PROSPECTUS July 7, 1995
EVERGREEN(SM) MONEY MARKET FUNDS (Evergreen logo appears here)
EVERGREEN MONEY MARKET FUND
EVERGREEN TAX EXEMPT MONEY MARKET FUND
EVERGREEN TREASURY MONEY MARKET FUND
CLASS A SHARES
CLASS B SHARES
The EVERGREEN MONEY MARKET FUNDS (the "Funds") are designed to
provide investors with current income, stability of principal and
liquidity. This Prospectus provides information regarding the Class A
offered by the Funds and the Class B shares offered by the EVERGREEN MONEY
MARKET FUND. 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 dated July
7, 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.
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.
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
EVERGREEN(SM) is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS 2
EXPENSE INFORMATION 3
FINANCIAL HIGHLIGHTS 5
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies 10
Investment Practices and Restrictions 13
MANAGEMENT OF THE FUNDS
Investment Advisers 14
Sub-Adviser 15
Distribution Plans and Agreements 16
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 16
How to Redeem Shares 18
Exchange Privilege 19
Shareholder Services 20
Effect of Banking Laws 21
OTHER INFORMATION
Dividends, Distributions and Taxes 21
General Information 22
</TABLE>
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 EVERGREEN MONEY MARKET FUND and EVERGREEN TAX
EXEMPT MONEY MARKET FUND is Evergreen Asset Management Corp. ("Evergreen Asset")
which, with its predecessors, has served as an investment adviser to the
Evergreen Funds since 1971. Evergreen Asset 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 Capital Management Group of FUNB ("CMG")
serves as investment adviser to EVERGREEN TREASURY MONEY MARKET FUND.
EVERGREEN MONEY MARKET FUND 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.
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.
EVERGREEN TREASURY MONEY MARKET FUND (formerly First Union Treasury Money
Market Portfolio) seeks to achieve stability of principal and current income
consistent with stability of principal.
Each Fund seeks to maintain a stable net asset value of $1.00 per share
although no assurances can be given that such a stable net asset value will be
maintained.
THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE
ACHIEVED.
2
<PAGE>
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 FUND, Class B Shares. For further information see
"Purchase and Redemption of Fund Shares" and "General Information -- Other
Classes of Shares".
<TABLE>
<CAPTION>
Class B Shares
SHAREHOLDER TRANSACTION EXPENSES Class A Shares (Evergreen Money Market Fund only)
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases None None
Sales Charge on Dividend Reinvestments None None
Contingent Deferred Sales Charge (as a % of None 5% during the first year, 4% during the
original purchase price or redemption second year, 3% during the third and fourth
proceeds, whichever is lower) years, 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 estimated 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).
EVERGREEN MONEY MARKET FUND (A)
<TABLE>
<CAPTION>
EXAMPLES
Assuming Assuming
ANNUAL OPERATING Redemption no
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 Fees ** .30% 1.00%
After 3 Years $ 32 $ 84 $ 54
Other Expenses .21% .21%
After 5 Years $ 56 $ 113 $ 93
After 10 Years $ 123 $ 175 $175
Total 1.01% 1.71%
</TABLE>
EVERGREEN TAX EXEMPT MONEY MARKET FUND (B)
<TABLE>
<CAPTION>
EXAMPLES
ANNUAL OPERATING Assuming Redemption
EXPENSES* at End of Period
Class A Class A
<S> <C> <C> <C> <C>
Advisory Fees .50%
After 1 Year $ 9
12b-1 Fees ** .30%
After 3 Years $ 27
Other Expenses .05%
After 5 Years $ 47
After 10 Years $105
Total .85%
</TABLE>
EVERGREEN TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
EXAMPLES
ANNUAL OPERATING Assuming Redemption
EXPENSES* at End of Period
Class A Class A
<S> <C> <C> <C> <C>
Advisory Fees .35%
After 1 Year $ 7
Administrative Fees .06%
After 3 Years $ 23
12b-1 Fees** .30%
After 5 Years $ 40
Other Expenses .05%
After 10 Years $ 90
Total .76%
</TABLE>
3
<PAGE>
(a) Estimated annual operating expenses reflect the combination of EVERGREEN
MONEY MARKET FUND and FIRST UNION MONEY MARKET PORTFOLIO.
(b) Estimated annual operating expenses reflect the combination of EVERGREEN TAX
EXEMPT MONEY MARKET FUND and FIRST UNION TAX EXEMPT MONEY MARKET PORTFOLIO.
Evergreen Asset has agreed to reimburse EVERGREEN MONEY MARKET FUND and
EVERGREEN TAX EXEMPT MONEY MARKET FUND to the extent that the Fund's aggregate
annual operating expenses (including the Adviser's fee, but excluding taxes,
interest, brokerage commissions, Rule 12b-1 distribution fees and shareholder
services fees and extraordinary expenses) exceed 1% of the average net assets
for any fiscal year.
*The annual operating expenses and examples do not reflect the voluntary fee
waivers of .39 of 1% of average net assets for EVERGREEN MONEY MARKET FUND and
.30 of 1% of average net assets for EVERGREEN TAX EXEMPT MONEY MARKET FUND for
the fiscal period ended August 31, 1994, and .28 of 1% of average net assets for
EVERGREEN TREASURY MONEY MARKET FUND for the fiscal period ended December 31,
1994.
**Class A Shares can pay up to .75 of 1% of average net assets as a 12b-1 Fee.
For the foreseeable future, the Class A Share's 12b-1 Fees will be limited to
.30 of 1% of average net assets. For Class B Shares of EVERGREEN MONEY MARKET
FUND, a portion of the 12b-1 Fees equivalent to .25 of 1% of average net assets
will be shareholder servicing related. Distribution related 12b-1 fees will be
limited to .75 of 1% of average net assets as permitted under the rules of the
National Association of Securities Dealers, Inc.
From time to time, each Fund's investment 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 investment adviser may cease these voluntary waivers
or reimbursements at any time.
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 for the most recent fiscal period. Such expenses have been restated
to reflect current fee arrangements and in the case of Funds that did not offer
all of the above-referenced Classes of shares during such periods, the amounts
set forth in the tables are based on the expenses incurred by the Classes which
were offered. 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.
