EVERGREEN MUNICIPAL TRUST, 485APOS, 1995-04-03

EVERGREEN MUNICIPAL TRUST
485APOS, 1995-04-03

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Registration No. 33-23180
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------

FORM N-1A

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 X

Pre-Effective Amendment No.

Post-Effective Amendment No. 17 X

and/or

REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 19 X
(Check appropriate box or boxes)
--------------------
THE EVERGREEN MUNICIPAL TRUST
(Exact name of registrant as specified in charter)

2500 Westchester Avenue
Purchase, N.Y. 10577
(Address of Principal Executive Offices)

(Registrant's Telephone Number, Including Area Code (914) 694-2020)

Joseph J. McBrien, Esq.
Evergreen Asset Management Corp.
2500 Westchester Avenue, Purchase, N.Y. 10577
(Name and address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box)
Immediately upon filing pursuant to paragraph (b) or
on (date) pursuant to paragraph (b) or
60 days after filing pursuant to paragraph (a)(i) or
on (date) pursuant to paragraph (a)(i) or
75 days after filing pursuant to paragraph (a)(ii) or
X on June 30, 1995 pursuant to paragraph (a)(ii) of Rule 485

If appropriate, check the following box:

This post-effective amendment designates a new effective date for a
previously filed post-effective amendment
60 days after filing pursuant to paragraph (a)(i)
on (date) pursuant to paragraph (a)(i)

Registrant has registered an indefinite number of shares under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940.
Registrant's Rule 24f-2 notice for its fiscal year ended August 31, 1994, was
filed on or about October 28, 1994.
<PAGE>
CROSS REFERENCE SHEET
(as required by Rule 481(a))

N-1A Item No. Location in Prospectus(es)

Part A

Item 1. Cover Page Cover Page

Item 2. Synopsis and Fee Table Overview of the Fund(s);
Expense Information

Item 3. Condensed Financial Information Financial Highlights

Item 4. General Description of Registrant Cover Page; Description of
the Fund(s);
General Information

Item 5. Management of the Fund Management of the Fund(s);
General Information

Item 5A. Management's Discussion Management's Discussion of
Fund(s) Performance

Item 6. Capital Stock and Other Securities Dividends, Distributions
and Taxes; General
Information

Item 7. Purchase of Securities Being Offered Purchase and Redemption
of Shares

Item 8. Redemption or Repurchase Purchase and Redemption
of Shares

Item 9. Pending Legal Proceedings Not Applicable

Location in Statement of
Part B Additional Information

Item 10. Cover Page Cover Page

Item 11. Table of Contents Table of Contents

Item 12. General Information and History Not Applicable

Item 13. Investment Objectives and Policies Investment Objectives and
Policies;Investment
Restrictions; Other
Restrictions and Operating
Policies

Item 14. Management of the Fund Management

Item 15. Control Persons and Principal Management
Holders of Securities

Item 16. Investment Advisory and Other Services Investment Adviser;
Purchase of Shares

Item 17. Brokerage Allocation Allocation of Brokerage

Item 18. Capital Stock and Other Securities Purchase of Shares

Item 19. Purchase, Redemption and Pricing of Distribution Plans;
Securities Being Offered Purchase of Shares;
Net Asset Value

Item 20. Tax Status Additional Tax Information

Item 21. Underwriters Distribution Plans;
Purchase of Shares

Item 22. Calculation of Performance Data Performance Information

Item 23. Financial Statements Financial Statements

Part C

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.

<PAGE>

--------------------------------------------------------------
PROSPECTUS , 1995

Evergreen Tax Exempt Funds
--------------------------------------------------------

CLASS A SHARES
CLASS B SHARES
-------------------------

EVERGREEN NATIONAL TAX-FREE FUND

EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND

EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND

EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA

The Evergreen Tax Exempt Funds (the "Funds") are designed to provide
investors with income exempt from Federal income taxes. This Prospectus provides
information regarding the Class A and Class B shares offered by the Funds. Each
Fund is, or is a series of, a diversified, open-end management investment
company. This Prospectus sets forth concise information about the Funds that a
prospective investor should know before investing. The address of the Funds is
2500 Westchester Avenue, Purchase, New York 10577.

A "Statement of Additional Information" for the Funds and the other
funds in the Evergreen Group of mutual funds (collectively, with the Funds the
"Evergreen Funds") dated ---------, 1995 has been filed with the Securities and
Exchange Commission and is incorporated by reference herein. The Statement of
Additional Information provides information regarding certain matters discussed
in this Prospectus and other matters which may be of interest to investors, and
may be obtained without charge by calling the Funds at (800) 807-2940. There can
be no assurance that the investment objective of any Fund will be achieved.
Investors are advised to read this Prospectus carefully.

The shares offered by this Prospectus are not deposits or obligations of First
Union or any subsidiaries of First Union, are not endorsed or guaranteed by
First Union or any subsidiaries of First Union, and are not insured or otherwise
protected by the Federal Deposit Insurance Corporation, the Federal Reserve
Board, or any other government agency and involve risk, including the possible
loss of principal.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Keep This Prospectus for Future Reference

TABLE OF CONTENTS

OVERVIEW OF THE FUND
EXPENSE INFORMATION
FINANCIAL HIGHLIGHTS
DESCRIPTION OF THE FUND
Investment Objectives And Policies
Other Investment Policies And
Techniques
MANAGEMENT OF THE FUND
Investment Adviser
Sub-Adviser

PURCHASE AND REDEMPTION OF SHARES
How To Buy Shares
How To Redeem Shares
Exchange Privilege
Shareholder Services
Effect Of Banking Laws
OTHER INFORMATION
Dividends, Distributions And Taxes
Management's Discussion of Fund
Performance
General Information
California Risk Considerations
Florida Risk Considerations

The following summary is qualified in its entirety by the more
detailed information contained elsewhere in this Prospectus. See "Description of
the Funds" and "Management of the Funds".

The Investment Adviser to Evergreen National Tax-Free Fund, Evergreen
Short-Intermediate Municipal Fund and Evergreen Short-Intermediate Municipal
Fund-California is Evergreen Asset Management Corp. ("Evergreen Asset") which,
with its predecessors, has served as investment adviser to the Evergreen Funds
since 1971. Evergreen Asset is a wholly-owned subsidiary of First Union National
Bank of North Carolina ("FUNB-NC"), which in turn is a subsidiary of First Union
Corporation, one of the ten largest bank holding companies in the United States.
The Capital Management Group of FUNB serves as investment adviser to Evergreen
Florida High Income Municipal Bond Fund.

Evergreen National Tax-Free Fund seeks a high level of current income exempt
from Federal income tax. It invests substantially all of its assets in long-term
municipal securities. Under normal market conditions, the Fund intends to invest
at least 80% of its total assets in municipal securities which are insured. The
Fund's dollar weighted average portfolio maturity is generally expected to
exceed fifteen years.

Evergreen Florida High Income Municipal Bond Fund seeks to provide a high level
of current income exempt from federal income taxes. Under normal circumstances,
the Fund will invest at least 65% of the value of its total assets in municipal
securities consisting of high yield (i.e., high risk), medium, lower rated and
unrated bonds. Such securities are commonly called junk bonds and are subject to
greater market fluctuations and risk of loss of income and principal than higher
rated securities. Lower quality securities involve a greater risk of default
and, consequently, shares of Evergreen Florida High Income Municipal Bond Fund
may be considered speculative securities.

Evergreen Short-Intermediate Municipal Fund seeks as high a level of current
income, exempt from Federal income tax other than the alternative minimum tax
("AMT"), as is consistent with preserving capital and providing liquidity.

The Fund invests substantially all of its assets in short and intermediate-term
municipal securities with a dollar weighted average portfolio maturity of two to
five years.

Evergreen Short-Intermediate Municipal Fund-California seeks as high a level of
current income exempt from Federal and California income taxes as is consistent
with preserving capital and providing liquidity. The Fund invests substantially
all of its assets in short and intermediate-term municipal securities with a
dollar weighted average portfolio maturity of two to five years.

There is no assurance the investment objective of any Fund will be achieved.

-------------------------------------------------------------------------------
EXPENSE INFORMATION
-------------------------------------------------------------------------------

The table set forth below summarizes the shareholder transaction costs
associated with an investment in Class A and Class B Shares of a Fund. For
further information see "Purchase and Redemption of Fund Shares" and "Other
Classes of Shares".

SHAREHOLDER TRANSACTION EXPENSES Class A Shares Class B Shares
Maximum Sales Charge Imposed on Purchases 4.75% None
(as a % of offering price)

Sales Charge on Dividend Reinvestments None None

Contingent Deferred Sales Charge (as a % None 5% during the first year, 4%
during the of original purchase price or redemption second year, 3% during the
third and proceeds, whichever is lower) fourth year, 2% during the fifth year,
1% during the sixth and seventh years and 0% after the seventh year

Redemption Fee None None

Exchange Fee None None

The following tables show for each Fund the annual operating expenses
(as a percentage of average net assets) attributable to each Class of Shares,
together with examples of the cumulative effect of such expenses on a
hypothetical $1,000 investment in each Class for the periods specified assuming
(i) a 5% annual return and (ii) redemption at the end of each period and,
additionally for Class B shares, no redemption at the end of each period.

In the following examples (i) the expenses for Class A Shares assume
deduction of the maximum 4.75% sales charge at the time of purchase, (ii) the
expenses for Class B Shares assume deduction at the time of redemption (if
applicable) of the maximum contingent deferred sales charge applicable for that
time period, and (iii) the expenses for Class B Shares reflect the conversion to
Class A Shares eight years after purchase (years eight through ten, therefore,
reflect Class A expenses).

Evergreen National Tax-Free Fund
<TABLE>
<CAPTION>
Examples
Assuming Redemption Assuming no
Annual Operating Expenses(1) at End of Period Redemption
Class A Class B Class A Class B Class B
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees .50% .50% After 1 Year $ 59 $ 69 $ 19
12b-1 Fees* .. .25% 1.00% After 3 Years $ 82 $ 89 $ 59
Other Expenses .39% .39% After 5 Years $ 107 $ 122 $ 102
----- -----
Total ........ 1.14% 1.89% After 10 Years $ 180 $ 192 $ 192
</TABLE>

Evergreen Florida High Income Municipal Fund
<TABLE>
<CAPTION>

Examples
Assuming Redemption Assuming no
Annual Operating Expenses(1) at End of Period Redemption
Class A Class B Class A Class B Class B
---- ---- ---- ---- ----
<S> <C>
Advisory Fees After 1 Year
12b-1 Fees* After 3 Years
Other Expenses After 5 Years
Total After 10 Years

</TABLE>

Evergreen Short-Intermediate Municipal Fund
<TABLE>
<CAPTION>
Examples
Assuming Redemption Assuming no
Annual Operating Expenses(1) at End of Period Redemption
Class A Class B Class A Class B Class B
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees .50% .50% After 1 Year $ 57 $ 69 $ 19
12b-1 Fees* .. .10% 1.00% After 3 Years $ 76 $ 88 $ 58
Other Expenses .33% .33% After 5 Years $ 97 $ 119 $ 99
-----
Total ........ .93% 1.83% After 10 Years $ 156 $ 180 $ 180
-----
</TABLE>

Evergreen Short-Intermediate Municipal Fund-California
<TABLE>
<CAPTION>
Examples
Assuming Redemption Assuming no
Annual Operating Expenses(1) at End of Period Redemption
Class A Class B Class A Class B Class B
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Advisory Fees .55% .55% After 1 Year $ 58 $ 70 $ 20
12b-1 Fees* .. .10% 1.00% After 3 Years $ 79 $ 91 $ 61
Other Expenses .40% .40% After 5 Years $103 $125 $105
----
Total ........ 1.05% 1.95% After 10 Years $170 $193 $193
</TABLE>

*For Class B Shares, a portion of the 12b-1 Fees equivalent to .25 of 1% of
average annual assets will be shareholder servicing-related.
Distribution-related 12b-1 Fees will be limited to .75 of 1% of average annual
assets as permitted under the rules of the National Association of Securities
Dealers, Inc.

Evergreen Asset has agreed to reimburse the Funds for which it serves as
investment adviser to the extent that their aggregate operating expenses
(including Evergreen Asset's fee, but excluding taxes, interest, brokerage
commissions, Rule 12b-1 distribution fees and shareholder servicing fees and
extraordinary expenses) exceed 1.00% of the average net assets for Evergreen
Short-Intermediate Municipal Fund and Evergreen Short-Intermediate Municipal
Fund-California and 1.25% of the average net assets for Evergreen National
Tax-Free Fund.

From time to time Evergreen Asset or FUNB-NC may, at its discretion, reduce or
waive its fees or reimburse these Funds for certain of their other expenses in
order to reduce their expense ratios. Evergreen Asset or FUNB-NC may cease these
voluntary waivers and reimbursements at any time.

(1)The estimated annual operating expenses for Evergreen National Tax-Free Fund
does not reflect a voluntary advisory fee waiver by Evergreen Asset of .48 of 1%
of average net assets and the voluntary reimbursement of a portion of the Fund's
other expenses representing .12% of average net assets for the fiscal period
ending August 31, 1994.

(2)The estimated annual operating expenses for Evergreen Short-Intermediate
Municipal Fund do not reflect a voluntary advisory fee waiver by Evergreen Asset
of .25 of 1% of average net assets for the fiscal period ending August 31, 1994.

(3)The estimated annual operating expenses for Evergreen Short-Intermediate
Municipal Fund - California do not reflect a voluntary advisory fee waiver by
Evergreen Asset of .43 of 1% of average net assets for the fiscal period ending
August 31, 1994.

The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in each Class of
Shares of the Funds will bear directly or indirectly. The amounts set forth both
in the tables and in the examples are estimated amounts based on the experience
of each Fund's Class Y shares for the fiscal period ending August 31, 1994. THE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR
ANNUAL RETURN. ACTUAL EXPENSES AND ANNUAL RETURN MAY BE GREATER OR LESS THAN
THOSE SHOWN. For a more complete description of the various costs and expenses
borne by the Funds see "Management of the Funds". As a result of asset-based
sales charges, long-term shareholders may pay more than the economic equivalent
of the maximum front-end sales charges permitted under the rules of the National
Association of Securities Dealers, Inc.
<PAGE>

- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

Evergreen National Tax-Free Fund

The following selected per share data and ratios for the periods ended
August 31, 1994 have been audited by Price Waterhouse LLP, independent auditors
for Evergreen National Tax-Free Fund, whose report thereon was unqualified. This
information should be read in conjunction with the financial statements and
notes thereto which are incorporated in the Statement of Additional Information
by reference. The per share data set forth below pertains to Class Y shares of
the Fund, which are not offered through this prospectus. See "Other Classes of
Shares". No per share data and ratios are shown for Class A or B shares, since
these classes did not have any operations prior to the date of this Prospectus.

Period from
December 30, 1992*
Year Ended through
PER SHARE DATA August 31, 1994 August 31, 1993
--------------- ---------------
Net asset value, beginning of year. . . . . . . $10.92 $10.00
------ ------

Income (loss) from investment operations:
Net investment income . . . . . . . . . . . . . .53 .40
Net realized and unrealized gain (loss) on (.77) .92
investments. . .
Total from investment operations. . . . . . (.24) 1.32

Less distributions to shareholders:
From net investment income. . . . . . . . . . . (.53) (.40)
From net realized gains . . . . . . . . . . . . (.14) ----
In excess of net realized gains. . . . . . . . (.02) ----
--------- -----------
Total distributions . . . . . . . . . . . . . (.69) (.40)
--------- ---------
Net asset value, end of year. . . . . . . . . . $9.99 $10.92
------- ------

TOTAL RETURN . . . . . . . . . . . . . . . . . (2.3)% 13.5%+
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year
(in millions). . . . . . . . . . . . . . . . $42 $33
Ratios to average net assets:
Expenses . . . . . . . . . . . . . . . . . . .29% (a) 0% (b)
Net investment income . . . . . . . . . . . 5.07% (a) 5.51%(b)
Portfolio turnover rate . . . . . . . . . . . 135% 166%
- ------------

* Commencement of operations.
(a) Net of partial advisory fee waiver of .48 of 1.00% of daily net assets and
the absorption of all other Fund expenses by the Adviser equal to .12% of
average daily net assets.
(b) Annualized and net of full advisory fee waiver of .50 of 1.00% of daily net
assets and the absorption of all other Fund expenses by the Adviser equal
to .42% of average daily net assets.
+ Total return calculated for the period December 30, 1992 through August 31,
1993 is not annualized.

<PAGE>

Evergreen Short Intermediate Municipal Fund

The following selected per share data and ratios for the periods ended
August 31, 1994 have been audited by Price Waterhouse LLP, independent auditors
for Evergreen Short Intermediate Municipal Fund, whose report thereon was
unqualified. This information should be read in conjunction with the financial
statements and notes thereto which are incorporated in the Statement of
Additional Information by reference. The per share data set forth below pertains
to Class Y shares of the Fund, which are not offered through this prospectus.
See "Other Classes of Shares". No per share data and ratios are shown for Class
A or B shares, since these classes did not have any operations prior to the date
of this Prospectus.

<TABLE>
<CAPTION>
Period from
July 17, 1991*
Year Ended August 31, through

PER SHARE DATA 1994 1993 1992+ August 31, 1991+
---- ---- ----- ----------------
<S> <C> <C> <C> <C>

Net asset value, beginning of year. . . . . . . . . $10.58 $10.33 $10.00 $10.00
------ ------ ------ ------
Income (loss) from investment operations:
Net investment income . . . . . . . . . . . . . . . .47 .49 .51 .06
. . . . . . . . . . . .
Net realized and unrealized gain (loss) on (.32) .25 .33 ----
investments. . .
Total from investment operations. . . . . . . . .15 .74 .84 .06
. . . . . . . . . .

Less distributions to shareholders from:
From net investment income. . . . . . . . . . . . . (.47) (.49) (.51) (.06)
. . . . . . . . . .
From net realized gains . . . . . . . . . . . . . . (.03) ---- ---- ----
. . . . . . . . . . . . .
In excess of net realized gains. . . . . . . . . . (.02) ---- ---- ----
. . . . . . . . . . . .

Total distributions . . . . . . . . . . . . . . (.52) (.49) (.51) (.06)
--------- --------- ---------- ---------
Net asset value, end of year. . . . . . . . . . . . $10.21 $10.58 $10.33 $10.00
------ ------ ------ ------
TOTAL RETURN . . . . . . . . . . . . . . . . . . . 1.4% 7.4% 8.6% .6%++
RATIOS & SUPPLEMENTAL DATA
Net assets, end of year
(in millions) . . . . . . . . . . . . . . . . . $53 $67 $54 $4
Ratios to average net assets:
Expenses . . . . . . . . . . . . . . . . . . . .58% (a) .40% (b) .17% (c) .0% (d)
Net investment income . . . . . . . . . . . . . 4.54% (a) 4.73% (b) 4.85% (c) 4.93% (d)
Portfolio turnover rate . . . . . . . . . . . . . . 32% -----
37% 57%
- ------------
<FN>
* Commencement of operations.
+ On November 18, 1991, the Fund was changed to a diversified municipal bond
fund with a fluctuating net asset value per share from a non-diversified
money market fund with a stable net asset value per share. The shares
outstanding at August 31, 1991 and the related per share data are restated
to reflect both a 1 for 2 reverse share split on October 30, 1991 and a 1
for 5 reverse share split on August 19, 1992. Total return calculated after
November 18, 1991 reflects the fluctuation in net asset value per share.
++ Total return calculated for the period July 17, 1991 through August 31,1991
is not annualized.
(a) Net of partial advisory fee waiver of .25 of 1.00% of daily net assets.
(b) Net of partial advisory fee waiver of .41 of 1.00% of daily net assets.
(c) Net of partial advisory fee waiver of .46 of 1.00% of daily net assets and
the absorption of a portion of all other Fund expenses by the Adviser equal
to .23% of average daily net assets.
(d) Annualized and net of full advisory fee waiver of .50 of 1.00% of daily net
assets and the absorption of all other Fund expenses by the Adviser equal
to .90% of average daily net assets.
</FN>
</TABLE>

<PAGE>

Evergreen Short Intermediate Municipal Fund - California

The following selected per share data and ratios for the periods ended
August 31, 1994 have been audited by Price Waterhouse LLP, independent auditors
for Evergreen Short Intermediate Municipal Fund - California, whose report
thereon was unqualified. This information should be read in conjunction with the
financial statements and notes thereto which are incorporated in the Statement
of Additional Information by reference. The per share data set forth below
pertains to Class Y shares of the Fund, which are not offered through this
prospectus. See "Other Classes of Shares". No per share data and ratios are
shown for Class A or B shares, since these classes did not have any operations
prior to the date of this Prospectus.

<TABLE>
<CAPTION>
Period from
November 2,
Year Ended August 31, 1988* through
PER SHARE DATA 1994 1993+ 1992+ 1991+ 1990+ August 31, 1989+
---- ----- ----- ----- ----- ----------------
<S> <C> <C> <C> <C> <C> <C>

Net asset value, beginning of year. . . . . . . . $10.34 $10.00 $10.00 $10.00 $10.00 $10.00
------ ------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income . . . . . . . . . . . . . . .43 .41 .33 .47 .55 .51
Net realized and unrealized gain (loss) on (.24) .34 ---- ---- ---- ----
investments

Total from investment operations. . . . . . . .19 .75 .33 .47 .55 .51
Less distributions to shareholders from:
From net investment income. . . . . . . . . . . . (.43) (.41) (.33) (.47) (.55) (.51)
From net realized gains . . . . . . . . . . . . . (.01) ---- ---- ---- ---- ----

Total distributions . . . . . . . . . . . . . (.44) (.41) (.33) (.47) (.55) (.51)
--------- --------- --------- - --------- --------- ---------
Net asset value, end of year. . . . . . . . . . . $10.09 $10.34 $10.00 $10.00 $10.00 $10.00
------ ------ ------ ------ ------ ------
TOTAL RETURN . . . . . . . . . . . . . . . . . . 1.8% 7.6% 3.4% 4.8% 5.7% 5.2%**
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year
(in millions). . . . . . . . . . . . . . . . . $28 $42 $37 $28 $30 $34
Ratios to average net assets:
Expenses . . . . . . . . . . . . . . . . . . . .52%(a) .30%(b) .40%(c) .37%(d) .29%(e) .24%(f)

Net investment income . . . . . . . . . . . . 4.20%(a) 3.96%(b) 3.36%(c) 4.66%(d) 5.52%(e) 6.40%(f)
. . . . . . . . . . . . .
Portfolio turnover rate . . . . . . . . . . . . . 12% 37% ---- ---- ---- ----
- ------------
<FN>
* Commencement of operations.
+ On October 16, 1992, the Fund was converted to a short-intermediate
municipal fund with a fluctuating net asset value per share from a money
market fund with a stable net asset value per share. The shares outstanding
and the related per share data for the fiscal years ended August 31, 1990
through August 31, 1992 are restated to reflect both the 1 for 10 reverse
share split on October 21, 1992. Total return calculated after October 16,
1992 reflects the fluctuation in net asset value per share.
** Total return calculated for the period November 2, 1988 through August 31,
1989 is not annualized.
(a) Net of partial advisory fee waiver of .43 of 1.00% of daily net assets.
(b) Net of partial advisory fee waiver of .52 of 1.00% of daily net assets and
the absorption of a portion of all other
Fund expenses by the Adviser equal to .16% of average daily net assets.
(c) Net of partial advisory fee waiver of .44 of 1.00% of daily net assets.
(d) Net of partial advisory fee waiver of .45 of 1.00% of daily net assets and
the absorption of a portion of all other Fund expenses by the Adviser equal
to .03% of average daily net assets.
(e) Net of partial advisory fee waiver of .51 of 1.00% of daily net assets and
the absorption of a portion of all other Fund expenses by the Adviser equal
to .08% of average daily net assets.
(f) Annualized and net of partial advisory fee waiver of .50 of 1.00% of daily
net assets and the absorption of a portion of all other Fund expenses by
the Adviser equal to .19% of average daily net assets.
</FN>
</TABLE>

- --------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVES AND POLICIES

Evergreen National Tax Free Fund

The investment objective of Evergreen National Tax Free Fund is to
achieve a high level of current income exempt from Federal income tax. The Fund
will seek to achieve its objective by investing substantially all of its assets
in a diversified portfolio of long-term debt obligations issued by states,
possessions of the United States and by the District of Columbia, and their
political subdivisions and duly constituted authorities, the interest from which
is exempt from Federal income tax. Such securities are generally known as
Municipal Securities (See "Municipal Securities" below). The Fund has no
maturity restrictions. Its dollar weighted average portfolio maturity, however,
is generally expected to exceed fifteen years. As a matter of policy, the
Trustees will not change the Fund's investment objective without shareholder
approval.

Under normal market conditions, the Fund intends to invest at least 80%
of its total assets in Municipal Securities that, at the time of purchase, are
insured or prefunded. Such Municipal Securities include securities which are
insured under a mutual fund insurance policy issued to the Trust for the benefit
of the Fund by an insurer having a claims-paying ability rated AAA by Standard &
Poor's Ratings Group ("S&P") or Aaa by Moody's Investors Service, Inc.
("Moody's") or insured by such an insurer under an insurance policy obtained by
the issuer or underwriter of such Municipal Securities at the time of original
issuance. The Fund may also purchase secondary market insurance on Municipal
Securities which it holds or acquires. Although the fee for secondary market
insurance will reduce the yield of the insured bond, such insurance would be
reflected in the market value of the bond purchased. A bond is prefunded if
marketable securities, typically U.S. Treasurys, are escrowed to maturity to
assure payment of principal and interest.

It should be noted that insurance is not a substitute for the basic
credit of an issuer, but supplements the existing credit and provides additional
security therefor. Moreover, while insurance coverage for the Municipal
Securities held by the Fund reduces credit risk by insuring that the Fund will
receive payment of principal and interest, it does not protect against market
fluctuations caused by changes in interest rates and other factors.

Obligations with longer maturities (e.g., 20 years or more) generally
offer both higher yields and greater exposure to market fluctuation from changes
in interest rates than do those with shorter maturities. Consequently, shares of
the Fund may not be suitable for persons who cannot assume the somewhat greater
risks of capital depreciation involved in seeking higher tax-exempt yields.

It is anticipated that the annual portfolio turnover rate for the Fund
may exceed 100%. For the period from December 30, 1992 (commencement of
operations) to August 31, 1993, and the fiscal year ended August 31, 1994, the
Fund's portfolio turnover rate was 166% and 135%, respectively. See "Investment
Practices and Restrictions", below.

Evergreen Florida High Income Municipal Bond Fund

Evergreen Florida High Income Municipal Bond Fund seeks to provide a high
level of current income which is exempt from federal income taxes. The term
"high-level" indicates that the Fund seeks to achieve an income level that
exceeds that which an investor would expect from an investment grade portfolio
with similar maturity characteristics. Evergreen Florida High Income Municipal
Bond Fund invests primarily in high yield, medium and lower rated (Baa through C
by Moody's and BBB through D by S&P) and unrated municipal securities. To
varying degrees, medium and lower rated municipal securities, as well as unrated
municipal securities, are considered to have speculative characteristics and are
subject to greater market fluctuations and risk of loss of income and principal
than higher rated and securities. To the extent that an investor realizes a
yield in excess of that which could be expected from a fund which invests
primarily in investment grade securities, the investor should expect to bear
increased risk due to the fact that the risk of principal and/or interest not
being repaid with respect to the high yield securities described above is
significantly greater than that which exists in connection with investment grade
securities. In assessing the risk involved in purchasing medium and lower rated
and unrated securities, the Fund's investment adviser will use nationally
recognized statistical rating organizations such as Moody's and S&P, and will
also rely heavily on credit analysis it develops internally. Under normal
circumstances, the Fund's dollar-weighted average maturity generally will be 15
years or more. In pursuit of its investment objective, Evergreen Florida High
Income Municipal Bond Fund will, under normal market conditions, invest at least
65% in such medium and lower rated municipal securities or unrated municipal
securities of comparable quality to such rated municipal bonds.. Investors
should note that such a policy is not a fundamental policy of the Fund and
shareholder approval is not necessary to change such policy. There is no
assurance that Evergreen Florida High Income Municipal Bond Fund can achieve its
investment objective.

The Fund will not invest in municipal securities which are in default,
i.e., securities rated D by S&P. Investments may also be made by Evergreen
Florida High Income Municipal Bond Fund in higher quality Municipal Obligations
and, for temporary defensive purposes, the Fund may invest less than 65% of its
total assets in the medium and lower quality municipal securities described
above. The Fund may assume a defensive position if, for example, yield spreads
between lower grade and investment grade municipal bonds are narrow and the
yields available on lower quality municipal securities do not justify the
increased risk associated with an investment in such securities or when there is
a lack of medium and lower quality issues in which to invest. Evergreen Florida
High Income Municipal Bond Fund may also invest primarily in higher quality
Municipal Obligations until its net assets reach a level that would permit the
Fund to begin investing in medium and lower rated municipal bonds and at the
same time maintain adequate diversification and liquidity. Investing in this
manner may result in yields lower than those normally associated with a fund
that invests primarily in medium and lower quality municipal securities.

Under normal circumstances, it is anticipated that the dollar-weighted
average maturity of Evergreen Florida High Income Municipal Bond Fund will
generally be 15 years or more, although it may invest in securities of any
maturity. If the Fund's investment determines that market conditions warrant a
shorter average maturity, the Fund's investments will be adjusted accordingly.

During the most recent fiscal year completed by Evergreen Florida High
Income Municipal Bond Fund's predecessor, ended April 30, 1995, its holdings had
the following average credit quality characteristics:

Percent of
Rating Net Assets

Aaa or AAA %
Aa or AA
A
Baa or BBB
Ba or BB
Non-rated

Total 100.00%

The Funds may purchase industrial development bonds only if the
interest on such bonds is, in the opinion of bond counsel, exempt from federal
income taxes. It is anticipated that the annual portfolio turnover rate for the
Fund may exceed 100%. The Fund may buy and sell Futures or Options on Futures
(as hereinafter defined), which involve investment risks different from those of
municipal securities. See "Investment Practices and Restrictions", below. Also,
see the Statement of Additional Information for further information in regard to
ratings.

Evergreen Short Intermediate Municipal Fund

The investment objective of Evergreen Short Intermediate Municipal Fund is
to achieve as high a level of current income, exempt from Federal income tax
other than the AMT, as is consistent with preserving capital and providing
liquidity. Under normal circumstances, it is anticipated that the Fund will
invest its assets so that at least 80% of its annual interest income is exempt
from Federal income tax other than the AMT. The Fund will seek to achieve its
objective by investing substantially all of its assets in a diversified
portfolio of short and intermediate-term debt obligations issued by states,
territories and possessions of the United States and by the District of
Columbia, and their political subdivisions and duly constituted authorities, the
interest from which is exempt from Federal income tax other than the AMT. Such
securities are generally known as Municipal Securities (See "Municipal
Securities" below). As a matter of policy, the Trustees will not change the
Fund's investment objective without shareholder approval.

The Fund intends to maintain a dollar-weighted average portfolio
maturity of two to five years. The Fund may consider an obligation's maturity to
be shorter than its stated maturity if the Fund has the right to sell the
obligation at a price approximating par value before its stated maturity date.
This is a liquidity put and is exercisable to the issuer or some third party.

It is anticipated that the annual portfolio turnover rate for the Fund
will generally not exceed 100%. For the fiscal years ended August 31, 1992, 1993
and 1994, the Fund's portfolio turnover rate was 57%, 37% and 32%, respectively.
See "Investment Practices and Restrictions", below.

Evergreen Short Intermediate Municipal Fund-California

The investment objective of Evergreen Short Intermediate Municipal
Fund-California is to achieve as high a level of current income exempt from
Federal and California income taxes, as is consistent with preserving capital
and providing liquidity. The Fund will seek to achieve its objective by
investing at least 80% of the value of its assets in a diversified portfolio of
short and intermediate-term debt obligations issued by the State of California,
its political subdivisions and duly constituted authorities, the interest from
which is exempt from Federal and California income taxes. Such securities are
generally known as Municipal Securities (see "Municipal Securities" below).

It is anticipated that the annual portfolio turnover rate for the Fund
will generally not exceed 100%. For the period from October 16, 1992
(commencement of operations as a short-intermediate municipal fund) through
August 31, 1993 and for the fiscal year ended August 31, 1994, the Fund's
portfolio turnover rate was 37% and 12%, respectively. See "Investment Practices
and Restrictions", below.

INVESTMENT PRACTICES AND RESTRICTIONS

Except where noted, each Fund may engage in the investment practices
described below. Each Fund is also subject to certain investment restrictions
more fully described in the Statement of Additional Information.

General. Evergreen Short-Intermediate Municipal Fund and Evergreen
Short-Intermediate Municipal Fund-California will invest in Municipal Securities
so long as they are determined to be of high or upper medium quality. Municipal
Securities meeting this criteria include bonds rated A or higher by S&P, Moody's
or another nationally recognized statistical rating organization ("SRO"); notes
rated SP-1 or SP-2 by S&P or MIG-1 or MIG-2 by Moody's or rated VMIG-1 or VMIG-2
by Moody's in the case of variable rate demand notes or having comparable
ratings from another SRO; and commercial paper rated A-1 or A-2 by S&P or
Prime-1 or Prime-2 by Moody's or having comparable ratings from another SRO.
Medium grade bonds are more susceptible to adverse economic conditions or
changing circumstances than higher grade bonds. For a description of such
ratings see Appendix C. The Funds may also purchase Municipal Securities which
are unrated at the time of purchase, if such securities are determined by the
Fund's investment adviser to be of comparable quality. Certain Municipal
Securities (primarily variable rate demand notes) may be entitled to the benefit
of standby letters of credit or similar commitments issued by banks and, in such
instances, the Fund's investment adviser will take into account the obligation
of the bank in assessing the quality of such security. Investments by Evergreen
Short-Intermediate Municipal Fund-California in unrated securities are limited
to 20% of total assets. As stated above, Evergreen Florida High Income Municipal
Bond Fund invests primarily in high yield, medium and lower rated (Baa through C
by Moody's and BBB through D by S&P) and unrated securities.

The ability of the Funds to meet their investment objectives is necessarily
subject to the ability of municipal issuers to meet their payment obligations.
In addition, the portfolios of the Funds will be affected by general changes in
interest rates which will result in increases or decreases in the value of the
obligations held by the Funds. Investors should recognize that, in periods of
declining interest rates, the yield of the Funds will tend to be somewhat higher
than prevailing market rates, and in periods of rising interest rates, the yield
of the Funds will tend to be somewhat lower. Also, when interest rates are
falling, the inflow of net new money to the Funds from the continuous sale of
its shares will likely be invested in portfolio instruments producing lower
yields than the balance of each Fund's portfolio, thereby reducing the current
yield of the Funds. In periods of rising interest rates, the opposite can be
expected to occur. In addition since Evergreen Short Intermediate Municipal
Fund-California will invest primarily in California Municipal Securities, there
are certain specific factors and considerations concerning California which may
affect the credit and market risk of the Municipal Securities that Evergreen
Short Intermediate Municipal Fund-California purchases. Similarly, since
Evergreen Florida High Income Municipal Bond Fund invests primarily in Florida
Municipal Securities, it is subject to certain specific factors and
considerations concerning Florida which may affect the credit and market risk of
the Municipal Securities that it purchases. The factors relating to these Funds
are described in Appendix A and B to this Prospectus. Additional risk factors
relating to the investment by Evergreen Florida High Income Municipal Bond Fund
in high yield, medium and lower rated (Baa through C by Moody's and BBB through
D by S&P) and unrated securities is discussed below.

Municipal Securities. As noted above, the Funds will invest substantially all of
their assets in Municipal Securities. These include Municipal Securities,
short-term municipal notes and tax exempt commercial paper. "Municipal
Securities" are debt obligations issued to obtain funds for various public
purposes that are exempt from Federal income tax in the opinion of issuer's
counsel. The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith, credit and taxing power for the payment of
principal and interest. Revenue bonds are payable only from the revenues derived
from a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise tax or other specific source such as from the user
of the facility being financed. The term "Municipal Securities" also includes
"moral obligation" issues which are normally issued by special purpose
authorities. Industrial development bonds ("IDBs") and private activity bonds
("PABs") are in most cases revenue bonds and are not payable from the
unrestricted revenues of the issuer. The credit quality of IDBs and PABs is
usually directly related to the credit standing of the corporate user of the
facilities being financed. Participation interests are interests in Municipal
Securities, including IDBs and PABs, and floating and variable rate obligations
that are owned by banks. These interests carry a demand feature permitting the
holder to tender them back to the bank, which demand feature is backed by an
irrevocable letter of credit or guarantee of the bank. A put bond is a municipal
bond which gives the holder the unconditional right to sell the bond back to the
issuer at a specified price and exercise date, which is typically well in
advance of the bond's maturity date. "Short-term municipal notes" and "tax
exempt commercial paper" include tax anticipation notes, bond anticipation
notes, revenue anticipation notes and other forms of short-term loans. Such
notes are issued with a short-term maturity in anticipation of the receipt of
tax funds, the proceeds of bond placements and other revenues.

Floating Rate and Variable Rate Obligations. Municipal Securities also include
certain variable rate and floating rate municipal obligations with or without
demand features. These variable rate securities do not have fixed interest
rates; rather, those rates fluctuate based upon changes in specified market
rates, such as the prime rate, or are adjusted at predesignated periodic
intervals. Certain of these obligations may carry a demand feature that gives
the Funds the right to demand prepayment of the principal amount of the security
prior to its maturity date. The demand obligation may or may not be backed by
letters of credit or other guarantees of banks or other financial institutions.
Such guarantees may enhance the quality of the security. The Funds will limit
the value of their investments in any floating or variable rate securities which
are not readily marketable to 10% or less of their total assets.

When-Issued Securities. The Funds may purchase Municipal Securities on a
"when-issued" basis (i.e., for delivery beyond the normal settlement date at a
stated price and yield). The Funds generally would not pay for such securities
or start earning interest on them until they are received. However, when the
Funds purchase Municipal Securities on a when-issued basis, they assume the
risks of ownership at the time of purchase, not at the time of receipt. Failure
of the issuer to deliver a security purchased by a Fund on a when-issued basis
may result in a Fund's incurring a loss or missing an opportunity to make an
alternative investment. Commitments to purchase when-issued securities will not
exceed 25% of each Fund's total assets. The Funds will maintain cash or liquid
high grade debt obligations in a segregated account with their custodian in an
amount equal to such commitments. The Funds do not intend to purchase
when-issued securities for speculative purposes but only in furtherance of their
investment objectives.

Stand-by Commitments. The Funds may also acquire "stand-by commitments" with
respect to Municipal Securities held in their portfolio. Under a stand-by
commitment, a dealer agrees to purchase, at a Fund's option, specified Municipal
Securities at a specified price. Failure of the dealer to purchase such
Municipal Securities may result in a Fund incurring a loss or missing an
opportunity to make an alternative investment. Each Fund expects that stand-by
commitments generally will be available without the payment of direct or
indirect consideration. However, if necessary and advisable, a Fund may pay for
stand-by commitments either separately in cash or by paying a higher price for
portfolio securities which are acquired subject to such a commitment (thus
reducing the yield to maturity otherwise available for the same securities). The
total amount paid in either manner for outstanding stand-by commitments held in
each Fund's portfolio will not exceed 10% of the value of the Fund's total
assets calculated immediately after each stand-by commitment is acquired. The
Funds will maintain cash or liquid high grade debt obligations in a segregated
account with its custodian in an amount equal to such commitments. The Funds
will enter into stand-by commitments only with banks and broker-dealers that, in
the judgment of each Fund's investment adviser, present minimal credit risks.

Taxable Investments. Evergreen National Tax Free Fund, Evergreen
Short-Intermediate Municipal Fund-California and Evergreen Florida High Income
Municipal Bond Fund may temporarily invest up to 20% of their assets in taxable
securities, and Evergreen Short-Intermediate Municipal Fund may temporarily
invest its assets so that not more than 20% of its annual interest income will
be derived from taxable securities, under any one or more of the following
circumstances: (a) pending investment of proceeds of sale of Fund shares or of
portfolio securities, (b) pending settlement of purchases of portfolio
securities, and (c) to maintain liquidity for the purpose of meeting anticipated
redemptions. In addition, each such Fund may temporarily invest more than 20% of
its total assets in taxable securities for defensive purposes. Each Fund may
invest for defensive purposes during periods when each Fund's assets available
for investment exceed the available Municipal Securities that meet each Fund's
quality and other investment criteria. Taxable securities in which the Funds may
invest on a short-term basis include obligations of the United States
Government, its agencies or instrumentalities, including repurchase agreements
with banks or securities dealers involving such securities; time deposits
maturing in not more than seven days; other debt securities rated within the two
highest ratings assigned by any major rating service; commercial paper rated in
the highest grade by Moody's, S&P or any SRO; and certificates of deposit issued
by United States branches of United States banks with assets of $1 billion or
more.

Alternative Minimum Tax. Under current tax law, a distinction is drawn between
Municipal Securities issued to finance certain "private activities" and other
Municipal Securities. Such private activity bonds include bonds issued to
finance such projects as airports, housing projects, resource recovery programs,
solid waste disposal facilities, student loan programs, and water and sewage
projects. Interest income from such "private activity bonds" ("AMT- Subject
Bonds") becomes an item of "tax preference" which is subject to the alternative
minimum tax when received by a person in a tax year during which he is subject
to that tax. Because interest income on AMT-Subject Bonds is taxable to certain
investors, it is expected, although there can be no guarantee, that such
Municipal Securities generally will provide somewhat higher yields than other
Municipal Securities of comparable quality and maturity. Evergreen Short
Intermediate Municipal Fund may invest up to 50% of its total assets, and
Evergreen National Tax Free Fund, Evergreen Short-Intermediate Municipal
Fund-California and Evergreen Florida High Income Municipal Bond Fund may invest
up to 80% of their total assets, in AMT-Subject Bonds.

Repurchase Agreements. The Funds may enter into repurchase agreements with
member banks of the Federal Reserve System, including State Street Bank and
Trust Company, the Fund's custodian ("State Street" or the "Custodian"), or
"primary dealers" (as designated by the Federal Reserve Bank of New York) in
United States Government securities. A repurchase agreement is an arrangement
pursuant to which a buyer purchases a security and simultaneously agrees to
resell it to the vendor at a price that results in an agreed-upon market rate of
return which is effective for the period of time (which is normally one to seven
days, but may be longer) the buyer's money is invested in the security. The
arrangement results in a fixed rate of return that is not subject to market
fluctuations during a Fund's holding period. Each Fund requires continued
maintenance of collateral with its Custodian in an amount equal to, or in excess
of, the market value of the securities, including accrued interest, which are
the subject of a repurchase agreement. In the event a vendor defaults on its
repurchase obligation, the Fund might suffer a loss to the extent that the
proceeds from the sale of the collateral were less than the repurchase price. If
the vendor becomes the subject of bankruptcy proceedings, a Fund might be
delayed in selling the collateral. Each Fund's investment adviser will review
and continually monitor the creditworthiness of each institution with which a
Fund enters into a repurchase agreement to evaluate these risks. A Fund may not
enter into repurchase agreements if, as a result, more than 10% of the Fund's
net assets would be invested in repurchase agreements maturing in more than
seven days.

Illiquid Securities. The Funds may invest up to 15% of their net assets in
illiquid securities and other securities which are not readily marketable,
except that they may only invest up to 10% of their assets in repurchase
agreements with maturities longer than seven days. Securities eligible for
resale pursuant to Rule 144A under the Securities Act of 1933, which have been
determined to be liquid, will not be considered by the Fund's investment adviser
to be illiquid or not readily marketable and, therefore, are not subject to the
aforementioned 15% limit. The inability of a Fund to dispose of illiquid or not
readily marketable investments readily or at a reasonable price could impair the
Fund's ability to raise cash for redemptions or other purposes. The liquidity of
securities purchased by a Fund which are eligible for resale pursuant to Rule
144A will be monitored by the Fund's investment adviser on an ongoing basis,
subject to the oversight of the Trustees. In the event that such a security is
deemed to be no longer liquid, a Fund's holdings will be reviewed to determine
what action, if any, is required to ensure that the retention of such security
does not result in a Fund having more than 15% of its assets invested in
illiquid or not readily marketable securities.

Other Investment Policies. The Funds may borrow funds and agree to sell
portfolio securities to financial institutions such as banks and broker-dealers
and to repurchase them at a mutually agreed upon date and price (a "reverse
repurchase agreement") for temporary or emergency purposes in amounts not in
excess of 10% of the value of each Fund's total assets at the time of such
borrowing. At the time a Fund enters into a reverse repurchase agreement, it
will place in a segregated custodial account cash, United States Government
securities or liquid high grade debt obligations having a value equal to the
repurchase price (including accrued interest) and will subsequently monitor the
account to ensure that such equivalent value is maintained. Reverse repurchase
agreements involve the risk that the market value of the securities sold by a
Fund may decline below the repurchase price of those securities. Each Fund will
not enter into reverse repurchase agreements exceeding 5% of the value of its
total assets. Evergreen Short-Intermediate Municipal Fund and Evergreen
Short-Intermediate Municipal Fund-California will not purchase any securities
whenever any borrowings (including reverse repurchase agreements) are
outstanding.

In order to generate income and to offset expenses, the Funds may lend
portfolio securities to brokers, dealers and other financial organizations. Each
Fund's investment adviser will monitor the creditworthiness of such borrowers.
Loans of securities by a Fund, if and when made, may not exceed 30 percent of
each Fund's total assets and will be collateralized by cash, letters of credit
or U.S. Government securities that are maintained at all times in an amount
equal to at least 100 percent of the current market value of the loaned
securities, including accrued interest. While such securities are on loan, the
borrower will pay a Fund any income accruing thereon, and the Fund may invest
the cash collateral, thereby increasing its return. A Fund will have the right
to call any such loan and obtain the securities loaned at any time on five days'
notice. Any gain or loss in the market price of the loaned securities which
occurs during the term of the loan would affect a Fund and its investors. A Fund
may pay reasonable fees in connection with such loans.

Hedging Instruments

Futures Contracts. For the purpose of protecting (hedging) the value of
the Fund's assets, Evergreen Florida High Income Municipal Bond Fund may
purchase and sell various kinds of futures contracts ("Futures"), and may enter
into closing purchase and sale transactions with respect to such contracts. The
Futures may be based on various debt securities (such as U.S. government
securities), indices and other financial instruments and indices.

In instances involving the purchase or sale of Futures by Evergreen Florida
High Income Municipal Bond Fund, an amount of cash or cash equivalents equal to
the market value of the Futures will be deposited in a segregated account with
the Fund's Custodian to collateralize the position and thereby insure that the
use of such Futures is unleveraged. The primary risks associated with the use of
Futures are: (i) imperfect correlation between the change in the market value of
the securities held in the Fund's portfolio and the prices of Futures purchased
or sold by the Fund; (ii) incorrect forecasts by the Fund's investment adviser
concerning interest rates which may result in the hedge being ineffective; (iii)
possible lack of a liquid secondary market for Futures; and (iv) the risk of
potentially unlimited losses. The resulting inability to close a Futures
position could adversely affect the Fund's hedging ability. For a hedge to be
completely effective, the price change of the hedging instrument should equal
the price change of the security being hedged. The risk of imperfect correlation
of these price changes is increased as the composition of a Fund's portfolio is
divergent from the debt securities underlying the index.

Options on Futures. Evergreen Florida High Income Municipal Bond Fund
may purchase and write call and put options on Futures which are traded on an
Exchange or Board of Trade and enter into closing transactions with respect to
such options to terminate an existing position ("Futures Options"). A Futures
Option gives the purchaser the right, and the writer the obligation, in return
for the premium paid, to assume a position in a Future (a long position if the
option is a call and short position if the option is a put) at a specified
exercise price at any time during the period of the Futures Option. The purchase
of put Futures Options is a means of hedging against the risk of rising interest
rates. The purchase of call Futures Options is a means of hedging against a
market advance when the Fund is not fully invested.

Evergreen Florida High Income Municipal Bond Fund may use Futures
Options only in connection with hedging strategies. While hedging can provide
protection against an adverse movement in interest rates, it can also preclude a
hedger's opportunity to benefit from a favorable interest rate movement. Thus,
writing a call Futures Option results in receipt of an option premium which may
offset a portion of any loss from a decline in the prices of Municipal
Obligations held by the Fund; however if the prices of Municipal Obligations
increase, all or part of any capital appreciation on portfolio securities would
be offset by a loss incurred in closing out the call option. In addition, use of
Futures and Futures Options causes the Fund to incur additional brokerage
commissions, and may cause an increase in the Fund's portfolio turnover rate.
Use of Futures Options would subject the Fund to risks similar to those
described above relating to Futures, but any losses incurred in connection with
the use of Futures Options would be limited to the amount of premiums paid.

Evergreen Florida High Income Municipal Bond Fund will deposit in a
segregated account with its custodian bank cash, U.S. government securities or
other appropriate high grade and readily marketable debt obligations, in an
amount equal to (i) the fluctuating market value of long positions it has
purchased less any margin deposited on long positions, or (ii) the fluctuating
market value of the options written less any margin deposited on such options.

Limitations on Futures and Futures Options. Under regulations of the
Commodity Futures Trading Commission ("CFTC"), the Futures and Futures Options
trading activities described herein will not result in Evergreen Florida High
Income Municipal Bond Fund being deemed to be a "commodity pool," as defined
under such regulations, provided such Fund adheres to certain restrictions. In
particular, a Fund may purchase and sell Futures and related Futures Options
only for bona fide hedging purposes, as defined under CFTC regulations and may
not purchase or sell any such Futures or related Futures Options if immediately
thereafter, the sum of the amount of initial margin deposits on the Fund's
existing futures and related Futures Options positions and the premiums paid for
related Futures Options exceeds 5% of such Fund's total assets. Margin deposits
may consist of cash or securities acceptable to the broker and the relevant
contract market. As a matter of fundamental policy, Evergreen Florida High
Income Municipal Bond Fund will not purchase a Future or Futures Option if
immediately thereafter more than 10% of the Fund's total assets would be so
invested. The Fund's ability to engage in transactions in futures and related
Futures Options may also be limited by provisions of the Internal Revenue Code.
See "Dividends, Distributions And Taxes" below and the Statement of Additional
Information for further information concerning tax aspects of Futures and
Futures Options.

Risk Factors Associated with Medium and Lower Rated and Unrated Municipal
Obligations

Evergreen Florida High Income Municipal Bond Fund will invest in medium and
lower rated or unrated municipal securities. The market for high yield, high
risk debt securities rated in the medium and lower rating categories, or which
are unrated, is relatively new and its growth has paralleled a long economic
expansion. Past experience may not, therefore, provide an accurate indication of
future performance of this market, particularly during periods of economic
recession. An economic downturn or increase in interest rates is likely to have
a greater negative effect on this market, the value of high yield debt
securities in the Fund's portfolio, the Fund's net asset value and the ability
of the bonds' issuers to repay principal and interest, meet projected business
goals and obtain additional financing, than would be the case if investments by
the Fund were limited to higher rated securities. These circumstances also may
result in a higher incidence of defaults. Yields on medium or lower-rated
Municipal Obligations may not fully reflect the higher risks of such bonds.
Therefore, the risk of a decline in market value, should interest rates increase
or credit quality concerns develop, may be higher than has historically been
experienced with such investments. An investment in Evergreen Florida High
Income Municipal Bond Fund may be considered more speculative than investment in
shares of another fund which invests primarily in higher rated debt securities.

Prices of high yield debt securities may be more sensitive to adverse
economic changes or corporate developments than higher rated investments. Debt
securities with longer maturities, which may have higher yields, may increase or
decrease in value more than debt securities with shorter maturities. Market
prices of high yield debt securities structured as zero coupon or pay-in-kind
securities are affected to a greater extent by interest rate changes and may be
more volatile than securities which pay interest periodically and in cash. Where
Evergreen Florida High Income Municipal Bond Fund deems it appropriate and in
the best interests of its shareholders, it may incur additional expenses to seek
recovery on a debt security on which the issuer has defaulted and to pursue
litigation to protect the interests of security holders of its portfolio
entities.

Because the market for medium or lower rated securities may be thinner
and less active than the market for higher rated securities, there may be market
price volatility for these securities and limited liquidity in the resale
market. Unrated securities are usually not as attractive to as many buyers as
are rated securities, a factor which may make unrated securities less
marketable. These factors may have the effect of limiting the availability of
the securities for purchase by Evergreen Florida High Income Municipal Bond Fund
and may also limit the ability of a Fund to sell such securities at their fair
value either to meet redemption requests or in response to changes in the
economy or the financial markets. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, may decrease the values and
liquidity of medium or lower rated debt securities, especially in a thinly
traded market. To the extent a Fund owns or may acquire illiquid or restricted
high yield securities, these securities may involve special registration
responsibilities, liabilities and costs, and liquidity and valuation
difficulties. Changes in values of debt securities which the Fund owns will
affect the Fund's net asset value per share. If market quotations are not
readily available for the Fund's lower rated or unrated securities, these
securities will be valued by a method that the Trustees believes accurately
reflects fair value. Valuation becomes more difficult and judgment plays a
greater role in valuing high yield debt securities than with respect to
securities for which more external sources of quotations and last sale
information are available.

Special tax considerations are associated with investing in high yield
debt securities structured as zero coupon or pay-in-kind securities. A Fund
investing in such securities accrues income on these securities prior to the
receipt of cash payments. Evergreen Florida High Income Municipal Bond Fund must
distribute substantially all of its income to shareholders to qualify for pass
through treatment under the tax laws and may, therefore, have to dispose of
portfolio securities to satisfy distribution requirements.

While credit ratings are only one factor Evergreen Florida High Income
Municipal Bond Fund's investment adviser relies on in evaluating high yield debt
securities, certain risks are associated with using credit ratings. Credit
ratings evaluate the safety of principal and interest payments, not market value
risk. Credit rating agencies may fail to change in timely manner the credit
ratings to reflect subsequent events; however, the Fund's investment adviser
continuously monitors the issuers of high yield debt securities in a Fund's
portfolio in an attempt to determine if the issuers will have sufficient cash
flow and profits to meet required principal and interest payments. Achievement
of Evergreen Florida High Income Municipal Bond Fund's investment objective may
be more dependent upon the Fund's investment adviser and the credit analysis
capability of the Fund's investment adviser, than is the case for higher quality
debt securities. Credit ratings for individual securities may change from time
to time and Evergreen Florida High Income Municipal Bond Fund may retain a
portfolio security whose rating has been changed. See the Statement of
Additional Information for a description of bond and note ratings.

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MANAGEMENT OF THE FUNDS
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INVESTMENT ADVISER

The management of each Fund is supervised by its Trustees or Directors.
Evergreen Asset Management Corp. ("Evergreen Asset") has been retained to serve
as investment adviser to Evergreen National Tax Free Fund, Evergreen
Short-Intermediate Municipal Fund and Evergreen Short-Intermediate Municipal
Fund-California. Evergreen Asset, with its predecessors, has served as
investment adviser to the Evergreen Group of Mutual Funds, which have assets in
excess of $3 billion, since 1971. Evergreen Asset is a wholly-owned subsidiary
of First Union National Bank of North Carolina ("FUNB"). The address of
Evergreen Asset is 2500 Westchester Avenue, Purchase, New York 10577. FUNB is a
subsidiary of First Union Corporation ("First Union"), one of the ten largest
bank holding companies in the United States. Stephen A. Lieber and Nola Maddox
Falcone serve as the chief investment officers of Evergreen Asset and, along
with Theodore J. Israel, Jr., were the owners of Evergreen Asset's predecessor
and the former general partners of Lieber & Company, which, as described below,
provides certain subadvisory services to Evergreen Asset in connection with its
duties as investment adviser to the aforementioned Funds. The Capital Management
Group of FUNB ("CMG") serves as investment adviser to Evergreen Florida High
Income Municipal Bond Fund.

First Union is a bank holding company headquartered in Charlotte, North
Carolina, which had $74.2 billion in consolidated assets as of September 30,
1994. First Union and its subsidiaries provide a broad range of financial
services to individuals and businesses through offices in 36 states. The Capital
Management Group of FUNB manages or otherwise oversees the investment of over
$36 billion in assets belonging to a wide range of clients, including the First
Union family of mutual funds. First Union Brokerage Services, Inc., a
wholly-owned subsidiary of FUNB, is a registered broker-dealer that is
principally engaged in providing retail brokerage services consistent with its
federal banking authorizations. First Union Capital Markets Corp., a
wholly-owned subsidiary of First Union, is a registered broker-dealer
principally engaged in providing, consistent with its federal banking
authorizations, private placement, securities dealing, and underwriting
services.

Evergreen Asset manages investments, provides various administrative
services and supervises the daily business affairs of Evergreen National Tax
Free Fund, Evergreen Short-Intermediate Municipal Fund and Evergreen
Short-Intermediate Municipal Fund-California, subject to the authority of the
Trustees of each Fund. Under its investment advisory agreement with Evergreen
Short-Intermediate Municipal Fund-California the Evergreen Asset is entitled to
receive an annual fee equal to .55 of 1% of the Fund's average daily net assets.
Under its investment advisory agreements with Evergreen Short-Intermediate
Municipal Fund and Evergreen National Tax Free Fund Evergreen Asset is entitled
to receive an annual fee equal to .50 of 1% of each Fund's average daily net
assets. For the fiscal period ended August 31, 1994, total expense ratios of
Evergreen National Tax Free Fund, Evergreen Short-Intermediate Municipal Fund
and Evergreen Short-Intermediate Municipal Fund-California were .29%, .58%, and
.52%, respectively. CMG manages investments and supervises the daily business
affairs of Evergreen Florida High Income Municipal Bond Fund and, as
compensation therefor, is entitled to receive an annual fee equal to .60 of 1%
of average daily net assets of Florida High Income Municipal Bond Fund. For its
most recent fiscal year ended _____________________, the total annualized
operating expenses of ABT Florida High Income Municipal Bond Fund, predecessor
to Florida High Income Municipal Bond Fund, were ___%. _________________
provides various administrative services to Florida High Income Municipal Bond
Fund and is entitled to receive an annual fee equal to .[__] of 1% of average
daily net assets of the Fund. The above-mentioned expense ratios are net of
voluntary advisory fee waivers and expense reimbursements by each Fund's
investment adviser which may, at its discretion, revise or cease such voluntary
waivers at any time.

The portfolio manager of Evergreen National Tax Free Fund is James T.
Colby, III. Mr. Colby has been associated with Evergreen Asset and its
predecessor since 1992 and has served as portfolio manager of the Fund since its
inception. Prior to joining the Adviser, Mr. Colby served as Vice
President-Investments at American Express Company from 1987 to 1992. The
portfolio manager for Evergreen Short-Intermediate Municipal Fund- California
and Evergreen Short-Intermediate Municipal Fund is Steven C. Shachat. Mr.
Shachat has been associated with Evergreen Asset and its predecessor since prior
to 1989 and has served as portfolio manager of these Funds since their
inception. The portfolio manager for Evergreen Florida High Income Municipal
Bond Fund is Stephen Eldridge, a Vice President of CMG who has been associated
with CMG since July, 1995. Prior to that, Mr. Eldridge was a Vice President of
Palm Beach Capital Management, Inc. and served as Portfolio manager of the
Fund's predecessor, ABT Florida High Income Municipal Bond Fund, since prior to
1989.

SUB-ADVISER

Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company with respect to each Fund which provides that Lieber & Company's
research department and staff will furnish Evergreen Asset with information,
investment recommendations, advice and assistance, and will be generally
available for consultation on each Fund's portfolio. Lieber & Company will be
reimbursed by the Adviser in connection with the rendering of services on the
basis of the direct and indirect costs of performing such services. There is no
additional charge to the Funds for the services provided by Lieber & Company.
The address of Lieber & Company is 2500 Westchester Avenue, Purchase, New York
10577. Lieber & Company is an indirect, wholly-owned, subsidiary of First Union.

DISTRIBUTION PLANS AND AGREEMENTS

Rule 12b-1 under the Investment Company Act of 1940 permits an
investment company to pay expenses associated with the distribution of its
shares in accordance with a duly adopted plan. Each Fund has adopted for each of
its Class A and Class B shares a Rule 12b-1 plan (each, a "Plan" or collectively
the "Plans"). Under the Plans, each Fund may incur distribution-related and
shareholder servicing-related expenses which may not exceed an annual rate of
.75 of 1% of the Fund's aggregate average daily net assets attributable to Class
A shares and 1.00% of the Fund's aggregate average daily net assets attributable
to the Class B. Payments with respect to Class A shares under the Plan are
currently voluntarily limited to .10 of 1% of aggregate average daily net assets
attributable to such shares in the case of Evergreen Short-Intermediate
Municipal Fund-California and Evergreen Short-Intermediate Municipal Fund and
.25 of 1% of aggregate average daily net assets attributable to such shares in
the case of Evergreen Florida High Income Municipal Fund and Evergreen National
Tax Free Fund. The Plans provide that a portion of the fee payable thereunder in
an amount not to exceed .25% of the aggregate average daily net assets of each
Fund attributable to each Class of shares may constitute a service fee to be
used for providing ongoing personal service and/or the maintenance of
shareholder accounts.

Each Fund has also entered into a distribution agreement (each a
"Distribution Agreement" or collectively the "Distribution Agreements") with,
Evergreen Funds Distributor, Inc. ("EFD"). Pursuant to the Distribution
Agreements, EFD will be compensated for its services as distributor at a rate
which may not exceed an annual rate of .10 of 1% of aggregate average daily net
assets attributable to Class A shares of Evergreen Short- Intermediate Municipal
Fund-California and Evergreen Short-Intermediate Municipal Fund, .25 of 1% of
aggregate average daily net assets attributable to Class A shares of Evergreen
Florida High Income Municipal Fund and Evergreen National Tax Free Fund and .75
of 1% of each Fund's aggregate average daily net assets attributable to the
Class B shares. The Distribution Agreements provide that EFD will use the
distribution fee received from a Fund for payments (i) to compensate
broker-dealers or other persons for distributing shares of the Funds, including
interest and principal payments made in respect of amounts paid to
broker-dealers or other persons that have been financed (EFD may assign its
rights to receive compensation under the Plans to secure such financings), (ii)
to otherwise promote the sale of shares of the Fund, and (iii) to compensate
broker-dealers, depository institutions and other financial intermediaries for
providing administrative, accounting and other services with respect to the
Fund's shareholders. The financing of payments made by EFD to compensate
broker-dealers or other persons for distributing shares of the Funds may be
provided by First Union or its affiliates. The Funds may also make payments
under the Plans, in amounts up to .25 of 1% of a Fund's aggregate average daily
net assets on an annual basis attributable to Class B shares, to compensate
organizations, which may include EFD and the Adviser or its affiliates, for
personal services rendered to shareholders and/or the maintenance of shareholder
accounts.

The Funds may not pay any distribution or services fees during any
fiscal period in excess of the amounts set forth above. Since EFD's compensation
under the Distribution Agreements is not directly tied to the expenses incurred
by EFD, the amount of compensation received by it under the Distribution
Agreements during any year may be more or less than its actual expenses and may
result in a profit to EFD. Distribution expenses incurred by EFD in one fiscal
year that exceed the level of compensation paid to EFD for that year may be paid
from distribution fees received from a Fund in subsequent fiscal years.

The Plans are in compliance with rules of the National Association of
Securities Dealers, Inc. which effectively limit the annual asset-based sales
charges and service fees that a mutual fund may pay on a class of shares to .75
of 1% and .25 of 1%, respectively, of the average annual net assets attributable
to that class. The rules also limit the aggregate of all front-end, deferred and
asset-based sales charges imposed with respect to a class of shares by a mutual
fund that also charges a service fee to 6.25% of cumulative gross sales of
shares of that class, plus interest at the prime rate plus 1% per annum.

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PURCHASE AND REDEMPTION OF SHARES
- ----------------------------------------------------------------------

HOW TO BUY SHARES

You can purchase shares of any of the Funds through broker-dealers,
banks or other financial intermediaries, or directly through EFD. The minimum
initial investment is $1,000, which may be waived in certain situations. There
is no minimum for subsequent investments. Investments of $25 or more are allowed
under the systematic investment program. Share certificates are not issued for
Class A and Class B shares. In states where EFD is not registered as a
broker-dealer shares of a Fund will only be sold through other broker-dealers or
other financial institutions that are registered. See the Share Purchase
Application and Statement of Additional Information for more information. Only
Class A and Class B shares are offered through this prospectus (see "Other
Classes of Shares").

Class A Shares-Front-End Sales Charge Alternative. You can purchase Class A
shares at net asset value plus an initial sales charge, as follows:

Sales Charge as a Percentage
Amount of Transaction of Public Offering Price
$ 0-$ 99,999 4.75%
$ 100,000-$ 249,999 3.75%
$ 250,000-$ 499,999 3.00%
$ 500,000-$ 999,999 2.00%
$1,000,000-$2,499,999 1.00%
$2,500,000 and above 0.25%

When Class A shares are sold, EFD will normally retain a portion of the
applicable sales charge and pay the balance to the broker-dealer or other
financial intermediary through whom the sale was made. EFD may also pay fees to
banks from sales charges for services performed on behalf of the bank's
customers in connection with the purchase of shares of the Funds. In addition to
compensation paid at the time of sale, entities whose clients have purchased
Class A shares may receive a trailing commission equal to .10 of 1% of the
aggregate average daily net assets attributable to Class A shares of Evergreen
Short-Intermediate Municipal Fund-California and Evergreen Short-Intermediate
Municipal Fund held by their clients, .__ of 1% of aggregate average daily net
assets attributable to Class A shares in the case of Evergreen Florida High
Income Municipal Fund, and .25 of 1% of aggregate average daily net assets
attributable to Class A shares of Evergreen National Tax Free Fund held by their
clients. Certain purchases of Class A shares may qualify for reduced sales
charges in accordance with a Fund's Combined Purchase Privilege, Cumulative
Quantity Discount, Statement of Intention, Privilege for Certain Retirement
Plans and Reinstatement Privilege. Consult the Share Purchase Application and
Statement of Additional Information for additional information concerning these
reduced sales charges.

Class B Shares-Deferred Sales Charge Alternative. You can purchase Class B
shares at net asset value without an initial sales charge. However, you may pay
a contingent deferred sales charge ("CDSC") if you redeem shares within seven
years after purchase. Shares obtained from dividend or distribution reinvestment
are not subject to the CDSC. The amount of the CDSC (expressed as a percentage
of the lesser of the current net asset value or original cost) will vary
according to the number of years from the purchase of Class B shares as set
forth below.

Year Since Purchase Contingent Deferred Sales Charge
FIRST 5%
SECOND 4%
THIRD and FOURTH 3%
FIFTH 2%
SIXTH and SEVENTH 1%

The CDSC is deducted from the amount of the redemption and is paid to EFD. The
CDSC will be waived on redemptions of shares following the death or disability
of a shareholder, to meet distribution requirements for certain qualified
retirement plans or in the case of certain redemptions made under a Fund's
Systematic Cash Withdrawal Plan. Class B shares are subject to higher
distribution fees than Class A shares for a period of seven years (after which
they convert to Class A shares) . The higher fees mean a higher expense ratio,
so Class B shares pay correspondingly lower dividends and may have a lower net
asset value than Class A shares. See the Statement of Additional Information for
further details.

How the Funds Value Their Shares. The net asset value of each Class of shares of
a Fund is calculated by dividing the value of the amount of the Fund's net
assets attributable to that Class by the outstanding shares of that Class.
Shares are valued each day the New York Stock Exchange (the "Exchange") is open
as of the close of regular trading (currently 4:00 p.m. Eastern time). The
securities in a Fund are valued at their current market value determined on the
basis of market quotations or, if such quotations are not readily available,
such other methods as a Fund's Trustees believe would accurately reflect fair
market value.

General. The decision as to which Class of shares is more beneficial to you
depends on the amount of your investment and the length of time you will hold
it. If you are making a large investment, thus qualifying for a reduced sales
charge, you might consider Class A shares. If you are making a smaller
investment, you might consider Class B shares since 100% of your purchase is
invested immediately and since such shares will convert to Class A shares, which
incur lower ongoing distribution charges, after seven years. The compensation
received by Dealers and agents may differ depending on whether they sell Class A
or Class B shares. There is no size limit on purchases of Class A shares.

In addition to the discount or commission paid to dealers, EFD will
from time to time pay to dealers additional cash or other incentives that are
conditioned upon the sale of a specified minimum dollar amount of shares of a
Fund and/or other Evergreen Mutual Funds. Such incentives will take the form of
payment for attendance at seminars, lunches, dinners, sporting events or theater
performances, or payment for travel, lodging and entertainment incurred in
connection with travel by persons associated with a dealer and their immediate
family members to urban or resort locations within or outside the United States.
Such a dealer may elect to receive cash incentives of equivalent amount in lieu
of such payments.

Additional Purchase Information. As a condition of this offering, if a purchase
is canceled due to nonpayment or because an investor's check does not clear, the
investor will be responsible for any loss a Fund or the Adviser incurs. If such
investor is an existing shareholder, a Fund may redeem shares from an investor's
account to reimburse the Fund or the Adviser for any loss. In addition, such
investors may be prohibited or restricted from making further purchases in any
of the Evergreen Funds.

HOW TO REDEEM SHARES

You may "redeem", i.e., sell your shares in a Fund to the Fund on any
day the Exchange is open, either directly or through your financial
intermediary. The price you will receive is the net asset value (less any
applicable CDSC for Class B shares) next calculated after the Fund receives your
request in proper form. Proceeds generally will be sent to you within seven
days. However, for shares recently purchased by check, a Fund will not send
proceeds until it is reasonably satisfied that the check has been collected
(which may take up to 15 days). Once a redemption request has been telephoned or
mailed, it is irrevocable and may not be modified or canceled.

