1933 Act File No. 33-16706
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 13 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 13 X
EVERGREEN MONEY MARKET FUND
(formerly Evergreen Money Market Trust)
(Exact Name of Registrant as Specified in Charter)
2500 WESTCHESTER AVENUE, PURCHASE, NEW YORK 10577
(Address of Principal Executive Offices)
(914) 694-2020
(Registrant's Telephone Number)
James P. Wallin, Esquire,
2500 Westchester Avenue
Purchase, New York 10577
(Name and Address of Agent for Service)
Copies to:
John A. Dudley, Esquire
Sullivan & Worcester
1025 Connecticut Ave., N.W.
Washington, D.C. 20036
It is proposed that this filing will become effective (check appropriate box)
/X/ Immediately upon filing pursuant to paragraph (b) or
/ / on (date) pursuant to paragraph (b) or
/ / 60 days after filing pursuant to paragraph (a)(i) or
/ / on (date) pursuant to paragraph (a)(i) or
/ / 75 days after filing pursuant to paragraph (a)(ii) or
/ / on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i)
Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:
/X/ filed the Notice required by that Rule on or about October 31, 1996; or
/ / intends to file the Notice required by that Rule on or about (date); or
/ / during the most recent fiscal year did not sell any securities
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and,
pursuant to Rule 24f-2(b)(2), need not file the Notice.
CROSS REFERENCE SHEET
(as required by Rule 481(a))
N-1A Item No. Location in Prospectus(es)
Part A
Item 1. Cover Page Cover Page
Item 2. Synopsis and Fee Table Overview of the Fund(s);
Expense Information
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant Cover Page; Description of
the Funds; General
Information
Item 5. Management of the Fund Management of the Fund(s);
General Information
Item 6. Capital Stock and Other Securities Dividends, Distributions and
Taxes; General
Information
Item 7. Purchase of Securities Being Offered Purchase and Redemption of
Shares
Item 8. Redemption or Repurchase Purchase and Redemption of
Shares
Item 9. Pending Legal Proceedings Not Applicable
Location in Statement of
Part B Additional Information
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History Not Applicable
Item 13. Investment Objectives and Policies Investment Objectives and
Policies;Investment
Restrictions; Other
Restrictions and
Operating Policies
Item 14. Management of the Fund Management
Item 15. Control Persons and Principal Management
Holders of Securities
Item 16. Investment Advisory and Other Services Investment Adviser;
Purchase of Shares
Item 17. Brokerage Allocation Allocation of Brokerage
Item 18. Capital Stock and Other Securities Purchase of Shares
Item 19. Purchase, Redemption and Pricing of Distribution Plans; Purchase
Securities Being Offered of Shares; Net Asset Value
Item 20. Tax Status Additional Tax Information
Item 21. Underwriters Distribution Plans; Purchase
of Shares
Item 22. Calculation of Performance Data Performance Information
Item 23. Financial Statements Financial Statements
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
*******************************************************************************
<PAGE>
PROSPECTUS October 31, 1996
EVERGREEN(SM) MONEY MARKET FUNDS (Evergreen tree logo)
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
October 31, 1996 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
ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, ARE NOT INSURED OR
OTHERWISE PROTECTED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY AND
INVOLVE INVESTMENT RISKS.
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 11
Investment Practices and Restrictions 14
MANAGEMENT OF THE FUNDS
Investment Advisers 15
Sub-Adviser 16
Distribution Plans and Agreements 17
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 18
How to Redeem Shares 20
Exchange Privilege 21
Shareholder Services 22
Effect of Banking Laws 22
OTHER INFORMATION
Dividends, Distributions and Taxes 23
General Information 24
</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. which, with its
predecessors, has served as an investment adviser to the Evergreen Funds since
1971. Evergreen Asset Management Corp. is a wholly-owned subsidiary of First
Union National Bank of North Carolina, which in turn is a subsidiary of First
Union Corporation, the sixth largest bank holding company in the United States.
The Capital Management Group of First Union National Bank of North Carolina
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 seeks to maintain 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 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>
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 year and 0% after the sixth 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
<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>
Management Fees .48% .48%
After 1 Year $ 9 $ 66 $ 16
12b-1 Fees ** .30% 1.00%
After 3 Years $ 28 $ 80 $ 50
Other Expenses .11% .11%
After 5 Years $ 49 $ 107 $ 87
After 10 Years $ 110 $ 161 $161
Total .89% 1.59%
</TABLE>
EVERGREEN TAX EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
EXAMPLES
ANNUAL OPERATING Assuming Redemption
EXPENSES* at End of Period
Class A Class A
<S> <C> <C> <C>
Management Fees .49%
After 1 Year $ 9
12b-1 Fees ** .30%
After 3 Years $ 29
Other Expenses .11%
After 5 Years $ 50
After 10 Years $111
Total .90%
</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>
Management Fees .35%
After 1 Year $ 8
12b-1 Fees** .30%
After 3 Years $ 25
Other Expenses .12%
After 5 Years $ 43
After 10 Years $ 95
Total .77%
</TABLE>
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 investment 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 .14 of 1% of average net assets for Evergreen Money Market Fund and
.11 of 1% of average net assets for Evergreen Tax Exempt Money Market Fund and
.08 of 1% of average net assets for Evergreen Treasury Money Market Fund for the
fiscal year ended August 31, 1996.
**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. 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 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>
TEN MONTHS
YEAR ENDED ENDED
AUGUST 31, AUGUST 31, YEAR ENDED OCTOBER 31,
1996 1995 1994 # 1993 1992 1991 1990 1989
<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................................. .05 .05 .03 .03 .04 .07 .08 .09
Less distributions to shareholders from net investment
income.............................................. (.05) (.05) (.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 $1.00
TOTAL RETURN+......................................... 5.3% 5.4% 2.9% 3.2% 4.2% 6.7% 8.4% 9.4%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in millions)............... $671 $ 283 $273 $299 $358 $438 $458 $408
Ratios to average net assets:
Expenses **......................................... .45% .53% .32%++ .39% .36% .30% .35% .38%
Net investment income **............................ 5.16% 5.26% 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
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 **......................................... .43%++
Net investment income **............................ 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.
** Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were reimbursed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets would have been the following:
<TABLE>
<CAPTION>
TEN MONTHS
YEAR ENDED ENDED
AUGUST 31, AUGUST 31, YEAR ENDED OCTOBER 31,
1996 1995 1994 # 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Expenses.............................................. .59% .73% .71% .71% .72% .70% .69% .75%
Net investment income................................. 5.02% 5.06% 3.07% 2.87% 3.82% 6.13% 7.74% 9.05%
<CAPTION>
NOVEMBER 2,
1987*
THROUGH
OCTOBER 31,
1988
<S> <C>
Expenses.............................................. .93%
Net investment income................................. 6.76%
</TABLE>
5
<PAGE>
EVERGREEN MONEY MARKET FUND -- CLASS A AND B SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
JANUARY 4, JANUARY 26,
YEAR ENDED 1995* YEAR ENDED 1995*
AUGUST 31, THROUGH AUGUST 31, THROUGH
1996 AUGUST 31, 1995 1996 AUGUST 31, 1995
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period......................... $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income...................................... .05 .03 .04 .03
Less distributions to shareholders from net investment
income..................................................... (.05 ) (.03) (.04) (.03)
Net asset value, end of period............................... $1.00 $1.00 $1.00 $1.00
TOTAL RETURN+................................................ 5.0% 3.5% 4.3% 2.8%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted).................... $1,755,267 $685,155 $10,218 $7,927
Ratios to average net assets:
Expenses **................................................ .75% .81%++ 1.45% 1.51%++
Net investment income **................................... 4.86% 5.26%++ 4.18% 4.54%++
</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.
** Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were reimbursed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets would have been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
JANUARY 4, JANUARY 26,
YEAR ENDED 1995* YEAR ENDED 1995*
AUGUST 31, THROUGH AUGUST 31, THROUGH
1996 AUGUST 31, 1995 1996 AUGUST 31, 1995
<S> <C> <C> <C> <C>
Expenses..................................................... .89% 1.02% 1.59% 2.39%
Net investment income........................................ 4.72% 5.05% 4.04% 3.66%
</TABLE>
6
<PAGE>
EVERGREEN TAX EXEMPT MONEY MARKET FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
1996 1995 1994 1993 1992 1991 1990
<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............... .03 .04 .02 .03 .04 .05 .06
Less distributions to shareholders
from net investment income.......... (.03) (.04) (.02) (.03) (.04) (.05) (.06)
Net asset value, end of period........ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN+......................... 3.5% 3.6% 2.5% 2.6% 3.7% 5.5% 6.2%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in
millions)........................... $617 $421 $402 $401 $417 $510 $311
Ratios to average net assets:
Expenses **......................... .49% .50% .34% .34% .32% .28% .31%
Net investment income **............ 3.44% 3.53% 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
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 **......................... .24%
Net investment income **............ 6.77%++
</TABLE>
* Commencement of operations.
+ Total return is calculated for the periods indicated and is not annualized.
++ Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were reimbursed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets would have been the following:
<TABLE>
<CAPTION>
NOVEMBER 2,
YEAR ENDED AUGUST 31, 1988* THROUGH
1996 1995 1994 1993 1992 1991 1990 AUGUST 31, 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Expenses.................................... .60% .63% .64% .63% .63% .66% .71% .79%
Net investment income....................... 3.33% 3.40% 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*
YEAR ENDED THROUGH
AUGUST 31, 1996 AUGUST 31, 1995
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period..................................................... $ 1.00 $ 1.00
Income from investment operations:
Net investment income.................................................................. .03 .02
Distributions to shareholders from net investment income................................. (.03) (.02)
Net asset value, end of period........................................................... $ 1.00 1.00
TOTAL RETURN+............................................................................ 3.2% 2.2%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)................................................ $660,516 $554,924
Ratios to average net assets:
Expenses **............................................................................ .79% .78%++
Net investment income **............................................................... 3.14% 3.28%++
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized.
++ Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were reimbursed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets would have been the following:
<TABLE>
<CAPTION>
JANUARY 5, 1995*
YEAR ENDED THROUGH
AUGUST 31, 1996 AUGUST 31, 1995
<S> <C> <C>
Expenses.............................................................................. .90% .90%
Net investment income................................................................. 3.03% 3.16%
</TABLE>
8
<PAGE>
EVERGREEN TREASURY MONEY MARKET FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
EIGHT MARCH 6,
MONTHS 1991*
YEAR ENDED ENDED YEAR ENDED THROUGH
AUGUST 31, AUGUST 31, DECEMBER 31, DECEMBER 31,
1996 1995# 1994 1993 1992 1991
<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................................. .05 .03 .04 .03 .03 .04
Less distributions to shareholders from net
investment income.................................... (.05) (.03) (.04) (.03) (.03) (.04)
Net asset value, end of period........................ $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN+......................................... 5.0% 3.6% 3.8% 2.7% 3.4% 4.5%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (In millions)............... $2,608 $1,178 $755 $261 $209 $100
Ratios to average net assets:
Expenses **......................................... .69% .63%++ .50% .48% .48% .47%++
Net investment income **............................ 4.76% 5.30%++ 3.91% 2.70% 3.22% 4.95%++
</TABLE>
# The Fund changed its fiscal year end from December 31 to August 31.
* Commencement of operations.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized.
++ Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were reimbursed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets would have been the following:
<TABLE>
<CAPTION>
EIGHT MARCH 6,
MONTHS 1991*
YEAR ENDED ENDED YEAR ENDED THROUGH
AUGUST 31, AUGUST 31, DECEMBER 31 DECEMBER 31,
1996 1995# 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Expenses...................................................... .77% .79% .78% .82% .82% 1.08%
Net investment income......................................... 4.68% 5.14% 3.63% 2.36% 2.88% 4.34%
</TABLE>
9
<PAGE>
EVERGREEN TREASURY MONEY MARKET FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
EIGHT MARCH 6,
MONTHS 1991*
YEAR ENDED ENDED YEAR ENDED THROUGH
AUGUST 31, AUGUST 31, DECEMBER 31, DECEMBER 31,
1996 1995# 1994 1993 1992 1991
<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............................................ .05 .04 .04 .03 .04 .05
Less distributions to shareholders from net
investment income............................................... (.05) (.04) (.04) (.03) (.04) (.05)
Net asset value, end of period................................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN+.................................................... 5.3% 3.8% 4.1% 3.0% 3.7% 4.7%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (In millions).......................... $760 $277 $163 $366 $286 $265
Ratios to average net assets:
Expenses **.................................................... .39% .33%++ .20% .18% .17% .20%++
Net investment income **....................................... 5.12% 5.60%++ 3.78% 3.00% 3.61% 5.53%++
</TABLE>
# The Fund changed its fiscal year end from December 31 to August 31.
* Commencement of operations.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized.
++ Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were reimbursed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets would have been the following:
<TABLE>
<CAPTION>
EIGHT MARCH 6,
MONTHS 1991*
YEAR ENDED ENDED YEAR ENDED THROUGH
AUGUST 31, AUGUST 31, DECEMBER 31, DECEMBER 31,
1996 1995 # 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Expenses.................................................... .47% .49% .48% .52% .52% .52%
Net investment income....................................... 5.04% 5.44% 3.50% 2.66% 3.26% 5.21%
</TABLE>
10
<PAGE>
DESCRIPTION OF THE FUNDS
INVESTMENT OBJECTIVES AND POLICIES
In addition to the investment policies detailed below, each Fund may
employ certain additional investment strategies which are discussed in
"Investment Practices and Restrictions".
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 otherwise eligible but 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 investment adviser to be of comparable quality.
6. Unrated corporate debt securities, commercial paper and bank
obligations otherwise determined by the investment adviser to be of comparable
quality.
7. Repurchase agreements with respect to the securities described in
paragraphs 1 through 6 above.
11
<PAGE>
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, as amended (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 net assets in
securities which are not readily marketable (including private placement
securities) and in repurchase agreements maturing in more than seven days.
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 investment adviser 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 investment adviser to be of
comparable quality. Certain Municipal Securities (primarily variable rate demand
notes) may be entitled to the benefit of standby letters of credit or similar
commitments issued by banks or other financial institutions and, in such
instances, the investment adviser will take into account the obligation of the
bank in assessing the quality of such security. Such commitments issued by banks
are not insured by the Federal Deposit Insurance Corporation or any other
agency. 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
12
<PAGE>
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 net 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.
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.The
Fund will only attempt to seek income to the extent consistent with stability of
principal and, therefore, investments will be made in short-term United States
Treasury obligations with an average dollar-weighted maturity of 90 days or less
and obligations the principal and interest of which are backed by the full faith
and credit of the United States Government, provided that the Fund shall, under
normal market conditions, invest
13
<PAGE>
at least 65% of its total assets in obligations issued directly by the U.S.
Treasury. The Fund also may enter into repurchase agreements collateralized by
the types of securities in which it may invest and lend its portfolio securities
to qualified institutional investors. 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.
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, the
Funds may lend portfolio securities to brokers, dealers and other financial
organizations and enter into reverse repurchase agreements. Each Fund's
investment adviser will monitor the creditworthiness of such borrowers. Loans of
securities by the Funds, if and when made, may not exceed 30% of a Fund's total
assets and will be collateralized by cash, letters of credit or
14
<PAGE>
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 Act, 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 net 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 each 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 a Fund enters into a reverse repurchase agreement, it will
place in a segregated custodial account cash, United States Government
securities or liquid high grade debt obligations having a value equal to the
repurchase price (including accrued interest) and will subsequently monitor the
account to ensure that such equivalent value is maintained. Reverse repurchase
agreements involve the risk that the market value of the securities sold by a
Fund may decline below the repurchase price of those securities.
Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the Statement of Additional Information.
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISERS
The management of each Fund is supervised by the Trustees of the Trust
under which each 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 a
corporation with 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 mutual funds since 1971. Evergreen Asset is
a wholly-owned
15
<PAGE>
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"), the sixth largest bank
holding company 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 headquartered in Charlotte, North Carolina, and had $139.9
billion in consolidated assets as of June 30, 1996. First Union and its
subsidiaries provide a broad range of financial services to individuals and
businesses throughout the United States. CMG manages or otherwise oversees the
investment of over $42.1 billion in assets belonging to a wide range of clients,
including all the series of Evergreen Investment Trust , the two series of The
Evergreen Lexicon Fund (formerly The FFB Lexicon Fund, and the two series of
Evergreen Tax-Free Trust (formerly FFB Funds Trust). 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 waived all or a portion of its fee for the purpose of reducing each
Fund's expense ratio. For the fiscal year ended August 31, 1996 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 year ended August 31, 1996 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 the
Fund. For the fiscal year ended August 31, 1996 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 fiscal year ended
August 31, 1996 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 LLC, an affiliate 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 were approximately $15.2 billion as of June 30,
1996.
SUB-ADVISER
Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company which provide 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
16
<PAGE>
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.
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 exceed .25 of 1% 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 distributor 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 others 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
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 Furman Selz LLC, 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.
<TABLE>
<CAPTION>
Year Since
Purchase Contingent Deferred Sales Charge
<S> <C>
FIRST 5%
SECOND 4%
THIRD and FOURTH 3%
FIFTH 2%
SIXTH 1%
</TABLE>
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") (currently 4:00 p.m. Eastern time) each business day,
i.e., any weekday exclusive of days on which the Exchange or State Street Bank
and Trust Company ("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
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<PAGE>
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 of
each Trust under which each Fund operates believe 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 the Fund's 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 the Fund's 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.
The Funds will not accept third party checks other than those payable directly
to a shareholder whose account has been in existence at least thirty days.
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 4:00 p.m. (Eastern time). Institutions should
telephone the Fund at the telephone 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 mutual funds. Although not currently
anticipated, each Fund reserves the right to suspend the offer of shares for a
period of time.
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 mutual 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. EFD may also limit the availability of such incentives to
certain specified dealers. EFD from time to time sponsors promotions involving
First Union Brokerage Servies, Inc. ("FUBS"), an affiliate of each Fund's
investment adviser, and other selected dealers, pursuant to which incentives are
paid, including gift certificates and payments in amounts up to 1% of the dollar
amount of shares of a Fund sold. Awards may also be made based on the opening of
a minimum number of accounts. Such promotions are not being made available to
all dealers. Certain broker-dealers may also receive payments from
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<PAGE>
EFD or a Fund's investment adviser over and above the usual trail commissions or
shareholder servicing payments applicable to a given Class of shares.
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 ten
days). Once a redemption request has been telephoned or mailed, it is
irrevocable and may not be modified or cancelled.
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. (Eastern time).
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 the telephone number on the front page of this Prospectus between the
hours of 8:00 a.m. to 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 or State Street by telephone should
follow the procedures outlined above for redemption by mail.
The telephone redemption service is not made available to shareholders
automatically. Shareholders wishing to use the telephone redemption service must
indicate this on the Share Purchase Application and choose how the redemption
proceeds are to be paid. Redemption proceeds will either (i) be mailed by check
to the shareholder at the address in which the account is registered or (ii) be
wired to an account with the same registration as the shareholder's account in a
Fund at a designated commercial bank. State Street currently deducts a $5.00
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 ten 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. Financial intermediaries may
charge a fee for handling telephonic requests. Procedures for redeeming Fund
shares by telephone may be modified or terminated without notice at any time.
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<PAGE>
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 thirty days. Shareholders will receive sixty days'
written notice to increase the account value before the account is closed. The
Funds have elected to be governed by Rule 18f-1 under the Investment Company Act
of 1940 pursuant to which each Fund is obligated to redeem shares solely in
cash, up to the lesser of $250,000 of 1% of a Fund's total net assets during any
ninety day period for any one shareholder. See the Statement of Additional
Information for further details.
EXCHANGE PRIVILEGE
How To Exchange Shares. You may exchange some or all of your shares for shares
of the same Class of the other Evergreen mutual funds through your financial
intermediary, or by telephone or mail as described below. 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. An exchange, which represents an initial investment in another
Evergreen mutual fund, is subject to the minimum investment and suitability
requirements of each Fund.
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 page of this Prospectus. Exchange requests
made after 4:00 p.m. (Eastern time) will be processed using the
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<PAGE>
net asset value determined on the next business day. During periods of drastic
economic or market changes, shareholders may experience difficulty in effecting
telephone exchanges. You should follow the procedures outlined below for
exchanges by mail if you are unable to reach State Street by telephone. If you
wish to use the telephone exchange service you should indicate this on the Share
Purchase Application. As noted above, each Fund will employ reasonable
procedures to confirm that instructions for the redemption or exchange of shares
communicated by telephone are genuine. A telephone exchange may be refused by a
Fund or State Street if it is believed advisable to do so. Procedures for
exchanging Fund shares by telephone may be modified or terminated at any time.
Written requests for exchanges should follow the same procedures outlined for
written redemption requests in the section entitled "How to Redeem Shares",
however, no signature guarantee is required.
SHAREHOLDER SERVICES
The Funds offer the following shareholder services. For more information
about these services or your account, contact 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 per month or
$75 per quarter. Each Fund reserves the right to close an account that through
liquidation of the Systematic Investment Plan has not reached a minimum balance
of $1,000 ($250 for retirement accounts) within twenty-four months of the
initial investment.
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.
Shares purchased under the Funds Systematic Investment Plan or Telephone
Investment Plan may not be redeemed for ten days from the date of investment.
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 Funds
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 $75. 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.
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
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<PAGE>
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.
OTHER INFORMATION
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Funds declare substantially all of their net income as dividends on
each business day. Such dividends are paid monthly. Net income, for dividend
purposes, includes accrued interest and any market discount or premium that day,
less the estimated expenses of a Fund. Gains or losses realized upon the sale of
portfolio securities are not included in net income, but are reflected in the
net asset value of a Fund's shares. Distributions of any net realized capital
gains will be made annually or more frequently as required by the provisions of
the Internal Revenue Code of 1986, as amended (the "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 4:00 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)
23
<PAGE>
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 is a separate investment series of
Evergreen Money Market Trust, a Massachusetts business trust organized in 1987.
The EVERGREEN TAX EXEMPT MONEY MARKET FUND is a separate investment series of
The Evergreen Municipal Trust, a Massachusetts business trust organized in 1988.
The EVERGREEN TREASURY MONEY MARKET FUND is a separate investment series of
Evergreen Investment Trust (formerly First Union Funds), 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.