4
<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the fund if shorter for EVERGREEN TREASURY MONEY MARKET FUND has been audited by
KPMG Peat Marwick LLP, the Fund's independent auditors, for EVERGREEN MONEY
MARKET FUND and EVERGREEN TAX EXEMPT MONEY MARKET FUND has, except as noted
otherwise, been audited by Price Waterhouse LLP, each Fund's independent
auditors. A report of KPMG Peat Marwick LLP or Price Waterhouse LLP, as the case
may be, on the audited information with respect to each Fund is incorporated by
reference in the Fund's Statement of Additional Information. The following
information for each Fund should be read in conjunction with the financial
statements and related notes which are incorporated by reference in the Fund's
Statement of Additional Information.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN MONEY MARKET FUND -- Y SHARES
<TABLE>
<CAPTION>
NOVEMBER 2,
TEN MONTHS 1987*
SIX MONTHS ENDED ENDED THROUGH
FEBRUARY 28, 1995 AUGUST 31, YEAR ENDED OCTOBER 31, OCTOBER 31,
(UNAUDITED) 1994 # 1993 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period............... $1.00 $ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income.............................. .02 .03 .03 .04 .07 .08 .09 .07
Total from investment operations................. .02 .03 .03 .04 .07 .08 .09 .07
Less distributions to shareholders from net
investment income................................ (.02) (.03) (.03) (.04) (.07) (.08) (.09) (.07)
Net asset value, end of period..................... $1.00 $ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN+...................................... 2.4% 2.9% 3.2% 4.2% 6.7% 8.4% 9.4% 7.4%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in millions)............ $244 $273 $299 $358 $438 $458 $408 $161
Ratios to average net assets:
Expenses (a)..................................... .54%++ .32%++ .39% .36% .30% .35% .38% .43%++
Net investment income (a)........................ 4.88%++ 3.46%++ 3.19% 4.18% 6.53% 8.08% 9.42% 7.26%++
</TABLE>
# On September 21, 1994, the Fund changed its fiscal year end from October 31
to August 31.
* Commencement of operations.
+ Total return is calculated for the periods indicated and is not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED TEN MONTHS
FEBRUARY 28, ENDED NOVEMBER 2, 1987
1995 AUGUST 31, YEAR ENDED OCTOBER 31, THROUGH
(UNAUDITED) 1994 1993 1992 1991 1990 1989 OCTOBER 31, 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Expenses.............................. .74% .71% .71% .72% .70% .69% .75% .93%
Net investment income................. 4.68% 3.07% 2.87% 3.82% 6.13% 7.74% 9.05% 6.76%
</TABLE>
5
<PAGE>
EVERGREEN MONEY MARKET FUND -- CLASS A AND B SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
JANUARY 4, 1995* JANUARY 26, 1995*
THROUGH THROUGH
FEBRUARY 28, 1995 FEBRUARY 28, 1995
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.................................................. $ 1.000 $ 1.000
Income from investment operations:
Net investment income............................................................... .008 .004
Total income from investment operations............................................. .008 .004
Less distributions to shareholders from net investment income......................... (.008) (.004)
Net asset value, end of period........................................................ $ 1.000 $ 1.000
TOTAL RETURN+......................................................................... .8% .4%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)............................................. $668 $35
Ratios to average net assets:
Expenses (a)........................................................................ .85%++ 1.56%++
Net investment income (a)........................................................... 5.40%++ 5.03%++
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value. Contingent deferred sales
charge is not reflected. Total return is calculated for the periods indicated
and is not annualized.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A and Class B shares are not necessarily comparable to that of the
Class Y shares, and are not necessarily indicative of future ratios.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
JANUARY 4, 1995 JANUARY 26, 1995
THROUGH THROUGH
FEBRUARY 28, 1995 FEBRUARY 28, 1995
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Expenses................................................... 1.30% 2.00%
Net investment income...................................... 4.95% 4.59%
</TABLE>
6
<PAGE>
EVERGREEN TAX EXEMPT MONEY MARKET FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, 1995 YEAR ENDED AUGUST 31,
(UNAUDITED) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income................ .02 .02 .03 .04 .05 .06
Total from investment operations... .02 .02 .03 .04 .05 .06
Less distributions to shareholders from
net investment income................ (.02 ) (.02) (.03) (.04) (.05) (.06)
Net asset value, end of period......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN+.......................... 1.7% 2.5% 2.6% 3.7% 5.5% 6.2%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in
millions)............................ $387 $402 $401 $417 $510 $311
Ratios to average net assets:
Expenses (a)......................... .51% ++ .34% .34% .32% .28% .31%
Net investment income (a)............ 3.34% ++ 2.47% 2.58% 3.72% 5.23% 5.94%
<CAPTION>
NOVEMBER 2,
1988* THROUGH
AUGUST 31, 1989
<S> <C>
PER SHARE DATA
Net asset value, beginning of period $1.00
Income from investment operations:
Net investment income................ .05
Total from investment operations... .05
Less distributions to shareholders from
net investment income................ (.05)
Net asset value, end of period......... $1.00
TOTAL RETURN+.......................... 5.5%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in
millions)............................ $109
Ratios to average net assets:
Expenses (a)......................... .24%++
Net investment income (a)............ 6.77%++
</TABLE>
* Commencement of operations.
+ Total return is calculated for the period indicated and is not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
SIX MONTHS ENDED NOVEMBER 2, 1988
FEBRUARY 28, 1995 YEAR ENDED AUGUST 31, THROUGH AUGUST 31,
(UNAUDITED) 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
Expenses............................... .64% .64% .63% .63% .66% .71% .79%
Net investment income.................. 3.21% 2.17% 2.29% 3.41% 4.85% 5.54% 6.22%
</TABLE>
7
<PAGE>
EVERGREEN TAX EXEMPT MONEY MARKET FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
JANUARY 5, 1995*
THROUGH
FEBRUARY 28, 1995
(UNAUDITED)
<S> <C>
PER SHARE DATA
Net asset value, beginning of period...................................................................... $ 1.000
Income from investment operations:
Net investment income................................................................................... .005
Total from investment operations........................................................................ .005
Distributions to shareholders from net investment income.................................................. (.005)
Net asset value, end of period............................................................................ $ 1.000
TOTAL RETURN+............................................................................................. .5%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................................................................. $144
Ratios to average net assets:
Expenses (a)............................................................................................ .83%++
Net investment income (a)............................................................................... 3.53%++
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized.
