestment of distributions......................... 3,838 41,210 5 56 Shares redeemed........................................................ (26,045) (280,780) -- -- Net increase........................................................... 842,263 9,079,157 1,669 18,598 Total net increase resulting from Fund share transactions.............. 294,614 $ 3,151,711 501,068 $ 5,402,965
*For Class B shares, the Fund share transaction is for the period January 30, 1996 (commencement of operations) through February 29, 1996. For Class Y shares, the Fund share transaction is for the period February 8, 1996 (commencement of operations) through February 29, 1996.
YEAR ENDED EIGHT MONTHS ENDED AUGUST 31, 1996 AUGUST 31, 1995 SHARES AMOUNT SHARES DOLLARS NORTH CAROLINA CLASS A Shares sold............................................................ 118,007 $ 1,198,058 125,332 $ 1,232,452 Shares issued on reinvestment of distributions......................... 27,147 275,346 19,270 189,699 Shares redeemed........................................................ (176,511) (1,780,168) (183,513) (1,800,044) Net increase (decrease)................................................ (31,357) (306,764) (38,911) (377,893) CLASS B Shares sold............................................................ 635,229 6,447,862 521,981 5,146,189 Shares issued on reinvestment of distributions......................... 144,603 1,466,473 101,358 997,747 Shares redeemed........................................................ (759,219) (7,700,019) (565,861) (5,555,413) Net increase........................................................... 20,613 214,316 57,478 588,523 CLASS Y Shares sold............................................................ 327,111 3,318,310 45,992 453,471 Shares issued on reinvestment of distributions......................... 1,016 10,257 448 4,415 Shares redeemed........................................................ (51,457) (522,912) (15,523) (152,131) Net increase........................................................... 276,670 2,805,655 30,917 305,755 Total net increase resulting from Fund share transactions.............. 265,926 $ 2,713,207 49,484 $ 516,385
73 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 4 -- SHARES OF BENEFICIAL INTEREST -- continued
YEAR ENDED EIGHT MONTHS ENDED AUGUST 31, 1996 AUGUST 31, 1995 SHARES AMOUNT SHARES AMOUNT SOUTH CAROLINA CLASS A Shares sold............................................................. 31,170 $ 305,932 28,494 $ 267,216 Shares issued on reinvestment of distributions.......................... 1,829 17,842 754 7,119 Shares redeemed......................................................... (9,800) (95,582) (1,851) (17,235) Net increase............................................................ 23,199 228,192 27,397 257,100 CLASS B Shares sold............................................................. 109,335 1,062,828 100,143 941,168 Shares issued on reinvestment of distributions.......................... 12,969 126,461 7,356 69,043 Shares redeemed......................................................... (49,850) (485,446) (22,831) (214,174) Net increase............................................................ 72,454 703,843 84,668 796,037 CLASS Y Shares sold............................................................. 349,743 3,411,415 173,778 1,645,544 Shares issued on reinvestment of distributions.......................... 10,998 107,081 745 7,094 Shares redeemed......................................................... (65,167) (627,612) (10,674) (100,744) Net increase............................................................ 295,574 2,890,884 163,849 1,551,894 Total net increase resulting from Fund share transactions............... 391,227 $3,822,919 275,914 $2,605,031
YEAR ENDED EIGHT MONTHS ENDED AUGUST 31, 1996 AUGUST 31, 1995 SHARES AMOUNT SHARES AMOUNT VIRGINIA CLASS A Shares sold............................................................. 105,025 $1,032,730 48,742 $ 465,071 Shares issued on reinvestment of distributions.......................... 10,186 99,877 5,890 56,155 Shares redeemed......................................................... (21,674) (211,176) (30,945) (295,864) Net increase............................................................ 93,537 921,431 23,687 225,362 CLASS B Shares sold............................................................. 145,062 1,427,003 105,642 1,013,607 Shares issued on reinvestment of distributions.......................... 19,108 187,592 11,096 105,855 Shares redeemed......................................................... (74,064) (721,093) (22,448) (212,617) Net increase............................................................ 90,106 893,502 94,290 906,845 CLASS Y Shares sold............................................................. 425,577 4,165,267 83,741 798,165 Shares issued on reinvestment of distributions.......................... 2,286 22,401 1,057 10,084 Shares redeemed......................................................... (87,094) (858,877) (23,858) (228,520) Net increase............................................................ 340,769 3,328,791 60,940 579,729 Total net increase resulting from Fund share transactions............... 524,412 $5,143,724 178,917 $1,711,936
74 COMBINED NOTES TO FINANCIAL STATEMENTS NOTE 5 -- INVESTMENT TRANSACTIONS The cost of purchases and proceeds from sales of investments, excluding short-term securities for the period ended August 31, 1996 were as follows:
PURCHASES SALES Florida High Income...................................... $67,704,133 $32,652,951 Florida.................................................. 46,368,105 57,651,332 Georgia.................................................. 4,459,364 2,618,439 New Jersey............................................... 3,582,124 15,000 North Carolina........................................... 53,236,380 51,769,071 South Carolina........................................... 6,660,242 2,935,667 Virginia................................................. 11,224,250 6,105,707
On August 31, 1996, the aggregate cost of investments for federal tax purposes was the same as for financial reporting purposes. The composition of unrealized appreciation and depreciation of investment securities was as follows:
APPRECIATION DEPRECIATION NET Florida High Income................. $1,468,023 $504,533 $ 963,490 Florida............................. 7,337,598 481,845 6,855,753 Georgia............................. 481,737 4,566 477,171 New Jersey.......................... 1,403,155 361,061 1,042,094 North Carolina...................... 1,683,434 160,622 1,522,812 South Carolina...................... 185,255 55,110 130,145 Virginia............................ 236,589 31,511 205,078
NOTE 6 -- 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. NOTE 7 -- FINANCING AGREEMENT Effective July 3, 1996, a financing agreement was put in place with all of the Evergreen Funds and the custodian, State Street Bank and Trust Company (the "Bank"). Under the agreement, the Bank is providing an unsecured line of credit facility, in the aggregate amount of $100 million ($50 million committed and $50 million uncommitted), to be accessed by the Funds for temporary or emergency purposes only and is subject to each participating Fund's borrowing restrictions. Borrowings under this facility bear interest at .75% per annum above the Bank's cost of funds as set periodically by the Bank. A commitment fee of .10% per annum will be incurred on the unused portion of the committed facility which will be allocated to all participating funds. During the year ended August 31, 1996, the Funds had no borrowings outstanding. 75 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, 1996, the results of its operations for the year ended, and the changes in its net assets and the financial highlights for the year then ended and for the four month period ended August 31, 1995, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at August 31, 1996 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. 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 18, 1996 76 INDEPENDENT AUDITORS' REPORT TO THE TRUSTEES AND SHAREHOLDERS OF EVERGREEN FLORIDA MUNICIPAL BOND FUND EVERGREEN GEORGIA MUNICIPAL BOND FUND EVERGREEN NEW JERSEY TAX FREE INCOME 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, 1996 and the related statements of operations, the changes in net assets, and the financial highlights for each of the periods listed below: EVERGREEN FLORIDA MUNICIPAL BOND FUND -- statement of operations for the year ended August 31, 1996, statements of changes in net assets and the financial highlights for the year ended August 31, 1996 and the four month period ended August 31, 1995. The financial highlights for each of the years or periods in the three-year period ended April 30, 1995 were audited by other auditors, whose report thereon, dated June 2, 1995 was unqualified; EVERGREEN GEORGIA MUNICIPAL BOND FUND -- statement of operations for the year ended August 31, 1996, statements of changes in net assets for the year ended August 31, 1996 and the eight-month period ended August 31, 1995 and the financial highlights for each of the years or periods from July 2, 1993 (commencement of operations) through August 31, 1996; EVERGREEN NEW JERSEY TAX FREE INCOME FUND -- statement of operations for the six-month period ended August 31, 1996, statements of changes in net assets for the six-month period ended August 31, 1996 and the year ended February 29, 1996, and the financial highlights for each of the years or periods from March 1, 1993 through August 31, 1996. The financial highlights for the year ended February 28, 1993 were audited by other auditors whose reports expressed unqualified opinions on those financial highlights; EVERGREEN NORTH CAROLINA MUNICIPAL BOND FUND -- statement of operations for the year ended August 31, 1996, statements of changes in net assets for the year ended August 31, 1996 and the eight-month period ended August 31, 1995 and the financial highlights for each of the years or periods from January 11, 1993 (commencement of operations) through August 31, 1996; EVERGREEN SOUTH CAROLINA MUNICIPAL BOND FUND -- statement of operations for the year ended August 31, 1996, statements of changes in net assets for the year ended August 31, 1996 and the eight-month period ended August 31, 1995 and the financial highlights for each of the years or periods from January 3, 1994 (commencement of operations) through August 31, 1996; EVERGREEN VIRGINIA MUNICIPAL BOND FUND -- statement of operations for the year ended August 31, 1996, statements of changes in net assets for the year ended August 31, 1996 and the eight-month period ended August 31, 1995 and the financial highlights for each of the years or periods from July 2, 1993 (commencement of operations) through August 31, 1996. KPMG PEAT MARWICK LLP Pittsburgh, Pennsylvania October 16, 1996 77 (This Page Left Blank Intentionally) 78 (This Page Left Blank Intentionally) 79 (This Page Left Blank Intentionally) 80 TRUSTEES AND OFFICERS TRUSTEES: Laurence B. Ashkin* Foster Bam* James S. Howell, Chairman Robert J. Jeffries*+ Gerald M. McDonnell Thomas L. McVerry William W. Pettit Russell A. Salton, III M.D. 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 Evergreen Florida High Income Municipal Bond Fund and Evergreen New Jersey Tax Free Income Fund only. + Trustee Emeritus FEDERAL INCOME TAX STATUS OF DIVIDENDS (UNAUDITED) 100% of the dividends distributed by Florida, Florida High Income, Georgia, New Jersey, North Carolina, South Carolina and Virginia for the year ended August 31, 1996 are exempt from federal income tax, other than alternative minimum tax. At August 31, 1996, Florida had long term capital gains of $166,845. These capital gains will be paid before August 31, 1997. This brochure must be preceeded or accompanied by a prospectus of an Evergreen fund contained herein. The prospectus contains more complete information, including fees and expenses, and should be read carefully before investing or sending money. NOT May lose value FDIC No bank guarantee INSURED Evergreen Funds Distributor, Inc. Evergreen(sm) is a Service Mark of Evergreen Asset Management Corp. Copyright 1996, Evergreen Asset Management Corp. 45129 539585 10/96 -----END PRIVACY-ENHANCED MESSAGE-----