Custodian, 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 custodian, registrar, transfer agent and dividend-disbursing agent.
State Street is compensated for its services as transfer agent by 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, an affiliate of Furman Selz LLC, located 230 Park
Avenue, New York, New York 10017, is the principal underwriter of the Funds.
Furman Selz LLC also acts as sub-administrator to EVERGREEN TREASURY MONEY
MARKET FUND and 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 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
24
<PAGE>
available to (i) persons who at or prior to December 31, 1994, owned shares in a
mutual fund advised by Evergreen Asset, (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.
In marketing a Fund's shares, information may be provided that is
designed to help individuals understand their investment goals and explore
various financial strategies. Such information may include publications
describing general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; a questionnaire designed to
help create a personal financial profite; and an action plan offering investment
alternatives. The information provided to investors may also include discussions
of other Evergreen mutual funds, products, and services, which may include:
retirement investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; and charitable
giving. In addition, the information provided to investors may quote financial
or business publications and periodicals, including model portfolios or
allocations, as they relate to fund management, investment philosophy, and
investment techniques. The Principal Underwriter may also reprint, and use as
advertising and sales literature, articles from EVERGREEN EVENTS, a quarterly
magazine provided to Evergreen mutual fund shareholders.
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 the
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 SEC under the Act. Copies of the Registration Statements may be
obtained at a reasonable charge from the SEC or may be examined, without charge,
at the offices of the SEC in Washington, D.C.
25
<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 of North Carolina, 201
South College Street, Charlotte, North Carolina 28288
EVERGREEN TREASURY MONEY MARKET FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company, Box 9021, Boston, Massachusetts
02205-9827
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C.
20036
INDEPENDENT AUDITORS
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., 230 Park Avenue, New York, New York 10017
45960 536120rev02
*******************************************************************************
<PAGE>
PROSPECTUS October 31, 1996
EVERGREEN(SM) MONEY MARKET FUNDS (Evergreen tree logo)
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
October 31, 1996 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
ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, ARE NOT INSURED OR
OTHERWISE PROTECTED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY, AND
INVOLVE INVESTMENT RISKS.
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 11
Investment Practices and Restrictions 14
MANAGEMENT OF THE FUNDS
Investment Advisers 15
Sub-Adviser 16
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 17
How to Redeem Shares 18
Exchange Privilege 19
Shareholder Services 20
Effect of Banking Laws 20
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. which, with its
predecessors, has served as an investment adviser to the Evergreen mutual funds
since 1971. Evergreen Asset Management Corp. is a wholly-owned subsidiary of
First Union National Bank of North Carolina, which in turn is a subsidiary of
First Union Corporation, the sixth largest bank holding company in the United
States. The Capital Management Group of First Union National Bank of North
Carolina 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 seeks to maintain 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
<TABLE>
<CAPTION>
ANNUAL OPERATING EXAMPLE
EXPENSES Class Y
<S> <C> <C> <C>
Management Fees .48%
After 1 Year $ 6
12b-1 Fees -- After 3 Years
After 3 Years $19
Other Expenses .11%
After 5 Years $33
After 10 Years $74
Total .59%
</TABLE>
EVERGREEN TAX EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING EXAMPLE
EXPENSES Class Y
<S> <C> <C> <C>
Management Fees .49%
After 1 Year $ 6
12b-1 Fees --
After 3 Years $19
Other Expenses .11%
After 5 Years $33
After 10 Years $75
Total .60%
</TABLE>
EVERGREEN TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING EXAMPLE
EXPENSES Class Y
<S> <C> <C> <C>
Management Fees .35%
After 1 Year $ 5
12b-1 Fees --
After 3 Years $15
Other Expenses .12%
After 5 Years $26
After 10 Years $59
Total .47%
</TABLE>
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 investment 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 year ended August 31, 1996 for
Class Y Shares were as follows:
<TABLE>
<S> <C>
EVERGREEN MONEY MARKET FUND .45%
EVERGREEN TAX EXEMPT MONEY MARKET FUND .49%
EVERGREEN TREASURY MONEY MARKET FUND .39%
</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 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 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 year. 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 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>
TEN MONTHS
YEAR ENDED ENDED
AUGUST 31, AUGUST 31, YEAR ENDED OCTOBER 31,
1996 1995 1994# 1993 1992 1991 1990 1989
<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.......... .05 .05 .03 .03 .04 .07 .08 .09
Less distributions to
shareholders from net
investment income............ (.05) (.05) (.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 $1.00
TOTAL RETURN+.................. 5.3% 5.4% 2.9% 3.2% 4.2% 6.7% 8.4% 9.4%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(in millions)................ $671 $283 $273 $299 $358 $438 $458 $408
Ratios to average net assets:
Expenses **.................. .45% .53% .32%++ .39% .36% .30% .35% .38%
Net investment income **..... 5.16% 5.26% 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
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 **.................. .43%++
Net investment income **..... 7.26%++
</TABLE>
# 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.
** Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were reimbursed or waived by the investment adviser, the annualized
ratios of expenses and net investment income to average net assets would have
been the following:
<TABLE>
<CAPTION>
TEN MONTHS
YEAR ENDED ENDED YEAR ENDED NOVEMBER 2, 1987*
AUGUST 31, AUGUST 31, OCTOBER 31, THROUGH
1996 1995 1994 # 1993 1992 1991 1990 1989 OCTOBER 31, 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Expenses.................. .59% .73% .71% .71% .72% .70% .69% .75% .93%
Net investment income..... 5.02% 5.06% 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
YEAR ENDED JANUARY 4, 1995* YEAR ENDED JANUARY 26, 1995*
AUGUST 31, THROUGH AUGUST 31, THROUGH
1996 AUGUST 31, 1995 1996 AUGUST 31, 1995
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period....................... $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income...................................... .05 .03 .04 .03
Less distributions to shareholders from net investment
income................................................... (.05 ) (.03) (.04) (.03)
Net asset value, end of period............................. $1.00 $1.00 $1.00 $1.00
TOTAL RETURN+.............................................. 5.0% 3.5% 4.3% 2.8%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted).................. $1,755,267 $685,155 $10,218 $7,927
Ratios to average net assets:
Expenses **.............................................. .75% .81%++ 1.45% 1.51%++
Net investment income **................................. 4.86% 5.26%++ 4.18% 4.54%++
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value for the periods indicated and
is not annualized. Contingent deferred sales charge is not reflected.
++ Annualized.
* Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were reimbursed or waived by the investment adviser, the annualized
ratios of expenses and net investment income to average net assets would have
been the following:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
YEAR ENDED JANUARY 4, 1995* YEAR ENDED JANUARY 26, 1995*
AUGUST 31, THROUGH AUGUST 31, THROUGH
1996 AUGUST 31, 1995 1996 AUGUST 31, 1995
<S> <C> <C> <C> <C>
Expenses................................................ .89% 1.02% 1.59% 2.39%
Net investment income................................... 4.72% 5.05% 4.04% 3.66%
</TABLE>
6
<PAGE>
EVERGREEN TAX EXEMPT MONEY MARKET FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
NOVEMBER 2,
YEAR ENDED AUGUST 31, 1988* THROUGH
1996 1995 1994 1993 1992 1991 1990 AUGUST 31, 1989
<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................. .03 .04 .02 .03 .04 .05 .06 .05
Less distributions to shareholders from
net investment income................. (.03) (.04) (.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 $1.00
TOTAL RETURN+........................... 3.5% 3.6% 2.5% 2.6% 3.7% 5.5% 6.2% 5.5%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (in
millions)............................. $617 $421 $402 $401 $417 $510 $311 $109
Ratios to average net assets:
Expenses **........................... .49% .50% .34% .34% .32% .28% .31% .24%++
Net investment income **.............. 3.44% 3.53% 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 periods indicated and
is not annualized.
++ Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were reimbursed or waived by the investment adviser, the annualized
ratios of expenses and net investment income to average net assets would have
been the following:
<TABLE>
<CAPTION>
NOVEMBER 2,
YEAR ENDED AUGUST 31, 1988* THROUGH
1996 1995 1994 1993 1992 1991 1990 AUGUST 31, 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Expenses.................................... .60% .63% .64% .63% .63% .66% .71% .79%
Net investment income....................... 3.33% 3.40% 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*
YEAR ENDED THROUGH
AUGUST 31, 1996 AUGUST 31, 1995
<S> <C> <C>
PER SHARE DATA:
Net asset value, beginning of period..................................................... $1.00 $1.00
Income from investment operations:
Net investment income.................................................................... .03 .02
Distributions to shareholders from net investment income................................. (.03) (.02)
Net asset value, end of period........................................................... $1.00 $1.00
TOTAL RETURN+............................................................................ 3.2% 2.2%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)................................................ $660,516 $554,924
Ratios to average net assets:
Expenses **............................................................................ .79% .78%++
Net investment income **............................................................... 3.14% 3.28%++
</TABLE>
* Commencement of class operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized.
++ Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all expenses
that were reimbursed or waived by the investment adviser, the annualized
ratios of expenses and net investment income to average net assets would have
been the following:
<TABLE>
<CAPTION>
JANUARY 5, 1995*
YEAR ENDED THROUGH
AUGUST 31, 1996 AUGUST 31, 1995
<S> <C> <C>
Expenses................................................................................. .90% .90%
Net investment income.................................................................... 3.03% 3.16%
</TABLE>
8
<PAGE>
EVERGREEN TREASURY MONEY MARKET FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
MARCH 6,
EIGHT MONTHS 1991*
YEAR ENDED ENDED THROUGH
AUGUST 31, AUGUST 31, YEAR ENDED DECEMBER 31, DECEMBER 31,
1996 1995 # 1994 1993 1992 1991
<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.............................................. .05 .03 .04 .03 .03 .04
Less distributions to shareholders from net investment income...... (.05) (.03) (.04) (.03) (.03) (.04)
Net asset value,
end of period.................................................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN+...................................................... 5.0% 3.6% 3.8% 2.7% 3.4% 4.5%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(in millions).................................................... $2,608 $1,178 $755 $261 $209 $100
Ratios to average net assets:
Expenses **...................................................... .69% .63%++ .50% .48% .48% .47%++
Net investment income **......................................... 4.76% 5.30%++ 3.91% 2.70% 3.22% 4.95%++
</TABLE>
# The Fund changed its fiscal year end from December 31 to August 31.
* Commencement of operations.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized.
++ Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were reimbursed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets would have been the following:
<TABLE>
<CAPTION>
MARCH 6,
EIGHT MONTHS 1991*
YEAR ENDED ENDED THROUGH
AUGUST 31, AUGUST 31, YEAR ENDED DECEMBER 31, DECEMBER 31,
1996 1995 # 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Expenses........................................................ .77% .79% .78% .82% .82% 1.08%
Net investment income........................................... 4.68% 5.14% 3.63% 2.36% 2.88% 4.34%
</TABLE>
9
<PAGE>
EVERGREEN TREASURY MONEY MARKET FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
MARCH 6,
EIGHT MONTHS 1991*
YEAR ENDED ENDED THROUGH
AUGUST 31, AUGUST 31, YEAR ENDED DECEMBER 31, DECEMBER 31,
1996 1995 # 1994 1993 1992 1991
<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............................................... .05 .04 .04 .03 .04 .05
Less distributions to shareholders from net investment income....... (.05) (.04) (.04) (.03) (.04) (.05)
Net asset value,
end of period..................................................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
TOTAL RETURN+....................................................... 5.3% 3.8% 4.1% 3.0% 3.7% 4.7%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(in millions)..................................................... $760 $277 $163 $366 $286 $265
Ratios to average net assets:
Expenses **....................................................... .39% .33%++ .20% .18% .17% .20%++
Net investment income **.......................................... 5.12% 5.60%++ 3.78% 3.00% 3.61% 5.53%++
</TABLE>
# The Fund changed its fiscal year end from December 31 to August 31.
* Commencement of operations.
+ Total return is calculated on net asset value per share for the periods
indicated and is not annualized.
++ Annualized.
** Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were reimbursed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets would have been the following:
<TABLE>
<CAPTION>
MARCH 6,
EIGHT MONTHS 1991*
YEAR ENDED ENDED THROUGH
AUGUST 31, AUGUST 31, YEAR ENDED DECEMBER 31, DECEMBER 31,
1996 1995 # 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Expenses......................................................... .47% .49% .48% .52% .52% .52%
Net investment income............................................ 5.04% 5.44% 3.50% 2.66% 3.26% 5.21%
</TABLE>
10
<PAGE>
DESCRIPTION OF THE FUNDS
INVESTMENT OBJECTIVES AND POLICIES
In addition to the investment policies detailed below, each Fund may
employ certain additional investment strategies, which are discussed in
"Investment Practices and Restrictions".
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 otherwise eligible but 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 investment adviser to be of comparable quality.
6. Unrated corporate debt securities, commercial paper and bank
obligations otherwise determined by the investment adviser to be of comparable
quality.
7. Repurchase agreements with respect to the securities described
in paragraphs 1 through 6 above.
11
<PAGE>
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, as amended (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 net assets in
securities which are not readily marketable (including private placement
securities) and in repurchase agreements maturing in more than seven days.
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 investment adviser 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 investment adviser to be of
comparable quality. Certain Municipal Securities (primarily variable rate demand
notes) may be entitled to the benefit of standby letters of credit or similar
commitments issued by banks or other financial institutions and, in such
instances, the investment adviser will take into account the obligation of the
bank in assessing the quality of such security. Such commitments issued by banks
are not insured by the Federal Deposit Insurance Corporation or any other
agency. 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
12
<PAGE>
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 net 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.
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.
The Fund will only attempt to seek income to the extent consistent with
stability of principal and, therefore, investments will be made in short-term
United States Treasury obligations with an average dollar-weighted maturity of
90 days or less and obligations the principal and interest of which are backed
by the full faith and credit of the United States Government, provided that the
Fund shall, under normal market conditions, invest at least 65% of its total
assets in obligations issued directly by the U.S. Treasury. The Fund also may
enter into
13
<PAGE>
repurchase agreements collateralized by the types of securities in which it may
invest and lend its portfolio securities to qualified institutional investors.
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.
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, the
Funds may lend portfolio securities to brokers, dealers and other financial
organizations and enter into reverse repurchase agreements. Each Fund's
investment adviser will monitor the creditworthiness of such borrowers. Loans of
securities by the Funds 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
14
<PAGE>
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 Act, 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 net 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 each 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 a Fund enters into a reverse repurchase agreement, it will
place in a segregated custodial account cash, United States Government
securities or liquid high grade debt obligations having a value equal to the
repurchase price (including accrued interest) and will subsequently monitor the
account to ensure that such equivalent value is maintained. Reverse repurchase
agreements involve the risk that the market value of the securities sold by a
Fund may decline below the repurchase price of those securities.
Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the Statement of Additional Information.
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISERS
The management of each Fund is supervised by the Trustees of the Trust
under which each 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 a
corporation with 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 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
15
<PAGE>
Westchester Avenue, Purchase, New York 10577. FUNB is a subsidiary of First
Union Corporation ("First Union"), the sixth largest bank holding company 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 headquartered in Charlotte, North Carolina, and had $139.9
billion in consolidated assets as of June 30, 1996. First Union and its
subsidiaries provide a broad range of financial services to individuals and
businesses throughout the United States. CMG manages or otherwise oversees the
investment of over $42.1 billion in assets belonging to a wide range of clients,
including all the series of Evergreen Investment Trust, the two series of
Evergreen Lexicon Fund (formerly The FFB Lexicon Fund) and the two series of
Evergreen Tax-Free Trust (formerly FFB Funds Trust), 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 waived all or a portion of its fees for the purpose of reducing each
Fund's expense ratio. For the fiscal year ended August 31, 1996 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 year ended August 31, 1996 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 the
Fund. For the fiscal year ended August 31, 1996 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 fiscal year ended
August 31, 1996 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 LLP, an affiliate 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 were approximately $15.2 billion as of June 30,
1996.
SUB-ADVISER
Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company which provide 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
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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.
PURCHASE AND REDEMPTION OF SHARES
HOW TO BUY SHARES
Eligible investors may purchase Fund shares at net asset value by mail or
wire as described below. The Funds impose no sales charges on Class Y shares.
Class Y shares are the only class of shares offered by this Prospectus and are
only available to (i) persons who at or prior to December 30, 1994, owned shares
in a mutual fund advised by Evergreen Asset, (ii) certain institutional
investors and (iii) investment advisory clients of CMG, Evergreen Asset or their
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 Share Purchase
Application and mail it, together with a check made payable to the Fund whose
shares are being purchased, to State Street Bank and Trust Company ("State
Street") at P.O. Box 9021, Boston, Massachusetts 02205-9827. Checks not drawn on
U.S. banks will be subject to foreign collection which will delay an investor's
investment date and will be subject to processing fees.
When making subsequent investments, an investor should either enclose the
return remittance portion of the statement, or indicate on the face of the
check, the name of the Fund in which an investment is to be made, the exact
title of the account, the address, and the Fund account number. Purchase
requests should not be sent to a Fund in New York. If they are, the Fund must
forward them to State Street, and the request will not be effective until State
Street receives them.
Initial investments may also be made by wire by (i) calling State Street
at (800) 423-2615 for an account number and (ii) instructing your bank, which
may charge a fee, to wire federal funds to State Street, as follows: State
Street Bank and Trust Company, ABA No.0110-0002-8, Attn: Custodian and
Shareholder Services. The wire must include references to the Fund in which an
investment is being made, account registration, and the account number. A
completed Application must also be sent to State Street indicating that the
shares have been purchased by wire, giving the date the wire was sent and
referencing the account number. Subsequent wire investments may be made by
existing shareholders by following the instructions outlined above. It is not
necessary, however, for existing shareholders to call for another account
number.
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") (currently 4:00 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
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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 believe 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 the Fund's 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 the Fund's 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.
The Funds will not accept third party checks other than those payable directly
to a shareholder whose account has been in existence at least thirty days.
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 4:00 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 mutual 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 ten days). Once a redemption request has been
telephoned or mailed, it is irrevocable and may not be modified or cancelled.
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. to 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 or State Street by telephone should follow the procedures
outlined above for redemption by mail.
The telephone redemption service is not made available to shareholders
automatically. Shareholders wishing to use the telephone redemption service must
indicate this on the Share Purchase Application and choose
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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 ten 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. Financial intermediaries may charge a fee for handling telephonic
requests. 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 thirty days. Shareholders will receive sixty days'
written notice to increase the account value before the account is closed. The
Funds have elected to be governed by Rule 18f-1 under the Investment Company Act
of 1940 pursuant to which each Fund is obligated to redeem shares solely in
cash, up to the lesser of $250,000 or 1% of a Fund's total net assets during any
ninety day period for any one shareholder. See the Statement of Additional
Information for further details.
EXCHANGE PRIVILEGE
How To Exchange Shares. You may exchange some or all of your shares for shares
of the same Class of the other Evergreen mutual funds by telephone or mail as
described below. 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. An exchange, which represents an initial
investment in another Evergreen mutual fund, is subject to the minimum
investment and suitability requirements of each Fund.
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.
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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 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' shares,
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 per month or
$75 per quarter. Each Fund reserves the right to close an account that through
liquidation of the Systematic Investment Plan has not reached a minimum of
$1,000 ($250 for retirement accounts) within twenty-four months of the initial
investment.
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.
Shares purchased under the Funds Systematic Investment Plan or Telephone
Investment Plan may not be redeemed for ten days from the date of investment.
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 Funds
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 $75. 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.
Tax Sheltered Retirement Plans. Eligible investors may open a pension and profit
sharing account in any Evergreen mutual fund (except those funds having an
objective of providing tax free income) under the following prototype retirement
plans: (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.
Automatic Reinvestment Plan. For the convenience of investors, all dividends and
distributions are automatically reinvested in full and fractional shares of the
Funds 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.
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
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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.
OTHER INFORMATION
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Funds declare substantially all of their net income as dividends on
each business day. Such dividends are paid monthly. Net income, for dividend
purposes, includes accrued interest and any market discount or premium that day,
less the estimated expenses of a Fund. Gains or losses realized upon the sale of
portfolio securities are not included in net income, but are reflected in the
net asset value of a Fund's shares. Distributions of any net realized capital
gains will be made annually or more frequently as required by the provisions of
the Internal Revenue Code of 1986, as amended (the "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 4:00 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
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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 is a separate investment series of
Evergreen Money Market Trust, a Massachusetts business trust organized in 1987.
The EVERGREEN TAX EXEMPT MONEY MARKET FUND is a separate investment series of
The Evergreen Municipal Trust, a Massachusetts business trust organized in 1988.
The EVERGREEN TREASURY MONEY MARKET FUND is a separate investment series of
Evergreen Investment Trust (formerly First Union Funds), 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
contingent deferred sales charge. 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.
Custodian, 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 custodian, registrar, transfer agent and dividend-disbursing agent.
State Street is compensated for its services as transfer agent by 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, an affiliate of Furman Selz LLC, located 230 Park
Avenue, New York, New York 10017, is the principal underwriter of the Funds.
Furman Selz LLC also acts as sub-administrator to EVERGREEN TREASURY MONEY
MARKET FUND and 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 MONEY MARKET FUND, including providing personnel to
serve as officers of the Funds.
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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) persons who at or prior to December 31, 1994, owned
shares in a mutual fund advised by Evergreen Asset, (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.
In marketing a Fund's shares, information may be provided that is
designed to help individuals understand their investment goals and explore
various financial strategies. Such information may include publications
describing general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; a questionnaire designed to
help create a personal financial profile; and an action plan offering investment
alternatives. The information provided to investors may also include discussions
of other Evergreen mutual funds, products, and services, which may include:
retirement investing; brokerage products and services; the effects of periodic
investment plans and dollar cost averaging; saving for college; and charitable
giving. In addition, the information provided to investors may quote financial
or business publications and periodicals, including model portfolios or
allocations, as they relate to fund management, investment philosophy, and
investment techniques. The Principal Underwriter may also reprint, and use as
advertising and sales literature, articles from EVERGREEN EVENTS, a quarterly
magazine provided to Evergreen mutual fund shareholders.
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 the
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 SEC under the Act. Copies of the Registration Statements may be
obtained at a reasonable charge from the SEC or may be examined, without charge,
at the offices of the SEC in Washington, D.C.