++ Annualized. Due to the recent commencement of its offering, the ratios for
Class A shares are not necessarily comparable to that of the Class Y shares,
and are not necessarily indicative of future ratios.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
JANUARY 5, 1995
THROUGH FEBRUARY 28, 1995
(UNAUDITED)
<S> <C>
Expenses................................................................ 1.30%
Net investment income................................................... 3.06%
</TABLE>
8
<PAGE>
EVERGREEN TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
CLASS A SHARES CLASS Y SHARES
MARCH 6, 1991* MARCH 6, 1991*
THROUGH THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, YEAR ENDED DECEMBER 31, DECEMBER 31,
1994 1993 1992 1991 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning
of period................ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations:
Net investment income...... .04 .03 .03 .04 .04 .03 .04 .05
Less distributions to
shareholders from net
investment income........ (.04) (.03) (.03) (.04) (.04) (.03) (.04) (.05)
Net asset value, end of
period................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN+.............. 3.8% 2.7% 3.4% 4.5% 4.1% 3.0% 3.7% 4.7%
Net assets, end of period
(000's omitted).......... $755,050 $261,475 $208,792 $ 99,549 $162,921 $366,109 $286,230 $265,109
Ratios to average net
assets:
Expenses (a)............. .50% .48% .48% .47%++ .20% .18% .17% 0.20%++
Net investment
income (a)............. 3.91% 2.70% 3.22% 4.95%++ 3.78% 3.00% 3.61% 5.53%++
</TABLE>
* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS Y SHARES
YEAR ENDED MARCH 6, 1991 YEAR ENDED MARCH 6, 1991
DECEMBER 31, THROUGH DECEMBER 31, DECEMBER 31, THROUGH DECEMBER 31,
1994 1993 1992 1991 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Expenses................ .78% .82% .82% 1.08% .48% .52% .52% .52%
Net investment income... 3.63% 2.36% 2.88% 4.34% 3.50% 2.66% 3.26% 5.21%
</TABLE>
10
- -------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Evergreen Money Market Fund
The investment objective of Evergreen Money Market Fund is to achieve
as high a level of current income as is consistent with preserving capital and
providing liquidity. This objective is a fundamental policy and may not be
changed without shareholder approval. 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 Investors 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. For
a description of these ratings see the Statement of Additional Information.
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 paragraphs 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 employ certain additional investment strategies which are
discussed in "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. This objective is
a fundamental policy and may not be changed without shareholder approval. 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. 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. The ability of the Fund to meet its investment
objective is necessarily subject to the ability of municipal issuers to meet
their payment obligations.
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, which may not be changed without
shareholder approval, 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, which may not be changed without shareholder approval, 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.
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 Fund's investment 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 Fund may invest
for defensive purposes during periods when the Fund's assets available for
investment exceed the available Municipal Securities that meet the Fund'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 an SRO; 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 Fund may employ certain additional investment strategies which are
discussed in "Investment Practices and Restrictions", below.
Evergreen Treasury Money Market Fund
The investment objective of Evergreen Treasury Money Market Fund, which
is a matter of fundamental policy that may not be changed without shareholder
approval, is to maintain stability of principal while earning current income.
However, the Fund will only attempt to seek income to the extent consistent with
stability of principal and, therefore, investments will only be made in
short-term United States Treasury obligations with an average dollar-weighted
maturity of 90 days or less. As a matter of investment strategy, the Fund's
investment adviser intends to maintain a dollar-weighted average maturity for
the Fund of 60 days or less.
Evergreen Treasury Money Market Fund is suitable for conservative
investors seeking high current yields plus relative safety. The Fund provides a
reasonable means of maximizing opportunities and minimizing risks resulting from
changing interest rates.
The short-term United States Treasury obligations in which the Fund
invests are issued by the U.S. Government and are fully guaranteed as to
principal and interest by the United States. Such securities will have a
maturity date that is 397 days or less from the date of acquisition unless they
are purchased under an agreement that provides for repurchase of the securities
from the Fund within 397 days from the date of acquisition. The Fund may also
retain Fund assets in cash.
The Fund may employ certain additional investment strategies which are
discussed in "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 under Evergreen Tax Exempt
Money Market Fund, 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. If a
portfolio security is no longer of eligible quality, a 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 ability of each Fund to meet its investment objective is
necessarily subject to the ability of the issuers of securities in which the
Funds invest to meet their payment obligations. In addition, the portfolio of
each 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 a Fund will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates, the yield of a Fund will tend to
be somewhat lower. Also, when interest rates are falling, the inflow of net new
money to a 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.
Repurchase Agreements. The Funds may enter into 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. Each Fund's investment 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,
Evergreen Tax Exempt Money Market Fund and Evergreen Money Market Fund 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 Evergreen Tax Exempt Money Market Fund or Evergreen Money
Market Fund, if and when made, may not exceed 30% of a Fund's total assets and
will be collateralized by cash, letters of credit or United States 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 a Fund and its investors. A Fund
may pay reasonable fees in connection with such loans.
When-Issued Securities. Evergreen Tax Exempt Money Market Fund and Evergreen
Treasury Money Market Fund may purchase securities on a "when-issued" basis
(i.e., for delivery beyond the normal settlement date at a stated price and
yield). A Fund generally would not pay for such securities or start earning
interest on them until they are received. However, when a Fund purchases
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 a Fund on a when-issued basis may result in the Fund
incurring a loss or missing an opportunity to make an alternative investment.
Evergreen Tax Exempt Money Market Fund does not expect that commitments to
purchase when-issued securities will normally exceed 25% of its total assets and
Evergreen Treasury Money Market Fund does not expect that such commitments will
exceed 20% of its total assets. The Funds do not intend to purchase when-issued
securities for speculative purposes but only in furtherance of their investment
objective.
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. In the
case of Evergreen Tax Exempt Money Market Fund and Evergreen Money Market Fund,
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 each
Fund's investment 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 each 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 10% of its assets invested in illiquid or not readily marketable
securities.
Other Investment Policies. The Funds may borrow money for temporary or emergency
purposes in amounts not in excess of 10% of the value of a Fund's total assets
in the case of Evergreen Tax Exempt Money Market Fund and Evergreen Money Market
Fund and one-third of the value of Evergreen Treasury Money Market Fund's total
assets, including the amount borrowed. As another means of borrowing both
Evergreen Tax Exempt Money Market Fund and Evergreen Money Market Fund may 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") at the time of such borrowing in amounts up
to 5% of the value of their total assets. A Fund will not purchase any
securities whenever any borrowings (including reverse repurchase agreements) are
outstanding. If either Evergreen Tax Exempt Money Market Fund or Evergreen Money
Market Fund enter into a reverse repurchase agreement, they 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.
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 ADVISERS
The management of each Fund is supervised by the Trustees of the Trust
under which the Fund has been established ("Trustees"). Evergreen Asset
Management Corp. ("Evergreen Asset") has been retained to serve as investment
adviser to Evergreen Money Market Fund and Evergreen Tax Exempt Money Market
Fund. Evergreen Asset succeeded on June 30, 1994 to the advisory business of the
same name, but under different ownership, which was organized in 1971. Evergreen
Asset, with its predecessors, has served as investment adviser to the Evergreen
Group of Mutual Funds 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 Treasury Money
Market Fund.