Redeeming Shares Through Your Financial Intermediary. A Fund must receive
instructions from your financial intermediary before 4:00 p.m. Eastern time for
you to receive that day's net asset value (less any applicable CDSC for Class B
shares). Your financial intermediary is responsible for furnishing all necessary
documentation to a Fund and may charge you for this service.

Redeeming Shares Directly by Mail or Telephone. Send a signed letter of
instruction or stock power form to State Street Bank and Trust Company ("State
Street") which is the registrar, transfer agent and dividend-disbursing agent
for each Fund. Stock power forms are available from your financial intermediary,
State Street, and many commercial banks. Additional documentation is required
for the sale of shares by corporations, financial intermediaries, fiduciaries
and surviving joint owners. Signature guarantees are required for all redemption
requests for shares with a value of more than $10,000 or where the redemption
proceeds are to be mailed to an address other than that shown in the account
registration. A signature guarantee must be provided by a bank or trust company
(not a Notary Public), a member firm of a domestic stock exchange or by other
financial institutions whose guarantees are acceptable to State Street.

Shareholders may withdraw amounts of $1,000 or more from their accounts
by calling State Street (800- 423-2615) between the hours of 9:00 a.m. and 4:00
p.m. (Eastern time) each business day (i.e., any weekday exclusive of days on
which the New York Stock Exchange or State Street's offices are closed). The New
York Stock Exchange is closed on New Year's Day, Presidents Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Redemption requests made after 4:00 p.m. (Eastern time) will be processed using
the net asset value determined on the next business day. Such redemption
requests must include the shareholder's account name, as registered with a Fund,
and the account number. During periods of drastic economic or market changes,
shareholders may experience difficulty in effecting telephone redemptions.
Shareholders who are unable to reach a Fund or State Street by telephone should
follow the procedures outlined above for redemption by mail.

The telephone redemption service is not made available to shareholders
automatically. Shareholders wishing to use the telephone redemption service must
indicate this on the Share Purchase Application and choose how the redemption
proceeds are to be paid. Redemption proceeds will either (i) be mailed by check
to the shareholder at the address in which the account is registered or (ii) be
wired to an account with the same registration as the shareholder's account in a
Fund at a designated commercial bank. State Street currently deducts a $5 wire
charge from all redemption proceeds wired. This charge is subject to change
without notice. A shareholder who decides later to use this service, or to
change instructions already given, should fill out a Shareholder Services Form
and send it to State Street Bank and Trust Company, P.O. Box 9021, Boston,
Massachusetts 02205-9827, with such shareholder's signature guaranteed by a bank
or trust company (not a Notary Public), a member firm of a domestic stock
exchange or by other financial institutions whose guarantees are acceptable to
State Street. Shareholders should allow approximately ten days for such form to
be processed. The Funds will employ reasonable procedures to verify that
telephone requests are genuine. These procedures include requiring some form of
personal identification prior to acting upon instructions and tape recording of
conversations. If the Fund fails to follow such procedures, it may be liable for
any losses due to unauthorized or fraudulent instructions. The Fund shall not be
liable for following telephone instructions reasonably believed to be genuine.
Also, the Fund reserves the right to refuse a telephone redemption request, if
it is believed advisable to do so. Financial intermediaries may charge a fee for
handling telephonic requests. The telephone redemption option may be suspended
or terminated at any time without notice.

General. The sale of shares is a taxable transaction for Federal tax purposes.
Under unusual circumstances, a Fund may suspend redemptions or postpone payment
for up to seven days or longer, as permitted by Federal securities law. The
Funds reserve the right to close an account that through redemption has remained
below $1,000 for 30 days. Shareholders will receive 60 days' written notice to
increase the account value before the account is closed. The Funds have elected
to be governed by Rule 18f-1 under the Investment Company Act of 1940 pursuant
to which each Fund is obligated to redeem shares solely in cash, up to the
lesser of $250,000 or 1% of a Fund's total net assets during any ninety day
period for any one shareholder. See the Statement of Additional Information for
further details.

EXCHANGE PRIVILEGE

How To Exchange Shares. You may exchange some or all of your shares for shares
of the same Class in the other Evergreen Funds through your financial
intermediary, or by telephone or mail as described below. An exchange which
represents an initial investment in another Evergreen Fund must amount to at
least $1,000. Once an exchange request has been telephoned or mailed, it is
irrevocable and may not be modified or canceled. Exchanges will be made on the
basis of the relative net asset values of the shares exchanged next determined
after an exchange request is received. Exchanges are subject to minimum
investment and suitability requirements.

Each of the Evergreen Funds have different investment objectives and
policies. For complete information, a prospectus of the fund into which an
exchange will be made should be read prior to the exchange. An exchange is
treated for Federal income tax purposes as a redemption and purchase of shares
and may result in the realization of a capital gain or loss. Shareholders are
limited to five exchanges per calendar year, with a maximum of three per
calendar quarter. This exchange privilege may be modified or discontinued at any
time by the Fund upon sixty days' notice to shareholders and is only available
in states in which shares of the fund being acquired may lawfully be sold.

No CDSC will be imposed in the event Class B shares are exchanged for
Class B shares of other Evergreen Funds. If you redeem shares, the CDSC
applicable to the Class B shares of the Evergreen Mutual Fund originally
purchased for cash is applied. Also, Class B shares will continue to age
following an exchange for purposes of conversion to Class A shares and
determining the amount of the applicable CDSC.

Exchanges Through Your Financial Intermediary. A Fund must receive exchange
instructions from your financial intermediary before 4:00 p.m. Eastern time for
you to receive that day's net asset value. Your financial intermediary is
responsible for furnishing all necessary documentation to a Fund and may charge
you for this service.

Exchanges by Telephone and Mail. You may exchange shares with a value of $1,000
or more by telephone by calling State Street (800-423-2615). Exchange requests
made after 4:00 p.m. (Eastern time) will be processed using the net asset value
determined on the next business day. During periods of drastic economic or
market changes, shareholders may experience difficulty in effecting telephone
exchanges. You should follow the procedures outlined below for exchanges by mail
if you are unable to reach State Street by telephone. If you wish to use the
telephone exchange service you should indicate this on the Share Purchase
Application. As noted above, each Fund will employ reasonable procedures to
confirm that instructions for the redemption or exchange of shares communicated
by telephone are genuine. A telephone exchange may be refused by a Fund or State
Street if it is believed advisable to do so. Procedures for exchanging Fund
shares by telephone may be modified or terminated at any time. Written requests
for exchanges should follow the same procedures outlined for written redemption
requests in the section entitled "How to Redeem Shares", however, no signature
guarantee is required.

SHAREHOLDER SERVICES

The Funds offer the following shareholder services. For more
information about these services or your account, contact your financial
intermediary, EFD or the toll-free number for the Funds, 800-807-2940. Some
services are described in more detail in the Share Purchase Application.

Systematic Investment Plan. You may make monthly or quarterly investments
into an existing account automatically in amounts of not less than $25.

Telephone Investment Plan. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 3:00 p.m. (Eastern time)
will be credited to a shareholder's account the day the request is received.

Systematic Cash Withdrawal Plan. When an account of $10,000 or more is opened or
when an existing account reaches that size, you may participate in the Fund's
Systematic Cash Withdrawal Plan by filling out the appropriate part of the Share
Purchase Application. Under this plan, you may receive (or designate a third
party to receive) a monthly or quarterly check in a stated amount of not less
than $100. Fund shares will be redeemed as necessary to meet withdrawal
payments. All participants must elect to have their dividends and capital gain
distributions reinvested automatically. Any applicable Class B CDSC will be
waived with respect to redemptions occurring under a Systematic Cash Withdrawal
Plan during a calendar year to the extent that such redemptions do not exceed
10% of (i) the initial value of the account plus (ii) the value, at the time of
purchase, of any subsequent investments.

Automatic Reinvestment Plan. For the convenience of investors, all dividends and
distributions are automatically reinvested in full and fractional shares of a
Fund at the net asset value per share on the last business day of each month,
unless otherwise requested by a shareholder in writing. If the transfer agent
does not receive a written request for subsequent dividends and/or distributions
to be paid in cash at least three full business days prior to a given record
date, the dividends and/or distributions to be paid to a shareholder will be
reinvested. If you elect to receive dividends and distributions in cash and the
U.S. Postal Service cannot deliver the checks, or if the checks remain uncashed
for six months, the checks will be reinvested into your account at the then
current net asset value.

EFFECT OF BANKING LAWS

The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass- Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of their customer. FUNB and
Evergreen Asset, since it is a subsidiary of FUNB, is subject to and in
compliance with the aforementioned laws and regulations.

Changes to applicable laws and regulations or future judicial or
administrative decisions could result in FUNB and Evergreen Asset being
prevented from continuing to perform the services required under the investment
advisory contract or from acting as agent in connection with the purchase of
shares of a Fund by its customers. If FUNB and Evergreen Asset were prevented
from continuing to provide the services called for under the investment advisory
agreement, it is expected that the Trustees would identify, and call upon each
Fund's shareholders to approve, a new investment adviser. If this were to occur,
it is not anticipated that the shareholders of any Fund would suffer any adverse
financial consequences.

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OTHER INFORMATION
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DIVIDENDS, DISTRIBUTIONS AND TAXES

Income dividends are declared daily and paid monthly. Distributions of
any net realized gains of a Fund will be made at least annually. Shareholders
will begin to earn dividends on the first business day after shares are
purchased unless shares were not paid for, in which case dividends are not
earned until the next business day after payment is received. Each Fund has
qualified and intends to continue to qualify to be treated as a regulated
investment company under the Internal Revenue Code (the "Code"). While so
qualified, so long as each Fund distributes all of its investment company
taxable income and any net realized gains to shareholders, it is expected that
the Funds will not be required to pay any Federal income taxes. A 4%
nondeductible excise tax will be imposed on a Fund if it does not meet certain
distribution requirements by the end of each calendar year. Each Fund
anticipates meeting such distribution requirements.

The Funds will designate and pay exempt-interest dividends derived from
interest earned on qualifying tax-exempt obligations. Such exempt-interest
dividends may be excluded by shareholders of a Fund from their gross income for
Federal income tax purposes, however (1) all or a portion of such
exempt-interest dividends may be a specific preference item for purposes of the
Federal individual and corporate alternative minimum taxes to the extent that
they are derived from certain types of private activity bonds issued after
August 7, 1986, and (2) all exempt- interest dividends will be a component of
the "adjusted current earnings" for purposes of the Federal corporate
alternative minimum tax.

Dividends paid from taxable income, if any, and distributions of any
net realized short-term capital gains (whether from tax exempt or taxable
obligations) are taxable as ordinary income and long-term capital gain
distributions are taxable as long-term capital gains, even though received in
additional shares of the Fund, and regardless of the investors holding period
relating to the shares with respect to which such gains are distributed. Market
discount recognized on taxable and tax-exempt bonds is taxable as ordinary
income, not as excludable income. Under current law, the highest Federal income
tax rate applicable to net long-term gains realized by individuals is 28%. The
rate applicable to corporations is 35%.

Since each Fund's gross income is ordinarily expected to be tax exempt
interest income, it is not expected that the 70% dividends-received deduction
for corporations will be applicable. Specific questions should be addressed to
the investor's own tax adviser.

Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gains distributions (if any) and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, each investor must certify on the Share Purchase
Application, or on a separate form supplied by State Street, that the investor's
social security or taxpayer identification number is correct and that the
investor is not currently subject to backup withholding or is exempt from backup
withholding.

For Evergreen Short Intermediate Municipal Fund-California, so long as
the Fund remains qualified under Subchapter M of the Code for federal purposes
and qualified as a diversified management investment company, then under current
California law, the Fund is entitled to pass through to its shareholders the
tax-exempt income it earns. To the extent that Fund dividends are derived from
earnings on California Municipal Securities, such dividends will be exempt from
California personal income taxes when received by the Fund's shareholders,
provided the Fund has complied with the requirement that at least 50% of its
assets be invested in California Municipal Securities. For California income tax
purposes, long-term capital gains distributions are taxable as ordinary income.

Statements describing the tax status of shareholders' dividends and
distributions will be mailed annually by the Funds. These statements will set
forth the amount of income exempt from Federal and, if applicable, state
taxation (including California), and the amount, if any, subject to Federal and
state taxation. Moreover, to the extent necessary, these statements will
indicate the amount of exempt-interest dividends which are a specific preference
item for purposes of the Federal individual and corporate alternative minimum
taxes. The exemption of interest income for Federal income tax purposes does not
necessarily result in exemption under the income or other tax law of any state
or local taxing authority. Investors should consult their own tax advisers about
the status of distributions from the Funds in their states and localities. Each
Fund notifies shareholders annually as to the interest exempt from Federal taxes
earned by the Fund.

A shareholder who acquires Class A shares of a Fund and sells or
otherwise disposes of such shares within 90 days of acquisition may not be
allowed to include certain sales charges incurred in acquiring such shares for
purposes of calculating gain and loss realized upon a sale or exchange of shares
of the Fund.

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

Evergreen National Tax Free Fund. The total return of Evergreen National Tax
Free Fund for the fiscal year ending August 31, 1994 was -2.29%, outperforming
the Lehman Brothers Long Insured Municipal Bond Index by .29% which stood at
- -2.57% as of that date. Since inception, the Fund's cumulative total return is
1.84% greater than that of the index +10.86% versus +9.02%. The average annual
return since inception was +6.33%. The Fund is a long-term bond fund with
average maturities generally longer than fifteen years and seeks to extend or
reduce those maturities as the market and interest rate outlook change. As the
1994 year evolved and the Federal Reserve initiated a series of moves to tighten
credit (raise rates), the primary strategy employed by the Adviser was to reduce
maturity and duration exposure, yet still provide a reasonable stream of
tax-free income to shareholders. Protection of principal is an important goal
for the Fund and though rising interest rates have caused returns to be negative
for the fiscal year, the Fund's performance compares favorably with the relevant
indices.

[CHART]

<PAGE>

A particular security type which has exhibited poorer performance
characteristics - deep market discount bonds - has been a specific candidate for
sale from the Fund, to be replaced by higher coupon bonds. This strategy has
generally enhanced the performance record of the Fund because more income is
generated with the higher coupons. When possible, the Fund will continue to
reduce its exposure to these securities to be consistent with the its goal of
principal protection in an interest rate environment that has a decidedly upward
bias. The Fund continues to invest at least 80% of its assets in Municipal
Securities insured as to interest and principal and to maintain wide
diversification in names of large national issuers.

Evergreen Florida High Income Municipal Fund. The Fund's total return for the
fiscal year ending August 31, 1994 was +1.42%, versus the Lehman Brothers 3-Year
Municipal Bond Index, which rose + 2.38%, and the Lehman Brothers 5-Year
Municipal Bond Index, which increased + 2.01%. As the economy picked up momentum
and the Federal Reserve started tightening, interest rates in the fixed-income
markets climbed in every maturity range. As a result, the Fund moved to a more
defensive position during the last half of the fiscal year in order to moderate
price volatility. We reduced the Fund's weighted average maturities and
durations, and adjusted the holdings by selling securities most sensitive to
price declines in a rising environment such as bonds trading at a discount.
Proceeds were reinvested in premium-based, high quality bonds. The strategy of
the Fund as of August 31, 1994 is to remain relatively short in the one to
three-year range as we look to purchase investment grade, non-callable bonds.

[CHART]

Evergreen Short-Intermediate Municipal Fund. The Fund's total return for the
fiscal year ending August 31, 1994 was +1.42%, versus the Lehman Brothers 3-Year
Municipal Bond Index, which rose + 2.38%, and the Lehman Brothers 5-Year
Municipal Bond Index, which increased + 2.01%. As the economy picked up momentum
and the

<PAGE>

Federal Reserve started tightening, interest rates in the fixed-income markets
climbed in every maturity range. As a result, the Fund moved to a more defensive
position during the last half of the fiscal year in order to moderate price
volatility. We reduced the Fund's weighted average maturities and durations, and
adjusted the holdings by selling securities most sensitive to price declines in
a rising environment such as bonds trading at a discount. Proceeds were
reinvested in premium-based, high quality bonds. The strategy of the Fund as of
August 31, 1994 is to remain relatively short in the one to three-year range as
we look to purchase investment grade, non-callable bonds.

[CHART]

Evergreen Short-Intermediate Municipal Fund - California. The Fund's total
return for the fiscal year ending August 31, 1994 was 1.84%, versus the Lehman
Brothers 3-Year California Municipal Bond Index, which rose +2.38% and the
Lehman Brothers California Municipal Bond Index, which increased + 2.21%.

As the economy picked up momentum and the Federal Reserve started
tightening, interest rates in the fixed-income markets climbed in every maturity
range. As a result, the Fund moved to a more defensive position during the last
half of the fiscal year in order to moderate price volatility. We reduced the
Fund's weighted average maturities and durations, and adjusted the holdings by
selling securities most sensitive to price declines in a rising environment such
as bonds trading at a discount. Proceeds were reinvested in premium-based, high
quality bonds. Our strategy as of August 31, 1994, is to remain relatively short
in the one to three-year range as we look to purchase investment grade, non
callable bonds.

<PAGE>

[CHART]

GENERAL INFORMATION

Portfolio Transactions. Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., and subject to seeking best
price and execution, a Fund may consider sales of its shares as a factor in the
selection of dealers to enter into portfolio transactions with the Fund.

Organization. The Funds are separate investment series of The Evergreen
Municipal Trust, a Massachusetts business trust organized in 1988. The Funds do
not intend to hold annual shareholder meetings; shareholder meetings will be
held only when required by applicable law. Shareholders have available certain
procedures for the removal of Trustees.

A shareholder in each class of a Fund will be entitled to his or her
share of all dividends and distributions from a Fund's assets, based upon the
relative value of such shares to those of other Classes of the Fund, and, upon
redeeming shares, will receive the then current net asset value of the Class of
shares of the Fund represented by the redeemed shares less any applicable CDSC.
The Funds are empowered to establish, without shareholder approval, additional
investment series, which may have different investment objectives, and
additional classes of shares for any existing or future series. If an additional
series or class were established in a Fund, each share of the series or class
would normally be entitled to one vote for all purposes. Generally, shares of
each series and class would vote together as a single class on matters, such as
the election of Directors, that affect each series and class in substantially
the same manner. Class A, B and Y shares have identical voting, dividend,
liquidation and other rights, except that each class bears, to the extent
applicable, its own distribution and transfer agency expenses as well as any
other expenses applicable only to a specific class. Each class of shares votes
separately with respect to Rule 12b-1 distribution plans and other matters for
which separate class voting is appropriate under applicable law. Shares are
entitled to dividends as determined by the Trustees and, in liquidation of a
Fund, are entitled to receive the net assets of the Fund.

Registrar, Transfer Agent and Dividend-Disbursing Agent. State Street Bank and
Trust Company, P.O. Box 9021, Boston, Massachusetts 02205-9827 acts as each
Fund's registrar, transfer agent and dividend-disbursing agent for a fee based
upon the number of shareholder accounts maintained for the Funds. The transfer
agency fee with respect to the Class B shares will be higher than the transfer
agency fee with respect to the Class A shares.

Principal Underwriter. EFD, a wholly-owned subsidiary of Furman Selz
Incorporated, located at 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. EFD provides personnel to serve as officers
of the Funds. The salaries and other expenses related to providing such
personnel are borne by EFD.

Other Classes of Shares. Each Fund currently offers three classes of shares,
Class A, Class B and Class Y, and may in the future offer additional classes.
Class Y shares are not offered by this Prospectus and are only available to (i)
all shareholders of record in one or more of the Evergreen Funds as of December
30, 1994, (ii) certain institutional investors and (iii) investment advisory
clients of the Adviser and its affiliates. The dividends payable with respect to
Class A and Class B shares will be less than those payable with respect to Class
Y shares due to the distribution and distribution related expenses borne by
Class A and Class B shares and the fact that such expenses are not borne by
Class Y shares.

Performance Information. A Fund's performance may be quoted in advertising in
terms of yield or total return. Both types of performance are based on SEC
formulas and are not intended to indicate future performance.

Yield is a way of showing the rate of income a Fund earns on its
investments as a percentage of the Fund's share price. A Fund's yield is
calculated according to accounting methods that are standardized by the SEC for
all stock and bond funds. Because yield accounting methods differ from the
method used for other accounting purposes, a Fund's yield may not equal its
distribution rate, the income paid to your account or the income reported in a
Fund's financial statements. To calculate yield, a Fund takes the interest
income it earned from its portfolio of investments (as defined by the SEC
formula) for a 30-day period (net of expenses), divides it by the average number
of shares entitled to receive dividends, and expresses the result as an
annualized percentage rate based on a Fund's share price at the end of the
30-day period. This yield does not reflect gains or losses from selling
securities.

A Fund may also quote tax-equivalent yields, which show the taxable
yields an investor would have to earn before taxes to equal the Fund's tax-free
yields. A tax-equivalent yield is calculated by dividing a Fund's tax-exempt
yield by the result of one minus a stated Federal tax rate. If only a portion of
a Fund's income was tax-exempt, only that portion is adjusted in the
calculation.

Total returns are based on the overall dollar or percentage change in
the value of a hypothetical investment in a Fund. A Fund's total return shows
its overall change in value including changes in share prices and assumes all a
Fund's distributions are reinvested. A cumulative total return reflects a Fund's
performance over a stated period of time. An average annual total return
reflects the hypothetical annually compounded return that would have produced
the same cumulative total return if a Fund's performance had been constant over
the entire period. Because average annual total returns tend to smooth out
variations in a Fund's return, you should recognize that they are not the same
as actual year-by-year results. To illustrate the components of overall
performance, a Fund may separate its cumulative and average annual total returns
into income results and realized and unrealized gain or loss.

Evergreen Short Intermediate Municipal Fund-California may also quote
tax-equivalent yields, which show the taxable yields an investor would have to
earn before taxes to equal the Fund's tax-free yields. A tax-equivalent yield is
calculated by dividing a Fund's tax-exempt yield by the result of one minus a
stated federal tax rate. If only a portion of a Fund's income was tax-exempt,
only that portion is adjusted in the calculation.

Comparative performance information may also be used from time to time
in advertising or marketing a Fund's shares, including data from Lipper
Analytical Services, Inc., Morningstar and other industry publications. The Fund
may also advertise in items of sales literature an "actual distribution rate"
which is computed by dividing the total ordinary income distributed (which may
include the excess of short-term capital gains over losses) to shareholders for
the latest twelve month period by the maximum public offering price per share on
the last day of the period. Investors should be aware that past performance may
not be reflective of future results.

Liability Under Massachusetts Law. Under Massachusetts law, trustees and
shareholders of a business trust may, in certain circumstances, be held
personally liable for its obligations. The Declaration of Trust under which
Funds operate provide that no trustee or shareholder will be personally liable
for the obligations of the Trust and that every written contract made by the
Trust contain a provision to that effect. If any trustee or shareholder were
required to pay any liability of the Trust, that person would be entitled to
reimbursement from the general assets of the Trust.

Additional Information. This Prospectus and the Statement of Additional
Information, which have been incorporated by reference herein, do not contain
all the information set forth in the Registration Statements filed by the Funds
with the Commission under the Securities Act. Copies of the Registration
Statements may be obtained at a reasonable charge from the Commission or may be
examined, without charge, at the offices of the Commission in Washington, D.C.

<PAGE>

APPENDIX A -- CALIFORNIA RISK CONSIDERATIONS

The following information as to certain California risk factors is
given to investors in view of the policy of Evergreen Short Intermediate
Municipal Fund-California of investing primarily in California state and
municipal issuers. The information is based primarily upon information derived
from public documents relating to securities offerings of California state and
municipal issuers, from independent municipal credit reports and historically
reliable sources but has not been independently verified by the Fund.

Changes in California constitutional and other laws during the last
several years have raised questions about the ability of California state and
municipal issuers to obtain sufficient revenue to pay their bond obligations. In
1978, California voters approved an amendment to the California Constitution
known as Proposition 13. Proposition 13 limits ad valorem taxes on real property
and restricts the ability of taxing entities to increase real property taxes.
Legislation passed subsequent to Proposition 13, however, provided for the
redistribution of California's General Fund surplus to local agencies, the
reallocation of revenues to local agencies, and the assumption of certain local
obligations by the state so as to help California municipal issuers to raise
revenue to pay their bond obligations. It is unknown, however, whether
additional revenue redistribution legislation will be enacted in the future and
whether, if enacted, such legislation would provide sufficient revenue for such
California issuers to pay their obligations. The state is also subject to
another constitutional amendment, Article XIIIB, which may have an adverse
impact on California state and municipal issuers. Article XIIIB restricts the
state from spending certain appropriations in excess of an appropriations limit
imposed for each state and local government entity. If revenues exceed such
appropriations limit, such revenues must be returned either as revisions in the
tax rates or fee schedules. Because of the uncertain impact of the
aforementioned statutes and cases, the possible inconsistencies in the
respective terms of the statutes and the impossibility of predicting the level
of future appropriations and applicability of related statutes to such
questions, it is not currently possible to assess the impact of such
legislation, cases and policies on the long-term ability of California state and
municipal issuers to pay interest or repay principal on their obligations.

California's economy is larger than many sovereign nations. During the
1980s, California experienced growth rates well in excess of the rest of the
nation. The state's major employment sectors are services, trade, and
manufacturing. Industrial concentration is in electronics, aerospace, and
non-electrical equipment. Also significant are agriculture and oil production.

Key sectors of California's economy have been severely affected by the
recession. Since May of 1990, job losses total over 850,000. Declines in the
aerospace and high technology sectors have been especially severe. The
continuing drive in population and labor force growth has produced higher
unemployment rates in the state. Although total job loss has declined, weakness
continues in key areas of California's economy, including government, real
estate and aerospace. Wealth levels still remain high in the state, although the
difference between state and national levels continues to narrow.

In July of 1994, both S&P and Moody's lowered the general obligation
bond ratings of the state of California. These revisions reflect the state's
heavy reliance on the short-term note market to finance its cash imbalance and
the likelihood that this exposure will persist for at least another two years.
For more information on these ratings revisions and the state's current budget,
please refer to the Statement of Additional Information.

Orange County Bankruptcy. On December 6, 1994, Orange County, California,
petitioned for bankruptcy based on losses in the Orange County Investment Fund
which at the time were estimated to be approximately $2 billion. At the time of
the petition, the Orange County Investment Fund held monies belonging to Orange
County as well as other municipal issuers located in Orange County and other
parts of California. Although the ultimate resolution of this matter is
uncertain, one possible result is that the ability of municipal issuers
investing in the Orange County Investment Fund to service some or all of their
outstanding debt obligations may be severely impaired.

As of December 6, 1994, Evergreen Short-Intermediate Municipal Fund -
California did not hold debt obligations of Orange County or other issuers that
the Fund is aware had invested in the Orange County Investment Fund. Although it
has no current intention to do so, if it deems it advisable, the Fund reserves
the right from time to time to make investments in municipal issuers who
maintain assets in the Orange County Investment Fund.

<PAGE>

APPENDIX B -- FLORIDA RISK CONSIDERATIONS

The following is a summary of economic factors which may affect the
ability of the municipal issuers of Florida Obligations to repay general
obligation and revenue bonds. Such information is derived from sources that are
generally available to investors and is believed by the Funds to be accurate,
but has not been independently verified and may not be complete. Under current
law, the State of Florida is required to maintain a balanced budget such that
current expenses are met from current revenues. Florida does not currently
impose a tax on personal income but does impose taxes on corporate income
derived from activities within the state. In addition, Florida imposes an ad
valorem tax as well as sales and use taxes. These taxes are the principal
sources of funds to meet state expenses, including repayment of, and interest
on, obligations backed solely by the full faith and credit of the state, without
recourse to any specific project or related revenue source.

On November 3, 1992, Florida voters approved an amendment to the state
constitution which limits the annual growth in the assessed valuation of
residential property and which, over time, could constrain the growth in
property taxes, a major revenue source for local governments. The amendment
restricts annual increases in assessed valuation to the lesser of 3% or the
Consumer Price Index. The amendment applies only to residential properties
eligible for the homestead exemption and does not affect the valuation of
rental, commercial, or industrial properties. When sold, residential property
would be reassessed at market value. The amendment became effective January 1,
1993. While no immediate ratings implications are expected, the amendment could
have a negative impact on the financial performance of local governments over
time and lead to ratings revisions which may have a negative impact on the
prices of affected bonds.

Many of the bonds in which the Funds invest were issued by various
units of local government in the State of Florida. In addition, most of these
bonds are revenue bonds where the security interest of the bond holders
typically is limited to the pledge of revenues or special assessments flowing
from the project financed by the bonds. Projects include, but are not limited
to, water and waste water utilities, drainage systems, roadways, and other
development-related infrastructures. Therefore, the capacity of these issuers to
repay their obligations may be affected by variations in the Florida economy.

Since 1970, Florida has been one of the fastest growing states in the
nation. Average annual population growth over the last 20 years was 320,000.
During this period only California and Texas grew more rapidly. In terms of
total population, Florida moved from the ninth most populous state in 1970 to
fourth today.

This rapid and sustained pace of population growth has given rise to
sharp increases in construction activity and to the need for roads, drainage
systems, and utilities to serve the burgeoning population. In turn this has
driven the growth in the volume of revenue bond debt outstanding.

The pace of growth, however, has not been steady. During economic
expansions, Florida's population growth has exceeded 500,000 people per year,
but in recessions growth has slowed to 120,000 per year. The variations in
construction activity over the course of business cycles is also very large.
Although the amplitude of the swings during business cycles is large, the
duration of downturns in Florida's growth has been short. Historically,
depressed levels of growth have lasted only a year or two at most. Furthermore,
Florida's cycles have not been periods of growth or decline. Instead, what has
occurred are periods of more growth or less growth.

Florida's ability to meet increasing expenses will be dependent in part
upon the state's ability to foster business and economic growth. During the past
decade, Florida has experienced significant increases in the technology-based
and other light industries and in the service sector. This growth has
diversified the state's overall economy, which at one time was dominated by the
citrus and tourism industries. The state's economic and business growth could be
restricted, however, by the natural limitations of environmental resources and
the state's ability to finance adequate public facilities such as roads and
schools.

--------------------------------------------------------------
PROSPECTUS , 1995

Evergreen Tax Exempt Funds
--------------------------------------------------------

CLASS Y SHARES
-------------------------

EVERGREEN NATIONAL TAX-FREE FUND

EVERGREEN FLORIDA HIGH INCOME MUNICIPAL BOND FUND

EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND

EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA

Keep This Prospectus for Future Reference

TABLE OF CONTENTS

The following summary is qualified in its entirety by the more
detailed information contained elsewhere in this Prospectus. See "Description of
the Funds" and "Management of the Funds".

The Fund invests substantially all of its assets in short and intermediate-term
municipal securities with a dollar weighted average portfolio maturity of two to
five years.

There is no assurance the investment objective of any Fund will be achieved.

-------------------------------------------------------------------------------
EXPENSE INFORMATION
-------------------------------------------------------------------------------

The table set forth below summarizes the shareholder transaction costs
associated with an investment in Class Y of Shares of a Fund. For further
information see "Purchases and Redemption of Shares".

SHAREHOLDER TRANSACTION EXPENSES Class Y
Shares
Maximum Sales Charge Imposed on Purchases None

Sales Charge on Dividend Reinvestments None

Contingent Deferred Sales Charge None

Redemption Fee None

Exchange Fee (only applies after 4 exchanges per calendar $5.00
year)
The following tables show for each Fund the annual operating expenses
attributable to Class Y Shares, together with examples of the cumulative effect
of such expenses on a hypothetical $1,000 investment for the periods specified
assuming (i) a 5% annual return and (ii) redemption at the end of each period.

Evergreen National Tax-Free Fund

Annual Operating Expenses1 Example
Class Y Class Y
Advisory Fees .50% After 1 Year $ 9
12b-1 Fees None After 3 Years $ 28
Other Expenses .39% After 5 Years $ 49
Total .89% After 10 Years $110

Evergreen Short-Intermediate Municipal Fund

Annual Operating Expenses2 Example
Class Y Class Y
Advisory Fees .50% After 1 Year $ 8
12b-1 Fees None After 3 Years $ 26
Other Expenses .33% After 5 Years $ 46
Total .83% After 10 Years $103

Evergreen Short-Intermediate Municipal Fund-California

Annual Operating Expenses3 Example
Class Y Class Y
Advisory Fees .55% After 1 Year $ 10
12b-1 Fees None After 3 Years $ 30
Other Expenses .40% After 5 Years $ 53
Total .95% After 10 Years $117

The Adviser has agreed to reimburse these Funds to the extent that
these Fund's aggregate operating expenses (including the Adviser's fee, but
excluding interest, taxes, brokerage commissions, Rule 12b-1 distribution fees
and shareholder servicing fees, and extraordinary expenses) exceed 1.00% of the
average net assets for Evergreen Short-Intermediate Municipal Fund and Evergreen
Short-Intermediate Municipal FundCalifornia and 1.25% of the average net assets
for Evergreen National Tax-Free Fund. From time to time the Adviser may, at its
discretion, reduce or waive its fees or reimburse these Fund's for certain of
their other expenses in order to reduce these Fund's expense ratios. The Adviser
may cease these voluntary waivers and reimbursements at any time.

<PAGE>

1The estimated annual operating expenses for Evergreen National Tax-Free Fund
does not reflect a voluntary advisory fee waiver by the Adviser of .48 of 1% of
average net assets and the voluntary reimbursement of a portion of the Fund's
other expenses representing .12% of average net assets for the fiscal period
ending August 31, 1994.

2The estimated annual operating expenses for Evergreen Short-Intermediate
Municipal Fund do not reflect a voluntary advisory fee waiver by the Adviser of
.25 of 1% of average net assets for the fiscal period ending August 31, 1994.

3The estimated annual operating expenses for Evergreen Short-Intermediate
Municipal Fund - California do not reflect a voluntary advisory fee waiver by
the Adviser of .43 of 1% of average net assets for the fiscal period ending
August 31, 1994.

The purpose of the foregoing table is to assist an investor in understanding the
various costs and expenses that an investor in the Class Y Shares of the Funds
will bear directly or indirectly. The amounts set forth under "Other Expenses"
as well as the amounts set forth in the examples are estimated amounts based on
historical experience for the fiscal period ending August 31, 1994. THE EXAMPLES
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL
RETURN. ACTUAL EXPENSES AND ANNUAL RETURN MAY BE GREATER OR LESS THAN THOSE
SHOWN. For a more complete description of the various costs and expenses borne
by the Funds see "Management of the Funds".

- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

Evergreen National Tax-Free Fund

<PAGE>

Evergreen Short Intermediate Municipal Fund

<TABLE>
<CAPTION>
Period from
July 17, 1991*
Year Ended August 31, through

PER SHARE DATA 1994 1993 1992+ August 31, 1991+
---- ---- ----- ----------------
<S> <C> <C> <C> <C>

<PAGE>

Evergreen Short Intermediate Municipal Fund - California

The following selected per share data and ratios for the periods ended
August 31, 1994 have been audited by Price Waterhouse LLP, independent auditors
for Evergreen Short Intermediate Municipal Fund - California, whose report
thereon was unqualified. This information should be read in conjunction with the
financial statements and notes thereto which are incorporated in the Statement
of Additional Information by reference. The per share data set forth below
pertains to Class Y shares of the Fund, which are not offered through this
prospectus. See "Other Classes of Shares". No per share data and ratios are
shown for Class A or B shares, since these classes did not have any operations
prior to the date of this Prospectus.

- --------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVES AND POLICIES

Evergreen National Tax Free Fund

Evergreen Florida High Income Municipal Bond Fund

Percent of
Rating Net Assets

Aaa or AAA %
Aa or AA
A
Baa or BBB
Ba or BB
Non-rated

Total 100.00%

Evergreen Short Intermediate Municipal Fund

Evergreen Short Intermediate Municipal Fund-California

INVESTMENT PRACTICES AND RESTRICTIONS

Hedging Instruments

Risk Factors Associated with Medium and Lower Rated and Unrated Municipal
Obligations

SUB-ADVISER

- -------------------------------------------------------------------------------

PURCHASE AND REDEMPTION OF SHARES
- -------------------------------------------------------------------------------

HOW TO BUY SHARES

Eligible investors may purchase Fund shares at net asset value by mail
or wire as described below. The Funds impose no sales charges on Class Y
shares. Class Y shares are the only class of shares offered by this
Prospectus and are only available to (i) all shareholders of record in one
or more of the Evergreen Funds as of December 30, 1994, (ii) certain
institutional investors and (iii) investment advisory clients of the
Adviser and its affiliates. The minimum initial investment is $1,000, which
may be waived in certain situations. There is no minimum for subsequent
investments. Investors may make subsequent investments by establishing a
Systematic Investment Plan or a Telephone Investment Plan.

Purchases by Mail or Wire. Each investor must complete the enclosed Share
Purchase Application and mail it together with a check made payable to the
Fund whose shares are being purchased, to State Street Bank and Trust
Company ("State Street") at P.O. Box 9021, Boston, Massachusetts
02205-9827. Checks not drawn on U.S. banks will be subject to foreign
collection which will delay an investor's investment date and will be
subject to processing fees.

When making subsequent investments, an investor should either enclose
the return remittance portion of the statement, or indicate on the face of
the check, the name of the Fund in which an investment is to be made, the
exact title of the account, the address, and the Fund account number.
Purchase requests should not be sent to a Fund in New York. If they are,
the Fund must forward them to State Street, and the request will not be
effective until State Street receives them.

<PAGE>
account number. A completed Application must also be sent to State Street
indicating that the shares have been purchased by wire, giving the date the
wire was sent and referencing the account number. Subsequent wire
investments may be made by existing shareholders by following the
instructions outlined above. It is not necessary, however, for existing
shareholders to call for another account number.

How the Funds Value Their Shares. The net asset value of each Class of
shares of a Fund is calculated by dividing the value of the amount of the
Fund's net assets attributable to that Class by the outstanding shares of
that Class. Shares are valued each day the New York Stock Exchange (the
"Exchange") is open as of the close of regular trading (currently 4:00 p.m.
Eastern time). The securities in a Fund are valued at their current market
value determined on the basis of market quotations or, if such quotations
are not readily available, such other methods as a Fund's Trustees believe
would accurately reflect fair market value.

Additional Purchase Information. As a condition of this offering, if a
purchase is canceled due to nonpayment or because an investor's check does
not clear, the investor will be responsible for any loss a Fund or the
Adviser incurs. If such investor is an existing shareholder, a Fund may
redeem shares from an investor's account to reimburse the Fund or the
Adviser for any loss. In addition, such investors may be prohibited or
restricted from making further purchases in any of the Evergreen Funds.

A Fund cannot accept investments specifying a certain price or date and
reserves the right to reject any specific purchase order, including orders
in connection with exchanges from the other Evergreen Funds. Although not
currently anticipated, each Fund reserves the right to suspend the offer of
shares for a period of time.

Shares of each Fund are sold at the net asset value per share next
determined after a shareholder's order is received. Investments by federal
funds wire or by check will be effective upon receipt by State Street.
Qualified institutions may telephone orders for the purchase of Fund
shares. Investors may also purchase shares through a broker/dealer, which
may charge a fee for the service.

HOW TO REDEEM SHARES

You may "redeem", i.e., sell your shares in a Fund to the Fund on any
day the Exchange is open, either directly or through your financial
intermediary. The price you will receive is the net asset value next
calculated after the Fund receives your request in proper form. Proceeds
generally will be sent to you within seven days. However, for shares
recently purchased by check, a Fund will not send proceeds until it is
reasonably satisfied that the check has been collected (which may take up
to 15 days). Once a redemption request has been telephoned or mailed, it is
irrevocable and may not be modified or canceled.

Redeeming Shares Directly by Mail or Telephone. Send a signed letter of
instruction or stock power form to State Street which is the registrar,
transfer agent and dividend-disbursing agent for each Fund. Stock power
forms are available from your financial intermediary, State Street, and
many commercial banks. Additional documentation is required for the sale of
shares by corporations, financial intermediaries, fiduciaries and surviving
joint owners. Signature guarantees are required for all redemption requests
for shares with a value of more than $10,000 or where the redemption
proceeds are to be mailed to an address other than that shown in the
account registration. A signature guarantee must be provided by a bank or
trust company (not a Notary Public), a member firm of a domestic stock
exchange or by other financial institutions whose guarantees are acceptable
to State Street.

Shareholders may withdraw amounts of $1,000 or more from their accounts
by calling State Street (800- 423-2615) between the hours of 9:00 a.m. and
4:00 p.m. (Eastern time) each business day (i.e., any weekday exclusive of
days on which the New York Stock Exchange or State Street's offices are
closed). The New York Stock Exchange is closed on New Year's Day,
Presidents Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Redemption requests made after 4:00
p.m. (Eastern time) will be processed using the net asset value determined
on the next business day. Such redemption requests must include the
shareholder's account name, as registered with a Fund, and the account
number. During periods of drastic economic or market changes, shareholders
may experience difficulty in effecting telephone redemptions. Shareholders
who are unable to reach a Fund or State Street by telephone should follow
the procedures outlined above for redemption by mail.

<PAGE>

registration as the shareholder's account in a Fund at a designated
commercial bank. State Street currently deducts a $5 wire charge from all
redemption proceeds wired. This charge is subject to change without notice.
A shareholder who decides later to use this service, or to change
instructions already given, should fill out a Shareholder Services Form and
send it to State Street Bank and Trust Company, P.O. Box 9021, Boston,
Massachusetts 02205-9827, with such shareholder's signature guaranteed by a
bank or trust company (not a Notary Public), a member firm of a domestic
stock exchange or by other financial institutions whose guarantees are
acceptable to State Street. Shareholders should allow approximately ten
days for such form to be processed. The Funds will employ reasonable
procedures to verify that telephone requests are genuine. These procedures
include requiring some form of personal identification prior to acting upon
instructions and tape recording of conversations. If the Fund fails to
follow such procedures, it may be liable for any losses due to unauthorized
or fraudulent instructions. The Fund shall not be liable for following
telephone instructions reasonably believed to be genuine. Also, the Fund
reserves the right to refuse a telephone redemption request, if it is
believed advisable to do so. Financial intermediaries may charge a fee for
handling telephonic requests. The telephone redemption option may be
suspended or terminated at any time without notice.

General. The sale of shares is a taxable transaction for Federal tax
purposes. Under unusual circumstances, a Fund may suspend redemptions or
postpone payment for up to seven days or longer, as permitted by Federal
securities law. The Funds reserve the right to close an account that
through redemption has remained below $1,000 for 30 days. Shareholders will
receive 60 days' written notice to increase the account value before the
account is closed. The Funds have elected to be governed by Rule 18f-1
under the Investment Company Act of 1940 pursuant to which each Fund is
obligated to redeem shares solely in cash, up to the lesser of $250,000 or
1% of a Fund's total net assets during any ninety day period for any one
shareholder. See the Statement of Additional Information for further
details.

EXCHANGE PRIVILEGE

How To Exchange Shares. You may exchange some or all of your shares for
shares of the same Class in the other Evergreen Funds by telephone or mail
as described below. An exchange which represents an initial investment in
another Evergreen Fund must amount to at least $1,000. Once an exchange
request has been telephoned or mailed, it is irrevocable and may not be
modified or canceled. Exchanges will be made on the basis of the relative
net asset values of the shares exchanged next determined after an exchange
request is received. Exchanges are subject to minimum investment and
suitability requirements.

Each of the Evergreen Funds have different investment objectives and
policies. For complete information, a prospectus of the fund into which an
exchange will be made should be read prior to the exchange. An exchange is
treated for Federal income tax purposes as a redemption and purchase of
shares and may result in the realization of a capital gain or loss. Each
Fund imposes a fee of $5 per exchange on shareholders who exchange in
excess of four times per calendar year. This exchange privilege may be
modified or discontinued at any time by the Fund upon sixty days' notice to
shareholders and is only available in states in which shares of the fund
being acquired may lawfully be sold.

Exchanges by Telephone and Mail. You may exchange shares with a value of
$1,000 or more by telephone by calling State Street (800-423-2615).
Exchange requests made after 4:00 p.m. (Eastern time) will be processed
using the net asset value determined on the next business day. During
periods of drastic economic or market changes, shareholders may experience
difficulty in effecting telephone exchanges. You should follow the
procedures outlined below for exchanges by mail if you are unable to reach
State Street by telephone. If you wish to use the telephone exchange
service you should indicate this on the Share Purchase Application. As
noted above, each Fund will employ reasonable procedures to confirm that
instructions for the redemption or exchange of shares communicated by
telephone are genuine. A telephone exchange may be refused by a Fund or
State Street if it is believed advisable to do so. Procedures for
exchanging Fund shares by telephone may be modified or terminated at any
time. Written requests for exchanges should follow the same procedures
outlined for written redemption requests in the section entitled "How to
Redeem Shares", however, no signature guarantee is required.

SHAREHOLDER SERVICES

The Funds offer the following shareholder services. For more
information about these services or your account, contact your financial
intermediary, Evergreen Funds Distributor, Inc.("EFD"), the distributor of
the Funds, or the toll-free number for the Funds, 800-807-2940. Some
services are described in more detail in the Share Purchase Application.

Systematic Investment Plan. You may make monthly or quarterly investments
into an existing account automatically in amounts of not less than $25.

Telephone Investment Plan. You may make investments into an existing
account electronically in amounts of not less than $100 or more than
$10,000 per investment. Telephone investment requests received by 3:00 p.m.
(Eastern time) will be credited to a shareholder's account the day the
request is received.

Automatic Reinvestment Plan. For the convenience of investors, all
dividends and distributions are automatically reinvested in full and
fractional shares of a Fund at the net asset value per share on the last
business day of each month, unless otherwise requested by a shareholder in
writing. If the transfer agent does not receive a written request for
subsequent dividends and/or distributions to be paid in cash at least three
full business days prior to a given record date, the dividends and/or
distributions to be paid to a shareholder will be reinvested. If you elect
to receive dividends and distributions in cash and the U.S. Postal Service
cannot deliver the checks, or if the checks remain uncashed for six months,
the checks will be reinvested into your account at the then current net
asset value.

EFFECT OF BANKING LAWS

-------------------------------------------------------------------------

OTHER INFORMATION
-------------------------------------------------------------------------

DIVIDENDS, DISTRIBUTIONS AND TAXES

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

[CHART]

<PAGE>

[CHART]

<PAGE>

[CHART]

<PAGE>

[CHART]

GENERAL INFORMATION

<PAGE>

APPENDIX A -- CALIFORNIA RISK CONSIDERATIONS

<PAGE>

APPENDIX B -- FLORIDA RISK CONSIDERATIONS

--------------------------------------------------------------
PROSPECTUS January 3, 1995

Evergreen Money Market Funds
--------------------------------------------------------

CLASS A SHARES
CLASS B SHARES
-------------------------

EVERGREEN MONEY MARKET TRUST

EVERGREEN TAX EXEMPT MONEY MARKET FUND

The Evergreen Money Market Funds (the "Funds") are designed to provide
investors with a selection of investment alternatives which seek to provide
current income, stability of principal and liquidity. This Prospectus provides
information regarding the Class A shares offered by the Funds and the Class B
shares offered by the Evergreen Money Market Trust. Each Fund is, or is a series
of, an open-end, diversified, management investment company. This Prospectus
sets forth concise information about the Funds that a prospective investor
should know before investing. The address of the Funds is 2500 Westchester
Avenue, Purchase, New York 10577.

A "Statement of Additional Information" for the Funds and the other
funds in the Evergreen Group of mutual funds (collectively, with the Funds the
"Evergreen Funds") dated January 3, 1995 has been filed with the Securities and
Exchange Commission and is incorporated by reference herein. The Statement of
Additional Information provides information regarding certain matters discussed
in this Prospectus and other matters which may be of interest to investors, and
may be obtained without charge by calling the Funds at (800) 807-2940. There can
be no assurance that the investment objective of any Fund will be achieved.
Investors are advised to read this Prospectus carefully.

An investment in the Funds is neither insured nor guaranteed by the U.S.
Government, and there can be no assurance that the Funds will be able to
maintain a stable net asset value of $1.00 per share.

Keep This Prospectus for Future Reference

<PAGE>

TABLE OF CONTENTS

OVERVIEW OF THE FUNDS 2 PURCHASE AND REDEMPTION OF SHARES
EXPENSE INFORMATION 2 How To Buy Shares 12
FINANCIAL HIGHLIGHTS 4 How To Redeem Shares 13
DESCRIPTION OF THE FUNDS Exchange Privilege 14
Investment Objectives And
Policies 6 Shareholder Services 15
Investment Practices And
Restrictions 9 Effect Of Banking Laws 16
MANAGEMENT OF THE FUNDS OTHER INFORMATION
Investment Adviser 10 Dividends, Distributions And Taxes 16
Sub-Adviser 11 General Information 17
Distribution Plans And
Agreements 11

- --------------------------------------------------------------------------------

OVERVIEW OF THE FUNDS
- --------------------------------------------------------------------------------

The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Funds" and "Management of the Funds".

The Investment Adviser to the Funds is Evergreen Asset Management Corp.
(the "Adviser") which, with its predecessors, has served as investment adviser
to the Evergreen Funds since 1971. The Adviser is a wholly-owned subsidiary of
First Union National Bank of North Carolina ("FUNB"), which in turn is a
subsidiary of First Union Corporation, one of the ten largest bank holding
companies in the United States.

The Evergreen Money Market Trust seeks as high a level of current income as is
consistent with preserving capital and providing liquidity. The Fund will invest
only in high quality money market instruments.

The Evergreen Tax Exempt Money Market Fund seeks as high a level of current
income exempt from Federal income tax as is consistent with preserving capital
and providing liquidity. The Fund invests substantially all of its assets in
short-term municipal securities, the interest from which is exempt from Federal
income tax.

There is no assurance the investment objective of any Fund will be
achieved.
- --------------------------------------------------------------------------------

EXPENSE INFORMATION
- --------------------------------------------------------------------------------

The table set forth below summarizes the shareholder transaction costs
associated with an investment in Class A shares of each Fund, and in the case of
Evergreen Money Market Trust, Class B Shares. For further information see
"Purchase and Redemption of Fund Shares" and "Other Classes of Shares".

SHAREHOLDER TRANSACTION EXPENSES Class A Shares B Shares Evergreen Money Market Trust only)
-------------- --------

Maximum Sales Charge Imposed on Purchases None None
Sales Charge on Dividend Reinvestments None None

Contingent Deferred Sales Charge (as a % of
original purchase price or redemption
proceeds, whichever is lower) None 5% during the first year, 4% during the second year,
3% during the third and fourth year, 2% during the
fifth year, 1% during the sixth and seventh years
and 0% after the seventh year
Redemption Fee None None
Exchange Fee None None

</TABLE>

The following tables show for each Fund the annual operating expenses
(as a percentage of average net assets) attributable to each Class of Shares,
together with examples of the cumulative effect of such expenses on a
hypothetical $1,000 investment in each Class for the periods specified assuming
(i) a 5% annual return, and (ii) redemption at the end of each period and,
additionally for Class B shares, no redemption at the end of each period.

In the following examples (i) the expenses for Class B Shares assume
deduction at the time of redemption (if applicable) of the maximum contingent
deferred sales charge applicable for that time period and (ii) the expenses for
Class B Shares reflect the conversion to Class A Shares eight years after
purchase (years eight through ten, therefore, reflect Class A expenses).
<TABLE>
<CAPTION>

Evergreen Money Market Trust
Examples
--------
Assuming Redemption Assuming no
Annual Operating Expenses* at End of Period Redemption
-------------------------- -------------------- ------------
Class A Class B Class A Class B Class B
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>

Advisory Fees .50% .50% After 1 Year $ 10 $ 67 $ 17
12b-1 Fees1 .30% 1.00% After 3 Years $ 32 $ 84 $ 54
Other Expenses .21% .21% After 5 Years $ 56 $113 $ 93
---- ----
Total 1.01% 1.71% After 10 Years $124 $175 $175
----- -----
</TABLE>

Evergreen Tax Exempt Money Market Fund
Examples
-------------------
Annual Operating Assuming Redemption
Expenses* at End of Period
---------------- -------------------
Class A Class A
Advisory Fees .50% After 1 Year $ 10
12b-1 Fees .30% After 3 Years $ 30
Other Expenses .14% After 5 Years $ 52
----
Total .94% After 10 years $115
----

The Adviser has agreed to reimburse these Funds' to the extent that any
Fund's aggregate annual operating expenses (including the Adviser's fee, but
excluding taxes, interest, brokerage commissions, Rule 12b-1 distribution fees
and shareholder service fees and extraordinary expenses) exceed 1.00% of the
average net assets for any fiscal year. From time to time, the Adviser may, at
its discretion, waive its fee or reimburse a Fund for certain of its expenses in
order to reduce a Fund's expense ratio.

*The annual operating expenses and examples do not reflect the voluntary
Advisory fee waivers of .39 of 1% of average net assets for Evergreen Money
Market Trust and .30 of 1% of average net assets for Evergreen Tax Exempt Money
Market Fund for the fiscal period ending August 31, 1994.

1For Class B Shares, a portion of the 12b-1 Fees equivalent to .25 of 1% of
average annual assets will be shareholder servicing related. Distribution
related 12b-1 Fees will be limited to .75 of 1% of average annual assets as
permitted under the rules of the National Association of Securities Dealers,
Inc.

The purpose of the foregoing table is to assist an investor in understanding the
various costs and expenses that an investor in each Class of Shares of the Funds
will bear directly or indirectly. The amounts set forth both in the tables and
in the examples are estimated amounts based on the experience of each Fund's
Class Y shares for the fiscal period ending August 31, 1994. THE EXAMPLES SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RETURN.
ACTUAL EXPENSES AND ANNUAL RETURN MAY BE GREATER OR LESS THAN THOSE SHOWN. For a
more complete description of the various costs and expenses borne by the Funds
see "Management of the Funds". As a result of asset-based sales charges,
long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charges permitted under the rules of the National Association of
Securities Dealers, Inc.

<PAGE>

- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

Evergreen Money Market Trust

The following selected per share data and ratios for the ten months
ended August 31, 1994 and the four annual periods ended October 31, 1993 have
been audited by Price Waterhouse LLP, independent accountants for Evergreen
Money Market Trust, whose report thereon was unqualified. This information
should be read in conjunction with the financial statements and notes thereto
which are incorporated in the Statement of Additional Information by reference.
The per share data set forth below pertains to the Class Y shares of the Fund,
which are not offered through this prospectus. See "Other Classes of Shares". No
per share data and ratios are shown for Class A or B shares, since these classes
did not have any operations prior to the date of this Prospectus.

Period
Ten Months from
Ended Year Ended October 31, 11/2/87**
August 31, ----------------------------------------- to
PER SHARE DATA 1994# 1993 1992 1991 1990 1989 10/31/88
----- ---- ---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C>

Net asset value, beginning of year. . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- -----
Income (loss) from investment operations:
Net investment income. . . . . . . . . . .03 .03 .04 .07 .08 .09 .07
Net realized gain (loss) on investments. ---- ---- ---- ---- ---- ---- ----
----- ----- ----- ----- ----- ----- -----
Total from investment operations. . . . . .03 .03 .04 .07 .08 .09 .07
Less distributions to shareholders from
net investment income. . . . . . . . . (.03) (.03) (.04) (.07) (.08) (.09) (.07)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of year. . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- -----
TOTAL RETURN+. . . . . . . . . . . . . . 2.9% 3.2% 4.2% 6.7% 8.4% 9.4% 7.4%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year
(in millions) . . . . . . . . . . . . $273 $299 $358 $438 $458 $408 $161
Ratios to average net assets:
Total expenses . . . . . . . . . . . . .36%* .35%* .38%* .32%++ .39%* .30%* .43%++
Net investment income . . . . . . . . 3.46%++ 3.19%* 4.18%* 6.53%* 8.08%* 9.42%* 7.26%++

<FN>
- ------------
+ Total return is calculated for the periods indicated and is not annualized.
++ Annualized and net of partial advisory fee waiver of .39% of daily net
assets for the ten months ended August 31, 1994 and full advisory fee
waiver of .50% of daily net assets for the period November 2, 1987 to
October 31, 1988.
* Net of partial advisory fee waivers of .325%, .36%, .40%, .34% and .37% of
daily net assets for the years ended October 31, 1993, 1992, 1991, 1990 and
1989, respectively.
** Commencement of operations.
# On September 21, 1994, the Fund's Trustees approved a change in the
Fund's fiscal year end from October 31 to August 31.

</FN>
</TABLE>

<PAGE>

Evergreen Tax Exempt Money Market Fund

The following selected per share data and ratios for the five annual
periods ended August 31, 1994 have been audited by Price Waterhouse LLP,
independent accountants for Evergreen Tax-Exempt Money Market Fund, whose report
thereon was unqualified. This information should be read in conjunction with the
financial statements and notes thereto which are incorporated in the Statement
of Additional Information by reference. The per share data set forth below
pertains to the Class Y shares of the Fund, which are not offered through this
prospectus. See "Other Classes of Shares". No per share data and ratios are
shown for Class A shares, since this class did not have any operations prior to
the date of this Prospectus.

<TABLE>
<CAPTION>
Period from
November 2,
Year Ended August 31, 1988* through
PER SHARE DATA 1994 1993 1992 1991 1990 August 31, 1989
---- ---- ---- ---- ---- ---------------
<S> <C> <C> <C> <C> <C> <C>

Net investment income declared as
dividends to shareholders. . . . . $.0247 $.0258 $.0367 $.0533 $.0599 $.0538
------ ------ ------ ------ ------ ------
Net asset value at beginning
and end of year . . . . . . . . . . $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- -------
TOTAL RETURN . . . . . . . . . . . 2.5% 2.6% 3.7% 5.5% 6.2% 5.5%+
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year
(in millions) . . . . . . . . . . . $402 $401 $417 $510 $311 $109
Ratios to average net assets:
Total expenses . . . . . . . . .34%(a) .34%(a) .32%(a) .28%(a) .31%(a) .24%(b)
Net investment income . . . . . . 2.47%(a) 2.58%(a) 3.72%(a) 5.23%(a) 5.94%(a) 6.77%(b)

<FN>
- ------------
* Commencement of operations.
+ Total return calculated for the period November 2, 1988 to August 31, 1989
is not annualized.
(a) Net of partial advisory fee waivers of .30 of 1% of daily net assets for
fiscal year ended August 31, 1994, .29 of 1% of daily net assets for fiscal
year ended August 31, 1993, .31 of 1% of daily net assets for fiscal year
ended August 31, 1992, .38 of 1% of daily net assets for fiscal year ended
August 31, 1991 and .40 of 1% of daily net assets for fiscal year ended
August 31, 1990.
(b) Annualized and net of partial advisory fee waiver of .46 of 1% of daily
net assets and the absorption of a portion of all other Fund expenses by
the Adviser equal to .09% of average net assets.
</FN>
</TABLE>

<PAGE>

- --------------------------------------------------------------------------------

DESCRIPTION OF THE FUNDS
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVES AND POLICIES

Evergreen Money Market Trust

The investment objective of Evergreen Money Market Trust is to achieve
as high a level of current income as is consistent with preserving capital and
providing liquidity. The Fund invests in high quality money market instruments,
which are determined to be of eligible quality under Securities and Exchange
Commission ("SEC") rules and to present minimal credit risk. Under SEC rules,
eligible securities include First Tier Securities (i.e., securities rated in the
highest short-term rating category) and Second Tier Securities (i.e., securities
which are not in the First Tier). The rules prohibit the Fund from holding more
than 5% of its value in Second Tier Securities. The Fund's permitted investments
include:

1. Marketable obligations of, or guaranteed by, the United States
Government, its agencies or instrumentalities, including issues of the United
States Treasury, such as bills, certificates of indebtedness, notes and bonds,
and issues of agencies and instrumentalities established under the authority of
an act of Congress. Some of these securities are supported by the full faith and
credit of the United States Government, others are supported by the right of the
issuer to borrow from the Treasury, and still others are supported only by the
credit of the agency or instrumentality. Agencies or instrumentalities whose
securities are supported by the full faith and credit of the United States
include, but are not limited to, the Federal Housing Administration, Farmers
Home Administration, Export-Import Bank of the United States, Small Business
Administration and Government National Mortgage Association. Examples of
agencies or instrumentalities whose securities are supported by the right of the
issuer to borrow from the Treasury include, but are not limited to, the Federal
Home Loan Bank, Federal Intermediate Credit Banks, Federal National Mortgage
Association and Tennessee Valley Authority. Agencies or instrumentalities whose
securities are supported only by the credit of the agency or instrumentality
include the Interamerican Development Bank and the International Bank for
Reconstruction and Development. These obligations are supported by appropriated
but unpaid commitments of its member countries. There are no assurances that the
commitments will be undertaken in the future.

2. Commercial paper, including variable amount master demand notes,
that is rated in one of the two highest short-term rating categories by any two
of Standard & Poor's Ratings Group ("S&P") or Moody's Investor Service, Inc.
("Moody's") or any other nationally recognized statistical rating organization
("SRO") (or by a single rating agency if only one of these agencies has assigned
a rating). The Fund will not invest more than 10% of its total assets, at the
time of the investment in question, in variable amount master demand notes.

3. Corporate debt securities and bank obligations that are rated in one
of the two highest short-term rating categories by any two of S&P, Moody's and
any other SRO (or by a single rating agency if only one of these agencies has
assigned a rating).

4. Unrated corporate debt securities, commercial paper and bank
obligations that are issued by an issuer that has outstanding a class of
short-term debt instruments (i.e., instruments having a maturity of 366 days or
less) that (A) is comparable in priority and security to the unrated securities
and (B) meets the rating requirements of 2 or 3 above.

5. Unrated corporate debt securities, commercial paper and bank
obligations issued by domestic and foreign companies which have an outstanding
long-term debt issue rated in the top two rating categories by a SRO and
determined by the Trustees to be of comparable quality.

6. Unrated corporate debt securities, commercial paper and bank
obligations otherwise determined by the Trustees to be of comparable quality.

7. Repurchase agreements with respect to the securities described in
paragraphs 1 through 6 above.

The Fund may invest up to 30% of its total assets in bank certificates
of deposit and bankers' acceptances payable in U.S. dollars and issued by
foreign banks (including U.S. branches of foreign banks) or by foreign branches
of U.S. banks. These investments involve risks that are different from
investments in domestic securities. These risks may include future unfavorable
political and economic developments, possible withholding taxes, seizure of
foreign deposits, currency controls, interest limitations or other governmental
restrictions which might affect the payment of principal or interest on the
securities in the Fund's portfolio. Additionally, there may be less publicly
available information about foreign issuers.

The Fund may invest in commercial paper and other short-term corporate
obligations which meet the rating criteria specified in paragraphs 3 and 4 above
which are issued in private placements pursuant to Section 4(2) of the
Securities Act of 1933 (the "Act"). Such securities are not registered for
purchase and sale by the public under the Act. The Fund has been informed that
the staff of the SEC does not consider such securities to be readily marketable.
The Fund will not invest more than 10% of its total assets in securities which
are not readily marketable (including private placement securities) and in
repurchase agreements maturing in more than seven days.

The Fund may borrow funds, issue senior securities and agree to sell
portfolio securities to financial institutions such as banks and broker-dealers
and to repurchase them at a mutually agreed upon date and price (a "reverse
repurchase agreement") for temporary or emergency purposes in amounts not in
excess of 10% of the value of the Fund's total assets at the time of such
borrowing. See "Investment Practices and Restrictions", below.

Evergreen Tax Exempt Money Market Fund

The investment objective of Evergreen Tax Exempt Money Market Fund is
to achieve as high a level of current income exempt from Federal income tax, as
is consistent with preserving capital and providing liquidity. The Fund will
seek to achieve its objective by investing substantially all of its assets in a
diversified portfolio of short-term (i.e., with remaining maturities not
exceeding 397 days) debt obligations issued by states, territories and
possessions of the United States and by the District of Columbia, and their
political subdivisions and duly constituted authorities, the interest from which
is exempt from Federal income tax. Such securities are generally known as
Municipal Securities (See "Municipal Securities" below.)

The Fund will invest in Municipal Securities only if they are
determined to be of eligible quality under SEC rules and to present minimum
credit risk. Municipal Securities in which the Fund may invest include: (i)
municipal securities that are rated in one of the top two short-term rating
categories by any two of S&P, Moody's or any other nationally recognized SRO (or
by a single rating agency if only one of these agencies has assigned a rating);
(ii) municipal securities that are issued by an issuer that has outstanding a
class of short-term debt instruments (i.e., having a maturity of 366 days or
less) that (A) is comparable in priority and security to such instruments and
(B) meets the rating requirements above; and (iii) bonds with a remaining
maturity of 397 days or less that are rated no lower than one of the top two
long-term rating categories by any SRO and determined by the Trustees to be of
comparable quality. For a description of such ratings see the Statement of
Additional Information. If a portfolio security is no longer of eligible
quality, the Fund shall dispose of such security in an orderly fashion as soon
as reasonably practicable, unless the Trustees determine, in light of market
conditions or other factors, that disposal of the instrument would not be in the
best interests of the Fund and its shareholders. The Fund may also purchase
Municipal Securities which are unrated at the time of purchase up to a maximum
of 20% of its total assets, if such securities are determined by the Fund's
Trustees to be of comparable quality. Certain Municipal Securities (primarily
variable rate demand notes) may be entitled to the benefit of standby letters of
credit or similar commitments issued by banks or other financial institutions
and, in such instances, the Trustees will take into account the obligation of
the bank in assessing the quality of such security.

Interest income on certain types of bonds issued after August 7, 1986
to finance nongovernmental activities is an item of "tax-preference" subject to
the Federal alternative minimum tax for individuals and corporations. To the
extent the Fund invests in these "private activity" bonds (some of which were
formerly referred to as "industrial development" bonds), individual and
corporate shareholders, depending on their status, may be subject to the
alternative minimum tax on the part of the Fund's distributions derived from the
bonds. As a matter of fundamental policy, the Fund will invest at least 80% of
its net assets in Municipal Securities, the interest from which is not subject
to the Federal alternative minimum tax.

Municipal Securities. As noted above, the Fund will invest substantially all of
its assets in Municipal Securities. These include municipal bonds, short-term
municipal notes and tax exempt commercial paper. "Municipal bonds" are debt
obligations issued to obtain funds for various public purposes that are exempt
from Federal income tax in the opinion of issuer's counsel. The two principal
classifications of municipal bonds are "general obligation" and "revenue" bonds.
General obligation bonds are secured by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and interest. Revenue bonds
are payable only from the revenues derived from a particular facility or class
of facilities or, in some cases, from the proceeds of a special excise tax or
other specific source such as from the user of the facility being financed. The
term "municipal bonds" also includes "moral obligation" issues which are
normally issued by special purpose authorities. Industrial development bonds
("IDBs") and private activity bonds ("PABs") are in most cases revenue bonds and
are not payable from the unrestricted revenues of the issuer. The credit quality
of IDBs and PABs is usually directly related to the credit standing of the
corporate user of the facilities being financed. Participation interests are
interests in municipal bonds, including IDBs and PABs, and floating and variable
rate obligations that are owned by banks. These interests carry a demand feature
permitting the holder to tender them back to the bank, which demand feature is
backed by an irrevocable letter of credit or guarantee of the bank. A put bond
is a municipal bond which gives the holder the unconditional right to sell the
bond back to the issuer at a specified price and exercise date, which is
typically well in advance of the bond's maturity date. "Short-term municipal
notes" and "tax exempt commercial paper" include tax anticipation notes, bond
anticipation notes, revenue anticipation notes and other forms of short-term
loans. Such notes are issued with a short-term maturity in anticipation of the
receipt of tax funds, the proceeds of bond placements and other revenues.

Floating Rate and Variable Rate Obligations. Municipal Securities also include
certain variable rate and floating rate municipal obligations with or without
demand features. These variable rate securities do not have fixed interest
rates; rather, those rates fluctuate based upon changes in specified market
rates, such as the prime rate, or are adjusted at predesignated periodic
intervals. Such securities must comply with conditions established by the SEC
under which they may be considered to have remaining maturities of 397 days or
less. Certain of these obligations may carry a demand feature that gives the
Fund the right to demand prepayment of the principal amount of the security
prior to its maturity date. The demand obligation may or may not be backed by
letters of credit or other guarantees of banks or other financial institutions.
Such guarantees may enhance the quality of the security. As a matter of
fundamental policy, the Fund will limit the value of its investments in any
floating or variable rate securities which are not readily marketable and in all
other not readily marketable securities to 10% or less of its total assets.

When-Issued Securities. The Fund may purchase Municipal Securities on a
"when-issued" basis (i.e., for delivery beyond the normal settlement date at a
stated price and yield). The Fund generally would not pay for such securities or
start earning interest on them until they are received. However, when the Fund
purchases Municipal Securities on a when-issued basis, it assumes the risks of
ownership at the time of purchase, not at the time of receipt. Failure of the
issuer to deliver a security purchased by the Fund on a when-issued basis may
result in the Fund's incurring a loss or missing an opportunity to make an
alternative investment. The Fund does not expect that commitments to purchase
when-issued securities will normally exceed 25% of its total assets. The Fund
does not intend to purchase when-issued securities for speculative purposes but
only in furtherance of its investment objective.