23
<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 of North Carolina, 201
South College Street, Charlotte, North Carolina 28288
EVERGREEN TREASURY MONEY MARKET FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company, Box 9021, Boston, Massachusetts
02205-9827
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C.
20036
INDEPENDENT AUDITORS
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., 230 Park Avenue, New York, New York 10017
45817 536128rev02
*******************************************************************************
<PAGE>
PROSPECTUS October 1, 1996
EVERGREEN(SM) INSTITUTIONAL MONEY MARKET FUNDS (Evergreen tree logo)
EVERGREEN INSTITUTIONAL MONEY MARKET FUND
EVERGREEN INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND
EVERGREEN INSTITUTIONAL TREASURY MONEY MARKET FUND
INSTITUTIONAL SERVICE SHARES
The Evergreen Institutional Money Market Funds (the "Funds") are
designed to provide institutional investors with current income, stability
of principal and liquidity. This Prospectus provides information regarding
the Institutional Service 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
October 1, 1996 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.
The minimum investment in each Fund is $1,000,000. 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
ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, ARE NOT INSURED OR
OTHERWISE PROTECTED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY, AND
INVOLVE INVESTMENT RISKS.
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 1996, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS 2
EXPENSE INFORMATION 3
FINANCIAL HIGHLIGHTS
DESCRIPTION OF THE FUNDS
Investment Objectives And Policies 4
Investment Practices And Restrictions 7
MANAGEMENT OF THE FUNDS
Investment Adviser 8
Distribution Plans And Agreements 9
PURCHASE AND REDEMPTION OF SHARES
How To Buy Shares 10
How To Redeem Shares 11
Exchange Privilege 12
Effect Of Banking Laws 13
OTHER INFORMATION
Dividends, Distributions And Taxes 13
General Information 14
</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 INSTITUTIONAL MONEY MARKET FUND,
EVERGREEN INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND and EVERGREEN INSTITUTIONAL
TREASURY MONEY MARKET FUND is the Capital Management Group of First Union
National Bank of North Carolina. First Union National Bank of North Carolina is
a wholly-owned subsidiary of First Union Corporation, the sixth largest bank
holding company in the United States.
EVERGREEN INSTITUTIONAL 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 INSTITUTIONAL 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 INSTITUTIONAL TREASURY MONEY MARKET FUND 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 Institutional Service 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 None
</TABLE>
The following tables show for each Fund the estimated annual operating
expenses (as a percentage of average net assets) attributable to the
Institutional Service shares of each Fund, 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 INSTITUTIONAL MONEY MARKET FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Management Fee .15%
After 1 Year $ 5
12b-1 Fees .25%
After 3 Years $16
Other Expenses .10%
Total .50%
</TABLE>
EVERGREEN INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Management Fee .15%
After 1 Year $ 5
12b-1 Fees .25%
After 3 Years $16
Other Expenses .10%
Total .50%
</TABLE>
EVERGREEN INSTITUTIONAL TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Management Fee .15%
After 1 Year $ 5
12b-1 Fees .25%
After 3 Years $16
Other Expenses .10%
Total .50%
</TABLE>
From time to time, the Funds 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 will reimburse these Funds to the
extent that any Fund's aggregate annual operating expenses (including the
investment adviser's fee, but excluding taxes, interest, brokerage commissions,
Rule 12b-1 distribution fees and shareholder service fees and extraordinary
expenses) exceed .45 of 1.00% of the average net assets for any fiscal year. 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 Institutional
Service 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 anticipated expenses during the first year of
operations. 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".
3
<PAGE>
DESCRIPTION OF THE FUNDS
INVESTMENT OBJECTIVES AND POLICIES
In addition to the investment policies detailed below, each Fund may
employ certain additional investment strategies, which are discussed in
"Investment Practices and Restrictions".
EVERGREEN INSTITUTIONAL MONEY MARKET FUND
The investment objective of EVERGREEN INSTITUTIONAL 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 otherwise eligible but 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, and not the credit of the United States
Government, 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 three of
Standard & Poor's Ratings Group ("S&P") or Moody's Investors Services, 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 three 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 investment adviser to be of comparable quality.
6. Unrated corporate debt securities, commercial paper and bank
obligations otherwise determined by the investment adviser to be of comparable
quality.
4
<PAGE>
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, foreign banks are subject to less extensive
regulations and disclosure requirements than U.S. banks and, accordingly, there
may be less publicly available information about such banks and greater risks
associated with their obligations.
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, as amended (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.
EVERGREEN INSTITUTIONAL TAX-EXEMPT MONEY MARKET FUND
The investment objective of EVERGREEN INSTITUTIONAL 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 Obligations. (See "Municipal Obligations" below.)
The Fund will invest in Municipal Obligations only if they are determined
to be of eligible quality under SEC rules and to present minimum credit risk.
Municipal Obligations in which the Fund may invest include: (i) municipal
securities that are rated in one of the top three 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 investment adviser to be of
comparable quality. For a description of such ratings see the Statement of
Additional Information. The Fund may also purchase Municipal Obligations 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 investment adviser to be of
comparable quality. Certain Municipal Obligations (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 investment adviser 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
Obligations, the interest from which is not subject to the Federal alternative
minimum tax.
Municipal Obligations. As noted above, the Fund will invest substantially all of
its assets in Municipal Obligations. 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
5
<PAGE>
"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 Obligations 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. 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 Obligations held in its portfolio. Under a stand-by
commitment, a dealer agrees to purchase, at the Fund's option, specified
Municipal Obligations 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 net 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
total 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 up to 100% 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 Obligations 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.
EVERGREEN INSTITUTIONAL TREASURY MONEY MARKET FUND
The investment objective of EVERGREEN INSTITUTIONAL 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
6
<PAGE>
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 INSTITUTIONAL 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.
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
INSTITUTIONAL 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 investment adviser determines, 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. The Funds 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, the
Funds may lend portfolio securities to brokers, dealers and other financial
organizations. The Funds investment adviser will monitor the creditworthiness of
such borrowers. Loans of securities 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
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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 INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND and
EVERGREEN INSTITUTIONAL 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 INSTITUTIONAL 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 INSTITUTIONAL 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 INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND and EVERGREEN
INSTITUTIONAL MONEY MARKET FUND, securities eligible for resale pursuant to Rule
144A under the Act, 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
the Funds 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 net 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 INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND and
EVERGREEN INSTITUTIONAL MONEY MARKET FUND and one-third of the value of
EVERGREEN INSTITUTIONAL TREASURY MONEY MARKET FUND'S total assets, including the
amount borrowed. As another means of borrowing both EVERGREEN INSTITUTIONAL TAX
EXEMPT MONEY MARKET FUND and EVERGREEN INSTITUTIONAL 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 INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND or
EVERGREEN INSTITUTIONAL 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.
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISER
The management of each Fund is supervised by the Trustees of the Trust
under which each Fund has been established ("Trustees"). The Capital Management
Group of First Union National Bank of North Carolina ("CMG") serves as
investment adviser to EVERGREEN INSTITUTIONAL TREASURY MONEY MARKET FUND,
EVERGREEN INSTITUTIONAL MONEY MARKET FUND and EVERGREEN INSTITUTIONAL TAX-EXEMPT
MONEY MARKET FUND. First Union National Bank of North Carolina ("FUNB") is a
subsidiary of First Union Corporation ("First Union"), the sixth
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largest bank holding company in the United States. First Union is headquartered
in Charlotte, North Carolina, and had $139.9 billion in consolidated assets as
of June 30, 1996. First Union and its subsidiaries provide a broad range of
financial services to individuals and businesses throughout the United States.
CMG manages or otherwise oversees the investment of over $42.1 billion in assets
belonging to a wide range of clients, including all the series of Evergreen
Investment Trust (formerly known as First Union Funds), the two series of The
Evergreen Lexicon Fund (formerly The FFB Lexicon Fund) and the two series of
Evergreen Tax-Free Trust (formerly FFB Funds Trust). 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. CMG is entitled to receive from each Fund an annual fee equal to .15
of 1% of average daily net assets.
Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly-owned
subsidiary of FUNB, serves as administrator to EVERGREEN INSTITUTIONAL TREASURY
MONEY MARKET FUND, EVERGREEN INSTITUTIONAL MONEY MARKET FUND and EVERGREEN
INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND and is entitled to receive a fee
based on the average daily net assets of each 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
LLC, an affiliate of Evergreen Funds Distributor, Inc., distributor for the
Evergreen group of mutual funds, serves as sub-administrator to the Funds and is
entitled to receive a fee from each Fund calculated on the average daily net
assets of the Funds 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 were approximately $15.2 billion as of June 30,
1996.
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 their Class A
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 .25 of 1% of
the Fund's aggregate average daily net assets attributable to Institutional
Service shares. The Plans provide that a portion of the fee payable thereunder
may constitute a service fee to be used for providing ongoing personal service
and/or the maintenance of shareholder accounts. Service fee payments to
financial intermediaries for such purposes will not exceed .25 of 1% on an
annualized basis of the aggregate average daily net assets attributable to each
Class of shares of the Funds.
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 at a rate which may
not exceed an annual rate of .20 of 1% of a Fund's aggregate average daily net
assets attributable to Institutional Service shares. The Distribution Agreements
provide that EFD will use the distribution fee received from a Fund for payments
(i) to compensate broker-dealers or other persons for distributing shares of the
Funds, (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 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
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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.
PURCHASE AND REDEMPTION OF SHARES
HOW TO BUY SHARES
Investors may purchase shares of the Funds through broker-dealers, banks
or other financial intermediaries, or directly through EFD. The minimum initial
investment is $1,000,000, which may be waived in certain situations. There is no
minimum for subsequent investments. In states where EFD is not registered as a
broker-dealer shares of the Funds will only be sold through Furman Selz LLC,
other broker-dealers or other financial institutions that are registered. See
the Share Purchase Application and Statement of Additional Information for more
information. Only Institutional Service shares of the Fund are offered through
this Prospectus. (See "General Information" -- "Other Classes of Shares".)
Institutional Service shares of the Fund 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.
Purchases by Wire. Initial investments may be made by wire by (i) calling State
Street at (800) 423-2615 for an account number and (ii) instructing your bank,
which may charge a fee, to wire federal funds to State Street, as follows: State
Street Bank and Trust Company, ABA No.0110-0002-8, Attn: Custodian and
Shareholder Services. The wire must include references to the Fund in which an
investment is being made, account registration, and the account number. A
completed Purchase 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 (currently 4:00 p.m. Eastern time) each business day (i.e., any weekday
exclusive of days on which the New York Stock Exchange (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 the Funds 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. The market value of securities which are not rated is
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 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 of
the Trust under which each Fund operates 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 remittance is not
promptly received, the investor will be responsible for any loss a Fund or the
Fund's investment adviser incurs. If such investor is an existing shareholder, a
Fund may redeem shares from the investor's account to reimburse a Fund or the
Fund's 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
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been converted to federal funds. Investments by federal funds wire will be
effective upon receipt. Shares purchased 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 4:00 p.m. (Eastern time).
Investors 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. 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.
General
In addition to the discount or commission paid to dealers, EFD will from
time to time pay to dealers additional cash or other incentives that are
conditioned upon the sale of a specified minimum dollar amount of shares of a
Fund and/or other Evergreen mutual funds. Such incentives will take the form of
payment for attendance at seminars, lunches, dinners, sporting events or theater
performances, or payment for travel, lodging and entertainment incurred in
connection with travel by persons associated with a dealer and their immediate
family members to urban or resort locations within or outside the United States.
Such a dealer may elect to receive cash incentives of equivalent amount in lieu
of such payments. EFD may also limit the availability of such incentives to
certain specified dealers. EFD from time to time sponsors promotions involving
First Union Brokerage Services, Inc. ("FUBS"), an affiliate of each Fund's
investment adviser, and select broker-dealers, pursuant to which incentives are
paid, including gift certificates and payments in amounts up to 1% of the dollar
amount of shares of a Fund sold. Awards may also be made based on the opening of
a minimum number of accounts. Such promotions are not being made available to
all dealers. Certain broker-dealers may also receive payments from EFD or a
Fund's investment adviser over and above the usual trail commissions or
shareholder servicing payments applicable to a given Class of shares.
Redeeming Shares Through Your Financial Intermediary. A Fund must receive
instructions from an investor's financial intermediary before 4:00 p.m. (Eastern
time) for them to receive that day's net asset value. The financial intermediary
is responsible for furnishing all necessary documentation to the Fund and may
charge an investor for this service. Certain financial intermediaries may
require that they be given instructions earlier than 4:00 p.m.
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 ten days). Once a redemption request has been
telephoned or mailed, it is irrevocable and may not be modified or cancelled.
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. to 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 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 Purchase Application and choose how the redemption proceeds
are to be paid. Redemption proceeds will either (i) be mailed by check to the
shareholder
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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 ten 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
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. Financial intermediaries may charge a fee for handling
telephonic requests. 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
Institutional Service 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 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 thirty days. Shareholders will receive sixty 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 Class A
shares of the other Evergreen mutual funds 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. 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 Through Your Financial Intermediary. A Fund must receive exchange
instructions from an investor's financial intermediary before 4:00 p.m. (Eastern
time) for them to receive that day's net asset value. The financial intermediary
is responsible for furnishing all necessary documentation to the Fund and may
charge an investor for this service.
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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 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.
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 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 was prevented from continuing to provide the services called
for under the investment advisory agreement, it is expected that the Trustees
would identify, and call upon each Fund's shareholders to approve, a new
investment adviser. If this were to occur, it is not anticipated that the
shareholders of any Fund would suffer any adverse financial consequences.
OTHER INFORMATION
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Funds declare substantially all of their net income as dividends on
each business day. Such dividends are paid monthly. Net income, for dividend
purposes, includes accrued interest and any market discount or premium that day,
less the estimated expenses of a Fund. Gains or losses realized upon the sale of
portfolio securities are not included in net income, but are reflected in the
net asset value of a Fund's shares. Distributions of any net realized capital
gains will be made annually or more frequently as required by the provisions of
the Internal Revenue Code of 1986, as amended (the "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 4:00 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 intends 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
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such distribution requirements. The excise tax generally does not apply to the
tax exempt income of a regulated investment company (such as EVERGREEN
INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND) that pays exempt interest dividends.
Except as noted below with respect to EVERGREEN INSTITUTIONAL 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 INSTITUTIONAL 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 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 Conduct Rules 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 INSTITUTIONAL MONEY MARKET FUND and EVERGREEN
INSTITUTIONAL TREASURY MONEY MARKET FUND are a separate investment series of
Evergreen Money Market Trust, which is a Massachusetts business trust organized
in 1987. The EVERGREEN INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND is a separate
investment series of The Evergreen Municipal Trust, which is a Massachusetts
business trust organized in 1988.
The Funds do not intend to hold annual shareholder meetings; shareholder
meetings will be held only when required by applicable law. Shareholders have
available certain procedures for the removal of Trustees.
A shareholder in each Class of the Funds will be entitled to their share
of all dividends and distributions from the 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 value of the Class of shares
of the Fund represented by the redeemed shares. The Trust is empowered to
establish, without shareholder approval, additional series, which may have
different investment objectives, and additional Classes of shares for any
existing or future series. If an additional series were established in the 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. Institutional Service and
Institutional 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 the Fund, are
entitled to receive the net assets of the Fund.
Custodian, 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 custodian, registrar, transfer agent and dividend-disbursing agent.
State Street is compensated for its services as transfer agent by a fee based
upon the number of shareholder accounts maintained for the Fund.
14
<PAGE>
Principal Underwriter. EFD, an affiliate of Furman Selz LLC, located 237 Park
Avenue, New York, New York 10017, is the principal underwriter of the Funds.
Furman Selz LLC also acts as sub-administrator to the Funds, including providing
personnel to serve as officers of the Funds.
Other Classes of Shares. The Funds offer two classes of shares, Institutional
Service and Institutional. Institutional shares are not offered by this
Prospectus.
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, 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 Funds' 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 SEC under the Act. Copies of the Registration Statements may be
obtained at a reasonable charge from the SEC or may be examined, without charge,
at the offices of the SEC in Washington, D.C.
15
<PAGE>
INVESTMENT ADVISER
Capital Management Group of First Union National Bank of North Carolina, 201
South College Street, Charlotte, North Carolina 28288
EVERGREEN INSTITUTIONAL MONEY MARKET FUND
EVERGREEN INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND
EVERGREEN INSTITUTIONAL TREASURY MONEY MARKET FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company, Box 9021, Boston, Massachusetts
02205-9827
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C.
20036
INDEPENDENT AUDITORS
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017
*******************************************************************************
<PAGE>
PROSPECTUS October 31, 1996
EVERGREEN(SM) INSTITUTIONAL MONEY MARKET FUNDS (Evergreen Tree Logo)
EVERGREEN INSTITUTIONAL MONEY MARKET FUND
EVERGREEN INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND
EVERGREEN INSTITUTIONAL TREASURY MONEY MARKET FUND
INSTITUTIONAL SHARES
The Evergreen Institutional Money Market Funds (the "Funds") are
designed to provide institutional investors with current income, stability
of principal and liquidity. This Prospectus provides information regarding
the Institutional 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
October 31, 1996 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.
The minimum investment in each Fund is $1,000,000. 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
ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, ARE NOT INSURED OR
OTHERWISE PROTECTED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY, AND
INVOLVE INVESTMENT RISKS.
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 1996, Evergreen Asset Management Corp.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS 2
EXPENSE INFORMATION 3
FINANCIAL HIGHLIGHTS
DESCRIPTION OF THE FUNDS
Investment Objectives And Policies 4
Investment Practices And Restrictions 7
MANAGEMENT OF THE FUNDS
Investment Adviser 8
PURCHASE AND REDEMPTION OF SHARES
How To Buy Shares 9
How To Redeem Shares 10
Exchange Privilege 11
Effect Of Banking Laws 12
OTHER INFORMATION
Dividends, Distributions And Taxes 12
General Information 13
</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 INSTITUTIONAL MONEY MARKET FUND,
EVERGREEN INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND and EVERGREEN INSTITUTIONAL
TREASURY MONEY MARKET FUND is the Capital Management Group of First Union
National Bank of North Carolina. First Union National Bank of North Carolina is
a wholly-owned subsidiary of First Union Corporation, the sixth largest bank
holding company in the United States.
EVERGREEN INSTITUTIONAL 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 INSTITUTIONAL 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 INSTITUTIONAL TREASURY MONEY MARKET FUND 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 Institutional 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 None
</TABLE>
The following tables show for each Fund the estimated annual operating
expenses (as a percentage of average net assets) attributable to shares of each
Fund, 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 INSTITUTIONAL MONEY MARKET FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Management Fee .15%
After 1 Year $ 3
Other Expenses .10%
After 3 Years $ 8
Total .25%
</TABLE>
EVERGREEN INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Management Fee .15%
After 1 Year $ 3
Other Expenses .10%
After 3 Years $ 8
Total .25%
</TABLE>
EVERGREEN INSTITUTIONAL TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Management Fee .15%
After 1 Year $ 3
Other Expenses .10%
After 3 Years $ 8
Total .25%
</TABLE>
From time to time, the Funds 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 will reimburse these Funds to the
extent that any Fund's aggregate annual operating expenses (including the
investment adviser's fee, but excluding taxes, interest, brokerage commissions,
and extraordinary expenses) exceed .20 of 1.00% of the average net assets for
any fiscal year. 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 Institutional
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 anticipated expenses during the first year of
operations. 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".
3
<PAGE>
DESCRIPTION OF THE FUNDS
INVESTMENT OBJECTIVES AND POLICIES
In addition to the investment policies detailed below, each Fund may
employ certain additional investment strategies, which are discussed in
"Investment Practices and Restrictions".
EVERGREEN INSTITUTIONAL MONEY MARKET FUND
The investment objective of EVERGREEN INSTITUTIONAL 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 otherwise eligible but 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, and not the credit of the United States
Government, 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 three of
Standard & Poor's Ratings Group ("S&P") or Moody's Investors Services, 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 three 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 investment adviser to be of comparable quality.
6. Unrated corporate debt securities, commercial paper and bank
obligations otherwise determined by the investment adviser to be of comparable
quality.
4
<PAGE>
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, foreign banks are subject to less extensive
regulation and disclosure requirements than U.S. banks and, accordingly, there
may be less publicly available information about such banks and greater risks
associated with their obligations.
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, as amended (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.
EVERGREEN INSTITUTIONAL TAX-EXEMPT MONEY MARKET FUND
The investment objective of EVERGREEN INSTITUTIONAL 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 Obligations. (See "Municipal Obligations" below.)
The Fund will invest in Municipal Obligations only if they are determined
to be of eligible quality under SEC rules and to present minimum credit risk.
Municipal Obligations in which the Fund may invest include: (i) municipal
securities that are rated in one of the top three 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 investment adviser to be of
comparable quality. For a description of such ratings see the Statement of
Additional Information. The Fund may also purchase Municipal Obligations 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 investment adviser to be of
comparable quality. Certain Municipal Obligations (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 investment adviser 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
Obligations, the interest from which is not subject to the Federal alternative
minimum tax.
Municipal Obligations. As noted above, the Fund will invest substantially all of
its assets in Municipal Obligations. 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
5
<PAGE>
"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 Obligations 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. 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 Obligations held in its portfolio. Under a stand-by
commitment, a dealer agrees to purchase, at the Fund's option, specified
Municipal Obligations 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 net 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
total 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 up to 100% 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 Obligations 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.
EVERGREEN INSTITUTIONAL TREASURY MONEY MARKET FUND
The investment objective of EVERGREEN INSTITUTIONAL 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
6
<PAGE>
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 INSTITUTIONAL 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.