First Union is a bank holding company headquartered in Charlotte, North
Carolina, and had $77.9 billion in consolidated assets as of March 31, 1995.
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 all the series of
Evergreen Investment Trust (formerly known as First Union 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 Money Market
Fund and Evergreen Tax Exempt Money Market Fund, subject to the authority of the
Trustees. Evergreen Asset is entitled to receive from each Fund an annual fee
equal to .50 of 1% of average daily net assets of each Fund on the first $1
billion in assets and .45 of 1% of average daily net assets in excess of $1
billion. However, Evergreen Asset 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 Evergreen
Asset waived a portion of the advisory fee payable by the Evergreen Money Market
Fund and Evergreen Tax Exempt Money Market Fund as set forth in the section
entitled "Financial Highlights". The total expenses as a percentage of average
daily net assets on an annualized basis for Evergreen Money Market Fund and
Evergreen Tax Exempt Money Market Fund for the fiscal period ended August 31,
1994 are also set forth in the section entitled "Financial Highlights". CMG
manages investments and supervises the daily business affairs of Evergreen
Treasury Money Market Fund and, as compensation therefor, is entitled to receive
an annual fee equal to .35 of 1% of average daily net assets of Evergreen
Treasury Money Market Fund. For the fiscal period ended December 31, 1994 CMG
waived a portion of the advisory fee payable by the Evergreen Treasury Money
Market Fund as set forth in the section entitled "Financial Highlights". The
total annualized operating expenses of Evergreen Treasury Money Market Fund for
its most recent fiscal year ended December 31, 1994 are also set forth in the
section entitled "Financial Highlights". Evergreen Asset serves as administrator
to Evergreen Treasury Money Market Fund and is entitled to receive a fee based
on the average daily net assets of the Fund at a rate based on the total assets
of the mutual funds administered by Evergreen Asset for which CMG or Evergreen
Asset also serve as investment adviser, calculated in accordance with the
following schedule: .050% of the first $7 billion; .035% on the next $3 billion;
.030% on the next $5 billion; .020% on the next $10 billion; .015% on the next
$5 billion; and .010% on assets in excess of $30 billion. Furman Selz
Incorporated, the parent of Evergreen Funds Distributor, Inc., distributor for
the Evergreen group of mutual funds, serves as sub-administrator to Evergreen
Treasury Money Market Fund and is entitled to receive a fee from the Fund
calculated on the average daily net assets of the Fund at a rate based on the
total assets of the mutual funds administered by Evergreen Asset for which CMG
or Evergreen Asset also serve as investment adviser, calculated in accordance
with the following schedule: .0100% of the first $7 billion; .0075% on the next
$3 billion; .0050% on the next $15 billion; and .0040% on assets in excess of
$25 billion. The total assets of the mutual funds administered by Evergreen
Asset for which CMG or Evergreen Asset serve as investment adviser as of March
31, 1995 were approximately $8 billion.
SUB-ADVISER
Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company 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 the
portfolios of Evergreen Money Market Fund and Evergreen Tax Exempt Money Market
Fund. Lieber & Company will be reimbursed by Evergreen Asset 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 Evergreen Money
Market Fund and Evergreen Tax Exempt Money Market Fund 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.
<PAGE>
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 Fund 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
may constitute a service fee to be used for providing ongoing personal services
and/or the maintenance of shareholder accounts. Service fee payments to
financial intermediaries for such purposes will not to exceed .25% of the
aggregate average daily net assets attributable to each Class of shares of each
Fund.
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 Fund. 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 Fund may
also make payments under its Class B Plan, in amounts up to .25 of 1% of the
Fund's aggregate average daily net assets on an annual basis attributable to
Class B shares, to compensate organizations, which may include EFD and Evergreen
Asset or its affiliates, for personal services rendered to shareholders and/or
the maintenance of shareholder accounts or for engaging other to render such
services.
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
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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. 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
Fund, Evergreen Treasury Money Market Fund and Evergreen Tax Exempt Money Market
Fund, and Class B shares of Evergreen Money Market Fund are offered through this
Prospectus (See "General Information" - 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. Certain
broker-dealers or other financial institutions may impose a fee in connection
with purchases at net asset value.
Class B Shares-Deferred Sales Charge Alternative. You can purchase Class B
shares of the Evergreen Money Market Fund 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 and/or shareholder service 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.
With respect to Class B shares, no CDSC will be imposed on: (1) the
portion of redemption proceeds attributable to increases in the value of the
account due to increases in the net asset value per Share, (2) Shares acquired
through reinvestment of dividends and capital gains, (3) Shares held for more
than seven years after the end of the calendar month of acquisition, (4)
accounts following the death or disability of a shareholder, or (5) minimum
required distributions to a shareholder over the age of 70 1/2 from an IRA or
other retirement plan.
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 (the "Exchange") (usually 4 p.m. Eastern time) each business day (i.e.,
any weekday exclusive of days on which the Exchange or State Street is closed).
The 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 each Fund's investment 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 an investor's check does not clear, the
investor will be responsible for any loss a Fund or its investment adviser
incurs. If such investor is an existing shareholder, a Fund may redeem shares
from his or her account to reimburse a Fund or its investment adviser for any
loss. In addition, such investors may be prohibited or restricted from making
further purchases in any of the Evergreen mutual 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 at the phone number on the front page of this Prospectus 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 Fund
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
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).
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. Certain financial
intermediaries may require that you give instructions earlier than 4:00 p.m.
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 the phone number on the front page of this Prospectus between the
hours of 8:00 a.m. and 5:30 p.m. (Eastern time) each business day (i.e., any
weekday exclusive of days on which the Exchange or State Street's offices are
closed). The 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 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 mutual funds through your financial intermediary, or by
telephone or mail as described below. An exchange which represents an initial
investment in another Evergreen mutual 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 mutual funds has 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 Fund are exchanged for Class B shares of other Evergreen mutual
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 mutual 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 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 by telephone by calling
the telephone number on the front of this Prospectus. 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 on the front page of this Prospectus. 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.
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.
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 mutual funds available to their participants. Each Fund's
investment adviser may provide compensation to organizations providing
administrative and recordkeeping services to plans which make shares of the
Evergreen mutual funds available to their participants.
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.
Tax Sheltered Retirement Plans. You may open a pension and profit sharing
account in any Evergreen mutual fund (except those funds having an objective of
providing tax free income), including: (i) Individual Retirement Accounts
("IRAs") and Rollover IRAs; (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.