Stand-by Commitments. The Fund may also acquire "stand-by commitments" with
respect to Municipal Securities held in its portfolio. Under a stand-by
commitment, a dealer agrees to purchase, at the Fund's option, specified
Municipal Securities at a specified price. The Fund expects that stand-by
commitments generally will be available without the payment of direct or
indirect consideration. However, if necessary and advisable, the Fund may pay
for stand-by commitments either separately in cash or by paying a higher price
for portfolio securities which are acquired subject to such a commitment (thus
reducing the yield to maturity otherwise available for the same securities). The
total amount paid in either manner for outstanding stand-by commitments held in
the Fund's portfolio will not exceed 10% of the value of the Fund's total assets
calculated immediately after each stand-by commitment is acquired. The Fund will
enter into stand-by commitments only with banks and broker-dealers that, in the
judgment of the Adviser, present minimal credit risks.

Taxable Investments. The Fund may temporarily invest up to 20% of the Fund's net
assets in taxable securities under any one or more of the following
circumstances: (a) pending investment of proceeds of sale of Fund shares or of
portfolio securities, (b) pending settlement of purchases of portfolio
securities, and (c) to maintain liquidity for the purpose of meeting anticipated
redemptions. In addition, the Fund may temporarily invest more than 20% of its
total assets in taxable securities for defensive purposes. The Trust may invest
for defensive purposes during periods when the Trust's assets available for
investment exceed the available Municipal Securities that meet the Trust's
quality and other investment criteria. Taxable securities in which the Fund may
invest on a short-term basis include obligations of the United States
Government, its agencies or instrumentalities, including repurchase agreements
with banks or securities dealers involving such securities; time deposits
maturing in not more than seven days; other debt securities rated within the two
highest ratings assigned by any major rating service; commercial paper rated in
the highest grade by Moody's or S&P; and certificates of deposit issued by
United States branches of United States banks with assets of $1 billion or more.

The ability of the Fund to meet its investment objective is necessarily
subject to the ability of municipal issuers to meet their payment obligations.
In addition, the portfolio of the Fund will be affected by general changes in
interest rates which will result in increases or decreases in the value of the
obligations held by the Fund. Investors should recognize that, in periods of
declining interest rates, the yield of the Fund will tend to be somewhat higher
than prevailing market rates, and in periods of rising interest rates, the yield
of the Fund will tend to be somewhat lower. Also, when interest rates are
falling, the inflow of net new money to the Fund from the continuous sale of its
shares will likely be invested in portfolio instruments producing lower yields
than the balance of the Fund's portfolio, thereby reducing the current yield of
the Fund. In periods of rising interest rates, the opposite can be expected to
occur.

The Fund may borrow funds and agree to sell portfolio securities to
financial institutions such as banks and broker-dealers and to repurchase them
at a mutually agreed upon date and price (a "reverse repurchase agreement") for
temporary or emergency purposes in amounts not in excess of 10% of the value of
the Fund's total assets at the time of such borrowing. See "Investment Practices
and Restrictions", below.

INVESTMENT PRACTICES AND RESTRICTIONS

General. The Funds invest only in securities that have remaining maturities of
397 days (thirteen months) or less at the date of purchase. For this purpose,
floating rate or variable rate obligations (described above), which are payable
on demand, but which may otherwise have a stated maturity in excess of this
period, will be deemed to have remaining maturities of less than 397 days
pursuant to conditions established by the SEC. The Funds maintain a
dollar-weighted average portfolio maturity of ninety days or less. The Funds
follow these policies to maintain a stable net asset value of $1.00 per share,
although there is no assurance they can do so on a continuing basis. The market
value of the obligations in a Fund's portfolio can be expected to vary inversely
to changes in prevailing interest rates.

Repurchase Agreements. A repurchase agreement is an arrangement pursuant to
which a buyer purchases a security and simultaneously agrees to resell it to the
vendor at a price that results in an agreed-upon market rate of return which is
effective for the period of time (which is normally one to seven days, but may
be longer) the buyer's money is invested in the security. The arrangement
results in a fixed rate of return that is not subject to market fluctuations
during a Fund's holding period. Repurchase agreements may be entered into with
member banks of the Federal Reserve System, including, the Fund's custodian or
"primary dealers" (as designated by the Federal Reserve Bank of New York) in
United States Government securities. Each Fund will require continued
maintenance of collateral with its Custodian in an amount equal to, or in excess
of, the repurchase price (including accrued interest). In the event a vendor
defaults on its repurchase obligation, a Fund might suffer a loss to the extent
that the proceeds from the sale of the collateral were less than the repurchase
price. If the vendor becomes the subject of bankruptcy proceedings, a Fund might
be delayed in selling the collateral. The Adviser will review and continually
monitor the creditworthiness of each institution with which the Fund enters into
a repurchase agreement to evaluate these risks. A Fund may not enter into
repurchase agreements if, as a result, more than 10% of a Fund's total assets
would be invested in repurchase agreements maturing in more than seven days and
in other securities that are not readily marketable.

Securities Lending. In order to generate income and to offset expenses, the Fund
may lend portfolio securities to brokers, dealers and other financial
organizations. The Adviser will monitor the creditworthiness of such borrowers.
Loans of securities by a Fund, if and when made, may not exceed 30% of the
Fund's total assets and will be collateralized by cash, letters of credit or
U.S. Government securities that are maintained at all times in an amount equal
to at least 100% of the current market value of the loaned securities, including
accrued interest. While such securities are on loan, the borrower will pay a
Fund any income accruing thereon, and the Fund may invest the cash collateral in
portfolio securities, thereby increasing its return. A Fund will have the right
to call any such loan and obtain the securities loaned at any time on five days'
notice. Any gain or loss in the market price of the loaned securities which
occurs during the term of the loan would affect the Fund and its investors. A
Fund may pay reasonable fees in connection with such loans.

Illiquid Securities. The Funds may invest up to 10% of their net assets in
illiquid securities and other securities which are not readily marketable,
including repurchase agreements with maturities longer than seven days.
Securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, which have been determined to be liquid, will not be considered by the
Adviser to be illiquid or not readily marketable and, therefore, are not subject
to the aforementioned 10% limit. The inability of a Fund to dispose of illiquid
or not readily marketable investments readily or at a reasonable price could
impair the Fund's ability to raise cash for redemptions or other purposes. The
liquidity of securities purchased by a Fund which are eligible for resale
pursuant to Rule 144A will be monitored by the Adviser on an ongoing basis,
subject to the oversight of the Trustees. In the event that such a security is
deemed to be no longer liquid, a Fund's holdings will be reviewed to determine
what action, if any, is required to ensure that the retention of such security
does not result in a Fund having more than 10% of its assets invested in
illiquid or not readily marketable securities.

Other Investment Policies. Each Fund may borrow funds and agree to sell
portfolio securities to financial institutions such as banks and broker-dealers
and to repurchase them at a mutually agreed upon date and price (a "reverse
repurchase agreement") for temporary or emergency purposes in amounts not in
excess of 10% of the value of a Fund's total assets at the time of such
borrowing. At the time a Fund enters into a reverse repurchase agreement, it
will place in a segregated custodial account cash, United States Government
securities or liquid high grade debt obligations having a value equal to the
repurchase price (including accrued interest) and will subsequently monitor the
account to ensure that such equivalent value is maintained. Reverse repurchase
agreements involve the risk that the market value of the securities sold by a
Fund may decline below the repurchase price of those securities. A Fund will not
enter into reverse repurchase agreements exceeding 5% of the value of its total
assets. A Fund also will not purchase any securities whenever any borrowings
(including reverse repurchase agreements) are outstanding.

Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the Statement of Additional Information.

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MANAGEMENT OF THE FUNDS
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INVESTMENT ADVISER

The management of each Fund is supervised by its Trustees. Evergreen
Asset Management Corp. (the "Adviser") has been retained by each Fund as
investment adviser. The Adviser succeeded on June 30, 1994 to the advisory
business of the same name, but under different ownership, which was organized in
1971. The Adviser to the Funds, with its predecessors, has served as investment
adviser to the Evergreen Funds since 1971. The Adviser is a wholly-owned
subsidiary of First Union National Bank of North Carolina ("FUNB"). The address
of the Adviser is 2500 Westchester Avenue, Purchase, New York 10577. FUNB is a
subsidiary of First Union Corporation ("First Union"), one of the ten largest
bank holding companies in the United States. Stephen A. Lieber and Nola Maddox
Falcone serve as the chief investment officers of the Adviser and, along with
Theodore J. Israel, Jr., were the owners of the Adviser's predecessor and the
former general partners of Lieber & Company, which, as described below, provides
certain subadvisory services to the Adviser in connection with its duties as
investment adviser to the Fund.

The Adviser manages each Fund's investments, provides various
administrative services and supervises each Fund's daily business affairs,
subject to the authority of the Trustees of each Fund. The Adviser is entitled
to receive from each Fund an annual fee equal to .50 of 1% of average daily net
assets of each Fund. However, the Adviser has in the past, and may in the
future, voluntarily waive all or a portion of its fee for the purpose of
reducing each Fund's expense ratio. For the fiscal period ended August 31, 1994
the Adviser waived a portion of the advisory fee payable by the Evergreen Money
Market Trust amounting to .39 of 1% of the Fund's average daily net assets on an
annual basis, and received a net advisory fee amounting to .11 of 1% of the
Fund's average daily net assets on an annual basis. With respect to the
Evergreen Tax Exempt Money Market Fund the Adviser waived a portion of the
advisory fee payable for the fiscal period ended August 31, 1994 amounting to
.30 of 1% of the Fund's average daily net assets on an annual basis, and
received a net advisory fee amounting to .20 of 1% of the Fund's average daily
net assets on an annual basis. The total expenses as a percentage of average
daily net assets on an annualized basis for Evergreen Money Market Trust and
Evergreen Tax Exempt Money Market Fund for the fiscal period ended August 31,
1994 were .32% and .34%, respectively

SUB-ADVISER

The Adviser has entered into sub-advisory agreements with Lieber &
Company with respect to each Fund which provides that Lieber & Company's
research department and staff will furnish the Adviser with information,
investment recommendations, advice and assistance, and will be generally
available for consultation on each Fund's portfolio. Lieber & Company will be
reimbursed by the Adviser in connection with the rendering of services on the
basis of the direct and indirect costs of performing such services. There is no
additional charge to the Funds for the services provided by Lieber & Company.
The address of the Lieber & Company is 2500 Westchester Avenue, Purchase, New
York 10577. Lieber & Company is an indirect, wholly-owned, subsidiary
of First Union.

DISTRIBUTION PLANS AND AGREEMENTS

Rule 12b-1 under the Investment Company Act of 1940 permits an
investment company to pay expenses associated with the distribution of its
shares in accordance with a duly adopted plan. Each Fund has adopted for its
Class A shares and Evergreen Money Market Trust for its Class B shares, a "Rule
12b-1 plan" (each, a "Plan" or collectively the "Plans"). Pursuant to each Plan,
a Fund may incur distribution-related and shareholder servicing-related expenses
which may not exceed an annual rate of .75 of 1% of the Fund's aggregate average
daily net assets attributable to Class A shares and 1.00% of the Fund's
aggregate average daily net assets attributable to the Class B shares. Payments
with respect to Class A shares under the Plan are currently voluntarily limited
to .30 of 1% of each Fund's aggregate average daily net assets attributable to
Class A shares. The Plans provide that a portion of the fee payable thereunder
in an amount not to exceed .25% of the aggregate average daily net assets of
each Fund attributable to each Class of shares may constitute a service fee to
be used for providing ongoing personal service and/or the maintenance of
shareholder accounts. Payments may be made by the Funds under the Plans to
financial intermediaries for services in amounts equal to .25 of 1% on an
annualized basis of the assets maintained in a Fund by their customers.

Each Fund has also entered into a distribution agreement (each a
"Distribution Agreement" or collectively the "Distribution Agreements") with,
Evergreen Funds Distributor, Inc. ("EFD"). Pursuant to the Distribution
Agreements, each Fund will compensate EFD for its services as EFD at a rate
which may not exceed an annual rate of .30 of 1% of a Fund's aggregate average
daily net assets attributable to Class A shares and .75 of 1% of aggregate
average daily net assets attributable to the Class B shares of the Evergreen
Money Market Trust. The Distribution Agreements provide that EFD will use the
distribution fee received from a Fund for payments (i) to compensate
broker-dealers or other persons for distributing shares of the Funds, including
interest and principal payments made in respect of amounts paid to
broker-dealers or other persons that have been financed (EFD may assign its
rights to receive compensation under the Plans to secure such financings), (ii)
to otherwise promote the sale of shares of the Fund, and (iii) to compensate
broker-dealers, depository institutions and other financial intermediaries for
providing administrative, accounting and other services with respect to the
Fund's shareholders. The financing of payments made by EFD to compensate
broker-dealers or other persons for distributing shares of the Funds may be
provided by First Union or its affiliates. The Evergreen Money Market Trust may
also make payments under the Plans, in amounts up to .25 of 1% of a Fund's
aggregate average daily net assets on an annual basis attributable to Class B
shares, to compensate organizations, which may include EFD and the Adviser or
its affiliates, for personal services rendered to shareholders and/or the
maintenance of shareholder accounts.

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PURCHASE AND REDEMPTION OF SHARES
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HOW TO BUY SHARES

You can purchase shares of any of the Funds through broker-dealers,
banks or other financial intermediaries, or directly through EFD. The minimum
initial investment is $1,000, which may be waived in certain situations. There
is no minimum for subsequent investments. Share certificates are not issued for
Class A, and in the case of Evergreen Money Market Trust, Class B shares. In
states where EFD is not registered as a broker-dealer shares of a Fund will only
be sold through other broker-dealers or other financial institutions that are
registered. See the Share Purchase Application and Statement of Additional
Information for more information. Only Class A shares of Evergreen Money Market
Trust and Evergreen Tax-Exempt Money Market Fund, and Class B shares of
Evergreen Money Market Trust are offered through this prospectus (See "Other
Classes of Shares").

Class A Shares. Class A shares of the Evergreen Money Market Funds can be
purchased at net asset value without an initial sales charge.

Class B Shares-Deferred Sales Charge Alternative. You can purchase Class B
shares of the Evergreen Money Market Trust at net asset value without an initial
sales charge. However, you may pay a contingent deferred sales charge ("CDSC")
if you redeem shares within seven years after purchase. Shares obtained from
dividend or distribution reinvestment are not subject to the CDSC. The amount of
the CDSC (expressed as a percentage of the lesser of the current net asset value
or original cost) will vary according to the number of years from the purchase
of Class B shares as set forth below.

Year Since Purchase Contingent Deferred Sales Charge
FIRST 5%
SECOND 4%
THIRD and FOURTH 3%
FIFTH 2%
SIXTH and SEVENTH 1%

The CDSC is deducted from the amount of the redemption and is paid to EFD. The
CDSC will be waived on redemptions of shares following the death or disability
of a shareholder, to meet distribution requirements for certain qualified
retirement plans or in the case of certain redemptions made under a Fund's
Systematic Cash Withdrawal Plan, and may be waived in other situations. Class B
shares are subject to higher distribution fees than Class A shares for a period
of seven years (after which they convert to Class A shares) . The higher fees
mean a higher expense ratio, so Class B shares pay correspondingly lower
dividends and may have a lower net asset value than Class A shares. See the
Statement of Additional Information for further details.

How the Funds Value Their Shares. The net asset value of each Fund's shares for
purposes of both purchases and redemptions is determined twice daily, at 12 noon
(Eastern time) and promptly after the regular close of the New York Stock
Exchange (usually 4 p.m. New York time) each business day (i.e., any weekday
exclusive of days on which the New York Stock Exchange or State Street is
closed). The New York Stock Exchange is closed on New Year's Day, Presidents
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. The net asset value per share is calculated by taking the sum
of the values of a Fund's investments and any cash and other assets, subtracting
liabilities, and dividing by the total number of shares outstanding. All
expenses, including the fees payable to the Adviser, are accrued daily. The
securities in a Fund's portfolio are valued on an amortized cost basis. Under
this method of valuation, a security is initially valued at its acquisition
cost, and thereafter, a constant straight-line amortization of any discount or
premium is assumed each day regardless of the impact of fluctuating interest
rates on the market value of the security. The market value of the obligations
in a Fund's portfolio can be expected to vary inversely to changes in prevailing
interest rates. As a result, the market value of the obligations in a Fund's
portfolio may vary from the value determined using the amortized cost method.
Securities which are not rated are normally valued on the basis of valuations
provided by a pricing service when such prices are believed to reflect the fair
value of such securities. Other assets and securities for which no quotations
are readily available are valued at the fair value as determined in good faith
by the Trustees.

Each Fund attempts to maintain its net asset value at $1.00 per share.
Under most conditions, management believes this will be possible, although there
can be no assurance that this will be achieved. Calculations are periodically
made to compare the value of a Fund's portfolio valued at amortized cost with
market values. If a deviation of 1/2 of 1% or more were to occur between the net
asset value calculated by reference to market values and a Fund's $1.00 per
share net asset value, or if there were other deviations which the Trustees
believed would result in a material dilution to shareholders or purchasers, the
Trustees would promptly consider what action, if any, should be initiated.

Additional Purchase Information. As a condition of this offering, if a purchase
is canceled due to nonpayment or because a investor's check does not clear, the
investor will be responsible for any loss a Fund or the Adviser incurs. If such
investor is an existing shareholder, a Fund may redeem shares from his or her
account to reimburse a Fund or the Adviser for any loss. In addition, such
investors may be prohibited or restricted from making further purchases in any
of the Evergreen Funds.

Shares of the Funds are sold at the net asset value per share next
determined after a shareholder's investment has been received. Investments by
federal funds wire will be effective upon receipt. Qualified institutions may
telephone orders for the purchase of Fund shares. Shares purchased by
institutions via telephone will receive the dividend declared on that day if the
telephone order is placed by 12 noon (Eastern time), and federal funds are
received the same day by 4 p.m. (Eastern time). Institutions should telephone
the Fund (800-235-0064) for additional information on same day purchases by
telephone. Investment checks received at State Street will be invested on the
date of receipt.
Shareholders will begin earning dividends the following business day.

General. The decision as to which Class of shares of Evergreen Money Market
Trust is more beneficial to you depends primarily on whether or not you wish to
exchange all or part of any Class B shares you purchase for Class B shares of
another Evergreen Fund at some future date. If you are not contemplating such an
exchange, it would probably be in your best interest to purchase Class A shares.
Consult your financial intermediary for further information. The compensation
received by Dealers and agents may differ depending on whether they sell Class A
or Class B shares. There is no size limit on purchases of Class A shares.

In addition to any discount or commission paid to dealers, EFD will
from time to time pay to dealers additional cash or other incentives that are
conditioned upon the sale of a specified minimum dollar amount of shares of a
Fund and/or other Evergreen Mutual Funds. Such incentives will take the form of
payment for attendance at seminars, lunches, dinners, sporting events or theater
performances, or payment for travel, lodging and entertainment incurred in
connection with travel by persons associated with a dealer and their immediate
family members to urban or resort locations within or outside the United States.
Such a dealer may elect to receive cash incentives of equivalent amount in lieu
of such payments.

HOW TO REDEEM SHARES

Shareholders may withdraw amounts of $1,000 or more from their accounts
by calling State Street (800-423-2615) between the hours of 9:00 a.m. and 4:00
p.m. (Eastern time) each business day (i.e., any weekday exclusive of days on
which the New York Stock Exchange or State Street's offices are closed). The New
York Stock Exchange is closed on New Year's Day, Presidents Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Redemption requests made after 4:00 p.m. (Eastern time) will be processed using
the net asset value determined on the next business day. Such redemption
requests must include the shareholder's account name, as registered with a Fund,
and the account number. During periods of drastic economic or market changes,
shareholders may experience difficulty in effecting telephone redemptions.
Shareholders who are unable to reach a Fund or State Street by telephone should
follow the procedures outlined above for redemption by mail.

The telephone redemption service is not made available to shareholders
automatically. Shareholders wishing to use the telephone redemption service must
indicate this on the enclosed Share Purchase Application and choose how the
redemption proceeds are to be paid. Redemption proceeds will either (i) be
mailed by check to the shareholder at the address in which the account is
registered or (ii) be wired to an account with the same registration as the
shareholder's account in a Fund at a designated commercial bank. State Street
currently deducts a $5.00 wire charge from all redemption proceeds wired. This
charge is subject to change without notice. Redemption proceeds will be wired on
the same day if the request is made prior to 12 noon (Eastern time). Such
shares, however, will not earn dividends for that day. Redemption requests
received after 12 noon will earn dividends for that day, and the proceeds will
be wired on the following business day. A shareholder who decides later to use
this service, or to change instructions already given, should fill out a
Shareholder Services Form and send it to State Street Bank and Trust Company,
P.O. Box 9021, Boston, Massachusetts 02205-9827, with such shareholder's
signature guaranteed by a bank or trust company (not a Notary Public), a member
firm of a domestic stock exchange or by other financial institutions whose
guarantees are acceptable to State Street. Shareholders should allow
approximately 10 days for such form to be processed. The Funds will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine. These procedures include requiring some form of personal identification
prior to acting upon instructions and tape recording of telephone instructions.
If a Fund fails to follow such procedures, it may be liable for any losses due
to unauthorized or fraudulent instructions. The Funds will not be liable for
following telephone instructions reasonably believed to be genuine. The Funds
reserve the right to refuse a telephone redemption if it is believed advisable
to do so. Procedures for redeeming Fund shares by telephone may be modified or
terminated without notice at any time.

Redemptions by Check. Upon request, each Fund will provide holders of Class A
shares, without charge, with checks drawn on the Fund that will clear through
State Street. Class B shares cannot be redeemed by check. Shareholders will be
subject to State Street's rules and regulations governing such checking
accounts. Checks will be sent usually within ten business days following the
date the account is established. Checks may be made payable to the order of any
payee in an amount of $250 or more. The payee of the check may cash or deposit
it like a check drawn on a bank. (Investors should be aware that, as in the case
with regular bank checks, certain banks may not provide cash at the time of
deposit, but will wait until they have received payment from State Street.) When
such a check is presented to State Street for payment, State Street, as the
shareholder's agent, causes the Fund to redeem a sufficient number of full and
fractional shares in the shareholder's account to cover the amount of the check.
Checks will be returned by State Street if there are insufficient or
uncollectable shares to meet the withdrawal amount. The check writing procedure
for withdrawal enables shareholders to continue earning income on the shares to
be redeemed up to but not including the date the redemption check is presented
to State Street for payment.

Shareholders wishing to use this method of redemption, should fill out
the appropriate part of the Share Purchase Application (including the Signature
Card) and mail the completed form to State Street Bank and Trust Company, P.O.
Box 9021, Boston, Massachusetts 02205-9827. Shareholders requesting this service
after an account has been opened must contact State Street since additional
documentation will be required. Currently, there is no charge either for checks
or for the clearance of any checks. This service may be terminated or altered at
any time.

General. Under unusual circumstances, a Fund may suspend redemptions or postpone
payment for up to seven days or longer, as permitted by Federal securities law.
The Funds reserve the right to close an account that through redemption has
remained below $1,000 for 30 days. Shareholders will receive 60 days' written
notice to increase the account value before the account is closed. See the
Statement of Additional Information for further details.

EXCHANGE PRIVILEGE

How To Exchange Shares. You may exchange some or all of your shares for shares
of the other Evergreen Funds through your financial intermediary, or by
telephone or mail as described below. An exchange which represents an initial
investment in another Evergreen Fund must amount to at least $1,000. Once an
exchange request has been telephoned or mailed, it is irrevocable and may not be
modified or canceled. Exchanges will be made on the basis of the relative net
asset values of the shares exchanged next determined after an exchange request
is received. Exchanges are subject to minimum investment and suitability
requirements.

Each of the Evergreen Funds have different investment objectives and
policies. For complete information, a prospectus of the fund into which an
exchange will be made should be read prior to the exchange. An exchange is
treated for Federal income tax purposes as a redemption and purchase of shares
and may result in the realization of a capital gain or loss. Shareholders are
limited to five exchanges per calendar year, with a maximum of three per
calendar quarter. This exchange privilege may be materially modified or
discontinued at any time by the Fund upon sixty days' notice to shareholders and
is only available in states in which shares of the fund being acquired may
lawfully be sold.

No CDSC will be imposed in the event Class B shares of the Evergreen
Money Market Trust are exchanged for Class B shares of other Evergreen Funds. If
you redeem shares, the CDSC applicable to the Class B shares of the Evergreen
Mutual Fund originally purchased for cash is applied. Also, Class B shares will
continue to age following an exchange for purposes of conversion to Class A
shares. An exchange of Class A shares of the Funds for Class A shares of other
Evergreen Funds not offered in this prospectus would, to the extent a waiver or
reduction were not available, require the payment of the applicable front-end
sales charge.

Exchanges by Telephone and Mail. You may exchange shares by telephone by calling
State Street (800-423-2615). Exchange requests made after 4:00 p.m. (Eastern
time) will be processed using the net asset value determined on the next
business day. During periods of drastic economic or market changes, shareholders
may experience difficulty in effecting telephone exchanges. You should follow
the procedures outlined below for exchanges by mail if you are unable to reach
State Street by telephone. If you wish to use the telephone exchange service you
should indicate this on the enclosed Share Purchase Application. As noted above,
each Fund will employ reasonable procedures to confirm that instructions for the
redemption or exchange of shares communicated by telephone are genuine. A
telephone exchange may be refused by a Fund or State Street if it is believed
advisable to do so. Procedures for exchanging Fund shares by telephone may be
modified or terminated at any time. Written requests for exchanges should follow
the same procedures outlined for written redemption requests in the section
entitled "How to Redeem Shares", however, no signature guarantee is required..

SHAREHOLDER SERVICES

The Funds offer the following shareholder services. For more
information about these services or your account, contact EFD or the toll-free
number for the Funds, 800 807-2940. Some services are described in more detail
in the Share Purchase Application.

Systematic Investment Plan. You may make monthly or quarterly investments
into an existing account automatically in amounts of not less than $25.

Telephone Investment Plan. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $25,000 per
investment. Telephone investment requests received by 3:00 p.m. (Eastern time)
will be credited to a shareholder's account two business days after the request
is received.

Investments Through Employee Benefit and Savings Plans. Certain qualified and
non-qualified benefit and savings plans may make shares of the Funds and the
other Evergreen Funds available to their participants. The Adviser may provide
compensation to organizations providing administrative and recordkeeping
services to plans which make shares of the Evergreen Funds available to their
participants.

Retirement Plans. Eligible investors may invest in Evergreen Money Market Trust
under the following prototype retirement plans: (i) Individual Retirement
Account (IRA); (ii) Simplified Employee Pension (SEP) for sole proprietors,
partnerships and corporations; and (iii) Profit-Sharing and Money Purchase
Pension Plans for corporations and their employees.

Automatic Reinvestment Plan. For the convenience of investors, all dividends and
distributions are automatically reinvested in full and fractional shares of the
Fund at the net asset value per share at the close of business on the last
business day of each month, unless otherwise requested by a shareholder in
writing. If the transfer agent does not receive a written request for subsequent
dividends and/or distributions to be paid in cash at least three full business
days prior to a given record date, the dividends and/or distributions to be paid
to a shareholder will be reinvested. If you elect to receive dividends and
distributions in cash and the U.S. Postal Service cannot deliver the checks, or
if the checks remain uncashed for six months, the checks will be reinvested into
your account at the then current net asset value.

EFFECT OF BANKING LAWS

The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of their customer. The
Adviser, since it is a subsidiary of First Union National Bank of North Carolina
("FUNB"), is subject to and in compliance with the aforementioned laws and
regulations.

Changes to applicable laws and regulations or future judicial or
administrative decisions could result in the Adviser being prevented from
continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of a
Fund by its customers. If the Adviser were prevented from continuing to provide
the services called for under the investment advisory agreement, it is expected
that the Trustees would identify, and call upon each Fund's shareholders to
approve, a new investment adviser. If this were to occur, it is not anticipated
that the shareholders of any Fund would suffer any adverse financial
consequences.

- --------------------------------------------------------------------------------

OTHER INFORMATION
- --------------------------------------------------------------------------------

DIVIDENDS, DISTRIBUTIONS AND TAXES

The Funds declare substantially all of their net income as dividends on
each business day. Such dividends are paid monthly. Net income, for dividend
purposes, includes accrued interest and any market discount or premium that day,
less the estimated expenses of a Fund. Gains or losses realized upon the sale of
portfolio securities are not included in net income, but are reflected in the
net asset value of a Fund's shares. Distributions of any net realized capital
gains will be made annually or more frequently as required by the provisions of
the Internal Revenue Code of 1986, as amended. The amount of dividends may
fluctuate from day to day, and the dividend may be omitted on a day where Fund
expenses exceed net investment income. Dividends and distributions generally are
taxable in the year in which they are paid, except any dividends paid in January
that were declared in the previous calendar quarter may be treated as paid in
the immediately preceding December.

Such dividends will be automatically reinvested in full and fractional
shares of a Fund on the last business day of each month. However, shareholders
who so inform the transfer agent in writing may have their dividends paid out in
cash monthly. Shareholders who invest by check will be credited with a dividend
on the business day following initial investment. Shareholders will receive
dividends on investments made by federal funds bank wire the same day the wire
is received provided that wire purchases are received by State Street by 12 noon
(Eastern time). Shares purchased by qualified institutions via telephone as
described in "How to Purchase Shares" will receive the dividend declared on that
day if the telephone order is placed by 12 noon (Eastern time), and federal
funds are received by 4 p.m. (Eastern time). All other wire purchases received
after 12 noon (Eastern time) will earn dividends beginning the following
business day. Dividends accruing on the day of redemption will be paid to
redeeming shareholders except for redemptions by check and where proceeds are
wired the same day. (See "How to Redeem Shares".)

Each Fund has qualified and intends to continue to qualify to be
treated as a regulated investment company under the Code. While so qualified, it
is expected that each Fund will not be required to pay any Federal income taxes
on that portion of its investment company taxable income and any net realized
capital gains it distributes to shareholders. The Code imposes a 4%
nondeductible excise tax on regulated investment companies, such as the Funds,
to the extent they do not meet certain distribution requirements by the end of
each calendar year. Each Fund anticipates meeting such distribution
requirements. The excise tax generally does not apply to the tax exempt income
of a regulated investment company (such as Evergreen Tax Exempt Money Market
Fund) that pays exempt interest dividends. Except as noted below with respect to
Evergreen Tax Exempt Money Market Fund, most shareholders of the Funds normally
will have to pay Federal income taxes and any state or local taxes on the
dividends and distributions they receive from a Fund.

Evergreen Tax Exempt Money Market Fund will designate and pay
exempt-interest dividends derived from interest earned on qualifying tax exempt
obligations. Such exempt-interest dividends may be excluded by shareholders of
the Fund from their gross income for Federal income tax purposes, however, (1)
all or a portion of such exempt-interest dividends may be a specific preference
item for purposes of the Federal individual and corporate alternative minimum
taxes to the extent that they are derived from certain types of private activity
bonds issued after August 7, 1986, and (2) all exempt-interest dividends will be
a component of "adjusted current earnings" for purposes of the Federal corporate
alternative minimum tax. Dividends paid from taxable income, if any, and
distributions of any net realized short-term capital gains (whether from tax
exempt or taxable obligations) are taxable as ordinary income, even though
received in additional Fund shares. Market discount recognized on taxable and
tax-free bonds is taxable as ordinary income, not as excludable income.

Following the end of each calendar year, every shareholder of the Fund
will be sent applicable tax information and information regarding the dividends
and capital gain distributions made during the calendar year. Under current law,
the highest Federal income tax rate applicable to net long-term capital gains
realized by individuals is 28%. The rate applicable to corporations is 35%.
Since the Funds' gross income is ordinarily expected to be interest income, it
is not expected that the 70% dividends-received deduction for corporations will
be applicable. Specific questions should be addressed to the investor's own tax
adviser.

Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by State Street, that the investor's social security
or taxpayer identification number is correct and that the investor is not
currently subject to backup withholding or is exempt from backup withholding.

GENERAL INFORMATION

Organization. The Evergreen Money Market Trust is a Massachusetts business trust
organized in 1987 and the Evergreen Tax Exempt Money Market Fund is a separate
investment series of the Evergreen Municipal Trust, which is a Massachusetts
business trust organized in 1988.

The Funds do not intend to hold annual shareholder meetings;
shareholder meetings will be held only when required by applicable law.
Shareholders have available certain procedures for the removal of Trustees or
Directors.

A shareholder in each class of a Fund will be entitled to his or her
share of all dividends and distributions from a Fund's assets, based upon the
relative value of such shares to those of other Classes of the Fund, and, upon
redeeming shares, will receive the then current net asset value of the Class of
shares of the Fund represented by the redeemed shares less any applicable CDSC.
The Trusts are empowered to establish, without shareholder approval, additional
investment series, which may have different investment objectives, and
additional classes of shares for any existing or future series. If an additional
series or class were established in a Fund, each share of the series or class
would normally be entitled to one vote for all purposes. Generally, shares of
each series and class would vote together as a single class on matters, such as
the election of Trustees, that affect each series and class in substantially the
same manner. Class A, B and Y shares have identical voting, dividend,
liquidation and other rights, except that each class bears, to the extent
applicable, its own distribution and transfer agency expenses as well as any
other expenses applicable only to a specific class. Each class of shares votes
separately with respect to Rule 12b-1 distribution plans and other matters for
which separate class voting is appropriate under applicable law. Shares are
entitled to dividends as determined by the Trustees and, in liquidation of a
Fund, are entitled to receive the net assets of the Fund.

Registrar, Transfer Agent And Dividend-Disbursing Agent. State Street Bank and
Trust Company, P.O. Box 9021, Boston, Massachusetts 02205-9827 acts as each
Fund's registrar, transfer agent and dividend-disbursing agent for a fee based
upon the number of shareholder accounts maintained for the Funds. The transfer
agency fee with respect to the Class B shares will be higher than the transfer
agency fee with respect to the Class A shares.

Principal Underwriter. EFD, a wholly-owned subsidiary of Furman Selz
Incorporated, located 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. EFD provides personnel to serve as officers
of the Funds.
The salaries and other expenses related to providing such personnel are borne by
EFD.

Other Classes of Shares. Evergreen Money Market Trust offers three classes of
shares, Class A, Class B, and Class Y. Evergreen Tax-Exempt Money Market Fund
offers two classes of shares, Class A and Class Y. Class Y shares are not
offered by this Prospectus and are only available to (i) all shareholders of
record in one or more of the Evergreen Funds as of December 30, 1994, (ii)
certain institutional investors and (iii) investment advisory clients of the
Adviser and its affiliates. The dividends payable with respect to Class A and
Class B shares will be less than those payable with respect to Class Y shares
due to the distribution and distribution-related expenses borne by Class A and
Class B shares and the fact that such expenses are not borne by Class Y shares.

Performance Information. From time to time, a Fund may quote its yield in
advertisements or in reports to shareholders. Yield information may be useful in
reviewing the performance of a Fund and for providing a basis for comparison
with other investment alternatives. However, since net investment income of a
Fund changes in response to fluctuations in interest rates and Fund expenses,
any given yield quotation should not be considered representative of a Fund's
yields for any future period.

The method of calculating each Fund's yield is set forth in the
Statement of Additional Information. Before investing in the Evergreen Tax
Exempt Money Market Fund, the investor may want to determine which investment --
tax-free or taxable -- will result in a higher after-tax return. To do this, the
yield on the tax-free investment should be divided by the decimal determined by
subtracting from 1 the highest Federal tax rate to which the investor currently
is subject. For example, if the tax-free yield is 6% and the investor's maximum
tax bracket is 36%, the computation is:

6% Tax-Free Yield /(1 - .36 Tax Rate)

= 6/.64 = 9.38% Taxable Yield.

In this example, the investor's after-tax return will be higher from
the 6% tax-free investment if available taxable yields are below 9.38%.
Conversely, the taxable investment will provide a higher return when taxable
yields exceed 9.38%. This is only an example and is not necessarily reflective
of a Fund's yield. The tax equivalent yield will be lower for investors in the
lower income brackets.

Comparative performance information may also be used from time to time
in advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., IBC/Donoghue's Money Fund Report, Bank Rate Monitor
and other industry publications.

Liability Under Massachusetts Law. Under Massachusetts law, trustees and
shareholders of a business trust may, in certain circumstances, be held
personally liable for its obligations. The Declarations of Trust under which
Funds operate provide that no trustee or shareholder will be personally liable
for the obligations of the trust and that every written contract made by the
trust contain a provision to that effect. If any trustee or shareholder were
required to pay any liability of the trust, that person would be entitled to
reimbursement from the general assets of the trust.

<PAGE>

--------------------------------------------------------------
PROSPECTUS January
3, 1995

Evergreen Money Market Funds
--------------------------------------------------------

CLASS Y SHARES
-------------------------

EVERGREEN MONEY MARKET TRUST

EVERGREEN TAX EXEMPT MONEY MARKET FUND

The Evergreen Money Market Funds (the "Funds") are designed to provide
investors with a selection of investment alternatives which seek to provide
current income, stability of principal and liquidity. This Prospectus provides
information regarding the Class Y shares offered by the Funds. Each Fund is, or
is a series of, an open-end, diversified, management investment company. This
Prospectus sets forth concise information about the Funds that a prospective
investor should know before investing. The address of the Funds is 2500
Westchester Avenue, Purchase, New York 10577.

An investment in the Funds is neither insured nor guaranteed by the U.S.
Government, and there can be no assurance that the Funds will be able to
maintain a stable net asset value of $1.00 per share.

Keep This Prospectus for Future Reference

<PAGE>

TABLE OF CONTENTS

OVERVIEW OF THE FUNDS 2 PURCHASE AND REDEMPTION OF SHARES
EXPENSE INFORMATION 3 How To Buy Shares 11
FINANCIAL HIGHLIGHTS 4 How To Redeem Shares 12
DESCRIPTION OF THE FUNDS Exchange Privilege 13
Investment Objectives Shareholder Services 14
And Policies 6 Effect Of Banking Laws 14
Investment Practices OTHER INFORMATION
And Restrictions 9 Dividends, Distributions And Taxes 15
MANAGEMENT OF THE FUNDS General Information 16
Investment Adviser 10
Sub-Adviser 11

- --------------------------------------------------------------------------------
OVERVIEW OF THE FUNDS
- --------------------------------------------------------------------------------

The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Funds" and "Management of the Funds".

There is no assurance the investment objective of any Fund will be
achieved.

<PAGE>

-------------------------------------------------------------------------------
EXPENSE INFORMATION
-------------------------------------------------------------------------------

The table set forth below summarizes the shareholder transaction costs
associated with an investment in each Class of Shares of a Fund. For further
information see "Purchases and Redemption of Fund Shares".

SHAREHOLDER TRANSACTION EXPENSES

Class Y Shares
Maximum Sales Charge Imposed on Purchases None

Sales Charge on Dividend Reinvestments None

Deferred Sales Charge None

Redemption Fee None

Exchange Fee (only applies after 4 exchanges
per calendar year) $5

The following tables show for each Fund the annual operating expenses
(as a percentage of average net assets) attributable to Class Y Shares, together
with examples of the cumulative effect of such expenses on a hypothetical $1,000
investment the periods specified assuming (i) a 5% annual return and (ii)
redemption at the end of each period.

Evergreen Money Market Trust

Annual Operating
Expenses* Examples
Class Y Class Y
Advisory Fees .50% After 1 Year $ 7
12b-1 Fees None After 3 Years $ 23
Other Expenses .21% After 5 Years $ 40
----
Total .71% After 10 Years $ 88
----

Evergreen Tax Exempt Money Market Fund

Annual Operating
Expenses* Examples
Class Y Class Y
Advisory Fees .50% After 1 Year $ 7
12b-1 Fees None After 3 Years $ 20
Other Expenses .14% After 5 Years $ 36
----
Total .64% After 10 Years $ 80
----

The Adviser has agreed to reimburse these Funds' to the extent that any Fund's
aggregate annual operating expenses (including the Adviser's fee, but excluding
interest, taxes, brokerage commissions, Rule 12b-1 distribution fees and
shareholder servicing fees, and extraordinary expenses) exceed 1.00% of the
Fund's average net assets. From time to time, the Adviser may, at its
discretion, waive its fee or reimburse a Fund for certain of its expenses in
order to reduce a Fund's expense ratio.

*The estimated annual operating expenses and examples do not reflect the
voluntary Advisory fee waivers of .39 of 1% of average net assets for Evergreen
Money Market Trust and .30 of 1% of average net assets for Evergreen Tax Exempt
Money Market Fund for the fiscal period ending August 31, 1994.

The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in Class Y Shares
of the Funds will bear directly or indirectly. The amounts set forth under
"Other Expenses" as well as the amounts set forth in the examples are estimated
amounts based on historical experience for the fiscal period ending August 31,
1994. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES OR ANNUAL RETURN. ACTUAL EXPENSES AND ANNUAL RETURN MAY BE GREATER OR
LESS THAN THOSE SHOWN. For a more complete description of the various costs and
expenses borne by the Funds see "Management of the Funds".

<PAGE>

- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

Evergreen Money Market Trust

The following selected per share data and ratios for the ten months
ended August 31, 1994 and the four annual periods ended October 31, 1993 have
been audited by Price Waterhouse LLP, independent accountants for Evergreen
Money Market Trust, whose report thereon was unqualified. This information
should be read in conjunction with the financial statements and notes thereto
which are incorporated in the Statement of Additional Information by reference.
The per share data set forth below pertains to the Class Y shares of the Fund,
which are offered through this prospectus. See "Other Classes of Shares". No per
share data and ratios are shown for Class A or B shares, since these classes did
not have any operations prior to the date of this Prospectus.
<TABLE>
<CAPTION>

Period
Ten Months from
Ended 11/2/87**
August 31, Year Ended October 31, to
PER SHARE DATA 1994# 1993 1992 1991 1990 1989 10/31/88
----- ---- ---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C>

Net asset value, beginning of year. . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- -----
. . . . . .
Income (loss) from investment operations:
Net investment income. . . . . . . . . . .03 .03 .04 .07 .08 .09 .07
. . . . . . . . .
Net realized gain (loss) on investments. ---- ---- ---- ---- ---- ---- ----
. . . . . .

Total from investment operations. . . . . .03 .03 .04 .07 .08 .09 .07
. . . . . .
Less distributions to shareholders from
net investment income. . . . . . . . . (.03) (.03) (.04) (.07) (.08) (.09) (.07)
------- ------- ------- ------- ------- ------- -------
. . . . . . .
Net asset value, end of year. . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- -----
TOTAL RETURN+. . . . . . . . . . . . . . 2.9% 3.2% 4.2% 6.7% 8.4% 9.4% 7.4%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year
(in millions) . . . . . . . . . . . . $273 $299 $358 $438 $458 $408 $161
Ratios to average net assets:
Total expenses . . . . . . . . . . . . .32%++ .39%* .36%* .30%* .35%* .38%* .43%++
Net investment income . . . . . . . . 3.46%++ 3.19%* 4.18%* 6.53%* 8.08%* 9.42%* 7.26%++

<FN>
- ------------

+ Total return is calculated for the periods indicated and is not annualized.
++ Annualized and net of partial advisory fee waiver of .39% of daily net
assets for the ten months ended August 31, 1994 and full advisory fee
waiver of .50% of daily net assets for the period November 2, 1987 to
October 31, 1988.
* Net of partial advisory fee waivers of .32%, .36%, .40%, .34% and .37% of
daily net assets for the years ended October 31, 1993, 1992, 1991, 1990 and
1989, respectively.
** Commencement of operations.
# On September 21, 1994, the Fund's Trustees approved a change in the
Fund's fiscal year end from October 31 to August 31.
</FN>
</TABLE>

<PAGE>

Evergreen Tax Exempt Money Market Fund

The following selected per share data and ratios for the five annual
periods ended August 31, 1994 have been audited by Price Waterhouse LLP,
independent accountants for Evergreen Tax-Exempt Money Market Fund, whose report
thereon was unqualified. This information should be read in conjunction with the
financial statements and notes thereto which are incorporated in the Statement
of Additional Information by reference. The per share data set forth below
pertains to the Class Y shares of the Fund, which are offered through this
prospectus. See "Other Classes of Shares". No per share data and ratios are
shown for Class A shares, since this class did not have any operations prior to
the date of this Prospectus.
<TABLE>
<CAPTION>

Period from
November 2,
Year Ended August 31, 1988* through
PER SHARE DATA 1994 1993 1992 1991 1990 August 31, 1989
---- ---- ---- ---- ---- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income declared as
dividends to shareholders. . . . . $.0247 $.0258 $.0367 $.0533 $.0599 $.0538
------ ------ ------ ------ ------ ------
Net asset value at beginning
and end of year . . . . . . . . . . $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
------- ------- ------- ------- ------- -------
TOTAL RETURN . . . . . . . . . . . 2.5% 2.6% 3.7% 5.5% 6.2% 5.5%+
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year
(in millions) . . . . . . . . . . . $402 $401 $417 $510 $311 $109
Ratios to average net assets:
Total expenses . . . . . . . . . .34%(a) .34%(a) .32%(a) .28%(a) .31%(a) .24%(b)
Net investment income . . . . . . 2.47%(a) 2.58%(a) 3.72%(a) 5.23%(a) 5.94%(a) 6.77%(b)

<FN>
------------
* Commencement of operations.
+ Total return calculated for the period November 2, 1988 to August 31, 1989
is not annualized.
(a) Net of partial advisory fee waivers of .30 of 1% of daily net assets for
fiscal year ended August 31, 1994, .29 of 1% of daily net assets for fiscal
year ended August 31, 1993, .31 of 1% of daily net assets for fiscal year
ended August 31, 1992, .38 of 1% of daily net assets for fiscal year ended
August 31, 1991 and .40 of 1% of daily net assets for fiscal year ended
August 31, 1990.
(b) Annualized and net of partial advisory fee waiver of .46 of 1% of daily net
assets and the absorption of a portion of all other Fund expenses by
the Adviser equal to .09% of average net assets.
</FN>
</TABLE>

<PAGE>

- --------------------------------------------------------------------------------

DESCRIPTION OF THE FUNDS
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVES AND POLICIES

Evergreen Money Market Trust

6. Unrated corporate debt securities, commercial paper and bank
obligations otherwise determined by the Trustees to be of comparable quality.

7. Repurchase agreements with respect to the securities described in
paragraphs 1 through 6 above.

Evergreen Tax Exempt Money Market Fund

Floating Rate and Variable Rate Obligations. Municipal Securities also include
certain variable rate and floating rate municipal obligations with or without
demand features. These variable rate securities do not have fixed interest
rates; rather, those rates fluctuate based upon changes in specified market
rates, such as the prime rate, or are adjusted at predesignated periodic
intervals. Such securities must comply with conditions established by the SEC
under which they may be considered to have remaining maturities of 397 days or
less. Certain of these obligations may carry a demand feature that gives the
Fund the right to demand prepayment of the principal amount of the security
prior to its maturity date. The demand obligation may or may not be backed by
letters of credit or other guarantees of banks or other financial institutions.
Such guarantees may enhance the quality of the security. As a matter of
fundamental policy, the Fund will limit the value of its investments in any
floating or variable rate securities which are not readily marketable and in all
other not readily marketable securities to 10% or less of its total assets.

INVESTMENT PRACTICES AND RESTRICTIONS

Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the Statement of Additional Information.

- --------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------

INVESTMENT ADVISER

<PAGE>

SUB-ADVISER

The Adviser has entered into sub-advisory agreements with Lieber &
Company with respect to each Fund which provides that Lieber & Company's
research department and staff will furnish the Adviser with information,
investment recommendations, advice and assistance, and will be generally
available for consultation on each Fund's portfolio. Lieber & Company will be
reimbursed by the Adviser in connection with the rendering of services on the
basis of the direct and indirect costs of performing such services. There is no
additional charge to the Funds for the services provided by Lieber & Company.
The address of the Lieber & Company is 2500 Westchester Avenue, Purchase, New
York 10577.
Lieber & Company is an indirect, wholly-owned, subsidiary of First Union.

- --------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------------

HOW TO BUY SHARES

Eligible investors may purchase Fund shares at net asset value by mail
or wire as described below. The Funds impose no sales charges on Class Y shares.
Class Y shares are the only class of shares offered by this Prospectus and are
only available to (i) all shareholders of record in one or more of the Evergreen
Funds as of December 30, 1994, (ii) certain institutional investors and (iii)
investment advisory clients of the Adviser and its affiliates. The minimum
initial investment is $1,000, which may be waived in certain situations. There
is no minimum for subsequent investments. Investors may make subsequent
investments by establishing a Systematic Investment Plan or a Telephone
Investment Plan.

Purchases by Mail or Wire. Each investor must complete the enclosed Share
Purchase Application and mail it together with a check made payable to the Fund
whose shares are being purchased, to State Street Bank and Trust Company ("State
Street") at P.O. Box 9021, Boston, Massachusetts 02205-9827. Checks not drawn on
U.S. banks will be subject to foreign collection which will delay an investor's
investment date and will be subject to processing fees.

When making subsequent investments, an investor should either enclose
the return remittance portion of the statement, or indicate on the face of the
check, the name of the Fund in which an investment is to be made, the exact
title of the account, the address, and the Fund account number. Purchase
requests should not be sent to a Fund in New York. If they are, the Fund must
forward them to State Street, and the request will not be effective until State
Street receives them.

Initial investments may also be made by wire by (i) calling State
Street at 800-423-2615 for an account number and (ii) instructing your bank,
which may charge a fee, to wire federal funds to State Street, as follows: State
Street Bank and Trust Company, ABA No.0110-0002-8, Attn: Custodian and
Shareholder Services. The wire must include references to the Fund in which an
investment is being made, account registration, and the account number. A
completed Application must also be sent to State Street indicating that the
shares have been purchased by wire, giving the date the wire was sent and
referencing the account number. Subsequent wire investments may be made by
existing shareholders by following the instructions outlined above. It is not
necessary, however, for existing shareholders to call for another account
number.

Shares of the Funds are sold at the net asset value per share next
determined after a shareholder's investment has been converted to federal funds.
Investments by federal funds wire will be effective upon receipt. Qualified
institutions may telephone orders for the purchase of Fund shares. Shares
purchased by institutions via telephone will receive the dividend declared on
that day if the telephone order is placed by 12 noon (Eastern time), and federal
funds are received the same day by 4 p.m. (Eastern time). Institutions should
telephone the Fund (800-235-0064) for additional information on same day
purchases by telephone. Investment checks received at State Street will be
invested on the date of receipt. Shareholders will begin earning dividends the
following business day.

The Share Purchase Application may not be used to invest in any of the
prototype retirement plans for which the Evergreen Money Market Trust is an
available investment. For information about the requirements to make such
investments, including copies of the necessary application forms, please call
the telephone number set forth on the cover page of this Prospectus. A Fund
cannot accept investments specifying a certain price or date and reserves the
right to reject any specific purchase order, including orders in connection with
exchanges from the other Evergreen Funds. Although not currently anticipated,
each Fund reserves the right to suspend the offer of shares for a period of
time.

HOW TO REDEEM SHARES

You may "redeem", i.e., sell your shares in a Fund to the Fund on any
day the Exchange is open, either directly or through your financial
intermediary. The price you will receive is the net asset value next calculated
after the Fund receives your request in proper form. Proceeds generally will be
sent to you within seven days. However, for shares recently purchased by check,
a Fund will not send proceeds until it is reasonably satisfied that the check
has been collected (which may take up to 15 days).

Redeeming Shares Directly by Mail or Telephone. Send a signed letter of
instruction or stock power form to State Street which is the registrar, transfer
agent and dividend-disbursing agent for each Fund. Stock power forms are
available from your financial intermediary, State Street, and many commercial
banks. Additional documentation is required for the sale of shares by
corporations, financial intermediaries, fiduciaries and surviving joint owners.
Signature guarantees are required for all redemption requests for shares with a
value of more than $10,000 or where the redemption proceeds are to be mailed to
an address other than that shown in the account registration. A signature
guarantee must be provided by a bank or trust company (not a Notary Public), a
member firm of a domestic stock exchange or by other financial institutions
whose guarantees are acceptable to State Street.

Shareholders may withdraw amounts of $1,000 or more from their accounts
by calling State Street (800-423-2615) between the hours of 9:00 a.m. and 4:00
p.m. (Eastern time) each business day (i.e., any weekday exclusive of days on
which the New York Stock Exchange or State Street's offices are closed). The New
York Stock Exchange is closed on New Year's Day, Presidents Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Redemption requests made after 4:00 p.m. (Eastern time) will be processed using
the net asset value determined on the next business day. Such redemption
requests must include the shareholder's account name, as registered with a Fund,
and the account number. During periods of drastic economic or market changes,
shareholders may experience difficulty in effecting telephone redemptions.
Shareholders who are unable to reach a Fund or State Street by telephone should
follow the procedures outlined above for redemption by mail.

Redemptions by Check. Upon request, each Fund will provide holders of Class Y
shares, without charge, with checks drawn on the Fund that will clear through
State Street. Shareholders will be subject to State Street's rules and
regulations governing such checking accounts. Checks will be sent usually within
ten business days following the date the account is established. Checks may be
made payable to the order of any payee in an amount of $250 or more. The payee
of the check may cash or deposit it like a check drawn on a bank. (Investors
should be aware that, as in the case with regular bank checks, certain banks may
not provide cash at the time of deposit, but will wait until they have received
payment from State Street.) When such a check is presented to State Street for
payment, State Street, as the shareholder's agent, causes the Fund to redeem a
sufficient number of full and fractional shares in the shareholder's account to
cover the amount of the check. Checks will be returned by State Street if there
are insufficient or uncollectable shares to meet the withdrawal amount. The
check writing procedure for withdrawal enables shareholders to continue earning
income on the shares to be redeemed up to but not including the date the
redemption check is presented to State Street for payment.

EXCHANGE PRIVILEGE

How To Exchange Shares. You may exchange some or all of your shares for shares
of the other Evergreen Funds by telephone or mail as described below. An
exchange which represents an initial investment in another Evergreen Fund must
amount to at least $1,000. Once an exchange request has been telephoned or
mailed, it is irrevocable and may not be modified or canceled. Exchanges will be
made on the basis of the relative net asset values of the shares exchanged next
determined after an exchange request is received. Exchanges are subject to
minimum investment and suitability requirements.

Each of the Evergreen Funds have different investment objectives and
policies. For complete information, a prospectus of the fund into which an
exchange will be made should be read prior to the exchange. An exchange is
treated for Federal income tax purposes as a redemption and purchase of shares
and may result in the realization of a capital gain or loss. Each Fund imposes a
fee of $5 per exchange on shareholders who exchange in excess of four times per
calendar year. This exchange privilege may be materially modified or
discontinued at any time by the Fund upon sixty days' notice to shareholders and
is only available in states in which shares of the fund being acquired may
lawfully be sold.

SHAREHOLDER SERVICES

The Funds offer the following shareholder services. For more
information about these services or your account, contact your financial
intermediary, Evergreen Funds Distributor, Inc.("EFD"), the distributor of the
Funds, or the toll-free number for the Funds, 800-807-2940. Some services are
described in more detail in the Share Purchase Application.

Systematic Investment Plan. You may make monthly or quarterly investments
into an existing account automatically in amounts of not less than $25.

EFFECT OF BANKING LAWS

The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of their customer. The
Adviser, since it is a subsidiary of First Union National Bank of North Carolina
("FUNB"), is subject to and in compliance with the aforementioned laws and
regulations.

- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------

DIVIDENDS, DISTRIBUTIONS AND TAXES

GENERAL INFORMATION

Other Classes of Shares. Evergreen Money Market Trust offers three classes of
shares, Class A, Class B, and Class Y. Evergreen Tax-Exempt Money Market Fund
offers two classes of shares, Class A and Class Y. Class Y shares are the only
class offered by this Prospectus and are only available to (i) all shareholders
of record in one or more of the Evergreen Funds as of December 30, 1994, (ii)
certain institutional investors and (iii) investment advisory clients of the
Adviser and its affiliates. The dividends payable with respect to Class A and
Class B shares will be less than those payable with respect to Class Y shares
due to the distribution and distribution-related expenses borne by Class A and
Class B shares and the fact that such expenses are not borne by Class Y shares.

A shareholder in each class of a Fund will be entitled to his or her
share of all dividends and distributions from a Fund's assets, based upon the
relative value of such shares to those of other Classes of the Fund, and, upon
redeeming shares, will receive the then current net asset value of the Class of
shares of the Fund represented by the redeemed shares less any applicable
contingent deferred sales charge ("CDSC"). There is no CDSC imposed on
redemptions of Class Y shares. The Trusts are empowered to establish, without
shareholder approval, additional investment series, which may have different
investment objectives, and additional classes of shares for any existing or
future series. If an additional series or class were established in a Fund, each
share of the series or class would normally be entitled to one vote for all
purposes. Generally, shares of each series and class would vote together as a
single class on matters, such as the election of Trustees, that affect each
series and class in substantially the same manner. Class A, B and Y shares have
identical voting, dividend, liquidation and other rights, except that each class
bears, to the extent applicable, its own distribution and transfer agency
expenses as well as any other expenses applicable only to a specific class. Each
class of shares votes separately with respect to Rule 12b-1 distribution plans
and other matters for which separate class voting is appropriate under
applicable law. Shares are entitled to dividends as determined by the Trustees
and, in liquidation of a Fund, are entitled to receive the net assets of the
Fund.

6% Tax-Free Yield /(1 - .36 Tax Rate)

= 6/.64 = 9.38% Taxable Yield.

Liability Under Massachusetts Law. Under Massachusetts law, trustees and
shareholders of a business trust may, in certain circumstances, be held
personally liable for its obligations. The Declarations of Trust under which
Funds operate provide that no trustee or shareholder will be personally liable
for the obligations of the trust and that every written contract made by the
trust contain a provision to that effect. If any trustee or shareholder were
required to pay any liability of the trust, that person would be entitled to
reimbursement from the general assets of the trust.

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

___________, 1995

THE EVERGREEN MUTUAL FUNDS

2500 Westchester Avenue, Purchase, New York 10577

800-807-2940

This Statement of Additional Information pertains to all classes of shares of
the Funds listed below. It is not a prospectus and should be read in conjunction
with the current Prospectus of the Fund in which you are making or contemplating
an investment. The Evergreen Mutual Funds are offered through 6 separate
prospectuses representing different investment categories, including growth,
growth and income, fixed-income, money market and tax exempt funds. Copies of
the Prospectuses for each Fund listed below may be obtained without charge by
calling the number listed above.

The Evergreen Fund ("Evergreen") The Evergreen Aggressive Growth Fund
("Aggressive") Evergreen Global Real Estate Equity Fund ("Global")
Evergreen U.S. Real Estate Equity Fund ("U.S. Real Estate") The
Evergreen Limited Market Fund, Inc. ("Limited Market") Evergreen Growth
and Income Fund ("Growth and Income") The Evergreen Total Return Fund
("Total Return") The Evergreen American Retirement Fund ("American
Retirement") Evergreen Small Cap Equity Income Fund ("Small Cap")
Evergreen Foundation Fund ("Foundation") Evergreen Tax Strategic
Foundation Fund ("Tax Strategic") Evergreen Short-Intermediate
Municipal Fund ("Short-Intermediate")
Evergreen Short-Intermediate Municipal Fund-CA("Short-Intermediate-CA")
Evergreen National Tax-Free Fund ("National")
Evergreen Florida High Income Fund ("Florida High Income")
Evergreen Tax Exempt Money Market Fund ("Tax Exempt")
The Evergreen Money Market Trust ("Money Market")
Evergreen U.S. Government Securities Fund ("U.S. Government")

<PAGE>

TABLE OF CONTENTS

.
Page
Investment Objectives and Policies....................................
Investment Restrictions...............................................
Non-Fundamental Operating Policies....................................
Certain Risk Considerations...........................................
Management............................................................
Investment Advisers...................................................
Distribution Plans....................................................
Allocation of Brokerage...............................................
Additional Tax Information............................................
Net Asset Value.......................................................
Purchase of Shares....................................................
Performance Information...............................................
Financial Statements..................................................

Appendix A - Note, Bond And Commercial Paper Ratings i
Appendix B - Additional Information Concerning California ii
Appendix B - Additional Information Concerning Florida iii

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES
(See also "Investment Objective and Policies" in each
Fund's Prospectus)

.........The investment objective of each Fund and a description of the
securities in which they may invest is set forth under "Investment Objective and
Policies" in each Fund's Prospectus.

.........Each of the Funds, with the exception of Global and U.S. Real
Estate may not invest more than 25% of its net assets in any one industry. Under
normal circumstances, Global and U.S. Real Estate will invest not less than 65%
of their total assets in equity securities of companies principally engaged in
the real estate industry. Also, Florida High Income, National, Tax Strategic,
Short-Intermediate and Short-Intermediate-CA may, subject to the Investment
Restrictions set forth below, invest 25% or more of their total assets in
municipal securities that are related in such a way that an economic, business,
or political development or change affecting one such security could also affect
the other securities (for example, securities whose issuers are located in the
same state).

.........As a matter of non-fundamental investment policy, each Fund may
invest up to 15% of its net assets in illiquid securities and other securities
which are not readily marketable (10% for Money Market and Tax Exempt).
Repurchase agreements with maturities longer than seven days will be included
for the purpose of the foregoing 15% (or 10%) limit but, with respect to Global,
U.S. Real Estate, Small Cap, Tax Strategic, National, Short-Intermediate,
Short-Intermediate-CA, Tax Exempt, Money Market and U.S. Government,,
investments in such repurchase agreements are limited to 10% of a Fund's assets.
American Retirement and Foundation may not invest in repurchase agreements.
Securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, which the Trustees/Directors of a Fund have determined to be liquid, will
not be considered by the Fund to be illiquid or not readily marketable and,
therefore, are not subject to the aforementioned 15% limit. The inability of a
Fund to dispose of illiquid or not readily marketable investments readily or at
a reasonable price could impair the Fund's ability to raise cash for redemptions
or other purposes. The liquidity of securities purchased by a Fund which are
eligible for resale pursuant to Rule 144A will be monitored by its investment
adviser on an ongoing basis, subject to the oversight of the Trustees/Directors.
Notwithstanding the fact that a favorable liquidity determination was made at
the time of purchase of such a security, subsequent developments affecting the
market for such securities held by a Fund could have a negative effect on their
liquidity. In the event that such a security is deemed to be no longer liquid, a
Fund's holdings will be reviewed to determine what action, if any, is required
to ensure that the retention of such security does not result in the Fund
exceeding the applicable limit on assets invested in illiquid or not readily
marketable securities.

.........A portion of the assets of Florida High Income, National,
Short-Intermediate, Short-Intermediate-CA or Tax-Strategic may be invested in
health care bonds issued for public and non-profit hospitals. Since 1983, the
U.S. hospital industry has been under significant pressure from third party
payors to reduce expenses and limit length of stay, a phenomenon which has
negatively affected the financial health of many hospitals. National or
Tax-Strategic may also from time to time invest in electric revenue issues which
have exposure to or participate in nuclear projects. There may be substantial
construction or operating risks associated with such nuclear plants which could
affect the issuer's financial performance. Such risks include delay in
construction and operation due to increased regulation, unexpected outages or
plant shutdowns, increased Nuclear Regulatory Commission surveillance or
inadequate rate relief.

.........Evergreen, Florida High Income, Total Return and Growth and Income
may write covered call options to a limited extent on their portfolio securities
("covered options") in an attempt to earn additional income. A call option gives
the purchaser of the option the right to buy a security from the writer at the
exercise price at any time during the option period. The premium paid to the
writer is the consideration for undertaking the obligations under the option
contract. The writer foregoes the opportunity to profit from an increase in the
market price of the underlying security above the exercise price except insofar
as the premium represents such a profit. The Fund retains the risk of loss
should the price of the underlying security decline. The Fund will write only
covered call option contracts and will receive premium income from the writing
of such contracts. Evergreen, Total Return and Growth and Income may purchase
call options to close out a previously written call option. In order to do so,
the Fund will make a "closing purchase transaction" -- the purchase of a call
option on the same security with the same exercise price and expiration date as
the call option which it has previously written. A Fund will realize a profit or
loss from a closing purchase transaction if the cost of the transaction is less
or more than the premium received from the writing of the option. If an option
is exercised, a Fund realizes a long-term or short-term gain or loss from the
sale of the underlying security and the proceeds of the sale are increased by
the premium originally received.

.........Consistent with its strategy of investing in "undervalued" securities,
Growth and Income may invest in lower medium and low-quality bonds and may also
purchase bonds in default if, in the opinion of the Fund's investment adviser,
there is significant potential for capital appreciation. Growth and Income,
however, will not invest more than 5% of its total assets in debt securities
which are rated below investment grade. These bonds are regarded as speculative
with respect to the issuer's continuing ability to meet principal and interest
payments. High yield bonds may be more susceptible to real or perceived adverse
economic and competitive industry conditions than investment grade bonds. A
projection of an economic downturn, or higher interest rates, for example, could
cause a decline in high yield bond prices because such events could lessen the
ability of highly leveraged companies to make principal and interest payments on
their debt securities. In addition, the secondary trading market for high yield
bonds may be less liquid than the market for higher grade bonds, which can
adversely affect the ability to dispose of such securities.

.........Subject to the limits described in the Prospectus and this
Statement of Additional Information, Florida High Income, National, Small Cap,
U.S. Government, and U.S. Real Estate may, to a limited extent, enter into
financial futures contracts including futures contracts based on securities
indices, purchase and write put and call options on such futures contracts, and
engage in related closing transactions.

<PAGE>

.........Florida High Income, Foundation, National, Short-Intermediate and
Short-Intermediate-CA may invest in variable and floating rate securities. The
terms of variable and floating rate instruments provide for the interest rate to
be adjusted according to a formula on certain predetermined dates. Variable and
floating rate instruments that are repayable on demand at a future date are
deemed to have a maturity equal to the time remaining until the principal will
be received on the assumption that the demand feature is exercised on the
earliest possible date. For the purposes of evaluating the interest-rate
sensitivity of the Fund, variable and floating rate instruments are deemed to
have a maturity equal to the period remaining until the next interest-rate
readjustment. For the purposes of evaluating the credit risks of variable and
floating rate instruments, these instruments are deemed to have a maturity equal
to the time remaining until the earliest date the Fund is entitled to demand
repayment of principal. Foundation may invest no more than 5% of its total
assets, at the time of the investment in question, in variable and floating rate
securities. Florida High Income, National, Short-Intermediate and
Short-Intermediate-CA may invest no more than 10% of their total assets, at the
time of the investment in question, in variable and floating rate securities
which are not readily marketable.

Fixed Income Ratings. The ratings assigned by nationally recognized
statistical rating organizations ("NRSROs") such as Moody's Investors Service,
Inc. (Moody's") or Standard & Poor's Ratings Group ("S&P") represent their
respective opinions of the quality of the municipal bonds and notes and Taxable
Short Term Obligations which they undertake to rate. It should be emphasized,
however, that ratings are general and not absolute standards of quality.
Consequently, obligations with the same maturity, stated interest rate and
rating may have different yields, while obligations of the same maturity and
stated interest rate with different ratings may have the same yield. While the
each Fund's investment adviser intends to use NRSROs such as Moody's or S&P to
evaluate the risk involved in purchasing medium and lower rated and unrated
instruments, they will also rely heavily on their internal credit analysis. See
Appendix A for further information about the ratings of Moody's and S&P as to
the various rated Municipal Obligations which the Funds may purchase.

When-Issued and Delayed Delivery Obligations. Each Fund may purchase
Obligations on a when-issued or delayed delivery basis. The purchase price and
the interest rate payable on the Obligations are fixed on the transaction date.
At the time a Fund makes the commitment to purchase Obligations on a when-issued
or delayed delivery basis, it will record the transaction and thereafter reflect
the value each day of such Obligations in determining its net asset value. A
Fund will make commitments for such when-issued transactions only when it has
the intention of actually acquiring the Obligations. To facilitate such
acquisitions, such Fund will maintain with the Custodian a separate account with
portfolio Obligations in an amount at least equal to such commitments. On
delivery dates for such transactions, a Fund will meet its commitments by
selling the Obligations held in the separate account and/or from cash flow. At
the time of settlement, the market values of the securities purchased may vary
from the purchase prices. Although a Fund will only purchase Obligations on a
when-issued basis with the intention of actually acquiring the Obligations, such
Fund may sell these securities before the settlement date if it is deemed
advisable.

There may be risks of delay in receiving additional collateral, or risks of
delay in recovery of the securities or even loss of rights in the collateral if
the borrower of the securities becomes insolvent.

MUNICIPAL BONDS. The two principal classifications of municipal bonds are
"general obligation" bonds and "revenue" bonds. General obligation bonds are
secured by the issuer's pledge of its full faith, credit and unlimited taxing
power for the payment of principal and interest. Revenue or special tax bonds
are payable only from the revenues derived from a particular facility or class
of facilities or projects or, in a few cases, from the proceeds of a special
excise or other tax, but are not supported by the issuer's power to levy general
taxes. There are, of course, variations in the security of municipal bonds, both
within a particular classification and between classifications, depending on
numerous factors. The yields of municipal bonds depend on, among other things,
general money market conditions, general conditions of the municipal bond
market, size of a particular offering, the maturity of the obligations and
rating of the issue.

Since the Funds may invest in industrial development bonds, the Funds
may not be an appropriate investment for entities which are "substantial users"
of facilities financed by industrial development bonds or for investors who are
"related persons". Generally, an individual will not be a "related person" under
the Code unless such investor or his immediate family (spouse, brothers, sisters
and lineal descendants) own directly or indirectly in the aggregate more than 50
percent of the value of the equity of a corporation or partnership which is a
"substantial user" of a facility financed from proceeds of "industrial
development bonds". A "substantial user" of such facilities is defined generally
as a "non-exempt person who regularly uses a part of a facility" financed from
the proceeds of industrial development bonds.