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
INSTITUTIONAL 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 investment adviser determines, 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. The Funds 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, the
Funds may lend portfolio securities to brokers, dealers and other financial
organizations. The Funds investment adviser will monitor the creditworthiness of
such borrowers. Loans of securities 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
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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 INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND and
EVERGREEN INSTITUTIONAL 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 INSTITUTIONAL 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 INSTITUTIONAL 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 INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND and EVERGREEN
INSTITUTIONAL MONEY MARKET FUND, securities eligible for resale pursuant to Rule
144A under the Act, 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
the Funds 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 net 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 INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND and
EVERGREEN INSTITUTIONAL MONEY MARKET FUND and one-third of the value of
EVERGREEN INSTITUTIONAL TREASURY MONEY MARKET FUND'S total assets, including the
amount borrowed. As another means of borrowing both EVERGREEN INSTITUTIONAL TAX
EXEMPT MONEY MARKET FUND and EVERGREEN INSTITUTIONAL 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 INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND or
EVERGREEN INSTITUTIONAL 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.
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISER
The management of each Fund is supervised by the Trustees of the Trust
under which each Fund has been established ("Trustees"). The Capital Management
Group of First Union National Bank of North Carolina ("CMG") serves as
investment adviser to EVERGREEN INSTITUTIONAL TREASURY MONEY MARKET FUND,
EVERGREEN INSTITUTIONAL MONEY MARKET FUND and EVERGREEN INSTITUTIONAL TAX-EXEMPT
MONEY MARKET FUND. First Union National Bank of North Carolina ("FUNB") is a
subsidiary of First Union Corporation ("First Union"), the sixth
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largest bank holding company in the United States. First Union is headquartered
in Charlotte, North Carolina, and had $139.9 billion in consolidated assets as
of June 30, 1996. First Union and its subsidiaries provide a broad range of
financial services to individuals and businesses throughout the United States.
CMG manages or otherwise oversees the investment of over $42.1 billion in assets
belonging to a wide range of clients, including all the series of Evergreen
Investment Trust, the two series of The Evergreen Lexicon Fund (formerly The FFB
Lexicon Fund) and the two series of Evergreen Tax-Free Trust (formerly FFB Funds
Trust). 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. CMG is entitled to receive from each Fund an annual fee
equal to .15 of 1% of average daily net assets.
Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly-owned
subsidiary of FUNB, serves as administrator to EVERGREEN INSTITUTIONAL TREASURY
MONEY MARKET FUND, EVERGREEN INSTITUTIONAL MONEY MARKET FUND and EVERGREEN
INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND and is entitled to receive a fee
based on the average daily net assets of each 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
LLC, an affiliate of Evergreen Funds Distributor, Inc., distributor for the
Evergreen group of mutual funds, serves as sub-administrator to the Funds and is
entitled to receive a fee from each Fund calculated on the average daily net
assets of the Funds at a rate based on the total assets of the mutual funds
administered by Evergreen Asset for which the 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 were approximately $15.2 billion as
of June 30, 1996.
PURCHASE AND REDEMPTION OF SHARES
HOW TO BUY SHARES
Investors may purchase Fund shares at net asset value by mail or wire as
described below. The Funds impose no sales charges on purchases of Institutional
shares. Institutional shares are the only class of shares offered by this
Prospectus and are only available to institutional investors who are clients of
the Funds investment adviser or its affiliates or who have a significant
business relationship with the Funds investment adviser or its affiliates. The
minimum initial investment is $1,000,000 which may be waived in certain
situations. There is no minimum for subsequent investments.
Purchases by Wire. Initial investments may be made by wire by (i) calling State
Street at (800) 423-2615 for an account number and (ii) instructing your bank,
which may charge a fee, to wire federal funds to State Street, as follows: State
Street Bank and Trust Company, ABA No.0110-0002-8, Attn: Custodian and
Shareholder Services. The wire must include references to the Fund in which an
investment is being made, account registration, and the account number. A
completed Purchase 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 (currently 4:00 p.m. Eastern time) each business day (i.e., any weekday
exclusive of days on which the New York Stock Exchange (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 the Funds 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
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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. The market value of securities
which are not rated is 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 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 of
the Trust under which each Fund operates 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 remittance is not
promptly received, the investor will be responsible for any loss a Fund or the
Fund's investment adviser incurs. If such investor is an existing shareholder, a
Fund may redeem shares from the investor's account to reimburse a Fund or the
Fund's 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 converted to federal funds.
Investments by federal funds wire will be effective upon receipt. Shares
purchased 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 4:00 p.m. (Eastern time). Investors 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. 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 ten days). Once a redemption request has been
telephoned or mailed, it is irrevocable and may not be modified or cancelled.
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. to 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 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 Purchase Application and choose how the redemption proceeds
are to be paid. Redemption proceeds will either (i) be mailed by check to the
shareholder
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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 ten 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
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. Financial intermediaries may charge a fee for handling
telephonic requests. 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
Institutional 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 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 thirty days. Shareholders will receive sixty 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 Class Y
shares of certain other Evergreen mutual funds 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. 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
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service you should indicate this on the 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.
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 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 was prevented from continuing to provide the services called
for under the investment advisory agreement, it is expected that the Trustees
would identify, and call upon each Fund's shareholders to approve, a new
investment adviser. If this were to occur, it is not anticipated that the
shareholders of any Fund would suffer any adverse financial consequences.
OTHER INFORMATION
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Funds declare substantially all of their net income as dividends on
each business day. Such dividends are paid monthly. Net income, for dividend
purposes, includes accrued interest and any market discount or premium that day,
less the estimated expenses of a Fund. Gains or losses realized upon the sale of
portfolio securities are not included in net income, but are reflected in the
net asset value of a Fund's shares. Distributions of any net realized capital
gains will be made annually or more frequently as required by the provisions of
the Internal Revenue Code of 1986, as amended (the "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 4:00 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 intends 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 INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND) that pays
exempt interest dividends. Except as noted below with respect to EVERGREEN
INSTITUTIONAL 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.
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EVERGREEN INSTITUTIONAL 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 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 Conduct Rules 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 INSTITUTIONAL MONEY MARKET FUND and EVERGREEN
INSTITUTIONAL TREASURY MONEY MARKET FUND are separate investment series of
Evergreen Money Market Trust, which is a Massachusetts business trust organized
in 1987. The EVERGREEN INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND is a separate
investment series of The Evergreen Municipal Trust, which is a Massachusetts
business trust organized in 1988.
The Funds do not intend to hold annual shareholder meetings; shareholder
meetings will be held only when required by applicable law. Shareholders have
available certain procedures for the removal of Trustees.
Custodian, 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 custodian, registrar, transfer agent and dividend-disbursing agent.
State Street is compensated for its services as transfer agent by a fee based
upon the number of shareholder accounts maintained for the Fund.
Principal Underwriter. EFD, an affiliate of Furman Selz LLC, located 237 Park
Avenue, New York, New York 10017, is the principal underwriter of the Funds.
Furman Selz LLC also acts as sub-administrator to the Funds, including providing
personnel to serve as officers of the Funds.
Other Classes of Shares. The Funds offer two classes of shares, Institutional
Service and Institutional. Institutional shares are the only Class offered by
this Prospectus.
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, 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.
13
<PAGE>
Comparative performance information may also be used from time to time in
advertising or marketing the Funds' 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 SEC under the Act. Copies of the Registration Statements may be
obtained at a reasonable charge from the SEC or may be examined, without charge,
at the offices of the SEC in Washington, D.C.
14
<PAGE>
INVESTMENT ADVISER
Capital Management Group of First Union National Bank of North Carolina, 201
South College Street, Charlotte, North Carolina 28288
EVERGREEN INSTITUTIONAL MONEY MARKET FUND
EVERGREEN INSTITUTIONAL TAX EXEMPT MONEY MARKET FUND
EVERGREEN INSTITUTIONAL TREASURY MONEY MARKET FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company, Box 9021, Boston, Massachusetts
02205-9827
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C.
20036
INDEPENDENT AUDITORS
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 230 Park Avenue, New York, New York 10017
45667
*******************************************************************************
STATEMENT OF ADDITIONAL INFORMATION
October 31, 1996
THE EVERGREEN MONEY MARKET FUNDS
2500 Westchester Avenue, Purchase, New York 10577
800-807-2940
Evergreen Money Market Fund ("Money Market")
Evergreen Tax Exempt Money Market Fund ("Tax Exempt")
Evergreen Pennsylvania Tax-Free Money Market Fund (formerly FFB Pennsylvania
Tax-Free Money Market Fund)("Pennsylvania")
Evergreen Treasury Money Market Fund (formerly First Union Treasury Money
Market Portfolio)("Treasury")
Evergreen Institutional Money Market Fund ("Institutional Money Market")
Evergreen Institutional Tax Exempt Money Market Fund ("Institutional Tax
Exempt")
Evergreen Institutional Treasury Money Market Fund ("Institutional Treasury")
This Statement of Additional Information pertains to all classes of shares of
the Funds listed above. It is not a prospectus and should be read in conjunction
with the Prospectus dated October 31, 1996 for the Fund in which you are making
or contemplating an investment. The Evergreen Money Market Funds are offered
through six separate prospectuses: one offering Class A and Class B shares of
Money Market and Class A shares of Tax Exempt and Treasury, one offering Class A
shares of Pennsylvania, one offering Class Y shares of Money Market, Tax Exempt
and Treasury, one offering Class Y shares of Pennsylvania, one offering
Institutional Service shares of Institutional Money Market, Institutional Tax
Exempt and Institutional Treasury and one offering Institutional shares of
Institutional Money Market, Institutional Tax Exempt and Institutional Treasury.
Copies of each Prospectus may be obtained without charge by calling the number
listed above.
TABLE OF CONTENTS
Investment Objectives and Policies................................ 2
Investment Restrictions........................................... 4
Certain Risk Considerations....................................... 9
Management........................................................ 9
Investment Advisers............................................... 15
Distribution Plans................................................ 19
Allocation of Brokerage........................................... 22
Additional Tax Information........................................ 23
Net Asset Value................................................... 25
Purchase of Shares................................................ 26
Performance Information........................................... 32
Financial Statements.............................................. 34
Appendix A - Description of Bond, Municipal Note and Commercial Paper Ratings
Appendix B - Special Considerations Relating to Investment In Pennsylvania
Municipal Issuers
1
INVESTMENT OBJECTIVES AND POLICIES
(See also "Description of the Funds -Investment Objectives and Policies" in each
Fund's Prospectus)
The investment objective of each Fund and a description of the securities in
which each Fund may invest is set forth under "Description of the Funds -
Investment Objectives and Policies" in the relevant Prospectus. The following
expands upon the discussion in the Prospectus regarding certain investments of
the following Funds:
Tax Exempt, Pennsylvania and Institutional Tax Exempt
To attain its objectives, each Fund invests primarily in high quality Municipal
Obligations which have remaining maturities not exceeding thirteen months. Each
Fund maintains a dollar-weighted average portfolio maturity of 90 days or less.
For information concerning the investment quality of Municipal Obligations that
may be purchased by the Fund, see "Investment Objective and Policies" in the
Prospectus. The tax-exempt status of a Municipal Obligation is determined by the
issuer's bond counsel at the time of the issuance of the security.
For the purpose of certain requirements under the Investment Company Act of 1940
(the "1940 Act") and each Fund's various investment restrictions, identification
of the "issuer" of a municipal security depends on the terms and conditions of
the security. When the assets and revenues of a political subdivision are
separate from those of the government which created the subdivision and the
security is backed only by the assets and revenues of the subdivision, the
subdivision would be deemed to be the sole issuer. Similarly, in the case of an
industrial development bond, if that bond is backed only by the assets and
revenues of the non-governmental user, then the non-governmental user would be
deemed to be the sole issuer. If, however, in either case, the creating
government or some other entity guarantees the security, the guarantee would be
considered a separate security and would be treated as an issue of the
government or other agency.
Municipal bonds may be categorized as "general obligation" or "revenue" bonds.
General obligation bonds are secured by the issuer's pledge of its faith, credit
and taxing power for the payment of principal and interest. Revenue bonds are
secured by the net revenue derived from a particular facility or group of
facilities or, in some cases, the proceeds of a special excise or other specific
revenue source, but not by the general taxing power. Industrial development
bonds are, in most cases, revenue bonds and do not generally carry the pledge of
the credit of the issuing municipality or public authority.
Municipal Notes. Municipal notes include, but are not limited to, tax
anticipation notes (TANs), bond anticipation notes (BANs), revenue anticipation
notes (RANs), construction loan notes and project notes. Notes sold as interim
financing in anticipation of collection of taxes, a bond sale or receipt of
other revenue are usually general obligations of the issuer. Project notes are
issued by local housing authorities to finance urban renewal and public housing
projects and are secured by the full faith and credit of the U.S. Government.
Municipal Commercial Paper. Municipal commercial paper is issued to finance
seasonal working capital needs or as short-term financing in anticipation of
longer-term debt. It is paid from the general revenues of the issuer or
2
refinanced with additional issuances of commercial paper or long-term debt.
Municipal Leases. Municipal leases, which may take the form of a lease or an
installment purchase or conditional sale contract, are issued by state and local
governments and authorities to acquire a wide variety of equipment and
facilities such as fire and sanitation vehicles, telecommunications equipment
and other capital assets. Municipal leases frequently have special risks not
normally associated with general obligation or revenue bonds. Leases and
installment purchases or conditional sale contracts (which normally provide for
title to the leased asset to pass eventually to the government issuer) have
evolved as a means for governmental issuers to acquire property and equipment
without meeting the constitutional and statutory requirements for the issuance
of debt. The debt-issuance limitations of many state constitutions and statutes
are deemed to be inapplicable because of the inclusion in many leases or
contracts of "non-appropriation" clauses that provide that the governmental
issuer has no obligation to make future payments under the lease or contract
unless money is appropriated for such purpose by the appropriate legislative
body on a yearly or other periodic basis. These types of municipal leases may be
considered illiquid and subject to the 10% limitation of investment in illiquid
securities set forth under "Investment Restrictions" contained herein. The Board
of Trustees of each Trust under which each Fund operates may adopt guidelines
and delegate to the Adviser (as defined below) the daily function of determining
and monitoring the liquidity of municipal leases. In making such determination,
the Board and the Adviser may consider such factors as the frequency of trades
for the obligations, the number of dealers willing to purchase or sell the
obligations and the number of other potential buyers and the nature of the
marketplace for the obligations, including the time needed to dispose of the
obligations and the method of soliciting offers. If the Board determines that
any municipal leases are illiquid, such leases will be subject to the 10%
limitation on investments in illiquid securities.
For purposes of diversification under the 1940 Act, the identification of the
issuer of Municipal Obligations depends on the terms and conditions of the
obligation. If the assets and revenues of an agency, authority, instrumentality
or other political subdivision are separate from those of the government
creating the subdivision and the obligation is backed only by the assets and
revenues of the subdivision, such subdivision would be regarded as the sole
issuer. Similarly, in the case of an industrial development bond, if the bond is
backed only by the assets and revenues of the non-governmental user, the
non-governmental user would be deemed to be the sole issuer. If in either case
the creating government or another entity guarantees an obligation, the
guarantee would be considered a separate security and be treated as an issue of
such government or entity.
As described in each Fund's Prospectus, the Fund may, under limited
circumstances, elect to invest in certain taxable securities and repurchase
agreements with respect to those securities. A Fund will enter into repurchase
agreements only with broker-dealers, domestic banks or recognized financial
institutions which, in the opinion of the Fund's Adviser, present minimal credit
risks. In the event of default by the seller under a repurchase agreement, a
Fund may have problems in exercising its rights to the underlying securities and
may incur costs and experience time delays in connection with the disposition of
such securities. The Fund's Adviser will monitor the value of the underlying
security at the time the transaction is entered into and at all times during the
term of the repurchase agreement to ensure that the value of the security always
3
equals or exceeds the agreed upon repurchase price. Repurchase agreements may be
considered to be loans under the 1940 Act, collateralized by the underlying
securities.
Each Fund may engage in the following investment activities:
Securities With Put Rights (or "stand-by commitments"). When a Fund purchases
Municipal Obligations it may obtain the right to resell them, or "put" them, to
the seller (a broker-dealer or bank) at an agreed upon price within a specific
period prior to their maturity date. The Fund does not limit the percentage of
its assets that may be invested in securities with put rights.
The amount payable to a Fund by the seller upon its exercise of a put will
normally be (i) the Fund's acquisition cost of the securities (excluding any
accrued interest which the Fund paid on their acquisition), less any amortized
market premium plus any amortized market or original issue discount during the
period the Fund owned the securities, plus (ii) all interest accrued on the
securities since the last interest payment date during the period the securities
were owned by the Fund. Absent unusual circumstances, each Fund values the
underlying securities at their amortized cost. Accordingly, the amount payable
by a broker-dealer or bank during the time a put is exercisable will be
substantially the same as the value of the underlying securities.
A Fund's right to exercise a put is unconditional and unqualified. A put is not
transferable by the Fund, although the Fund may sell the underlying securities
to a third party at any time. Each Fund expects that puts will generally be
available without any additional direct or indirect cost. However, if necessary
and advisable, the Fund may pay for certain puts either separately in cash or by
paying a higher price for portfolio securities which are acquired subject to
such a put (thus reducing the yield to maturity otherwise available to the same
securities). Thus, the aggregate price paid for securities with put rights may
be higher than the price that would otherwise be paid.
The acquisition of a put will not affect the valuation of the underlying
security, which will continue to be valued in accordance with the amortized cost
method. The actual put will be valued at zero in determining net asset value.
Where a Fund pays directly or indirectly for a put, its cost will be reflected
as an unrealized loss for the period during which the put is held by that Fund
and will be reflected in realized gain or loss when the put is exercised or
expires. If the value of the underlying security increases, the potential for
unrealized or realized gain is reduced by the cost of the put.
INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT RESTRICTIONS
.........Except as noted, the investment restrictions set forth below are
fundamental and may not be changed with respect to each Fund without the
affirmative vote of a majority of the outstanding voting securities of the Fund.
Where an asterisk (*) appears after a Fund's name, the relevant policy is
non-fundamental with respect to that Fund and may be changed by the Fund's
Adviser without shareholder approval, subject to review and approval by the
Trustees. As used in this Statement of Additional Information and in the
Prospectus, "a majority of the outstanding voting securities of the Fund" means
4
the lesser of (1) the holders of more than 50% of the outstanding shares of
beneficial interest of the Fund or (2) 67% of the shares present if more than
50% of the shares are present at a meeting in person or by proxy.
1........Concentration of Assets in Any One Issuer
.........Tax Exempt, Pennsylvania, Money Market, Institutional Tax Exempt and
Institutional Money Market may not invest more than 5% of their total assets, at
the time of the investment in question, in the securities of any one issuer
other than the U.S. government and its agencies or instrumentalities, except
that up to 25% of the value of Tax Exempt's, Institutional Tax Exempt's and
Pennsylvania's total assets may be invested without regard to such 5%
limitation. For this purpose each political subdivision, agency, or
instrumentality and each multi-state agency of which a state is a member, and
each public authority which issues industrial development bonds on behalf of a
private entity, will be regarded as a separate issuer for determining the
diversification of each Fund's portfolio.
2........Ten Percent Limitation on Securities of Any One Issuer
.........Neither Money Market, Pennsylvania, Tax Exempt, Institutional Money
Market nor Institutional Tax Exempt may purchase more than 10% of any class of
securities of any one issuer other than the U.S. government and its agencies or
instrumentalities.
3........Investment for Purposes of Control or Management
.........Neither Money Market, Pennsylvania, Tax Exempt, Institutional Money
Market* nor Institutional Tax Exempt* may invest in companies for the purpose of
exercising control or management.
4........Purchase of Securities on Margin
.........Neither Money Market, Pennsylvania, Tax Exempt, Treasury, Institutional
Money Market*, Institutional Tax Exempt* nor Institutional Treasury* may
purchase securities on margin, except that each Fund may obtain such short-term
credits as may be necessary for the clearance of transactions. A deposit or
payment by a Fund of initial or variation margin in connection with financial
futures contracts or related options transactions is not considered the purchase
of a security on margin.
5........Unseasoned Issuers
.........Money Market and Institutional Money Market* may not invest more than
5% of their total assets in securities of unseasoned issuers that have been in
continuous operation for less than three years, including operating periods of
their predecessors.
.........Tax Exempt and Institutional Tax Exempt* may not invest more than 5% of
their total assets in taxable securities of unseasoned issuers that have been in
continuous operation for less than three years, including operating periods of
their predecessors, except that (i) each Fund may invest in obligations issued
or guaranteed by the U.S. government and its agencies or instrumentalities, and
(ii) each Fund may invest in municipal securities.
5
6........Underwriting
.........Money Market, Pennsylvania, Tax Exempt, Institutional Money Market and
Institutional Tax Exempt may not engage in the business of underwriting the
securities of other issuers; provided that the purchase by Tax Exempt and
Institutional Tax Exempt of municipal securities or other permitted investments,
directly from the issuer thereof (or from an underwriter for an issuer) and the
later disposition of such securities in accordance with the Fund's investment
program shall not be deemed to be an underwriting.
7........Interests in Oil, Gas or Other Mineral Exploration or Development
Programs
.........Neither Money Market, Pennsylvania, Tax Exempt, Institutional Money
Market* nor Institutional Tax Exempt* may purchase, sell or invest in interests
in oil, gas or other mineral exploration or development programs.
8........Concentration in Any One Industry
.........Neither Money Market, Pennsylvania, Tax Exempt, Institutional Money
Market nor Institutional Tax Exempt may invest 25% or more of its total assets
in the securities of issuers conducting their principal business activities in
any one industry; provided, that this limitation shall not apply to obligations
issued or guaranteed by the U.S. government or its agencies or
instrumentalities, or with respect to Pennsylvania, Tax Exempt and Institutional
Tax Exempt, to municipal securities and certificates of deposit and bankers'
acceptances issued by domestic branches of U.S.
banks.
9........Warrants
.........Tax Exempt and Institutional Tax Exempt* may not invest more than 5% of
their total net assets in warrants, and, of this amount, no more than 2% of the
Fund's total net assets may be invested in warrants that are listed on neither
the New York nor the American Stock Exchange.
10.......Ownership by Trustees/Officers
.........Neither Money Market, Tax Exempt, Treasury, Institutional Money
Market*, Institutional Tax Exempt* nor Institutional Treasury* may purchase or
retain the securities of any issuer if (i) one or more officers or Trustees of a
Fund or its investment adviser individually owns or would own, directly or
beneficially, more than 1/2 of 1% of the securities of such issuer, and (ii) in
the aggregate, such persons own or would own, directly or beneficially, more
than 5% of such securities.