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. Evergreen
Asset, since it is a subsidiary of FUNB, and CMG are 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 CMG or 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 CMG or 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
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 "Code"). 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 Funds
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
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 Evergreen Money Market Fund (formerly Evergreen Money Market
Trust) is a Massachusetts business trust organized in 1987, 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, and
the Evergreen Treasury Money Market Fund is a separate investment series of
Evergreen Investment Trust (formerly First Union Funds), which is a
Massachusetts business trust organized in 1984.
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 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. Furman Selz Incorporated, also acts as
sub-administrator to Evergreen Treasury Money Market Fund and which provides
certain sub-administrative services to Evergreen Asset in connection with its
role as investment adviser to Evergreen Tax Exempt Money Market Fund and
Evergreen Treasury Money Market Fund, including providing personnel to serve as
officers of the Funds.
Other Classes of Shares. Evergreen Money Market Fund offers three classes of
shares, Class A, Class B, and Class Y. Evergreen Tax Exempt Money Market Fund
and Evergreen Treasury Money Market Fund each offer 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 Funds for
which Evergreen Asset serves as investment adviser as of December 30, 1994, (ii)
certain institutional investors and (iii) investment advisory clients of CMG,
Evergreen Asset or their 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 and shareholder servicing
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.
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 Trusts
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.
9
<PAGE>
INVESTMENT ADVISER
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN MONEY MARKET FUND, EVERGREEN TAX EXEMPT MONEY MARKET FUND
Capital Management Group of First Union National Bank, 201 South College
Street, Charlotte, North Carolina 28288
EVERGREEN TREASURY MONEY MARKET FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827
LEGAL COUNSEL
Sullivan & Worcester, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
EVERGREEN MONEY MARKET FUND, EVERGREEN TAX EXEMPT MONEY MARKET FUND
KPMG Peat Marwick, LLP One Mellon Bank Center Pittsburgh, Pennsylvania 15219
EVERGREEN TREASURY MONEY MARKET FUND
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017
536120
<PAGE>
PROSPECTUS July 7, 1995
EVERGREEN(SM) MONEY MARKET FUNDS (Evergreen logo appears here)
EVERGREEN MONEY MARKET FUND
EVERGREEN TAX EXEMPT MONEY MARKET FUND
EVERGREEN TREASURY MONEY MARKET FUND
CLASS Y SHARES
The Evergreen Money Market Funds (the "Funds") are designed to
provide investors with 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.
A "Statement of Additional Information" for the Funds dated July
7, 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) 235-0064. 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.
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.
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
EVERGREEN(SM) is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS 2
EXPENSE INFORMATION 3
FINANCIAL HIGHLIGHTS 5
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies 10
Investment Practices and Restrictions 13
MANAGEMENT OF THE FUNDS
Investment Advisers 14
Sub-Adviser 15
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 16
How to Redeem Shares 17
Exchange Privilege 18
Shareholder Services 19
Effect of Banking Laws 19
OTHER INFORMATION
Dividends, Distributions and Taxes 20
General Information 21
</TABLE>
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 EVERGREEN MONEY MARKET FUND and EVERGREEN TAX
EXEMPT MONEY MARKET FUND is Evergreen Asset Management Corp. ("Evergreen Asset")
which, with its predecessors, has served as an investment adviser to the
Evergreen Funds since 1971. Evergreen Asset 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 Capital Management Group of FUNB ("CMG")
serves as investment adviser to EVERGREEN TREASURY MONEY MARKET FUND.
EVERGREEN MONEY MARKET FUND 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.
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.
EVERGREEN TREASURY MONEY MARKET FUND (formerly First Union Treasury Money
Market Portfolio) seeks to achieve stability of principal and current income
consistent with stability of principal.
Each Fund seeks to maintain a stable net asset value of $1.00 per share
although no assurances can be given that such a stable net asset value will be
maintained.
THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE
ACHIEVED.
2
<PAGE>
EXPENSE INFORMATION
The table set forth below summarizes the shareholder transaction costs
associated with an investment in the Class Y Shares of the Fund. For further
information see "Purchase and Redemption of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
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
year) $ 5.00
</TABLE>
The following table shows for the Fund the estimated 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 for the periods specified assuming (i) a 5%
annual return and (ii) redemption at the end of each period.
EVERGREEN MONEY MARKET FUND (A)
<TABLE>
<CAPTION>
ANNUAL OPERATING EXAMPLE
EXPENSES Class Y
<S> <C> <C> <C>
Advisory Fees .50%
After 1 Year $ 7
12b-1 Fees -- After 3 Years
After 3 Years $23
Other Expenses .21%
After 5 Years $40
After 10 Years $88
Total .71%
</TABLE>
EVERGREEN TAX EXEMPT MONEY MARKET FUND (B)
<TABLE>
<CAPTION>
ANNUAL OPERATING EXAMPLE
EXPENSES Class Y
<S> <C> <C> <C>
Advisory Fees .50%
After 1 Year $ 6
12b-1 Fees --
After 3 Years $18
Other Expenses .05%
After 5 Years $31
After 10 Years $69
Total .55%
</TABLE>
EVERGREEN TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING EXAMPLE
EXPENSES Class Y
<S> <C> <C> <C>
Advisory Fees .35%
After 1 Year $ 5
Administrative Fees .06%
After 3 Years $15
12b-1 Fees --
After 5 Years $26
Other Expenses .05%
After 10 Years $58
Total .46%
</TABLE>
(a) Estimated annual operating expenses reflect the combination of EVERGREEN
MONEY MARKET FUND and First Union Money Market Portfolio.
(b) Estimated annual operating expenses reflect the combination of EVERGREEN TAX
EXEMPT MONEY MARKET FUND and First Union Tax Free Money Market Portfolio.
3
<PAGE>
Evergreen Asset has agreed to reimburse EVERGREEN MONEY MARKET FUND and
EVERGREEN TAX EXEMPT MONEY MARKET FUND to the extent that the Fund's aggregate
annual operating expenses (including the Adviser's fee, but excluding interest,
taxes, brokerage commissions, Rule 12b-1 distribution fees and shareholder
services fees, and extraordinary expenses) exceed 1% of the Fund's average net
assets.
The estimated operating expenses and examples do not reflect fee waivers
and expense reimbursements for the most recent fiscal year. Actual expenses, net
of fee waivers and expense reimbursements for the fiscal year ended December 31,
1994 or August 31, 1994, as applicable for Class Y Shares were as follows:
<TABLE>
<S> <C>
EVERGREEN MONEY MARKET FUND .32%
EVERGREEN TAX EXEMPT MONEY MARKET FUND .34%
EVERGREEN TREASURY MONEY MARKET FUND .20%
</TABLE>
From time to time, each Fund's investment 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 Adviser may cease these voluntary waivers or
reimbursements at any time.
