April 19, 2001    Evergreen High Income Municipal Bond Fund (VMPAX) crushed its average muni short competitors in 2000, but its recent returns are more in line with those of its average peer.

The Fund's stash of zero-coupon bonds helped fuel its returns last year, as zeros got a big lift from falling interest rates.   In recent months, however, manager Clark Stamper has turned the Fund's attention to the higher- quality, shorter-term issues favored by most of its muni short rivals.   He has also cut the Fund's stake in non-rated issues to 9% from 19% at the end of 2000.  Stamper argues that the economy could be headed for a nasty recession, which would damage lower-quality illiquid issues.

The Fund's profile has changed, but Stamper's approach hasn't.  He continues to favor callable bonds that he believes have little chance of getting called away.  These bonds are typically priced to be called and pay a relatively high yield.  This yield advantage is reflected in the Fund's yield, which as usual, ranks near the top of the muni short category.