11.......Short Sales
.........Neither Money Market, Tax Exempt, Treasury, Institutional Money
Market*, Institutional Tax Exempt* nor Institutional Treasury* may make short
sales of securities or maintain a short position; except that, in the case of
Treasury, Institutional Treasury, Institutional Tax Exempt and Institutional
Money Market, at all times when a short position is open it owns an equal amount
of such securities or of securities which, without payment of any further
consideration are convertible into or exchangeable for securities of the same
6
issue as, and equal in amount to, the securities sold short.
12.......Lending of Funds and Securities
.........Tax Exempt and Institutional Tax Exempt may not lend their funds to
other persons; however, they may purchase issues of debt securities, enter into
repurchase agreements and acquire privately negotiated loans made to municipal
borrowers.
.........Money Market and Institutional Money Market may not lend their funds to
other persons, provided that they may purchase money market securities or enter
into repurchase agreements.
.........Treasury and Institutional Treasury will not lend any of their assets,
except that they may purchase or hold U.S. Treasury obligations, including
repurchase agreements.
.........Neither Money Market, Pennsylvania, Tax Exempt, Institutional Money
Market nor Institutional Tax Exempt may lend its portfolio securities, unless
the borrower is a broker, dealer or financial institution that pledges and
maintains collateral with the Fund consisting of cash, letters of credit or
securities issued or guaranteed by the United States Government having a value
at all times not less than 100% of the current market value of the loaned
securities, including accrued interest, provided that the aggregate amount of
such loans shall not exceed 30% of the Fund's total assets (5% in the case of
Pennsylvania).
13.......Commodities
......... Money Market, Tax Exempt, Treasury*, Institutional Treasury*,
Institutional Money Market* and Institutional Tax Exempt* may not purchase, sell
or invest in commodities, commodity contracts or financial futures contracts.
14.......Real Estate
.........The Funds may not purchase, sell or invest in real estate or interests
in real estate, except that Money Market and Institutional Money Market may
purchase, sell or invest in marketable securities of companies holding real
estate or interests in real estate, including real estate investment trusts, Tax
Exempt and Institutional Tax Exempt may purchase municipal securities and other
debt securities secured by real estate or interests therein and Pennsylvania may
purchase securities secured by real estate or interests therein, or securities
issued by companies which invest in real estate or interests therein.
15.......Borrowing, Senior Securities, Reverse Repurchase Agreements
......... Money Market, Tax Exempt, Institutional Money Market and Institutional
Tax Exempt may not borrow money, issue senior securities or enter into reverse
repurchase agreements, except for temporary or emergency purposes, and not for
leveraging, and then in amounts not in excess of 10% of the value of the Fund's
total assets at the time of such borrowing; or mortgage, pledge or hypothecate
any assets except in connection with any such borrowing and in amounts not in
excess of the lesser of the dollar amounts borrowed or 10% of the value of the
Fund's total assets at the time of such borrowing, provided that the Fund will
not purchase any securities at times when any borrowings (including reverse
7
repurchase agreements) are outstanding. The Funds will not enter into reverse
repurchase agreements exceeding 5% of the value of their total assets.
.........Pennsylvania shall not borrow money, issue senior securities, or
pledge, mortgage or hypothecate its assets, except that the Fund may borrow from
banks if immediately after each borrowing there is asset coverage of at least
300%.
.........Treasury and Institutional Treasury will not issue senior securities
except that each Fund may borrow money directly, as a temporary measure for
extraordinary or emergency purposes and then only in amounts not in excess of 5%
of the value of its total assets, or in an amount up to one- third of the value
of its total assets, including the amount borrowed, in order to meet redemption
requests without immediately selling portfolio instruments. Any such borrowings
need not be collateralized. Each Fund will not purchase any securities while
borrowings in excess of 5% of the total value of its total assets are
outstanding. Each Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage purposes. Treasury and Institutional Treasury
will not mortgage, pledge or hypothecate any assets except to secure permitted
borrowings. In these cases, Treasury and Institutional Treasury may pledge
assets having a market value not exceeding the lesser of the dollar amounts
borrowed or 15% of the value of total assets at the time of the pledge.
16.......Options
.........Money Market, Tax Exempt, Institutional Money Market* and Institutional
Tax Exempt* may not write, purchase or sell put or call options, or combinations
thereof, except Money Market and Institutional Money Market may do so as
permitted under "Description of the Funds - Investment Objective and Policies"
in each Fund's Prospectus and Tax Exempt and Institutional Tax Exempt may
purchase securities with rights to put securities to the seller in accordance
with its investment program.
.........Pennsylvania shall not write, purchase or sell puts, calls, warrants or
options or any combination thereof, except that the Fund may purchase securities
with put or demand rights.
17.......Investment in Municipal Securities
.........Pennsylvania, Tax Exempt and Institutional Tax Exempt may not invest
more than 20% of its total assets in securities other than municipal securities
(as described under "Description of Funds - Investment Objectives and Policies"
in each Fund's Prospectus), unless extraordinary circumstances dictate a more
defensive posture.
18.......Investment in Money Market Securities
.........Money Market may not purchase any securities other than money market
instruments(as described under "Description of Funds - Investment Objectives and
Policies" in the Fund's Prospectus).
19.......Investing in Securities of Other Investment Companies
.........Treasury*, Money Market*, Pennsylvania*, Tax Exempt*, Institutional
Treasury*, Institutional Money Market* and Institutional Tax Exempt* will
8
purchase securities of investment companies only in open-market transactions
involving customary broker's commissions. However, these limitations are not
applicable if the securities are acquired in a merger, consolidation or
acquisition of assets. It should be noted that investment companies incur
certain expenses such as management fees and therefore any investment by the
Funds in shares of another investment company would be subject to such duplicate
expenses.
Except with respect to borrowing money, if a percentage limitation is adhered to
at the time of investment, a later increase or decrease in percentage resulting
from any change in value or net assets will not result in a violation of such
restriction.
CERTAIN RISK CONSIDERATIONS
...........There can be no assurance that a Fund will achieve its investment
objective and an investment in the Fund involves certain risks which are
described under "Description of the Funds - Investment Objectives and Policies"
in each Fund's Prospectus.
MANAGEMENT
The age, address and principal occupation of the Trustees and executive officers
of Evergreen Investment Trust (formerly First Union Funds), The Evergreen
Municipal Trust, Evergreen Tax Free Trust (formerly FFB Funds Trust) and
Evergreen Money Market Trust (each a "Trust" and collectively the "Trusts"),
during the past five years are set forth below:
Laurence B. Ashkin (68), 180 East Pearson Street, Chicago, IL-Trustee. Real
estate developer and construction consultant since 1980; President of Centrum
Equities since 1987 and Centrum Properties, Inc. since 1980.
Foster Bam (69), 2 Greenwich Plaza, Greenwich, CT-Trustee. Partner in the law
firm of Cummings and Lockwood since 1968.
James S. Howell (72), 4124 Crossgate Road, Charlotte, NC-Chairman and Trustee.
Retired Vice President of Lance Inc. (food manufacturing); Chairman of the
Distribution Comm. Foundation for the Carolinas from 1989 to 1993.
Gerald M. McDonnell (57), 209 Harris Drive, Norfolk, NE-Trustee. Sales
Representative with Nucor-Yamoto Inc. (steel producer) since 1988.
Thomas L. McVerry (58), 4419 Parkview Drive, Charlotte, NC-Trustee. Director of
Carolina Cooperative Federal Credit Union since 1990.
William Walt Pettit* (41), Holcomb and Pettit, P.A., 227 West Trade St.,
Charlotte, NC-Trustee. Partner in the law firm Holcomb and Pettit, P.A. since
1990.
Russell A. Salton, III, M.D. (49), 205 Regency Executive Park, Charlotte, NC-
Trustee. Medical Director, U.S. Healthcare of Charlotte, North Carolina since
1995; President, Primary Physician Care from 1990 to 1995.
Michael S. Scofield (53), 212 S. Tryon Street Suite 1280, Charlotte, NC-Trustee.
Attorney, Law Offices of Michael S. Scofield since 1969.
9
Robert J. Jeffries (73), 2118 New Bedford Drive, Sun City Center, FL-Trustee
Emeritus. Corporate consultant since 1967.
John J. Pileggi (37), 237 Park Avenue, Suite 910, New York, NY-President and
Treasurer. Senior Managing Director, Furman Selz LLC since 1992, Managing
Director from 1984 to 1992.
Joan V. Fiore (40), 237 Park Avenue, Suite 910, New York, NY-Secretary. Managing
Director and Counsel, Furman Selz LLC since 1991; Staff Attorney, Securities and
Exchange Commission from 1986 to 1991.
The officers listed above hold the same positions with thirteen investment
companies offering a total of forty-one investment funds within the Evergreen
mutual fund complex. Messrs. Howell, Salton and Scofield are Trustees of all
thirteen investment companies. Messrs. McDonnell, McVerry and Pettit are
Trustees of twelve of the investment companies (excluded is Evergreen Variable
Trust). Messrs. Ashkin, Bam and Jeffries are Trustees of eleven of the
investment companies (excluded are Evergreen Variable Trust and Evergreen
Investment Trust.)
- ----------
* Mr. Pettit may be deemed to be an "interested person" within the meaning of
the 1940 Act.
The officers of the Trusts are all officers and/or employees of Furman Selz LLC.
Furman Selz LLC is an affiliate of Evergreen Funds Distributor, Inc., the
distributor of each Class of shares of each Fund.
The Funds do not pay any direct remuneration to any officer or Trustee who is an
"affiliated person" of either First Union National Bank of North Carolina or
Evergreen Asset Management Corp. or their affiliates. See "Investment Adviser."
Currently, none of the Trustees is an "affiliated person" as defined in the 1940
Act. Evergreen Investment Trust, Evergreen Money Market Trust and The Evergreen
Municipal Trust pay each Trustee who is not an "affiliated person" an annual
retainer and a fee per meeting attended, plus expenses. The Evergreen Tax Free
Trust pays each Trustee who is not an "affiliated person" a fee per meeting
attended, plus expenses, as follows:
Name of Fund Annual Retainer Meeting Fee
Evergreen Investment Trust - $15,000* $2,000*
Treasury
Evergreen Money Market Trust - $4,000**
Money Market $100
Institutional Money Market $100
Institutional Treasury $100
The Evergreen Municipal Trust - **
Tax Exempt $100
Institutional Tax Exempt $100
Evergreen Tax Free Trust - -0-
Pennsylvania $100
10
- ---------------------------
* The annual retainer and the per meeting fee paid by Evergreen Investment Trust
to each Trustee are allocated among its fourteen series.
** Allocated among the Evergreen Money Market Trust (which offers three
investment series) and The Evergreen Municipal Trust (which offers five
investment series).
In addition:
(1) Each non-affiliated Trustee is paid a fee of $500 for each special
telephonic meeting in which he participates, regardless of the number
of Funds for which the meeting is called.
(2) The Chairman of the Board of the Evergreen group of mutual funds is
paid an annual retainer of $5,000, and the Chairman of the Audit
Committee is paid an annual retainer of $2,000. These retainers are
allocated among all the funds in the Evergreen group of mutual funds,
based upon assets.
(3) Each member of the Audit Committee is paid an annual retainer of $500.
(4) Any individual who has been appointed as a Trustee Emeritus of one or
more funds in the Evergreen group of mutual funds is paid one-half of
the fees that are payable to regular Trustees.
Set forth below for each of the Trustees is the aggregate compensation paid
to such Trustees by each of Evergreen Investment Trust, The Evergreen Municipal
Trust and Evergreen Money Market Trust for the fiscal year ended August 31, 1996
and by Evergreen Tax Free Trust for the period January 19, 1996 (the date of
their election as Trustees) through August 31, 1996.
Total
Aggregate Compensation From Trust Compensation
Evergreen The From Trusts
Money Evergreen Evergreen Evergreen & Fund
Name of Market Municipal Investment Tax Free Complex Paid
Trustee Trust Trust Trust Trust to Trustees
Laurence Ashkin $4,108 $4,038 0 $ 611 $33,050
Foster Bam 4,108 4,038 0 611 33,050
James S. Howell 4,466 4,287 25,779 606 62,825
Gerald M. 4,018 3,963 22,166 606 56,300
McDonnell
Thomas L. 4,190 4,053 22,706 606 57,425
McVerry
11
William Walt 3,968 3,927 21,987 606 55,925
Pettit
Russell A. 3,968 3,927 21,987 606 58,575
Salton, III, M.D.
Michael S. 3,968 3,927 21,987 606 58,575
Scofield
Robert Jeffries* 2,648 2,686 0 311 21,813
- --------------------
* Robert J. Jeffries has been serving as a Trustee Emeritus since January 1,
1996.
As of the date of this Statement of Additional Information, the officers
and Trustees of each of the Trusts as a group owned less than 1% of the
outstanding shares of any of the Funds.
Set forth below is information with respect to each person, who, to each
Fund's knowledge, owned beneficially or of record more than 5% of a class of
each Fund's total outstanding shares and their aggregate ownership of the Fund's
total outstanding shares as of August 31, 1996.
Name of % of
Name and Address* Fund/Class No. of Shares Class/Fund
- ------------------ ---------- ------------- ----------
First Union National Bank of FL Money Market/A 441,116,098 25.13% /16.73%
Attn: Cap Account Dept.
One First Union Center
Charlotte, NC 28288
First Union National Bank of NC Money Market/A 189,391,713 10.70% / 7.18%
Cap Account
Attn: Shelia Bryendon CMG 1164
One First Union Center
301 S. College Street
Charlotte, NC 28202-6000
First Union National Bank of NJ Money Market/A 105,731,878 6.02% / 4.01%
Attn: Cap Account Dept.
One First Union Center
Charlotte, NC 28288
First Union National Bank Money Market/A 212,302,903 12.09% / 8.05%
Trust Accounts
Attn Ginny Batten CMG 1151-2
401 Tryon Street 3rd Fl.
Charlotte NC 28288
First Union National Bank Money Market/Y 176,135,042 26.22% / 6.68%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union Insurance Group Money Market/Y 35,800,000 5.33% / 1.36%
Attn Harry Laderer
301 S. Tryon Street
Charlotte, NC 28288-0001
12
First Union National Bank of FL Tax-Exempt/A 194,707,088 29.47% / 15.23%
Attn: Cap Account Dept.
One First Union Center
Charlotte, NC 28288
First Union National Bank of NC Tax-Exempt/A 148,212,559 22.43% / 11.60%
Cap Account
Attn: Shelia Bryendon CMG 1164
One First Union Center
301 S. College Street
Charlotte, NC 28288-0001
First Union National Bank of GA Tax-Exempt/A 38,452,170 5.82% / 3.01%
Attn: Cap Account Dept.
One First Union Center
Charlotte, NC 28288
First Union National Bank Tax-Exempt/A 58,110,478 8.80% /14.55%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-151
301 S. Tryon Street
Charlotte, NC 28288
First Union National Bank Tax-Exempt/Y 105,527,990 17.09% /8.26%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-151
301 S. Tryon Street
Charlotte, NC 28288
St Joe Forest Prod Specl Acct Tax-Exempt/Y 71,030,564 11.50%/5.56%
Attn Susan Bacher Treas Mgr.
301 S. Tryon Street
Charlotte, NC 28288
St Joe Industries Inc. Special Tax-Exempt/Y 64,548,439 10.45%/5.05%
Attn David Childers III
301 S. Tryon Street
Charlotte, NC 28288
First Union National Bank of FL Treasury/A 441,570,610 16.03% / 13.11%
Attn: Cap Account Dept.
One First Union Center
Charlotte, NC 28288
First Union National Bank of NC Treasury/A 270,046,253 10.36% / 8.02%
Attn: Cap Account Dept.
One First Union Center
301 S. College Street
Charlotte, NC 28202-6000
First Union National Bank of VA Treasury/A 152,550,548 5.85% / 4.53%
Attn: Cap Account Dept.
One First Union Center
Charlotte, NC 28288
13
First Union National Bank of NC Treasury/A 858,336,465 32.91% / 25.49%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank of NC Treasury/Y 685,143,280 90.15% / 20.34%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001
Dalick Feith & Pennsylvania/Y 2,849,082 5.89% / 4.04%
Rose Feith JT Ten
301 S. Tryon Street
Charlotte, NC 28288-0001
Johnathan B Detwiller Pennsylvania/Y 2,873,457 5.95%/ 4.07%
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union National Bank Pennsylvania/Y 14,284,140 29.55%/20.25%
Trust Accounts
Attn Ginny Batten CMG 11512
301 S. Tryon Street
Charlotte, NC 28288-0001
First Union Nation Bank of PA Pennsylvania/A 18,119,249 81.63%/25.69%
Attn Cap Account Dept.
One First Union Center
Charlotte NC 28288
Form Union National Bank of North Carolina and its affiliates act in
various capacities for numerous accounts. As a result of its ownership on August
31, 1996, of 90.15% of Class Y shares and 43.27% Class A shares of Treasury
Money Market Fund, 29.55% and 81.63%, respectively, of Class Y and Class A
shares of Pennsylvania Money Market Fund, 26.22% of Class Y and 54.04% of Class
A shares of Money Market Fund and 66.52% of Tax Exempt Money Market Fund, First
Union may be deemed to "control" those Funds as that term is defined in the 1940
Act.
14
INVESTMENT ADVISERS
(See also "Management of the Funds" in each Fund's Prospectus)
The investment adviser of Money Market and Tax Exempt is Evergreen Asset
Management Corp., a New York corporation, with offices at 2500 Westchester
Avenue, Purchase, New York ("Evergreen Asset" or the "Adviser."). Evergreen
Asset is owned by First Union National Bank of North Carolina ("FUNB" or the
"Adviser") which, in turn, is a subsidiary of First Union Corporation ("First
Union"), a bank holding company headquartered in Charlotte, North Carolina. The
investment adviser of Treasury, Institutional Treasury, Institutional Money
Market, Institutional Tax Exempt and Pennsylvania is FUNB which provides
investment advisory services through its Capital Management Group. The Directors
of Evergreen Asset are Richard K. Wagoner and Barbara I. Colvin. The executive
officers of Evergreen Asset are Stephen A. Lieber, Chairman and Co-Chief
Executive Officer, Nola Maddox Falcone, President and Co-Chief Executive
Officer, and Theodore J. Israel, Jr., Executive Vice President.
On June 30, 1994, Evergreen Asset and Lieber and Company ("Lieber") were
acquired by First Union through certain of its subsidiaries. Evergreen Asset was
acquired by FUNB, a wholly-owned subsidiary (except for directors' qualifying
shares) of First Union, by merger into EAMC Corporation ("EAMC") a wholly-owned
subsidiary of FUNB. EAMC then assumed the name "Evergreen Asset Management
Corp." and succeeded to the business of Evergreen Asset. Contemporaneously with
the succession of EAMC to the business of Evergreen Asset and its assumption of
the name "Evergreen Asset Management Corp.", Money Market and Tax Exempt entered
into a new investment advisory agreement with EAMC and into a distribution
agreement with Evergreen Funds Distributor, Inc. (the "Distributor"), an
affiliate of Furman Selz LLC. At that time, EAMC also entered into a new
sub-advisory agreement with Lieber pursuant to which Lieber provides certain
services to Evergreen Asset in connection with its duties as investment adviser.
The partnership interests in Lieber, a New York general partnership, were
acquired by Lieber I Corp. and Lieber II Corp., which are both wholly-owned
subsidiaries of FUNB. The business of Lieber is being continued. The new
advisory and sub-advisory agreements were approved by the shareholders of Money
Market and Tax Exempt at their meeting held on June 23, 1994, and became
effective on June 30, 1994.
Prior to January 1, 1996, First Fidelity Bank, N.A. ("First Fidelity") acted as
investment adviser to Pennsylvania. On June 18, 1995, First Union entered into
an Agreement and Plan of Merger (the "Merger Agreement") with First Fidelity
Bancorporation ("FFB"), the corporate parent of First Fidelity which provided,
among other things, for the merger (the "Merger") of FFB with and into a
wholly-owned subsidiary of First Union. The Merger was consummated on January 1,
1996. As a result of the Merger, FUNB and its wholly-owned subsidiary, Evergreen
Asset succeeded to the investment advisory and administrative functions
currently performed by various units of First Fidelity.
Under its Investment Advisory Agreement with each Fund, each Adviser has agreed
to furnish reports, statistical and research services and recommendations with
respect to each Fund's portfolio of investments. In addition, each Adviser
provides office facilities to the Funds and performs a variety of administrative
services. Each Fund pays the cost of all of its other expenses and liabilities,
including expenses and liabilities incurred in connection with maintaining their
15
registration under the Securities Act of 1933, as amended, and the 1940 Act,
printing prospectuses (for existing shareholders) as they are updated, state
qualifications, mailings, brokerage, custodian and stock transfer charges,
printing, legal and auditing expenses, expenses of shareholder meetings and
reports to shareholders. Notwithstanding the foregoing, each Adviser will pay
the costs of printing and distributing prospectuses used for prospective
shareholders.
The method of computing the investment advisory fee for each Fund is
described in such Fund's Prospectus. The advisory fees paid by each Fund for the
three most recent fiscal periods reflected in its registration statement are set
forth below:
TAX EXEMPT Year Ended Year Ended Year Ended
8/31/96 8/31/95 8/31/94
Advisory Fee $5,540,924 $2,329,035 $2,126,246
Waiver (1,243,131) (558,942) (1,256,653)
----------- --------- ----------
Net Advisory Fee $4,297,793 $1,770,093 $869,593
=========== ========= =========
MONEY MARKET Year Ended Year Ended Year Ended
8/31/96 8/31/95 8/31/94
Advisory Fee $8,346,173 $1,831,518 $1,245,513
Waiver (2,427,423) (732,723) (974,438)
----------- --------- ---------
Net Advisory Fee $5,918,750 $1,098,795 $271,075
========= ========= =========
PENNSYLVANIA Six Months Year Ended Year Ended
ended 8/31/96* 2/29/96 2/28/95
Advisory Fee $148,591 $312,440 $85,049
Waiver (59,186) (241,213) (85,049)
-------- --------- ---------
Net Advisory Fee $89,405 $ 71,227 $ 0
======= ========= =========
TREASURY Year Ended Eight Months Year Ended
Ended
8/31/96 8/31/95** 12/31/94
Advisory Fee $8,857,503 $2,814,251 $2,549,955
Waiver (2,109,068) (1,258,611) (1,948,237)
---------- --------- ---------
Net Advisory Fee $6,748,435 $1,555,640 $601,718
========= ========= =========
- --------------------
* The Fund changed its fiscal year from February 28 to August 31.