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 most recent fiscal period. Such
expenses have been restated to reflect current fee arrangements. 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".
4
<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the fund if shorter for EVERGREEN TREASURY MONEY MARKET FUND has been audited by
KPMG Peat Marwick LLP, the Fund's independent auditors, for EVERGREEN MONEY
MARKET FUND and EVERGREEN TAX EXEMPT MONEY MARKET FUND has, except as noted
otherwise, been audited by Price Waterhouse LLP, each Fund's independent
auditors. A report of KPMG Peat Marwick LLP or Price Waterhouse LLP, as the case
may be, on the audited information with respect to each Fund is incorporated by
reference in the Fund's Statement of Additional Information. The following
information for each Fund should be read in conjunction with the financial
statements and related notes which are incorporated by reference in the Fund's
Statement of Additional Information.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN MONEY MARKET FUND -- Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED TEN MONTHS
FEBRUARY 28, ENDED
1995 AUGUST 31, YEAR ENDED OCTOBER 31,
(UNAUDITED) 1994# 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period........................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income.............. .02 .03 .03 .04 .07 .08 .09
Total from investment
operations..................... .02 .03 .03 .04 .07 .08 .09
Less distributions to shareholders
from net investment income....... (.02) (.03) (.03) (.04) (.07) (.08) (.09)
Net asset value, end of period..... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN+...................... 2.4% 2.9% 3.2% 4.2% 6.7% 8.4% 9.4%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(in millions).................... $244 $273 $299 $358 $438 $458 $408
Ratios to average net assets:
Expenses (a)..................... .54%++ .32%++ .39% .36% .30% .35% .38%
Net investment income (a)........ 4.88%++ 3.46%++ 3.19% 4.18% 6.53% 8.08% 9.42%
<CAPTION>
NOVEMBER 2, 1987*
THROUGH
OCTOBER 31, 1988
<S> <C>
PER SHARE DATA
Net asset value, beginning of
period........................... $1.00
Income from investment operations:
Net investment income.............. .07
Total from investment
operations..................... .07
Less distributions to shareholders
from net investment income....... (.07)
Net asset value, end of period..... $1.00
TOTAL RETURN+...................... 7.4%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(in millions).................... $161
Ratios to average net assets:
Expenses (a)..................... .43%++
Net investment income (a)........ 7.26%++
</TABLE>
# On September 21, 1994, the Fund changed its fiscal year end from October 31
to August 31.
* Commencement of operations.
+ Total return is calculated for the periods indicated and is not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED TEN MONTHS
FEBRUARY 28, ENDED YEAR ENDED NOVEMBER 2, 1987
1995 AUGUST 31, OCTOBER 31, THROUGH
(UNAUDITED) 1994 1993 1992 1991 1990 1989 OCTOBER 31, 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Expenses........................ .74% .71% .71% .72% .70% .69% .75% .93%
Net investment income........... 4.68% 3.07% 2.87% 3.82% 6.13% 7.74% 9.05% 6.76%
</TABLE>
5
<PAGE>
EVERGREEN MONEY MARKET FUND -- CLASS A AND B SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
JANUARY 4, 1995* JANUARY 26, 1995*
THROUGH THROUGH
FEBRUARY 28, 1995 FEBRUARY 28, 1995
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.................................................. $ 1.000 $ 1.000
Income from investment operations:
Net investment income................................................................. .008 .004
Total income from investment operations............................................. .008 .004
Less distributions to shareholders from net investment income......................... (.008) (.004)
Net asset value, end of period........................................................ $ 1.000 $ 1.000
TOTAL RETURN+......................................................................... .8% .4%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)............................................. $668 $35
Ratios to average net assets:
Expenses (a)........................................................................ .85%++ 1.56%++
Net investment income (a)........................................................... 5.40%++ 5.03%++
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value. Contingent deferred sales
charge is not reflected. Total return is calculated for the periods indicated
and is not annualized.
++ Annualized. Due to the recent commencement of their offering, the ratios for
Class A and Class B shares are not necessarily comparable to that of the
Class Y shares, and are not necessarily indicative of future ratios.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
JANUARY 4, 1995 JANUARY 26, 1995
THROUGH THROUGH
FEBRUARY 28, 1995 FEBRUARY 28, 1995
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Expenses...................................................... 1.30% 2.00%
Net investment income......................................... 4.95% 4.59%
</TABLE>
6
<PAGE>
EVERGREEN TAX EXEMPT MONEY MARKET FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED NOVEMBER 2,
FEBRUARY 28, 1995 YEAR ENDED AUGUST 31, 1988* THROUGH
(UNAUDITED) 1994 1993 1992 1991 1990 AUGUST 31, 1989
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income................ .02 .02 .03 .04 .05 .06 .05
Total from investment operations... .02 .02 .03 .04 .05 .06 .05
Less distributions to shareholders from
net investment income................ (.02) (.02) (.03) (.04) (.05) (.06) (.05)
Net asset value, end of period......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN........................... 1.7% 2.5% 2.6% 3.7% 5.5% 6.2% 5.5%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in
millions)............................ $387 $402 $401 $417 $510 $311 $109
Ratios to average net assets:
Expenses (a)......................... .51++ .34% .34% .32% .28% .31% .24%++
Net investment income (a)............ 3.34++ 2.47% 2.58% 3.72% 5.23% 5.94% 6.77%++
</TABLE>
* Commencement of operations.
+ Total return is calculated on net asset value for the period indicated and is
not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, NOVEMBER 2, 1988
1995 YEAR ENDED AUGUST 31, THROUGH AUGUST 31,
(UNAUDITED) 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C>
Expenses.............................. .64% .64% .63% .63% .66% .71% .79%
Net investment income................. 3.21% 2.17% 2.29% 3.41% 4.85% 5.54% 6.22%
</TABLE>
7
<PAGE>
EVERGREEN TAX EXEMPT MONEY MARKET FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
JANUARY 5, 1995*
THROUGH
FEBRUARY 28, 1995
(UNAUDITED)
<S> <C>
PER SHARE DATA
Net asset value, beginning of period...................................................................... $ 1.000
Income from investment operations:
Net investment income..................................................................................... .005
Total from investment operations........................................................................ .005
Distributions to shareholders from net investment income.................................................. (.005)
Net asset value, end of period............................................................................ $ 1.000
TOTAL RETURN+............................................................................................. .5%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................................................................. $144
Ratios to average net assets:
Expenses (a)............................................................................................ .83%++
Net investment income (a)............................................................................... 3.53%++
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized.