As set forth in the Prospectus, the Code establishes new unified volume
caps for most "private purpose" municipal bonds (such as industrial development
bonds and obligations to finance low-interest mortgages on owner-occupied
housing and student loans). The unified volume cap is not expected to affect
adversely the availability of Municipal Obligations for investment by the Funds;
however, it is possible that proposals will be introduced before Congress to
further restrict or eliminate the federal income tax exemption for interest on
Municipal Obligations. Any such proposals, if enacted, could adversely affect
the availability of municipal bonds for investment by the Funds and the value of
each Fund's portfolio might be affected. In that event, each Fund might
reevaluate its investment policies and restrictions and consider recommending to
its shareholders changes in both.

CURRENCY HEDGING - Global

Forward Contracts

.........As noted in its Prospectus, Global may enter into forward foreign
currency exchange contracts in order to protect against uncertainty in the level
of future foreign exchange rates. A forward foreign currency exchange contract
involves an obligation to purchase or sell a specific currency at a future date,
which may be any fixed number of days (usually less than one year) from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their customers. A
forward contract generally has a deposit requirement, and no commissions are
charged at any stage for trades. Although foreign exchange dealers do not charge
a fee for conversion, they do realize a profit based on the difference (the
spread) between the price at which they are buying and selling various
currencies.

.........Except for cross-hedges, the Fund will not enter into such forward
contracts or maintain a net exposure to such contracts where the consummation of
the contracts would obligate the Fund to deliver an amount of foreign currency
in excess of the value of the Fund's portfolio securities or other assets
denominated in that currency. At the consummation of such a forward contract,
the Fund may either make delivery of the foreign currency or terminate its
contractual obligation to deliver the foreign currency by purchasing an
offsetting contract obligating it to purchase, at the same maturity date, the
same amount of such foreign currency. If the Fund chooses to make delivery of
the foreign currency, it may be required to obtain such currency through the
sale of portfolio securities denominated in such currency or through conversion
of other assets of the Fund into such currency. If the Fund engages in an
offsetting transaction, the Fund will incur a gain or loss to the extent that
there has been a change in forward contract prices.

.........The Fund's investment adviser believes that it is important to have the
flexibility to enter into such forward contracts when it determines that the
best interest of the Fund will be served. The Fund will place cash or high grade
debt securities in a separate account of the Fund at its custodian bank in an
amount equal to the value of the Fund's total assets committed to forward
foreign currency exchange contracts entered into as a hedge against a
substantial decline in the value of a particular foreign currency. If the value
of the securities placed in the separate account declines, additional cash or
securities will be placed in the account on a daily basis so that the value of
the account will equal the amount of the Fund's commitments with respect to such
contracts.

.........It should be realized that this method of protecting the value of
the Fund's portfolio securities against a decline in the value of a currency
does not eliminate fluctuations in the underlying prices of the securities. It
simply establishes a rate of exchange which can be achieved at some future point
in time. Additionally, although such contracts tend to minimize the risk of loss
due to a decline in the value of the hedged currency, at the same time they tend
to limit any potential gain which might result should the value of such currency
increase.

.........Inasmuch as it is not clear whether the gross income from certain
foreign currency transactions will be excluded by the Internal Revenue Service
from "qualifying income" for the purpose of qualification of the Fund as a
regulated investment company under U.S. Federal income tax law, the Fund intends
to operate so that the gross income from such transactions, together with other
nonqualifying income, will be less than 10% of the gross income of the Fund in
any taxable year.

Futures Contracts on Currencies .........Global may also invest in currency
futures contracts and related options thereon. The Fund may sell a currency
futures contract or a call option thereon or purchase a put option on such
futures contract, if Evergreen Asset anticipates that exchange rates for a
particular currency will fall, as a hedge (or in the case of a sale of a call
option, a partial hedge) against a decrease in the value of the Fund's
securities denominated in such currency. If Evergreen Asset anticipates that
exchange rates will rise, the Fund may purchase a currency futures contract or a
call option thereon to protect against an increase in the price of securities
denominated in a particular currency the Fund intends to purchase. These futures
contracts and related options will be used only as a hedge against anticipated
currency rate changes.

.........A currency futures contract sale creates an obligation by the
Fund, as seller, to deliver the amount of currency called for in the contract at
a specified future time for a specified price. A currency futures contract
purchase creates an obligation by the Fund, as purchaser, to take delivery of an
amount of currency at a specified future time at a specified price. Although the
terms of currency futures contracts specify actual delivery or receipt, in most
instances the contracts are closed out before the settlement date without the
making or taking of delivery of the currency. Closing out of a currency futures
contract is effected by entering into an offsetting purchase or sale
transaction. An offsetting transaction for a currency futures contract sale is
effected by the Fund entering into a currency futures contract purchase for the
same aggregate amount of currency and same delivery date. If the price of the
sale exceeds the price of the offsetting purchase, the Fund is immediately paid
the difference and realizes a loss. Similarly, the closing out of a currency
futures contract purchase is effected by the Fund entering into a currency
futures contract sale. If the offsetting sale price exceeds the purchase price,
the Fund realizes a gain, and if the offsetting sale price is less than the
purchase price, the Fund realizes a loss.

.........Unlike a currency futures contract, which requires the parties to
buy and sell currency on a set date, an option on a futures contract entitles
its holder to decide on or before a future date whether to enter into such a
contract. If the holder decides not to enter into the contract, the premium paid
for the option is lost.

.........The Fund is required to maintain margin deposits with brokerage
firms through which it effects currency futures contracts and options thereon.
In addition, due to current industry practice, daily variations in gains and
losses on open contracts are required to be reflected in cash in the form of
variation margin payments. The Fund may be required to make additional margin
payments during the term of the contract.

.........A risk in employing currency futures contracts to protect against
the price volatility of portfolio securities denominated in a particular
currency is that the prices of such securities subject to currency futures
contracts may correlate imperfectly with the behavior of the cash prices of the
Fund's securities. The correlation may be distorted by the fact that the
currency futures market may be dominated by short-term traders seeking to profit
from changes in exchange rates. This would reduce their value for hedging
purposes over a short-term period. Such distortions are generally minor and
would diminish as the contract approached maturity. Another risk is that the
Fund's investment adviser could be incorrect in its expectations as to the
direction or extent of various exchange rate movements or the time span within
which the movements take place.

.........Put and call options on currency futures have characteristics
similar to those of other options. In addition to the risks associated with
investing in options on securities, there are particular risks associated with
investing in options on currency futures. In particular, the ability to
establish and close out positions on such options will be subject to the
development and maintenance of a liquid secondary market. It is not certain that
this market will develop.

.........The Fund may not enter into currency futures contracts or related
options thereon if immediately thereafter the amount committed to margin plus
the amount paid for premiums for unexpired options on currency futures exceeds
5% of the market value of the Fund's total assets. The Fund may not purchase or
sell currency futures contracts or related options if immediately thereafter
more than 30% of its net assets would be hedged. In instances involving the
purchase of currency futures contracts by the Fund, an amount equal to the
market value of the currency futures contract will be deposited in a segregated
account of cash and cash equivalents to collateralize the position and thereby
ensure that the use of such futures contract is unleveraged.

FUTURES CONTRACTS - Florida High Income, Small Cap, U.S. Government and
U.S. Real Estate.

Florida High Income, Small Cap, U.S. Government and U.S. Real Estate are
permitted to use futures contracts ("Futures") as a possible means of hedging
each Fund's exposure to the equity or fixed income markets. The following
discussion is intended to explain briefly the workings of Futures.

Unlike when a Fund purchases or sells a portfolio security, no money is
paid or received by theFund upon the purchase or sale of a Future. Initially,
however, when such transactions are entered into, a Fund will be required to
deposit with the futures commission merchant ("broker") an amount of cash or
portfolio securities equal to a varying specified percentage of the contract
amount. This amount is known as initial margin. Subsequent payments, called
variation margin, to and from the broker, will be made on a daily basis as the
price of the underlying securities fluctuate making the Future more or less
valuable, a process known as mark to market. Insolvency of the broker may make
it more difficult to recover initial or variation margin. Changes in variation
margin are recorded by each Fund as unrealized gains or losses. Margin deposits
do not involve borrowing by a Fund and may not be used to support any other
transactions. At any time prior to the expiration of the Future, a Fund may
elect to close the position by taking an opposite position which will operate to
terminate such Fund's position in the Future. A final determination of variation
margin is then made. Additional cash is required to be paid or released to such
Fund and it realizes a gain or a loss. Although Futures by their terms call for
the actual delivery or acceptance of cash or securities, in most cases the
contractual obligation is fulfilled without having to make or take delivery. All
transactions in the futures markets are subject to commissions payable and are
offset or fulfilled through a clearing house associated with the exchange on
which the contracts are traded. Although the Funds intend to buy and sell
Futures only on an exchange where there appears to be an active secondary
market, there is no assurance that a liquid secondary market will exist for any
particular Future at any particular time. In such event, or in the event of an
equipment failure at a clearing house, it may not be possible to close a Futures
position.

The "sale" of a Future means the acquisition by a Fund of an
obligations to deliver an amount of cash equal to a specified dollar amount
times the difference between the index value at the close of the last trading
day of the Future and the price at which the Future is originally struck (which
a Fund anticipates will be lower because of a subsequent rise in interest rates
and a corresponding decline in the index value). This is referred to as having a
"short" Futures position. The "purchase" of a Future means the acquisition by a
Fund of an obligation to take delivery of such an amount of cash. In this case,
a Fund anticipates that the closing index value will be higher than the price at
which the Future is originally struck. This is referred to as having a "long"
Futures position. No physical delivery of the securities making up the index is
made as to either a long or a short Futures position.

Risks Relating to Futures Contracts. One risk in employing Futures to
attempt to protect against the price volatility of a Fund's portfolio securities
is that the Fund's investment adviser could be incorrect in its expectations as
to the extent of various interest rate movements or the time span within which
the movements take place. For example, if a Fund sold a Future in anticipation
of an increase in interest rates, and then interest rates went down instead,
such Fund would lose money on the sale.

Another risk as to Futures arises because of the imperfect correlation
between movement in the price of the Future and movements in the prices of the
portfolio securities which are the subject of the hedge. The risk of imperfect
correlation increases as the composition of a Fund's portfolio diverges from the
securities underlying the Futures. The price of the Future may move more than or
less than the price of the portfolio securities being hedged. If the price of
the Future moves less than the price of the portfolio securities which are the
subject of the hedge, the hedge will not be fully effective but, if the price of
the portfolio securities being hedged has moved in an unfavorable direction, a
Fund would be in a better position than if it had not hedged at all. If the
price of the Fportfolio securities being hedged has moved in a favorable
direction, this advantage will be partially offset by the Future. If the price
of the Future moved more than the price of the portfolio securities, a Fund will
experience either a loss or gain on the Future which will not be completely
offset by movements in the price of the Fportfolio securities which are the
subject of the hedge. To compensate for the imperfect correlation of movements
in the price of the portfolio securities being hedged and movements in the price
of the Futures, a Fund may buy or sell Futures in a greater dollar amount than
the dollar amount of the Obligations being hedged if the historical volatility
of the prices of the Obligations being hedged is less than the historical
volatility of the debt securities underlying the Futures. It is also possible
that, where a Fund has sold Futures to hedge its portfolio against decline in
the market, the market may advance and the value of the Fportfolio securities
held in such Fund's portfolio may decline. If this occurred, such Fund would
lose money on the Future and also experience a decline in value of its portfolio
securities.

Where Futures are purchased to hedge against a possible increase in the
price of portfolio securities before a Fund is able to invest in them in an
orderly fashion, it is possible that the market may decline instead; if such
Fund then concludes not to invest in them at that time because of concern as to
possible further market decline or for other reasons, such Fund will realize a
loss on the Futures that is not offset by a reduction in the price of the
portfolio securities which it had anticipated purchasing.

There are daily price fluctuation limits established by contract
markets which limit the amount of fluctuation in a futures contract price during
a single trading day. Once the daily limit has been reached on a contract, no
trades may be entered into at prices beyond the limit, thus preventing the
liquidation of open Futures positions.

Risks Relating to Futures
Options. In addition to the risks which apply to Futures, there are several
special risks relating to Futures Options. The ability to establish and close
out a position on Futures Options is subject to the development and maintenance
of a liquid secondary market.

Compared to the purchase or sale of Futures, the purchase of call or
put Futures Options involves less potential risk to a Fund because the maximum
amount at risk is the premium paid for the Futures Options (plus transaction
costs). There may be circumstances, however, when the purchase of a call or put
Futures Option would result in a loss, and the purchase or sale of a Future
would not result in a loss, such as when there is no movement in the prices of
the underlying securities. The writing of a put or call Futures Option involves
risks similar to those relating to transactions in Futures as described above.

During the option period, a Fund as a call writer, in return for the
premium on the Futures Option, has given up the opportunity for capital
appreciation above the exercise price should the market price of the Future
increase, but has retained the risk of depreciation should the price of the
Future decline. As a secured put writer, a Fund also retains the risk of loss
should the market value of the Future decline below the exercise price of the
Futures Option. In both cases, a Fund has no control over the time when it may
be required to fulfill its obligation as a writer of the Futures Option.

If a Fund as a call Future Option writer is unable to effect a closing
purchase transaction, it would continue to bear the risk of an increase in the
market price of the Future until the Futures Option expires or is exercised. If
a Fund as a secured put Futures Option writer is unable to effect a closing
purchase transaction, it would continue to bear the risk of decline in the
market price of the Future until the Futures Option expires or is exercised.

In purchasing a put Futures Option, a Fund would realize a loss if the
price of the Future subject to the Futures Option increased or remained the same
or did not decrease during the option period by more than the amount of the
premium. In purchasing a call Futures Option, a Fund would realize a loss if the
price of the Future subject to the Futures Option decreased or remained the same
or did not increase during the option period by more than the amount of the
premium. In purchasing Futures Options, a Fund relies on a clearing corporation
to purchase or deliver the Future if the Futures Option is exercised. Failure of
a clearing corporation to do so may cause a Fund to lose the opportunity to
effect a profitable transaction.

Regulatory Aspects of Futures Contracts. Each Fund, due to requirements
under the Investment Company Act of 1940 (the "1940 Act"), will deposit in a
segregated account with its custodian bank portfolio maturing in one year or
less or cash, in an amount equal to the fluctuating market value of long Futures
it has purchased, less any margin deposited on long positions.

Each Fund must operate within certain restrictions as to its long and
short positions in Futures under a rule (the "CFTC Rule" ) adopted by the
Commodity Futures Trading Commission ( "CFTC" ) under the Commodity Exchange Act
(the "CEA" ) to be eligible for the exclusion provided by the CFTC Rule as a
"commodity pool operator" (as defined under the CEA), and must represent to the
CFTC that it will operate within such restrictions. Under these restrictions a
Fund will not, as to any positions, whether long, short or a combination
thereof, enter into Futures for which the aggregate initial margins exceed 5% of
the fair market value of its assets. Under the restrictions, a Fund also must,
as to its short positions, use Futures solely for bona- fide hedging purposes
within the meaning and intent of the applicable provisions under the CEA. As to
a Fund's long positions which are used as part of its portfolio strategy and are
incidental to its activities in the underlying cash market, the "underlying
commodity value" (see below) of its Futures must not exceed the sum of (i) cash
set aside in an identifiable manner, or short-term U.S. debt obligations or
other U.S. dollar-denominated high quality short-term money market instruments
so set aside, plus any funds deposited as margin; (ii) cash proceeds from
existing investments due in 30 days and (iii) accrued profits held at the
futures commission merchant. (There is described above the segregated account
which a Fund must maintain with its Custodian bank as to its Futures activities
due to requirements other than those of the CFTC Rule; a Fund will, as to long
positions, be required to abide by the more restrictive of this other
requirement or the above requirements of the CFTC Rule. ) The "underlying
commodity value" of a Future is computed by multiplying the size of the Future
by the daily settlement price of the Future.

INVESTMENT RESTRICTIONS

.........Except as noted, the investment restrictions set forth below are
fundamental and may not be changed with respect to each Fund without the
affirmative vote of a majority of the outstanding voting securities of the Fund.
Where an asterisk (*) appears after a Fund's name, the relevant policy is
non-fundamental with respect to that Fund and may be changed by the Fund's
investment adviser without shareholder approval, subject to review and approval
by the Trustees. As used in this Statement of Additional Information and in the
Prospectus, "a majority of the outstanding voting securities of the Fund" means
the lesser of (1) the holders of more than 50% of the outstanding shares of
beneficial interest of the Fund or (2) 67% of the shares present if more than
50% of the shares are present at a meeting in person or by proxy.

1........Concentration of Assets in Any One Issuer

.........None of Growth and Income, Limited Market and Total Return may
invest more than 5% of its total net assets, at the time of the investment in
question, in the securities of any one issuer other than the United States
Government and its instrumentalities.

.........Evergreen may not invest more than 5% of its total net assets in
the securities of any one issuer other than the United States Government and its
instrumentalities.

.........American Retirement may not invest more than 5% of its total
assets, at the time of the investment in question, in the securities of any one
issuer other than the United States Government and its agencies or
instrumentalities.

........None of Aggressive, Foundation, Global, Small Cap and U.S. Real
Estate may invest more than 5% of its total assets, at the time of the
investment in question, in the securities of any one issuer other than the
United States Government and its agencies or instrumentalities, except that up
to 25% of the value of the Fund's total assets may be invested without regard to
such 5% limitation.

.........None of Florida High Income, National, Short Intermediate, Short
Intermediate-CA, Tax Exempt, and Tax Strategic may invest more than 5% of its
total assets, at the time of the investment in question, in the securities of
any one issuer other than the United States Government and its agencies or
instrumentalities, except that up to 25% of the value of each Fund's total
assets may be invested without regard to such 5% limitation. For this purpose
each political subdivision, agency, or instrumentality and each multi-state
agency of which a state is a member, and each public authority which issues
industrial development bonds on behalf of a private entity, will be regarded as
a separate issuer for determining the diversification of each Fund's portfolio.

.........Money Market may not invest more than 5% of its total assets, at the
time of the investment in question, in the securities of any one issuer other
than the United States Government and its agencies or instrumentalities, except
that up to 25% of the value of the Fund's total assets may be invested without
regard to such 5% limitation. (In order to comply with amendments to the
applicable portfolio diversification requirements, the Fund as a matter of
operating policy, prohibits the investment of more than 5% of the Fund's total
assets in securities issued by any one issuer, except that the Fund may invest
more than 5% of its total assets in First Tier Securities of a single issuer for
a period of up to three business days after the purchase thereof. The Fund may
not make more than one such investment at any time.)

2........10% Limit on Securities of Any One Issuer

.........None of Aggressive*, American Retirement, Foundation, Global,
Money Market, Short Intermediate-CA, Small Cap*, Tax Exempt and U.S. Real
Estate* may purchase more than 10% of any class of securities of any one issuer
other than the United States Government and its agencies or instrumentalities.

.........None of Evergreen, Growth and Income, Limited Market and Total
Return may purchase more than 10% of any class of securities of any one issuer
other than the United States Government and its instrumentalities.

.........None of Florida High Income*, National*, Short-Intermediate* and
Tax Strategic* may invest more than 10% of the voting securities of any one
issuer other than the United States Government and its agencies or
instrumentalities.

3........Investment for Purposes of Control or Management

.........No Fund(2) may invest in companies for the purpose of exercising
control or management.
- --------
(2) Not fundamental for Small Cap, Tax Strategic, U.S. Real Estate,
National and U.S. Government.

4........Purchase of Securities on Margin

.........None of Agressive*, American Retirement, Evergreen, Foundation,
Global, Growth and Income, Limited Market, Money Market, National,*
Short-Intermediate, Short Intermediate-CA, Tax-Exempt, Tax Strategic* and Total
Return may purchase securities on margin, except that each Fund may obtain such
short-term credits as may be necessary for the clearance of transactions.

.........None of Florida High Income*, Small Cap,* U.S. Government* and
U.S. Real Estate* may purchase securities on margin, except that each Fund may
obtain such short-term credits as may be necessary for clearance of
transactions, and provided that margin payments in connection with futures
contracts and options on futures contracts shall not constitute purchasing
securities on margin.

5........Unseasoned Issuers

.........Neither American Retirement nor Foundation may invest in the
securities of unseasoned issuers that have been in continuous operation for less
than three years, including operating periods of their predecessors.

.........None of Evergreen, Money Market and Total Return may invest more than
5% of its total assets (5% of total net assets for Evergreen) in securities of
unseasoned issuers that have been in continuous operation for less than three
years, including operating periods of their predecessors.

.........None of Florida High Income*, National, Short-Intermediate,
Short-Intermediate-CA and Tax Exempt may invest more than 5% of its total assets
in securities of unseasoned issuers (taxable securities of unseasoned issuers
for Short Intermediate, Short-Intermediate-CA and Tax Exempt) that have been in
continuous operation for less than three years, including operating periods of
their predecessors, except that no such limitation shall apply to the extent
that (i) each Fund may invest in obligations issued or guaranteed by the United
States Government and its agencies or instrumentalities, (ii)
Short-Intermediate, Short-Intermediate-CA and Tax Exempt may invest in Municipal
Securities, and (iii) Florida High Income*, National* may invest in Municipal
Bonds.

.........None of Growth and Income, Small Cap* and Tax Strategic* may invest
more than 15% of its total assets (10% of total net assets for Growth and
Income) in securities of unseasoned issuers that have been in continuous
operation for less than three years, including operating periods of their
predecessors.

.........Aggressive* and U.S. Real Estate* may not invest more than 15% of
its total assets in securities of unseasoned issuers that have been in
continuous operation for less than three years, including operating periods of
their predecessors, except obligations issued or guaranteed by the United States
Government and its agencies or instrumentalities (this limitation does not apply
to real estate investment trusts).

.........Global may not invest more than 5% of its total assets in securities of
unseasoned issuers that have been in continuous operation for less than three
years, including operating periods of their predecessors, except obligations
issued or guaranteed by the United States Government and its agencies or
instrumentalities (this limitation does not apply to real estate investment
trusts).

<PAGE>

6........Underwriting

.........None of Aggressive*, American Retirement, Evergreen, Foundation,
Global, Growth and Income, Limited Market, Money Market, Small Cap,* Tax
Strategic,* Total Return, U.S. Government and U.S. Real Estate* may engage in
the business of underwriting the securities of other issuers.

.........None of Florida High Income*, National,* Short-Intermediate,
Short-Intermediate - CA and Tax-Exempt may engage in the business of
underwriting the securities of other issuers, provided that the purchase of
Municipal Securities (Municipal Bonds for National), or other permitted
investments, directly from the issuer thereof (or from an underwriter for an
issuer) and the later disposition of such securities in accordance with a Fund's
investment program shall not be deemed to be an underwriting.

7........Interests in Oil, Gas or Other Mineral Exploration or Development
Programs

......... No Fund may purchase, sell or invest in interests in oil, gas or
other mineral exploration or development programs.

8........Concentration in Any One Industry

.........Neither Global nor U.S. Real Estate may concentrate its
investments in any one industry, except that each Fund will invest at least 65%
of its total assets in securities of companies engaged principally in the real
estate industry.

.........None of Evergreen, Growth and Income, Limited Market and Total
Return may concentrate its investments in any one industry, except that each
Fund may invest up to 25% of its total net assets in any one industry.

.........None of Aggressive, American Retirement, Foundation, Money Market,
Small Cap and Tax Strategic may invest 25% or more of its total assets in the
securities of issuers conducting their principal business activities in any one
industry; provided, that this limitation shall not apply (i) with respect to
each Fund, to obligations issued or guaranteed by the United States Government
or its agencies or instrumentalities, (ii) with respect to Tax Strategic, to
Municipal Securities, or (iii) with respect to Money Market, to certificates of
deposit, bankers' acceptances and interest bearing savings deposits. For
purposes of this restriction, utility companies, gas, electric, water and
telephone companies will be considered separate industries.

.........U.S. Government may not purchase the securities of any issuer
(other than obligations issued or guaranteed by the government of the United
States or its agencies or instrumentalities) if, as a result, 25% or more of the
Fund's total assets would be invested in the securities of issuers having their
principal business activities in the same industry.

.........None of Short-Intermediate, Short-Intermediate-CA and Tax Exempt may
invest 25% or more of its total assets in the securities of issuers conducting
their principal business activities in any one industry; provided, that this
limitation shall not apply (i) with respect to each Fund, to obligations issued
or guaranteed by the United States Government or its agencies or
instrumentalities and Municipal Securities, or (ii) with respect to
Short-Intermediate-CA and Tax-Exempt, to certificates of deposit and bankers'
acceptances issued by domestic branches of United States banks).

.........Florida High Income and National may not invest more than 25% of
their total assets in the securities of issuers conducting their principal
business activities in any one industry; provided, that this limitation shall
not apply to obligations issued or guaranteed by the United States Government or
its agencies or instrumentalities or Municipal Bonds.

9........Warrants

.........None of Aggressive*, American Retirement, Evergreen, Florida High
Income*, lobal, Growth and Income, Limited Market, National,*
Short-Intermediate, Short-Intermediate - CA, Small Cap,* Tax-Exempt, Total
Return and U.S. Real Estate* may invest more than 5% of its total net assets in
warrants, and, of this amount, no more than 2% of each Fund's total net assets
may be invested in warrants that are listed on neither the New York nor the
American Stock Exchange.

.........Neither Foundation nor Tax Strategic* may invest more than 5% of
its net assets in warrants, and of this amount, no more than 2% of each Fund's
net assets may be invested in warrants that are listed on neither the New York
nor the American Stock Exchanges.

.........U.S. Government* may not invest more than 5% of its total net
assets in warrants, and of this amount, no more than 2% of the Fund's total net
assets may be invested in warrants that are not traded on principal domestic or
foreign exchanges.

10.......Ownership by Directors/Trustees

.........None of Agressive*, American Retirement, Evergreen, Foundation,
Florida High Income*, Global, Growth and Income, Limited Market, Money Market,
National, Short-Intermediate, Short-Intermediate-CA, Tax-Exempt, Total Return
and U.S. Government* may purchase or retain the securities of any issuer if (i)
one or more officers or trustees/directors of the Fund or its investment adviser
individually owns or would own, directly or beneficially, more than 1/2% of the
securities of such issuer, and (ii) in the aggregate, such persons own or would
own, directly or beneficially, more than 5% of such securities.

.........None of Small Cap,* Tax Strategic* and U.S. Real Estate* may
purchase or retain the securities of any issuer if, to the Fund's knowledge, (i)
one or more officers or trustees/directors of the Fund or its investment adviser
individually owns or would own, directly or beneficially, more than 1/2% of the
securities of such issuer, and (ii) in the aggregate, such persons own or would
own, directly or beneficially, more than 5% of such securities.
11.......Short Sales

.........None of Aggressive*, National,* Money Market, Short-Intermediate,
Short-Intermediate-CA and Tax Exempt may make short sales of securities or
maintain a short position.

.........Neither American Retirement nor Foundation may make short sales of
securities unless, at the time of each such sale and thereafter while a short
position exists, each Fund owns the securities sold or securities convertible
into or carrying rights to acquire such securities.

.........None of Evergreen, Growth and Income, Global, Limited Market, Tax
Strategic* and Total Return may make short sales of securities unless, at the
time of each such sale and thereafter while a short position exists, each Fund
owns an equal amount of securities of the same issue or owns securities which,
without payment by the Fund of any consideration, are convertible into, or are
exchangeable for, an equal amount of securities of the same issue.

.........None of Florida High Income*, Small Cap,* U.S. Real Estate* and
U.S. Government* may make short sales of securities unless, at the time of each
such sale and thereafter while a short position exists, each Fund owns an equal
amount of securities of the same issue or owns securities which, without payment
by the Fund of any consideration, are convertible into, or are exchangeable for,
an equal amount of securities of the same issue (and provided that transactions
in futures contracts and options are not deemed to constitute selling securities
short).

12.......Lending of Funds

.........None of Global, Small Cap, U.S. Government, U.S. Real Estate and
Tax Strategic may lend its funds to other persons, except through the purchase
of a portion of an issue of publicly distributed debt securities or the entering
into of repurchase agreements.

.........None of American Retirement, Evergreen, Foundation, Growth and
Income, Limited Market and Total Return may lend its funds to other persons,
except through the purchase of a portion of an issue of publicly distributed
debt securities.

.........None of Aggressive, Florida High Incoem, National,
Short-Intermediate, Short-Intermediate-CA and Tax Exempt may lend its funds to
other persons, provided that each Fund may purchase issues of debt securities,
acquire privately negotiated loans made to municipal borrowers and enter into
repurchase agreements.

.........Money Market may not lend its funds to other persons, provided
that it may purchase money market securities or enter into repurchase
agreements.

13.......Lending of Securities

.........None of Foundation, Aggressive*, Florida High Income*, Global,
National, Short-Intermediate, Small Cap, Tax Strategic, U.S. Government and U.S.
Real Estate may lend its portfolio securities, unless the borrower is a broker,
dealer or financial institution that pledges and maintains collateral with the
Fund consisting of cash or securities issued or guaranteed by the United States
Government having a value at all times not less than 100% of the current market
value of the loaned securities, including accrued interest, provided that the
aggregate amount of such loans shall not exceed 30% of the Fund's total assets
(30% of the Fund's total net assets for Global, U.S. Government and U.S. Real
Estate).

.........None of American Retirement, Evergreen, Growth and Income and Limited
Market may lend its portfolio securities, unless the borrower is a broker,
dealer or financial institution that pledges and maintains collateral with the
Fund consisting of cash or securities issued or guaranteed by the United States
Government having a value at all times not less than 100% of the value of the
loaned securities (100% of the current market value for American Retirement),
provided that the aggregate amount of such loans shall not exceed 30% of the
Fund's total net assets.

.........None of Money Market, Short-Intermediate-CA, Tax Exempt and Total
Return may lend its portfolio securities, unless the borrower is a broker,
dealer or financial institution that pledges and maintains collateral with the
Fund consisting of cash, letters of credit or securities issued or guaranteed by
the United States Government having a value at all times not less than 100% of
the current market value of the loaned securities (100% of the value of the
loaned securities for Total Return), including accrued interest, provided that
the aggregate amount of such loans shall not exceed 30% of the Fund's total
assets (30% of the Fund's total net assets for Total Return).

14.......Commodities

.........None of National,* Short-Intermediate, Short-Intermediate-CA, Tax
Exempt and Tax Strategic* may purchase, sell or invest in commodities, commodity
contracts or financial futures contracts.

.........None of Aggressive*, Florida High Income*, Small Cap, U.S.
Government and U.S. Real Estate may purchase, sell or invest in physical
commodities unless acquired as a result of ownership of securities or other
instruments (but this shall not prevent the Fund from purchasing or selling
options and futures contracts or from investing in securities or other
instruments backed by physical commodities).

.........None of American Retirement, Evergreen, Foundation, Growth and
Income, Limited Market, Money Market and Total Return may purchase, sell or
invest in commodities or commodity contracts.

.........Global may not purchase, sell or invest in commodities or commodity
contracts; provided, however, that this policy does not prevent the Fund from
purchasing and selling currency futures contracts and entering into forward
foreign currency contracts.

15.......Real Estate

.........Neither Small Cap nor U.S. Government may purchase or invest in
real estate or interests in real estate (but this shall not prevent either Fund
from investing in marketable securities issued by companies such as real estate
investment trusts which deal in real estate or interests therein, and shall not
prevent U.S. Government from investing in participation interests in pools of
real estate mortgage loans).

.........Global may not purchase or invest in real estate or interests in
real estate (although it may purchase securities secured by real estate or
interests therein, or issued by companies or investment trusts which invest in
real estate or interests therein).

.........U.S. Real Estate* may not purchase, sell or invest in real estate
or interests in real estate (although it may purchase securities secured by real
estate or interests therein, or issued by companies or investment trusts which
invest in real estate or interests therein).

.........None of Aggressive*, American Retirement, Evergreen, Foundation,
Florida High Income*, Growth and Income, Limited Market, Money Market, Tax
Strategic and Total Return may purchase, sell or invest in real estate or
interests in real estate, except that (i) each Fund may purchase, sell or invest
in marketable securities of companies holding real estate or interests in real
estate, including real estate investment trusts, and (ii) Tax Strategic may
purchase, sell or invest in Municipal Securities or other debt securities
secured by real estate or interests therein.

None of National, Short-Intermediate, Short-Intermediate-CA and Tax Exempt may
purchase, sell or invest in real estate or interests in real estate, except that
each Fund may purchase Municipal Securities (Municipal Bonds for National) and
other debt securities secured by real estate or interests therein.

16.......Borrowing, Senior Securities, Reverse Repurchase Agreements

.........(Certain Funds have additional fundamental policies relating to
senior securities, repurchase agreements and reverse repurchase agreements. (See
Items 17 and 20 below)).

.........None of American Retirement, Foundation, Limited Market and Total
Return may borrow money except from banks as a temporary measure to facilitate
redemption requests which might otherwise require the untimely disposition of
portfolio investments and for extraordinary or emergency purposes (and, with
respect to American Retirement only, for leverage), provided that the aggregate
amount of such borrowings shall not exceed 5% of the value of the Fund's total
net assets (5% of total assets for American Retirement and Foundation) at the
time of any such borrowing, or mortgage, pledge or hypothecate its assets,
except in an amount sufficient to secure any such borrowing.

.........Evergreen may not borrow money except from banks as a temporary measure
for extraordinary or emergency purposes (i) on an unsecured basis, subject to
the requirements that the value of the Fund's assets, including the proceeds of
borrowings, does not at any time become less than 300% of the Fund's
indebtedness; provided, however, that if the value of the Fund's assets becomes
less than such amount, the Fund will reduce its borrowings within three business
days so that the value of the Fund's assets will be at least 300% of its
indebtedness, or (ii) may make such borrowings on a secured basis, provided that
the aggregate amount of such borrowings shall not exceed 5% of the value of its
total net assets at the time of any such borrowing, or mortgage, pledge or
hypothecate its assets, except in an amount not exceeding 15% of its total net
assets taken at cost to secure such borrowing.

.........Aggressive may not borrow money except on an unsecured basis up to
25% of its net assets, subject to the requirements that the value of the Fund's
assets, including the proceeds of borrowings, does not at any time become less
than 300% of the Fund's indebtedness; provided, however, that if the value of
the Fund's assets becomes less than such amount, the Fund will reduce its
borrowings within three business days so that the value of the Fund's assets
will be at least 300% of its indebtedness.

.........None of Global, Short-Intermediate, Short-Intermediate-CA,
Small-Cap, Tax-Exempt, Tax Strategic, U.S. Government and U.S. Real Estate may
borrow money, issue senior securities or enter into reverse repurchase
agreements, except for temporary or emergency purposes, and not for leveraging,
and then in amounts not in excess of 10% of the value of each Fund's total
assets at the time of such borrowing; or mortgage, pledge or hypothecate any
assets except in connection with any such borrowing and in amounts not in excess
of the lesser of the dollar amounts borrowed or 10% of the value of each Fund's
total assets at the time of such borrowing, provided that each of Small Cap, Tax
Strategic, U.S. Government and U.S. Real Estate will not purchase any securities
at any time when borrowings, including reverse repurchase agreements, exceed 5%
of the value of its total assets, and provided further that each of Global, Tax
Exempt, Short-Intermediate and Short-Intermediate-CA will not purchase any
securities at times when any borrowings (including reverse repurchase
agreements) are outstanding. No Fund will enter into reverse repurchase
agreements exceeding 5% of the value of its total assets.

.........Money Market may not borrow money, issue senior securities or
enter into reverse repurchase agreements except for temporary or emergency
purposes, and not for leveraging, and then in amounts not in excess of 10% of
the value of the Fund's assets at the time of such borrowing; or mortgage,
pledge or hypothecate any assets except in connection with any such borrowing
and in amounts not in excess of the lesser of the dollar amounts borrowed or 10%
of the value of the Fund's assets at the time of such borrowing. The Fund will
not enter into reverse repurchase agreements exceeding 5% of the value of its
total assets. The Fund also will not purchase any additional securities whenever
any borrowings are outstanding.

.........Florida High Income and National may not borrow money or enter
into reverse repurchase agreements except for temporary or emergency purposes,
and not for leveraging, and then in amounts not in excess of 10% of the value of
the Fund's total assets at the time of such borrowing; or mortgage, pledge or
hypothecate any assets except in connection with any such borrowing and in
amounts not in excess of the lesser of the dollar amounts borrowed or 10% of the
value of the Fund's total assets at the time of such borrowing. The Fund will
not enter into reverse repurchase agreements exceeding 5% of the value of its
total assets.

.........Growth and Income may not borrow money except from banks as a temporary
measure for extraordinary or emergency purposes, provided that the aggregate
amount of such borrowings shall not exceed 5% of the value of the Fund's total
assets at the time of such borrowing; or mortgage, pledge or hypothecate its
assets, except in an amount not exceeding 15% of its assets taken at cost to
secure such borrowing.

17.......Senior Securities

.........(The policies of certain Funds concerning senior securities are
set forth in Item 16 above.)

.........National* may not issue senior securities.

.........Neither American Retirement nor Foundation may issue senior
securities, except as permitted by the Investment Company Act of 1940, as
amended.

.........Growth and Income may not issue senior securities, as defined in the
Investment Company Act of 1940, as amended, except that this restriction shall
not be deemed to prohibit the Fund from (i) making any permitted borrowings,
mortgages or pledges, (ii) lending its portfolio securities, or (iii) entering
into permitted repurchase transactions.

.........Limited Market may not issue senior securities as defined in the
Investment Company Act of 1940, as amended, except insofar as the Fund may be
deemed to have issued a senior security by reason of borrowing money in
accordance with the restrictions described above.

18.......Joint Trading

.........None of Aggressive, American Retirement, Evergreen, Florida High
Income, Foundation, Global, Growth and Income, Limited Market and Total Return,
Small Cap,* Tax Strategic,* U.S. Government* and U.S. Real Estate* may
participate on a joint or joint and several basis in any trading account in any
securities. (The "bunching of orders for the purchase or sale of portfolio
securities with the Fund's investment adviser or accounts under its management
to reduce brokerage commissions, to average prices among them or to facilitate
such transactions is not considered a trading account in securities for purposes
of this restriction).

19.......Options

.........None of Foundation, Global, Limited Market, Money Market, Tax
Strategic* and U.S. Real Estate* may write, purchase or sell put or call
options, or combinations thereof, except that Global and U.S. Real Estate may do
so as permitted under "Investment Objective" in each such Fund's Prospectus.

.........None of National,* Short-Intermediate, Short-Intermediate-CA and
Tax Exempt may write, purchase or sell put or call options, or combinations
thereof; except each Fund may purchase securities with rights to put securities
to the seller in accordance with its investment program.

.........None of Evergreen, Growth and Income and Total Return may write,
purchase or sell put or call options, or combinations thereof, except that each
Fund is authorized to write covered call options on portfolio securities and to
purchase call options in closing purchase transactions, provided that (i) such
options are listed on a national securities exchange, (ii) the aggregate market
value of the underlying securities does not exceed 25% of the Fund's total net
assets, taken at current market value on the date of any such writing, and (iii)
the Fund retains the underlying securities for so long as call options written
against them make the shares subject to transfer upon the exercise of any
options.

.........American Retirement may not write, purchase or sell put or call
options, or combinations thereof, except that the Fund is authorized (i) to
write call options traded on a national securities exchange against no more than
15% of the value of the equity securities (including securities convertible into
equity securities) held in its portfolio, provided that the Fund owns the
optioned securities or securities convertible into or carrying rights to acquire
the optioned securities and (ii) to purchase call options in closing purchase
transactions.

20.......Repurchase Agreements; Reverse Repurchase Agreements.

.........(The policies of certain Funds concerning repurchase agreements
and/or reverse repurchase agreements are set forth in Item 16 above).

.........Money Market may not invest more than 10% of its total assets in
repurchase agreements maturing in more than seven days.

.........Neither American Retirement nor Foundation may enter into
repurchase agreements or reverse repurchase agreements.

21.......Investment in Equity Securities

.........American Retirement may not invest more than 75% of the value of
its total assets in equity securities (including securities convertible into
equity securities).

22. ....Investment in Municipal Securities

.........National may not invest more than 20% of its total assets in
securities other than Municipal Bonds (as described under "Investment Objective"
in the Fund's Prospectus), unless extraordinary circumstances dictate a more
defensive posture.

.........Neither Short-Intermediate nor Tax Exempt may invest more than 20%
of its total assets in securities other than Municipal Securities (as described
under "Investment Objective" in each Fund's Prospectus), unless extraordinary
circumstances dictate a more defensive posture.

.........Short-Intermediate-CA may not invest more than 20% of its total
assets in securities other than California Municipal Securities (as described
under "Investment Objective" in the Fund's Prospectus), unless extraordinary
circumstances dictate a more defensive posture.

........Florida High Income* will invest, under normal market conditions,
at least 80% of its net assets in municipal securities and at least 90% of such
assets will be invested in Florida obligations.

23.......Investment in Money Market Securities
.........Money Market may not purchase any securities other than money
market instruments (as described under "Investment Objective" in the Fund's
Prospectus).

NON FUNDAMENTAL OPERATING POLICIES

.........Certain Funds have adopted additional non-fundamental operating
policies. Operating policies may be changed by the Board of Trustees without a
shareholder vote.

1........Securities Issued by Government Units; Industrial Development Bonds.
Each of Short-Intermediate and Tax-Exempt have determined not to invest more
than 25% of its total assets (i) in securities issued by governmental units
located in any one state, territory or possession of the United States (but this
limitation does not apply to project notes backed by the full faith and credit
of the United States Government) or (ii) industrial development bonds not backed
by bank letters of credit. In addition, Short-Intermediate-CA has determined not
to invest more than 25% of its total assets in industrial development bonds not
backed by bank letters of credit.

2........Futures and Options Transactions. Each of Small Cap, U.S. Real Estate
and U.S. Government has adopted the following limitations on futures and options
transactions: Each Fund has filed a notice of eligibility for exclusion from the
definition of the term "commodity pool operator" with the Commodity Futures
Trading Commission (CFTC) and the National Futures Association, which regulate
trading in the futures markets. Pursuant to Section 4.5 of the regulations under
the Commodity Exchange Act, the notice of eligibility included the following
representations:

.........The Fund will use commodity futures or commodity options contracts
solely for bona fide hedging purposes within the meaning and intent of Section
1.3(z)(1) of the General Regulations under the Act (the "Regulations");
provided, however, that in addition, with respect to positions in commodity
futures or commodity option contracts which do not come within the meaning and
intent of Section 1.3(z)(i) of the Regulations, the Fund represents that the
aggregate initial margin and premiums required to establish such positions will
not exceed five percent (5%) of the fair market value of the Fund's portfolio,
after taking into account unrealized profits and unrealized losses on any such
contracts it has entered into; and, provided, further, that in the case of an
option that is in-the-money at the time of purchase, the in-the-money amount as
defined in Section 190.01(x) may be excluded in computing such five percent;

.........The Fund will not be, and has not been, marketing participations
to the public as or in a commodity pool or otherwise as or in a vehicle for
trading in the commodity future or commodity options market;

.........The Fund will disclose in writing to each prospective participant
the purpose of and the limitations on the scope of the commodity future and
commodity options trading in which it intends to engage; and

.........The Fund will submit to such special calls as the CFTC may make to
require the qualifying entity to demonstrate compliance with the provision of
Reg. 4.5(c).

.........In addition to the above limitations, the Fund will not: (i) sell
futures contracts, purchase put options or write call options if, as a result,
more than 30% of the Fund's total assets (25% of total assets for U.S.
Government) would be hedged with futures and options under normal conditions;
(ii) purchase futures contracts or write put options if, as a result, the Fund's
total obligations upon settlement or exercise of purchased futures contracts and
written put options would exceed 30% of its total assets (25% of total assets
for U.S. Government); or (iii) purchase call options if, as a result, the
current value of option premiums for options purchased by the Fund would exceed
5% of the Fund's total assets. These limitations do not apply to options
attached to, or acquired or traded together with their underlying securities,
and do not apply to securities that incorporate features similar to options.

3........Illiquid Securities.

.........None of Evergreen, Global, Growth and Income, Limited Market,
Money Market, National, Short-Intermediate, Short-Intermediate-CA, Small Cap,
Tax-Exempt, Tax Strategic, Total Return, U.S. Government and U.S. Real Estate
may invest more than 15% (10% for Money Market and Tax-Exempt) of its net assets
in illiquid securities and other securities which are not readily marketable,
including repurchase agreements which have a maturity of longer than seven days,
but excluding securities eligible for resale under Rule 144A of the Securities
Act of 1933, as amended, which the Directors/Trustees have determined to be
liquid.

.........Neither American Retirement nor Foundation may invest more than 15% of
its net assets in illiquid securities and other securities (other than
repurchase agreements) which are not readily marketable, excluding securities
eligible for resale under Rule 144A of the Securities Act of 1933, as amended,
which the Trustees have determined to be liquid.

4........Other Investment Companies. Each Fund may purchase the securities
of other investment companies, except to the extent such purchases are not
permitted by applicable law.

5........Other. In order to comply with certain state blue sky limitations:
-----

.........Each of American Retirement, Evergreen, Foundation, Global, Growth
and Income, National, Money Market, Short-Intermediate, Short-Intermediate-CA,
Small Cap, Tax-Exempt, Tax Strategic, Total Return, U.S. Government and U.S.
Real Estate interprets fundamental investment restriction 15 to prohibit
investment in real estate limited partnerships which are not readily marketable.
.........Foundation interprets fundamental investment restriction 11 to permit
short sales only where the Fund owns the securities sold or securities
convertible into or carrying rights to acquire such securities without payment
of any additional consideration therefor.

CERTAIN ADDITIONAL RISK CONSIDERATIONS

.........There can be no assurance that a Fund will achieve its investment
objective and an investment in the Fund involves certain risks which are
described under "Description of the Funds" in the Prospectus.

.........In addition, the ability of Florida High Income, National,
Short-Intermediate, Short-Intermediate-CA, Tax-Exempt, and Tax Strategic to
achieve their respective investment objectives is dependent on the continuing
ability of the issuers of Municipal Bonds in which the Funds' invest -- and of
banks issuing letters of credit backing such securities -- to meet their
obligations with respect to the payment of interest and principal when due. The
ratings of Moody's, S&P and other nationally recognized rating organizations
represent their opinions as to the quality of Municipal Bonds which they
undertake to rate. Ratings are not absolute standards of quality; consequently,
Municipal Bonds with the same maturity, coupon, and rating may have different
yields. There are variations in Municipal Bonds, both within a particular
classification and between classifications, resulting from numerous factors.

......... Unlike other types of investments, Municipal Bonds have
traditionally not been subject to regulation by, or registration with, the
Securities and Exchange Commission, although there have been proposals which
would provide for regulation in the future.

......... The federal bankruptcy statutes relating to the debts of
political subdivisions and authorities of states of the United States provide
that, in certain circumstances, such subdivisions or authorities may be
authorized to initiate bankruptcy proceedings without prior notice to or consent
of creditors, which proceedings could result in material and adverse changes in
the rights of holders of their obligations. In addition, there have been
lawsuits challenging the issuance of pollution control revenue bonds or the
validity of their issuance under state or Federal law which could ultimately
affect the validity of those Municipal Bonds or the tax-free nature of the
interest thereon.

......... While not anticipated, it is conceivable that substantial
redemptions could result in the realization by Florida High Income, National,
Short-Intermediate, Tax-Exempt, and Short-Intermediate-CA of gains. Short-term
gains would be taxable as ordinary income when distributed to the Fund's
shareholders. Long-term gains would be treated as capital gains.

......... While Global and U.S. Real Estate are technically diversified
within the meaning of the Investment Company Act of 1940, as amended (the "1940
Act"), because the investment alternatives of each Fund are restricted by a
policy of concentrating at least 65% of its total assets in companies in the
real estate industry, investors should understand that investment in these Funds
may be subject to greater risk and market fluctuation than an investment in a
portfolio of securities representing a broader range of industry investment
alternatives.

Borrowing.
.........The table set forth below describes the extent to which Evergreen
and Global entered into borrowing transactions during the fiscal years ended
September 30, 1993 and 1994.
<TABLE>
<S> <C> <C> <C> <C>
Evergreen
Amount of Debt Average Amount of Average Number of Average Amount of
Outstanding Debt Outstanding Shares Outstanding Debt Per-Share
Year Ended During the Year During the Year During the Year During the Year
September 30, 1993 $0 $ 1,369,863 50,301,298 $0.03
September 30, 1994 $0 $11,164,110 39,709,107 $0.28

Global
September 30, 1993 $0 $ 1,369,863 50,301,298 $0.03

</TABLE>

<PAGE>
MANAGEMENT

.........The following is a list of the Trustees or Directors and executive
officers of each Fund:

Laurence B. Ashkin, 180 East Pearson Street, Chicago, IL
Trustee/Director. Real estate developer and construction consultant
since 1980; President of Centrum Equities since 1987 and Centrum
Properties, Inc. since 1980.

Foster Bam, Greenwich Plaza, Greenwich, CT Trustee/Director. Partner in the
law firm of Cummings and Lockwood since 1968.(3)(2)

James S. Howell, 4124 Crossgate Road, Charlotte, NC
Trustee/Director. Retired Vice President of Lance Inc.; Chairman of the
Distribution Comm. Foundation for the Carolinas from 1989 to 1993;
Chairman of the First Union Funds since 1984.

Robert J. Jeffries, 2118 New Bedford Drive, Sun City Center, FL
Trustee/Director. Corporate consultant since 1967.

Gerald M. McDonnell, 821 Regency Drive, Charlotte, NC Trustee/Director. Sales
Representative with Nucor-Yamoto Inc. since 1988; Trustee of the First
Union Funds since 1988.

Thomas L. McVerry, 4419 Parkview Drive, Charlotte, NC
Trustee/Director. Senior executive and advisor to the Board of Directors
of Rexham Corporation from 1973 to 1980; Director of Carolina
Cooperative Federal Credit Union since 1990 and Rexham Corporation from
1988 to 1990; Vice President of Rexham Industries, Inc. from 1989 to
1990; Vice President-Finance and Resources, Rexham Corporation from 1979
to 1990; Trustee of the First Union Funds since October 1993.

William Walt Pettit, Holcomb and Pettit, P.A., 207 West Trade St., Charlotte, NC
Trustee/Director. Partner in the law firm Holcomb and Pettit, P.A. since
1990; Attorney, Clontz and Clontz from 1980 to 1990; Trustee of the
First Union Funds since 1988.(4)

Russell A. Salton, III, M.D., Primary Physician Care, 1515 Mockingbird Lane,
Charlotte, NC Trustee/Director. President, Primary Physician Care since
1990; President, Metrolina Family Practice Group, P.A. from 1982 to 1989;
Trustee of the First Union Funds since 1984.

Michael S. Scofield, 212 S. Tryon Street Suite 980, Charlotte, NC
Trustee/Director. Attorney, Law Offices of Michael S. Scofield since
prior to 1989; Trustee of the First Union Funds since 1984.

John J. Pileggi, 237 Park Avenue, Suite 910, New York, NY President and
Treasurer. Senior Managing Director, Furman Selz Incorporated since 1992,
Managing Director from 1984 to 1992.

Joan V. Fiore, 237 Park Avenue, Suite 910, New York, NY Secretary. Managing
Director and Counsel, Furman Selz Incorporated since 1991; Staff
Attorney, Securities and Exchange Commission from 1986 to 1991.

Donald E. Brostrom, 237 Park Avenue, Suite 910, New York, NY Assistant
Treasurer. Director of Fund Services, Furman Selz Incorporated since
1992, Associate Director from 1986 to 1992.

Sheryl A. Hirschfeld, 237 Park Avenue, Suite 910, New York, NY Assistant
Secretary. Director, Corporate Secretary Services, Furman Selz Incorporated
since 1994; Assistant to the Corporate Secretary, The Dreyfus Corporation
since prior to 1989.

Stephen W. St. Clair, 237 Park Avenue, Suite 910, New York, NY
Assistant Treasurer. Associate Director of Fund Services, Furman Selz
Incorporated since 1994, Administrator from 1992 to 1994; Assistant
Treasurer of J. W. Seligman Co., Inc. from 1989 to 1992.

The officers of the Funds are all officers and/or employees of Furman
Selz Incorporated. Furman Selz Incorporated is the parent of Evergreen Funds
Distributor, Inc., the distributor of each Class of shares of each Fund.
- ------------
(3) Mr. Bam may be deemed to be an "interested person" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act") due to the fact
that his son is employed by the Adviser.

(4) Mr. Pettit may be deemed to be an "interested person" within the
meaning of the 1940 Act as a result of the legal services rendered to a
subsidiary of First Union by the law firm of Holcomb and Pettit, P.A.

The Funds do not pay any direct remuneration to any officer or Trustee/
Director who is an "affiliated person" of the Evergreen Asset, First Union
National Bank of North Carolina ("FUNB") or their affiliates. Currently, none of
the Funds' Trustees/Directors is an "affiliated person". One of the
Trustees/Directors, Mr. Pettit, is considered an "interested person" of the
Funds by virtue of the fact that he and his firm provide legal services to FUNB.
Another Trustee/Director, Mr. Bam, is considered an "interested person" of the
Fund by virtue of the fact that his son is employed by Evergreen Asset. However,
Mr. Bam and Mr. Pettit are not considered "affiliated persons" of Evergreen
Asset or FUNB as defined in the 1940 Act. The Trusts or Funds pay each
Trustee/Director who is not an "affiliated person" an annual retainer and a fee
per meeting attended, plus expenses (and $50 for each telephone conference
meeting) as follows:

Name of Trust/Fund Annual Retainer Meeting Fee

Evergreen Trust $ 4,500
Evergreen $ 300
Aggressive 100
Total Return 5,500 300
Limited Market 500 100
Growth and Income 500 100
The Evergreen American Retirement Trust 1,000
American Retirement 100
Small Cap 100
The Evergreen Money Market Trust 300
Evergreen Municipal Trust and Fixed Income Trust 4,000
Tax Exempt 100
Short-Intermediate 100
Short-Intermediate-CA 100
National 100
Florida High Income 100
U.S. Government 100
Evergreen Real Estate Equity Trust 1,000
Global 100
U.S. Real Estate 100
Evergreen Foundation Trust 500
Foundation 100
Tax Strategic 100

The Trustees/Directors who were not affiliated with the Adviser during
each Fund's last fiscal year received total Trustees/Directors' fees and
expenses as follows:

Fees No. of
Name of Fund Fiscal Year Ended* Expenses Meetings

Evergreen September 30, 1994 $34,175 4
Global September 30, 1994 8,080 4
U.S. Real Estate September 30, 1994 2,847 4
Limited Market September 30, 1994 3,223 4
Total Return January 31, 1994
Growth and Income December 31, 1994
American Retirement December 31, 1994
Small Cap December 31, 1994
Foundation December 31, 1994
Tax Strategic December 31, 1994
Short-Intermediate August 31, 1994 4,377 4
Short-Intermediate-CA August 31, 1994 3,129 4
National August 31, 1994 3,620 4
Tax Exempt August 31, 1994 12,390 4
Money Market August 31, 1994 11,478 4
U.S. Government March 31, 1994 1,772 3

- ----------

* The following Funds changed their fiscal year ends during the periods
covered by the foregoing table: Global and U.S. Real Estate from December 31, to
September 30; and Limited Market, from May 31 to September 30. Accordingly, the
Trustees/Directors fees and expenses reported in the foregoing table reflect,
for Global and U.S. Real Estate, the period from January 1, 1994 to September
30, 1994 and, for Limited Market, the period from June 1, 1994 to September 30,
1994. Also Small Cap and Tax Strategic commenced operations on October 1, 1993,
November 2, 1993 and September 1, 1993, respectively, and therefore the figures
set forth in the table above reflect expenses incurred for the period from
commencement of operations through December 31, 1993.

No officer or Trustee/Director of the Funds owned Class A, B or C
shares of any Fund as of the date hereof. The number and percent of outstanding
shares Class Y shares of each Fund in the Evergreen Group of Funds owned by
officers and Trustees/Directors as a group on April 15, 1995, is as follows:

Ownership by Officers and Trustees/Directors

No. of Shares Owned No. of Shares Owned
By Officers Trustees/Directors as a % of Fund
Name of Fund as a as a Group Shares Outstanding

Evergreen - Y
Total Return - Y
Limited Market - Y
Growth and Income - Y
Money Market - Y
American Retirement - Y
Small Cap - Y
Tax Exempt - Y
Short-Intermediate - Y
Short-Intermediate-CA - Y
National - Y
Global - Y
U.S. Real Estate - Y
Foundation - Y
Tax Strategic - Y
U.S. Government- Y

Of the Funds set forth above where the Directors/Trustees or Officers
collectively own more than 1%, but less than 5%, of the outstanding shares, the
percentage owned by each Director/Trustee or Officer owning shares of such Funds
is as follows:
<TABLE>
<CAPTION>

Name and Address Name of Fund Number of Shares Percentage of Class
- ---------------- ------------ ---------------- -------------------
<S> <C> <C> <C>

Foster Bam Limited Market - Y
2 Greenwich Plaza Growth and Income - Y
Greenwich, CT 06830 American Retirement - Y
Short-Intermediate - Y

Robert J. Jeffries Limited Market - Y
2118 New Bedford Drive Growth and Income - Y
Sun City, FL 33573 American Retirement - Y
Short-Intermediate - Y

Joan V. Fiore American Retirement - Y
237 Park Avenue
New York, NY 10017
</TABLE>

The table below sets forth information with respect to each person,
including Directors or Trustees of the Funds who, to each Funds knowledge, owned
beneficially or of record more than 5% of each Fund's total outstanding shares
as of April 15, 1995:
<TABLE>
<CAPTION>

Name and Address Name of Fund Number of Shares % of Class
- ---------------- ------------ ---------------- ----------
<S> <C> <C> <C>

Stephen A. Lieber
2500 Westchester Ave.
Purchase, NY 10577

Foster Bam
2 Greenwich Plaza Greenwich, CT 06830

Nola Maddox Falcone 2500 Westchester Ave.
Purchase, NY 10577

Pax Beale DBA
Bush & Octavia Realty Co. 163 Alpine
San Francisco, CA 94117
</TABLE>

*As a result of his ownership of .......... and......... , of the shares of
National, Small Cap, U.S. Real Estate, Tax Strategic and U.S. Government,
respectively, on April 15, 1995, Mr. Lieber may be deemed to "control" the Fund,
as that term is defined in Section 2(a)(9) of the Investment Company Act of
1940, as amended (the "1940 Act"). If any matter was submitted for a shareholder
vote while Mr. Lieber owned more than 50% of any Fund's shares, the presence of
Mr. Lieber or his proxy would be required for, and constitute, a quorum and the
vote of Mr. Lieber or his proxy would be dispositive.

INVESTMENT ADVISERS
(See also "Management of the Fund" in each Fund's Prospectus)

EVERGREEN ASSET MANAGEMENT CORP.

The investment adviser of each Fund in the Evergreen Group of Funds,
except Aggressive and Florida High Income, is Evergreen Asset Management Corp.,
a New York corporation, with offices at 2500 Westchester Avenue, Purchase, New
York (the "Adviser"). Evergreen Asset is owned by First Union National Bank of
North Carolina (previously defined as "FUNB") which, in turn, is a subsidiary of
First Union Corporation. The Directors of Evergreen Asset are Richard K. Wagoner
and Barbara I. Colvin. The executive officers of Evergreen Asset are Stephen A.
Lieber, Chairman and Co-Chief Executive Officer, Nola Maddox Falcone, President
and Co-Chief Executive Officer, Theodore J. Israel, Jr., Executive Vice
President, Joseph J. McBrien, Senior Vice President and General Counsel, and
George R. Gaspari, Senior Vice President and Chief Financial Officer.

On June 30, 1994, Evergreen and Lieber and Company ("Lieber") were
acquired by First Union Corporation ("First Union") through certain of its
subsidiaries. Evergreen was acquired by FUNB, a wholly-owned subsidiary (except
for directors' qualifying shares) of First Union, by merger into EAMC
Corporation ("EAMC") a wholly-owned subsidiary of FUNB. EAMC then assumed the
name "Evergreen Asset Management Corp." and succeeded to the business of
Evergreen. Contemporaneously with the succession of EAMC to the business of
Evergreen and its assumption of the name "Evergreen Asset Management Corp.",
each Fund entered into a new investment advisory agreement the ("Investment
Advisory Agreement") with EAMC and into a distribution agreement with Evergreen
Funds Distributor, Inc., a subsidiary of Furman Selz Incorporated. At that time,
EAMC also entered into a new sub-advisory agreement with Lieber pursuant to
which Lieber provides certain services to Evergreen Asset in connection with its
duties as investment adviser to each Fund.

The partnership interests in Lieber, a New York general partnership,
were acquired by Lieber I Corp. and Lieber II Corp., which are both wholly-owned
subsidiaries of FUNB. The business of Lieber is being continued. The new
advisory and sub-advisory agreements were approved by the Funds' shareholders at
their meeting held on June 23, 1994, and became effective on June 30, 1994.

Under its Investment Advisory Agreement with each Fund for which it
serves as investment adviser, Evergreen Asset has agreed to furnish reports,
statistical and research services and recommendations with respect to each Funds
portfolio of investments. In addition, Evergreen Asset provides office
facilities to the Funds and performs a variety of administrative services. Each
Fund pays the cost of all of its other expenses and liabilities, including
expenses and liabilities incurred in connection with maintaining
theirregistration under the Securities Act of 1933, as amended, and the 1940
Act, printing prospectuses (for existing shareholders) as they are updated,
state qualifications, share certificates, mailings, brokerage, custodian and
stock transfer charges, printing, legal and auditing expenses, expenses of
shareholder meetings and reports to shareholders. Notwithstanding the foregoing,
Evergreen Asset will pay the costs of printing and distributing prospectuses
used for prospective shareholders.

For the performance of its services Evergreen Asset is entitled to
receive a fee at the following annual rate of each Fund's daily net assets.
These fees are computed daily and paid monthly, and are accrued daily for
purposes of determining the redemption and offering price of each Fund's shares
(exclusive of Money Market and Tax Exempt, which seek to maintain a stable net
asset value of $1.00 per share):

Advisory Advisory
Name of Fund Fee Name of Fund Fee

Evergreen 1% Short-Intermediate .50%
Total Return 1% Short-Intermediate-CA .55%
Limited Market 1% National .50%
Growth and Income 1% Global 1%
American Retirement .75% U.S. Real Estate 1%
Small Cap 1% Foundation .875%
Money Market .50% Tax Strategic .875%
Tax Exempt .50% U.S. Government .50%

The rates of the advisory fees paid by Evergreen, Total Return, Limited Market,
Growth and Income, Small Cap, Global and U.S. Real Estate are higher than those
paid by most management investment companies. However the fee paid by Global is
not higher than that paid by other funds, which like Global, that invest a
substantial part of their assets in foreign securities. The advisory fees paid
by each Fund for the three most recent fiscal periods reflected in its
registration statement are set forth below:

EVERGREEN Year Ended Year Ended Year Ended GLOBAL Period Ended Year Ended Year Ended
9/30/94 9/30/93 9/30/92 9/30/94 12/31/93 12/31/92
Advisory Fee $5,738,633 $7,217,230 $7,588,372 Advisory Fee $1,133,380 $523, 294 $75,696
========== ========== ========== ========== ========= =========

Expense
Reimbursement $0 $ 41,226 $130,246
-------- ---------
Reimbursement as a
% of Average Daily
Net Assets 0.08% 1.72%
----- -----

U.S. REAL ESTATE Year Ended Year Ended LIMITED MARKET Year Ended Year Ended Year Ended
9/30/94 12/31/93 9/30/94 5/31/94 5/31/93
Advisory Fee $57,506 $8,624 Advisory Fee $314,648 $964,383 $658,014
-------- ------- ======== ======== ========

Waiver ($57,506) ($8,624)
Net Advisory Fee $ 0 $ 0
============ ==========

Expense
Reimbursement $9,102 $18,480

TOTAL RETURN Year Ended Year Ended Year Ended GROWTH AND INCOME Year Ended Year Ended Year Ended
3/31/94 3/31/93 3/31/92 12/31/93 12/31/92 12/31/91
Advisory Fee $11,613,964 $10,671,425 $11,065,156 Advisory Fee $722,166 $528,190 $427,498
=========== =========== =========== ======== ======== ========

FOUNDATION Year Ended Year Ended Year Ended AMERICAN Year Ended Year Ended Year Ended
12/31/93 12/31/92 12/31/91 RETIREMENT 12/31/93 12/31/92
12/31/91
Advisory Fee $1,290,748 $257,141 $42,202 Advisory Fee $226,080 $152,055 $102,456
========== ======== ======= ======== ========
========

Expense Expense
Reimbursement $ 7,926 $66,546 Reimbursement $ 16,093 $44,189
---------- ------- ---------
- ---------

SMALL CAP Year Ended TAX STRATEGIC Year Ended
12/31/93 12/31/93
Advisory Fee $ 4,929 Advisory Fee $ 4,989
-------- -------

Waiver ($ 4,929) Waiver ($4,989)
Net Advisory Fee 0 Net Advisory Fee $ 0
============ ==========

Expense Expense
Reimbursement $16,800 Reimbursement $12,700
------- -------

NATIONAL Year Ended Year Ended SHORT-INTERMEDIATE Year Ended Year Ended Year Ended
8/31/94 8/31/93 8/31/94 8/31/93 8/31/92
Advisory Fee $ 196,089 $72,564 Advisory Fee $301,565 $313,180 $135,976
--------- -------- -------- -------- ---------
Waiver ($190,396) ($72,564) Waiver ($150,194) ($256,324) ($124,013)
Net Advisory Fee $ 6, 413 $ 0 Net Advisory Fee $151,371 $56,856 $11,963
=========== ============ ======== ========== ==========
Expense Expense
Reimbursement $ 45,680 $61,146 Reimbursement $63,773
---------- --------
- ---------

SHORT-INTERMEDIATE-C Year Ended Year Ended Year Ended TAX EXEMPT Year Ended Year Ended Year Ended
8/31/94 8/31/93 8/31/92 8/31/94 8/31/93 8/31/92
Advisory Fee $164,447 $158,025 $213,131 Advisory Fee $2,126,246 $ 2,028,966 $2,272,890
--------- --------- --------- ---------- ----------- ------------
Waiver ($129,952) ($150,551) ($170,867) Waiver ($1,256,653) ($1,168,131) ($1,411,094)
Net Advisory Fee $34,495 $7,474 $42,264 Net Advisory Fee $869,593 $ 860,835 $861,796
========= =========== ========= ============ ============ ============

Expense
Reimbursement $44,957

MONEY MARKET Year Ended Year Ended Year Ended U.S. GOVERNMENT Year Ended
8/31/94 10/31/93 10/31/92 3/31/94
Advisory Fee $1,245,513 $1,637,123 $2,089,939 Advisory Fee $20,607
---------- ---------- ---------- ---------

Waiver ($974,438) (1,047,935) ($1,507,506) Waiver ($20,607)

Net Advisory Fee $271,075 $589,188 $582,433 Net Advisory Fee $ 0
========== ========== ============ Expense
Reimbursement $48,772

</TABLE>

The following Funds changed their fiscal year ends during the periods
covered by the foregoing table: Global and U.S. Real Estate from December 31, to
September 30; and Limited Market, from May 31 to September 30. Accordingly, the
investment advisory fees reported in the foregoing table reflect, for Global and
U.S. Real Estate, the period from January 1, 1994 to September 30, 1994 and, for
Limited Market, the period from June 1, 1994 to September 30, 1994. Also Small
Cap, Tax Strategic and U.S. Real Estate commenced operations on October 1, 1993,
November 2, 1993 and September 1, 1993, respectively, and therefore the figures
set forth in the table above reflect investment advisory fees paid for the
period from commencement of operations through December 31, 1993.

Expense Limitations

Evergreen Asset's fee will be reduced by, or Evergreen Asset will
reimburse the Funds (except Money Market, National, Tax Exempt,
Short-Intermediate, Short-Intermediate CA and U.S. Government, which have
specific percentage limitations described below) for any amount necessary to
prevent such expenses (exclusive of taxes, interest, brokerage commissions and
extraordinary expenses, but inclusive of Evergreen Asset's fee) from exceeding
the most restrictive of the expense limitations imposed by state securities
commissions of the states in which the Fund's shares are then registered or
qualified for sale.

<PAGE>

Reimbursement, when necessary, will be made monthly in the same manner in which
the advisory fee is paid. Currently the most restrictive state expense
limitation is 2.5% of the first $30,000,000 of the Fund's average daily net
assets, 2% of the next $70,000,000 of such assets and 1.5% of such assets in
excess of $100,000,000.

With respect to Money Market, Tax Exempt, Short-Intermediate and
Short-Intermediate CA the Adviser has agreed to reimburse each Fund to the
extent that the Fund's aggregate operating expenses (including Evergreen Asset's
fee but excluding interest, taxes, brokerage commissions and extraordinary
expenses, and, for Class A, Class B and Class C shares Rule 12b-1 distribution
fees and shareholder servicing fees payable) exceed 1% of its average daily net
assets for any fiscal year. With respect to U.S. Government and National,
Evergreen Asset has agreed to reimburse each Fund to the extent that its
aggregate operating expenses (including Evergreen Asset's fee, but excluding
interest, taxes, brokerage commissions and extraordinary expenses, and, for
Class A, Class B and Class C shares, Rule 12b-1 distribution fees and
shareholder servicing fees) exceed 1.25% of its average net assets for any
fiscal year.

In addition, Evergreen Asset has in some instances voluntarily limited
(and may in the future limit) expenses of certain of the Funds. For the years
ended December 31, 1991 and 1992, and for the three month period ended March 31,
1993, the Adviser limited the expenses of Global to 2% of the Fund's average net
assets on an annual basis.

For the four month period January 1, 1992 to April 30, 1992, the
Adviser voluntarily limited the expenses of American Retirement to 1.50% of
average net assets.