16
** The Fund changed its fiscal year from December 31 to August 31.
Expense Limitations
Evergreen Asset as Adviser to Money Market and Tax Exempt has, pursuant to each
Investment Advisery Agreement, agreed to reimburse each Fund to the extent that
any of these Funds' aggregate operating expenses (including the Adviser's fee,
but excluding interest, taxes, brokerage commissions, and extraordinary
expenses, and for such Funds Class A and Class B shares, as applicable, Rule
12b-1 distribution fees and shareholder servicing fees payable) exceed 1.00% of
their average net assets for any fiscal year. FUNB as Adviser to Institutional
Money Market, Institutional Tax Exempt and Institutional Treasury has
voluntarily agreed to reimburse each Fund to the extent that any of these Funds'
aggregate operating expenses (including the Adviser's fee, but excluding
interest, taxes, brokerage commissions, and extraordinary expenses, and for such
Funds Institutional Service shares Rule 12b-1 distribution fees and shareholder
servicing fees payable) exceed .20 of 1.00% of their average net assets for any
fiscal year for Institutional Class Shares and .45 of 10% for Insitutional
Service Class shares.
The Investment Advisory Agreements are terminable, without the payment of any
penalty, on sixty days' written notice, by a vote of the holders of a majority
of each Fund's outstanding shares, or by a vote of a majority of each Trust's
Trustees or by the respective Adviser. The Investment Advisory Agreements will
automatically terminate in the event of their assignment. Each Investment
Advisory Agreement provides in substance that the Adviser shall not be liable
for any action or failure to act in accordance with its duties thereunder in the
absence of willful misfeasance, bad faith or gross negligence on the part of the
Adviser or of reckless disregard of its obligations thereunder. The Investment
Advisory Agreements with respect to Money Market and Tax Exempt, dated June 30,
1994, were each last approved by the Trustees of each Trust on February 8, 1996
and will continue from year to year provided that such continuance is approved
annually by a vote of a majority of the Trustees of each Trust including a
majority of those Trustees who are not parties thereto or "interested persons"
(as defined in the 1940 Act) of any such party, cast in person at a meeting duly
called for the purpose of voting on such approval or a majority of the
outstanding voting shares of each Fund. With respect to Treasury, the Investment
Advisory Agreement dated February 28, 1985 and amended from time to time
thereafter was last approved by the Trustees on February 8, 1996 and it will
continue from year to year with respect to each Fund provided that such
continuance is approved annually by a vote of a majority of the Trustees
including a majority of those Trustees who are not parties thereto or
"interested persons" of any such party cast in person at a meeting duly called
for the purpose of voting on such approval or by a vote of a majority of the
outstanding voting securities of the Fund. With respect to Pennsylvania, the
Investment Advisory Agreement dated January 1, 1996 was first approved by the
shareholders of the Fund on December 12, 1995 and will continue until January 1,
1998 and from year to year with respect to the Fund provided that such
continuance is approved annually by a vote of a majority of the Trustees
including a majority of those Trustees who are not parties thereto or
"interested persons" of any such party cast in person at a meeting duly called
for the purpose of voting on such approval or by a vote of a majority of the
outstanding voting securities of the Fund. With respect to Institutional Money
17
Market, Institutional Tax Exempt and Institutional Treasury, the Investment
Advisory Agreements dated September 30, 1996 were approved by each Fund's
initial shareholder on September 30, 1996, and will continue in effect until
September 30, 1998, and thereafter from year to year provided that their
continuance is approved annually by a vote of a majority of the Trustees of each
Trust including a majority of those Trustees who are not parties thereto or
"interested persons" of any such party cast in person at a meeting duly called
for the purpose of voting on such approval or by a vote of a majority of the
outstanding voting securities of each Fund.
Certain other clients of each Adviser may have investment objectives and
policies similar to those of the Funds. Each Adviser (including the sub-adviser)
may, from time to time, make recommendations which result in the purchase or
sale of a particular security by its other clients simultaneously with a Fund.
If transactions on behalf of more than one client during the same period
increase the demand for securities being purchased or the supply of securities
being sold, there may be an adverse effect on price or quantity. It is the
policy of each Adviser to allocate advisory recommendations and the placing of
orders in a manner which is deemed equitable by the Adviser to the accounts
involved, including the Funds. When two or more of the clients of the Adviser
(including one or more of the Funds) are purchasing or selling the same security
on a given day from the same broker-dealer, such transactions may be averaged as
to price.
Although the investment objectives of the Funds are not the same, and their
investment decisions are made independently of each other, they rely upon the
same resources for investment advice and recommendations. Therefore, on
occasion, when a particular security meets the different investment objectives
of the various Funds, they may simultaneously purchase or sell the same
security. This could have a detrimental effect on the price and quantity of the
security available to each Fund. If simultaneous transactions occur, the Adviser
attempts to allocate the securities, both as to price and quantity, in
accordance with a method deemed equitable to each Fund and consistent with their
different investment objectives. In some cases, simultaneous purchases or sales
could have a beneficial effect, in that the ability of one Fund to participate
in volume transactions may produce better executions for that Fund.
Each Fund has adopted procedures under Rule 17a-7 of the 1940 Act to permit
purchase and sales transactions to be effected between each Fund and the other
registered investment companies for which either Evergreen Asset or FUNB acts as
investment adviser or between the Fund and any advisory clients of Evergreen
Asset, FUNB or Lieber. Each Fund may from time to time engage in such
transactions but only in accordance with these procedures and if they are
equitable to each participant and consistent with each participant's investment
objectives.
Prior to July 1, 1995, Federated Administrative Services, a subsidiary of
Federated Investors, provided legal, accounting and other administrative
personnel and support services to each of the portfolios of Evergreen Investment
Trust. The Trust paid a fee for such services at the following annual rate: .15%
on the first $250 million average daily net assets of the Trust; .125% on the
next $250 million; .10% on the next $250 million and .075% on assets in excess
of $250 million. For the fiscal year ended August 31, 1996, the fiscal period
ended August 31, 1995 and the fiscal year ended December 31, 1994, Treasury
incurred $1,264,550, $601,034 and $462,002, respectively, in administrative
18
service costs.
Prior to January 19, 1996, Furman Selz LLC acted as administrator for
Pennsylvania. For the fiscal period ended January 18, 1996 and the fiscal years
ended February 28, 1995 and 1994 Furman Selz LLC waived its entire
administrative fee.
On July 1, 1995, Evergreen Asset, in the case of each of the portfolios of
Evergreen Investment Trust, on January 19, 1996, in the case of Pennsylvania,
and on the date of this Statement of Additional Information in the case of
Institutional Treasury, Institutional Money Market and Institutional Tax Exempt,
commenced providing administrative services for a fee based on the average daily
net assets of each fund administered by Evergreen Asset for which Evergreen
Asset or FUNB also serve as investment adviser, calculated daily and payable
monthly at the following annual rates: .050% on 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 LLC an affiliate of the Distributor, serves as
sub-administrator to Treasury, Institutional Treasury, Institutional Money
Market, Institutional Tax Exempt and Pennsylvania and is entitled to receive a
fee based on the average daily net assets of Treasury, Institutional Treasury,
Institutional Money Market, Institutional Tax Exempt and Pennsylvania at a rate
from the Fund calculated on the total assets of the mutual funds administered by
Evergreen Asset for which FUNB 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;
.0040% on assets in excess of $25 billion. The total assets of mutual funds
administered by Evergreen Asset for which Evergreen Asset or FUNB serve as
investment adviser as of August 31, 1996 were approximately $15.7 billion.
DISTRIBUTION PLANS
Reference is made to "Management of the Funds - Distribution Plans and
Agreements" in the Prospectus of each Fund for additional disclosure regarding
the Funds' distribution arrangements. Distribution fees are accrued daily and
paid monthly on the Class A shares of Money Market, Tax Exempt, Treasury,
Pennsylvania, Institutional Service shares of Intitutional Treasury,
Institutional Money Market and Institutional Tax Exempt, and for Money Market,
its Class B shares and are charged as class expenses, as accrued. The
distribution fees attributable to the Class B shares are designed to permit an
investor to purchase such shares through broker-dealers without the assessment
of a front-end sales charge, while at the same time permitting the Distributor
to compensate broker-dealers in connection with the sale of such shares.
Under the Rule 12b-1 Distribution Plans that have been adopted by each Fund with
respect to each of its Class A, Institutional Service and Class B shares, as
applicable, (to the extent that each Fund offers such classes) (each a "Plan"
and collectively, the "Plans"), the Treasurer of each Fund reports the amounts
expended under the Plan and the purposes for which such expenditures were made
to the Trustees of each Trust for their review on a quarterly basis. Also, each
Plan provides that the selection and nomination of Trustees who are not
"interested persons" of each Trust (as defined in the 1940 Act) are committed to
the discretion of such disinterested Trustees then in office.
19
Each Adviser may from time to time and from its own funds or such other
resources as may be permitted by rules of the Securities and Exchange Commission
make payments for distribution services to the Distributor; the latter may in
turn pay part or all of such compensation to brokers or other persons for their
distribution assistance.
Money Market commenced offering Class A and Class B shares and Tax Exempt
commenced offering Class A shares, on January 3, 1995. Each Plan with respect to
such Funds became effective on December 30, 1994 and was initially approved by
the sole shareholder of each Class of shares of each Fund with respect to which
a Plan was adopted on that date and by the unanimous vote of the Trustees of
each Trust, including the disinterested Trustees voting separately, at a meeting
called for that purpose and held on December 13, 1994. The Distribution
Agreements between each Fund and the Distributor, pursuant to which distribution
fees are paid under the Plans by each Fund with respect to its Class A and Class
B shares were also approved at the December 13, 1994 meeting by the unanimous
vote of the Trustees, including the disinterested Trustees voting separately.
Each Plan and Distribution Agreement will continue in effect for successive
twelve-month periods provided, however, that such continuance is specifically
approved at least annually by the Trustees of each Trust or by vote of the
holders of a majority of the outstanding voting securities (as defined in the
1940 Act) of that Class, and, in either case, by a majority of the Trustees of
the Trust who are not parties to the Agreement or interested persons, as defined
in the 1940 Act, of any such party (other than as Trustees of the Trust) and who
have no direct or indirect financial interest in the operation of the Plan or
any agreement related thereto.
Prior to July 8, 1995, Federated Securities Corp., a subsidiary of Federated
Investors, served as the distributor for Treasury as well as other portfolios of
Evergreen Investment Trust. The Distribution Agreement between Treasury and the
Distributor pursuant to which distribution fees are paid under the Plan by
Treasury with respect to its Class A shares was approved on June 15, 1995 by the
unanimous vote of the Trustees including the disinterested Trustees voting
separately. In the case of Pennsylvania, FFB Funds Distributor, Inc. served as
distributor prior to January 19, 1996. The Distribution Agreement between
Pennsylvania and the Distributor pursuant to which distribution fees are paid
under the Plan by Pennsylvania with respect to its Class A shares was approved
on January 19, 1996 by the unanimous vote of the Trustees including the
disinterested Trustees voting separately.
On October 1, 1996 Institutional Money Market, Institutional Tax Exempt and
Institutional Treasury commenced the offering of each Fund's Institutional
Service shares. Each Plan with respect to such Funds became effective on August
1, 1996 and was initially approved by the sole shareholder of each Fund on
September 30, 1996 and by the unanimous vote of the Trustees of each Trust,
including the disinterested Trustees voting separately, at a meeting called for
that purpose and held on August 1, 1996. The Distribution Agreements between
each Fund and the Distributor, pursuant to which distribution fees are paid
under the Plans by each Fund with respect to its Institutional Service shares
were also approved at the August 1, 1996 meeting by the unanimous vote of the
disinterested Trustees voting separately. Each Plan and Distribution Agreement
will continue in effect for successive twelve-month periods provided, however,
that such continuance is specifically approved at least annually by the Trustees
of each Trust or by vote of the holders of a majority of the outstanding voting
securities (as defined in the 1940 Act) of that class and, in either case, by a
majority of the Trustees of the
20
Trust who are not parties to the Distribution Agreement or interested persons,
as defined in the 1940 Act, of any such party (other than as Trustees of the
Trust) and who have no direct or indirect financial interest in the operation of
the Plan or any agreement related thereto.
The Plans permit the payment of fees to brokers and others for distribution and
shareholder-related administrative services and to broker-dealers, depository
institutions, financial intermediaries and administrators for administrative
services as to each Fund's Class A, Institutional Service and Class B shares, as
applicable. The Plans are designed to (i) stimulate brokers to provide
distribution and administrative support services to the Funds and holders of
each Fund's Class A, Institutional Service, and Class B shares, as applicable
and (ii) stimulate administrators to render administrative support services to
the Funds and holders of such shares. The administrative services are provided
by a representative who has knowledge of the shareholder's particular
circumstances and goals, and include, but are not limited to providing office
space, equipment, telephone facilities, and various personnel including
clerical, supervisory, and computer, as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and redemption
transactions and automatic investments of client account cash balances;
answering routine client inquiries regarding each Fund's Class A, Institutional
Service, and Class B shares, as applicable; assisting clients in changing
dividend options, account designations, and addresses; and providing such other
services as the Fund reasonably requests for its Class A, Institutional Service,
and Class B shares, as applicable.
In the event that a Plan or Distribution Agreement is terminated or not
continued with respect to one or more Classes of shares of a Fund, (i) no
distribution fees (other than current amounts accrued but not yet paid) would be
owed by the Fund to the Distributor with respect to that Class or Classes of
shares, and (ii) the Fund would not be obligated to pay the Distributor for any
amounts expended under the Distribution Agreement not previously recovered by
the Distributor from distribution services fees in respect of such Class or
Classes of shares through deferred sales charges.
All material amendments to any Plan or Distribution Agreement must be approved
by a vote of the Trustees of a Trust or the holders of the Fund's outstanding
voting securities, voting separately by Class, and in either case, by a
majority of the disinterested Trustees, cast in person at a meeting called for
the purpose of voting on such approval; and any Plan or Distribution Agreement
may not be amended in order to increase materially the costs that a particular
Class of shares of a Fund may bear pursuant to the Plan or Distribution
Agreement without the approval of a majority of the holders of the outstanding
voting shares of the Class affected. Any Plan or Distribution Agreement may be
terminated (a) by a Fund without penalty at any time by a majority vote of the
holders of the outstanding voting securities of the Fund, voting separately by
Class or by a majority vote of the Trustees who are not "interested persons" as
defined in the 1940 Act, or (b) by the Distributor. To terminate any
Distribution Agreement, any party must give the other parties 60 days' written
notice; to terminate a Plan only, the Fund need give no notice to the
Distributor. Any Distribution Agreement will terminate automatically in the
event of its assignment.
Fees Paid Pursuant to Distribution Plans. Treasury, Money Market, Tax Exempt
and Pennsylvania incurred the following distribution service fees:
Treasury. For the fiscal year ended August 31, 1996, $6,381,827 on behalf of
21
Class A shares.
Money Market. For the fiscal year ended August 31, 1996, $3,910,297 on behalf of
Class A shares and $68,566 behalf of Class B shares.
Tax Exempt. For the fiscal year ended August 31, 1996, $1,898,665 on behalf of
Class A shares.
Pennsylvania. For the six months ended August 31, 1996 (commencement of
operations), $24,476 on behalf of Class A shares.
Information pertaining to such fees for Institutional Money Market,
Institutional Tax Exempt and Institutional Treasury has not been included
because these Funds have not completed a full year of operation.
ALLOCATION OF BROKERAGE
Decisions regarding each Fund's portfolio are made by its Adviser, subject to
the supervision and control of the Trustees. Orders for the purchase and sale of
securities and other investments are placed by employees of the Adviser, all of
whom, in the case of Evergreen Asset, are associated with Lieber. In general,
the same individuals perform the same functions for the other funds managed by
the Adviser. A Fund will not effect any brokerage transactions with any broker
or dealer affiliated directly or indirectly with the Adviser unless such
transactions are fair and reasonable, under the circumstances, to the Fund's
shareholders. Circumstances that may indicate that such transactions are fair or
reasonable include the frequency of such transactions, the selection process and
the commissions payable in connection with such transactions.
It is anticipated that most purchase and sale transactions involving fixed
income securities will be with the issuer or an underwriter or with major
dealers in such securities acting as principals. Such transactions are normally
on a net basis and generally do not involve payment of brokerage commissions.
However, the cost of securities purchased from an underwriter usually includes a
commission paid by the issuer to the underwriter. Purchases or sales from
dealers will normally reflect the spread between bid and ask prices.
In selecting firms to effect securities transactions, the primary consideration
of each Fund shall be prompt execution at the most favorable price. A Fund will
also consider such factors as the price of the securities and the size and
difficulty of execution of the order. If these objectives may be met with more
than one firm, the Fund will also consider the availability of statistical and
investment data and economic facts and opinions helpful to the Fund. To the
extent that receipt of these services for which the Adviser or its affiliates
might otherwise have paid, it would tend to reduce their expenses.
Under Section 11(a) of the Securities Exchange Act of 1934, as amended, and the
rules adopted thereunder by the Securities and Exchange Commission, Lieber may
be compensated for effecting transactions in portfolio securities for a Fund on
a national securities exchange provided the conditions of the rules are met.
Each Fund advised by Evergreen Asset has entered into an agreement with Lieber
authorizing Lieber to retain compensation for brokerage services. In accordance
with such agreement, it is contemplated that Lieber, a member of the New York
and American Stock Exchanges, will, to the extent practicable, provide brokerage
22
services to the Fund with respect to substantially all securities transactions
effected on the New York and American Stock Exchanges. In such transactions, a
Fund will seek the best execution at the most favorable price while paying a
commission rate no higher than that offered to other clients of Lieber or that
which can be reasonably expected to be offered by an unaffiliated broker-dealer
having comparable execution capability in a similar transaction. However, no
Fund will engage in transactions in which Lieber would be a principal. While no
Fund advised by Evergreen Asset contemplates any ongoing arrangements with other
brokerage firms, brokerage business may be given from time to time to other
firms. In addition, the Trustees have adopted procedures pursuant to Rule 17e-1
under the 1940 Act to ensure that all brokerage transactions with Lieber, as an
affiliated broker-dealer, are fair and reasonable.
Any profits from brokerage commissions accruing to Lieber as a result of
portfolio transactions for the Fund will accrue to FUNB and to its ultimate
parent, First Union. The Investment Advisory Agreements do not provide for a
reduction of the Adviser's fee with respect to any Fund by the amount of any
profits earned by Lieber from brokerage commissions generated by portfolio
transactions of the Fund.
ADDITIONAL TAX INFORMATION
(See also "Taxes" in the Prospectus)
Each Fund other than Institutional Money Market, Institutional Tax Exempt and
Institutional Treasury has qualified and intends to continue to qualify, and
Institutional Money Market, Institutional Tax Exempt and Institutional Treasury
intend to qualify, for and elect the tax treatment applicable to regulated
investment companies ("RIC") under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). (Such qualification does not involve supervision
of management or investment practices or policies by the Internal Revenue
Service.) In order to qualify as a regulated investment company, a Fund must,
among other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to proceeds from securities loans, gains from
the sale or other disposition of securities or foreign currencies and other
income (including gains from options, futures or forward foreign contracts)
derived with respect to its business of investing in such securities; (b) derive
less than 30% of its gross income from the sale or other disposition of
securities, options, futures or forward contracts (other than those on foreign
currencies), or foreign currencies (or options, futures or forward contracts
thereon) that are not directly related to the RIC's principal business of
investing in securities (or options and futures with respect thereto) held for
less than three months; and (c) diversify its holdings so that, at the end of
each quarter of its taxable year, (i) at least 50% of the market value of the
Fund's total assets is represented by cash, U.S. government securities and other
securities limited in respect of any one issuer, to an amount not greater than
5% of the Fund's total assets and 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its total assets is
invested in the securities of any one issuer (other than U.S. government
securities and securities of other regulated investment companies). By so
qualifying, a Fund is not subject to Federal income tax if it timely distributes
its investment company taxable income and any net realized capital gains. A 4%
nondeductible excise tax will be imposed on a Fund to the extent it does not
meet certain distribution requirements by the end of each calendar year. Each
Fund anticipates meeting such distribution requirements.
23
Dividends paid by a Fund from investment company taxable income generally will
be taxed to the shareholders as ordinary income. Investment company taxable
income includes net investment income and net realized short-term gains (if
any). Any dividends received by a Fund from domestic corporations will
constitute a portion of the Fund's gross investment income.
Distributions of the excess of net long-term capital gain over net short-term
capital loss are taxable to shareholders (who are not exempt from tax) as
long-term capital gain, regardless of the length of time the shares of a Fund
have been held by such shareholders. Short-term capital gains distributions are
taxable to shareholders who are not exempt from tax as ordinary income. Such
distributions are not eligible for the dividends-received deduction. Any loss
recognized upon the sale of shares of a Fund held by a shareholder for six
months or less will be treated as a long-term capital loss to the extent that
the shareholder received a long-term capital gain distribution with respect to
such shares.
Distributions of investment company taxable income and any net short-term
capital gains will be taxable as ordinary income as described above to
shareholders (who are not exempt from tax), whether made in shares or in cash.
Shareholders electing to receive distributions in the form of additional shares
will have a cost basis for Federal income tax purposes in each share so received
equal to the net asset value of a share of a Fund on the reinvestment date.
Distributions by each Fund result in a reduction in the net asset value of the
Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution nevertheless would be taxable as
ordinary income or capital gain as described above to shareholders (who are not
exempt from tax), even though, from an investment standpoint, it may constitute
a return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution. The price of
shares purchased at that time includes the amount of the forthcoming
distribution. Those purchasing just prior to a distribution will then receive
what is in effect a return of capital upon the distribution which will
nevertheless be taxable to shareholders subject to taxes.