++ Annualized. Due to the recent commencement of its offering, the ratios for
Class A shares are not necessarily comparable to that of the Class Y shares,
and are not necessarily indicative of future ratios.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
JANUARY 5, 1995
THROUGH
FEBRUARY 28, 1995
(UNAUDITED)
<S> <C>
Expenses.......................................................................... 1.30%
Net investment income............................................................. 3.06%
</TABLE>
8
<PAGE>
EVERGREEN TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
CLASS A SHARES CLASS Y SHARES
MARCH 6, MARCH 6,
1991* 1991*
THROUGH THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31, YEAR ENDED DECEMBER 31, DECEMBER 31,
1994 1993 1992 1991 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning
of period............... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations:
Net investment income..... .04 .03 .03 .04 .04 .03 .04 .05
Less distributions to
shareholders from net
investment income....... (.04) (.03) (.03) (.04) (.04) (.03) (.04) (.05)
Net asset value, end of
period.................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN+............. 3.8% 2.7% 3.4% 4.5% 4.1% 3.0% 3.7% 4.7%
Net assets, end of period
(000's omitted)......... $755,050 $261,475 $208,792 $ 99,549 $162,921 $366,109 $286,230 $265,109
Ratios to average net
assets:
Expenses (a)............ .50% .48% .48% .47%++ .20% .18% .17% .20%++
Net investment
income (a)............ 3.91% 2.70% 3.22% 4.95%++ 3.78% 3.00% 3.61% 5.53%++
</TABLE>
* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS Y SHARES
YEAR ENDED MARCH 6, 1991 YEAR ENDED MARCH 6, 1991
DECEMBER 31, THROUGH DECEMBER 31, DECEMBER 31, THROUGH DECEMBER 31,
1994 1993 1992 1991 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Expenses................ .78% .82% .82% 1.08% .48% .52% .52% .52%
Net investment income... 3.63% 2.36% 2.88% 4.34% 3.50% 2.66% 3.26% 5.21%
</TABLE>
9
<PAGE>
10
- -------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Evergreen Money Market Fund
The investment objective of Evergreen Money Market Fund is to achieve
as high a level of current income as is consistent with preserving capital and
providing liquidity. This objective is a fundamental policy and may not be
changed without shareholder approval. 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 Investors 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. For
a description of these ratings see the Statement of Additional Information.
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 paragraphs 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 employ certain additional investment strategies which are
discussed in "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. This objective is
a fundamental policy and may not be changed without shareholder approval. 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. 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. The ability of the Fund to meet its investment
objective is necessarily subject to the ability of municipal issuers to meet
their payment obligations.
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, which may not be changed without
shareholder approval, 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, which may not be changed without shareholder approval, 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.
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 Fund's investment 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 Fund may invest
for defensive purposes during periods when the Fund's assets available for
investment exceed the available Municipal Securities that meet the Fund'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 an SRO; 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 Fund may employ certain additional investment strategies which are
discussed in "Investment Practices and Restrictions", below.
Evergreen Treasury Money Market Fund
The investment objective of Evergreen Treasury Money Market Fund, which
is a matter of fundamental policy that may not be changed without shareholder
approval, is to maintain stability of principal while earning current income.
However, the Fund will only attempt to seek income to the extent consistent with
stability of principal and, therefore, investments will only be made in
short-term United States Treasury obligations with an average dollar-weighted
maturity of 90 days or less. As a matter of investment strategy, the Fund's
investment adviser intends to maintain a dollar-weighted average maturity for
the Fund of 60 days or less.
Evergreen Treasury Money Market Fund is suitable for conservative
investors seeking high current yields plus relative safety. The Fund provides a
reasonable means of maximizing opportunities and minimizing risks resulting from
changing interest rates.
The short-term United States Treasury obligations in which the Fund
invests are issued by the U.S. Government and are fully guaranteed as to
principal and interest by the United States. Such securities will have a
maturity date that is 397 days or less from the date of acquisition unless they
are purchased under an agreement that provides for repurchase of the securities
from the Fund within 397 days from the date of acquisition. The Fund may also
retain Fund assets in cash.
The Fund may employ certain additional investment strategies which are
discussed in "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 under Evergreen Tax Exempt
Money Market Fund, 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. If a
portfolio security is no longer of eligible quality, a 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 ability of each Fund to meet its investment objective is
necessarily subject to the ability of the issuers of securities in which the
Funds invest to meet their payment obligations. In addition, the portfolio of
each 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 a Fund will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates, the yield of a Fund will tend to
be somewhat lower. Also, when interest rates are falling, the inflow of net new
money to a 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.
Repurchase Agreements. The Funds may enter into 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. Each Fund's investment 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,
Evergreen Tax Exempt Money Market Fund and Evergreen Money Market Fund 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 Evergreen Tax Exempt Money Market Fund or Evergreen Money
Market Fund, if and when made, may not exceed 30% of a Fund's total assets and
will be collateralized by cash, letters of credit or United States 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 a Fund and its investors. A Fund
may pay reasonable fees in connection with such loans.
When-Issued Securities. Evergreen Tax Exempt Money Market Fund and Evergreen
Treasury Money Market Fund may purchase securities on a "when-issued" basis
(i.e., for delivery beyond the normal settlement date at a stated price and
yield). A Fund generally would not pay for such securities or start earning
interest on them until they are received. However, when a Fund purchases
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 a Fund on a when-issued basis may result in the Fund
incurring a loss or missing an opportunity to make an alternative investment.
Evergreen Tax Exempt Money Market Fund does not expect that commitments to
purchase when-issued securities will normally exceed 25% of its total assets and
Evergreen Treasury Money Market Fund does not expect that such commitments will
exceed 20% of its total assets. The Funds do not intend to purchase when-issued
securities for speculative purposes but only in furtherance of their investment
objective.
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. In the
case of Evergreen Tax Exempt Money Market Fund and Evergreen Money Market Fund,
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 each
Fund's investment 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 each 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 10% of its assets invested in illiquid or not readily marketable
securities.
Other Investment Policies. The Funds may borrow money for temporary or emergency
purposes in amounts not in excess of 10% of the value of a Fund's total assets
in the case of Evergreen Tax Exempt Money Market Fund and Evergreen Money Market
Fund and one-third of the value of Evergreen Treasury Money Market Fund's total
assets, including the amount borrowed. As another means of borrowing both
Evergreen Tax Exempt Money Market Fund and Evergreen Money Market Fund may 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") at the time of such borrowing in amounts up
to 5% of the value of their total assets. A Fund will not purchase any
securities whenever any borrowings (including reverse repurchase agreements) are
outstanding. If either Evergreen Tax Exempt Money Market Fund or Evergreen Money
Market Fund enter into a reverse repurchase agreement, they 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.