For U.S. Government, during the period from June 14, 1993 (commencement
of investment operations) through March 31, 1994, Evergreen Asset voluntarily
waived its entire management fee of .50 of 1% of daily net assets which amounted
to $20,607, and reimbursed the Fund for all other expenses incurred by the Fund
representing 1.18% of average net assets

Evergreen Asset has voluntarily agreed to reimburse Small Cap to the
extent that the Fund's aggregate operating expenses (including Evergreen Asset's
fee but excluding interest, taxes, brokerage commissions and extraordinary
expenses) exceed 1.50% of its average net assets until such time as the Fund's
net assets reach $15 million.

During the fiscal years ended December 31, 1991 and December 31, 1992,
the Adviser voluntarily absorbed a portion of Foundation's expenses and
reimbursed the Fund for expenses in excess of the voluntary expense limitation
in an amount equal to 1.38% of its average daily net assets for fiscal 1991 and
in an amount equal to .03% of its average daily net assets for fiscal 1992; the
voluntary expense limitation and the absorption of Fund expenses ceased on May
1, 1992.

Evergreen Asset has agreed to voluntarily reimburse Tax Strategic until
the Fund reaches $15 million in net assets, to the extent that the Fund's
aggregate operating expenses (including the Advisory Fees, but excluding
interest, taxes, brokerage commissions, Rule 12b-1 distribution fees and
shareholder servicing fees and extraordinary expenses) exceed 1.50% of its
average net assets for any fiscal year. During the period from November 2, 1993
(commencement of investment operations) to December 31, 1993, Evergreen Asset
voluntarily waived its advisory fee with respect to Tax Strategic, which
amounted to $4,989, and reimbursed the Fund for all of the Fund's other expenses
which aggregated $12,700 (2.23% of average net assets).

Until U.S. Real Estate reaches $15 million in net assets, Evergreen
Asset has voluntarily agreed to reimburse the Fund to the extent that the Fund's
aggregate operating expenses (including Evergreen Asset's fee but excluding
taxes, interest, brokerage commissions and extraordinary expenses) exceed 1.50%
of its average net assets for any fiscal year.

During the period from December 30, 1992 (commencement of investment
operations) to August 31, 1993, Evergreen Asset voluntarily waived National's
entire management fee of .50 of 1% of daily net assets and reimbursed the Fund
for all other expenses incurred by the Fund representing .42% of the daily net
assets. During the fiscal year ended August 31, 1994, Evergreen Asset
voluntarily waived .78 of 1% of its advisory fee and absorbed a portion of the
Fund's other expenses equal to .12 % of average net assets. Evergreen Asset may,
at its discretion, revise or cease the voluntary absorption of Fund expenses at
any time.

The Investment Advisory Agreements are terminable, without the payment
of any penalty, on sixty days' written notice, by a vote of the holders of a
majority of each Fund's outstanding shares, or by a vote of a majority of each
Fund's Trustees/Directors or by Evergreen Asset. The Investment Advisory
Agreements will automatically terminate in the event of their assignment. Each
Investment Advisory Agreement provides in substance that Evergreen Asset shall
not be liable for any action or failure to act in accordance with its duties
thereunder in the absence of willful misfeasance, bad faith or gross negligence
on the part of the Adviser or of reckless disregard of its obligations
thereunder. The Investment Advisory Agreements were approved by each Fund's
shareholders on June 23, 1994, became effective on June 30, 1994, and will
continue in effect until June 30, 1996, and thereafter from year to year
provided that their continuance is approved annually by a vote of a majority of
the Trustees/Directors of each Fund who are not parties thereto or interested
persons (as defined in the 1940 Act) of any such party, cast in person at a
meeting duly called for the purpose of voting on such approval, and by a vote of
the Trustees/Directors of each Fund or a majority of the outstanding voting
shares of each Fund. With respect to Money Market, National, Short-Intermediate,
Short-Intermediate-California, Tax Exempt and U.S. Government, the Investment
Advisory Agreements were amended on December 13, 1994 by shareholder vote to
clarify that distribution fees and shareholder servicing fees applicable only to
a particular class of shares of any such Funds will not be included for the
purpose of calculating the expense limitations contained in such Investment
Advisory Agreements.

Certain other clients of Evergreen Asset may have investment objectives
and policies similar to those of the Funds. The Adviser (including the
sub-adviser)may, from time to time, make recommendations which result in the
purchase or sale of a particular security by its other clients simultaneously
with a Fund. If transactions on behalf of more than one client during the same
period increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price or quantity. It
is the policy of the Adviser to allocate advisory recommendations and the
placing of orders in a manner which is deemed equitable by Evergreen Asset to
the accounts involved, including the Funds. When two or more of the clients of
the Adviser (including one or more of the Funds) are purchasing or selling the
same security on a given day from the same broker-dealer, such transactions may
be averaged as to price.

Although the investment objectives of the Funds are not the same, and
their investment decisions are made independently of each other, they rely upon
the same resources for investment advice and recommendations. Therefore, on
occasion, when a particular security meets the different investment objectives
of the various Funds, they may simultaneously purchase or sell the same
security. This could have a detrimental effect on the price and quantity of the
security available to each Fund. If simultaneous transactions occur, Evergreen
Asset attempts to allocate the securities, both as to price and quantity, in
accordance with a method deemed equitable to each Fund and consistent with their
different investment objectives. In some cases, simultaneous purchases or sales
could have a beneficial effect, in that the ability of one Fund to participate
in volume transactions may produce better executions for that Fund.

Each Fund has adopted procedures under Rule 17a-7 of the 1940 Act to
permit purchase and sales transactions to be effected between each Fund and the
other registered investment companies for which Evergreen Asset acts as
investment adviser or between the Fund and any advisory clients of Evergreen
Asset or Lieber & Company. Each Fund may from time to time engage in such
transactions but only in accordance with these procedures and if they are
equitable to each participant and consistent with each participant's investment
objectives.

FIRST UNION NATIONAL BANK OF NORTH CAROLINA - CAPITAL MANAGEMENT GROUP
Aggressive and Florida High Income

The investment adviser to Aggressive and Florida High Income is FUNB. It
provides investment advisory services through its Capital Management Group.
First Union is a subsidiary of First Union Corporation, a bank holding company
headquartered in Charlotte, North Carolina.

FUNB's Capital Management Group employs an experienced staff of
professional investment analysts, portfolio managers, and traders, and uses
several proprietary computer-based systems in conjunction with fundamental
analysis to identify investment opportunities. The Capital Management Group has
been managing trust assets for over 50 years and currently oversees assets of
more than $51.2 billion. In addition, the Capital Management Group has advised
the Trust since its inception in 1984.

As part of its regular banking operations, FUNB may make loans to public
companies. Thus, it may be possible, from time to time, for the Funds to hold or
acquire the securities of issuers which are also lending clients of FUNB. The
lending relationship will not be a factor in the selection of securities.

FUNB shall not be liable to any Fund or any shareholder thereof for any
losses that may be sustained in the purchase, holding, or sale of any security,
or for anything done or omitted by it, except acts or omissions involving wilful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
imposed upon it by its contract with the Trust.

Because of the internal controls maintained by FUNB to restrict the flow of
non-public information, each Fund's investments are typically made without any
knowledge of FUNB's or its affiliates' lending relationships with an issuer.

The Investment Advisory Agreements are terminable, without the payment of
any penalty, on sixty days' written notice, by a vote of the holders of a
majority of each Fund's outstanding shares, or by a vote of a majority of each
Fund's Trustees or by FUNB. The Investment Advisory Agreements will
automatically terminate in the event of their assignment. Each Investment
Advisory Agreement provides in substance that FUNB shall not be liable for any
action or failure to act in accordance with its duties thereunder in the absence
of willful misfeasance, bad faith or gross negligence on the part of FUNB or of
reckless disregard of its obligations thereunder. The Investment Advisory
Agreements were approved by each Fund's shareholders on April 20, 1995, became
effective on July 1, 1995, and will continue in effect until June 30, 1996, and
thereafter from year to year provided that their continuance is approved
annually by a vote of a majority of the Trustees of each Fund who are not
parties thereto or interested persons (as defined in the 1940 Act) of any such
party, cast in person at a meeting duly called for the purpose of voting on such
approval, and by a vote of the Trustees of each Fund or a majority of the
outstanding voting shares of each Fund.

ADVISORY FEES

For its advisory services, FUNB receives an annual investment advisory fee
as described in the respective prospectus of Aggressive and Florida High Income.

ADMINISTRATIVE SERVICES

----------------------------------------------------------------------
provides administrative personnel and services to Aggressive and Florida High
Income and manages the business affairs of each Fund for a fee as described in
the respective prospectus of Aggressive and Florida High Income.

DISTRIBUTION PLANS

Reference is made to "Management of the Fund - Distribution Plans and
Agreements" in the Prospectus of each Fund for additional disclosure regarding
the Funds' distribution arrangements. Distribution fees are accrued daily and
paid monthly on the Class A, B and C shares and are charged as class expenses,
as accrued. The distribution fees attributable to the Class B shares and Class C
shares are designed to permit an investor to purchase such shares through
broker-dealers without the assessment of an initial sales charge, and, in the
case of Class C shares, without the assessment of a contingent deferred sales
charge after the first year following purchase, while at the same time
permitting the Distributor to compensate broker-dealers in connection with the
sale of such shares. In this regard the purpose and function of the combined
contingent deferred sales charge and distribution services fee on the Class B
shares and the Class C shares, are the same as those of the initial sales charge
and distribution fee with respect to the Class A shares in that in each case the
sales charge and/or distribution fee provide for the financing of the
distribution of the Fund's shares.

Under the Rule 12b-1 Distribution Plans that have been adopted by each
Fund with respect to each of its Class A, Class B and Class C shares (to the
extent that each Fund offers such classes) (each a "Plan" and collectively, the
"Plans"), the Treasurer of each Fund reports the amounts expended under the Plan
and the purposes for which such expenditures were made to the Trustees or
Directors of each Fund for their review on a quarterly basis. Also, each Plan
provides that the selection and nomination of Trustees or Directors who are not
interested persons of each Fund (as defined in the 1940 Act) are committed to
the discretion of such disinterested Trustees or Directors then in office.

The Adviser may from time to time and from its own funds or such other
resources as may be permitted by rules of the Securities and Exchange Commission
make payments for distribution services to the Distributor; the latter may in
turn pay part or all of such compensation to brokers or other persons for their
distribution assistance.

As of the date of this Statement of Additional Information, no Fund has
offered Class A, B or C shares.

Each Plan, except those pertaining to Aggressive and Florida High Income,
became effective on December 30, 1994 and were initially approved by the sole
shareholder of each Class of shares of each Fund with respect to which a Plan
was adopted on that date and by the unanimous vote of the Trustees or Directors
of each Fund, including the disinterested Trustees or Directors voting
separately, at a meeting called for that purpose and held on December 13, 1994.
The Plans of Aggressive and Florida High Income became effective on ---------,
1995 and were initially approved by the sole shareholder of each Class of shares
of those Funds with respect to which a Plan was adopted on that date and by the
unanimous vote of the Trustees or Directors of each Fund, including the
disinterested Trustees or Directors voting separately, at a meeting called for
that purpose and held on April 20, 1995. The Distribution Agreements between
each Fund and Evergreen Funds Distributor, Inc., pursuant to which distribution
fees are paid under the Plans by each Fund with respect to its Class A, and
where applicable Class B and Class C shares, were, in the case of all Funds
except Aggressive and Florida High Income, also approved at the December 13,
1994 meeting by the unanimous vote of the Trustees or Directors of each Fund,
including the disinterested Trustees or Directors voting separately. The
Distribution Agreements between Aggressive and Florida High Income and Evergreen
Funds Distributor, Inc., were approved at the April 20, 1995 meeting by the
unanimous vote of the Trustees or Directors of each Fund, including the
disinterested Trustees or Directors voting separately. Each Plan and
Distribution Agreement will continue in effect for successive twelve-month
periods provided, however, that such continuance is specifically approved at
least annually by the Trustees or Directors of each Fund or by vote of the
holders of a majority of the outstanding voting securities (as defined in the
1940 Act) of that Class, and, in either case, by a majority of the Directors of
the Fund who are not parties to the Agreement or interested persons, as defined
in the 1940 Act, of any such party (other than as trustees or directors of the
Fund) and who have no direct or indirect financial interest in the operation of
the Plan or any agreement related thereto.

In the event that a Plan or Distribution Agreement is terminated or not
continued with respect to one or more Classes of a Fund, (i) no distribution
fees (other than current amounts accrued but not yet paid) would be owed by the
Fund to the Distributor with respect to that Class or Classes, and (ii) the Fund
would not be obligated to pay the Distributor for any amounts expended under the
Distribution Agreement not previously recovered by the Distributor from
distribution services fees in respect of shares of such Class or Classes through
deferred sales charges.

All material amendments to any Plan or Distribution Agreement must be
approved by a vote of the Trustees or Directors of a Fund or the holders of the
Fund's outstanding voting securities, voting separately by Class, and in either
case, by a majority of the disinterested Trustees or Directors, cast in person
at a meeting called for the purpose of voting on such approval; and any Plan or
Distribution Agreement may not be amended in order to increase materially the
costs that a particular Class of shares of a Fund may bear pursuant to the Plan
or Distribution Agreement without the approval of a majority of the holders of
the outstanding voting shares of the Class affected. Any Plan or Distribution
Agreement may be terminated (a) by a Fund without penalty at any time by a
majority vote of the holders of the outstanding voting securities of the Fund,
voting separately by Class or by a majority vote of the Trustees or Directors
who are not "interested persons" as defined in the 1940 Act, or (b) by the
Distributor. To terminate any Distribution Agreement, any party must give the
other parties 60 days' written notice; to terminate a Plan only, the Fund need
give no notice to the Distributor. Any Distribution Agreement will terminate
automatically in the event of its assignment.

ALLOCATION OF BROKERAGE

Decisions regarding the portfolio of each Fund other than Aggressive
and Florida High Income are made by Evergreen Asset, subject to the supervision
and control of the Trustees/Directors. Orders for the purchase and sale of
securities and other investments are placed by employees of Evergreen Asset, all
of whom are associated with Lieber. In general, the same individuals perform the
same functions for the other funds managed by Evergreen Asset. A Fund will not
effect any brokerage transactions with any broker or dealer affiliated directly
or indirectly with Evergreen Asset or FUNB unless such transactions are fair and
reasonable, under the circumstances, to the Fund's shareholders. Circumstances
that may indicate that such transactions are fair or reasonable include the
frequency of such transactions, the selection process and the commissions
payable in connection with such transactions.

Most of the transactions in equity securities for each Fund will occur
on domestic and, in the case of Global foreign, stock exchanges. Transactions on
stock exchanges involve the payment of brokerage commissions. In transactions on
stock exchanges in the United States, these commissions are negotiated, whereas
on many foreign stock exchanges these commissions are fixed. In the case of
securities traded in the foreign and domestic over-the-counter markets, there is
generally no stated commission, but the price usually includes an undisclosed
commission or markup. Over-the-counter transactions will generally be placed
directly with a principal market maker, although the Fund may place an
over-the-counter order with a broker-dealer if a better price (including
commission) and execution are available.

It is anticipated that most purchase and sale transactions involving
Money Market, National, Short Intermediate, Short Intermediate-Ca, Tax Exempt
and U.S. Government (and the other Funds to the extent they purchase fixed
income securities) will be with the issuer or an underwriter or with major
dealers in such securities acting as principals. Such transactions are normally
on a net basis and generally do not involve payment of brokerage commissions.
However, the cost of securities purchased from an underwriter usually includes a
commission paid by the issuer to the underwriter. Purchases or sales from
dealers will normally reflect the spread between bid and ask prices.

In selecting firms to effect securities transactions, the primary
consideration of each Fund shall be prompt execution at the most favorable
price. A Fund will also consider such factors as the price of the securities and
the size and difficulty of execution of the order. If these objectives may be
met with more than one firm, the Fund will also consider the availability of
statistical and investment data and economic facts and opinions helpful to the
Fund. Any such research and analysis is not expected to reduce the costs of the
Adviser.

No Fund, other than Global, allocated brokerage commissions to firms in
exchange for research during the most recent fiscal year. Of the total brokerage
commissions paid by Global for its fiscal year ended September 30, 1994,
$738,237 or 80% were allocated in exchange for best execution and research.

Under Section 11(a) of the Securities Exchange Act of 1934, as amended,
and the rules adopted thereunder by the Securities and Exchange Commission,
Lieber & Company may be compensated for effecting transactions in portfolio
securities for a Fund on a national securities exchange provided the conditions
of the rules are met. Each Fund, other than Aggressiv and Florida High Income,
has entered into an agreement with Lieber authorizing Lieber to retain
compensation for brokerage services. In accordance with such agreement, it is
contemplated that Lieber a member of the New York and American Stock Exchanges,
will, to the extent practicable, provide brokerage services to the Fund with
respect to substantially all securities transactions effected on the New York
and American Stock Exchanges. In such transactions, a Fund will seek the best
execution at the most favorable price while paying a commission rate no higher
than that offered to other clients of Lieber & Company or that which can be
reasonably expected to be offered by an unaffiliated broker-dealer having
comparable execution capability in a similar transaction. However, no Fund will
engage in transactions in which Lieber would be a principal. While no Fund
contemplates any ongoing arrangements with other brokerage firms, brokerage
business may be given from time to time to other firms. In addition, the
Trustees or Directors have adopted procedures pursuant to Rule 17e-1 under the
1940 Act to ensure that all brokerage transactions with Lieber & Company, as an
affiliated broker-dealer, are fair and reasonable.

Any profits from brokerage commissions accruing to Lieber & Company as
a result of portfolio transactions for the Fund will accrue to FUNB and to its
ultimate parent, First Union Corporation. The Investment Advisory Agreements do
not provide for a reduction of Evergreen Asset's fee with respect to any fund by
the amount of any profits earned by Lieber & Company from brokerage commissions
generated by portfolio transactions of any Fund.

The following chart shows: (1) the brokerage commissions paid by the Funds
during their last three fiscal years; (2) the amount and percentage thereof, if
any, paid to Lieber & Company; ; and (3) the percentage of the total dollar
amount of all portfolio transactions with respect to which commission have been
paid which were effected by Lieber & Company:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>

EVERGREEN Year Ended Year Ended Year Ended GLOBAL Period Ended Year Ended Year Ended
9/30/94 9/30/93 9/30/92 9/30/94 12/31/93 12/31/92
Total Brokerage $535,816 $534,533 $595,552 Total Brokerage $917,989 $868,367 $196,719
Commissions Commissions
Dollar Amount and % $478,391 89% $477,691 89% $548,346 92% Dollar Amount and % $174,137 19% $154,666 18% $51,684 26%
paid to Lieber paid to Lieber
% of Transactions % of Transactions
Effected by Lieber 90% 90% 91% Effected by Lieber 33% 29% 35%

U.S. REAL ESTATE Period Ended Year Ended Year Ended LIMITED MARKET Period Ended Year Ended Year Ended
9/30/94 12/31/93 9/30/94 5/31/94 5/31/93
Total Brokerage $49,723 $14,287 Total Brokerage $94,996 $183,282 $43,664
Commissions Commissions
Dollar Amount and % $48,400 97% $13,657 96% Dollar Amount and % $51,736 54% $82,104 45% $25,221 58%
paid to Lieber paid to Lieber
% of Transactions % of Transactions
Effected by Lieber 98% 97% Effected by Lieber 50% 40% 57%

TOTAL RETURN Year Ended Year Ended Year Ended GROWTH AND INCOME Year Ended Year Ended Year Ended
3/31/94 3/31/93 3/31/92 12/31/93 12/31/92 12/31/91
Total Brokerage $3,234,684 4,873,169 $4,105,695 Total Brokerage $76,427 $66,266 $41,514
Commissions Commissions
Dollar Amount and % $3,199,114 $4,842,437 $4,047,326 Dollar Amount and % $66,670 87% $57,686 87% $38,829 94%
paid to Lieber 99% 99% 99% paid to Lieber
% of Transactions % of Transactions
Effected by Lieber 99% 99% 99% Effected by Lieber 84% 86% 92%

<PAGE>

FOUNDATION Year Ended Year Ended Year Ended AMERICAN RETIREMENT Year Ended Year Ended Year Ended
12/31/93 12/31/92 12/31/91 12/31/93 12/31/92 12/31/91
Total Brokerage $291,259 $128,811 $36,180 Total Brokerage $99,435 $99,293 $46,018
Commissions Commissions
Dollar Amount and % $284,864 98% $124,801 97% $35,655 99% Dollar Amount and % $96,950 98% $98,793 99.5% $45,868
paid to Lieber paid to Lieber 99.7%
% of Transactions % of Transactions
Effected by Lieber 98% 96% 98% Effected by Lieber 98% 99.6% 99.5%

SMALL CAP Period Ended TAX STRATEGIC Period Ended
12/31/93 12/31/93
Total Brokerage $2,091 Total Brokerage $3,260
Commissions Commissions
Dollar Amount and % $1,729 Dollar Amount and % $3,210
paid to Lieber 83% paid to Lieber 98%
% of Transactions % of Transactions
Effected by Lieber 73% Effected by Lieber 98%
</TABLE>

The following Funds changed their fiscal year ends during the periods
covered by the foregoing table: Global and U.S. Real Estate from December 31 to
September 30; and Limited Market, from May 31 to September 30. Accordingly, the
commissions reported in the foregoing table reflect, for Global and U.S. Real
Estate, the period from January 1, 1994 to September 30, 1994 and, for Limited
Market, the period from June 1, 1994 to September 30, 1994. Also Small Cap, Tax
Strategic and U.S. Real Estate commenced operations on October 1, 1993, November
2, 1993 and September 1, 1993, respectively, and therefore the figures set forth
in the table above reflect commissions paid for the period from commencement of
operations through December 31, 1993.

The transactions in which National, U.S. Government, Money Market,
Short-Intermediate, Tax Exempt, and Short-Intermediate-CA engage do not involve
the payment of brokerage commissions and are executed with brokers other than
Lieber & Company.

ADDITIONAL TAX INFORMATION
(See also "Taxes" in the Prospectus)

Each Fund has qualified and intends to continue to qualify for and
elect the tax treatment applicable to regulated investment companies ("RIC")
under Subchapter M of the Code. (Such qualification does not involve supervision
of management or investment practices or policies by the Internal Revenue
Service.) In order to qualify as a regulated investment company, a Fund must,
among other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to proceeds from securities loans, gains from
the sale or other disposition of securities and other income (including gains
from options) derived with respect to its business of investing in such
securities; (b) derive less than 30% of its gross income from the sale or other
disposition of securities of any of the following: options, futures or forward
contracts (other than those on foreign currencies), or foreign currencies (or
options, futures or forward contracts thereon) that are not directly related to
the RIC's principal business of investing in securities (or options and futures
with respect thereto) held less than three months; and (c) diversify its
holdings so that, at the end of each quarter of its taxable year, (i) at least
50% of the market value of the Fund's total assets is represented by cash, U.S.
Government securities and other securities limited in respect of any one issuer,
to an amount not greater than 5% of the Fund's total assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities of any one issuer (other
than U.S. Government securities). By so qualifying, a Fund is not subject to
Federal income tax if it timely distributes its investment company taxable
income and any net realized capital gains. A 4% nondeductible excise tax will be
imposed on a Fund to the extent it does not meet certain distribution
requirements by the end of each calendar year. Each Fund anticipates meeting
such distribution requirements.

Dividends paid by a Fund from investment company taxable income
generally will be taxed to the shareholders as ordinary income. Investment
company taxable income includes net investment income and net realized
short-term gains (if any). Any dividends received by a Fund from domestic
corporations will constitute a portion of the Fund's gross investment income. It
is anticipated that this portion of the dividends paid by a Fund (other than
distributions of securities profits) will qualify for the 70% dividends-received
deduction for corporations. Shareholders will be informed of the amounts of
dividends which so qualify.

<PAGE>

Distributions of the excess of net long-term capital gain over net
short-term capital loss are taxable to shareholders (who are not exempt from
tax) as long-term capital gain, regardless of the length of time the shares of a
Fund have been held by such shareholders. Short-term capital gains are taxable
to shareholders who are not exempt from tax as ordinary income. Such
distributions are not eligible for the dividends-received deduction. Any loss
recognized upon the sale of shares of a Fund held by a shareholder for six
months or less will be treated as a long-term capital loss to the extent that
the shareholder received a long-term capital gain distribution with respect to
such shares.

Distributions of investment company taxable income and any net
long-term capital gains will be taxable as ordinary income as described above to
shareholders (who are not exempt from tax), whether made in shares or in cash.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for Federal income tax purposes in each share so received
equal to the net asset value of a share of a Fund on the reinvestment date.

Distributions by each Fund result in a reduction in the net asset value
of the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution nevertheless would be taxable as
ordinary income or capital gain as described above to shareholders (who are not
exempt from tax), even though, from an investment standpoint, it may constitute
a return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution. The price of
shares purchased at that time includes the amount of the forthcoming
distribution. Those purchasing just prior to a distribution will then receive,
what in effect is, a return of capital upon the distribution which will
nevertheless be taxable to shareholders subject to taxes.

Upon a sale or exchange of its shares, a shareholder will realize a
taxable gain or loss depending on its basis in the shares. Such gains or loss
will be treated as a capital gain or loss if the shares are capital assets in
the investor's hands and will be a long-term capital gain or loss if the shares
have been held for more than one year. Generally, any loss realized on a sale or
exchange will be disallowed to the extent shares disposed of are replaced within
a period of sixty-one days beginning thirty days before and ending thirty days
after the shares are disposed of. Any loss realized by a shareholder on the sale
of shares of the Fund held by the shareholder for six months or less will be
disallowed to the extent of any exempt interest dividends received by the
shareholder with respect to such shares, and will be treated for tax purposes as
a long-term capital loss to the extent of any distributions of net capital gains
received by the shareholder with respect to such shares.

All distributions, whether received in shares or cash, must be reported
by each shareholder on his or her Federal income tax return. Each shareholder
should consult his or her own tax adviser to determine the state and local tax
implications of Fund distributions.

Shareholders who fail to furnish their taxpayer identification numbers
to a Fund and to certify as to its correctness and certain other shareholders
may be subject to a 31% Federal income tax backup withholding requirement on
dividends, distributions of capital gains and redemption proceeds paid to them
by the Fund. If the withholding provisions are applicable, any such dividends or
capital gain distributions to these shareholders, whether taken in cash or
reinvested in additional shares, and any redemption proceeds will be reduced by
the amounts required to be withheld. Investors may wish to consult their own tax
advisers about the applicability of the backup withholding provisions.

The foregoing discussion relates solely to U.S. Federal income tax law as
applicable to U.S. persons (i.e., U.S.citizens and residents and U.S.domestic
corporations, partnerships, trusts and estates). It does not reflect the special
tax consequences to certain taxpayers (e.g., banks, insurance companies, tax
exempt organizations and foreign persons). Shareholders are encouraged to
consult their own tax advisers regarding specific questions relating to Federal,
state and local consequences of investing in shares of a Fund. Each shareholder
who is not a U.S. person should consult his or her tax adviser regarding the
U.S. and foreign tax consequences of ownership of shares of a Fund, including

<PAGE>

the possibility that such a shareholder may be subject to a U.S. withholding tax
at a rate of 30% (or at a lower rate under a tax treaty)on amounts treated as
income from U.S. sources under the Code.

Special Tax Consideration for Florida High Income, National, Tax Exempt, Short
Intermediate, Short Intermediate-CA, and Tax Strategic

With respect to Florida High Income, National, Tax Exempt, Short
Intermediate, Short Intermediate-CA, and Tax Strategic, to the extent that the
Fund distributes exempt interest dividends to a shareholder, interest on
indebtedness incurred or continued by such shareholder to purchase or carry
shares of the Fund is not deductible. Furthermore, entities or persons who are
"substantial users" (or related persons) of facilities financed by "private
activity" bonds (some of which were formerly referred to as "industrial
development" bonds) should consult their tax advisers before purchasing shares
of the Fund. "Substantial user" is defined generally as including a "non-exempt
person" who regularly uses in its trade or business a part of a facility
financed from the proceeds of industrial development bonds.

Special Tax Considerations for Global

Global maintains accounts and calculates income in U.S. dollars. In
general, gains or losses on the disposition of debt securities denominated in a
foreign currency that are attributable to fluctuations in exchange rates between
the date the debt security is acquired and the date of disposition, gains and
losses attributable to fluctuations in exchange rates that occur between the
time the Fund accrues interest or other receivable or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund actually
collects such receivable or pays such liabilities, and gains and losses from the
disposition of foreign currencies and foreign currency forward contracts will be
treated as ordinary income or loss. These gains or losses increase or decrease,
respectively, the amount of the Fund's investment company taxable income
available to be distributed to its shareholders as ordinary income.

The Fund's transactions in foreign currencies, forward contracts,
options and futures contracts (including options and futures contracts on
foreign currencies) are subject to special provisions of the Code that, among
other things, may affect the character of gains and losses by the Fund (i.e.,
may affect whether gains or losses are ordinary or capital), accelerate
recognition of income to the Fund and defer Fund losses. These rules could
therefore affect the character, amount and timing of distributions to
shareholders. These provisions also (a) require the Fund to mark-to-market
certain types of positions in its portfolio (i.e., treat them as if they were
closed out) and (b) may cause the Fund to recognize income without receiving
cash with which to pay dividends or make distributions in amounts necessary to
satisfy the distribution requirements for avoiding U.S. Federal income and
excise taxes. The Fund will monitor its transactions, make appropriate tax
elections and make appropriate entries in its books and records when it acquires
any foreign currency, forward contract, option, futures contract or hedged
investment in order to mitigate the effect of these rules. The Fund anticipates
that its hedging activities will not adversely affect its regulated investment
company status.

Income received by the Fund from sources within various foreign
countries may be subject to foreign income tax. If more than 50% of the value of
the Fund's total assets at the close of its taxable year consists of the stock
or securities of foreign corporations, the Fund may elect to "pass through" to
the Fund's shareholders the amount of foreign income taxes paid by the Fund.
Pursuant to such election, shareholders would be required: (i) to treat a
proportionate share of dividends paid by the Fund which represent foreign source
income received by the Fund plus the foreign taxes paid by the Fund as foreign
source income; and (ii) either to deduct their pro-rata share of foreign taxes
in computing their taxable income, or to use it as a foreign tax credit against
Federal income taxes (but not both). No deduction for foreign taxes could be
claimed by a shareholder who does not itemize deductions.

The Fund intends to meet for each taxable year the requirements of the
Code to "pass through" to its shareholders foreign income taxes paid if it is
determined by the Adviser to be beneficial to do so. There can be no assurance
that the Fund will be able to pass through foreign income taxes paid. Each
shareholder will be notified within 60 days after the close of each taxable year
of the Fund whether the foreign taxes paid by the Fund will "pass through" for
that year, and, if so, the amount of each shareholder's pro-rata share (by
country) of (i) the foreign taxes paid and (ii) the Fund's gross income from
foreign sources. Of course, shareholders who are not liable for Federal income
taxes, such as retirement plans qualified under Section 401 of the Code, will
not be affected by any such "pass through" of foreign tax credits.

The Fund may invest in certain entities that may qualify as "passive
foreign investment companies." Generally, the income of such companies may
become taxable to the Fund prior to the receipt of distributions, or,
alternatively, income taxes and interest charges may be imposed on the Fund on
"excess distributions" received by the Fund or on gain from the disposition of
such investments by the Fund. In addition, gains from the sale of such
investments held for less than three months will count toward the 30% of gross
income test described above. The Fund will take steps to minimize income taxes
and interest charges arising from such investments, and will monitor such
investments to ensure that the Fund complies with the 30% of gross income test.
Proposed tax regulations, if they become effective, will allow the Fund to mark
to market and recognize gains on such investments at the Fund's taxable year
end. The Fund would not be subject to income tax on these gains if they are
distributed subject to these proposed rules.

<PAGE>

NET ASSET VALUE

The following information supplements that set forth in each Prospectus
under the subheading "How to Buy Shares - How the Funds Value Their Shares" in
the Section entitled "Purchase and Redemption of Shares".

The public offering price of shares of a Fund is its net asset value,
plus, in the case of Class A shares, a sales charge which will vary depending on
the purchase alternative chosen by the investor, as more fully described in the
Prospectus. See "Purchase of Shares - Initial Sales Charge Alternative -- Class
A Shares." On each Fund business day on which a purchase or redemption order is
received by a Fund and trading in the types of securities in which a Fund
invests might materially affect the value of Fund shares, the per share net
asset value of each such Fund is computed in accordance with each Fund's
Declaration of Trust or Articles of Incorporation, as applicable, and By-Laws as
of the next close of regular trading on the New York Stock Exchange (the
"Exchange") (currently 4:00 p.m. Eastern time) by dividing the value of the
Fund's total assets, less its liabilities, by the total number of its shares
then outstanding. A Fund business day is any weekday, exclusive of national
holidays on which the Exchange is closed and Good Friday. For Tax Exempt and
Money Market, securities are valued at amortized cost. Under this method of
valuation, a security is initially valued at its acquisition cost and,
thereafter, a constant straight line amortization of any discount or premium is
assumed each day regardless of the impact of fluctuating interest rates on the
market value of the security. For each other Fund, Exchange-listed securities
and over-the-counter securities admitted to trading on the NASDAQ National List
are valued at the last quoted sale or, if no sale, at the mean of closing bid
and asked prices and portfolio bonds are presently valued by a recognized
pricing service when such prices are believed to reflect the fair value of the
security. Unlisted securities for which market quotations are readily available
are valued at a price quoted by one or more brokers. If accurate quotations are
not available, securities will be valued at fair value determined in good faith
by the Board of Trustees or Directors.

The respective per share net asset values of the Class A, Class B,
Class C (if Class C shares are offered by a Fund) and Class Y shares are
expected to be substantially the same. Under certain circumstances, however, the
per share net asset values of the Class B and Class C shares may be lower than
the per share net asset value of the Class A shares (and, in turn, that of Class
A shares may be lower than Class Y shares) as a result of the greater daily
expense accruals, relative to Class A and Class Y shares, of Class B and Class C
shares relating to distribution and, to the extent applicable, transfer agency
fees and the fact that Class Y shares bear no additional distribution or
transfer agency related fees. While it is expected that, in the event each Class
of shares of a Fund realizes net investment income or does not realize a net
operating loss for a period, the per share net asset values of the four classes
will tend to converge immediately after the payment of dividends, which
dividends will differ by approximately the amount of the expense accrual
differential among the classes, there is no assurance that this will be the
case. In the event one or more Classes of a Fund experiences a net operating
loss for any fiscal period, the net asset value per share of such Class or
Classes will remain lower than that of Classes that incurred lower expenses for
the period.

To the extent that any Fund invests in non-U.S. dollar denominated
securities, the value of all assets and liabilities will be translated into
United States dollars at the mean between the buying and selling rates of the
currency in which such a security is denominated against United States dollars
last quoted by any major bank. If such quotations are not available, the rate of
exchange will be determined in accordance with policies established by the Fund.
The Trustees or Directors will monitor, on an ongoing basis, a Fund's method of
valuation. Trading in securities on European and Far Eastern securities
exchanges and over-the-counter markets is normally completed well before the
close of business on each business day in New York. In addition, European or Far
Eastern securities trading generally or in a particular country or countries may
not take place on all business days in New York. Furthermore, trading takes
place in various foreign markets on days which are not business days in New York
and on which the Fund's net asset value is not calculated. Such calculation does
not take place contemporaneously with the determination of the prices of the
majority of the portfolio securities used in such calculation. Events affecting
the values of portfolio securities that occur between the time their prices are
determined and the close of the New York Stock Exchange will not be reflected in
a Fund's calculation of net asset value unless the Trustees or Directors deem
that the particular event would materially affect net asset value, in which case
an adjustment will be made. Securities transactions are accounted for on the
trade date, the date the order to buy or sell is executed. Dividend income and
other distributions are recorded on the ex-dividend date, except certain
dividends and distributions from foreign securities which are recorded as soon
as the Fund is informed after the ex-dividend date.

PURCHASE OF SHARES

The following information supplements that set forth in each Prospectus
under the heading "Purchase and Redemption of Shares - How To Buy Shares."

General

Shares of each Fund will be offered on a continuous basis at a price
equal to their net asset value plus an initial sales charge at the time of
purchase (the "initial sales charge alternative"), with a contingent deferred
sales charge (the deferred sales charge alternative"), or without any initial
sales charge, but with a contingent deferred sales charge imposed only during
the first year after purchase (the "level-load alternative"), as described
below. Class Y shares which, as described below, are not offered to the general
public, are offered without any initial or contingent sales charges. Shares of
each Fund are offered on a continuous basis through (i) investment dealers that
are members of the National Association of Securities Dealers, Inc. and have
entered into selected dealer agreements with the Distributor ("selected
dealers"), (ii) depository institutions and other financial intermediaries or
their affiliates, that have entered into selected agent agreements with the
Distributor ("selected agents"), or (iii) the Distributor. The minimum for
initial investments is $1,000; there is no minimum for subsequent investments.

The subscriber may use the Share Purchase Application available from the
Distributor for his or her initial investment. Sales personnel of selected
dealers and agents distributing a Fund's shares may receive differing
compensation for selling Class A, Class B or Class C shares.

Investors may purchase shares of a Fund in the United States either
through selected dealers or agents or directly through the Distributor. A Fund
reserves the right to suspend the sale of its shares to the public in response
to conditions in the securities markets or for other reasons.

Each Fund will accept unconditional orders for its shares to be
executed at the public offering price equal to the net asset value next
determined (plus for Class A shares, the applicable sales charges), as described
below. Orders received by the Distributor prior to the close of regular trading
on the Exchange on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on the Exchange on
that day (plus for Class A shares the sales charges). In the case of orders for
purchase of shares placed through selected dealers or agents, the applicable
public offering price will be the net asset value as so determined, but only if
the selected dealer or agent receives the order prior to the close of regular
trading on the Exchange and transmits it to the Distributor prior to its close
of business that same day (normally 5:00 p.m. Eastern time). The selected dealer
or agent is responsible for transmitting such orders by 5:00 p.m. If the
selected dealer or agent fails to do so, the investor's right to that day's
closing price must be settled between the investor and the selected dealer or
agent. If the selected dealer or agent receives the order after the close of
regular trading on the Exchange, the price will be based on the net asset value
determined as of the close of regular trading on the Exchange on the next day it
is open for trading.

Following the initial purchase of shares of a Fund, a shareholder may
place orders to purchase additional shares by telephone if the shareholder has
completed the appropriate portion of the Share Purchase Application. Payment for
shares purchased by telephone can be made only by Electronic Funds Transfer from
a bank account maintained by the shareholder at a bank that is a member of the
National Automated Clearing House Association ("ACH"). If a shareholder's
telephone purchase request is received before 4:00 p.m. New York time on a Fund
business day, the order to purchase shares is automatically placed the same Fund
business day for non-money market funds, and two days following the day the
order is received for money market funds, and the applicable public offering
price will be the public offering price determined as of the close of business
on such business day. Full and fractional shares are credited to a subscriber's
account in the amount of his or her subscription. As a convenience to the
subscriber, and to avoid unnecessary expense to a Fund, stock certificates
representing Class Y shares of a Fund are not issued except upon written request
to the Fund by the shareholder or his or her authorized selected dealer or
agent. This facilitates later redemption and relieves the shareholder of the
responsibility for and inconvenience of lost or stolen certificates. No
certificates are issued for fractional shares, although such shares remain in
the shareholder's account on the records of a Fund, or for Class A, B or C
shares of any Fund.

In addition to the discount or commission amount paid to selected
dealers or agents, the Distributor may from time to time pay additional cash
bonuses or other incentives to selected dealers in connection with the sale of
shares, other than Class Y shares, of a Fund. On some occasions, such bonuses or
incentives may be conditioned upon the sale of a specified minimum dollar amount
of the shares of the Fund and/or other Evergreen Mutual Funds, as defined below,
during a specific period of time. At the option of the dealer such bonuses or
other incentives may take the form of payment for travel expenses, including
lodging incurred in connection with trips taken by persons associated with the
dealer and members of their families to places within or outside of the United
States.

Alternative Purchase Arrangements

Except as noted, each Fund issues four classes of shares: (i) Class A
shares, which are sold to investors choosing the initial sales charge
alternative; (ii) Class B shares, which are sold to investors choosing the
deferred sales charge alternative and which are not currently offered by Tax
Exempt; (iii) Class C shares, which are sold to investors choosing the
level-load sales charge alternative and which are not currently offered by
National, Short-Intermediate, Short-Intermediate-CA, Tax Exempt and Money
Market; and (iv) Class Y shares, which are offered only to (a) shareholders in
one or more of the Evergreen Mutual Funds prior to December 30, 1994., (b)
certain investment advisory clients of the Adviser and its affiliates, and (c)
institutional investors. The four classes of shares each represent an interest
in the same portfolio of investments of the Fund, have the same rights and are
identical in all respects, except that (I) only Class A, Class B and Class C
shares are subject to a Rule 12b-1 distribution fee, (II) Class A shares bear
the expense of the initial sales charge and Class B and Class C shares bear the
expense of the deferred sales charge, (III) Class B shares and Class C shares
each bear the expense of a higher Rule 12b-1 distribution fee than Class A
shares and, in the case of Class B shares, higher transfer agency costs, (IV)
with the exception of Class Y Shares, each Class of each Fund has exclusive
voting rights with respect to provisions of the Rule 12b-1 Plan pursuant to
which its distribution services fee is paid which relates to a specific Class
and other matters for which separate Class voting is appropriate under
applicable law, provided that, if the Fund submits to a simultaneous vote of
Class A, Class B and Class C shareholders an amendment to the Rule 12b-1 Plan
that would materially increase the amount to be paid thereunder with respect to
the Class A shares, the Class A shareholders and the Class B and Class C
shareholders will vote separately by Class, and (V) only the Class B shares are
subject to a conversion feature. Each Class has different exchange privileges
and certain different shareholder service options available.

The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, and other
circumstances. Investors should consider whether, during the anticipated life of
their investment in the Fund, the accumulated distribution services fee and
contingent deferred sales charges on Class B shares prior to conversion, or the
accumulated distribution services fee on Class C shares, would be less than the
initial sales charge and accumulated distribution services fee on Class A shares
purchased at the same time, and to what extent such differential would be offset
by the higher return of Class A shares. Class B and Class C shares will normally
not be suitable for the investor who qualifies to purchase Class A shares at the
lowest applicable sales charge. For this reason, the Distributor will reject any
order (except orders for Class B shares from certain retirement plans) for more
than $2,500,000 for Class B or Class C shares.

Class A shares are subject to a lower distribution services fee and,
accordingly, pay correspondingly higher dividends per share than Class B shares
or Class C shares. However, because initial sales charges are deducted at the
time of purchase, investors purchasing Class A shares would not have all their
funds invested initially and, therefore, would initially own fewer shares.
Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time might consider
purchasing Class A shares because the accumulated continuing distribution
charges on Class B shares or Class C shares may exceed the initial sales charge
on Class A shares during the life of the investment. Again, however, such
investors must weigh this consideration against the fact that, because of such
initial sales charges, not all their funds will be invested initially.

Other investors might determine, however, that it would be more
advantageous to purchase Class B shares or Class C shares in order to have all
their funds invested initially, although remaining subject to higher continuing
distribution charges and, in the case of Class B shares, being subject to a
contingent deferred sales charge for a seven-year period. For example, based on
current fees and expenses, an investor subject to the 4.75% initial sales charge
would have to hold his or her investment approximately seven years for the B and
Class C distribution services fee, to exceed the initial sales charge plus the
accumulated distribution services fee of Class A shares. In this example, an
investor intending to maintain his or her investment for a longer period might
consider purchasing Class A shares. This example does not take into account the
time value of money, which further reduces the impact of the Class C
distribution services fees on the investment, fluctuations in net asset value or
the effect of different performance assumptions.

Those investors who prefer to have all of their funds invested
initially but may not wish to retain Fund shares for the seven year period
during which Class B shares are subject to a contingent deferred sales charge
may find it more advantageous to purchase Class C shares.

The Trustees or Directors of each Fund have determined that currently
no conflict of interest exists between or among the Class A, Class B, Class C
and Class Y shares. On an ongoing basis, the Trustees and Directors of each
Fund, pursuant to their fiduciary duties under the 1940 Act and state laws, will
seek to ensure that no such conflict arises.

Initial Sales Charge Alternative--Class A Shares

The public offering price of Class A shares for purchasers choosing the
initial sales charge alternative is the net asset value plus a sales charge
(except for Money Market and Tax Exempt), as set forth in the Prospectus for
each Fund.

Shares issued pursuant to the automatic reinvestment of income
dividends or capital gains distributions are not subject to any sales charges.
The Fund receives the entire net asset value of its Class A shares sold to
investors. The Distributor's commission is the sales charge set forth in the
Prospectus for each Fund, less any applicable discount or commission "reallowed"
to selected dealers and agents. The Distributor will reallow discounts to
selected dealers and agents in the amounts indicated in the table in the
Prospectus. In this regard, the Distributor may elect to reallow the entire
sales charge to selected dealers and agents for all sales with respect to which
orders are placed with the Distributor. A selected dealer who receives
reallowance in excess of 90% of such a sales charge may be deemed to be an
"underwriter" under the Securities Act of 1933, as amended.

Set forth below is an example of the method of computing the offering
price of the Class A shares of each Fund. The example assumes a purchase of
Class A shares of a Fund aggregating less than $100,000 subject to the schedule
of sales charges set forth above at a price based upon the net asset value of
Class A shares of each Fund at the end of each Fund's latest fiscal year.
<TABLE>
<CAPTION>

Net Per Share Offering Net Per Share Offering
Asset Sales Price Asset Sales Price Per
Value Charge Date Per Share Value Charge Date Share
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Aggressive Evergreen $14.62 $.73 9/30/94 $15.35%

Florida High
Income Foundation $12.12 $.65 12/31/93 $13.77

Global $13.81 $.69 9/30/94 $14.50 Tax Strategic $10.31 $.51 12/31/93 $10.82

U.S. Real Short-Inter-
Estate $10.07 $.50 9/30/94 $10.57 mediate $10.21 $.51 8/31/94 $10.72

Short-Inter-
Limited Market $21.74 $1.08 9/30/94 $22.82 mediate-CA $10.09 $.50 8/31/94 $10.59

Growth and
Income $15.41 $.77 12/31/93 $16.18 National $9.99 $.47 8/31/94 $10.46

Total Return $18.29 $.91 3/31/94 $19.20 Tax Exempt $1.00 N/A 8/31/94 $1.00

American
Retirement $11.60 $.58 12/31/93 $12.18 U.S. Government $9.34 $.47 3/31/94 $9.81

Small Cap $10.15 $.51 12/31/93 $10.66 Money Market $1.00 N/A 8/31/94 $1.00
</TABLE>

Prior to the date of this Statement of Additional Information, shares
of the Funds were offered exclusively on a no-load basis and, accordingly, no
underwriting commissions have been paid in respect of sales of shares of the
Funds or retained by the Distributor. In addition, since Class B and Class C
shares were not offered prior to the date hereof, no contingent deferred sales
charges have been paid to the distributor with respect to Class B or Class C
shares.

Investors choosing the initial sales charge alternative may under
certain circumstances be entitled to pay reduced sales charges. The
circumstances under which such investors may pay reduced sales charges are
described below.

Combined Purchase Privilege. Certain persons may qualify for the sales
charge reductions by combining purchases of shares of one or more Funds into a
single "purchase," if the resulting "purchase" totals at least $100,000. The
term "purchase" refers to: (i) a single purchase by an individual, or to
concurrent purchases, which in the aggregate are at least equal to the
prescribed amounts, by an individual, his or her spouse and their children under
the age of 21 years purchasing shares for his, her or their own account(s); (ii)
a single purchase by a trustee or other fiduciary purchasing shares for a single
trust, estate or single fiduciary account although more than one beneficiary is
involved; or (iii) a single purchase for the employee benefit plans of a single
employer. The term "purchase" also includes purchases by any "company," as the
term is defined in the 1940 Act, but does not include purchases by any such
company which has not been in existence for at least six months or which has no
purpose other than the purchase of shares of a Fund or shares of other
registered investment companies at a discount. The term "purchase" does not
include purchases by any group of individuals whose sole organizational nexus is
that the participants therein are credit card holders of a company, policy
holders of an insurance company, customers of either a bank or broker-dealer or
clients of an investment adviser. A "purchase" may also include shares,
purchased at the same time through a single selected dealer or agent, of any
Evergreen Mutual Fund.

Currently, the Evergreen Mutual Funds include:

The Evergreen Fund
Evergreen Aggressive Growth Fund
Evergreen Global Real Estate Equity Fund
Evergreen U.S. Real Estate Equity Fund
The Evergreen Limited Market Fund, Inc.
Evergreen Growth and Income Fund
The Evergreen Total Return Fund
The Evergreen American Retirement Fund
Evergreen Small Cap Equity Income Fund
Evergreen Tax Strategic Foundation Fund
Evergreen Short-Intermediate Municipal Fund
Evergreen Short-Intermediate Municipal Fund-CA
Evergreen National Tax-Free Fund
Evergreen Florida High Income Municipal Fund
Evergreen Tax Exempt Money Market Fund
The Evergreen Money Market Trust
Evergreen U.S. Government Securities Fund
Evergreen Foundation Fund

Prospectuses for the Evergreen Mutual Funds may be obtained without charge
by contacting the Distributor, Evergreen Asset or FUNB at the address or
telephone number shown on the front cover of this Statement of Additional
Information.

Cumulative Quantity Discount (Right of Accumulation). An investor's
purchase of additional Class A shares of a Fund may qualify for a Cumulative
Quantity Discount. The applicable sales charge will be based on the total of:

(i) the investor's current purchase;

(ii) the net asset value (at the close of business on the
previous day) of (a) all Class A, Class B and Class C shares
of the Fund held by the investor and (b) all such shares of
any other Evergreen Mutual Fund held by the investor; and

(iii) the net asset value of all shares described in paragraph

(ii) owned by another shareholder eligible to combine his or
her purchase with that of the investor into a single
"purchase" (see above).

For example, if an investor owned Class A, B or C shares of an
Evergreen Mutual Fund worth $200,000 at their then current net asset value and,
subsequently, purchased Class A shares of a Fund worth an additional $100,000,
the sales charge for the $100,000 purchase would be at the 3.00% rate applicable
to a single $300,000 purchase of shares of the Fund, rather than the 3.75% rate.

To qualify for the Combined Purchase Privilege or to obtain the
Cumulative Quantity Discount on a purchase through a selected dealer or agent,
the investor or selected dealer or agent must provide the Distributor with
sufficient information to verify that each purchase qualifies for the privilege
or discount.

Statement of Intention. Class A investors may also obtain the reduced
sales charges shown in the table above by means of a written Statement of
Intention, which expresses the investor's intention to invest not less than
$100,000 within a period of 13 months in Class A shares (or Class A, Class B
and/or Class C shares) of the Fund or any other Evergreen Mutual Fund. Each
purchase of shares under a Statement of Intention will be made at the public
offering price or prices applicable at the time of such purchase to a single
transaction of the dollar amount indicated in the Statement of Intention. At the
investor's option, a Statement of Intention may include purchases of Class A, B
or C shares of the Fund or any other Evergreen Mutual Fund made not more than 90
days prior to the date that the investor signs a Statement of Intention;
however, the 13-month period during which the Statement of Intention is in
effect will begin on the date of the earliest purchase to be included.

Investors qualifying for the Combined Purchase Privilege described
above may purchase shares of the Evergreen Mutual Funds under a single Statement
of Intention. For example, if at the time an investor signs a Statement of
Intention to invest at least $100,000 in Class A shares of the Fund, the
investor and the investor's spouse each purchase shares of the Fund worth
$20,000 (for a total of $40,000), it will only be necessary to invest a total of
$60,000 during the following 13 months in shares of the Fund or any other
Evergreen Mutual Fund, to qualify for the 3.75% sales charge on the total amount
being invested (the sales charge applicable to an investment of $100,000).

The Statement of Intention is not a binding obligation upon the
investor to purchase the full amount indicated. The minimum initial investment
under a Statement of Intention is 5% of such amount. Shares purchased with the
first 5% of such amount will be held in escrow (while remaining registered in
the name of the investor) to secure payment of the higher sales charge
applicable to the shares actually purchased if the full amount indicated is not
purchased, and such escrowed shares will be involuntarily redeemed to pay the
additional sales charge, if necessary. Dividends on escrowed shares, whether
paid in cash or reinvested in additional Fund shares, are not subject to escrow.
When the full amount indicated has been purchased, the escrow will be released.
To the extent that an investor purchases more than the dollar amount indicated
on the Statement of Intention and qualifies for a further reduced sales charge,
the sales charge will be adjusted for the entire amount purchased at the end of
the 13-month period. The difference in sales charge will be used to purchase
additional shares of the Fund subject to the rate of sales charge applicable to
the actual amount of the aggregate purchases.

Investors wishing to enter into a Statement of Intention in conjunction
with their initial investment in Class A shares of the Fund should complete the
appropriate portion of the Subscription Application found in the Prospectus
while current Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting a Fund at the address or telephone numbers
shown on the cover of this Statement of Additional Information.

Investments Through Employee Benefit and Savings Plans. Certain
qualified and non-qualified benefit and savings plans may make shares of the
Evergreen Funds available to their participants. Investments made by such
employee benefit plans may be exempt from any applicable front-end sales charges
if they meet the criteria set forth in the Prospectus under "Class A
Shares-Front End Sales Charge Alternative". The Adviser may provide compensation
to organizations providing administrative and recordkeeping services to plans
which make shares of the Evergreen Funds available to their participants.

Reinstatement Privilege. A Class A shareholder who has caused any or
all of his or her shares of the Fund to be redeemed or repurchased may reinvest
all or any portion of the redemption or repurchase proceeds in Class A shares of
the Fund at net asset value without any sales charge, provided that such
reinvestment is made within 30 calendar days after the redemption or repurchase
date. Shares are sold to a reinvesting shareholder at the net asset value next
determined as described above. A reinstatement pursuant to this privilege will
not cancel the redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for Federal tax purposes except that no loss will
be recognized to the extent that the proceeds are reinvested in shares of the
Fund. The reinstatement privilege may be used by the shareholder only once,
irrespective of the number of shares redeemed or repurchased, except that the
privilege may be used without limit in connection with transactions whose sole
purpose is to transfer a shareholder's interest in the Fund to his or her
individual retirement account or other qualified retirement plan account.
Investors may exercise the reinstatement privilege by written request sent to
the Fund at the address shown on the cover of this Statement of Additional
Information.

Sales at Net Asset Value. The Fund may sell its Class A shares at net
asset value, i.e., without any sales charge, to certain categories of investors
including: (i) certain investment advisory clients of the Adviser or its
affiliates; (ii) officers and present or former Trustees or Directors of the
Fund; present or former directors and trustees of other investment companies
managed by the Adviser; present or retired full-time employees of the Adviser;
officers, directors and present or retired full-time employees of the Adviser,
the Distributor, and their affiliates; officers, directors and present and
full-time employees of selected dealers or agents; or the spouse, sibling,
direct ancestor or direct descendant (collectively "relatives") of any such
person; or any trust, individual retirement account or retirement plan account
for the benefit of any such person or relative; or the estate of any such person
or relative, if such shares are purchased for investment purposes (such shares
may not be resold except to the Fund); (iii) certain employee benefit plans for
employees of the Adviser, the Distributor. and their affiliates; and (iv)
persons participating in a fee-based program, sponsored and maintained by a
registered broker-dealer and approved by the Distributor, pursuant to which such
persons pay an asset-based fee to such broker-dealer, or its affiliate or agent,
for service in the nature of investment advisory or administrative services.
These provisions are intended to provide additional job-related incentives to
persons who serve the Funds or work for companies associated with the Funds and
selected dealers and agents of the Funds. Since these persons are in a position
to have a basic understanding of the nature of an investment company as well as
a general familiarity with the Fund, sales to these persons, as compared to
sales in the normal channels of distribution, require substantially less sales
effort. Similarly, these provisions extend the privilege of purchasing shares at
net asset value to certain classes of institutional investors who, because of
their investment sophistication, can be expected to require significantly less
than normal sales effort on the part of the Funds and the Distributor.

Deferred Sales Charge Alternative--Class B Shares

Investors choosing the deferred sales charge alternative purchase Class
B shares at the public offering price equal to the net asset value per share of
the Class B shares on the date of purchase without the imposition of a sales
charge at the time of purchase. The Class B shares are sold without an initial
sales charge so that the full amount of the investor's purchase payment is
invested in the Fund initially.

Proceeds from the contingent deferred sales charge are paid to the
Distributor and are used by the Distributor to defray the expenses of the
Distributor related to providing distribution-related services to the Fund in
connection with the sale of the Class B shares, such as the payment of
compensation to selected dealers and agents for selling Class B shares. The
combination of the contingent deferred sales charge and the distribution
services fee enables the Fund to sell the Class B shares without a sales charge
being deducted at the time of purchase. The higher distribution services fee
incurred by Class B shares will cause such shares to have a higher expense ratio
and to pay lower dividends than those related to Class A shares.

Contingent Deferred Sales Charge. Class B shares which are redeemed
within seven years of purchase will be subject to a contingent deferred sales
charge at the rates set forth in the Prospectus charged as a percentage of the
dollar amount subject thereto. The charge will be assessed on an amount equal to
the lesser of the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be imposed on
increases in net asset value above the initial purchase price. In addition, no
CDSC charge will be assessed on shares derived from reinvestment of dividends or
capital gains distributions. The amount of the contingent deferred sales charge,
if any, will vary depending on the number of years from the time of payment for
the purchase of Class B shares until the time of redemption of such shares.

In determining the contingent deferred sales charge applicable to a
redemption, it will be assumed, that the redemption is first of any Class A
shares or Class C shares in the shareholder's Fund account, second of Class B
shares held for over eight years or Class B shares acquired pursuant to
reinvestment of dividends or distributions and third of Class B shares held
longest during the eight-year period.

To illustrate, assume that an investor purchased 100 Class B shares at
$10 per share (at a cost of $1,000) and in the second year after purchase, the
net asset value per share is $12 and, during such time, the investor has
acquired 10 additional Class B shares upon dividend reinvestment. If at such
time the investor makes his or her first redemption of 50 Class B shares, 10
Class B shares will not be subject to charge because of dividend reinvestment.
With respect to the remaining 40 Class B shares, the charge is applied only to
the original cost of $10 per share and not to the increase in net asset value of
$2 per share. Therefore, of the $600 of the shares redeemed $400 of the
redemption proceeds (40 shares x $10 original purchase price) will be charged at
a rate of 4.0% (the applicable rate in the second year after purchase for a CDSC
of $16).

The contingent deferred sales charge is waived on redemptions of shares
(i) following the death or disability, as defined in the Internal Revenue Code
of 1986, as amended (the "Code"), of a shareholder, or (ii) to the extent that
the redemption represents a minimum required distribution from an individual
retirement account or other retirement plan to a shareholder who has attained
the age of 70-1/2.

Conversion Feature. At the end of the period ending seven years after
the end of the calendar month in which the shareholder's purchase order was
accepted, Class B shares will automatically convert to Class A shares and will
no longer be subject to a higher distribution services fee imposed on Class B
shares. Such conversion will be on the basis of the relative net asset values of
the two classes, without the imposition of any sales load, fee or other charge.
The purpose of the conversion feature is to reduce the distribution services fee
paid by holders of Class B shares that have been outstanding long enough for the
Distributor to have been compensated for the expenses associated with the sale
of such shares.

For purposes of conversion to Class A, Class B shares purchased through
the reinvestment of dividends and distributions paid in respect of Class B
shares in a shareholder's account will be considered to be held in a separate
sub-account. Each time any Class B shares in the shareholder's account (other
than those in the sub-account) convert to Class A, an equal pro-rata portion of
the Class B shares in the sub-account will also convert to Class A.

The conversion of Class B shares to Class A shares is subject to the
continuing availability of an opinion of counsel to the effect that (i) the
assessment of the higher distribution services fee and transfer agency costs
with respect to Class B shares does not result in the dividends or distributions
payable with respect to other Classes of a Fund's shares being deemed
"preferential dividends" under the Code, and (ii) the conversion of Class B
shares to Class A shares does not constitute a taxable event under Federal
income tax law. The conversion of Class B shares to Class A shares may be
suspended if such an opinion is no longer available at the time such conversion
is to occur. In that event, no further conversions of Class B shares would
occur, and shares might continue to be subject to the higher distribution
services fee for an indefinite period which may extend beyond the period ending
eight years after the end of the calendar month in which the shareholder's
purchase order was accepted, subject to the Rules of Fair Practice of the
National Association of Securities Dealers, Inc.

Level-Load Alternative--Class C Shares

Class C shares are offered by all Funds except Short-Intermediate,
Short-Intermediate-CA, Money Market and Tax Exempt. Investors choosing the level
load sales charge alternative purchase Class C shares at the public offering
price equal to the net asset value per share of the Class C shares on the date
of purchase without the imposition of a sales charge. However, you will pay a
1.0% CDSC if you redeem shares during the first year after purchase. No charge
is imposed in connection with redemptions made more than one year from the date
of purchase . Class C shares are sold without an initial sales charge so that
the Fund will receive the full amount of the investor's purchase payment and
after the first year without a contingent deferred sales charge so that the
investor will receive as proceeds upon redemption the entire net asset value of
his or her Class C shares. The Class C distribution services fee enables the
Fund to sell Class C shares without either an initial or contingent deferred
sales charge. However, unlike Class B shares, Class C shares do not convert to
any other class of shares of the Fund. Class C shares incur higher distribution
services fees than Class A shares, and will thus have a higher expense ratio and
pay correspondingly lower dividends than Class A shares.

Class Y Shares

Class Y shares are not offered to the general public and are available
only to (i) investors that held shares in one or more of the Evergreen Mutual
Funds prior to December 30, 1994., (ii) certain investment advisory clients of
the Adviser and its affiliates, and (iii) institutional investors. Class Y
shares do not bear any Rule 12b-1 distribution expenses and are not subject to
any front-end or contingent deferred sales charges.

GENERAL INFORMATION

Capitalization and Organization.

All of the Funds, except Limited Market, are series of Massachusetts business
trusts (the "Trusts"). Evergreen and Aggressive are the two series of the
Evergreen Trust, which was originally organized in 1971 as a Delaware
corporation under the name "The Evergreen Fund, Inc." and reincorporated as a
Maryland corporation in 1981. On January 30, 1987, Evergreen was reorganized
from a Maryland corporation into a Massachusetts business trust. Total Return is
the only series of the Evergreen Total Return Fund and was originally organized
in 1978 as a Maryland corporation under the name "The Evergreen Total Return
Fund, Inc." On August 1, 1986, the Total Return was reorganized from a Maryland
corporation into a Massachusetts business trust. American Retirement and Small
Cap are series of The Evergreen American Retirement Trust, which was organized
as a Massachusetts business trust in 1987. Florida High Income, National,
Short-Intermediate, Short-Intermediate-CA and Tax Exempt, are series of the
Evergreen Municipal Trust, which was organized as a Massachusetts business trust
in 1988. Money Market is the only series of the Evergreen Money Market Trust,
which was organized as a Massachusetts business trust in 1987. Global and U.S.
Real Estate are the two series of Evergreen Real Estate Equity Trust, which was
organized as a Massachusetts business trust in 1988. Growth and Income, is the
only series of a Massachusetts business trust organized in 1986. U.S. Government
is the only series of Evergreen Fixed Income Trust, which was organized as a
Massachusetts business trust in 1992. Foundation and Tax Strategic are the two
series of Evergreen Foundation Trust which was organized as a Massachusetts
business trust in 1989. Limited Market is a Maryland corporation initially
organized in 1983.

Liability Under Massachusetts Law

Under Massachusetts law, trustees and shareholders of a business trust
may, in certain circumstances, be held personally liable for its obligations.
The Declaration of Trust under which the Fund operates provides that no trustee
or shareholder will be personally liable for the obligations of the Trust and
that every written contract made by the Trust contain a provision to that
effect. If any Trustee or shareholder were required to pay any liability of the
Trust, that person would be entitled to reimbursement from the general assets of
the Trust.

Aggressive, Total Return, Evergreen and Growth and Income may issue an
unlimited number of shares of beneficial interest with a $0.001 par value.
American Retirement, Florida High Income, Small Cap, Global, U.S. Real Estate,
Foundation, Tax Strategic, U.S. Government, Money Market, Tax Exempt,
Short-Intermediate, Short-Intermediate-CA and National may issue an unlimited
number of shares of beneficial interest with a $0.0001 par value. All shares of
these Funds have equal rights and privileges. Each share is entitled to one
vote, to participate equally in dividends and distributions declared by the
Funds and on liquidation to their proportionate share of the assets remaining
after satisfaction of outstanding liabilities. Shares of these Funds are fully
paid, nonassessable and fully transferable when issued and have no pre-emptive,
conversion or exchange rights. Fractional shares have proportionally the same
rights, including voting rights, as are provided for a full share.

The authorized capital stock of Limited Market consists of 25,000,000
shares of Common Stock having a par value of $0.10 per share. Each share of
Limited Market is entitled to one vote and to participate equally in dividends
and distributions declared by Limited Market and, on liquidation, to its
proportionate share of the net assets remaining after satisfaction of
outstanding liabilities (including fractional shares on a proportional basis).
All shares of Limited Market when issued will be fully paid and non-assessable
and have no preemptive, conversion or exchange rights. Fractional shares have
proportionally the same rights, including voting rights, as are provided for a
full share. The rights of the holders of shares of Common Stock may not be
modified except by vote of the holders of a majority of the outstanding shares.

The Trustees of the Funds (with the exception of Limited Market) were
elected by the shareholders of each Fund at a Joint Special Meeting of
Shareholders held on June 23, 1994. Under each Funds Declaration of Trust, each
Trustee will continue in office until the termination of the Fund or his or her
earlier death, incapacity, resignation or removal. Shareholders can remove a
Trustee upon a vote of two-thirds of the outstanding shares of beneficial
interest of the Trust. Vacancies will be filled by a majority of the remaining
Trustees, subject to the 1940 Act. As a result, normally no annual or regular
meetings of shareholders will be held, unless otherwise required by the
Declaration of Trust of each Fund or the 1940 Act.

The Directors of Limited Market were elected by the shareholders of the
Fund at their meeting held June 23, 1994. Under the Fund's Bylaws, each Director
will continue in office until such time as less than a majority of the Directors
then holding office have been elected by the shareholders or upon the occurrence
of any of the conditions described under Section 16 of the 1940 Act. As a
result, normally no annual or regular meetings of shareholders will be held,
unless otherwise required by the Bylaws or the 1940 Act.

Shares have noncumulative voting rights, which means that the holders
of more than 50% of the shares voting for the election of Trustees or Directors
can elect 100% of the Trustees or Directors if they choose to do so and in such
event the holders of the remaining shares so voting will not be able to elect
any Trustees or Directors.

The Trustees or Directors of each Fund are authorized to reclassify and
issue any unissued shares to any number of additional series without shareholder
approval. Accordingly, in the future, for reasons such as the desire to
establish one or more additional portfolios of a Trust or Limited market with
different investment objectives, policies or restrictions, additional series of
shares may be created by one or more Funds. Any issuance of shares of another
series or class would be governed by the 1940 Act and the law of either the
State of Massachusetts or the State of Maryland. If shares of another series of
a Trust or Limited Market were issued in connection with the creation of
additional investment portfolios, each share of the newly created portfolio
would normally be entitled to one vote for all purposes. Generally, shares of
all portfolios would vote as a single series on matters, such as the election of
Trustees or Directors, that affected all portfolios in substantially the same
manner. As to matters affecting each portfolio differently, such as approval of
the Investment Advisory Contract and changes in investment policy, shares of
each portfolio would vote separately.

In addition any Fund may, in the future, create additional classes of
shares which represent an interest in the same investment portfolio. Except for
the different distribution related an other specific costs borne by such
additional classes, they will have the same voting and other rights described
for the existing classes of each Fund.

Procedures for calling a shareholders' meeting for the removal of the
Trustees or Directors of each Fund, similar to those set forth in Section 16(c)
of the 1940 Act will be available to shareholders of each Fund. The rights of
the holders of shares of a series of a Fund may not be modified except by the
vote of a majority of the outstanding shares of such series.

An order has been received from the Securities and Exchange Commission
permitting the issuance and sale of multiple classes of shares representing
interests in each Fund. In the event a Fund were to issue additional Classes of
shares other than those described herein, no further relief from the Securities
and Exchange Commission would be required.

As of April 15, 1995 each Fund had outstanding the following number of
shares of each Class:
<TABLE>
<CAPTION>

Total Shares Class A Class B Class C Class Y
<S> <C> <C> <C> <C> <C>

Evergreen
Total Return
Limited Market
Growth and Income
Money Market
American Retirement
Small Cap
Tax Exempt
Short-Intermediate
Short-Intermediate-CA
National
Global
U.S. Real Estate
Foundation
Tax Strategic
U.S. Government
</TABLE>

Custodian and Transfer Agent

State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, acts as custodian for the securities and cash of each Fund
but plays no part in deciding the purchase or sale of portfolio securities.
State Street has entered into sub-custodian agreements with a number of major
financial institutions, pursuant to which cash and Global's portfolio securities
which are purchased outside the United States will be maintained in the custody
of such institutions. All sub-custodian arrangements will be approved by
Global's Trustees in accordance with Rule 17f-5 of the 1940 Act.