Upon a sale or exchange of its shares, a shareholder will realize a taxable gain
or loss depending on its basis in the shares. Such gains or losses will be
treated as a capital gain or loss if the shares are capital assets in the
investor's hands and will be a long-term capital gain or loss if the shares have
been held for more than one year. Generally, any loss realized on a sale or
exchange will be disallowed to the extent shares disposed of are replaced within
a period of sixty-one days beginning thirty days before and ending thirty days
after the shares are disposed of. Any loss realized by a shareholder on the sale
of shares of the Fund held by the shareholder for six months or less will be
disallowed to the extent of any exempt interest dividends received by the
shareholder with respect to such shares, and will be treated for tax purposes as
a long-term capital loss to the extent of any distributions of net capital gains
received by the shareholder with respect to such shares.
All distributions, whether received in shares or cash, must be reported by each
shareholder on his or her Federal income tax return. Each shareholder should
consult his or her own tax adviser to determine the state and local tax
implications of Fund distributions.
24
Shareholders who fail to furnish their taxpayer identification numbers to a Fund
and to certify as to its correctness and certain other shareholders may be
subject to a 31% Federal income tax backup withholding requirement on dividends,
distributions of capital gains and redemption proceeds paid to them by the Fund.
If the withholding provisions are applicable, any such dividends or capital gain
distributions to these shareholders, whether taken in cash or reinvested in
additional shares, and any redemption proceeds will be reduced by the amounts
required to be withheld. Investors may wish to consult their own tax advisers
about the applicability of the backup withholding provisions.
The foregoing discussion relates solely to U.S. Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens and residents and U.S. domestic
corporations, partnerships, trusts and estates). It does not reflect the special
tax consequences to certain taxpayers (e.g., banks, insurance companies, tax
exempt organizations and foreign persons). Shareholders are encouraged to
consult their own tax advisers regarding specific questions relating to Federal,
state and local tax consequences of investing in shares of a Fund. Each
shareholder who is not a U.S. person should consult his or her tax adviser
regarding the U.S. and foreign tax consequences of ownership of shares of a
Fund, including the possibility that such a shareholder may be subject to a U.S.
withholding tax at a rate of 31% (or at a lower rate under a tax treaty) on
amounts treated as income from U.S. sources under the Code.
Special Tax Considerations for Tax Exempt, Pennsylvania and Institutional Tax
Exempt
To the extent that a Fund distributes exempt interest dividends to a
shareholder, interest on indebtedness incurred or continued by such shareholder
to purchase or carry shares of the Fund is not deductible. Furthermore, entities
or persons who are "substantial users" (or related persons) of facilities
financed by "private activity" bonds (some of which were formerly referred to as
"industrial development" bonds) should consult their tax advisers before
purchasing shares of the Fund. "Substantial user" is defined generally as
including a "non-exempt person" who regularly uses in its trade or business a
part of a facility financed from the proceeds of industrial development bonds.
The percentage of the total dividends paid by a Fund with respect to any taxable
year that qualifies as exempt interest dividends will be the same for all
shareholders of the Fund receiving dividends with respect to such year. If a
shareholder receives an exempt interest dividend with respect to any share and
such share has been held for six months or less, any loss on the sale or
exchange of such share will be disallowed to the extent of the exempt interest
dividend amount.
NET ASSET VALUE
The following information supplements that set forth in each Fund's Prospectus
under the subheading "How to Buy Shares - How the Funds Value Their Shares" in
the Section entitled "Purchase and Redemption of Shares".
The public offering price of shares of a Fund is its net asset value. On each
Fund business day on which a purchase or redemption order is received by a Fund
and trading in the types of securities in which a Fund invests might materially
affect the value of Fund shares, the per share net asset value of each such Fund
25
is computed in accordance with the Declaration of Trust and By-Laws governing
each Fund twice daily, at 12 noon Eastern time and as of the next close of
regular trading on the New York Stock Exchange (the "Exchange") (currently 4:00
p.m. Eastern time) by dividing the value of the Fund's total assets, less its
liabilities, by the total number of its shares then outstanding. A Fund business
day is any weekday, exclusive of national holidays on which the Exchange is
closed and Good Friday. Each Fund's securities are valued at amortized cost.
Under this method of valuation, a security is initially valued at its
acquisition cost and, thereafter, a constant straight line amortization of any
discount or premium is assumed each day regardless of the impact of fluctuating
interest rates on the market value of the security. If accurate quotations are
not available, securities will be valued at fair value determined in good faith
by the Board of Trustees.
PURCHASE OF SHARES
The following information supplements that set forth in each Fund's Prospectus
under the heading "Purchase and Redemption of Shares - How To Buy Shares".
General
Shares of each Fund will be offered on a continuous basis at a price equal to
their net asset value without any front-end or contingent deferred sales charges
or with a contingent deferred sales charge (the "deferred sales charge
alternative") as described below. Class Y and Institutional shares which, as
described below, are not offered to the general public or which, in the case of
Institutional, are only available to investors having certain relationships with
the Adviser of its affiliates, are offered without any front-end or contingent
sales charges. Shares of each Fund are offered on a continuous basis through (i)
investment dealers that are members of the National Association of Securities
Dealers, Inc. and have entered into selected dealer agreements with the
Distributor ("selected dealers"), (ii) depository institutions and other
financial intermediaries or their affiliates, that have entered into selected
agent agreements with the Distributor ("selected agents"), or (iii) the
Distributor. For Money Market, Tax Exempt, Pennsylvania and Treasury, the
minimum for initial investments is $1,000; there is no minimum for subsequent
investments. For Institutional Money Market, Institutional Tax Exempt and
Institutional Treasury, the minimum amount for initial investments is
$1,000,000; there is no minimum for subsequent investments. The subscriber may
use the Share Purchase Application available from the Distributor for his or her
initial investment. Sales personnel of selected dealers and agents distributing
a Fund's shares may receive differing compensation for selling Class A,
Institutional Service or Class B shares.
Investors may purchase shares of a Fund in the United States either through
selected dealers or agents or directly through the Distributor. A Fund reserves
the right to suspend the sale of its shares to the public in response to
conditions in the securities markets or for other reasons.
Each Fund will accept unconditional orders for its shares to be executed at the
public offering price equal to the net asset value next determined, as described
below. Orders received by the Distributor prior to the close of regular trading
on the Exchange on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on the Exchange on
that day. In the case of orders for purchase of shares placed through selected
26
dealers or agents, the applicable public offering price will be the net asset
value as so determined, but only if the selected dealer or agent receives the
order prior to the close of regular trading on the Exchange and transmits it to
the Distributor prior to its close of business that same day (normally 5:00 p.m.
Eastern time). The selected dealer or agent is responsible for transmitting such
orders by 5:00 p.m. If the selected dealer or agent fails to do so, the
investor's right to that day's closing price must be settled between the
investor and the selected dealer or agent. If the selected dealer or agent
receives the order after the close of regular trading on the Exchange, the price
will be based on the net asset value determined as of the close of regular
trading on the Exchange on the next day it is open for trading.
Following the initial purchase of shares of a Fund, a shareholder may place
orders to purchase additional shares by telephone if the shareholder has
completed the appropriate portion of the Share Purchase Application. Payment for
shares purchased by telephone can be made only by Electronic Funds Transfer from
a bank account maintained by the shareholder at a bank that is a member of the
National Automated Clearing House Association ("ACH"). If a shareholder's
telephone purchase request is received before 3:00 p.m. New York time on a Fund
business day, the order to purchase shares is automatically placed the same Fund
business day for non-money market funds, and two days following the day the
order is received for money market funds, and the applicable public offering
price will be the public offering price determined as of the close of business
on such business day. Full and fractional shares are credited to a subscriber's
account in the amount of his or her subscription. As a convenience to the
subscriber, and to avoid unnecessary expense to a Fund, stock certificates are
not issued for any class of shares of any Fund, although such shares remain in
the shareholder's account on the records of a Fund. This facilitates later
redemption and relieves the shareholder of the responsibility for and
inconvenience of lost or stolen certificates.
Alternative Purchase Arrangements
The Funds issue the following classes of shares:
Pennsylvania, Money Market, Tax Exempt, and Treasury: Class A shares;
Money Market: Class B shares, which should only be purchased by investors
choosing the deferred sales charge alternative and who contemplate an exchange
into Class B shares of other Evergreen funds;
Pennsylvania, Money Market, Tax Exempt and Treasury: Class Y shares, which are
offered only to (a) persons who at or prior to December 30, 1994, owned shares
in a mutual fund advised by Evergreen Asset, (b) certain investment advisory
clients of the Advisers and their affiliates, and (c) institutional investors;
Institutional Money Market, Institutional Tax Exempt and Institutional Treasury:
Institutional Service shares, which are sold to institutional investors; and
Institutional Money Market, Institutional Tax Exempt and Institutional Treasury:
Institutional shares, which are sold to institutional investors who are clients
of the Adviser or its affiliates or who have a significant business relationship
with the Adviser or its affiliates.
The three classes of shares each represent an interest in the same portfolio of
investments of the Fund, have the same rights and are identical in all respects,
except that (I) only Class A and Class B shares are subject to a Rule 12b-1
distribution fee, (II) Class B shares bear the expense of the deferred sales
charge, (III) Class B shares bear the expense
27
of a higher Rule 12b-1 distribution services fee than Class A shares and higher
transfer agency costs, (IV) with the exception of Class Y shares, each Class of
each Fund has exclusive voting rights with respect to provisions of the Rule
12b-1 Plan pursuant to which its distribution services fee is paid which relates
to a specific Class and other matters for which separate Class voting is
appropriate under applicable law, provided that, if the Fund submits to a
simultaneous vote of Class A and Class B shareholders an amendment to the Rule
12b-1 Plan that would materially increase the amount to be paid thereunder with
respect to the Class A shares, the Class A shareholders and the Class B
shareholders will vote separately by Class, and (VI) only the Class B shares are
subject to a conversion feature. Each Class has different exchange privileges
and certain different shareholder service options available.
The alternative purchase arrangements permit an investor to choose the method of
purchasing shares that is most beneficial. The decision as to which Class of
shares of Money Market is more beneficial depends primarily on whether or not
the investor wishes to exchange all or part of any Class B shares purchased for
Class B shares of another Evergreen mutual fund at some future date. If the
investor does not contemplate such an exchange, it is probably in such
investor's best interest to purchase Class A shares. Class A shares are subject
to a lower distribution services fee and, accordingly, pay correspondingly
higher dividends per share than Class B shares.
The Trustees have determined that currently no conflict of interest exists
between or among the Class A, Class B and Class Y shares of Money Market, Tax
Exempt, Pennsylvania and Treasury, and the Institutional Service and
Institutional shares of Institutional Money Market, Institutional Tax Exempt and
Institutional Treasury. On an ongoing basis, the Trustees, pursuant to their
fiduciary duties under the 1940 Act and state laws, will seek to ensure that no
such conflict arises.
Deferred Sales Charge Alternative--Class B Shares
Investors choosing the deferred sales charge alternative purchase Class B shares
at the public offering price equal to the net asset value per share of the Class
B shares on the date of purchase without the imposition of a sales charge at the
time of purchase. The Class B shares are sold without a front-end sales charge
so that the full amount of the investor's purchase payment is invested in the
Fund initially.
Proceeds from the contingent deferred sales charge are paid to the Distributor
and are used by the Distributor to defray the expenses of the Distributor
related to providing distribution-related services to the Fund in connection
with the sale of the Class B shares, such as the payment of compensation to
selected dealers and agents for selling Class B shares. The combination of the
contingent deferred sales charge and the distribution services fee enables the
Fund to sell the Class B shares without a sales charge being deducted at the
time of purchase. The higher distribution services fee incurred by Class B
shares will cause such shares to have a higher expense ratio and to pay lower
dividends than those related to Class A shares.
Contingent Deferred Sales Charge. Class B shares which are redeemed within seven
years of purchase will be subject to a contingent deferred sales charge at the
rates set forth in the Prospectus charged as a percentage of the dollar amount
subject thereto. The charge will be assessed on an amount equal to the lesser of
the cost of the shares being redeemed or their net asset value at the time of
redemption. Accordingly, no sales charge will be imposed on increases in net
28
asset value above the initial purchase price. In addition, no contingent
deferred sales charge will be assessed on shares derived from reinvestment of
dividends or capital gains distributions. The amount of the contingent deferred
sales charge, if any, will vary depending on the number of years from the time
of payment for the purchase of Class B shares until the time of redemption of
such shares.
In determining the contingent deferred sales charge applicable to a redemption,
it will be assumed, that the redemption is first of any Class A shares in the
shareholder's Fund account, second of Class B shares held for over seven years
or Class B shares acquired pursuant to reinvestment of dividends or
distributions and third of Class B shares held longest during the seven-year
period.
To illustrate, assume that an investor purchased 1,000 Class B shares at $1 per
share (at a cost of $1,000) and, during such time, the investor has acquired 100
additional Class B shares upon dividend reinvestment. If at such time the
investor makes his or her first redemption of 500 Class B shares, 100 Class B
shares will not be subject to charge because of dividend reinvestment.
Therefore, of the $500 of the shares redeemed $400 of the redemption proceeds
(400 shares x $1 original purchase price) will be charged at a rate of 4.0% (the
applicable rate in the second year after purchase for a contingent deferred
sales charge of $16).
The contingent deferred sales charge is waived on redemptions of shares (i)
following the death or disability, as defined in the Code, of a shareholder, or
(ii) to the extent that the redemption represents a minimum required
distribution from an individual retirement account or other retirement plan to a
shareholder who has attained the age of 70-1/2.
Conversion Feature. At the end of the period ending seven years after the end of
the calendar month in which the shareholder's purchase order was accepted, Class
B shares will automatically convert to Class A shares and will no longer be
subject to a higher distribution services fee imposed on Class B shares. Such
conversion will be on the basis of the relative net asset values of the two
classes, without the imposition of any sales load, fee or other charge. The
purpose of the conversion feature is to reduce the distribution services fee
paid by holders of Class B shares that have been outstanding long enough for the
Distributor to have been compensated for the expenses associated with the sale
of such shares.
For purposes of conversion to Class A, Class B shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B shares in
a shareholder's account will be considered to be held in a separate sub-account.
Each time any Class B shares in the shareholder's account (other than those in
the sub-account) convert to Class A, an equal pro-rata portion of the Class B
shares in the sub-account will also convert to Class A.
The conversion of Class B shares to Class A shares is subject to the continuing
availability of an opinion of counsel to the effect that (i) the assessment of
the higher distribution services fee and transfer agency costs with respect to
Class B shares does not result in the dividends or distributions payable with
respect to other Classes of a Fund's shares being deemed "preferential
dividends" under the Code, and (ii) the conversion of Class B shares to Class A
shares does not constitute a taxable event under Federal income tax law. The
29
conversion of Class B shares to Class A shares may be suspended if such an
opinion is no longer available at the time such conversion is to occur. In that
event, no further conversions of Class B shares would occur, and shares might
continue to be subject to the higher distribution services fee for an indefinite
period which may extend beyond the period ending eight years after the end of
the calendar month in which the shareholder's purchase order was accepted.
GENERAL INFORMATION ABOUT THE FUNDS
(See also "Other Information - General Information" in each Fund's Prospectus)
Capitalization and Organization
Evergreen Money Market Fund, Evergreen Institutional Money Market Fund and
Evergreen Institutional Treasury Money Market Fund are each separate series of
Evergreen Money Market Trust, a Massachusetts business trust. Evergreen Tax
Exempt Money Market Fund and Evergreen Institutional Tax Exempt Money Market
Fund are each separate series of The Evergreen Municipal Trust, a Massachusetts
business trust. The Evergreen Treasury Money Market Fund (which prior to July 7,
1995 was known as the First Union Treasury Money Market Portfolio) is a separate
series of Evergreen Investment Trust, a Massachusetts business trust. On July 7,
1995, First Union Funds changed its name to Evergreen Investment Trust. On
December 14, 1992, The Salem Funds changed its name to First Union Funds. The
Evergreen Pennsylvania Tax Free Money Market Fund is a separate series of
Evergreen Tax Free Trust. Evergreen Tax Free Trust (formerly known as FFB Funds
Trust) is a Massachusetts business trust which was organized on December 4,
1985. Each Trust is governed by a board of trustees. Unless otherwise stated,
references to the "Board of Trustees" or "Trustees" in this Statement of
Additional Information refer to the Trustees of all the Trusts.
Each Fund, other than Pennsylvania, may issue an unlimited number of shares of
beneficial interest with a $0.0001 par value. Pennsylvania may issue an
unlimited number of shares of beneficial interest with a $.001 par value. All
shares of these Funds have equal rights and privileges. Each share is entitled
to one vote, to participate equally in dividends and distributions declared by
the Funds and on liquidation to their proportionate share of the assets
remaining after satisfaction of outstanding liabilities. Shares of these Funds
are fully paid, nonassessable and fully transferable when issued and have no
pre-emptive, conversion or exchange rights. Fractional shares have
proportionally the same rights, including voting rights, as are provided for a
full share.
Under each Trust's Declaration of Trust, each Trustee will continue in office
until the termination of the Fund or his or her earlier death, incapacity,
resignation or removal. Shareholders can remove a Trustee upon a vote of
two-thirds of the outstanding shares of beneficial interest of the Trust.
Vacancies will be filled by a majority of the remaining Trustees, subject to the
1940 Act. As a result, normally no annual or regular meetings of shareholders
will be held, unless otherwise required by the Declaration of Trust of each
Trust or the 1940 Act.
Shares have noncumulative voting rights, which means that the holders of more
than 50% of the shares voting for the election of Trustees can elect 100% of the
Trustees if they choose to do so and in such event the holders of the remaining
shares so voting will not be able to elect any Trustees.
30
The Trustees of each Trust are authorized to reclassify and issue any unissued
shares to any number of additional series without shareholder approval.
Accordingly, in the future, for reasons such as the desire to establish one or
more additional portfolios of a Trust with different investment objectives,
policies or restrictions, additional series of shares may be created by one or
more Funds. Any issuance of shares of another series or class would be governed
by the 1940 Act and the law of the Commonwealth of Massachusetts. If shares of
another series of a Trust were issued in connection with the creation of
additional investment portfolios, each share of the newly created portfolio
would normally be entitled to one vote for all purposes. Generally, shares of
all portfolios would vote as a single series on matters, such as the election of
Trustees, that affected all portfolios in substantially the same manner. As to
matters affecting each portfolio differently, such as approval of the Investment
Advisory Agreement and changes in investment policy, shares of each portfolio
would vote separately.
In addition any Fund may, in the future, create additional classes of shares
which represent an interest in the same investment portfolio. Except for the
different distribution related and other specific costs borne by such additional
classes, they will have the same voting and other rights described for the
existing classes of each Fund.
Procedures for calling a shareholders meeting for the removal of the Trustees of
each Trust, similar to those set forth in Section 16(c) of the 1940 Act, will be
available to shareholders of each Fund. The rights of the holders of shares of a
series of a Fund may not be modified except by the vote of a majority of the
outstanding shares of such series.
An order has been received from the Securities and Exchange Commission
permitting the issuance and sale of multiple classes of shares representing
interests in each Fund. In the event a Fund were to issue additional classes of
shares other than those described herein, no further relief from the Securities
and Exchange Commission would be required.
Distributor
Evergreen Funds Distributor, Inc. (the "Distributor"), 230 Park Avenue, New
York, New York 10169, serves as each Fund's principal underwriter, and as such
may solicit orders from the public to purchase shares of any Fund. The
Distributor is not obligated to sell any specific amount of shares and will
purchase shares for resale only against orders for shares. Under the agreement
between each Fund and the Distributor, each Fund has agreed to indemnify the
Distributor, in the absence of its willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations thereunder, against certain
civil liabilities, including liabilities under the Securities Act of 1933, as
amended.
Counsel
Sullivan & Worcester LLP, Washington, D.C., serves as counsel to the Funds.
Independent Auditors
Price Waterhouse LLP has been selected to be the independent auditors of Money
Market, Tax Exempt, Institutional Money Market, Institutional Treasury and
31
Institutional Tax Exempt.
KPMG Peat Marwick LLP has been selected to be the independent auditors of
Treasury and Pennsylvania.
PERFORMANCE INFORMATION
YIELD CALCULATIONS
Each Fund may quote a "Current Yield" or "Effective Yield" from time to time.
The Current Yield is an annualized yield based on the actual total return for a
seven-day period. The Effective Yield is an annualized yield based on a
compounding of the Current Yield. These yields are each computed by first
determining the "Net Change in Account Value" for a hypothetical account having
a share balance of one share at the beginning of a seven-day period ("Beginning
Account Value"), excluding capital changes. The Net Change in Account Value will
generally equal the total dividends declared with respect to the account.
The yields are then computed as follows:
Current Yield = Beginning Account Value x 365/7
Effective Yield = (1 + Total Dividend for 7 days) 365/7-1
Tax Equivalent Yield =
Effective Yield
----------------------
1 - Fed Tax rate + [state Tax Rate - (state Tax Rate x Fed Tax Rate]
Yield fluctuations may reflect changes in a Fund's net investment income, and
portfolio changes resulting from net purchases or net redemptions of the Fund's
shares may affect the yield. Accordingly, a Fund's yield may vary from day to
day, and the yield stated for a particular past period is not necessarily
representative of its future yield. Since the Funds use the amortized cost
method of net asset value computation, it does not anticipate any change in
yield resulting from any unrealized gains or losses or unrealized appreciation
or depreciation not reflected in the yield computation, or change in net asset
value during the period used for computing yield. If any of these conditions
should occur, yield quotations would be suspended. A Fund's yield is not
guaranteed, and the principal is not insured.
Yield information is useful in reviewing a Fund's performance, but because
yields fluctuate, such information cannot necessarily be used to compare an
investment in a Fund's shares with bank deposits, savings accounts and similar
investment alternatives which often provide an agreed or guaranteed fixed yield
for a stated period of time. Shareholders should remember that yield is a
function of the kind and quality of the instruments in the Funds' investment
portfolios, portfolio maturity, operating expenses and market conditions.
It should be recognized that in periods of declining interest rates the yields
will tend to be somewhat higher than prevailing market rates, and in periods of
rising interest rates the yields 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 instruments producing
lower yields than the balance of the Fund's investments, thereby reducing the
current yield of the Fund. In periods of rising interest rates, the opposite can
be expected to occur.