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 ADVISERS
The management of each Fund is supervised by the Trustees of the Trust
under which the Fund has been established ("Trustees"). Evergreen Asset
Management Corp. ("Evergreen Asset") has been retained to serve as investment
adviser to Evergreen Money Market Fund and Evergreen Tax Exempt Money Market
Fund. Evergreen Asset succeeded on June 30, 1994 to the advisory business of the
same name, but under different ownership, which was organized in 1971. Evergreen
Asset, with its predecessors, has served as investment adviser to the Evergreen
Group of Mutual Funds 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 Treasury Money
Market Fund.
First Union is a bank holding company headquartered in Charlotte, North
Carolina, and had $77.9 billion in consolidated assets as of March 31, 1995.
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 all the series of
Evergreen Investment Trust (formerly known as First Union 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 Money Market
Fund and Evergreen Tax Exempt Money Market Fund, subject to the authority of the
Trustees. Evergreen Asset is entitled to receive from each Fund an annual fee
equal to .50 of 1% of average daily net assets of each Fund on the first $1
billion in assets and .45 of 1% of average daily net assets in excess of $1
billion. However, Evergreen Asset 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 Evergreen
Asset waived a portion of the advisory fee payable by the Evergreen Money Market
Fund and Evergreen Tax Exempt Money Market Fund as set forth in the section
entitled "Financial Highlights". The total expenses as a percentage of average
daily net assets on an annualized basis for Evergreen Money Market Fund and
Evergreen Tax Exempt Money Market Fund for the fiscal period ended August 31,
1994 are also set forth in the section entitled "Financial Highlights". CMG
manages investments and supervises the daily business affairs of Evergreen
Treasury Money Market Fund and, as compensation therefor, is entitled to receive
an annual fee equal to .35 of 1% of average daily net assets of Evergreen
Treasury Money Market Fund. For the fiscal period ended December 31, 1994 CMG
waived a portion of the advisory fee payable by the Evergreen Treasury Money
Market Fund as set forth in the section entitled "Financial Highlights". The
total annualized operating expenses of Evergreen Treasury Money Market Fund for
its most recent fiscal year ended December 31, 1994 are also set forth in the
section entitled "Financial Highlights". Evergreen Asset serves as administrator
to Evergreen Treasury Money Market Fund and is entitled to receive a fee based
on the average daily net assets of the Fund at a rate based on the total assets
of the mutual funds administered by Evergreen Asset for which CMG or Evergreen
Asset also serve as investment adviser, calculated in accordance with the
following schedule: .050% of the first $7 billion; .035% on the next $3 billion;
.030% on the next $5 billion; .020% on the next $10 billion; .015% on the next
$5 billion; and .010% on assets in excess of $30 billion. Furman Selz
Incorporated, the parent of Evergreen Funds Distributor, Inc., distributor for
the Evergreen group of mutual funds, serves as sub-administrator to Evergreen
Treasury Money Market Fund and is entitled to receive a fee from the Fund
calculated on the average daily net assets of the Fund at a rate based on the
total assets of the mutual funds administered by Evergreen Asset for which CMG
or Evergreen Asset also serve as investment adviser, calculated in accordance
with the following schedule: .0100% of the first $7 billion; .0075% on the next
$3 billion; .0050% on the next $15 billion; and .0040% on assets in excess of
$25 billion. The total assets of the mutual funds administered by Evergreen
Asset for which CMG or Evergreen Asset serve as investment adviser as of March
31, 1995 were approximately $8 billion.
SUB-ADVISER
Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company 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 the
portfolios of Evergreen Money Market Fund and Evergreen Tax Exempt Money Market
Fund. Lieber & Company will be reimbursed by Evergreen Asset 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 Evergreen Money
Market Fund and Evergreen Tax Exempt Money Market Fund 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.
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PURCHASE AND REDEMPTION OF SHARES
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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 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.
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 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 at the number on the front page of this Prospectus 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 Fund 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 10 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 at (800) 423-2615 between the hours of 8:00 a.m. and
5:30 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 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.
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 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.
Exchanges by Telephone and Mail. You may exchange shares by telephone by calling
State Street at (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 your financial
intermediary, Evergreen Funds Distributor, Inc.("EFD"), the distributor of the
Funds, or the number on the front page of this Prospectus. 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.
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.
Retirement Plans. Eligible investors may invest in Evergreen Money Market Fund
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.
Tax Sheltered Retirement Plans. You may open a pension and profit sharing
account in any Evergreen mutual fund (except those funds having an objective of
providing tax free income), including: (i) Individual Retirement Accounts
("IRAs") and Rollover IRAs; (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.
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. Evergreen
Asset, since it is a subsidiary of FUNB, and CMG are 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 CMG or 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 CMG or 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
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 "Code"). 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 Funds
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
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 Evergreen Money Market Fund (formerly Evergreen Money Market
Trust) is a Massachusetts business trust organized in 1987, 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, and
the Evergreen Treasury Money Market Fund is a separate investment series of
Evergreen Investment Trust (formerly First Union Funds), which is a
Massachusetts business trust organized in 1984.
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 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. Furman Selz Incorporated, also acts as
sub-administrator to Evergreen Treasury Money Market Fund and which provides
certain sub-administrative services to Evergreen Asset in connection with its
role as investment adviser to Evergreen Tax Exempt Money Market Fund and
Evergreen Treasury Money Market Fund, including providing personnel to serve as
officers of the Funds.
Other Classes of Shares. Evergreen Money Market Fund offers three classes of
shares, Class A, Class B, and Class Y. Evergreen Tax Exempt Money Market Fund
and Evergreen Treasury Money Market Fund each offer 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 Funds
for which Evergreen Asset serves as investment adviser as of December 30, 1994,
(ii) certain institutional investors and (iii) investment advisory clients of
CMG, Evergreen Asset or their 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 and shareholder servicing
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.
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 Trusts
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>
INVESTMENT ADVISER
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN MONEY MARKET FUND, EVERGREEN TAX EXEMPT MONEY MARKET FUND
Capital Management Group of First Union National Bank, 201 South College
Street, Charlotte, North Carolina 28288
EVERGREEN TREASURY MONEY MARKET FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827
LEGAL COUNSEL
Sullivan & Worcester, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
EVERGREEN MONEY MARKET FUND, EVERGREEN TAX EXEMPT MONEY MARKET FUND
KPMG Peat Marwick, LLP One Mellon Bank Center Pittsburgh, Pennsylvania 15219
EVERGREEN TREASURY MONEY MARKET FUND
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017
536128