Distributor

Evergreen Funds Distributor, Inc. (the "Distributor"), 230 Park Avenue,
New York, New York 10169, serves as each Fund's principal underwriter, and as
such may solicit orders from the public to purchase shares of any Fund.
Evergreen Funds Distributor, Inc. is not obligated to sell any specific amount
of shares and will purchase shares for resale only against orders for shares.

<PAGE>

Under the Agreement between the Fund and the Distributor, the Fund has agreed to
indemnify the Distributor, in the absence of its willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations thereunder, against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended.

Counsel

Shereff, Friedman, Hoffman & Goodman, LLP, 919 Third Avenue, New York,
New York 10022 serves as counsel to the Funds.

Independent Auditors

Ernst & Young LLP has been selected to be the independent auditors of
Total Return, Limited Market, Growth and Income and the two series funds of The
Evergreen American Retirement Trust.

Price Waterhouse LLP has been selected to be the independent auditors
of the two series funds of Evergreen Trust, Money Market, the five series funds
of The Evergreen Municipal Trust, the two series funds of Evergreen Real Estate
Equity Trust, the two series funds of Evergreen Foundation Trust and the sole
series of Evergreen Fixed-Income Trust.

PERFORMANCE INFORMATION

Total Return

From time to time a Fund may advertise its "total return" . Computed
separately for each class, the Fund's "total return" is its average annual
compounded total return for recent one, five, and ten-year periods (or the
period since the Fund's inception). The Fund's total return for such a period is
computed by finding, through the use of a formula prescribed by the Securities
and Exchange Commission, the average annual compounded rate of return over the
period that would equate an assumed initial amount invested to the value of such
investment at the end of the period. For purposes of computing total return,
income dividends and capital gains distributions paid on shares of the Fund are
assumed to have been reinvested when paid and the maximum sales charge
applicable to purchases of Fund shares is assumed to have been paid. The Fund
will include performance data for Class A, Class B and Class C shares in any
advertisement or information including performance data of the Fund.

The shares of each Fund outstanding prior to January 3, 1995 have been
reclassified as Class Y shares. The average annual compounded total return, or
where applicable yield, for each Class of shares offered by the Funds for the
most recently completed one, five and ten year fiscal periods is set forth in
the table below.

<TABLE>

EVERGREEN 1 Year 5 Years 10 Years AGGRESSIVE 1 Year 5 Years 10 Years
-------
Ended Ended Ended Ended Ended Ended
------
9/30/94 9/30/94 9/30/94
Class A 1.12% 5.73% 11.57% Class A
Class B 1.16% 6.46% 12.11% Class B
Class C 5.16% 6.77% 12.11% Class C
Class Y 6.16% 6.77% 12.11% Class Y

FLORIDA HIGH
INCOME 1 Year 5 Years 10 Years TOTAL RETURN 1 Year 5 Years 10 Years
-------
Ended Ended Ended Ended Ended Ended
------
9/30/94 9/30/94 9/30/94 3/31/94 3/31/94 3/31/94
Class A 1.12% 5.73% 11.57% Class A -6.78% 7.11% 11.25%
Class B 1.16% 6.46% 12.11% Class B -6.51% 7.87% 11.79%
Class C 5.16% 6.77% 12.11% Class C -3.01% 8.16% 11.79%

<PAGE>

Class Y 6.16% 6.77% 12.11% Class Y -2.13% 8.16% 11.79%

LIMITED MARKET 1 Year 5 Years 10 Years GROWTH AND INCOME 1 Year 5 Years From
Ended Ended Ended Ended Ended 10/15/86
9/30/94 9/30/94 9/30/94 12/31/93 12/31/93 (inception)
Class A -2.74% 8.58% 15.32% Class A 9.00% 13.34% 11.81%
Class B -2.71% 9.37% 15.89% Class B 9.44% 14.22% 12.50%
Class C 1.15% 9.64% 15.89% Class C 13.44% 14.45% 12.57%
Class Y 2.11% 9.64% 15.89% Class Y 14.44% 14.45% 12.57%

MONEY MARKET 1 Year 5 Years From AMERICAN RETIREMENT 1 Year 5 Years From
Ended Ended 11/2/87 Ended Ended 3/14/88
8/31/94 8/31/94 (inception) 12/31/93 12/31/93 (inception)
Class A 3.60% 5.31% 6.16% Class A 8.64% 10.25% 9.82%
Class B -1.40% 4.98% 6.06% Class B 9.06% 11.07% 10.64%
Class Y 3.60% 5.31% 6.16% Class C 13.06% 11.33% 10.75%
Class Y 14.06% 11.33% 10.75%

SMALL CAP From TAX EXEMPT 1 Year 5 Years From
10/1/93 Ended Ended 11/2/88
(inception) 8/31/94 8/31/94 (inception)
Class A -2.41% Class A 2.50% 4.08% 4.44%
Class B -2.54% Class Y 2.50% 4.08% 4.44%
Class C 1.46%
Class Y 2.46%

SHORT INTERMEDIATE 1 Year From SHORT-INTERMEDIATE-CA 1 Year From
Ended 11/18/91 Ended 10/16/92
8/31/94 (inception) 8/31/94 (inception)
Class A -3.40% 3.96% -3.00% 2.12%
Class B -3.41% 4.81% -3.04% 2.74%
Class Y 1.42% 5.79% 1.84% 4.79%

NATIONAL 1 Year From GLOBAL 1 Year 5 Years From 2/1/89
Ended 10/1/93 Ended Ended (inception)
-----------
8/31/94 (inception) 9/30/94 9/30/94
Class A -6.93% 3.30% -1.74% 6.28% 5.92%
Class B -6.86% 4.04% -1.84% 7.01% 5.70%
Class C -2.29% 6.33% 2.16% 7.32% 6.83%
Class Y 3.16% 7.32% 6.83%

U.S. REAL ESTATE 1 Year From 9/1/93 FOUNDATION 1 Year From 1/2/90
Ended (inception) Ended (inception)
----------- -----------
9/30/94 12/31/93
Class A -6.89% -3.37% 10.21% 17.76%
Class B -7.11% -2.62% 10.71% 18.76%
Class C -3.22% 1.08% 14.71% 19.20%
Class Y -2.25% 1.08% 15.71% 19.20%

TAX STRATEGIC From 11/02/93 U.S. GOVERNMENT From 6/14/93 (inception)
(inception) to 12/31/93 to 3/31/94
Class A -1.37% -5.38%
Class B -1.45% -5.33%
Class C -2.55% -1.56%
Class Y 3.55% -0.66%
</TABLE>

The performance numbers for the Class A, B and C shares are
hypothetical numbers based on the performance for Class Y shares as adjusted for
any applicable front-end sales charge or CDSC. The performance data does not
reflect any Rule 12b-1 fees. If such fees were reflected the returns would be
lower.

A Fund's total return is not fixed and will fluctuate in response to
prevailing market conditions or as a function of the type and quality of the
securities in a Fund's portfolio and its expenses. Total return information is
useful in reviewing a Fund's performance but such information may not provide a
basis for comparison with bank deposits or other investments which pay a fixed
yield for a stated period of time. An investor's principal invested in a Fund is
not fixed and will fluctuate in response to prevailing market conditions.

YIELD CALCULATIONS - NON-MONEY MARKET FUNDS

The yields used by U.S. Government, National, Short-Intermediate and
Short-Intermediate-CA in advertising are computed by dividing the Fund's
interest income (as defined in the SEC yield formula) for a given 30-day or one

<PAGE>

month period, net of expenses, by the average number of shares entitled to
receive distributions during the period, dividing this figure by the Fund's net
asset value per share at the end of the period and annualizing the result
(assuming compounding of income) in order to arrive at an annual percentage
rate. The formula for calculating yield is as follows:

YIELD = 2[(a-b+1)6-1]
cd
Where a = Interest earned during the period
b = Expenses accrued for the period (net of reimbursements) c = The
average daily number of shares outstanding during the period
that were entitled to receive dividends
d = The maximum offering price per share on the last day of the period

Income is calculated for purposes of yield quotations in accordance with
standardized methods applicable to all stock and bond funds. Gains and losses
generally are excluded from the calculation. Income calculated for purposes of
determining a Fund's yield differs from income as determined for other
accounting purposes. Because of the different accounting methods used, and
because of the compounding assumed in yield calculations, the yields quoted for
a Fund may differ from the rate of distributions a Fund paid over the same
period, or the net investment income reported in a Fund's financial statements.

Yield examples for National, Short-Intermediate and Short-Intermediate-CA are
shown under "Tax Equivalent Yield', below. An example of the 30-day yield for
U.S. Government is set forth below:

Year Ended: Yield
U.S. Government 3/31/94 6.95%

Tax Equivalent Yield

National, Short-Intermediate and Short-Intermediate-CA invest principally in
obligations the interest from which is exempt from federal income tax other than
the AMT. In addition, the securities in which Short-Intermediate-CA invests will
also, to the extent practicable, be exempt from California income taxes. However
from time to time the Funds may make investments which generate taxable income.
A Fund's tax-equivalent yield is the rate an investor would have to earn from a
fully taxable investment in order to equal the Fund's yield after taxes.
Tax-equivalent yields are calculated by dividing a Fund's yield by the result of
one minus a stated federal or combined federal and state tax rate. (If only a
portion of the Fund's yield is tax-exempt, only that portion is adjusted in the
calculation.) Of course, no assurance can be given that a Fund will achieve any
specific tax-exempt yield. If only a portion of the Fund's yield is tax-exempt,
only that portion is adjusted in the calculation. Of course, no assurance can be
given that the Fund will achieve any specific tax-exempt yield.

The following formula is used to calculate Tax Equivalent Yield without taking
into account state tax:

Fund's Yield
1 - Fed Tax Rate

The following formula is used to calculate Tax Equivalent Yield taking into
account state tax:

Fund's Yield
1 - Fed Tax Rate + (State Tax Rate - [State Tax Rate x Fed Tax Rate])

Examples of the 30-day tax exempt and tax equivalent yields, assuming the 36%
federal income tax bracket and, for Short-Intermediate-CA only, the 11%
California income tax bracket, are set forth below:

Year Ended: Yield Tax Equivalent Yield
National 8/31/94 5.20% 8.12%
Short-Intermediate 8/31/94 4.23% 6.61%
Short-Intermediate-CA 8/31/94 4.10% 7.20%

<PAGE>

CURRENT YIELD - MONEY MARKET FUNDS

Money Market and Tax Exempt may quote a "Current Yield" or "Effective Yield"
from time to time. The Current Yield is an annualized yield based on the actual
total return for a seven-day period. The Effective Yield is an annualized yield
based on a compounding of the Current Yield. These yields are each computed by
first determining the "Net Change in Account Value" for a hypothetical account
having a share balance of one share at the beginning of a seven-day period
("Beginning Account Value"), excluding capital changes. The Net Change in
Account Value will generally equal the total dividends declared with respect to
the account.

The yields are then computed as follows:

Current Yield = Net Change in Account Value
Beginning Account Value x 365/7

Effective Yield = (1 + Total Dividend for 7 days)365/7- 1

Yield fluctuations may reflect changes in a Fund's net investment income, and
portfolio changes resulting from net purchases or net redemptions of the Fund's
shares may affect the yield. Accordingly, a Fund's yield may vary from day to
day, and the yield stated for a particular past period is not necessarily
representative of its future yield. Since the Funds use the amortized cost
method of net asset value computation, it does not anticipate any change in
yield resulting from any unrealized gains or losses or unrealized appreciation
or depreciation not reflected in the yield computation, or change in net asset
value during the period used for computing yield. If any of these conditions
should occur, yield quotations would be suspended. A Fund's yield is not
guaranteed, and the principal is not insured. However, a Fund will use its best
efforts to maintain its net asset value at $1.00 per share. Examples of seven
day current and effective yields for Money Market and Tax-Exempt are set forth
below:

7-Day Period Ended Current Yield Effective Yield
Money Market 8/31/94 4.21% 4.30%
Tax Exempt 8/31/94 2.87% 2.91%

GENERAL

From time to time, a Fund may quote its performance in advertising and other
types of literature as compared to the performance of the S & P Index, the Dow
Jones Industrial Average, Russell 2000 Index, or any other commonly quoted index
of common stock prices. The S & P Index, the Dow Jones Industrial Average and
the Russell 2000 Index are unmanaged indices of selected common stock prices. A
Fund's performance may also be compared to those of other mutual funds having
similar objectives. This comparative performance would be expressed as a ranking
prepared by Lipper Analytical Services, Inc., an independent service which
monitors the performance of mutual funds. A Fund's performance will be
calculated by assuming, to the extent applicable, reinvestment of all capital
gains distributions and income dividends paid. Any such comparisons may be
useful to investors who wish to compare a Fund's past performance with that of
its competitors. Of course, past performance cannot be a guarantee of future
results.

Additional Information

Any shareholder inquiries may be directed to the shareholder's broker
or to the Adviser. at the address or telephone numbers shown on the front cover
of this Statement of Additional Information. This Statement of Additional
Information does not contain all the information set forth in the Registration
Statement filed by the Fund with the Securities and Exchange Commission under
the Securities Act of 1933. Copies of the Registration Statement may be obtained
at a reasonable charge from the Securities and Exchange Commission or may be
examined, without charge, at the offices of the Securities and Exchange
Commission in Washington, D.C.

<PAGE>

FINANCIAL STATEMENTS

Each Fund's financial statements appearing in their most current fiscal
year Annual Report to shareholders and the report thereon of the independent
auditors appearing therein, namely Ernst & Young, LLP (in the case of Total
Return, Limited Market, Growth and Income and the two series funds of The
Evergreen American Retirement Trust) or Price Waterhouse, (in the case of
Evergreen, Money Market, the four series funds of The Evergreen Municipal Trust,
the two series funds of Evergreen Real Estate Equity Trust, the two series funds
of Evergreen Foundation Trust and the sole series fund of Evergreen Fixed-Income
Trust) , and for Total Return, Growth and Income, American Retirement, Small
Cap, Foundation, Tax Strategic and U.S. Government the Semi-Annual Report for
the most recently completed semi-annual period, along with the reports of each
Fund for the aforementioned periods filed with the Securities and Exchange
Commission on form NSAR are incorporated by reference in this Statement of
Additional Information. The Annual and Semi-Annual Reports to Shareholders for
each Fund, which contain the referenced statements, are available upon request
and without charge.

<PAGE>

APPENDIX A - NOTE, BOND AND COMMERCIAL PAPER RATINGS

APPENDIX A - DESCRIPTION OF BOND RATINGS AND NOTE RATINGS

Bond Ratings

Standard & Poor's Corporation. A Standard & Poor's corporate or
municipal bond rating is a current assessment of the credit worthiness of an
obligor with respect to a specific obligation. This assessment of credit
worthiness may take into consideration obligors such as guarantors, insurers or
lessees. The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.

The ratings are based on current information furnished to Standard &
Poor's by the issuer or obtained by Standard & Poor's from other sources it
considers reliable. Standard & Poor's does not perform any audit in connection
with the ratings and may, on occasion, rely on unaudited financial information.
The ratings may be changed, suspended or withdrawn as a result of changes in,
unavailability of such information, or for other circumstances.

The ratings are based, in varying degrees, on the following
considerations:

1. Likelihood of default-capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance with the
terms of the obligation.

2. Nature of and provisions of the obligation.

3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or their arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.

AAA - This is the highest rating assigned by Standard & Poor's to a
debt obligation and indicates an extremely strong capacity to pay interest and
repay any principal.

AA - Debt rated AA also qualifies as high quality debt obligations.
Capacity to pay interest and repay principal is very strong and in the majority
of instances they differ from AAA issues only in small degree.

A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than is higher rated categories.

BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC and C is regarded, on a
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation.

BB indicates the lowest degree of speculation and C the highest degree
of speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

BB - Debt rated BB has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB - rating.

B - Debt rated B has greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB- rating.

CCC - Debt rated CCC has a currently indefinable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The CCC rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating.

CC - The rating CC is typically applied to debt subordinated to senior
debt that is assigned an actual or implied CCC rating.

C - The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating. The C rating may
be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.

C1 - The rating C1 is reserved for income bonds on which no interest is
being paid.

D - Debt rated D is in payment default. It is used when interest
payments or principal payments are not made on a due date even if the applicable
grace period has not expired, unless Standard & Poor's believes that such
payments will be made during such grace periods; it will also be used upon a
filing of a bankruptcy petition if debt service payments are jeopardized.

Plus (+) or Minus (-) - To provide more detailed indications of credit
quality, the ratings from AA to CCC may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.

NR - indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular type of obligation as a matter of policy. Debt
obligations of issuers outside the United States and its territories are rated
on the same basis as domestic corporate and municipal issues. The ratings
measure the credit worthiness of the obligor but do not take into account
currency exchange and related uncertainties.

Bond Investment Quality Standards: Under present commercial bank
regulations issued by the Comptroller of the Currency, bonds rated in the top
four categories (AAA, AA, A, BBB, commonly known as "Investment Grade" ratings)
are generally regarded as eligible for bank investment. In addition, the Legal
Investment Laws of various states may impose certain rating or other standards
for obligations eligible for investment by savings banks, trust companies,
insurance companies and fiduciaries generally.

Moody's Investors Service. A brief description of the applicable Moody's
Investors Service rating symbols and their meanings follows:

Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.

Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.

A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.

Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Some bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

NOTE: Bonds within the above categories which possess the strongest investment
attributes are designated by the symbol "1" following the rating.

Ba - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.

Caa - Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.

Ca - bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.

C - bonds which are rated C are the lowest rated class of bonds and
issue so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

NOTE RATINGS

Moody's Investors Service: MIG-1 -- the best quality. MIG-2 -- high
quality, with margins of protection ample though not so large as in the
preceding group. MIG-3 -- favorable quality, with all security elements
accounted for, but lacking the undeniable strength of the preceding grades.
Market access for refinancing, in particular, is likely to be less well
established.

Standard & Poor's Ratings Group: SP-1 - Very strong or strong capacity to pay

<PAGE>

principal and interest. SP-2 -- Satisfactory capacity to pay principal
and interest.

Municipal Note Ratings. A Standard & Poor's note rating reflects the liquidity
concerns and market access risks unique to notes. Notes due in three years or
less will likely receive a note rating. Notes maturing beyond three years will
most likely receive a long-term debt rating. The following criteria will be used
in making that assessment.

o Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).

o Source of Payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note.)

Note rating symbols are as follows:

o SP-1 Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.

o SP-2 Satisfactory capacity to pay principal and interest.

o SP-3 Speculative capacity to pay principal and interest.

Moody's Short-Term Loan Ratings - Moody's ratings for state and
municipal short-term obligations will be designated Moody's Investment Grade
(MIG). This distinction is in recognition of the differences between short-term
credit risk and long-term risk. Factors affecting the liquidity of the borrower
are uppermost in importance in short-term borrowing, while various factors of
major importance in bond risk are of lesser importance over the short run.

Rating symbols and their meanings follow:

o MIG 1 - This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.

o MIG 2 - This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.

o MIG 3 - This designation denotes favorable quality. All security
elements are accounted for but this is lacking the undeniable strength
of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well
established.

o MIG 4 - This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although
not distinctly or predominantly speculative, there is specific risk.

<PAGE>

APPENDIX B - ADDITIONAL INFORMATION CONCERNING CALIFORNIA

<PAGE>

The following information as to certain California risk factors is
given to investors in view of Short-Intermediate-CA's policy of investing
primarily in California state and municipal issuers. The information is based
primarily upon information derived from public documents relating to securities
offerings of California state and municipal issuers, from independent municipal
credit reports and historically reliable sources, but has not been independently
verified by the Fund.

On June 6, 1978, California voters approved Proposition 13, which added
Article XIIIA to the California Constitution. The principal thrust of Article
XIIIA is to limit the amount of ad valorem taxes on real property to one percent
of the full cash value as determined by the county assessor. The assessed
valuation of all real property may be increased, but not in excess of two
percent per year, or decreased to reflect the rate of inflation or deflation as
shown by the consumer price index. Article XIIIA requires a vote of two thirds
of the qualified electorate to impose special taxes, and completely prohibits
the imposition of any additional ad valorem, sales or transaction tax on real
property (other than ad valorem taxes to repay general obligation bonds issued
to acquire or improve real property), and requires the approval of two-thirds of
all members of the State Legislature to change any state tax laws resulting in
increased tax revenues.

On November 6, 1979, California voters approved the initiative seeking
to amend the California Constitution entitled "Limitation of Government
Appropriations" which added Article XIIIB to the California Constitution. Under
Article XIIIB state and local governmental entities have an annual
appropriations limit and may not spend certain monies which are called
appropriations subject to limitations (consisting of tax revenues, state
subventions and certain other funds) in an amount higher than the appropriations
limit. Generally, the appropriations limit is to be based on certain 1978-79
expenditures, and is to be adjusted annually to reflect changes in consumer
prices, population and services provided by these entities.

Decreased in state and local revenues in future fiscal years as a
consequence of these initiatives may continue to result in reductions in
allocations of state revenues to California municipal issuers or reduce the
ability of such California issuers to pay their obligations.

With the apparent onset of recovery in California's economy, revenue
growth over the next few years could recommence at levels that would enable
California to restore fiscal stability. The political environment, however,
combined with pressures on the state's financial flexibility, may frustrate its
ability to reach this goal. Strong interests in long-established state programs
ranging from low-cost public higher education access to welfare and health
benefits join with the more recently emerging pressure for expanded prison
construction and a heightened awareness and concern over the state's business
climate.

Adopted on July 8, 1994, the fiscal 1994 budget is designed to address
California's accumulated deficit over a 22-month period. In order to balance the
budget and generate sufficient cash to retire the $4 billion deficit Revenue
Anticipation Warrant and a $3 billion Revenue Anticipation Note to be issued in
July 1995, the state's fiscal plan relies upon aggressive assumptions of federal
aid, projected at about $760 million in fiscal year 1995 and $2.8 billion in
fiscal year 1995, to compensate the state for its costs of providing service to
illegal immigrants. These assumptions, combined with fiscal year 1996
constitutionally mandated increases in spending for K-14 education, and

<PAGE>

continued growth in social services and corrections expenditures, are risky. To
offset this risk, the state has enacted a Budget Adjustment Law, known as the
"trigger" legislation, which established a set of backup budget adjustment
mechanisms to address potential shortfalls in cash. The trigger mechanism will
be in effect for both fiscal years 1995 and 1996.

In July of 1994, S& P and Moody's lowered the general obligation bond
rating of the state of California. The rating agencies explained their actions
by citing the state's continuing deferral of substantial portions of its
estimated $3.8 billion accumulated deficit; continuing structural budgetary
constraints including a funding guarantee for K-14 education; overly optimistic
expectation of federal aid to balance fiscal year 1995's budget and fiscal year
1996's cash flow projections; and reliance upon a trigger mechanism to reduce
spending if the plan's federal aid assumptions prove to be inflated.

<PAGE>

THE EVERGREEN MUNICIPAL TRUST

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

a. Financial Statements

Included in Part A of this Registration Statement:

Financial Highlights for Evergreen Short-Intermediate Municipal Fund for
the fiscal period from July 17, 1991 (commencement of operations) through
August 31, 1991 and for the fiscal years ended August 31, 1992 through
August 31, 1994.

Financial Highlights for Evergreen Short-Intermediate Municipal Fund -
California for the fiscal period from November 2, 1988 (commencement of
operations) through August 31, 1989 and for the fiscal years ended August
31, 1990 through August 31, 1994.

Financial Highlights for Evergreen National Tax-Free Fund for the fiscal
period from December 30, 1992 (commencement of operations) through August
31, 1993 and for the fiscal year ended August 31, 1994.

Financial Highlights for Evergreen Tax Exempt Money Market Fund for the
fiscal period from November 2, 1988 (commencement of operations) through
August 31, 1989 and for the fiscal years ended August 31, 1990 through
August 31, 1994.

Included in Part B of this Registration Statement:*

Statements of Investments of Evergreen Short-Intermediate Municipal Fund,
Evergreen Short-Intermediate Municipal Fund - California, Evergreen
National Tax-Free Fund and Evergreen Tax Exempt Money Market Fund as of
August 31, 1994

Statements of Assets and Liabilities of Evergreen Short-Intermediate
Municipal Fund, Evergreen Short-Intermediate Municipal Fund - California,
Evergreen National Tax-Free Fund and Evergreen Tax Exempt Money Market Fund
as of August 31, 1994

Statements of Operations of Evergreen Short-Intermediate Municipal Fund,
Evergreen Short-Intermediate Municipal Fund - California, Evergreen
National Tax-Free Fund and Evergreen Tax Exempt Money Market Fund for the
year ended August 31, 1994

Statements of Changes in Net Assets of Evergreen Short-Intermediate
Municipal Fund, Evergreen Short-Intermediate Municipal Fund - California,
Evergreen National Tax-Free Fund and Evergreen Tax Exempt Money Market Fund
for the fiscal years ended August 31, 1993 and 1994

Financial Highlights of Evergreen Short-Intermediate Municipal Fund,
Evergreen Short-Intermediate Municipal Fund - California, Evergreen
National Tax-Free Fund and Evergreen Tax Exempt Money Market Fund

Notes to Financial Statements of Evergreen Short-Intermediate Municipal

<PAGE>

Fund, Evergreen Short-Intermediate Municipal Fund - California, Evergreen
National Tax-Free Fund and Evergreen Tax Exempt Money Market Fund

Reports of Independent Auditors relating to each of the aforementioned
financial statements

Statements, schedules and historical information other than those listed
above have been omitted since they are either not applicable or are not
required or the required information is shown in the financial statements
or notes thereto.
- --------------------
* Incorporated by reference to the Annual Report to Shareholders for the fiscal
year ended August 31, 1994 which has been previously filed with the Commission
and which is attached as an Exhibit to this Post-Effective Amendment and by
reference to the Annual Report of Registrant on form NSAR for the aforementioned
period.

<PAGE>

b. Exhibits

No. Description

1(A) Amended and Restated Declaration of Trust***
1(B) Form of Instrument providing for the Establishment and
Designation of Classes***
2 By-Laws**
3 None
4 Instruments Defining Rights of Shareholders**
5(A) Evergreen Fund Investment Advisory Agreement***
5(B) Evergreen Fund Investment Subadvisory Agreement***
5(C) Evergreen Florida High Income Fund Investment Advisory Agreement
6 Distribution Agreement***
7 Form of Administration Agreement
8 Custodian Agreement**
9 None
10 None
11 Consent of Price Waterhouse, independent accountants
12 None
13 None
14 None
15 Rule 12b-1 Distribution Plans***
16 None
17 Other Exhibits
Annual Reports of Evergreen Short-Intermediate
Municipal Fund, Evergreen Short-Intermediate Municipal
Fund - California, Evergreen National Tax-Free Fund and
Evergreen Tax Exempt Money Market Fund for the fiscal
years ended August 31, 1994

- --------------------------

* Incorporated all or in part by reference to the Annual Report to
Shareholders of each series for the fiscal year ended August 31, 1994 which has
been previously filed with the Commission and which is attached as an Exhibit to
this Post-Effective Amendment and by reference to the Annual Report of
Registrant on form NSAR for the aforementioned period.

** Incorporated all or in part by reference to Registrant's initial
Registration on Form N-1A filed on September 15, 1988.

*** Incorporated all or in part by reference to Post-Effective Amendment
No. 16 to Registrant's initial Registration on Form N-1A filed on January 3,
1995.

Item 25. Persons Controlled by or Under Common Control with Registrant

Stephen A. Lieber, Chairman and Co-Chief Executive Officer of Evergreen
Asset Management Corp., the investment adviser to all four of
Registrant's separate investment series, owns, as of the date of this

<PAGE>

Post Effective Amendment to the Registration Statement % of the
outstanding shares of one such series, namely Evergreen National Tax
Free Fund, and therefore, with respect to matters on which only
shareholders of that investment series may vote, Mr. Lieber may be
presumed to "control" that series.

Item 26. Number of Holders of Securities (as of March 28, 1995)

(1) (2)
Number of
Title of Class Record Shareholders

Evergreen Short Intermediate Municipal Fund:
Class Y Shares of Beneficial Interest ($0.0001 par value) 1,280

Class A Shares of Beneficial Interest ($0.0001 par value) 27

Class B Shares of Beneficial Interest ($0.0001 par value) 64

Evergreen Short Intermediate Municipal Fund-California:
Class Y Shares of Beneficial Interest ($0.0001 par value) 843

Class A Shares of Beneficial Interest ($0.0001 par value) 1

Class B Shares of Beneficial Interest ($0.0001 par value) 1

- ---------------------
**Incorporated by reference to Registrant's previous filings on Form N-1A.

Evergreen National Tax Free Fund:
Class Y Shares of Beneficial Interest ($0.0001 par value) 783

Class A Shares of Beneficial Interest ($0.0001 par value) 18

Class B Shares of Beneficial Interest ($0.0001 par value) 33

Evergreen Florida High Income Municipal Fund:
Class Y Shares of Beneficial Interest ($0.0001 par value) 1

Class A Shares of Beneficial Interest ($0.0001 par value) 1

Class B Shares of Beneficial Interest ($0.0001 par value) 1

Evergreen Tax Exempt Money Market Fund:
Class Y Shares of Beneficial Interest ($0.0001 par value) 9,482

Class A Shares of Beneficial Interest ($0.0001 par value) 19

Item 27. Indemnification

Article XI of the Registrant's By-laws contains the following
provisions regarding indemnification of Trustees and officers:

SECTION 11.1 Actions Against Trustee or Officer. The Trust shall

<PAGE>

indemnify any individual who is a present or former Trustee or officer of the
Trust and who, by reason of his position as such, was, is, or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
any action or suit by or in the right of the Trust) against expenses, including
attorneys' fees, judgments, fines, and amounts paid in settlement, actually and
reasonably incurred by him in connection with the claim, action, suit, or
proceeding, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon the plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.

SECTION 11.2 Derivative Actions Against Trustees or Officers. The Trust
shall indemnify any individual who is a present or former Trustee or officer of
the Trust and who, by reason of his position as such, was, is, or is threatened
to be made a party to any threatened, pending or completed action or suit by or
on behalf of the Trust to obtain a judgment or decree in its favor, against
expenses, including attorneys' fees, actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust, except that no indemnification shall be made in
respect of any claim, issue or matter as to which the individual has been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Trust, except to the extent that the court in which the action or
suit was brought determines upon application that, despite the adjudication of
liability but in view of all circumstances of the case, the person is fairly and
reasonably entitled to indemnity for those expenses which the court shall deem
proper, provided such Trustee or officer is not adjudged to be liable by reason
of his willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.

SECTION 11.3 Expenses of Successful Defense. To the extent that a
Trustee or officer of the Trust has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in Section 11.1 or 11.2
or in defense of any claim, issue, or matter therein, he shall be indemnified
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection therewith.

SECTION 11.4 Required Standard of Conduct.

(a) Unless a court orders otherwise, any indemnification under
Section 11.1 or 11.2 may be made by the Trust only as authorized in the specific
case after a determination that indemnification of the Trustee or officer is
proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 11.1 or 11.2. The determination shall be made by:
(i) the Trustees, by a majority vote of a quorum consisting of Trustees who were
not parties to the action, suit or proceeding; or if the required quorum is not
obtainable, or if a quorum of disinterested Trustees so directs, (ii) an
independent legal counsel in a written opinion.

(b) Nothing contained in this Article XI shall be construed to
protect any Trustee or officer of the Trust against any liability to the Trust
or its Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office (any such conduct being hereinafter called
"Disabling Conduct"). No indemnification shall be made pursuant to this Article
XI unless:
(i) There is a final determination on the merits by a court or other
body before whom the action, suit or proceeding was brought that the
individual to be indemnified was not liable by reason of Disabling
Conduct; or

(ii) In the absence of such a judicial determination, there is a
reasonable determination, based upon a review of the facts, that
such individual was not liable by reason of Disabling Conduct, which
determination shall be made by:

(A) A majority of a quorum of Trustees who are neither
"interested persons" of the Trust, as defined in section 2(a)
(19) of the 1940 Act, nor parties to the action, suit or
proceeding; or

(B) An independent legal counsel in a written opinion.

SECTION 11.5 Advance Payments. Notwithstanding any provision of this
Article XI, any advance payment of expenses by the Trust to any Trustee or
officer of the Trust shall be made only upon the undertaking by or on behalf of
such Trustee or officer to repay the advance unless it is ultimately determined
that he is entitled to indemnification as above provided, and only if one of the
following conditions is met:

(a) the Trustee or officer to be indemnified provides a security
for his undertaking; or (b) The Trust is insured against losses
arising by reason of any lawful advances; or

(c) There is a determination, based on a review of readily
available facts, that there is reason to believe that the Trustee
or officer to be indemnified ultimately will be entitled to
indemnification, which determination shall be made by:

(i) A majority of a quorum of Trustees who are neither
"interested persons" of the Trust, as defined in Section 2(a) (19) of the 1940
Act, nor parties to the action, suit or proceeding; or

(ii) An independent legal counsel in a written opinion.

SECTION 11.6 Former Trustees and Officers. The indemnification provided
by this Article XI shall continue as to an individual who has ceased to be a
Trustee or officer of the Trust and inure to the benefit of the legal
representatives of such individual and shall not be deemed exclusive of any
other rights to which any Trustee, officer, employee or agent of the Trust may
be entitled under any agreement, vote of Trustees or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding office as such; provided, that no Person may satisfy any right of
indemnity granted herein or to which he may be otherwise entitled, except out of
the Trust Property, and no Shareholder shall be personally liable with respect
to any claim for indemnity.

SECTION 11.7 Insurance. The Trust may purchase and maintain insurance
on behalf of any person who is or was a Trustee, officer, employee, or agent of
the Trust, against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such. However, the Trust shall
not purchase insurance to indemnify any Trustee or officer against liability for
any conduct in respect of which the 1940 Act prohibits the Trust itself from
indemnifying him.

SECTION 11.8 Other Rights to Indemnification. The indemnification
provided for herein shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any By-Law, agreement, vote
of Shareholders or disinterested Trustees or otherwise.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, officer, or controlling person of the Registrant
in connection with the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

Item 28. Business or Other Connections of Investment Adviser

Evergreen Asset Management Corp. ("Evergreen Asset"), the investment
adviser to each of Registrant's series other than the Evergreen Florida High
Income Municipal Bond Fund series, and Lieber and Company, the sub-adviser
thereto also acts as such to one or more of the separate investment series
offered by The Evergreen Total Return Fund, The Evergreen Limited Market Fund,
Inc., The Evergreen Value Timing Fund, The Evergreen Money Market Trust, The
Evergreen American Retirement Trust, The Evergreen Municipal Trust, Evergreen
Global Real Estate Equity Trust and Evergreen Foundation Fund, all registered
investment companies. Stephen A. Lieber, Chairman and Co-CEO, Theodore J.
Israel, Jr., Executive Vice President, Nola Maddox Falcone, President and
Co-CEO, George R. Gaspari, Senior Vice President and CFO and Joseph J. McBrien,
Senior Vice President and General Counsel, are the principal executive officers
of Evergreen Asset and Lieber and Company, were, prior to June 30, 1994 officers
and/or directors or trustees of the Registrant and the other funds for which the
Adviser acts as investment adviser.

For a description of the other business of the First Union National Bank of
North Carolina ("FUNB-NC"), which will serves as investment adviser to
Registrant's Evergreen Florida High Income Municipal Bond Fund series, see
the section entitled "Investment Advisers" in Part A.

The Directors and principal executive officers of FUNB, are set forth in
the following table:

FIRST UNION NATIONAL BANK OF NORTH CAROLINA
BOARD OF DIRECTORS

Ben Mayo Boddie Raymond A. Bryan, Jr.
Chairman & CEO Chairman & CEO
Boddie-Noell Enterprises, Inc. T.A. Loving Company
P.O. Box 1908 P.O. Drawer 919
Rocky Mount, NC 27802 Goldsboro, NC 27530

John F.A.V. Cecil John W. Copeland
President President
Biltmore Dairy Farms, Inc. Ruddick Corporation
P.O. Box 5355 2000 Two First Union Center
Asheville, NC 28813 Charlotte, NC 28282

John Crosland, Jr. J. William Disher
Chairman of the Board Chairman & President
The Crosland Group, Inc. Lance Incorporated
135 Scaleybark Road P.O. Box 32368
Charlotte, NC 28209 Charlotte, NC 28232

Frank H. Dunn Malcolm E. Everett, III
Chairman and CEO President
First Union National Bank First Union National Bank
of North Carolina of North Carolina
One First Union Center 310 S. Tryon Street
Charlotte, NC 28288-0006 Charlotte, NC 28288-0156

James F. Goodmon Shelton Gorelick
President & Chief President
Executive Officer SGIC, Inc.
Capitol Broadcasting 741 Kenilworth Ave., Suite 200
Company, Inc. Charlotte, NC 28204
2619 Western Blvd.
Raleigh, NC 27605

Charles L. Grace James E. S. Hynes
President Chairman
Cummins Atlantic, Inc. Hynes Sales Company, Inc.
P.O. Box 240729 P.O. Box 220948
Charlotte, NC 28224-0729 Charlotte, NC 28222

Daniel W. Mathis Earl N. Phillips, Jr.
Vice Chairman President
First Union National Bank First Factors Corporation
of North Carolina P.O. Box 2730
One First Union Center High Point, NC 27261
Charlotte, NC 28288-0009

J. Gregory Poole, Jr. John P. Rostan, III
Chairman & President Senior Vice President
Gregory Poole Equipment Company Waldensian Bakeries, Inc.
P.O. Box 469 P.O. Box 220
Raleigh, NC 27602 Valdese, NC 28690

Nelson Schwab, III Charles M. Shelton, Sr.
Chairman & CEO Chairman & CEO
Paramount Parks The Shelton Companies, Inc
8720 Red Oak Boulevard, Suite 315 3600 One First Union Center
Charlotte, NC 28217 Charlotte, NC 28202

George Shinn Harley F. Shuford, Jr.
Owner and Chairman President and CEO
Shinn Enterprises, Inc. Shuford Industries
One Hive Drive P.O. Box 608
Charlotte, NC 28217 Hickory, NC 28603

FIRST UNION NATIONAL BANK OF NORTH CAROLINA
EXECUTIVE OFFICERS

James Maynor, President, First Union Mortgage Corporation; Austin
A. Adams, Executive Vice President; Howard L. Arthur, Senior Vice
President; Robert T. Atwood, Executive Vice President and Chief
Financial Officer; Marion A. Cowell, Jr., Executive Vice
President, Secretary and General Counsel; Edward E. Crutchfield,
Jr., Chairman, CEO, First Union Corporation; Frank H. Dunn, Jr.,
Chairman and CEO; Malcolm E. Everett, III, President; John R.
Georgius, President, First Union Corporation; James Hatch, Senior
Vice President and Corporate Controller; Don R. Johnson,
Executive Vice President; Mark Mahoney, Senior Vice President;
Barbara K. Massa, Senior Vice President; Daniel W. Mathis, Vice
Chairman; H. Burt Melton, Executive Vice President; Malcolm T.
Murray, Jr., Executive Vice President; Alvin T. Sale, Executive
Vice President; Louis A. Schmitt, Jr., Executive Vice President;
Ken Stancliff, Senior Vice President and Corporate Treasurer;
Richard K. Wagoner, Executive Vice President and General Fund
Officer.

All of the Executive Officers are located at the following
address: First Union National Bank of North Carolina, One First
Union Center, Charlotte, NC 28288.

Item 29. Principal Underwriters

Evergreen Funds Distributor, Inc. The Director and principal executive
officers are:

Director Michael C. Petrycki

Officers Robert A. Hering President
Michael C. Petrycki Vice President
Gordon Forrester Vice President
Lawrence Wagner VP, Chief Financial Officer
Steven D. Blecher VP, Treasurer, Secretary
Elizabeth Q. Solazzo Assistant Secretary
Thalia M. Cody Assistant Secretary

Item 30. Location of Accounts and Records

Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained at the offices of the Registrant's Custodian, State
Street Bank and Trust Company, 2 Heritage Drive, North Quincy, Massachusetts
02171 or the offices of Evergreen Asset Management Corp., 2500 Westchester
Avenue, Purchase, New York 10577.

Item 31. Management Services

Not Applicable.

Item 32. Undertakings

Not Applicable.

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant hereby certifies that it has caused this Post-Effective
Amendment to Registrant's Registration Statement has been signed on behalf of
the Registrant, in the City of New York and State of New York, on the 3rd day
of April, 1995.

Registrant: The Evergreen Municipal Trust

By: /s/ John J. Pileggi
----------------------
Name: John J. Pileggi
Title: President

As required by the Securities Act of 1933, this Post-Effective Amendment to
Registrant's Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

Signature Title Date

/s/ John J. Pileggi President (Principal April 3, 1995
- -------------------
John J. Pileggi Executive Officer) and
Treasurer (Principal
Financial and Accounting
Officer)

/s/ Laurence B. Ashkin* Trustee April 3, 1995
- ----------------------
Laurence B. Ashkin

/s/ Foster Bam* Trustee April 3, 1995
- -----------------------
Foster Bam

/s/ Robert J. Jefferies* Trustee April 3, 1995
- -----------------------
Robert J. Jefferies

/s/ James Howell* Trustee April 3, 1995
- -----------------------
James Howell

/s/ Gerald McDonnell* Trustee April 3, 1995
- -----------------------
Gerald McDonnell

/s/ Thomas L. McVerry* Trustee April 3, 1995
- -----------------------
Thomas L. McVerry

/s/ William W. Pettit* Trustee April 3, 1995
- -----------------------
William W. Pettit

/s/ Russell A. Salton, III* Trustee April 3, 1995
- --------------------------
Russell A. Salton, III

/s/ Michael S. Scofield* Trustee April 3, 1995
- -----------------------
Michael S. Scofield

- ------------------------------
* by Joseph J. McBrien, Attorney in Fact

<PAGE>

INDEX TO EXHIBITS
INDEX TO EXHIBITS

N-1A Item 24 EXHIBIT No. PAGE

1(B) Form of Instrument providing for the Establishment and
Designation of Classes

5(C) Evergreen Florida High Income Fund
Form of Investment Advisory Agreement

7 Form of Administration Agreement

14 Consent of Price Waterhouse LLP

15 Form of Rule 12b-1 Distribution Plan

27 Financial Data Schedules

OTHER EXHIBITS

Annual Report of Evergreen National Tax Free Fund for the fiscal
year ended August 31, 1994.

Annual Report of Evergreen Short Intermediate Municipal Fund CA for
the fiscal year ended August 31, 1994.

Annual Report of Evergreen Short Intermediate Municipal Fund for the
fiscal year ended August 31, 1994.

Annual Report of Evergreen Tax Exempt Money Market Fund for the fiscal
year ended August 31, 1994.
- --------------------------

THE EVERGREEN MUNICIPAL TRUST

Establishment and Designation of Series and
Establishment and Designation of Classes

The undersigned, being a majority of the Trustees of The Evergreen
Municipal Trust, a Massachusetts business trust (the "Trust"), acting pursuant
to Sections 6.1 and 6.6(j) of the Declaration of Trust dated July 13, 1988 as
amended (the "Declaration") of the Trust, do hereby establish and designate a
new series of the Trust to be known as the "Evergreen Florida High Income
Municipal Fund" (the "New Series").

The undersigned, being a majority of the Trustees of the Trust, acting
pursuant to Sections 6.1 and 6.6(j) of the Declaration, do hereby divide the
shares of beneficial interest of the New Series to create three classes of
shares, within the meaning of said Sections, as follows:

1. The three classes of shares of the New Series are designated "Class A
Shares," "Class B Shares," and "Class Y Shares."

2. Such Class A Shares, Class B Shares, and Class Y Shares
shall be entitled to all of the rights and preferences
accorded to shares of beneficial interest of the Trust under
the Declaration.

3. The purchase price, the method of determination of net
asset value, the price, terms and manner of redemption, and
the relative dividend rights of holders of such Class A
Shares, Class B Shares, and Class Y Shares shall be as
established by the Trustees of the Trust in accordance with
the provisions of the Declaration and set forth in the
currently effective prospectus and statement of additional
information of the Trust relating to the New Series, as
amended from time to time, contained in the Trust's
registration statement under the Securities Act of 1933, as
amended.

4. Such Class A Shares, Class B Shares, and Class Y Shares
shall vote together as a single class except that shares of a
class may vote separately on matters affecting only that class
and shares of a class not affected by a matter will not vote
on that matter.

5. A class of shares of the New Series may be terminated by the Trustees by
written notice to the Shareholders of the class.

The Declaration provides that the name of "The Evergreen Municipal
Trust" refers to the Trustees under the Declaration collectively as Trustees,
but not as individuals or personally; and no Trustee, shareholder, officer,
employee or agent of The Evergreen Municipal Trust shall be held to any personal
liability, nor shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of said Trust but the Trust Property only shall be liable.

<PAGE>

IN WITNESS WHEREOF, the undersigned have signed this
instrument in duplicate original counterparts and have caused a duplicate
original to be lodged among the records of the Trust this 13 day of March, 1995.

/s/ /s/
Laurence B. Ashkin Thomas L. McVerry
Trustee Trustee

/s/ /s/
Foster Bam William Walt Pettit
Trustee Trustee

/s/ /s/
James S. Howell Russell A. Salton, III
Trustee Trustee

/s/ /s/
Robert J. Jeffries Michael S. Scofield
Trustee Trustee

/s/
Gerald M. McDonnell
Trustee

First Union National Bank of North Carolina

Dear Sirs:

The undersigned, the Evergreen ......... Trust (the "Fund"), is an
investment company organized as a series company, which means that it may offer
separate classes (or series) of shares comprising different investment
portfolios. Presently, the Fund offers five investment funds:
..................................................................... The Fund
desires to employ its capital by investing and reinvesting the same in
securities in accordance with the limitations specified in its Declaration of
Trust and in its Prospectus as from time to time in effect, copies of which have
been, or will be, submitted to you, and in such manner and to such extent as may
from time to time be approved by the Fund's Trustees. Subject to the terms and
conditions of this Agreement, the Fund desires to employ your corporation (the
"Adviser") and the Adviser desires to be so employed, to supervise and assist in
the management of the business of its ....................... series(the
"Portfolio"). Accordingly, this will confirm our agreement as follows:

1. The Adviser shall, on a continuous basis, furnish reports, statistical
and research services, and advice and recommendations with respect to each
Portfolio of investments. The Adviser shall use its best judgment in rendering
these services to the Fund, and the Fund agrees as an inducement to the Adviser
undertaking such services that the Adviser shall not be liable for any mistake
of judgment or in any other event whatsoever, except for lack of good faith,
provided that nothing herein shall be deemed to protect the Adviser against any
liability to the Fund or to the shareholders of the Fund (or any Portfolio) to
which it would otherwise be subject by reason of wilful misfeasance, bad faith
or gross negligence in the performance of the Adviser's duties hereunder or by
reason of the Adviser's reckless disregard of its obligations and duties
hereunder.

2. The Adviser agrees that in any case where an officer or director of the
Adviser is also an officer or director of another corporation, and the purchase
or sale of securities issued by such other corporation is under consideration,
such officer or director shall abstain from participation in any decision made
on behalf of the Fund (or any Portfolio) to purchase or sell any securities
issued by such other corporation.

3. In consideration of the Adviser performing its obligations hereunder,
the Fund will pay to the Adviser an advisory fee, payable monthly, at an annual
rate of .-- of 1% of the daily net assets of the Portfolio.

4. The Fund understands that the Adviser acts as investment adviser to
other investment companies, and that the Adviser's parent acts as investment
adviser to individuals, partnerships, corporations, and pension funds, and the
Fund confirms that it has no objection to the Adviser or its parent so acting.

5. This Agreement shall be in effect until ............. This Agreement
shall continue in effect from year to year thereafter, provided it is approved,
at least annually, in the manner required by the Act. The Act requires that this
Agreement and any renewal thereof be approved by a vote of a majority of
Trustees of the Fund who are not parties thereto or interested persons (as
defined in the Act) of any such party, cast in person at a meeting duly called
for the purpose of voting on such approval, and by a vote of the Trustees of the
Fund or a majority of the outstanding voting securities of the Fund. A vote of a
majority of the outstanding voting securities of the Fund is defined in the Act
to mean a vote of the lesser of (i) more than 50% of the outstanding voting
securities of the Fund or (ii) 67% or more of the voting securities present at
the meeting if more than 50% of the outstanding voting securities are present or
represented by proxy.

This Agreement may be terminated at any time, without payment of
any penalty, on sixty (60) days' prior written notice by a vote of a majority of
the Fund's outstanding voting securities, by a vote of a majority of the Fund's
Trustees, or by the Adviser. This Agreement shall be automatically terminated in
the event of its assignment (as such term is defined in the Act).

7. This Agreement is made by the Fund pursuant to authority granted by the
Trustees, and the obligations created hereby are not binding on any of the
Trustees or shareholders of the Fund individually, but bind only the property of
the Fund.

If the foregoing is in accordance with your understanding, please
so indicate by signing and returning to the undersigned the enclosed copy
hereof.

Very truly yours,

EVERGREEN .......... TRUST

By:

ACCEPTED:

By:

MASTER ADMINISTRATIVE SERVICES CONTRACT

__________________ 1995

Dear Sirs:

This will confirm the agreement between the undersigned (the "Trust") and
you (the "Administrator") as follows:

1. The Trust is an open-end investment company organized as a Massachusetts
business trust and consists of one or more separate investment portfolios as may
be established and designated by the Trustees from time to time (the "Funds").
This contract shall pertain to such Funds as shall be designated in supplements
to this contract, as further agreed by the Trust and the Administrator. A
separate series of shares of beneficial interest in the Trust is offered to
investors with respect to each Fund. The Trust engages in the business of
investing and reinvesting the assets of each Fund in the manner and in
accordance with the investment objective and restrictions specified in the
currently effective prospectus (the "prospectus") relating to the Trust and the
Fund included in the Trust's Registration statement, as amended from time to
time (the "Registration statement"), filed by the Trust under the investment
Company Act of 1940 (the "1940 Act") and the securities Act of 1933 (the "1933
Act"). Copies of the documents referred to in the preceding sentence have been
furnished to the Administrator. Any amendments to those documents shall be
furnished to the Administrator promptly. The Trust has entered into an
investment advisory contract or contracts (the "Advisory contract") with respect
to the Funds with such advisors as are designated therein (each such advisor is
hereinafter referred to as an "Advisor") , and a Distribution Contract or
Contracts relating to the distribution of its shares (together, the
"Distribution contract") with such distributor as are designated therein (each
such distributor is hereinafter referred to as a "distributor") . The Trust also
has adopted a Distribution Plan or Plans (the "Plan") pursuant to Rule 12b-l
under the 1940 Act with respect to certain of the Funds.

2. (a) The Administrator shall provide all management and administrative
services reasonably necessary for the operation of the Trust and each Fund,
other than those investment management and administrative services which are to
be provided with respect to a Fund by an Advisor pursuant to an Advisory
contract. The Administrator may retain Service organizations (as defined in the
Prospectus) to provide these services to the Trust. The Administrator shall make
periodic reports to the Trust's Board of Trustees on the performance of its
obligations under this contract, other than servtces provided to the Trust by
service organizations retained in accordance with the previous sentence.

(b) The Administrator shall, at its expense, (i) provide the Trust with
office space and office facilities reasonably necessary for the operation of the
Trust and the Funds, (ii)employ or associate with itself such persons as it
believes appropriate to assist it in performing its obligations under this
contract and (iii) provide the Trust with persons satisfactory to the Trust's
Board of Trustees to serve as officers and employees of the Trust, including a
president, one or more vice presidents, a secretary and a treasurer. The
Administrator shall pay the entire compensation of all of the Trust's officers
and employees and the entire compensation of the trustees cf the Trust who are
affiliated persons of the Administrator and the compensation shall not be deemed
to be expenses of the Trust for purposes of paragraph 5 hereof.

(c) Except as provided in subparagraph (b) and, with respect to a Fund,
in an Advisory contract, the Trust shall be responsible for all of its expenses
and liabilities, including compensation of its Trustees who are not affiliated
with the Administratoror the Advisor or any of their affiliates; taxes and
governmental fees; interest charges; fees and expenses of the Trust's
independent accountants and legal counsel; trade association membership dues;
fees and expenses of any custodian (including maintenance cf books and accounts
and calculation of the net asset value of shares of the Fund) , transfer agent,
registrar and dividend disbursing agent of the Trust; expenses of issuing,
redeeming, registering and gualifying for sale shares of beneficial interest in
the Trust; expenses of preparing and printing share certificates, prospectuses
and reports to shareholders, notices, proxy statements and reports to regulatory
agencies; the cost of office supplies, including stationery; travel expenses of
all officers, trustees and employees; insurance premiums; brokerage and other
expenses of executing portfolio transactions; expenses of shareholders'
meetings; organizational expenses; extraordinary expenses; and reimbursements to
the Administrator in accordance with the Plan.

3. The Administrator shall give the Trust the benefit of the
Administrator's best judgment and efforts in rendering services under this
Contract. As an inducement to the Administrator's undertaking to render these
services, the Trust agrees that the Administrator shall not be liable under this
contract for any mistake in judgment or in any other event whatsoever except for
lack of good faith, provided that nothing in this Contract shall be deemed to
protect or purport to protect the Administrator against any liability to the
Trust or its shareholders to which the Administrator would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of the Administrator's duties under this contract or by reason of
the Administrator's reckless disregard of its obligations and duties hereunder.

4. in consideration of the services to be rendered by the Administrator
under this contract, the Trust shall pay the Administrator a monthly fee with
respect to each Fund on the first business day of each month, based upon the
average daily value of the net assets of that Fund during the preceding month at
annual rates set forth in a supplement to this contract with respect to that
Fund. If the fees payable to the Administrator pursuant to this paragraph 4
begin to accrue before the end of any month or if this contract terminates
before the end of any month, the fees for the period from that date to the end
of that month or from the beginning of that month to the date of termination, as
the case may be, shall be prorated according to the proportion that the period
bears to the full month in which the effectiveness or termination occurs. For
purposes of calculating the monthly fees, the value of the net assets of each
Fund shall be computed in the manner specified in its Prospectus for the
computation of net asset value. For purposes of this contract, a "business day"
is any day the New York stock Exchange is open for trading.

5. If the aggregate expenses of every character incurred by, or allocated
to, a Fund in any fiscal year, other than interest, taxes, brokerage commissions
and other portfolio transaction expenses, other expenditures which are
capitalized in accordance with generally accepted accounting principles and any
extraordinary expense (including, without limitation, litigation and
indemnification expense), but including the fees provided for in paragraph 4 and
under an Advisory contract with respect to a Fund ("includable expenses") ,
shall exceed the expense limitations applicable to that Fund imposed by state
securities law or regulations thereunder, as these limitations may be raised or
lowered from time to time, the Administrator shall pay that Fund an amount egual
to a percentage of that excess (the "Administrator's reimbursement"), such
Administrator's reimbursement to be in an amount set forth with respect to the
Fund in a supplement to this contract. With respect to portions of a fiscal year
in which this contract shall be in effect, the foregoing limitations shall be
prorated according to the proportion which that portion of the fiscal year bear
to the full fiscal year. At the end of each month of the Trust's fiscal year,
the Administrator will review the includable expenses accrued during that fiscal
year to the end of the period and shall estimate the contemplated includable
expenses for the balance cf that fiscal year. if, as a result of that review and
estimation, it appears likely that the includable expenses will exceed the
limitations referred to in this paragraph 5 for a fiscal year, the monthly fees
payable to the Administrator under this Contract for such month shall be
reduced, subject to a later reimbursement to reflect actual expenses, by an
amount egual to a percentage (which shall be egual to the Administrator's
reimbursement) of a pro rata portion (prorated on the basis of the remaining
months of the fiscal year, including the month just ended) of the amount by
which the includable expenses for the fiscal year (less an amount egual to the
aggregate of actual reductions made pursuant to this provision with respect to
prior months of the fiscal year) are expected to exceed the limitations provided
in this paragraph 5 For purposes of the foregoing, the value of the net assets
of each Fund shall be computed in the manner specified in paragraph 4, and any
payments required to be made by the Administrator shall be made once a year
promptly after the end of the Trust's fiscal year.

6. This contract, and any supplement, shall become effective with respect to
a Fund only when approved by vote of a majority of (i) the Board of Trustees of
the Trust, and (ii) the trustees who are not "interested persons" (as defined in
the 1940 Act) cf the Trust and who have no direct or indirect financial interest
in this contract, cast in person at a meeting called for the purpose of voting
on such approval. This contract and any supplement, shall continue in effect
with respect to a Fund until the last day of the calendar year next following
the date of effectiveness specified in a supplement to the contract, and
thereafter shall continue automatically for successive annual periods ending on
the last day of each calendar year, provided such continuance is specifically
approved at least annually by a vote of a majority of (i) the Trust's Board of
Trustees and (ji) the trustees who are not "interested persons" (as defined in
the 1940 Act) of the Trust and who have no direct or indirect financial interest
in the contract, by vote cast in person at a meeting called for the purpose of
voting on such approval. This contract may be terminated at any time, without
payment of any penalty, by a vote of a majority of the outstanding voting
securities of each Fund (as defined in the 1940 Act) or by a vote of a majority
of the trustees of the Trust who are not "interested persons" (as defined in the
1940 Act) and who have no direct or indirect financial interest in this contract
on 60 days written notice to the Administrator or by the Administrator on 60
days written notice to the Trust. This contract shall terminate automatically in
the event of its assignment (as defined in the 1940 Act)

7. Except to the extent necessary to perform the Administrator's
obligations under this contract, nothing herein shall be deemed to limit or
restrict the right of the Administrator, or any affiliate of the Administrator,
or any employee of the Administrator, to engage in any other business or to
devote time and attention to the management or other aspects of any other
business, whether of a similar or -dissimilar nature, or to render services of
any kind to any other corporation, firm, individual or association.

8. The Declaration of Trust establishing the Trust, filed on .............,
a copy of which, together with all amendments thereto (the "Declaration"), is on
file in the office of the Secretary of the Commonwealth of Massachusetts,
provides that the name "..........." refers to the trustees under the
Declaration collectively as trustees and not as individuals or personally, and
that no shareholder, trustee, officer, employee or agent of the Trust shall be
subject to claims against or obligations of the Trust to any extent whatsoever,
but that the Trust estate only shall be liable.

9. This contract shall be construed and its provisions interpreted in
accordance with the laws of the State of New York.

If the foregoing correctly sets forth the agreement between the Trust and
the Administrator, please so indicate by signing and returning to the Trust the
enclosed copy hereof.

Very truly yours,

ACCEPTED:

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post Effective
Amendment No. 17 to the Registration Statement registration statement on Form
N-1A (the "Registration Statement") of our reports dated October 17, 1994,
relating to the financial statements and financial highlights appearing in the
August 31, 1994 Annual Reporst to Shareholders of the Evergreen Tax Exempt Money
Market Fund, The Evergreen Short Intermediate Municipal Fund-California, The
Evergreen Short Intermediate Municipal Fund and the Evergreen National Tax-Free
Fund, which are also incorporated by reference into the Registration Statement.
We also consent to the references to us under the heading "Financial Highlights"
in the Prospectus and under the headings "Independent Auditors" and "Financial
Statements" in the Statement of Additional Information.

/s/Price Waterhouse LLP
Price Waterhouse LLP
New York, NY
March 30, 1995

DISTRIBUTION PLAN OF CLASS -- SHARES

THE EVERGREEN FUND

EVERGREEN FUND

Section 1. The (the "Trust") may act as the distributor of
securities which are issued in respect of one or more of its separate investment
series, pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"1940 Act") according to the terms of this Distribution Plan ("Plan").
Section 2. The Trust may expend daily amounts at an annual rate of 0.-- of 1%
of the average daily net asset value of the Class A Shares ("Shares") of its
Evergreen Fund Series ("Fund") to finance any activity which is principally
intended to result in the sale of Shares including, without limitation,
expenditures consisting of payments to a principal underwriter of the Fund
(Principal Underwriter) or others in order: (i) to enable payments to be made by
the Principal Underwriter or others for any activity primarily intended to
result in the sale of Shares, including, without limitation, (a) compensation to
public relations consultants or other persons assisting in, or providing
services in connection with, the distribution of Shares, (b) advertising, (c)
printing and mailing of prospectuses and reports for distribution to persons
other than existing shareholders, (d) preparation and distribution of
advertising material and sales literature, (e) commission payments, and
principal and interest expenses associated with the financing of commission
payments, made by the Principal Underwriter in connection with the sale of
Shares and (f) conducting public relations efforts such as seminars; (ii) to
enable the Principal Underwriter or others to receive, pay or to have paid to
others who have sold Shares, or who provide services to holders of Shares, a
maintenance or other fee in respect of services provided to holders of Shares,
at such intervals as the Principal Underwriter may determine, in respect of
Shares previously sold and remaining outstanding during the period in respect of
which such fee is or has been paid; and/or (iii) to compensate the Principal
Underwriter for its efforts in respect of sales of Shares since inception of the
Plan. Appropriate adjustments shall be made to the payments made pursuant to
this Section 2 to the extent necessary to ensure that no payment is made by the
Fund with respect to any Class in excess of the applicable limit imposed on
asset based, front end and deferred sales charges under subsection (d) of
Section 26 of Article III of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. (the "NASD"). In addition, to the extent
any amounts paid hereunder fall within the definition of an "asset based sales
charge" under said NASD Rule such payments shall be limited to .75 of 1% of the
aggregate net asset value of the Shares on an annual basis and, to the extent
that any such payments are made in respect of "shareholder services" as that
term is defined in the NASD Rule, such payments shall be limited to .25 of 1% of
the aggregate net asset value of the Shares on an annual basis and shall only be
made in respect of shareholder services rendered during the period in which such
amounts are accrued.
Section 3. This Plan shall not take effect with respect to any Fund until it
has been approved by votes of a majority of (a) the outstanding Shares of such
Series, (b) the Trustees of the Trust, and (c) those Trustees of the Trust who
are not "interested persons" of the Fund (as defined in the 1940 Act) and who
have no direct or indirect financial interest in the operation of this Plan or
any agreements of the Trust related hereto or any other person related to this
Plan ("Disinterested Trustees"), cast in person at a meeting called for the
purpose of voting on this Plan. In addition, any agreement related to this Plan
and entered into by the Fund in connection therewith shall not take effect until
it has been approved by votes of a majority of (a) the Board of Trustees of the
Trust, and (c) the Disinterested Trustees of the Trust.
Section 4. Unless sooner terminated pursuant to Section 6, this Plan shall
continue in effect for a period of one year from the date it takes effect and
thereafter shall continue in effect for additional periods that shall not exceed
one year so long as such continuance is specifically approved by votes of a
majority of both (a) the Board of Trustees of the Trust and (b) the
Disinterested Trustees of the Trust, cast in person at a meeting called for the
purpose of voting on this Plan.
Section 5. Any person authorized to direct the disposition of monies paid or
payable pursuant to this Plan or any related agreement shall provide to the
Trust's Board and the Board shall review at least quarterly a written report of
the amounts so expended and the purposes for which such expenditures were made.
Section 6. This Plan may be terminated at any time with respect to any Fund
by vote of a majority of the Disinterested Trustees, or by vote of a majority of
the Shares of the Fund.
Section 7. Any agreement of the Trust, with respect to any Fund, related to
this Plan shall be in writing and shall provide:
A. That such agreement may be terminated with respect to a Fund at any
time without payment of any penalty, by vote of a majority of the Disinterested
Trustees or by a vote of a majority of the outstanding Shares of such Fund on
not more than sixty days written notice to any other party to the agreement; and
B. That such agreement shall terminate automatically in the event of its
assignment.
Section 8. This Plan may not be amended to increase materially the amount
of distribution expenses provided for in Section 2 with respect to a Fund unless
such amendment is approved by a vote of at least a majority (as defined in the
1940 Act) of the outstanding Shares of such Fund, and no material amendment to
this Plan shall be made unless approved by votes of a majority of (a) the Board
of Trustees of the Trust, and (c) the Disinterested Trustees of the Trust, cast
in person at a meeting called for the purpose of voting on such amendment.

DATED:

<S> <C>

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Aug-31-1994
<PERIOD-END> Aug-31-1994
<INVESTMENTS-AT-COST> 52,488,411
<INVESTMENTS-AT-VALUE> 52,822,054
<RECEIVABLES> 737,818
<ASSETS-OTHER> 110,392
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53,670,264
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 253,095
<TOTAL-LIABILITIES> 253,095
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 52,232,212
<SHARES-COMMON-STOCK> 5,230,083
<SHARES-COMMON-PRIOR> 6,295,897
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (148,686)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 333,643
<NET-ASSETS> 53,417,169
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3,082,775
<OTHER-INCOME> 0
<EXPENSES-NET> 347,990
<NET-INVESTMENT-INCOME> 2,734,785
<REALIZED-GAINS-CURRENT> (53,108)
<APPREC-INCREASE-CURRENT> (1,837,704)
<NET-CHANGE-FROM-OPS> 843,973
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,734,785
<DISTRIBUTIONS-OF-GAINS> 277,003
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,211,704
<NUMBER-OF-SHARES-REDEEMED> 2,526,223
<SHARES-REINVESTED> 248,705
<NET-CHANGE-IN-ASSETS> (13,190,015)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 180,991
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 301,565
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 498,184
<AVERAGE-NET-ASSETS> 60,312,957
<PER-SHARE-NAV-BEGIN> 10.58
<PER-SHARE-NII> 0.47
<PER-SHARE-GAIN-APPREC> (0.32)
<PER-SHARE-DIVIDEND> 0.47
<PER-SHARE-DISTRIBUTIONS> 0.05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.21
<EXPENSE-RATIO> 0.58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> EVERGREEN TAX-EXEMPT MONEY MARKET FUND PORTFOLIO

<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Aug-31-1994
<PERIOD-END> Aug-31-1994
<INVESTMENTS-AT-COST> 412,615,353
<INVESTMENTS-AT-VALUE> 412,615,353
<RECEIVABLES> 2,809,528
<ASSETS-OTHER> 1,158,272
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 416,583,173
<PAYABLE-FOR-SECURITIES> 12,905,836
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,258,156
<TOTAL-LIABILITIES> 14,163,992
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 402,419,181
<SHARES-COMMON-STOCK> 402,419,181
<SHARES-COMMON-PRIOR> 401,375,823
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 402,419,181
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,930,196
<OTHER-INCOME> 0
<EXPENSES-NET> 1,438,093
<NET-INVESTMENT-INCOME> 10,492,103
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 10,492,103
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 10,492,103
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 438,032,706
<NUMBER-OF-SHARES-REDEEMED> 447,132,393
<SHARES-REINVESTED> 10,143,045
<NET-CHANGE-IN-ASSETS> 1,043,358
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,126,246
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,694,746
<AVERAGE-NET-ASSETS> 425,249,277
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.025
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.025
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.34
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>

<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> EVERGREEN NATIONAL TAX-FREE FUND

<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Aug-31-1994
<PERIOD-END> Aug-31-1994
<INVESTMENTS-AT-COST> 41,977,070
<INVESTMENTS-AT-VALUE> 41,285,743
<RECEIVABLES> 1,583,788
<ASSETS-OTHER> 115,447
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 42,984,978
<PAYABLE-FOR-SECURITIES> 773,449
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 68,196
<TOTAL-LIABILITIES> 841,645
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 44,080,537
<SHARES-COMMON-STOCK> 4,216,459
<SHARES-COMMON-PRIOR> 3,029,743
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,245,877)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (691,327)
<NET-ASSETS> 42,143,333
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,109,228
<OTHER-INCOME> 0
<EXPENSES-NET> 113,534
<NET-INVESTMENT-INCOME> 1,995,694
<REALIZED-GAINS-CURRENT> (1,159,204)
<APPREC-INCREASE-CURRENT> (1,935,794)
<NET-CHANGE-FROM-OPS> (1,099,304)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,995,694
<DISTRIBUTIONS-OF-GAINS> 581,055
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,815,233
<NUMBER-OF-SHARES-REDEEMED> 1,860,323
<SHARES-REINVESTED> 231,806
<NET-CHANGE-IN-ASSETS> 9,058,227
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 494,382
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 196,809
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 349,610
<AVERAGE-NET-ASSETS> 39,361,721
<PER-SHARE-NAV-BEGIN> 10.92
<PER-SHARE-NII> 0.53
<PER-SHARE-GAIN-APPREC> (0.77)
<PER-SHARE-DIVIDEND> 0.53
<PER-SHARE-DISTRIBUTIONS> 0.16
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.99
<EXPENSE-RATIO> 0.29
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>

<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA
<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Aug-31-1994
<PERIOD-END> Aug-31-1994
<INVESTMENTS-AT-COST> 28,041,963
<INVESTMENTS-AT-VALUE> 28,122,538
<RECEIVABLES> 387,383
<ASSETS-OTHER> 24,902
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 28,534,823
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101,788
<TOTAL-LIABILITIES> 101,788
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28,275,386
<SHARES-COMMON-STOCK> 2,816,554
<SHARES-COMMON-PRIOR> 2,915,063
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 77,074
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 80,575
<NET-ASSETS> 28,433,035
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,410,461
<OTHER-INCOME> 0
<EXPENSES-NET> 154,461
<NET-INVESTMENT-INCOME> 1,256,000
<REALIZED-GAINS-CURRENT> 97,167
<APPREC-INCREASE-CURRENT> (823,736)
<NET-CHANGE-FROM-OPS> 529,431
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,256,000
<DISTRIBUTIONS-OF-GAINS> 97,167
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,453,754
<NUMBER-OF-SHARES-REDEEMED> 1,666,477
<SHARES-REINVESTED> 114,214
<NET-CHANGE-IN-ASSETS> (1,702,468)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 2,656
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 164,447
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 284,413
<AVERAGE-NET-ASSETS> 29,899,508
<PER-SHARE-NAV-BEGIN> 10.34
<PER-SHARE-NII> 0.43
<PER-SHARE-GAIN-APPREC> (0.24)
<PER-SHARE-DIVIDEND> 0.43
<PER-SHARE-DISTRIBUTIONS> 0.01
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.09
<EXPENSE-RATIO> 0.52
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

Schedule for Computation Initial
of Fund Performance Data Invest of: $10,000

EVERGREEN SHORT- Offering
INTERMEDIATE MUNICIPAL Price/
FUND Share= $10.00

Return Since Inception
ending 8/31/94 NAV= $10.00

FYE:August31
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total
DECLARED: DAILY Begin Capital Ending Ending
PAID: MONTHLY Reinvest Period Dividend Gain Reinvest Period Investment
Dates Shares /Share /Share Price Shares Price Value
11/18/91 10.00 1,000.000 10.00 10,000.00
11/29/91 1,000.000 0.020412380 10.05 1,002.031 10.05 10,070.41
12/31/91 1,002.031 0.046542875 10.15 1,006.626 10.15 10,217.25
1/31/92 1,006.626 0.046163465 10.15 1,011.204 10.15 10,253.72
2/28/92 1,011.204 0.038782210 10.15 1,015.068 10.15 10,302.94
3/31/92 1,015.068 0.039923440 10.10 1,019.080 10.10 10,292.71
4/30/92 1,019.080 0.042291330 10.15 1,023.326 10.15 10,386.76
5/29/92 1,023.326 0.042073525 10.20 1,027.547 10.20 10,480.98
6/30/92 1,027.547 0.041153470 10.25 1,031.673 10.25 10,574.65
7/31/92 1,031.673 0.043695340 10.40 1,036.008 10.40 10,774.48
8/28/92 1,036.008 0.038586243 10.33 1,039.877 10.33 10,741.93
9/30/92 1,039.877 0.040443334 10.35 1,043.941 10.35 10,804.79
10/30/92 1,043.941 0.040914259 10.29 1,048.092 10.29 10,784.86
11/30/92 1,048.092 0.040320616 10.35 1,052.175 10.35 10,890.01
12/31/92 1,052.175 0.041814222 0.0028 10.38 1,056.697 10.38 10,968.52
1/31/93 1,056.697 0.041936250 10.35 1,060.979 10.35 10,981.13
2/28/93 1,060.979 0.042258365 10.57 1,065.220 10.57 11,259.38
3/31/93 1,065.220 0.041026176 10.48 1,069.390 10.48 11,207.21
4/30/93 1,069.390 0.044483758 10.51 1,073.917 10.51 11,286.86
5/28/93 1,073.917 0.038887838 10.50 1,077.894 10.50 11,317.89
6/30/93 1,077.894 0.041713991 10.56 1,082.152 10.55 11,427.52
7/30/93 1,082.152 0.041676964 10.50 1,086.447 10.50 11,407.70
8/31/93 1,086.447 0.038940768 10.58 1,090.446 10.58 11,536.92
9/30/93 1,090.446 0.040634696 10.62 1,094.618 10.62 11,624.85
10/29/93 1,094.618 0.039932979 10.60 1,098.742 10.60 11,646.65
11/30/93 1,098.742 0.040390788 10.52 1,102.961 10.52 11,603.14
12/27/93 1,102.961 0.0465 10.58 1,107.808 10.58 11,720.61
12/30/93 1,107.808 0.040086126 10.58 1,112.005 10.58 11,765.02
1/28/94 1,112.005 0.039516775 10.60 1,116.151 10.60 11,831.20
2/28/94 1,116.151 0.040321489 10.42 1,120.470 lO.42 11,575.30
3/31/94 1,120.470 0.043325051 10.23 1,125.215 10.23 11,510.95
4/29/94 1,125.215 0.036276659 10.23 1,129.205 10.23 11,551.77
5/31/94 1,129.206 0.037693748 10.23 1,133.366 10.23 11,594.34
6/30/94 1,133.366 0.038536980 10.18 1,137.557 10.18 11,581.35
7/29/94 1,137.657 0.037601661 10.23 1,141.638 10.23 11,681.01
8/31/94 1,141.838 0.037586731 10.21 1,146.042 10.21 11,701.09

$10,000 (1+T) = End Value
T = 17.01%

</TABLE>

Schedule for Computation Initial
of Fund Performance Data Invest of: $10,000

EVERGREEN NATIONAL Offering
TAX-FREE FUND Price/
Share $10.00
Return Since Inception
ending 8/31/94 NAV= $10.00

$10,000 (1+T) = End Value
T = 10.86%
</TABLE>

Schedule for Computation Initial
of Fund Performance Data Invest of: $10,000

EVERGREEN SHORT- Offering
INTERMEDIATE MUNICIPAL Price/
FUND-CALIFORNIA Share

$10.00
Return Since Inception
ending 8/31/94 NAV= $10.00

FYE:August31
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total
DECLARED: DAILY Begin Capital Ending Ending
PAID: MONTHLY Reinvest Period Dividend Gain Reinvest Period Investment
Dates Shares /Share /Share Price Shares Price Value
10/16/92 1,000.000 10.00 1,000.000 lO.00 10,000.00
10/31/92 1,000.000 0.011352560 10.01 1,001.134 10.01 10,021.35
11/30/92 1,001.134 0.030496480 10.07 1,004.166 lO.07 10,111.95
12/31/92 1,004.166 0.035425973 10.09 1,007.692 lO.09 10,167.61
1/31/93 1,007.692 0.036719856 10.16 1,011.334 lO.16 10,275.15
2/28/93 1,011.334 0.037867708 10.36 1,015.030 lO.36 10,515.71
3/31/93 1,015.030 0.037508623 10.21 1,018.759 10.21 10,401.53
4/30/93 1,018.759 0.040266299 10.23 1,022.759 10.23 10,462.93
5/28/93 1,022.769 0.034503687 10.23 1,026.219 10.23 10,498.22
6/30/93 1,026.219 0.035905727 10.30 1,029.796 10.30 10,606.90
7/30/93 1,029.796 0.037146090 10.23 1,033.535 10.23 10,573.07
8/31/93 1,033.535 0.034849341 10.34 1,037.019 10.34 10,722.77
9/30/93 1,037.019 0.036544685 10.40 1,040.663 lO.40 10,822.89
10/29/93 1,040.663 0.036405859 10.38 1,044.313 10.38 10,839.96
11/30/93 1,044.313 0.036559432 10.32 1,048.012 10.32 10,815.49
12/27/93 1,048.012 0.0077 10.41 1,048.787 10.41 10,917.88
12/30/93 1,048.787 0.036360419 10.41 1,052.451 10.41 10,958.01
1128194 1,052.451 0.036265026 10.46 1,056.099 10.48 11,046.80
2128194 1,056.099 0.036419346 10.27 1,059.845 10.27 10,884.60
3131194 1,059.845 0.039166155 10.08 1,063.963 10.08 10,724.74
4129194 1,063.963 0.033635410 10.09 1,087.509 10.09 10,771.17
5131194 1,067.509 0.034943816 10.09 1,071.206 10.09 10,808.47
6130194 1,071.206 0.035699222 10.04 1,075.015 10.04 10,793.15
7129194 1,075.015 0.034658697 10.11 1,078.701 10.11 10,905.66
8131194 1,078.701 0.033356154 10.09 1,082.267 10.09 10,920.07

$10,000 (1+T) = End Value
T = 9.20%
</TABLE>

EVERGREEN
SHORT-INTERMEDIATE
MUNICIPAL FUND
- --CALIFORNIA

ANNUAL REPORT
AUGUST 31, 1994

THE EVERGREEN FUNDS

<PAGE>

- -------------------------------------------------------------------------------

September 19, 1994
Dear Fellow Shareholder:

We are pleased to bring you the second annual report for Evergreen
Short-Intermediate Municipal Fund -California. During the fiscal year which
ended August 31, 1994, the Fund produced a total return for investors of
+1.84%*. The Fund's average annual compounded rate of return from inception on
October 16, 1992, through August 31, 1994, was +4.80%. The Fund's 30-day
annualized yield as of this writing is 4.15%, with a taxable equivalent yield of
7.29% for investors in the 47% combined California state and marginal Federal
tax bracket. We are happy to report that all of the Fund's net investment income
was 100% free of California state and Federal income taxes*.
The bond market turmoil that began in early February continued and was
dominated by the strength of the domestic economy and the accompanying credit
tightening measures taken by the Federal Reserve. In response to accelerating
growth, the Federal Reserve raised interest rates four more times after the
first action in early February. The latest move, which occurred this past
August, raised the Fed Funds rate (the overnight lending rate among banks) to
4.75% and the discount rate (the rate charged by the Federal Reserve for loans
to banks) to 4.00%.
As the economy picked up momentum and the Fed started tightening, interest
rates in the fixed-income markets climbed in every maturity range. In the
taxable sector, the yield on the one-year treasury bill ended the fiscal year at
5.54%, while the yield on the 30-year treasury bond ended at 7.45%.
Yields in the tax exempt sector moved up similarly, though not quite as
sharply. Very short-term yields (i.e. overnight and 7-day rates) initially held
firm due to supply and demand factors. By August 31, however, yields on
securities from one-day to one-year increased dramatically from the lows of the
previous month. Moving out on the yield curve, intermediate and long-term yields
averaged 60 to 80 basis points higher for the six-month period.
The Fund moved to a more defensive position during the past six months
in order to moderate price volatility. We reduced the Fund's weighted average
maturities and durations by selling securities most sensitive to price declines
in a rising interest rate environment, such as bonds trading at a discount.
Proceeds were reinvested in short-term, high-quality bonds. Our current strategy
is to remain relatively short in the one-to-three-year range as we look to
purchase high quality, non-callable bonds.
We expect tax exempts to outperform treasuries as new municipal issuance
declines. While we think that the municipal market is attractive relative to
other fixed-income investments and that supply looks manageable, the overall
direction of this market will be determined by the movement of rates in the
taxable (specifically the U.S. Treasury) sector. Over the next several months we
will take our cue from the economic indicators that typically shape the
prospects for Gross Domestic Product (GDP) and inflation.
We thank you for investing in Evergreen Short-Intermediate
Fund-California and look forward to continuing to serve your investment needs.

Sincerely,

/s/ Stephen A. Lieber /s/ Steven C. Shachat
Stephen A. Lieber Steven C. Shachat
Chairman Portfolio Manager
Evergreen Asset
Management Corp.

- ----------------------------------
Figures represent past performance which does not guarantee future results.

* Performance figures include reinvestment of income dividend and capital gain
distributions, if any.

The Fund's return, net asset value and yield will vary and there can be no
guarantee that the Fund will achieve its objective or any particular tax exempt
yield. Investors' shares, when redeemed, may be worth more or less than their
original cost.

Currently, the Adviser is voluntarily waiving a portion of its advisory fee. Had
this fee not been waived, the Fund's 30-day annualized and tax-equivalent yields
as of September 19, 1994, would have been 3.95% and 6.93%, respectively, and
returns would have been lower. Voluntary fee waivers may be revised at any time.
Tax-equivalent yield would be lower for investors in lower marginal income tax
brackets.

The Fund may invest in securities the income from which may be subject to the
Federal alternative minimum tax for certain investors.

<PAGE>

- -------------------------------------------------------------------------------

EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND--CALIFORNIA
STATEMENT OF INVESTMENTS
AUGUST 31, 1994

- ----------------------------------------------------------
PAR INTEREST MATURITY
ISSUE (000) RATE DATE VALUE
- ----------------------------------------------------------
LONG-TERM INVESTMENTS--92.2%
- ----------------------------------------------------------
Alameda County $1,200 5.00% 05/01/98 $ 1,212,312
Transportation
Authority Sales
Tax (Limited Tax)
Series 1992-RB (FGIC Insured)
- ----------------------------------------------------------
Burbank-Glendale- 1,000 5.00 06/01/98 1,013,870
Pasedena Airport
Authority Airport
Series 1992-RRB
(AMBAC Insured)
- ----------------------------------------------------------
California Housing 310 4.70 02/01/96 309,860
Finance Agency 325 5.00 02/01/97 325,423
Multi-Unit Rental 345 5.25 02/01/98 345,197
Housing 1992
Series A-RB
- ----------------------------------------------------------
California Statewide 500 5.00 08/15/98 505,525
Communities Development
Authority (Sutter
Obligated Group)-COP
(AMBAC Insured)
- ----------------------------------------------------------
California Various 490 5.00 09/01/97 496,390
Purpose Bonds-GO
- ----------------------------------------------------------
Chino Unified School 320 5.25 02/01/97 322,400
District San
Bernadino County
1975 Series 3-GO
- ----------------------------------------------------------
City of Beverly Hills 250 4.70 06/01/97 249,855
(1992 Refunding 300 4.90 06/01/98 299,976
Project)-COP
- ----------------------------------------------------------
City of Burbank Public 980 6.10 06/01/97 1,019,278
Service Department
of Electric and
Water 1992
Series A-RB
(AMBAC Insured)
- ----------------------------------------------------------
City of Long Beach, 1,500 4.50 05/15/00 1,452,195
California Harbor
Series 1993-RB
- ----------------------------------------------------------
City of Los Angeles 200 5.10 12/15/95 202,872
Department of Water
and Power Electric
Plant, Issue of
1977-RRB
- ----------------------------------------------------------
City of Los Angeles 1,200 4.50 08/15/00 1,158,012
Department of Water
and Power Electric
Plant, Issue of
1994-RRB
- ----------------------------------------------------------

<PAGE>

- -------------------------------------------------------------------------------

EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND--CALIFORNIA
STATEMENT OF INVESTMENTS (continued)
AUGUST 31, 1994

- ----------------------------------------------------------
PAR INTEREST MATURITY
ISSUE (000) RATE DATE VALUE
- ----------------------------------------------------------
City of Los Angeles $1,090 5.00% 08/01/00 $ 1,086,643
Judgement
Obligation Bonds
Series 1992-A
- ----------------------------------------------------------
City of Santa Rosa 565 5.10 07/02/98 573,006
(Sonoma County)
Wastewater Service
Facilities District
1992 Refunding
Improvement Bonds
(AMBAC Insured)
- ----------------------------------------------------------
City of Santa Rosa 650 5.10 09/01/98 659,613
(Sonoma County)
Wastewater 1992
Series B-RRB
(FGIC Insured)
- ----------------------------------------------------------
City of Vallejo (Water 1,100 6.00 11/01/98 1,153,031
Improvement
Project)
1992 Series B-RB
(FGIC Insured)
- ----------------------------------------------------------
County of Los Angeles 475 5.25 03/01/98 477,256
(1993 Disney
Parking Project)-COP
- ----------------------------------------------------------
County of San 685 7.70 11/01/98 773,714
Bernardino (West
Valley Detention
Center Project)-
COP Prerefunded
@ $102
- ----------------------------------------------------------
Los Angeles Building 1,000 6.25 03/01/96 1,023,070
Authority Lease
(State of California
Department of
General Services
Lease)1988
Series A-RB
- ----------------------------------------------------------
Los Angeles County 1,250 4.75 07/01/96 1,259,300
Transportation
Commission
Proposition C
Sales Tax Senior
Series 1992 A-RB
(MBIA Insured)
- ----------------------------------------------------------
Northern California 585 6.20 07/01/96 601,439
Power Agency
Geothermal Project
Number 3
1987 Series A-RRB
- ----------------------------------------------------------

<PAGE>
- -------------------------------------------------------------------------------

EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND--CALIFORNIA
STATEMENT OF INVESTMENTS (continued)
AUGUST 31, 1994

- ----------------------------------------------------------
PAR INTEREST MATURITY
ISSUE (000) RATE DATE VALUE
- ----------------------------------------------------------
Pasadena Community $1,200 5.00% 12/01/96 $ 1,210,212
Development
Commission
Multifamily
Housing(Civic
Center West
Project)
Series B-RB
(FSA Insured)
- ----------------------------------------------------------
Pico Rivera Public 450 5.70 12/01/98 467,113
Financing Authority
1992 (Water
Enterprise Project)
Series A-RRB
(MBIA Insured)
- ----------------------------------------------------------
Port of Oakland 1992 475 6.10 11/01/03 504,749
Series E-RB
(MBIA Insured)
- ----------------------------------------------------------
Rim of the World 500 5.10 09/01/97 508,050
Unified School 500 5.25 09/01/98 510,100
District 1992
(Measure V Capital
Project)-COP
(AMBAC Insured)
- ----------------------------------------------------------
Sacramento Municipal 1,000 7.50 08/15/98 1,101,100
Utility District
Electric Series V
-RB Prerefunded
@ $100
- ----------------------------------------------------------
Sacramento Municipal 1,410 5.10 05/15/01 1,406,715
Utility District
Electric 1993
Series E-RB
- ----------------------------------------------------------
San Diego County 760 5.00 09/01/01 758,222
(1993 Vista
Detention Facility
Refunding
Project)-COP
(AMBAC Insured)
- ----------------------------------------------------------
San Diego County 1,200 4.75 05/01/98 1,201,524
Water Authority
Water Revenue
Refunding Series
1993 A-COP
(FGIC Insured)
- ----------------------------------------------------------
San Diego Unified 575 5.90 07/01/97 593,831
School District
Series B-COP
- ----------------------------------------------------------
San Francisco Bay Area 250 6.50 07/01/98 264,698
Rapid Transit
District Sales Tax
Revenue Notes
Series 1993
- ----------------------------------------------------------

<PAGE>

EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND--CALIFORNIA
STATEMENT OF INVESTMENTS (continued)
AUGUST 31, 1994

- ----------------------------------------------------------
PAR INTEREST MATURITY
ISSUE (000) RATE DATE VALUE
- ----------------------------------------------------------
San Francisco City $ 785 7.60% 10/01/97 $ 865,031
& County Sewer
Series B-RB
Prerefunded
@ $101.50
(AMBAC Insured)
- ----------------------------------------------------------
Sunnyvale Financing 300 5.10 10/01/98 304,509
Authority Utility
Revenue (Solid
Waste Materials
Recovery and
Transfer Station)
1992 Series B-RB
(MBIA Insured)
- ----------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS (COST $26,135,516) 26,216,091
- ----------------------------------------------------------
SHORT-TERM INVESTMENTS--6.7%
- ----------------------------------------------------------
California RANS 1,000 5.00 06/28/95 1,006,447
- ----------------------------------------------------------
California Statewide 600 3.20 V 600,000
Community
Development
Authority
(DV Industries)
(LOC: Bank of
Tokyo)
- ----------------------------------------------------------
City of Irvine Apartment 300 2.90 V 300,000
Development (San
Rafael Apartments
Project) Issue A of
1992-RB
- ----------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,906,447) 1,906,447
- ----------------------------------------------------------
TOTAL INVESTMENTS
(COST $28,041,963) 98.9% 28,122,538
OTHER ASSETS AND LIABILITIES-NET 1.1 310,497
- ----------------------------------------------------------
NET ASSETS 100.0% $28,433,035
==========================================================
AMBAC--American Municipal Bond Assurance Corp.
COP--Certificates of Participation
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
GO--General Obligations
MBIA--Municipal Bond Investors Assurance
RANS--Revenue Anticipation Notes
RB--Revenue Bonds
RRB--Refunding Revenue Bonds
V--Variable Rate Demand Notes are payable on demand at par on no more than seven
calendar days notice given by the Fund to the issuer or other parties not
affiliated with the issuer. Interest rates are determined and reset by the
issuer daily or weekly depending upon the terms of the security. The
interest rates presented for these securities are those in effect at August
31, 1994.

See accompanying notes to financial statements.

<PAGE>
- -------------------------------------------------------------------------------

EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1994

- -------------------------------------------------------------------------------
ASSETS:
Investments at value (cost $28,041,963) $28,122,538
Cash 20,496
Interest receivable 387,308
Receivable for Fund shares sold 75
Prepaid expenses 4,406
- -------------------------------------------------------------------------------
Total assets 28,534,823
- -------------------------------------------------------------------------------
LIABILITIES:
Payable for Fund shares repurchased 43,500
Accrued expenses 42,091
Accrued advisory fee 9,491
Dividend payable in cash 6,706
- -------------------------------------------------------------------------------
Total liabilities 101,788
- -------------------------------------------------------------------------------
NET ASSETS:
Paid-in capital 28,275,386
Undistributed net realized gain on investment transactions 77,074
Net unrealized appreciation of investments 80,575
- -------------------------------------------------------------------------------
Net assets $28,433,035
===============================================================================
NET ASSET VALUE PER SHARE, based on 2,816,554 shares of
beneficial interest outstanding (unlimited shares
authorized of $.0001 par value) $10.09
===============================================================================
See accompanying notes to financial statements.

<PAGE>

- -------------------------------------------------------------------------------

EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1994

- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $1,410,461
EXPENSES:
Custodian fee $45,688
Advisory fee--net of $129,952 fee waiver 34,495
Transfer agent fee 25,417
Professional fees 20,551
Reports and notices to shareholders 12,886
Insurance 6,386
Trustees' fees and expenses 3,129
Registration and filing fees 1,056
Amortization of organization expenses 844
Other 4,009
-----

Total expenses 154,461
- -------------------------------------------------------------------------------
Net investment income 1,256,000
- -------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 97,167
Net decrease in unrealized appreciation of investments (823,736)
- -------------------------------------------------------------------------------
Net loss on investments (726,569)
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 529,431
===============================================================================
See accompanying notes to financial statements.

<PAGE>

- -------------------------------------------------------------------------------

EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
-------------------------------
1994 1993
- -------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $1,256,000 $1,137,284
Net realized gain on investments 97,167 2,656
Net change in unrealized appreciation of
investments (823,736) 904,311
- -------------------------------------------------------------------------------
Net increase resulting from operations 529,431 2,044,251
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,256,000) (1,137,284)
Net realized gains on investment transactions (22,749) --
- -------------------------------------------------------------------------------
Total distributions to shareholders (1,278,749) (1,137,284)
- -------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS:
Proceeds from sale of shares 14,927,525 20,570,340
Net asset value of shares issued on
reinvestment of distributions 1,169,051 1,060,522
- -------------------------------------------------------------------------------
16,096,576 21,630,862
Cost of shares repurchased (17,049,726) (26,854,680)
- -------------------------------------------------------------------------------
Net decrease resulting from Fund share
transactions (953,150) (5,223,818)
- -------------------------------------------------------------------------------
Net decrease in net assets (1,702,468) (4,316,851)
NET ASSETS:
Beginning of year 30,135,503 34,452,354
- -------------------------------------------------------------------------------
End of year $28,433,035 $30,135,503
===============================================================================
NUMBER OF FUND SHARES:
Sold 1,453,754 4,887,860
Issued on reinvestment of distributions 114,214 170,281
Reverse share split -- (24,896,601)
Repurchased (1,666,477) (11,698,831)
- -------------------------------------------------------------------------------
Net decrease (98,509) (31,537,291)
Outstanding at beginning of year 2,915,063 34,452,354
- -------------------------------------------------------------------------------
Outstanding at end of year 2,816,554 2,915,063
===============================================================================
See accompanying notes to financial statements.

<PAGE>

- -------------------------------------------------------------------------------

EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND--CALIFORNIA
FINANCIAL HIGHLIGHTS

YEAR ENDED AUGUST 31,
------------------------------------------
PER SHARE DATA 1994 1993+ 1992+ 1991+ 1990+
- -------------------------------------------------------------------------------
Net asset value, beginning
of year $10.34 $10.00 $10.00 $10.00 $10.00
- -------------------------------------------------------------------------------
Income from investment operations:
Net investment income .43 .41 .33 .47 .55
Net realized and unrealized gain
(loss)on investments (.24) .34 -- -- --
- -------------------------------------------------------------------------------
Total from investment operations .19 .75 .33 .47 .55
- -------------------------------------------------------------------------------
Less distributions to shareholders
from:
Net investment income (.43) (.41) (.33) (.47) (.55)
Net realized gains (.01) -- -- -- --
- -------------------------------------------------------------------------------
Total distributions (.44) (.41) (.33) (.47) (.55)
- -------------------------------------------------------------------------------
Net asset value, end of year $10.09 $10.34 $10.00 $10.00 $10.00
===============================================================================
TOTAL RETURN 1.8% 7.6% 3.4% 4.8% 5.7%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of year
(000's omitted) $28,433 $30,136 $34,452 $42,022 $37,291
Ratios to average net assets:
Expenses .52%(a) .30%(b) .40%(c) .37%(d) .29%(e)
Net investment income 4.20%(a) 3.96%(b) 3.36%(c) 4.66%(d) 5.52%(e)
Portfolio turnover rate 12% 37% -- -- --
===============================================================================
+ On October 16, 1992, the Fund was converted to a short-intermediate
municipal fund with a fluctuating net asset value per share from a money
market fund with a stable net asset value per share. The shares outstanding
and the related per share data for the fiscal years ended August 31, 1990
through August 31, 1992 are restated to reflect the 1 for 10 reverse share
split on October 21, 1992. Total return calculated after October 16, 1992
reflects the fluctuation in net asset value per share.
(a) Net of partial advisory fee waiver of .43 of 1% of daily net assets.
(b) Net of partial advisory fee waiver of .52 of 1% of daily net assets and the
absorption of a portion of all other Fund expenses by the Adviser equal to
.16% of average daily net assets.
(c) Net of partial advisory fee waiver of .44 of 1% of daily net assets.
(d) Net of partial advisory fee waiver of .45 of 1% of daily net assets and the
absorption of a portion of all other Fund expenses by the Adviser equal to
.03% of average daily net assets.
(e) Net of partial advisory fee waiver of .51 of 1% of daily net assets and the
absorption of a portion of all other Fund expenses by the Adviser equal to
.08% of average daily net assets.
See accompanying notes to financial statements.

<PAGE>

- -------------------------------------------------------------------------------

EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND--CALIFORNIA
NOTES TO FINANCIAL STATEMENTS

NOTE 1--ORGANIZATION
The Evergreen Short-Intermediate Municipal Fund-California (the "Fund"), is a
portfolio of the Evergreen Municipal Trust (the "Trust"). The Trust was
organized in the Commonwealth of Massachusetts as a Massachusetts business trust
on July 13, 1988. The Fund is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end diversified management investment
company.

The Fund commenced investment operations on November 2, 1988, as a
diversified tax exempt money market fund which maintained a stable $1.00 net
asset value per share and a dollar weighted average maturity of 90 days or less.
On October 16, 1992, an amendment to the registration statement filed by the
Trust with the Securities and Exchange Commission on August 13, 1992 became
effective which allowed the Fund to invest in long-term tax exempt securities
and maintain a dollar weighted average portfolio of between two and five years.
Subsequent to this change, the Fund has a fluctuating net asset value per share.
On October 8, 1992 the Fund's Trustees declared a 1 for 10 reverse share split
effective for shareholders of record on October 21, 1992. This reverse split
decreased shares outstanding on October 21, 1992 by 24,896,601 and changed the
net asset value per share from $1.00 to $10.00.

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.

SECURITY VALUATION--Portfolio securities (other than short-term obligations
purchased with a remaining maturity of 60 days or less) are valued on the
basis of valuations provided by a pricing service when such prices are
believed to reflect the fair value of such securities. Short-term
obligations, when purchased with a remaining maturity of 60 days or less, are
valued at amortized cost, which approximates market value.

SECURITIES TRANSACTIONS AND INVESTMENT INCOME--Securities transactions are
recorded on the trade date (the date the order to buy or sell is executed).
Interest income, including the accretion or amortization of discount and
premium, is recognized on the accrual basis.

DISTRIBUTIONS TO SHAREHOLDERS--The Fund declares substantially all of its net
investment income as dividends each business day to shareholders of record.
At the end of each month, such dividends are either reinvested in Fund shares
and credited to the shareholder's account or, if elected by the shareholder,
paid in cash. Distributions of net realized capital gains (if any) will be
made at least annually.

OTHER--Expenses incurred directly by the Fund in connection with its
operations are charged to the Fund. Expenses common to the Trust as a whole,
including the compensation of all non-affiliated trustees of the Trust, are
primarily allocated to the funds in the Trust in proportion to net assets.

NOTE 3--ADVISORY FEE AND RELATED PARTY
TRANSACTIONS
Evergreen Asset Management Corp. (the "Adviser"), an affiliate of Lieber &
Company, is the investment adviser to the Fund and also furnishes the Fund with
administrative services. The Adviser, which is an indirect, wholly-owned
subsidiary of First Union Corporation, succeeded on June 30, 1994 to the
advisory business of the same name, but under different ownership. The Adviser
is entitled to a fee, accrued daily and payable monthly, for the performance of
its services at the annual rate of .55 of 1% of the daily net assets. For the
year ended August 31, 1994, the total advisory fee amounted to $164,447 of which
the Adviser voluntarily waived $129,952, resulting in a net fee incurred by the
Fund of $34,495. The Adviser may, at its discretion, revise or cease this
voluntary fee waiver at any time.

<PAGE>

- -------------------------------------------------------------------------------

EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND--CALIFORNIA
NOTES TO FINANCIAL STATEMENTS (continued)

The Adviser has agreed to reimburse the Fund to the extent that the Fund's
aggregate annual operating expenses (including the Adviser's fee but excluding
interest, taxes, brokerage commissions and extraordinary expenses) exceed 1.00%
of its average daily net assets for any fiscal year. The expenses of the Fund
for the year ended August 31, 1994, did not exceed this limit.

Evergreen Funds Distributor, Inc. (the "Distributor"), a subsidiary of Furman
Selz Incorporated, is the distributor of the Fund's shares and provides
personnel to serve as officers of the Trust. For its services, the Distributor
is paid an annual fee by the Adviser. No portion of this fee is borne by the
Fund.

Cost of purchases and proceeds from sales of investments, other than
short-term obligations, aggregated $3,306,919 and $5,223,728 respectively, for
the year ended August 31, 1994.

NOTE 4--PORTFOLIO TRANSACTIONS
The aggregate cost of investments owned at August 31, 1994 is the same for
financial statement and Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities at August 31, 1994, was $234,760 and
$154,185, respectively.

NOTE 5--CONCENTRATION OF CREDIT RISK
The Fund invests in obligations issued by the State of California and by its
political subdivisions and duly constituted authorities. The issuers' abilities
to meet their obligations may be affected by economic and political developments
in the State of California. Certain debt obligations held in the Fund's
portfolio may be entitled to the benefit of standby letters of credit or other
guarantees of banks or other financial institutions.

<PAGE>

- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Shareholders of
Evergreen Short-Intermediate Municipal Fund-California

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 Short-Intermediate
Municipal Fund-California (the "Fund"), constituting one of The Evergreen
Municipal Trust portfolios, at August 31, 1994, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the five years
in the period then ended, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our 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, 1994 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
October 17, 1994

- -------------------------------------------------------------------------------
FEDERAL INCOME TAX STATUS OF DISTRIBUTIONS (UNAUDITED)

During the year ended August 31, 1994, the Evergreen Short-Intermediate
Municipal Fund paid distributions from net investment income aggregating $.43
per share. For Federal income tax purposes these distributions represents
tax-exempt interest which is 100% exempt from all Federal income taxes other
than the alternative minimum tax. On December 31, 1993, the Fund paid a
short-term gain distribution of $.0077 per share which, for Federal income
tax purposes, is taxable as ordinary income.
- -------------------------------------------------------------------------------

<PAGE>
- -------------------------------------------------------------------------------
EVERGREEN FAMILY OF FUNDS

GROWTH FUNDS ____________________________________

EVERGREEN FUND seeks capital appreciation by investing in securities of little
known or relatively small companies and companies with entrepreneurial
management.

GLOBAL REAL ESTATE EQUITY FUND seeks capital appreciation by investing in
securities of companies involved in various aspects of the real estate industry
throughout the world.

LIMITED MARKET FUND seeks capital appreciation by investing in securities of
little-known, small or special situation companies.

U.S. REAL ESTATE EQUITY FUND seeks long-term capital growth by investing in
equity securities of U.S. companies which are principally engaged in the real
estate industry or which own significant real estate assets.

GROWTH & INCOME FUNDS _________________________

AMERICAN RETIREMENT FUND seeks conservation of capital, reasonable income and
capital growth by investing in a diversified and balanced portfolio of equity
and fixed income securities.

EVERGREEN FOUNDATION FUND seeks reasonable income, conservation of capital and
growth by investing in common and preferred stocks, convertibles and fixed
income securities.

GROWTH & INCOME FUND seeks capital appreciation and current income by investing
in securities of companies undervalued in the marketplace due to temporary
adverse circumstances or misperceptions of underlying values.

SMALL CAP EQUITY INCOME FUND seeks a return consisting of current income and
capital appreciation by investing primarily in companies with market
capitalizations of less than $500 million.

TAX STRATEGIC FOUNDATION FUND seeks to maximize the after tax total return on
its portfolio investments by investing in common and preferred stocks and
securities convertible into or exchangeable for common stocks, and municipal
securities.

GROWTH & INCOME FUNDS (continued)

TOTAL RETURN FUND seeks a total return consisting of current income and capital
appreciation by investing in common and preferred stocks, securities convertible
or exchangeable for common stocks and fixed income securities.

INCOME FUND _____________________________________

U.S. GOVERNMENT SECURITIES FUND seeks a high level of return from a combination
of current income and capital appreciation through investment in obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.

TAX-FREE FUNDS___________________________________

NATIONAL TAX-FREE FUND seeks a high level of current income, exempt from Federal
income tax, by investing at least 80% of its portfolio in insured long-term
municipal securities.

SHORT-INTERMEDIATE MUNICIPAL FUND seeks as high a level of current income,
exempt from Federal income tax (other than the alternative minimum tax), as is
consistent with preserving capital and providing liquidity by investing in short
and intermediate-term municipal securities.

SHORT-INTERMEDIATE MUNICIPAL FUND-CALIFORNIA seeks as high a level of current
income, exempt from Federal and California state income taxes, as is consistent
with preserving capital and providing liquidity by investing in short and
intermediate-term municipal securities.

MONEY MARKET FUNDS _________________________

MONEY MARKET TRUST seeks as high a level of current income as is consistent with
preserving capital and providing liquidity.

TAX EXEMPT MONEY MARKET FUND seeks as high a level of current income exempt from
Federal income taxes as is consistent with preserving capital and providing
liquidity.

THE PROSPECTUS(ES) CONTAIN MORE COMPLETE INFORMATION AND SHOULD BE READ
CAREFULLY PRIOR TO INVESTING.

<PAGE>

- --------------------------------------------------------------------------------

TRUSTEES
Laurence B. Ashkin
Foster Bam
James S. Howell
Robert J. Jeffries
Gerald M. McDonnell
Thomas L. McVerry
William Walt Pettit
Russell A. Salton, III, M.D.
Michael S. Scofield
Ben Weberman

INVESTMENT ADVISER
Evergreen Asset Management Corp.
2500 Westchester Avenue
Purchase, New York 10577

CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company

LEGAL COUNSEL
Shereff, Friedman, Hoffman & Goodman

INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP

DISTRIBUTOR
Evergreen Funds Distributor, Inc.

The investment adviser to the Evergreen Funds is Evergreen Asset Management
Corp., which is wholly owned by First Union National Bank of North Carolina.
Investments in the Evergreen Funds are not endorsed or guaranteed by First
Union, are not deposits or other obligations of First Union, are not insured or
otherwise protected by the U.S. government, the FDIC or any other government
agency, and involve investment risks, including possible loss of principal.

The Evergreen Funds are sponsored and distributed by Evergreen Funds
Distributor, Inc., which is independent of Evergreen and First Union.

EVERGREEN SHORT-INTERMEDIATE
MUNICIPAL FUND--CALIFORNIA
2500 Westchester Avenue
Purchase, New York 10577

<PAGE>

EVERGREEN
SHORT-INTERMEDIATE
MUNICIPAL FUND

ANNUAL REPORT
AUGUST 31, 1994

THE EVERGREEN FUNDS

<PAGE>

- --------------------------------------------------------------------------------

September 19, 1994
Dear Fellow Shareholder:

We are pleased to bring you Evergreen Short-Intermediate Municipal
Fund's annual report for the fiscal year ended August 31, 1994. During this
period, the Fund produced a total return for investors of +1.42%*. The Fund's
average annual compounded rate of return from inception on November 18, 1991,
through August 31, 1994, was +5.79%. The Fund's 30-day annualized yield as of
this writing is 4.27%, which is equivalent to a taxable yield of 6.67% for
investors in the 36% marginal Federal tax bracket*.
The bond market turmoil that began in early February continued and was
dominated by the strength of the domestic economy and the accompanying credit
tightening measures taken by the Federal Reserve. In response to accelerating
growth, the Federal Reserve raised interest rates four more times after their
first action in early February. The latest move, which occurred this past
August, increased the Fed Funds rate (the overnight lending rate among banks) to
4.75% and the discount rate (the rate charged by the Federal Reserve for loans
to banks) to 4.00%.
As the economy picked up momentum and the Fed started tightening, interest
rates in the fixed-income markets climbed in every maturity range. In the
taxable sector, the yield on the one-year treasury bill ended the fiscal year at
5.54% while the yield on the 30-year treasury bond ended at 7.45%.
Yields in the tax exempt sector moved up similarly, though not quite as
sharply. Very short-term yields (i.e. overnight and 7-day rates) initially held
firm due to supply and demand factors. By August 31, however, yields on
securities from one-day to one-year increased dramatically from the lows of the
previous month. Moving out on the yield curve, intermediate and long-term yields
averaged 60 to 80 basis points higher for the six-month period.
The Fund moved to a more defensive position during the past six months
in order to moderate price volatility. We reduced the Fund's weighted average
maturities and durations by selling securities most sensitive to price declines
in a rising interest rate environment, such as bonds trading at a discount.
Proceeds were reinvested in premium-priced, high-quality bonds. Our current
strategy is to remain relatively short in the one-to-three-year range as we look
to purchase high quality, non-callable bonds.
We expect tax exempts to outperform treasuries as new municipal issuance
declines. While we think that the municipal market is attractive relative to
other fixed-income investments and that supply looks manageable, the overall
direction of our market will be determined by the movement of rates in the
taxable (specifically the U.S. Treasury) sector. Over the next several months we
will take our cue from the economic indicators that typically shape the
prospects for Gross Domestic Product (GDP) and inflation.
Thank you for investing in Evergreen Short-Intermediate Municipal Fund.
We look forward to serving your continued investment needs.

Sincerely,

/s/Stephen A. Lieber /s/Steven C. Shachat
Stephen A. Lieber Steven C. Shachat
Chairman Portfolio Manager
Evergreen Asset
Management Corp.

- ----------------------------------
Figures represent past performance which does not guarantee future results.

* Performance figures include reinvestment of income dividend and capital gain
distributions, if any.

The Fund's return, net asset value and yield will fluctuate and there can be no
guarantee that the Fund will achieve its objective or any particular tax exempt
yield. Investors' shares, when redeemed, may be worth more or less than their
original cost.

Currently, the Adviser is voluntarily waiving a portion of its advisory fee. Had
this fee not been waived, the Fund's 30-day annualized and tax-equivalent yields
as of September 19, 1994, would have been 4.15% and 6.48%, respectively, and
returns would have been lower. Voluntary fee waivers may be revised at any time.
Tax-equivalent yield would be lower for investors in lower tax brackets.

Income may be subject to some state and local taxes, and the Federal alternative
minimum tax for certain investors.
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
STATEMENT OF INVESTMENTS
AUGUST 31, 1994

- ----------------------------------------------------------
PAR INTEREST MATURITY
ISSUE (000) RATE DATE VALUE
- ----------------------------------------------------------
LONG-TERM INVESTMENTS--96.8%
- ----------------------------------------------------------
ALASKA--6.7%
- ----------------------------------------------------------
Alaska Student Loan Corp. $ 400 6.20% 07/01/96 $ 410,388
State Assisted Student
Loan RB Series 1991A
- ----------------------------------------------------------
Municipality of
Anchorage, 1,045 5.00 02/01/98 1,051,468
Alaska 1993 GO School
RFB Series 1993A
- ----------------------------------------------------------
North Slope Borough, GO 1,950 7.50 06/30/97 2,091,999
RFB Series 1988G
- ----------------------------------------------------------
3,553,855
- ----------------------------------------------------------
ARIZONA--2.2%
- ----------------------------------------------------------
City of Tuscon, Arizona 1,100 7.70 07/01/15 1,184,480
Water System RRB
Series 1993,
Prerefunded @ $102
- ----------------------------------------------------------
COLORADO--2.5%
- ----------------------------------------------------------
Colorado Student
Obligation 1,315 6.125 12/01/98 1,351,872
Board Authority Student
Loan RB Series 1985B
- ----------------------------------------------------------
DELAWARE--1.7%
- ----------------------------------------------------------
City of Wilmington, GO
Series 1986 200 6.80 03/01/96 207,218
Series 1987 685 7.50 08/15/97 719,490
- ----------------------------------------------------------
926,708
- ----------------------------------------------------------
DISTRICT OF COLUMBIA--3.0%
- ----------------------------------------------------------
District of Columbia GO 1,500 6.625 06/01/98 1,579,635
RFB Series 1989B
- ----------------------------------------------------------
FLORIDA--7.2%
- ----------------------------------------------------------
City of Sunrise Special Tax 375 5.10 11/01/96 378,720
District No. 1 Ad Valorem
Tax RFB Series 1991
(LOC; Hypo Bank)
- ----------------------------------------------------------
Florida Board of
Education 1,500 4.55 06/01/00 1,468,710
Public Education Capital
Outlay Bonds
Series 1992E
- ----------------------------------------------------------
Florida Housing Finance 2,000 5.50 11/01/07 2,020,860
Agency Multi-Family
Housing RB 1985
Series QQ (Lantana-
Oxford Project)
- ----------------------------------------------------------
3,868,290
- ----------------------------------------------------------
GEORGIA--2.0%
- ----------------------------------------------------------
Municipal Electric
Authority 1,000 7.50 01/01/98 1,074,890
of Georgia Power RB
Series 1986L
- ----------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
STATEMENT OF INVESTMENTS (continued)
AUGUST 31, 1994

- ----------------------------------------------------------
PAR INTEREST MATURITY
ISSUE (000) RATE DATE VALUE
- ----------------------------------------------------------
ILLINOIS--10.5%
- ----------------------------------------------------------
City of Evanston, Cook $ 440 5.70% 07/01/05 $ 448,914
County Residential
Mortgage RRB
Series 1992
- ----------------------------------------------------------
City of Joliet, Will County 180 9.75 01/01/96 192,245
Waterworks and Sewer-
age RB Series 1989
- ----------------------------------------------------------
Du Page Water Commission 1,000 5.90 05/01/96 1,022,320
RB (Du Page, Cook and
Will Counties) Series 1987
- ----------------------------------------------------------
Forest Preserve
District of 1,900 7.40 11/01/98 2,073,698
Du Page County GO
Series 1987
- ----------------------------------------------------------
Illinois Health Facilities 300 6.00 02/15/97 305,937
Authority RB (Edward
Hospital Association
Project) Series 1992
- ----------------------------------------------------------
Illinois Student Assistance 500 5.45 03/01/97 504,875
Commission Student RB
Loan Series 1992M
- ----------------------------------------------------------
Metropolitan Sanitary 1,000 8.50 01/01/95 1,036,870
District of Greater
Chicago GO Capital
Improvement Bonds
Series 1985, Prerefunded
@ $102
- ----------------------------------------------------------
5,584,859
- ----------------------------------------------------------
KENTUCKY--0.3%
- ----------------------------------------------------------
Kentucky State University 155 6.25 05/01/96 159,673
Consolidated Educational
Buildings RB Series 1991G
- ----------------------------------------------------------
MAINE--2.1%
- ----------------------------------------------------------
Maine Educational Loan 1,000 5.20 05/01/97 1,005,590
Marketing Corp. Student
Loan RB Series 1988A
- ----------------------------------------------------------
Maine Housing Authority RB 110 6.30 11/15/95 112,549
Mortgage Purchase
Series 1988D-4
- ----------------------------------------------------------
1,118,139
- ----------------------------------------------------------
MARYLAND--2.7%
- ----------------------------------------------------------
Board of Education of 325 5.75 12/01/96 332,667
Baltimore County, (Seven
Oaks Elementary School
Facility) COP Series 1990A
- ----------------------------------------------------------
Montgomery County GO 1,105 5.20 10/01/99 1,131,177
Series 1992A Consolidated
Public Improvement Bonds
- ----------------------------------------------------------
1,463,844
- ----------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
STATEMENT OF INVESTMENTS (continued)
AUGUST 31, 1994

- ----------------------------------------------------------
PAR INTEREST MATURITY
ISSUE (000) RATE DATE VALUE
- ----------------------------------------------------------
MASSACHUSETTS--6.1%
- ----------------------------------------------------------
Massachusetts Bay $2,160 7.00% 03/01/97 $2,281,630
Transportation Authority
General Transportation
System Bond
Series 1990A
- ----------------------------------------------------------
New England Educational 1,000 5.40 06/01/00 988,730
Loan Marketing Corp.
Student Loan RB
Series 1993B
- ----------------------------------------------------------
3,270,360
- ----------------------------------------------------------
MISSOURI--1.0%
- ----------------------------------------------------------
Missouri Environmental 530 5.40 07/01/97 538,994
Improvement & Energy
Resources Authority
Water Pollution Control
RB (State Revolving Fund
Program-Multiple
Participant Series)
Series 1992A
- ----------------------------------------------------------
NEVADA--2.1%
- ----------------------------------------------------------
Las Vegas Valley Water 1,000 7.25 11/01/97 1,094,800
District GO (Limited Tax)
Water RRB Series 1987,
Prerefunded @ $102
- ----------------------------------------------------------
NEW JERSEY--2.8%
- ----------------------------------------------------------
City of Passaic GO Fiscal 200 6.40 11/15/96 207,876
Year Adjustment Bonds
Series 1991
- ----------------------------------------------------------
New Jersey Health Care 1,125 4.25 07/01/99 1,060,020
Facilities Financing
Authority RB (Chilton
Memorial Hospital Issue)
Series 1993D
- ----------------------------------------------------------
New Jersey Health Care 200 6.00 07/01/96 204,854
Facilities Financing
Authority RB (Pascack
Valley Hospital Association
Issue) Series 1991
- ----------------------------------------------------------
1,472,750

- ----------------------------------------------------------
NEW YORK--3.2%
- ----------------------------------------------------------
City of New York
Series GO 1,000 5.20 08/15/01 980,000
1993B
- ----------------------------------------------------------
New York Local Government
Assistance Corporation (A
Public Benefit Corporation
of the State of New York)
Series 1991B 500 6.25 04/01/96 513,200
Series 1991D 200 5.70 04/01/96 203,588
- ----------------------------------------------------------
1,696,788
- ----------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
STATEMENT OF INVESTMENTS (continued)
AUGUST 31, 1994

- ----------------------------------------------------------
PAR INTEREST MATURITY
ISSUE (000) RATE DATE VALUE
- ----------------------------------------------------------
NORTH CAROLINA--5.7%
- ----------------------------------------------------------
North Carolina Municipal $1,000 5.10% 01/01/98 $1,006,010
Power Agency RB 2,000 5.20 01/01/00 2,016,480
Number 1 Catawba
Electric Series 1992
- ----------------------------------------------------------
3,022,490
- ----------------------------------------------------------
OHIO--2.2%
- ----------------------------------------------------------
Gateway Economic 200 6.40 09/01/94 200,000
Development Corporation
of Greater Cleveland RB
(Senior Lien Excise Tax)
Series 1990
- ----------------------------------------------------------
The Student Loan Funding 1,000 5.50 12/01/01 993,410
Corporation (Cincinnati)
Student Loan RB
Series 1993A
- ----------------------------------------------------------
1,193,410
- ----------------------------------------------------------
OKLAHOMA--1.4%
- ----------------------------------------------------------
Oklahoma Student Loan 750 5.35 09/01/96 746,918
Authority RRB
Series 1992A
----------------------------------------------------------
PENNSYLVANIA--1.0%
- ----------------------------------------------------------
State of Pennsylvania 500 6.00 12/15/98 506,250
GO Series 1971
----------------------------------------------------------
RHODE ISLAND--1.9%
- ----------------------------------------------------------
Rhode Island GO 1,000 6.00 05/15/96 1,026,590
Construction Capital
Development Loan
Series 1991B
- ----------------------------------------------------------
SOUTH CAROLINA--4.0%
- ----------------------------------------------------------
Rock Hill School
District 1,000 7.75 02/01/97 1,070,970
No. 3 of York County RFB
Series 1992B
- ----------------------------------------------------------
School District of
Chester 1,000 7.70 02/01/97 1,063,490
County GO School
Building Bonds
Series 1992
- ----------------------------------------------------------
2,134,460
- ----------------------------------------------------------
TENNESSEE--0.4%
- ----------------------------------------------------------
Metropolitan Government of 200 8.20 01/01/95 207,192
Nashville & Davidson
County Water & Sewer
RRB Series 1985A,
Prerefunded @ $102
----------------------------------------------------------
TEXAS--7.9%
- ----------------------------------------------------------
Brazos Higher Education
Authority, Inc. Student
Loan RRB
Series 1992-A 790 6.00 03/01/96 802,522
Series 1993A-1 1,000 5.30 12/01/97 1,009,400
- ----------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
STATEMENT OF INVESTMENTS (continued)
AUGUST 31, 1994

- ----------------------------------------------------------
PAR INTEREST MATURITY
ISSUE (000) RATE DATE VALUE
- ----------------------------------------------------------
TEXAS--CONTINUED
- ----------------------------------------------------------
City of Austin (Travis & $ 250 8.875%09/01/98 $ 286,775
Williamson Counties)
Improvement Bonds
Series 1991-A
- ----------------------------------------------------------
Houston Water 1,000 6.375 12/15/00 1,068,320
Conveyance System
Contract COP
Series 1993D
- ----------------------------------------------------------
Northside, Texas 1,000 7.00 02/01/98 1,069,480
Independent School GO
(District Unlimited Tax)
Series 1986
- ----------------------------------------------------------
4,236,497
- ----------------------------------------------------------
UTAH--1.4%
- ----------------------------------------------------------
Intermountain Power 180 8.40 07/01/95 189,695
Agency Power Supply
RRB Series 1985G,
Prerefunded @ $102
- ----------------------------------------------------------
Utah Housing Finance 560 5.20 01/01/01 554,898
Agency Single Family
Mortgage RRB Senior
Bonds Series 1993A
- ----------------------------------------------------------
744,593
- ----------------------------------------------------------
VIRGINIA--3.6%
- ----------------------------------------------------------
Medical College Of 410 5.60 11/15/96 417,442
Hampton Roads RRB
Series 1991A
- ----------------------------------------------------------
Virginia Housing 1,500 6.00 01/01/98 1,524,240
Development Authority
Commonwealth Mortgage
Bonds Series 1992B-AMT
Subseries B-1
- ----------------------------------------------------------
1,941,682
- ----------------------------------------------------------
WASHINGTON--6.5%
- ----------------------------------------------------------
Public Utility District
No. 2 1,000 5.00 01/01/99 1,006,110
of Grant County Electric
System RRB
Series 1993-E
- ----------------------------------------------------------
Seattle Metropolitan
Sewer 1,500 5.00 01/01/01 1,488,660
RRB Series 1993Y
- ----------------------------------------------------------
Washington Public Power 1,000 5.10 07/01/98 1,001,650
Supply System RRB
(Nuclear Project #2)
Series 1992A
- ----------------------------------------------------------
3,496,420
- ----------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
STATEMENT OF INVESTMENTS (continued)
AUGUST 31, 1994

- ----------------------------------------------------------
PAR INTEREST MATURITY
ISSUE (000) RATE DATE VALUE
- ----------------------------------------------------------
WISCONSIN--4.7%
- ----------------------------------------------------------
State of Wisconsin GO $1,000 5.75% 05/01/97 $ 1,031,510
Series 1992A
- ----------------------------------------------------------
Wisconsin Health & 1,500 5.00 08/15/98 1,494,105
Educational Facilities
Authority (Sisters of the
Sorrowful Mother-Ministry
Corp.) Series 1993B
- ----------------------------------------------------------
2,525,615
- ----------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS
(COST $51,388,411) 51,722,054
- ----------------------------------------------------------
SHORT-TERM INVESTMENTS--2.1%
- ----------------------------------------------------------
DISTRICT OF COLUMBIA--0.2%
- ----------------------------------------------------------
Washington, DC GO Series 100 3.10 VR 100,000
1992A-4 (LOC; Industrial
Bank of Japan, Ltd., NY)
- ----------------------------------------------------------
MICHIGAN--1.5%
- ----------------------------------------------------------
Michigan State Strategic 800 4.15 VR 800,000
Fund Ltd Series 1989
(Coil Center Corp.
Project) (LOC; Tokai
Bank, Ltd., NY)
- ----------------------------------------------------------
OHIO--0.4%
- ----------------------------------------------------------
Ohio Housing Finance 200 3.40 VR 200,000
Agency RB Single Family
Mortgage (LOC; Dai-Ichi
Kangyo Bank, Ltd.)
- ----------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,100,000) 1,100,000
- ----------------------------------------------------------
TOTAL INVESTMENTS (COST $52,488,411) 98.9% 52,822,054
OTHER ASSETS AND LIABILITIES-NET 1.1 595,115
- ----------------------------------------------------------
NET ASSETS 100.0% $53,417,169
==========================================================
COP--Certificates of Participation
GO--General Obligations
LOC--Letter of Credit
RB--Revenue Bonds
RFB--Refunding Bonds
RRB--Revenue Refunding Bonds
VR--Variable Rate Demand Notes are payable on demand at par on no more than
seven calendar days' notice given by the Fund to the issuer or other parties not
affiliated with the issuer. The interest rates are determined and reset by the
issuer daily or weekly. The interest rates presented for these securities are
those in effect as of August 31, 1994.

See accompanying notes to financial statements.

<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1994

- --------------------------------------------------------------------------------
ASSETS:
Investments at value (identified cost $52,488,411) $52,822,054
Cash 73,942
Interest receivable 736,718
Receivable for Fund shares sold 1,100
Unamortized organization expenses 16,510
Prepaid expenses 19,940
- --------------------------------------------------------------------------------
Total assets 53,670,264
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for Fund shares repurchased 170,749
Accrued expenses 38,446
Accrued advisory fees 13,455
Dividend payable in cash 30,445
- --------------------------------------------------------------------------------
Total liabilities 253,095
- --------------------------------------------------------------------------------
NET ASSETS:
Paid-in capital 53,232,212
Accumulated net realized loss on investment transactions (148,686)
Net unrealized appreciation of investments 333,643
- --------------------------------------------------------------------------------
Net assets $53,417,169
================================================================================
NET ASSET VALUE PER SHARE, based on 5,230,083
shares of beneficial interest outstanding
(unlimited shares authorized of $.0001 par value) $10.21
================================================================================

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1994
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $3,082,775

EXPENSES:
Advisory fee--net of $150,194 fee waiver $151,371
Custodian fee 52,047
Registration and filing fees 38,105
Transfer agent expense 33,433
Professional fees 27,267
Reports and notices to shareholders 15,926
Insurance expense 12,383
Amortization of organization expenses 8,823
Trustees' fees and expenses 4,377
Other 4,258
-------

Total expenses 347,990
- --------------------------------------------------------------------------------
Net investment income 2,734,785
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments (53,108)
Net decrease in unrealized appreciation of investments (1,837,704)
- --------------------------------------------------------------------------------
Net loss on investments (1,890,812)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 843,973
================================================================================
See accompanying notes to financial statements.

<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-------------------------------------
1994 1993
- ----------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C>
Net investment income $ 2,734,785 $ 2,961,980
Net realized gain (loss) on investments (53,108) 180,991
Net change in unrealized appreciation
of investments (1,837,704) 1,305,169
- -----------------------------------------------------------------------------------------------------------------
Net increase resulting from operations 843,973 4,448,140
- -----------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (2,734,785) (2,961,980)
From net realized gains on investment transactions (180,991) (15,779)
In excess of net realized gains on investment transactions (96,012) --
- -----------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (3,011,788) (2,977,759)
- -----------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS:
Proceeds from sale of shares 12,683,649 33,919,896
Net asset value of shares issued
on reinvestment of distributions 2,590,791 2,618,234
- -----------------------------------------------------------------------------------------------------------------
15,274,440 36,538,130
Cost of shares repurchased (26,296,640) (25,870,993)
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from Fund share transactions (11,022,200) 10,667,137
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets (13,190,015) 12,137,518
NET ASSETS:
Beginning of year 66,607,184 54,469,666
- -----------------------------------------------------------------------------------------------------------------
End of year $ 53,417,169 $ 66,607,184
=================================================================================================================
NUMBER OF FUND SHARES:
Sold 1,211,704 3,251,318
Issued on reinvestment of distributions 248,705 250,345
Repurchased (2,526,223) (2,479,120)
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) (1,065,814) 1,022,543
Outstanding at beginning of year 6,295,897 5,273,354
- -----------------------------------------------------------------------------------------------------------------
Outstanding at end of year 5,230,083 6,295,897
=================================================================================================================

</TABLE>
See accompanying notes to financial statements.
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS

NOTE 1--ORGANIZATION
Evergreen Short-Intermediate Municipal Fund (the "Fund") is a portfolio of The
Evergreen Municipal Trust (the "Trust"). The Trust was organized in the
Commonwealth of Massachusetts as a Massachusetts business trust on July 13,
1988. The Fund is registered under the Investment Company Act of 1940, as
amended (the "Act") as an open-end, diversified management investment company.
The Fund commenced investment operations July 17, 1991 as a non-diversified tax
exempt money market fund. On November 18, 1991, the Fund was changed to a
diversified municipal bond fund with a fluctuating net asset value per share.
The Fund invests substantially all of its assets in short and intermediate-term
municipal securities with a dollar weighted average portfolio maturity of two to
five years.

SECURITY VALUATION--Portfolio securities (other than short-term obligations
purchased with a remaining maturity of 60 days or less) are valued on the
basis of valuations provided by a pricing service when such prices are
believed to reflect the fair value of such securities. Short-term obligations
purchased with a remaining maturity of 60 days or less are valued at
amortized cost, which approximates market value.

FEDERAL INCOME TAXES--It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable and other income to its shareholders.
Therefore, no Federal income tax provision is required. During the year ended
August 31, 1994, the Fund distributed net realized gains for Federal income
tax purposes of $277,003 resulting in a distribution of $96,012 in excess of
net realized gains recognized for financial statement purposes. This excess
distribution is due to net realized losses on securities sold after October
31, 1993, in the amount of $148,686, which are deferred for Federal income
tax purposes.

UNAMORTIZED ORGANIZATION EXPENSES--The expenses of the Fund incurred in
connection with its organization and initial registration are being deferred
and amortized by the Fund over a period of benefit not to exceed 60 months
from the date the Fund commenced investment operations.

<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
NOTES TO FINANCIAL STATEMENTS (continued)

Fund. For the year ended August 31, 1994, the total advisory fee amounted to
$301,565 of which the Adviser voluntarily waived $150,194, resulting in a net
fee incurred by the Fund of $151,371. The Adviser may, at its discretion, revise
or cease this voluntary advisory fee waiver at any time.

The Adviser has agreed to reimburse the Fund to the extent that the Fund's
aggregate annual operating expenses (including the Adviser's fee and
amortization of organization expenses, but excluding interest, taxes, brokerage
commissions and extraordinary expenses) exceed 1.00% of its average daily net
assets for any fiscal year.

Lieber & Company is the investment sub-adviser to the Fund. Lieber & Company is
reimbursed by the Adviser, at no additional expense to the Fund, for its cost of
providing investment advisory services to the adviser. Evergreen Funds
Distributor, Inc. (the "Distributor"), a subsidiary of Furman Selz Incorporated,
is the distributor of the Fund's shares and provides personnel to serve as
officers of the Trust. For its services, the Distributor is paid an annual fee
by the Adviser. No portion of this fee is borne by the Fund.

NOTE 4--PORTFOLIO TRANSACTIONS
Cost of purchases and proceeds from sales of investments, other than short-term
obligations, aggregated $18,808,313 and $30,553,077 respectively, for the year
ended August 31, 1994. The aggregate cost of investments owned at August 31,
1994, is the same for financial statement and Federal income tax purposes. Gross
unrealized appreciation and depreciation of securities at August 31, 1994, was
$585,242 and $251,599, respectively.

NOTE 5--CONCENTRATION OF CREDIT RISK
The Fund invests in obligations issued by states, territories and possessions of
the United States and by the District of Columbia, and by their political
subdivisions and duly constituted authorities. The issuers' abilities to meet
their obligations may be affected by economic and political developments in a
specific state or region. Certain debt obligations held in the Fund's portfolio
may be entitled to the benefit of standby letters of credit or other guarantees
of banks or other financial institutions.
<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>

JULY 17, 1991*
YEAR ENDED AUGUST 31, THROUGH
--------------------------------------------
PER SHARE DATA 1994 1993 1992+ AUGUST 31, 1991+
- --------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
Net asset value, beginning of year $10.58 $10.33 $10.00 $10.00
- --------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .47 .49 .51 .06
Net realized and unrealized gain (loss)
on investments (.32) .25 .33 --
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations .15 .74 .84 .06
- --------------------------------------------------------------------------------------------------------------------
Less distributions to shareholders:
From net investment income (.47) (.49) (.51) (.06)
From net realized gains (.03) -- -- --
In excess of net realized gains (.02) -- -- --
- --------------------------------------------------------------------------------------------------------------------
Total distributions (.52) (.49) (.51) (.06)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $10.21 $10.58 $10.33 $10.00
====================================================================================================================
TOTAL RETURN 1.4% 7.4% 8.6% .6%++
RATIOS & SUPPLEMENTAL DATA
Net assets, end of year
(000's omitted) $53,417 $66,607 $54,470 $4,025
Ratios to average net assets:
Expenses .58%(a) .40%(b) .17%(c) 0%(d)
Net investment income 4.54%(a) 4.73%(b) 4.85%(c) 4.93%(d)
Portfolio turnover rate 32% 37% 57% --
====================================================================================================================
</TABLE>

* Commencement of operations.
+ On November 18, 1991, the Fund was changed to a diversified municipal bond
fund with a fluctuating net asset value per share from a non-diversified
money market fund with a stable net asset value per share. The shares
outstanding at August 31, 1991 and the related per share data are restated
to reflect both a 1 for 2 reverse share split on October 30, 1991 and a 1
for 5 reverse share split on August 19, 1992. Total return calculated after
November 18, 1991 reflects the fluctuation in net asset value per share.
++ Total return is calculated for the period July 17, 1991 through August 31,
1991 is not annualized.
(a) Net of partial advisory fee waiver of .25 of 1.00% of daily net assets.
(b) Net of partial advisory fee waiver of .41 of 1.00% of daily net assets.
(c) Net of partial advisory fee waiver of .46 of 1.00% of daily net assets and
the absorption of a portion of all other Fund expenses by the Adviser equal
to .23% of average daily net assets.
(d) Annualized and net of full advisory fee waiver of .50 of 1.00% of daily net
assets and the absorption of all other Fund expenses by the Adviser equal to
.90% of average daily net assets.

See accompanying notes to financial statements.
<PAGE>

- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Shareholders
of Evergreen Short-Intermediate Municipal 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 Short-Intermediate
Municipal Fund (the "Fund"), constituting one of The Evergreen Municipal Trust
portfolios, at August 31, 1994, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the three years in the
period then ended and for the period July 17, 1991 (commencement of operations)
through August 31, 1991, 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, 1994 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
October 17, 1994

- --------------------------------------------------------------------------------

FEDERAL INCOME TAX STATUS OF
DISTRIBUTIONS (UNAUDITED)

During the year ended August 31, 1994, the Evergreen Short-Intermediate
Municipal Fund paid distributions from net investment income aggregating
$.4719 per share. For Federal income tax purposes these distributions
represent tax-exempt interest which is 100% exempt from all Federal income
taxes other than the alternative minimum tax. On December 31, 1993, the Fund
paid a distribution from net realized gains of $.0465 per share comprised of
$.0251 short-term gains which, is considered ordinary income for Federal
income tax purposes and $.0214 long-term capital gains.

- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
EVERGREEN FAMILY OF FUNDS

GROWTH FUNDS ____________________________________

EVERGREEN FUND seeks capital appreciation by investing in securities of little
known or relatively small companies and companies with entrepreneurial
management.

GLOBAL REAL ESTATE EQUITY FUND seeks capital appreciation by investing in
securities of companies involved in various aspects of the real estate industry
throughout the world.

LIMITED MARKET FUND seeks capital appreciation by investing in securities of
little-known, small or special situation companies.

GROWTH & INCOME FUNDS _________________________

AMERICAN RETIREMENT FUND seeks conservation of capital, reasonable income and
capital growth by investing in a diversified and balanced portfolio of equity
and fixed income securities.

EVERGREEN FOUNDATION FUND seeks reasonable income, conservation of capital and
growth by investing in common and preferred stocks, convertibles and fixed
income securities.

SMALL CAP EQUITY INCOME FUND seeks a return consisting of current income and
capital appreciation by investing primarily in companies with market
capitalizations of less than $500 million.

GROWTH & INCOME FUNDS (continued)

INCOME FUND _____________________________________

TAX-FREE FUNDS___________________________________

NATIONAL TAX-FREE FUND seeks a high level of current income, exempt from Federal
income tax, by investing at least 80% of its portfolio in insured long-term
municipal securities.

MONEY MARKET FUNDS _________________________

MONEY MARKET TRUST seeks as high a level of current income as is consistent with
preserving capital and providing liquidity.

TAX EXEMPT MONEY MARKET FUND seeks as high a level of current income exempt from
Federal income taxes as is consistent with preserving capital and providing
liquidity.

THE PROSPECTUS(ES) CONTAIN MORE COMPLETE INFORMATION AND SHOULD BE READ
CAREFULLY PRIOR TO INVESTING.

<PAGE>

- --------------------------------------------------------------------------------

TRUSTEES
Laurence B. Ashkin
Foster Bam
James S. Howell
Robert J. Jeffries
Gerald M. McDonnell
Thomas L. McVerry
William Walt Pettit
Russell A. Salton, III, M.D.
Michael S. Scofield
Ben Weberman

INVESTMENT ADVISER
Evergreen Asset Management Corp.
2500 Westchester Avenue
Purchase, New York 10577

CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company

LEGAL COUNSEL
Shereff, Friedman, Hoffman & Goodman

INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP

DISTRIBUTOR
Evergreen Funds Distributor, Inc.

The investment adviser to the Evergreen Funds is Evergreen Asset Management
Corp., which is wholly owned by First Union National Bank of North
Carolina. Investments in the Evergreen Funds are not endorsed or guaranteed
by First Union, are not deposits or other obligations of First Union, are
not insured or otherwise protected by the U.S. government, the FDIC or any
other government agency, and involve investment risks, including possible
loss of principal.

The Evergreen Funds are sponsored and distributed by Evergreen Funds
Distributor, Inc., which is independent of Evergreen and First Union.

EVERGREEN SHORT-INTERMEDIATE MUNICIPAL FUND
2500 Westchester Avenue
Purchase, New York 10577

<PAGE>

Evergreen
National
Tax-Free Fund

- ------------------------
Annual Report
August 31, 1994

The Evergreen Funds [LOGO]

<PAGE>

Dear Fellow Shareholder: August 31, 1994

In this, our second annual report for Evergreen National Tax-Free Fund, we
stand in stark contrast to our report of one year ago when we reported on a
weakened economy and declining interest rates. As evidenced by the Federal
Reserve's five increases in short-term interest rates year-to-date, the national
economy appears to have rebounded during 1994 with gains in employment,
industrial production and housing that have set the fixed-income markets on
their heels. In September of 1993, long-term U.S. Treasuries were yielding
6.00%, as compared to current long-term U.S. Treasuries at 7.70%. Similarly,
30-year insured municipals yielding 5.25% in September 1993, are currently
yielding 6.30% or higher. Although insured municipals performed better than
long-term treasuries during this period, the resulting impact upon the
performance of the Fund was still, of course, to the negative. The details are
as follows: As of the date of this writing, the Fund's 30-day annualized yield
is 5.20% producing a taxable-equivalent yield of 8.12%* for investors in the 36%
Federal marginal tax bracket. The Fund's cumulative total return for the
calendar year-to-date is -4.47%**, with the 12-month total return at -2.29%.
Since its inception on December 30, 1992, the Fund's average annual compounded
rate of return through August 31, 1994, is +6.33%.

As of August 31, 85% of the Fund's investments were in securities that are
insured as to payment of principal and interest, which produced an Aaa weighted
average credit quality rating for the Fund's securities. While insurance on the
Fund's securities does not remove market risks, it does reduce the risk of
default on the Fund's investments. Our weighted average maturity of 14.2 years
and duration of 8.4 years are significantly below levels of one year ago,
reflecting our concern about rising rates and our desire to preserve principal
during this period of market volatility.

Since there is a decided bias toward higher interest rates going forward,
the strategy employed these past eight months, to reduce exposure to interest
rate risk, remains in place. So that the Fund may continue to seek to protect
principal, we will sacrifice some yield until such time as the economy shows
signs of weakening or the Federal Reserve signals an end to inflation fears.
Further, it is important to note that great value remains in the tax-free market
place relative to taxable investments. After tax, you would still have to assume
more rate risk (longer maturities) and credit risk (lower quality) to equal or
better your returns versus that of long-term tax-free funds. Finally, municipal
issuance is down 40% from 1993, which has meant stronger price performance
relative to most fixed-income securities, despite the rise in rates. We will
continue to be vigilant in our attempt to not only maximize the Fund's returns
but also guard against any further erosion due to volatile market activities.

We thank you for investing in Evergreen National Tax-Free Fund and look
forward to serving your continued investment needs.

Sincerely,

/s/ Stephen A. Lieber /s/ James T. Colby, III
Stephen A. Lieber James T. Colby, III
Chairman Portfolio Manager
Evergreen Asset
Management Corp.

- -----------------------------------

Figures represent past performance which does not guarantee future results.

* Currently, the Adviser is waiving a portion of its advisory fee. Had this fee
not been waived, the Fund's 30-day annualized and tax-equivalent yields would
have been 4.81% and 7.52%, respectively, and returns would have been lower. Fee
waivers may be revised at any time.

The tax-equivalent yield would be lower for investors in lower tax brackets.

** Performance figures include reinvestment of income dividend and capital gain
distributions, if any.

The Fund's return, net asset value and yield will fluctuate and there can be no
guarantee that the Fund will achieve its objective or any particular tax exempt
yield. Shares, when redeemed may be worth more or less than their original cost.

Income may be subject to some state and local taxes, and the Federal alternative
minimum tax for certain investors.

<PAGE>

Evergreen National Tax-Free Fund
Statement of Investments
August 31, 1994

- --------------------------------------------------------------------------------
Par Interest Maturity
Issue (000) Rate Date Value
- --------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--87.1%
- --------------------------------------------------------------------------------
ALASKA--1.2%
- --------------------------------------------------------------------------------
Municipality of $ 500 6.20% 12/01/13 $ 502,275
Anchorage Senior
Lien Electric Series
1993 RRB (MBIA)
- --------------------------------------------------------------------------------
ARKANSAS--2.4%
- --------------------------------------------------------------------------------
Beaver Water District 1,000 5.75 11/15/07 1,010,670
of Benton and
Washington
Counties RRB
Series 1994 (MBIA)
- --------------------------------------------------------------------------------
CALIFORNIA--11.6%
- --------------------------------------------------------------------------------
City and County of 1,000 6.75 05/01/13 1,052,700
San Francisco
Airports Commission,
San Francisco
International Airport
RRB Second Series
Issue 2 Bonds
(MBIA)
- --------------------------------------------------------------------------------
City of Fresno Sewer 1,500 6.25 09/01/14 1,539,780
System Series
1993A RB (AMBAC)
- --------------------------------------------------------------------------------
Redevelopment 750 6.00 08/01/15 741,150
Agency of the City 1,000 6.00 08/01/08 1,018,860
of San Jose Merged
Area Redevelopment
Project Tax
Allocation Bonds
Series 1993 (MBIA)
- --------------------------------------------------------------------------------
San Mateo County 500 6.50 07/01/16 523,895
Joint Powers
Financing Authority
Lease (Capital
Projects Program)
Series 1993A RRB
(MBIA)
- --------------------------------------------------------------------------------
4,876,385
- --------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--1.1%
- --------------------------------------------------------------------------------
Metropolitan 500 5.75 10/01/20 462,570
Washington Airports
Authority Airports
System RB Series
1994A (MBIA)
- --------------------------------------------------------------------------------
FLORIDA--1.1%
- --------------------------------------------------------------------------------
Orlando-Orange 500 5.50 07/01/18 457,245
County Expressway
Authority Senior
Lien Series 1993
RRB (FGIC)
- --------------------------------------------------------------------------------
Par Interest Maturity
Issue (000) Rate Date Value
- --------------------------------------------------------------------------------
GEORGIA--2.5%
- --------------------------------------------------------------------------------
City of Atlanta Airport $ 500 6.50% 01/01/10 $ 529,420
Facilities Series
1994A RRB
(AMBAC)
- --------------------------------------------------------------------------------
Municipal Electric 500 6.40 01/01/13 522,570
Authority of Georgia
Project One Special
Obligation Bonds,
Fifth Crossover
Series (AMBAC)
- --------------------------------------------------------------------------------
1,051,990
- --------------------------------------------------------------------------------
HAWAII--3.2%
- --------------------------------------------------------------------------------
Hawaii State Airport 1,250 7.50 07/01/20 1,362,563
Systems Second
Series 1990 RB
(FGIC)
- --------------------------------------------------------------------------------
IDAHO--2.4%
- --------------------------------------------------------------------------------
Idaho Housing Agency 1,000 6.30 07/01/11 1,003,200
Single Family
Mortgage Bonds
Series 1994C-1
Term Mezzanine
Bonds
- --------------------------------------------------------------------------------
ILLINOIS--4.2%
- --------------------------------------------------------------------------------
City of Chicago Water 1,250 6.50 11/01/15 1,302,775
Series 1993 RRB
(FGIC)
- --------------------------------------------------------------------------------
Illinois State University 500 5.75 04/01/14 470,875
Board of Regents
(Auxiliary Facilities
System) Series
1993 RRB (MBIA)
- --------------------------------------------------------------------------------
1,773,650
- --------------------------------------------------------------------------------
INDIANA--2.8%
- --------------------------------------------------------------------------------
Indiana Health 500 5.875 08/01/13 479,865
Facilities Finance
Authority Hospital
(Lafayette Home
Hospital) Series
1993 RRB (MBIA)
- --------------------------------------------------------------------------------
Indianapolis Airport 750 5.875 01/01/13 713,197
Authority Series
1993 RB (MBIA)
- --------------------------------------------------------------------------------
1,193,062
- --------------------------------------------------------------------------------
IOWA--1.2%
- --------------------------------------------------------------------------------
City of Iowa City, 500 6.00 07/01/12 499,950
Johnson County
Sewer Series 1993
RB (AMBAC)
- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
Par Interest Maturity
Issue (000) Rate Date Value
- --------------------------------------------------------------------------------
MAINE--2.7%
- --------------------------------------------------------------------------------
Maine Turnpike $1,000 7.125% 07/01/08 $1,129,850
Authority Turnpike
RB Series 1994
(MBIA)
- --------------------------------------------------------------------------------
MARYLAND--1.2%
- --------------------------------------------------------------------------------
Community 500 5.70 04/01/17 498,710
Development
Administration
Department of
Housing and
Community Single
Family Program
Bonds, First Series
1994
- --------------------------------------------------------------------------------
MASSACHUSETTS--8.0%
- --------------------------------------------------------------------------------
Massachusetts 1,000 6.00 07/01/11 1,001,360
Municipal Wholesale
Electric
Company Series
1992E RB (MBIA)
- --------------------------------------------------------------------------------
Massachusetts 1,100 6.15 10/01/15 1,092,212
Housing Finance
Agency Housing
Project Series
1993A RB (AMBAC)
- --------------------------------------------------------------------------------
Massachusetts 250 6.60 07/01/14 253,245
Housing Finance
Agency Insured
Rental Housing
Bonds, Series
1994A (AMBAC)
- --------------------------------------------------------------------------------
Massachusetts 500 6.30 07/01/13 507,720
Industrial Finance
Agency (Mt.
Holyoke College)
RRB (MBIA)
- --------------------------------------------------------------------------------
Massachusetts State 500 6.25 07/01/20 500,725
Health & Educational
Facilities
Authority Series
1992F (Massachusetts
General
Hospital Project)
RB (AMBAC)
- --------------------------------------------------------------------------------
3,355,262
- --------------------------------------------------------------------------------
MICHIGAN--3.6%
- --------------------------------------------------------------------------------
City of Detroit Water 1,000 6.50 07/01/15 1,051,560
Supply System
Series 1993 RRB
(FGIC)
- --------------------------------------------------------------------------------
Par Interest Maturity
Issue (000) Rate Date Value
- --------------------------------------------------------------------------------
MICHIGAN--continued
- --------------------------------------------------------------------------------
City of Grand Haven $ 510 5.25% 07/01/13 $ 460,214
Electric System
Series 1993 RRB
(MBIA)
- --------------------------------------------------------------------------------
1,511,774
- --------------------------------------------------------------------------------
MINNESOTA--2.4%
- --------------------------------------------------------------------------------
Minnesota Housing 1,000 6.70 01/01/18 1,030,290
Finance Agency
Single Family
Mortgage Bonds
Series 1994H
- --------------------------------------------------------------------------------
NEVADA--4.1%
- --------------------------------------------------------------------------------
City of Henderson 500 5.60 05/01/13 467,040
Series 1993A GO
(FGIC)
- --------------------------------------------------------------------------------
City of Henderson 500 6.375 12/01/14 508,020
Water Bonds Series
1993A GO
(AMBAC)
- --------------------------------------------------------------------------------
Washoe County, 750 6.30 12/01/14 751,800
Nevada Gas &
Water Facilities
(Sierra Pacific)
Series 1987 RRB
(AMBAC)
- --------------------------------------------------------------------------------
1,726,860
- --------------------------------------------------------------------------------
NEW HAMPSHIRE--0.6%
- --------------------------------------------------------------------------------
New Hampshire State 250 5.95 07/01/13 236,455
Housing Finance
Authority Single
Family Mortgage
Series 1993B RRB
- --------------------------------------------------------------------------------
NEW JERSEY--3.0%
- --------------------------------------------------------------------------------
New Jersey Health 300 5.75 07/01/14 286,656
Care Facilities
Finance Authority
(St. Clares-
Riverside Medical
Center Obligated
Group Issue) Series
1994 RB (MBIA)
- --------------------------------------------------------------------------------
New Jersey Housing 1,000 6.30 04/01/25 999,920
& Mortgage Finance
Agency Home
Buyer Series
1990F-2 RB (MBIA)
- --------------------------------------------------------------------------------
1,286,576
- --------------------------------------------------------------------------------

<PAGE>

Evergreen National Tax-Free Fund
Statement of Investments (continued)
August 31, 1994

- --------------------------------------------------------------------------------
Par Interest Maturity
Issue (000) Rate Date Value
- --------------------------------------------------------------------------------
NEW MEXICO--1.2%
- --------------------------------------------------------------------------------
City of Farmington $ 500 6.375% 12/15/22 $ 503,495
Pollution Control
(Public Service Co.
of New Mexico)
Series 1992A RRB
(AMBAC)
- --------------------------------------------------------------------------------
NEW YORK--5.4%
- --------------------------------------------------------------------------------
New York State 1,000 7.75 01/01/24 1,072,180
Energy Reserve &
Development
Authority Electric
Facilities Series
1989A RB
(Consolidated Edison
Company of New
York, Inc. Project)
- --------------------------------------------------------------------------------
Westchester County, 1,225 5.75 07/01/09 1,216,425
Industrial Development
Agency Resource Recovery
Bonds (Westchester
Resco Company
Project) Series
1994A RRB
(AMBAC)
- --------------------------------------------------------------------------------
2,288,605
- --------------------------------------------------------------------------------
OHIO--2.4%
- --------------------------------------------------------------------------------
Ohio Housing Finance 270 6.10 09/01/14 266,620
Agency Residential
Mortgage (GNMA
Mortgage-Backed
Securities Program)
Series 1994A-1 RB
- --------------------------------------------------------------------------------
Ohio Water Development 750 6.00 12/01/16 749,910
Authority Water
Development RRB
1992 Clean Water
Refunding Bonds
(MBIA)
- --------------------------------------------------------------------------------
1,016,530
- --------------------------------------------------------------------------------
OKLAHOMA--1.5%
- --------------------------------------------------------------------------------
Tulsa Industrial 645 5.75 02/15/05 650,521
Authority Hospital
(St. John's Medical
Center Project) RB
Series 1994
- --------------------------------------------------------------------------------
PENNSYLVANIA--3.7%
- --------------------------------------------------------------------------------
Pennsylvania Industrial 500 7.00 01/01/07 554,150
Development
Authority RB Series
1994 (AMBAC)
- --------------------------------------------------------------------------------
Pennsylvania Turnpike 1,000 5.80 12/01/07 1,009,900
Commission Series
1992P RB (MBIA)
- --------------------------------------------------------------------------------
1,564,050
- --------------------------------------------------------------------------------
Par Interest Maturity
Issue (000) Rate Date Value
- --------------------------------------------------------------------------------
TEXAS--2.8%
- --------------------------------------------------------------------------------
City of Houston Water $1,000 7.50% 12/15/14 $ 1,168,000
Conveyance
Systems Contract
Series 1993H COP
(AMBAC)
- --------------------------------------------------------------------------------
VIRGINIA--1.6%
- --------------------------------------------------------------------------------
Fairfax County, Public 250 5.50 10/01/03 256,067
Improvement Series
1992C RB
- --------------------------------------------------------------------------------
County of Roanoke 500 5.00 07/01/21 418,000
Water System
Series 1993 RRB
(FGIC)
- --------------------------------------------------------------------------------
674,067
- --------------------------------------------------------------------------------
WASHINGTON--7.4%
- --------------------------------------------------------------------------------
Tacoma, Washington
Electric System
Series 1992A RRB 500 6.25 01/01/11 504,865
(AMBAC)
Series 1992B RRB 500 6.15 01/01/08 508,460
(AMBAC)
- --------------------------------------------------------------------------------
Washington Health 1,000 6.25 10/01/18 976,820
Care Facilities
Authority Series
1992 RB (The
Children's Hospital
and Medical Center,
Seattle) (FGIC)
- --------------------------------------------------------------------------------
Washington State 1,000 7.125 07/01/16 1,121,360
Public Power
Supply System
Series 1989B
(Nuclear Project
No. 3) RRB (MBIA)
- --------------------------------------------------------------------------------
3,111,505
- --------------------------------------------------------------------------------
WISCONSIN--1.8%
- --------------------------------------------------------------------------------
Wisconsin Housing & 500 6.875 09/01/24 502,945
Economic Development
Authority
Home Ownership
Series 1992 RRB
- --------------------------------------------------------------------------------
Wisconsin Health & 250 5.875 10/01/13 236,688
Education Facilities
Authority Series
1994A RB
(Froedtert Memorial
Lutheran Hospital,
Inc.) (MBIA)
- --------------------------------------------------------------------------------
739,633
- --------------------------------------------------------------------------------
Total Long-Term Investments
(Cost $37,377,070) 36,685,743
- --------------------------------------------------------------------------------

<PAGE>

COP--Certificates of Participation

GO--General Obligations

LOC--Letter of Credit

RB--Revenue Bonds

RRB--Revenue Refunding Bonds

VR--Variable Rate Demand Notes are payable on demand at par on no more than
seven calendar days' notice given by the Fund to the issuer or other parties not
affiliated with the issuer. Interest rates are determined and reset by the
issuer daily or weekly. Interest rates presented for these securities are those
in effect at August 31, 1994.

++ At August 31, 1994, the percentage breakdown of total investments which are
insured by municipal bond insurance companies are as follows:

AMBAC--American Municipal Bond Assurance Corp. 26%
FGIC--Financial Guaranty Insurance Corp. 24
MBIA--Municipal Bond Insurance Association 35
--
% of Total Investments Insured 85%
==

<PAGE>

Evergreen National Tax-Free Fund
Statement of Assets and Liabilities
August 31, 1994

<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Assets:
Investments at value (identified cost $41,977,070) $41,285,743
Cash 70,422
Receivable for investment securities sold 1,017,308
Receivable for Fund shares sold 12,000
Interest receivable 554,480
Unamortized organization expenses 31,316
Prepaid expenses 13,709
- ---------------------------------------------------------------------------------------------------------------------
Total assets 42,984,978
- ---------------------------------------------------------------------------------------------------------------------
Liabilities:
Payable for investment securities purchased 773,449
Payable for Fund shares repurchased 5,054
Accrued advisory fees 4,805
Accrued expenses 37,127
Dividend payable in cash 21,210
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities 841,645
- ---------------------------------------------------------------------------------------------------------------------
Net assets:
Paid-in capital 44,080,537
Accumulated net realized loss on investment transactions (1,245,877)
Net unrealized depreciation of investments (691,327)
- ---------------------------------------------------------------------------------------------------------------------
Net assets $42,143,333
=====================================================================================================================
Net asset value per share, based on 4,216,459 shares of beneficial interest
outstanding (unlimited shares authorized of $.0001 par value) $9.99
=====================================================================================================================
</TABLE>

<TABLE>
Statement of Operations
For the Year Ended August 31, 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment income:
Interest $ 2,109,228
Expenses:
Custodian fee $ 44,432
Registration and filing fees 25,523
Professional fees 24,619
Transfer agent expense 21,795
Reports and notices to shareholders 14,583
Amortization of organization expenses 9,400
Insurance expense 6,486
Advisory fee--net of $190,396 fee waiver 6,413
Trustees' fees and expenses 3,620
Other 2,343
-------
159,214
Less-expense reimbursement (45,680)
-------
Total expenses 113,534
- ---------------------------------------------------------------------------------------------------------------------
Net investment income 1,995,694
- ---------------------------------------------------------------------------------------------------------------------
Net realized and unrealized loss on investments:
Net realized loss on investments (1,159,204)
Net change in unrealized appreciation (depreciation) of investments (1,935,794)
- ---------------------------------------------------------------------------------------------------------------------
Net loss on investments (3,094,998)
- ---------------------------------------------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(1,099,304)
=====================================================================================================================
</TABLE>

See accompanying notes to financial statements.

<PAGE>

Evergreen National Tax-Free Fund
Statement of Changes in Net Assets

<TABLE>
<CAPTION>
For the Period
December 30, 1992*
Year Ended through
August 31, 1994 August 31, 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 1,995,694 $ 799,883
Net realized gain (loss) on investments (1,159,204) 494,382
Net change in unrealized appreciation
(depreciation) of investments (1,935,794) 1,244,467
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from operations (1,099,304) 2,538,732
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income (1,995,694) (799,883)
From net realized gains on investment transactions (494,382) --
In excess of net realized gains on investment transactions (86,673) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders (2,576,749) (799,883)
- ------------------------------------------------------------------------------------------------------------------------------------
Fund share transactions:
Proceeds from sale of shares 29,696,495 33,316,196
Net asset value of shares issued on reinvestment of distributions 2,424,612 780,126
- ------------------------------------------------------------------------------------------------------------------------------------
32,121,107 34,096,322
Cost of shares repurchased (19,386,827) (2,750,075)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase resulting from Fund share transactions 12,734,280 31,346,247
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 9,058,227 33,085,096
Net assets:
Beginning of year 33,085,106 10
- ------------------------------------------------------------------------------------------------------------------------------------
End of year $ 42,143,333 $ 33,085,106
====================================================================================================================================
Number of Fund shares:
Sold 2,815,233 3,212,540
Issued on reinvestment of distributions 231,806 73,620
Repurchased (1,860,323) (256,418)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase 1,186,716 3,029,742
Outstanding at beginning of year 3,029,743 1
- ------------------------------------------------------------------------------------------------------------------------------------
Outstanding at end of year 4,216,459 3,029,743
====================================================================================================================================
</TABLE>

* Commencement of operations.

See accompanying notes to financial statements.

<PAGE>

Evergreen National Tax-Free Fund
Notes to Financial Statements

Note 1--Organization

Evergreen National Tax-Free Fund (formerly Evergreen Insured National Tax-Free
Fund) (the "Fund") is a portfolio of The Evergreen Municipal Trust (the
"Trust"). The Trust was organized in the Commonwealth of Massachusetts as a
Massachusetts business trust on July 13, 1988. The Fund is registered under the
Investment Company Act of 1940, as amended (the "Act") as an open-end,
diversified management investment company and commenced investment operations on
December 30, 1992.

Note 2--Significant Accounting Policies

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.

Security Valuation--Portfolio securities (other than short-term obligations
purchased with a remaining maturity of 60 days or less) are valued on the
basis of valuations provided by a pricing service when such prices are
believed to reflect the fair value of such securities. Short-term
obligations purchased with a remaining maturity of 60 days or less are
valued at amortized cost, which approximates market value.

Securities Transactions and Investment Income--Securities transactions are
recorded on the trade date (the date the order to buy or sell is executed).
Interest income, including the accretion or amortization of discount and
premium, is recognized on the accrual basis.

Distributions to Shareholders--The Fund declares substantially all of its
net investment income as dividends each business day to shareholders of
record. At the end of each month, such dividends are either reinvested in
Fund shares and credited to the shareholder's account or, if elected by the
shareholder, paid in cash. Distributions of net realized capital gains (if
any) will be made at least annually.

Federal Income Taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable and other income
to its shareholders. Therefore, no Federal income tax provision is
required. During the year ended August 31, 1994, the Fund distributed net
realized gains for Federal income tax purposes of $581,055 resulting in a
distribution of $86,673 in excess of net realized gains recognized for
financial statement purposes. This excess distribution is due to net
realized losses on securities sold after October 31, 1993, in the amount of
$1,246,378, which are deferred for Federal income tax purposes.

Unamortized Organization Expenses--The expenses of the Fund incurred in
connection with its organization and initial registration are being
deferred and amortized by the Fund over a period of benefit not to exceed
60 months from the date the Fund commenced investment operations.

Other--Expenses incurred directly by the Fund in connection with its
operations are charged to the Fund. Expenses common to the Trust as a
whole, including the compensation of all non-affiliated trustees of the
Trust, are primarily allocated to the funds in the Trust in proportion to
net assets.

Note 3--Advisory Fee and Related Party
Transactions

The Adviser has agreed to reimburse the Fund to the extent that the Fund's
aggregate annual operating expenses (including the Adviser's fee and
amortization of organization expenses, but excluding interest, taxes, brokerage
commissions and extraordinary expenses) exceed 1.25% of its average daily net
assets for any fiscal year.

For the year ended August 31, 1994, the Adviser waived a portion of its advisory
fee totalling $190,396. Additionally, the Adviser voluntarily reimbursed the

<PAGE>

Fund for certain of its expenses in the amount of $45,680 representing .12% of
average net assets. The Adviser ceased this voluntary expense reimbursement on
May 23, 1994. The Adviser may, at its discretion, revise or cease voluntary
Advisory fee waivers and expense reimbursements at any time.

Note 4--Portfolio Transactions

Cost of purchases and proceeds from sales of investments, other than short-term
obligations, aggregated $56,185,153 and $49,328,814 respectively, for the year
ended August 31, 1994.

The aggregate cost of investments owned at August 31, 1994, is the same for
financial statement and Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities at August 31, 1994, was $152,543 and
$843,870 respectively.

Note 5--Concentration of Credit Risk

The Fund invests in obligations issued by states, territories and possessions of
the United States and by the District of Columbia, and by their political
subdivisions and duly constituted authorities. The issuers' abilities to meet
their obligations may be affected by economic and political developments in a
specific state or region. The Fund intends to invest at least 80% of its total
assets in obligations that, at the time of purchase, are insured as to the
payment of interest and principal. Certain debt obligations held in the Fund's
portfolio may be entitled to the benefit of standby letters of credit or other
guarantees of banks or other financial institutions.

- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>

December 30, 1992*
Year Ended through
Per Share Data August 31, 1994 August 31, 1993
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of year $10.92 $10.00
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .53 .40
Net realized and unrealized gain (loss) on investments (.77) .92
- ---------------------------------------------------------------------------------------------------------------------
Total from investment operations (.24) 1.32
- ---------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income (.53) (.40)
From net realized gains (.14) --
In excess of net realized gains (.02) --
- ---------------------------------------------------------------------------------------------------------------------
Total distributions (.69) (.40)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 9.99 $10.92
=====================================================================================================================
Total return (2.3)% 13.5%+
Ratios & Supplemental Data
Net assets, end of year (000's omitted) $42,143 $33,085
Ratios to average net assets:
Expenses .29%(a) 0%(b)
Net investment income 5.07%(a) 5.51%(b)
Portfolio turnover rate 135% 166%
=====================================================================================================================
</TABLE>

* Commencement of operations.
(a) Net of partial advisory fee waiver of .48 of 1.00% of daily net assets and
the absorption of a portion of all other Fund expenses by the Adviser equal
to .12% of average daily net assets.
(b) Annualized and net of full advisory fee waiver of .50 of 1.00% of daily net
assets and the absorption of all other Fund expenses by the Adviser equal
to .42% of average daily net assets.
+ Total return is calculated for the period December 30, 1992 through August
31, 1993 is not annualized. See accompanying notes to financial statements.

See accompanying notes to financial statements.

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Shareholders
of Evergreen National Tax-Free 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 National Tax-Free Fund
(the "Fund"), formerly Evergreen Insured National Tax-Free Fund, constituting
one of The Evergreen Municipal Trust portfolios, at August 31, 1994, the results
of its operations for the year then ended and the changes in its net assets and
the financial highlights for the year then ended and for the period December 30,
1992 (commencement of operations) through August 31, 1993, 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, 1994 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.

PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
October 17, 1994

- --------------------------------------------------------------------------------
FEDERAL INCOME TAX STATUS OF
DISTRIBUTIONS (UNAUDITED)

During the year ended August 31, 1994, the Evergreen National Tax-Free Fund
paid distributions from net investment income aggregating $.5290 per share.
For Federal income tax purposes these distributions represent tax-exempt
interest which is 100% exempt from all Federal income taxes other than the
alternative minimum tax. On December 31, 1993, the Fund paid a net short-term
gain distribution of $.1639 per share, which, for Federal income tax purposes
is taxable as ordinary income.
- --------------------------------------------------------------------------------

<PAGE>

TRUSTEES
Laurence B. Ashkin
Foster Bam
James S. Howell
Robert J. Jeffries
Gerald M. McDonnell
Thomas L. McVerry
William Walt Pettit
Russell A. Salton, III, M.D.
Michael S. Scofield
Ben Weberman

INVESTMENT ADVISER
Evergreen Asset Management Corp.
2500 Westchester Avenue
Purchase, New York 10577

CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company

LEGAL COUNSEL
Shereff, Friedman, Hoffman & Goodman

INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP

DISTRIBUTOR
Evergreen Funds Distributor, Inc.

The Evergreen Funds are sponsored and distributed by Evergreen Funds
Distributor, Inc., which is independent of Evergreen and First Union.

Evergreen National Tax-Free Fund
2500 Westchester Avenue
Purchase, New York 10577

- --------------------------------------------------------------------------------

Evergreen
Tax Exempt
Money Market
Fund

---------------------------------------------------

Annual Report
August 31, 1994

The Evergreen Funds [Logo]

<PAGE>

- --------------------------------------------------------------------------------

Dear Fellow Shareholder: September 19, 1994

We are pleased to bring you the sixth annual report for Evergreen Tax
Exempt Money Market Fund. The Fund's annual yield for the fiscal year ended
August 31, 1994, was 2.49%*. The taxable-equivalent yield for investors in the
36% marginal Federal tax bracket was 3.89%. The Fund's average annual compounded
rates of return for the one and five-year periods and the period since the
Fund's inception on November 2, 1988, through August 31, 1994, were +2.50%,
+4.08% and +4.44%, respectively. As of August 31, the Fund's 7-day current and
effective (compound) yields were 2.87% and 2.91%, respectively*.

Evergreen Tax Exempt Money Market Fund continues to strive to meet its
objective of providing investors with as high a level of tax-free income as is
consistent with capital preservation and the maintenance of daily liquidity. The
chart below compares the Fund's monthly yields for the past six months to
Donoghue's average for all stockbroker and general purpose tax-free money market
funds.

Average Monthly Yields

Evergreen Donoghue's
Tax Exempt Tax-Free
Money Market Money Market
Month Fund** Average+
- --------------------------------------------------------------------------------
March .............................. 2.33% 1.80%
April .............................. 2.52% 1.95%
May ................................ 2.68% 2.27%
June ............................... 2.48% 2.10%
July ............................... 2.30% 2.08%
August ............................. 2.68% 2.38%

During the period under review, Evergreen Tax Exempt Money Market Fund
continued to receive national recognition for its consistently superior
performance. The Fund was ranked #4 among all 120 tax exempt money market funds
tracked by Lipper Analytical Services++ based on its twelve-month total return
through August 31, 1994. In addition, Lipper ranked the Fund #2 among 84 tax
exempt money market funds for its five-year average annual compounded rate of
return through August 31.

It is the Fund's intent to purchase securities the income from which is
free from all forms of Federal income taxation for individuals. To this end, the
Fund will attempt to continue to purchase securities the income from which is
not subject to the Federal alternative minimum tax.

We continue to search for the highest yield possible while maintaining
standards of high credit quality. We research individual securities extensively,
searching for value relative to comparable securities available in the market.
The creditworthiness of issuers and diversification of the portfolio are of
primary importance in our analysis.

The bond market turmoil that began in early February continued and was
dominated by the strength of the domestic economy and the accompanying credit
tightening measures taken by the Federal Reserve. In response to accelerating
growth, the Federal Reserve raised interest rates four more times after their
first action in early February. The latest move, which occurred this past
August, increased the Federal funds rate (the overnight lending rate among
banks) to 4.75% and the discount rate (the rate charged by the Federal Reserve
for loans to banks) to 4.00%.

As the economy picked up momentum and the Fed started tightening, interest
rates in the fixed-income markets climbed in every maturity range. In the
taxable sector, yields on one-year treasury bills closed the fiscal year at
5.54% while yields on 30-year treasury bonds closed at 7.45%.

Yields in the tax exempt sector moved up similarly, though not quite as
sharply. Very short-term yields (i.e. overnight and 7-day rates) initially held
firm due to supply and demand factors. By August 31, however, yields on
securities from one-day to one-year increased dramatically from the lows of the
previous month. Moving out on the yield curve, intermediate and long-term yields
averaged 60 to 80 basis points higher for the six-month period.

During the past six months, we initially reduced the Fund's weighted
average maturity to assure a more defensive posture as the Fed moved rates
higher. The light supply of new issues in the money market sector coupled with

<PAGE>

persistent demand for safe short-term securities, depressed the rise in tax
exempt rates relative to taxable alternatives. However, a reverse of this
relationship occurred in July and August as the seasonal summer borrowings put
upward pressure on yields. The shorter maturities in the Fund gave us more
flexibility for good buying opportunities over the past two months.

We expect tax exempts to outperform treasuries as new municipal issuance
declines. While we think that the municipal market is attractive relative to
other fixed-income investments and that supply looks manageable, the overall
direction of this market will be determined by the movement of rates in the
taxable (specifically the U.S. Treasury) sector. Over the next several months we
will take our cue from the coming economic indicators that typically shape the
prospects for Gross Domestic Product (GDP) and inflation.

We thank you for investing in Evergreen Tax Exempt Money Market Fund and
look forward to continuing to serve your investment needs.

Sincerely,

/s/Stephen A. Lieber /s/Steven C. Shachat

Stephen A. Lieber Steven C. Shachat
Chairman Portfolio Manager
Evergreen Asset
Management Corp.

- --------------------------------------------------------------------------------

Figures represent past performance which is no guarantee of future results.

* The Fund's yield may vary, and there can be no guarantee that the Fund will
achieve its objective or any particular tax exempt yield. The tax-equivalent
yield would be lower for investors in lower marginal income tax brackets.

Income may be subject to some state or local taxes, and the Federal alternative
minimum tax for certain investors.

An investment in the Fund is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that the Fund will be able to maintain
a stable net asset value of $1.00 per share.

During the period under review, the Adviser voluntarily waived a portion of its
advisory fee. Had fees not been waived, the 7-day current and effective yields
as of August 31, 1994, would have been 2.72% and 2.76%, respectively. Fee
waivers may be revised at any time.

**Calculated as total per share dividends declared for the month divided by the
number of days for which dividends were declared for the month and multiplied by
365.

+ IBC/Donoghue's Money Fund Average(TM) for all stockbroker and general purpose
tax-free funds listed in its monthly publication. As of August 31, 1994, there
were 133 funds in this category.

++ Source: Lipper Analytical Services, Inc., an independent mutual funds
performance monitor.

<PAGE>

- --------------------------------------------------------------------------------

Evergreen Tax Exempt Money Market Fund
Statement of Investments
August 31, 1994

- --------------------------------------------------------------------------------
Par
(000) Issue Value
- --------------------------------------------------------------------------------
ALABAMA--3.3%
- --------------------------------------------------------------------------------
$2,850 City of Arab Industrial Development $ 2,850,000
Board RRB Series 1989 (SCI
Manufacturing, Inc.), 3.35%-VRDN
(LOC: Bank of Tokyo)
- --------------------------------------------------------------------------------
1,340 City of Birmingham Commercial 1,340,000
Authority RB Series 1991 (Avondale
Development Commerce Park, Phase
II Project), 3.50%-VRDN (LOC:
Amsouth Bank)
- --------------------------------------------------------------------------------
750 City of Birmingham Commercial 750,000
Development Authority RB Series
1991 (Southside Business Center
Project)-ARB, 3.85% Due 12/01/94
(LOC: Amsouth Bank)
- --------------------------------------------------------------------------------
5,935 City of Northport Multifamily Housing 5,935,000
Refunding Revenue Warrants
(Northbrook I Project) 1993 Series
A, 3.55%-VRDN (LOC: Southtrust
Bank of Alabama, N.A.)
- --------------------------------------------------------------------------------
1,200 City of Parrish Industrial Development 1,200,000
Board Pollution Control RB
(Alabama Power Co. Project),
3.15%-VRDN
- --------------------------------------------------------------------------------
1,000 City of Tuscaloosa, Industrial 1,000,000
Development Board RRB Series 1992
(Field Container Corp.),
3.25%-VRDN (LOC: American National
Bank and Trust Co. of Chicago)
- --------------------------------------------------------------------------------
13,075,000
- --------------------------------------------------------------------------------
ARKANSAS--0.3%
- --------------------------------------------------------------------------------
1,025 City of Texarkana Public Facilities 1,050,890
Board SCH Health Care System RB
(Sisters of Charity of the
Incarnate World) Prerefunded @
$100, 10.50% Due 01/01/95
- --------------------------------------------------------------------------------
ARIZONA--2.1%
- --------------------------------------------------------------------------------
8,500 Maricopa County Tax Anticipation Notes 8,548,074
Series 1994, 5.00% Due 07/28/95
- --------------------------------------------------------------------------------
CALIFORNIA--17.8%
- --------------------------------------------------------------------------------
9,295 California Housing Finance Agency 9,295,000
Mortgage RB, 3.15%-VRDN (LIQ:
Banque Nationale de Paris)
- --------------------------------------------------------------------------------
10,000 California Public Capital Improvements 10,000,000
Financing Authority RB (Pooled
Projects) Series 1988C, 3.15% Due
09/15/94 (LOC: National
Westminster Bank)
- --------------------------------------------------------------------------------
3,000 California State GO, 3,000,000
3.35% Due 11/01/94 (FGIC Insured)
- --------------------------------------------------------------------------------
16,000 California State Revenue 16,099,957
Anticipation Notes Series A, 5.00%
Due 06/28/95
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Par
(000) Issue Value
- --------------------------------------------------------------------------------
CALIFORNIA (continued)
- --------------------------------------------------------------------------------
$ 350 City of Barstow Central $ 350,000
Redevelopment Project Tax
Allocation Bonds 1994 Series A,
3.45% Due 09/01/94 (MBIA Insured)
- --------------------------------------------------------------------------------
4,500 City of Corona Multifamily Housing RB 4,500,000
(Household Bank Project) 1985
Series B, 3.775%-VRDN (LOC:
Household Bank-Guaranteed by
Household Finance Corp.)
- --------------------------------------------------------------------------------
10,000 County of Orange 1994-95 10,000,000
Series B TRANS, 3.19375% Due
08/10/95-VRDN
- --------------------------------------------------------------------------------
8,500 Lancaster Redevelopment 8,500,000
Agency Multifamily Housing RRB
(Far West Savings and Loan
Association/20th Street Apartments
Project) Issue of 1988, 3.65%-VRDN
(LOC: Far West Savings and Loan
Association, Collateralized: U.S.
Treasury Bills)
- --------------------------------------------------------------------------------
6,000 Los Angeles Unified School 6,044,523
District 1994-95 TRANS, 4.50% Due
07/10/95
- --------------------------------------------------------------------------------
4,000 San Francisco Unified School District 4,021,381
(City and County of San Francisco)
1994 TRANS, 4.75% Due 08/24/95
- --------------------------------------------------------------------------------
71,810,861
- --------------------------------------------------------------------------------
COLORADO--4.3%
- --------------------------------------------------------------------------------
8,000 Arapahoe County Capital Improvement 8,000,000
Trust Fund Highway RB (E-470
Project) Series 1986E-ARB, 3.90%
Due 02/28/95
- --------------------------------------------------------------------------------
605 Boulder County Development RB 605,000
(The Geological Society of
America, Inc. Project) Series
1992-ARB, 3.25% Due 12/01/94 (LOC:
Banc One Corp.)
- --------------------------------------------------------------------------------
5,000 Colorado Housing Finance Authority 5,000,000
Multifamily Housing RB (Grant
Plaza Project) 1984 Series A,
3.275%-VRDN (LOC: Bankers Trust
Co.)
- --------------------------------------------------------------------------------
3,555 Jefferson County School District No. R-1, 3,525,482
GO Bond Series 1992, 2.95% Due
12/15/94 (AMBAC Insured)
- --------------------------------------------------------------------------------
17,130,482
- --------------------------------------------------------------------------------
CONNECTICUT--0.1%
- --------------------------------------------------------------------------------
205 Connecticut Housing Finance Authority 205,586
Housing Mortgage Finance Program
Bonds 1985 Series B, 7.80% Due
11/15/94
- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------

Evergreen Tax Exempt Money Market Fund
Statement of Investments (continued)
August 31, 1994

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Par
(000) Issue Value
- --------------------------------------------------------------------------------
DELAWARE--3.0%
- --------------------------------------------------------------------------------
$12,000 Delaware Economic Development $12,000,000
Authority Gas Facilities RRB
(Delmarva Power & Light Co.
Project) Series 1993C, 3.05%-VRDN
- --------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--0.5%
- --------------------------------------------------------------------------------
2,000 District of Columbia GO Bonds 2,125,094
Series 1985B Prerefunded
@ $102, 9.75% Due 06/01/95
- --------------------------------------------------------------------------------
FLORIDA--1.8%
- --------------------------------------------------------------------------------
500 City of St. Petersburg Public 520,146
Improvement RRB Series 1988A,
Prerefunded @ $102, 7.80% Due
02/01/95 (MBIA Insured)
- --------------------------------------------------------------------------------
400 City of Sarasota Infrastructure 400,000
Sales Surtax Bonds, Series 1989,
6.30% Due 09/01/94 (AMBAC Insured)
- --------------------------------------------------------------------------------
645 City of Tampa Allegany Health 645,000
System RB (St. Joseph's Hospital)
Series 1993, 2.65% Due 12/01/94
(MBIA Insured)
- --------------------------------------------------------------------------------
5,000 Lee County Industrial Development 5,000,000
Authority Industrial Development
RB (The Christian and Missionary
Alliance Foundation Shell Point
Village Project) Series 1985,
3.275%-VRDN (LOC: Banque Paribas)
- --------------------------------------------------------------------------------
500 Palm Beach County Criminal Justice 498,872
Facilities RB Series 1994, 3.60%
Due 06/01/95 (FGIC Insured)
- --------------------------------------------------------------------------------
7,064,018
- --------------------------------------------------------------------------------
GEORGIA--4.2%
- --------------------------------------------------------------------------------
6,555 Clayton County Multifamily Housing 6,555,000
RRB (Summerwind Project) Series
1989, 3.35%-VRDN (LOC: Amsouth
Bank N.A.)
- --------------------------------------------------------------------------------
2,200 Columbus Housing Authority Multifamily 2,200,000
Housing RRB (Quail Ridge Project)
Series 1988, 3.55%-VRDN (LOC:
Columbus Bank & Trust Co.)
- --------------------------------------------------------------------------------
7,470 County of Dekalb Housing Authority 7,470,000
Multifamily Housing RRB (Terrace
Club Project) Series 1993A,
3.40%-VRDN (LOC: Amsouth Bank
N.A.)
- --------------------------------------------------------------------------------
565 Georgia Residential Finance Authority 565,000
Home Ownership Mortgage Bonds,
1984 Series A-ARB, 3.375% Due
12/01/94 (TOP: The Citizens and
Southern National Bank)
- --------------------------------------------------------------------------------
16,790,000
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Par
(000) Issue Value
- --------------------------------------------------------------------------------
HAWAII--0.1%
- --------------------------------------------------------------------------------
$ 525 City & County of Honolulu GO $ 529,287
Bonds 1990 Series D, Escrowed to
Maturity, 6.30% Due 12/01/94
- --------------------------------------------------------------------------------
ILLINOIS--1.6%
- --------------------------------------------------------------------------------
1,550 Illinois Development Finance Authority 1,550,000
Industrial Development Revenue and
RRB Series 1992 (Saint Xavier
University), 3.25%-VRDN (LOC:
American National Bank and Trust
Co. of Chicago)
- --------------------------------------------------------------------------------
500 Illinois Development Finance Authority 506,220
School District Program RB Series
1993 (Wheaton-Warrenville
Community Unit School District
#200 Project), 8.00% Due 12/01/94
(MBIA Insured)
- --------------------------------------------------------------------------------
3,000 Illinois Development Finance Authority 3,000,000
RB Series 1994 (St. Ignatius
College Prep), 3.20%-VRDN (LOC:
Northern Trust Co.)
- --------------------------------------------------------------------------------
500 State of Illinois GO Bonds 515,008
Prerefunded $101, 7.10% Due
05/01/95
- --------------------------------------------------------------------------------
1,000 Village of Skokie Economic 1,000,000
Development RB (Skokie Fashion
Square Associates Project) Series
1984, 3.30%-VRDN (LOC: Bankers
Trust Co.)
- --------------------------------------------------------------------------------
6,571,228
- --------------------------------------------------------------------------------
INDIANA--1.3%
- --------------------------------------------------------------------------------
4,000 Indiana Bond Bank Advanced Funding 4,004,110
Program Series 1994A-2-GMN, 3.03%
Due 01/17/95
- --------------------------------------------------------------------------------
750 Indiana Transportation Finance 750,000
Authority Highway RB Series A,
3.75% Due 06/01/95 (AMBAC Insured)
- --------------------------------------------------------------------------------
315 Valparaiso Multi-Schools Building Corp. 315,000
(Porter County) First Mortgage RFB
Series 1994, 2.75% Due 01/01/95
(AMBAC Insured)
- --------------------------------------------------------------------------------
5,069,110
- --------------------------------------------------------------------------------
KANSAS--0.6%
- --------------------------------------------------------------------------------
City of Salina, Salina Central Mall L.P.-
3.175%-VRDN (LOC: Boatmen's Bancshares Inc.)
1,200 Dillard's Project 1,200,000
1,105 Penney's Project 1,105,000
- --------------------------------------------------------------------------------
2,305,000
- --------------------------------------------------------------------------------
KENTUCKY--2.5%
- --------------------------------------------------------------------------------
9,900 County of Ohio, Kentucky Pollution 9,900,000
Control RFB Series 1985 (Big
Rivers Electric Corp. Project),
3.60%-VRDN (LOC: Chemical Bank)
- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Par
(000) Issue Value
- --------------------------------------------------------------------------------
LOUISIANA--0.1%
- --------------------------------------------------------------------------------
$ 500 Jefferson Parish Hospital District No. 1 $ 500,000
Hospital RB Series 1993, 3.60% Due
01/01/95 (FGIC Insured)
- --------------------------------------------------------------------------------
MAINE--0.3%
- --------------------------------------------------------------------------------
1,250 Maine Health and Higher Educational 1,250,000
Facilities Authority RB Bowdoin
College Issue Series 1985-ARB,
3.00% Due 10/01/94 (SPBA: The
Sanwa Bank Ltd.)
- --------------------------------------------------------------------------------
MARYLAND--4.0%
- --------------------------------------------------------------------------------
8,875 Custodial Receipts, Municipal Series 8,875,000
1991 A1-27, 3.40%-VRDN (LIQ: Sakura
Bank Ltd.)
- --------------------------------------------------------------------------------
1,200 Mayor and City Council of Baltimore 1,200,000
Economic Development RRB Series
1992 (Field Container Corp.),
3.25%-VRDN (LOC: American National
Bank and Trust Co. of Chicago)
- --------------------------------------------------------------------------------
6,200 State of Maryland Single Family Program 6,200,000
Bonds Department of Housing and
Community Development 1987 Fourth
Series, 3.20% Due 10/01/94 (TOP:
First National Bank of Chicago)
- --------------------------------------------------------------------------------
16,275,000
- --------------------------------------------------------------------------------
MASSACHUSETTS--2.1%
- --------------------------------------------------------------------------------
1,010 City of Cambridge GO Bond Municipal 1,013,095
Purpose Loan 1994, 3.75% Due
02/01/95
- --------------------------------------------------------------------------------
7,600 Massachusetts Bay Transportation 7,599,772
Authority GO 1993 Series C, 3.25%
Due 09/30/94
- --------------------------------------------------------------------------------
8,612,867
- --------------------------------------------------------------------------------
MICHIGAN--1.8%
- --------------------------------------------------------------------------------
2,909 City of Battle Creek Limited Obligation 2,909,000
Economic Development Corp. RRB
Series 1992 (Michigan Carton &
Paperboard Co.), 3.25%-VRDN (LOC:
American National Bank and Trust
Co. of Chicago)
- --------------------------------------------------------------------------------
4,000 Michigan Job Development Authority RB 4,000,000
(Gordon Foods Service, Inc.
Project) Series 1985, 3.275%-VRDN
(LOC: Rabobank Nederland)
- --------------------------------------------------------------------------------
435 St. Josephs Hospital Finance Authority 435,000
RRB (Mercy Memorial Medical Center
Obligated Group), 2.90% Due
01/01/95 (AMBAC Insured)
- --------------------------------------------------------------------------------
7,344,000
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Par
(000) Issue Value
- --------------------------------------------------------------------------------
MINNESOTA--0.4%
- --------------------------------------------------------------------------------
$ 500 City of Minneapolis Health Care $ 500,000
System RB Series 1993A (Fairview
Hospital and Healthcare Services),
3.00% Due 11/15/94 (MBIA Insured)
- --------------------------------------------------------------------------------
1,000 Regents of the University of 1,046,305
Minnesota GO-RFB Series 1985A
Prerefunded @ $102, 9.50% Due
02/15/95
- --------------------------------------------------------------------------------
1,546,305
- --------------------------------------------------------------------------------
MISSOURI--0.6%
- --------------------------------------------------------------------------------
2,365 City of Springfield Industrial 2,365,000
Development Authority (Springfield
Retirement Center Ltd. Project)
Series 1985, 3.525%-VRDN (LOC:
Kreditbank N.A.)
- --------------------------------------------------------------------------------
NEVADA--0.1%
- --------------------------------------------------------------------------------
530 Nevada State Municipal Bond Bank Project 531,233
#R-5 Series A, 4.10% Due 11/01/94
- --------------------------------------------------------------------------------
NEW JERSEY--3.2%
- --------------------------------------------------------------------------------
670 City of Bayonne School Bonds (New 679,953
Jersey School Bond Reserve Act,
5.80% Due 05/01/95 (FGIC Insured)
- --------------------------------------------------------------------------------
2,815 New Jersey Economic Development 2,815,000
Authority Economic Development
Bonds (Atlantic States Cast Iron
Pipe Co. Project), 3.35%-VRDN
(LOC: Amsouth Bank N.A.)
- --------------------------------------------------------------------------------
5,400 New Jersey GO Bonds, RB 5,400,000
Series D-ARB, 3.75% Due 02/15/95
(LIQ: Banque Nationale de Paris)
- --------------------------------------------------------------------------------
400 Passaic County General Improvement 403,137
Bonds, 5.125% Due 03/01/95
(FGIC Insured)
- --------------------------------------------------------------------------------
3,400 Passaic County Utilities Authority 3,400,000
Solid Waste System Project Notes
Series 1993B-GMN, 3.00% Due
11/10/94
- --------------------------------------------------------------------------------
12,698,090
- --------------------------------------------------------------------------------
NEW MEXICO--1.4%
- --------------------------------------------------------------------------------
5,750 City of Albuquerque Gross Receipts 5,784,169
Lodgers' Tax RRB Series 1991A,
4.70% Due 01/02/95 (LOC: Canadian
Imperial Bank of Commerce)
- --------------------------------------------------------------------------------
NEW YORK--5.5%
- --------------------------------------------------------------------------------
4,200 City of New York GO Fiscal 1994 Series I, 4,200,000
3.15%-VRDN (FSA Insured)
- --------------------------------------------------------------------------------
18,000 City of New York GO, Floating Rate 18,000,000
Series B-RANS, 3.23438%-VRDN
- --------------------------------------------------------------------------------
22,200,000
- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------

Evergreen Tax Exempt Money Market Fund
Statement of Investments (continued)
August 31, 1994

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Par
(000) Issue Value
- --------------------------------------------------------------------------------
NORTH CAROLINA--1.5%
- --------------------------------------------------------------------------------
$ 4,000 Beaufort County Industrial Facilities and $ 4,000,000
Pollution Control Financing
Authority Pollution Control RB
(Texasgulf Inc. Project) Series
1985, 3.05%-VRDN (LOC: Societe
Generale)
- --------------------------------------------------------------------------------
2,100 NCNB Pooled Tax-Exempt Trust 2,100,000
(North Carolina) COP Series 1990A,
3.875%-VRDN (LOC: NationsBank of
North Carolina)
- --------------------------------------------------------------------------------
6,100,000
- --------------------------------------------------------------------------------
OHIO--3.4%
- --------------------------------------------------------------------------------
2,500 Cleveland-Cuyahoga County Port 2,500,000
Authority RB (Rock and Roll Hall
of Fame and Museum Project),
3.20%-VRDN (LOC: Credit Local de
France)
- --------------------------------------------------------------------------------
10,300 Ohio Housing Finance Agency Single 10,300,000
Family Mortgage RRB (GNMA Mortgage
Backed Securities Program) Series
1992 2B, 3.40%-VRDN (LOC: Dai-Ichi
Kangyo Bank)
- --------------------------------------------------------------------------------
1,000 Toledo-Lucas County Port Authority 1,000,000
Industrial Development RRB, Series
1994 (Countrymark Cooperative,
Inc. Project) 3.15%-VRDN (LOC:
Fifth Third Bank)
- --------------------------------------------------------------------------------
13,800,000
- --------------------------------------------------------------------------------
OKLAHOMA--0.8%
- --------------------------------------------------------------------------------
2,800 Bartlesville Development Authority RB 2,800,000
(Heritage Village Nursing Center
Project) Series 1985, 3.65%-VRDN
(LOC: Kreditbank)
- --------------------------------------------------------------------------------
500 Independent School District No.1 509,805
Tulsa County (Tulsa Board of
Education) Building Bonds of 1993,
7.90% Due 03/01/95
- --------------------------------------------------------------------------------
3,309,805
- --------------------------------------------------------------------------------
PENNSYLVANIA--6.5%
- --------------------------------------------------------------------------------
12,390 BSTE Funding III Inc. Municipal 12,389,612
Securities Trust Receipts Series
1993 BFIII 5, 3.40%-VRDN
- --------------------------------------------------------------------------------
650 Lawrence County Industrial Development 650,000
Authority Pollution Control RB
(Calgon Carbon Project) 1983
Series A, 3.65%-VRDN
- --------------------------------------------------------------------------------
13,000 School District of Philadelphia TRANS 13,056,887
Series 1994-1995, 4.75% Due
06/30/95
- --------------------------------------------------------------------------------
26,096,499
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Par
(000) Issue Value
- --------------------------------------------------------------------------------
SOUTH CAROLINA--0.9%
- --------------------------------------------------------------------------------
$ 690 Charleston County Public Facilities Corp. $ 690,000
Refunding COP, Series 1994,
3.00% Due 12/01/94 (MBIA Insured)
- --------------------------------------------------------------------------------
800 School District of Oconee County 814,286
GO Bonds of 1994, 8.50% Due
01/01/95 (MBIA Insured)
- --------------------------------------------------------------------------------
2,000 South Carolina Educational Facilities 2,000,000
Authority for Private Nonprofit
Institutions of Higher Learning
Educational Facilities RB
(Presbyterian College Project)
Series 1993, 3.15%-VRDN (LOC: The
South Carolina National Bank)
- --------------------------------------------------------------------------------
3,504,286
- --------------------------------------------------------------------------------
TENNESSEE--5.7%
- --------------------------------------------------------------------------------
5,000 City of Clarksville Public Building 5,000,000
Authority Adjustable Rate Pooled
Financing RB Series 1994
(Tennessee Municipal Bond Fund),
3.15%-VRDN (LOC: NationsBank of
Tennessee)
- --------------------------------------------------------------------------------
5,000 City of Morristown Industrial Development 5,000,000
Board Industrial RB, Series 1983
(Camvac International, Inc.
Project), 3.175%-VRDN (LOC: ABN
Amro Bank)
- --------------------------------------------------------------------------------
1,100 Health, Educational and Housing 1,100,000
Facility Board of the County of
Shelby Educational Facilities RB
(Rhodes College) Series 1985,
3.00%-VRDN (LOC: National
Westminster Bank)
- --------------------------------------------------------------------------------
2,000 Health and Educational Facilities Board 2,000,000
of the Metropolitan Government of
Nashville and Davidson County RRB
(West Meade Place Project) Series
1992, 3.15%-VRDN (LOC: NationsBank
of Georgia)
- --------------------------------------------------------------------------------
4,000 Metropolitan Government of Nashville 4,000,000
& Davidson County Industrial
Development Board RB Multifamily
Housing Apartments (Arbor Crest
Project) Series 1985, 3.15%-VRDN
(LOC: Chemical Bank)
- --------------------------------------------------------------------------------
2,850 Metropolitan Government of Nashville 2,850,000
& Davidson County Industrial
Development Board RB Multifamily
Housing Apartments, 4.25% Due
09/01/95 (LOC: Union Bank of
Switzerland)
- --------------------------------------------------------------------------------
3,000 Metropolitan Government of Nashville 3,132,006
& Davidson County Unlimited Tax GO
Prerefunded @ $102, 7.45% Due
05/01/95
- --------------------------------------------------------------------------------
23,082,006
- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
Par
(000) Issue Value
- --------------------------------------------------------------------------------
TEXAS--12.6%
- --------------------------------------------------------------------------------
$ 6,310 Bexar County Health Facilities $ 6,310,000
Development Corp. Retirement
Community RB (The Army Retirement
Residence Foundation-San Antonio
Project) Series 1985B, 3.275%-VRDN
(LOC: Banque Paribas)
- --------------------------------------------------------------------------------
300 City of Fort Worth (Tarrant County) 308,710
General Purpose RB Series 1985 A,
Prerefunded @ $100, 8.70% Due
03/01/95
- --------------------------------------------------------------------------------
6,800 Galveston Housing Finance Corp. 6,800,000
Multifamily Housing RRB (Village
by the Sea Apartments Project)
Series 1993, 3.30%-VRDN (LOC:
Sumitomo Bank, Ltd.)
- --------------------------------------------------------------------------------
2,000 Harris County Toll Road Unlimited 2,117,669
Tax RB, Prerefunded @ $103, 9.875%
Due 02/01/95
- --------------------------------------------------------------------------------
2,000 Harris County Toll Road Unlimited Tax 2,111,195
and Sub Lien RB Series 1985F,
Prerefunded @ $103, 9.25% Due
02/01/95
- --------------------------------------------------------------------------------
5,000 Harris County Toll Road Unlimited Tax 5,000,000
and Sub Lien RB Series 1994A,
3.32%-VRDN (LIQ: Citibank)
- --------------------------------------------------------------------------------
10,000 Irving Texas Independent School District 10,055,500
TRANS 4.75% Due 08/31/95
- --------------------------------------------------------------------------------
7,425 NCNB Pooled Tax Exempt Trust (Texas) 7,425,000
COP Series 1990B, 3.875%-VRDN
(LOC: NationsBank of Texas)
- --------------------------------------------------------------------------------
1,200 San Antonio Electric & Gas Revenue 1,250,393
Series A, Prerefunded @ $101.50,
9.60% Due 02/01/95
- --------------------------------------------------------------------------------
7,350 San Antonio Electric & Gas Systems 7,570,850
Revenue Improvement Bonds Series
1985A Prerefunded @ $101.50, 7.00%
Due 02/01/95
- --------------------------------------------------------------------------------
1,500 Tarrant County Health Facilities 1,500,000
Development Corp. Multimodal
Retirement - Cumberland RB,
3.35%-VRDN (LOC: Banque Paribas)
- --------------------------------------------------------------------------------
250 Texas Public Finance Authority GO RFB 250,000
Series 1992A, 3.50% Due 10/01/94
(MBIA Insured)
- --------------------------------------------------------------------------------
50,699,317
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Par
(000) Issue Value
- --------------------------------------------------------------------------------
UTAH--2.3%
- --------------------------------------------------------------------------------
Intermountain Power Agency Power
Supply RRB 1985,3.00% Due 09/15/94
(SBPA: Bank of America)
$2,000 Series E $ 2,000,000
4,000 Series F 4,000,000
- --------------------------------------------------------------------------------
3,100 Summit County Industrial Development 3,100,000
RB (Hornes' Kimball Junction L.P.
Project) Series 1985, 3.65%-VRDN
(LOC: West One Trust)
- --------------------------------------------------------------------------------
9,100,000
- --------------------------------------------------------------------------------
VIRGINIA--0.2%
- --------------------------------------------------------------------------------
1,000 Industrial Development Authority of 1,000,000
Rockingham County Pollution
Control RB 1982 Series A (Merck &
Co. Project), 3.65%-VRDN
- --------------------------------------------------------------------------------
WASHINGTON--2.2%
- --------------------------------------------------------------------------------
Washington Public Power Supply
System RRB Series 1993B, 3.35%-VRDN
(LIQ: Bankers Trust Co.)
6,165 Nuclear Project #1 6,165,000
2,750 Nuclear Project #3 2,750,000
- --------------------------------------------------------------------------------
8,915,000
- --------------------------------------------------------------------------------
WISCONSIN--2.3%
- --------------------------------------------------------------------------------
3,400 City of Alma Pollution Control RRB 3,400,000
Series 1984 (Dairyland Power
Cooperative Project), 3.00%-VRDN
(LOC: Rabobank Nederland)
- --------------------------------------------------------------------------------
6,000 Lac du Flambeau Band of Lake Superior 6,000,000
Chippewa Indians Special
Obligation Bonds (Simpson Electric
Co. Project) Series 1985,
3.30%-VRDN (LOC: Barclay's Bank)
- --------------------------------------------------------------------------------
9,400,000
- --------------------------------------------------------------------------------
OTHER--1.1%
- --------------------------------------------------------------------------------
4,327 LaSalle National Bank BusTOPS Trust, 4,327,146
BusTOPS Certificates Series 1993A,
3.50%-VRDN (LIQ: LaSalle National Bank)
- --------------------------------------------------------------------------------
Total Investments (Cost $412,615,353) 102.5% 412,615,353
Other Assets and Liabilities-Net (2.5) (10,196,172)
- --------------------------------------------------------------------------------
Net Assets 100.0% $402,419,181
- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------

Evergreen Tax Exempt Money Market Fund
Statement of Investments (continued)
August 31, 1994

- --------------------------------------------------------------------------------

SUMMARY OF ABBREVIATIONS
AMBAC--American Municipal Bond Assurance Corp.
ARB--Adjustable Rate Bonds
COP--Certificates of Participation
FGIC--Financial Guaranty Insurance Co.
FSA--Financial Security Assurance Inc.
GMN--General Market Notes
GO--General Obligations
LIQ--Liquidity Guaranty
LOC--Letter of Credit
MBIA--Municipal Bond Investors Assurance
RB--Revenue Bonds
RFB--Refunding Bonds
RRB--Refunding Revenue Bonds
SBPA--Standby Bond Purchase Agreement
TRANS--Tax Revenue Anticipation Notes
TOP--Tender Option Purchase
VRDN--Variable Rate Demand Notes

Adjustable Rate Bonds are putable back to the issuer or other parties not
affiliated with the issuer at par on the interest reset dates. Interest
rates are determined and set by the issuer quarterly, semi-annually or
annually depending upon the terms of the security. Interest rates presented
for these securities are those in effect at August 31, 1994. These
securities represent 4% of total investments at August 31, 1994.

Variable Rate Demand Notes are payable on demand on no more than seven
calendar days notice given by the Fund to the issuer or other parties not
affiliated with the issuer. Interest rates are determined and reset by the
issuer daily, weekly or monthly depending upon the terms of the security.
Interest rates presented for these securities are those in effect at
August 31, 1994. These securities represent 61% of total investments
at August 31, 1994.

Certain obligations held in the portfolio have credit enhancements or
liquidity features that may, under certain circumstances, provide for
repayment of principal and interest on the obligation upon demand date,
interest rate reset date or final maturity. These enhancements include:
letters of credit; liquidity guarantees; standby bond purchase agreements;
tender option purchase agreements; and third party insurance (i.e. FGIC, FSA
and MBIA).

Adjustable rate bonds and variable rate demand notes held in the portfolio
may be considered derivative securities. Management has determined that
these securities comply with the standards imposed by the Securities and
Exchange Commission under Rule 2a-7 which were designed to minimize both
credit risk and market risk.

See accompanying notes to financial statements.

<PAGE>

- --------------------------------------------------------------------------------

Evergreen Tax Exempt Money Market Fund
Statement of Assets and Liabilities
August 31, 1994

- --------------------------------------------------------------------------------
Assets:
Investments at value (amortized cost $412,615,353) $412,615,353
Cash 1,129,809
Interest receivable 2,210,192
Receivable for Fund shares sold 599,336
Prepaid expenses 28,483
- --------------------------------------------------------------------------------
Total assets 416,583,173
- --------------------------------------------------------------------------------
Liabilities:
Payable for investment securities purchased 12,905,836
Payable for Fund shares repurchased 958,004
Accrued advisory fee 145,772
Accrued expenses 131,058
Dividend payable in cash 23,322
- --------------------------------------------------------------------------------
Total liabilities 14,163,992
- --------------------------------------------------------------------------------
Net assets:
Paid-in capital $402,419,181
================================================================================
Net asset value per share, based on 402,419,181
shares of beneficial interest outstanding
(unlimited shares authorized of $.0001 par value) $ 1.00
================================================================================
See accompanying notes to financial statements

<PAGE>

- --------------------------------------------------------------------------------
Evergreen Tax Exempt Money Market Fund
Statement of Operations
For the Year Ended August 31, 1994

- --------------------------------------------------------------------------------
Investment income:
Interest $11,930,196
Expenses:
Advisory fee-net of $1,256,653 fee waiver $869,593
Transfer agent fee 268,204
Custodian fee 84,097
Professional fees 76,673
Registration and filing fees 51,678
Reports and notices to shareholders 38,011
Insurance 14,476
Trustees' fees and expenses 12,390
Amortization of organization expenses 2,176
Other 20,795
--------
Total expenses 1,438,093
- --------------------------------------------------------------------------------
Net investment income and net increase in
net assets resulting from operations $10,492,103
================================================================================
See accompanying notes to financial statements.

<PAGE>

- --------------------------------------------------------------------------------
Evergreen Tax Exempt Money Market Fund
Statement of Changes in Net Assets

<TABLE>
<CAPTION>
Year Ended August 31,
-----------------------------------------
1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income and net increase in
net assets resulting from operations $ 10,492,103 $ 10,458,428
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (10,492,103) (10,458,428)
- ------------------------------------------------------------------------------------------------------------------------------------
Fund share transactions (valued at $1.00 per share):
Proceeds from sale of shares 438,032,706 426,705,680
Net asset value of shares issued on reinvestment of dividends 10,143,045 10,084,157
- ------------------------------------------------------------------------------------------------------------------------------------
448,175,751 436,789,837
Cost of shares repurchased (447,132,393) (452,338,345)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) resulting from Fund share transactions 1,043,358 (15,548,508)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 1,043,358 (15,548,508)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of year 401,375,823 416,924,331
- ------------------------------------------------------------------------------------------------------------------------------------
End of year $ 402,419,181 $ 401,375,823
====================================================================================================================================
</TABLE>

Financial Highlights
<TABLE>
<CAPTION>

Year Ended August 31,
--------------------------------------------------------------------------
Per Share Data 1994 1993 1992 1991 1990
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net investment income declared
as dividends to shareholders $ .0247 $ .0258 $ .0367 $ .0533 $ .0599
====================================================================================================================================
Net asset value at beginning and end of year $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
====================================================================================================================================
Total Return 2.5% 2.6% 3.7% 5.5% 6.2%
Ratios & Supplemental Data
Net assets, end of year
(000's omitted) $402,419 $401,376 $416,924 $510,160 $310,667
Ratios to average net assets:
Expenses .34%+ .34%+ .32%+ .28%+ .31%+
Net investment income 2.47%+ 2.58%+ 3.72%+ 5.23%+ 5.94%+
====================================================================================================================================
</TABLE>

+ Net of partial advisory fee waivers of .30 of 1% of daily net assets for
fiscal year ended August 31, 1994, .29 of 1% of daily net assets for fiscal
year ended August 31, 1993, .31 of 1% of daily net assets for fiscal year
ended August 31, 1992, .38 of 1% of daily net assets for fiscal year ended
August 31, 1991 and .40 of 1% of daily net assets for fiscal year ended
August 31, 1990.

See accompanying notes to financial statements.

<PAGE>

- --------------------------------------------------------------------------------
Evergreen Tax Exempt Money Market Fund
Notes to Financial Statements

Note 1--Significant Accounting Policies

The Evergreen Tax Exempt Money Market Fund (the "Fund"), is a portfolio of the
Evergreen Municipal Trust (the "Trust"). The Trust was organized in the
Commonwealth of Massachusetts as a Massachusetts business trust on July 13,
1988. The Fund is registered under the Investment Company Act of 1940, as
amended (the "Act"), as an open-end, diversified management investment company.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.

Security Valuation--Portfolio securities are valued at amortized cost, which
approximates market value. The amortized cost method involves valuing a
security at cost on the date of purchase and thereafter assuming a
straight-line accretion or amortization to maturity of any discount or
premium.

Dividends to Shareholders--The Fund declares substantially all of its net
investment income which includes realized gains or losses, if any, as
dividends each business day to shareholders of record. At the end of each
month, such dividends are either reinvested in Fund shares and credited to
the shareholder's account or, if elected by the shareholder, paid in cash.

Other--Expenses incurred directly by the Fund in connection with its
operations are charged to the Fund. Expenses common to the Trust as a whole,
including the compensation of all non-affiliated trustees of the Trust, are
primarily allocated to the funds in the Trust in proportion to net assets.

Note 2--Advisory Fee and Related Party
Transactions

Evergreen Asset Management Corp. (the "Adviser"), an affiliate of Lieber &
Company, is the investment adviser to the Fund and also furnishes the Fund with
administrative services. The Adviser, which is an indirect, wholly-owned
subsidiary of First Union Corporation, succeeded on June 30, 1994 to the
advisory business of the same name, but under different ownership. The Adviser
is entitled to a fee, accrued daily and payable monthly, for the performance of
its services at the annual rate of .50 of 1% of the daily net assets of the
Fund. For the year ended August 31, 1994, the total advisory fee amounted to
$2,126,246 of which the Adviser voluntarily waived $1,256,653, resulting in a
net fee incurred by the Fund of $869,593. The Adviser may, at its discretion,
revise or cease this voluntary fee waiver at any time.

Lieber & Company is the investment sub-adviser to the Fund. Lieber & Company is
reimbursed by the Adviser, at no additional expense to the Fund, for its cost of
providing advisory services to the the Adviser.

<PAGE>

- --------------------------------------------------------------------------------
Evergreen Tax Exempt Money Market Fund
Notes to Financial Statements (continued)

Note 3--Concentration of Credit Risk

The Fund maintains a portfolio of short-term debt obligations maturing in 397
days or less whose ratings are determined to be of eligible quality under
Securities and Exchange Commission rules. The Fund invests in short-term debt
obligations issued by states, territories and possessions of the United States
and by the District of Columbia, and by their political subdivisions and duly
constituted authorities. The issuers' abilities to meet their obligations may be
affected by economic and political developments in a specific state or region.
Certain short-term debt obligations held in the Fund's portfolio may be entitled
to the benefit of standby letters of credit or other guarantees of banks or
other financial institutions.

Note 4--Subsequent Event

On September 21, 1994, the Trustees approved a change in the Fund's dividend
policy whereby daily net investment income dividends will be calculated
excluding the effect of net realized gains or losses. Distributions of net
realized gains (if any) will be made annually. This change became effective
September 22, 1994.

<PAGE>

- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Shareholders of
Evergreen Tax Exempt Money Market 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 Tax Exempt Money Market
Fund, (the "Fund"), constituting one of The Evergreen Municipal Trust
portfolios, at August 31, 1994, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our 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, 1994 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.

PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
October 17, 1994

- --------------------------------------------------------------------------------
FEDERAL INCOME TAX STATUS OF DISTRIBUTIONS (UNAUDITED)

Consistent with its investment objective, 100% of the dividends paid by
Evergreen Tax Exempt Money Market Fund for the year ended August 31,
1994 are exempt from regular Federal income taxes.
- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
TRUSTEES
Laurence B. Ashkin
Foster Bam
James S. Howell
Robert J. Jeffries
Gerald M. McDonnell
Thomas L. McVerry
William Walt Pettit
Russell A. Salton, III, M.D.
Michael S. Scofield
Ben Weberman

INVESTMENT ADVISER
Evergreen Asset Management Corp.
2500 Westchester Avenue
Purchase, New York 10577

CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company

LEGAL COUNSEL
Shereff, Friedman, Hoffman & Goodman

INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP

DISTRIBUTOR
Evergreen Funds Distributor, Inc.

The Investment adviser to the Evergreen Funds is Evergreen Asset Management
Corp., which is wholly owned by First Union National Bank of North Carolina.
Investments in the Evergreen Funds are not endorsed or guaranteed by First
Union, are not deposits or other obligations of First Union, are not insured
or otherwise protected by the U.S. government, the FDIC or any other
governement agency, and involve investment risks, including the possible
loss of principal.

The Evergreen Funds are sponsored and distributed by Evergreen Funds
Distributor, Inc., which is independent of Evergreen and First Union.

Evergreen Tax Exempt Money Market Fund
2500 Westchester Avenue
Purchase, New York 10577