32
The current yield and effective yield of each Fund (and for Tax Exempt and
Pennsylvania, the tax equivalent yield) for the seven-day period ended August
30, 1996 for each Class of shares offered by the Funds is set forth in the table
below. The table assumes a Federal tax rate of 36% for Tax Exempt, and a
combined Federal and state tax rate for Pennsylvania of 37.8%.
Current Effective Tax Equivalent
Yield Yield Yield
Money Market
Class A 4.83% 4.95%
Class B 4.12% 4.20%
Class Y 5.12% 5.25%
Tax Exempt
Class A 3.03% 3.08% 4.81%
Class Y 3.33% 3.38% 5.29%
Treasury
Class A 4.66% 4.77%
Class Y 4.96% 5.08%
Pennsylvania
Class A 3.07% 5.02% 8.07%
Class Y 3.15% 5.14% 8.26%
GENERAL
From time to time, a Fund may quote its performance in advertising and other
types of literature as compared to the performance of the Bank Rate Monitor
National Index which publishes weekly average rates of 50 leading bank and
thrift institution money market deposit accounts. A Fund's performance may also
be compared to those of other mutual funds having similar objectives. This
comparative performance would be expressed as a ranking prepared by Lipper
Analytical Services, Inc., Donoghue's Money Fund Report or similar independent
services monitoring mutual fund performance. A Fund's performance will be
calculated by assuming, to the extent applicable, reinvestment of all capital
gains distributions and income dividends paid. Any such comparisons may be
useful to investors who wish to compare a Fund's past performance with that of
its competitors. Of course, past performance cannot be a guarantee of future
results.
Additional Information
Any shareholder inquiries may be directed to the shareholder's broker or to each
Adviser at the address or telephone number shown on the front cover of this
Statement of Additional Information. This Statement of Additional Information
does not contain all the information set forth in the Registration Statement
filed by the Trusts with the Securities and Exchange Commission under the
Securities Act of 1933. Copies of the Registration Statement may be obtained at
a reasonable charge from the Securities and Exchange Commission or may be
examined, without charge, at the offices of the Securities and Exchange
Commission in Washington, D.C.
33
FINANCIAL STATEMENTS
The financial statements of Money Market, Tax Exempt, Treasury and Pennsylvania
appearing in their most current fiscal year Annual Report to shareholders and
the report thereon of the independent auditors appearing therein, namely Price
Waterhouse LLP (in the case of Money Market and Tax Exempt) or KPMG Peat Marwick
LLP (in the case of Pennsylvania and Treasury) are incorporated by reference in
this Statement of Additional Information. The Annual Reports to Shareholders for
each Fund, which contain the referenced statements, are available upon request
and without charge. The initial audited Statements of Assets and Liabilities of
Institutional Money Market, Institutional Tax Exempt and Institutional Treasury
as of September 6, 1996 and the reports thereon of Price Waterhouse LLP
appearing therein are included in this Statement of Additional Information.
EVERGREEN INSTITUTI0NAL MONEY MARKET FUNDS
STATEMENT OF ASSETS AND LIABILITIES
September 6, 1996
Institutional
Institutional Treasury
Assets: Money Market Money Market
Fund Fund
Cash $ 10 $ 10
Deferred organizational expenses 13,700 13,700
------ -------
Total assets 13,710 13,710
------ ------
------ ------
Liabilities:
Organizational expenses payable 13,700 13,700
Net assets:
Paid-in Capital 10 10
--- --
Net assets 10 10
-- --
-- --
Net asset value per share based on (10
shares of beneficial interest issued
and outstanding, respectively,
unlimited share authorized of
$.0001 par value) $1.00 $1.00
See accompanying notes to financial statements.
EVERGREEN INSTITUTIONAL MONEY MARKET FUNDS
34
NOTES TO FINANCIAL STATEMENTS
September 6, 1996
Note 1 - Organization
The Evergreen Institutional Money Market Fund ("Money Market") and the
Evergreen Institutional Treasury Money Market Fund ("Treasury"), collectively
(the "Funds"), are newly organized separate investment series of Evergreen
Money Market Trust, an open end management investment company registered
under the Investment Company Act of 1940, as amended (the "Act"). Money Market
and Treasury are part of the Evergreen Institutional Money Market Funds. The
Funds have had no operations other than the sale of 10 shares of beneficial
interest of Money Market and Treasury to Evergreen Funds Distributors, Inc.
("EFD"), an affiliate of Furman Selz LLC ("Furman Selz").
Note 2 - Investment Advisory and Administration Agreements
Each Fund has agreed to enter into an investment advisory agreement with the
Capital Management Group of First Union Bank of North Carolina ("First Union"),
pursuant to which First Union will manage each Fund's investments. In
consideration of First Union performing its obligations, the Funds will pay to
First Union an investment advisory fee accrued daily and payable monthly, at an
annual rate of .15 of 1% of its daily net assets.
Each Fund has agreed to enter into an administrative services agreement with
Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly owned subsidiary
of First Union, to provide administrative services and to supervise each Fund's
daily business affairs. Each Fund will pay Evergreen Asset an administration
fee accrued daily and payable monthly, at a rate based on the aggregate average
daily net assets of all of the Funds administered by Evergreen Asset for which
either Evergreen Asset or First Union serves as investment adviser. The fee is
calculated daily and payable monthly at the following annual rates: .050% on 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. As of September 6, 1996, the net assets for which
either Evergreen Asset or First Union served as investment adviser totaled
approximately $16.2 billion.
Furman Selz will serve as sub-administrator and will pay the cost of
compensation of the officers of the Funds. Each Fund will pay Furman Selz a fee
based on the aggregate average daily net assets of all of the Funds administered
by Evergreen Asset for which either Evergreen Asset or First Union serves as
investment adviser. The fee is calculated daily and payable monthly at the
following annual rates: .010% on the first $7 billion, .0075% on the next
$3 billion, .005% on the next $15 billion and .004% on assets in excess of
$25 billion.
EVERGREEN INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS
September 6, 1996
Note 3 - Organizational Costs
First Union has agreed to advance all of the costs incurred and to be incurred
in connection with the organization and initial registration of the Funds and
35
the Funds have agreed to reimburse First Union for such costs. These costs have
been deferred and will be amortized by each Fund over a period of benefit not to
exceed 60 months from the date each Fund commences operations.
Note 4 - Distribution Plans
In connection with distribution plans pursuant to Rule 12b-1 of the Act, each
Fund has agreed to enter into a distribution agreement (the "Agreements") with
EFD whereby each Fund will compensate EFD for its services at a rate which may
not exceed an annual rate of .20 of 1% of a Fund's aggregate average daily net
assets. The Agreements provides that EFD will use these fees (i) to compensate
broker-dealers or other persons for distributing shares of the Fund, (ii) to
otherwise promote the sale of shares of the Fund, (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.
EVERGREEN INSTITUTIONAL MONEY MARKET FUNDS
STATEMENT OF ASSETS AND LIABILITIES
September 6, 1996
Institutional
Tax Exempt
Assets: Money Market
Fund
Cash $ 10
Deferred organizational expenses 13,700
-------
Total assets 13,710
-------
-------
Liabilities:
Organizational expenses payable 13,700
36
Net assets:
Paid-in Capital 10
--
Net assets 10
--
--
Net asset value per share based on 10
shares of beneficial interest and
outstanding (unlimited shares
authorized of $.0001 par value) $1.00
See accompanying notes to financial statements.
EVERGREEN INSTITUTIONAL MONEY MARKET FUNDS
NOTES TO FINANCIAL STATEMENT
September 6, 1996
Note 1 - Organization
The Evergreen Institutional Tax Exempt Market Fund (the "Fund") is a newly
organized separate investment series of The Evergreen Municipal Trust, an open
end management investment company registered under the Investment Company Act of
1940, as amended (the "Act"). The Fund is part of the Evergreen Institutional
Money Market Funds. The Fund has had no operations other than the sale of 10
shares of beneficial interest Evergreen Funds Distributors, Inc. (EFD) an
affiliate of Furman Selz LLC ("Furman Selz").
Note 2 - Investment Advisory and Administration Agreements
The Fund has agreed to enter into an investment advisory agreement with the
Capital Management Group of First Union Bank of North Carolina ("First Union"),
pursuant to which First Union will manage the Fund's investments. In
consideration of First Union performing its obligations, the Fund will pay to
First Union an investment advisory fee accrued daily and payable monthly, at an
annual rate of .15 of 1% of its' daily net assets.
The Fund has agreed to enter into an administrative services agreement with
Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly owned subsidiary
of First Union, to provide administrative services and to supervise the Fund's
daily business affairs. The Fund will pay Evergreen Asset an administration
fee accrued daily and payable monthly, at a rate based on the aggregate average
daily net assets of all of the Funds administered by Evergreen Asset for which
either Evergreen Asset or First Union serves as investment adviser. The fee is
calculated daily and payable monthly at the following annual rates: .050% on 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. As of September 6, 1996, the net assets for which
either Evergreen Asset or First Union served as investment adviser totaled
approximately $16.2 billion.
Furman Selz will serve as sub-administrator and will pay the cost of
compensation of the officers of the Fund. The Fund will pay Furman Selz a fee
based on the aggregate average daily net assets of all of the Funds administered
by Evergreen Asset for which either Evergreen Asset or First Union serves as
investment adviser. The fee is calculated daily and payable monthly at the
37
following annual rates: .010% on the first $7 billion, .0075% on the next
$3 billion, .005% on the next $15 billion and .004% on assets in excess of
$25 billion.
Note 3 - Organizational Costs
First Union has agreed to advance all of the costs incurred and to be incurred
in connection with the organization and initial registration of the Fund and
the Fund has agreed to reimburse First Union for such costs. These costs have
been deferred and will be amortized by each Fund over a period of benefit not to
exceed 60 months from the date the Fund commences operations.
Note 4 - Distribution Plan
In connection with distribution plan pursuant to Rule 12b-1 of the Act, the Fund
has agreed to enter into a distribution agreement (the "Agreement") with EFD
whereby the Fund will compensate EFD for its services at a rate which may not
exceed an annual rate of .20 of 1% of the Fund's aggregate average daily net
assets. The Agreement provide that EFD will use this fee (i) to compensate
broker-dealers or other persons for distributing shares of the Fund, (ii) to
otherwise promote the sale of shares of the Fund, (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.
APPENDIX "A"
DESCRIPTION OF BOND RATINGS
Standard & Poor's Ratings Group. A Standard & Poor's corporate or municipal bond
rating is a current assessment of the credit worthiness of an obligor with
respect to a specific obligation. This assessment of credit worthiness may take
into consideration obligors such as guarantors, insurers or lessees. The debt
rating is not a recommendation to purchase, sell or hold a security, inasmuch as
it does not comment as to market price or suitability for a particular investor.
The ratings are based on current information furnished to Standard & Poor's by
the issuer or obtained by Standard & Poor's from other sources it considers
reliable. Standard & Poor's does not perform any audit in connection with the
ratings and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended or withdrawn as a result of changes in,
unavailability of such information, or for other circumstances.
The ratings are based, in varying degrees, on the following considerations:
1. Likelihood of default-capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation.
2. Nature of and provisions of the obligation.
38
3. Protection afforded by, and relative position of, the obligation in the event
of bankruptcy, reorganization or their arrangement under the laws of bankruptcy
and other laws affecting creditors' rights.
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay interest and repay
any principal.
AA - Debt rated AA also qualifies as high quality debt obligations. Capacity to
pay interest and repay principal is very strong and in the majority of instances
they differ from AAA issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than is higher rated categories.
BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC and C is regarded, on a balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB - rating.
B - Debt rated B has greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC - Debt rated CCC has a currently indefinable vulnerability to default, and
is dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC - The rating CC is typically applied to debt subordinated to senior debt that
is assigned an actual or implied CCC rating.
39
C - The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
C1 - The rating C1 is reserved for income bonds on which no interest is being
paid.
D - Debt rated D is in payment default. It is used when interest payments or
principal payments are not made on a due date even if the applicable grace
period has not expired, unless Standard & Poor's believes that such payments
will be made during such grace periods; it will also be used upon a filing of a
bankruptcy petition if debt service payments are jeopardized. Plus (+) or Minus
(-) - To provide more detailed indications of credit quality, the ratings from
AA to CCC may be modified by the addition of a plus or minus sign to show
relative standing within the major rating categories.
NR - indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular type of obligation as a matter of policy. Debt
obligations of issuers outside the United States and its territories are rated
on the same basis as domestic corporate and municipal issues. The ratings
measure the credit worthiness of the obligor but do not take into account
currency exchange and related uncertainties.
Bond Investment Quality Standards: Under present commercial bank regulations
issued by the Comptroller of the Currency, bonds rated in the top four
categories (AAA, AA, A, BBB, commonly known as "Investment Grade" ratings) are
generally regarded as eligible for bank investment. In addition, the Legal
Investment Laws of various states may impose certain rating or other standards
for obligations eligible for investment by savings banks, trust companies,
insurance companies and fiduciaries generally.
Moody's Investors Service, Inc. A brief description of the applicable Moody's
Investors Service, Inc. rating symbols and their meanings follows:
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge". Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
40
Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Some bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. NOTE: Bonds within the above
categories which possess the strongest investment attributes are designated by
the symbol "1" following the rating.
Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C - bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Duff & Phelps, Inc.: AAA-- highest credit quality, with negligible risk factors;
AA -- high credit quality, with strong protection factors and modest risk, which
may vary very slightly from time to time because of economic conditions;
A--average credit quality with adequate protection factors, but with greater and
more variable risk factors in periods of economic stress. The indicators "+" and
"-" to the AA and A categories indicate the relative position of a credit within
those rating categories.
Fitch Investors Service Inc.: AAA -- highest credit quality, with an
exceptionally strong ability to pay interest and repay principal; AA -- very
high credit quality, with very strong ability to pay interest and repay
principal; A -- high credit quality, considered strong as regards principal and
interest protection, but may be more vulnerable to adverse changes in economic
conditions and circumstances. The indicators "+" and "-" to the AA, A and BBB
categories indicate the relative position of credit within those rating
categories.
DESCRIPTION OF MUNICIPAL NOTE RATINGS
A Standard & Poor's note rating reflects the liquidity concerns and market
access risks unique to notes. Notes due in three years or less will likely
receive a note rating. Notes maturing beyond three years will most likely
receive a long-term debt rating. The following criteria will be used in making
that assessment.
41
o Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).
o Source of Payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note.) Note rating symbols
are as follows:
o SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
o SP-2 Satisfactory capacity to pay principal and interest.
o SP-3 Speculative capacity to pay principal and interest.
Moody's Short-Term Loan Ratings - Moody's ratings for state and municipal
short-term obligations will be designated Moody's Investment Grade (MIG). This
distinction is in recognition of the differences between short-term credit risk
and long-term risk. Factors affecting the liquidity of the borrower are
uppermost in importance in short-term borrowing, while various factors of major
importance in bond risk are of lesser importance over the short run.
Rating symbols and their meanings follow:
o MIG 1 - This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
o MIG 2 - This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
o MIG 3 - This designation denotes favorable quality. All security elements are
accounted for but this is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
o MIG 4 - This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc.: Commercial paper rated "Prime" carries the
smallest degree of investment risk. The modifiers 1, 2, and 3 are used to denote
relative strength within this highest classification.
Standard & Poor's Ratings Group: "A" is the highest commercial paper rating
category utilized by Standard & Poor's Ratings Group which uses the numbers 1+,
1, 2 and 3 to denote relative strength within its "A" classification.
Duff & Phelps, Inc.: Duff 1 is the highest commercial paper rating category
utilized by Duff & Phelps which uses + or - to denote relative strength within
this classification. Duff 2 represents good certainty of timely payment, with
minimal risk factors. Duff 3 represents satisfactory protection factors, with
42
risk factors larger and subject to more variation.
Fitch Investors Service Inc.: F-1+ -- denotes exceptionally strong credit
quality given to issues regarded as having strongest degree of assurance for
timely payment; F-1 -- very strong, with only slightly less degree of assurance
for timely payment than F-1+; F-2 -- good credit quality, carrying a
satisfactory degree of assurance for timely payment.
APPENDIX B
Special Considerations Relating to Investment In Pennsylvania Municipal Issuers
The following information as to certain Pennsylvania considerations is given to
investors in view of the Evergreen Pennsylvania Tax Free Money Market Fund's
policy of investing primarily in securities of Pennsylvania issuers. Such
information is derived from sources that are generally available to investors
and is believed by the Adviser to be accurate. Such information constitutes only
a brief summary, does not purport to be a complete description and is based on
information from official statements relating to securities offerings of
Pennsylvania issuers.
Employment. The industries traditionally strong in Pennsylvania, such as coal,
steel and railway, have declined and account for a decreasing share of total
employment. Service industries (including trade, health care, government and
finance) have grown, however, contributing increasing shares to the
Commonwealth's gross product and exceeding the manufacturing sector in each year
since 1985 as the largest single source of employment.
While the level of Pennsylvania's population increased 2.3% from 1985 through
1993, nonagricultural employment increased by 8.0% from 1983 through 1993. In
contrast, increases in U.S. nonagricultural employment have been greater for the
same period, with U.S. employment increasing by 13% from 1985 through 1993.
Trends in the unemployment rates of Pennsylvania and the U.S. have been similar
from 1985 through 1993. From 1986 to 1990, Pennsylvania's unemployment rate was
lower than the U.S. rate. For example, Pennsylvania's unemployment rate for 1989
and 1990 was 4.5% and 5.4%, respectively, while the unemployment rate for the
U.S. was 5.3% and 5.5% for the same years. In 1991, 1992 and 1993,
Pennsylvania's unemployment rate was 6.9%, 7.5% and 6.8% for the same years.
Commonwealth Debt. Debt service on general obligation bonds of Pennsylvania,
except those issued for highway purposes or the benefit of other special revenue
funds, is payable from Pennsylvania's general fund, the recipient of all
Commonwealth revenues that are not required to be deposited in other funds.
As of June 30, 1994, the Commonwealth had $5,076 million of long-term bonds
outstanding, with debt for capital projects constituting the largest dollar
amount. Although Pennsylvania's Constitution permits the issuance of an
aggregate amount of capital project debt equal to 1.75 times the average annual
tax revenues of the preceding five fiscal years, the General Assembly may
authorize and historically has authorized a smaller amount. This constitutional
limit does not apply to other types of Pennsylvania debt such as electorate
approved debt or debt issued to rehabilitate areas affected by disaster.
However, the former may be incurred only after the enactment of legislation
calling for a referendum and usually specifying the purpose and amount of such
debt, followed by electoral approval. Similarly, debt issued to rehabilitate a
43
disaster area must be authorized by legislation which sets the debt limits.
These statutory and constitutional limitations imposed on bonds are also
applicable to bond anticipation notes.
Pennsylvania cannot use tax anticipation notes or any other form of debt to fund
budget deficits between fiscal years. All year-end deficits must be funded
within the succeeding fiscal year's budget. Moreover, the principal amount of
tax anticipation notes issued and outstanding for the account of a fund during a
fiscal year may not exceed 20 percent of that fund's estimated revenues for that
fiscal year.
Moral Obligations. The debt of the Pennsylvania Housing Finance Agency ("PHFA"),
a state agency which provides housing for lower and moderate income families,
and certain obligations of The Hospitals and Higher Education Facilities
Authority of Philadelphia (the "Hospitals Authority") are the only debt bearing
Pennsylvania's moral obligation. PHFA's bonds, but not its notes, are partially
secured by a capital reserve fund required to be maintained by PHFA in an amount
equal to the maximum annual debt service on its outstanding bonds in any
succeeding calendar year. If there is a potential deficiency in the capital
reserve fund or if funds are necessary to avoid default on interest, principal
or sinking fund payments on bonds or notes of PHFA, the Governor must place in
Pennsylvania's budget for the next succeeding year an amount sufficient to make
up any such deficiency or to avoid any such default. The budget which the
General Assembly adopts may or may not include such amount. PHFA is not
permitted to borrow additional funds as long as any deficiency exists in the
capital reserve fund.
In fiscal 1976, the Commonwealth purchased $32.0 million principal amount of
notes from PHFA, issued for the purpose of redeeming all outstanding bond
anticipation notes and paying unfunded liabilities of PHFA. All such notes have
been redeemed by PHFA and the funds returned, with interest, to Pennsylvania. As
of December 31, 1994, PHFA had $2,300 million of bonds and notes outstanding.
The Hospitals Authority is a municipal authority organized by the City of
Philadelphia (the "City") to, inter alia, acquire and prepare various sites for
use as intermediate care facilities for the mentally retarded. In 1986 the
Hospitals Authority issued $20.4 million of bonds, which were refunded in 1993
by a $21.1 million bond issue of the Hospitals Authority (the "Hospitals
Authority Bonds") for such facilities for the City. The Hospitals Authority
Bonds are secured by leases with the City and a debt service reserve fund for
which the Pennsylvania Department of Public Welfare (the "Department") has
agreed with the Hospitals Authority to request in the Department's annual budget
submission to the Governor, an amount of funds sufficient to alleviate any
deficiency in the debt service reserve fund that may arise. The budget as
finally adopted may or may not include the amount requested. If funds are paid
to the Hospitals Authority, the Department will obtain certain rights in the
property financed with the Hospitals Authority Bonds in return for such payment.
In response to a delay in the availability of billable beds and the revenues
from these beds to pay debt service on the Hospitals Authority Bonds, PHFA
agreed in June 1989 to provide a $2.2 million low interest loan to the Hospitals
Authority. The loan enabled the Hospitals Authority to make all debt service
payments on the Hospitals Authority Bonds during 1990. Enough beds were
completed in 1991 to provide sufficient revenues to the Hospitals Authority to
meet its debt service payments and to begin repaying the loan from PHFA. As of
44
December 31, 1994, $1.64 million of the loan was outstanding.
Other Commonwealth Obligations; Pensions. Other obligations of Pennsylvania
include long-term agreements with public authorities to make lease payments that
are pledged as security for those authorities' revenue bonds and pension plans
covering state public school and other employees. The total unfunded accrued
liability under these pension plans for their fiscal years ended in 1994 was
$2,950 million.
Pennsylvania Agencies. Certain Pennsylvania-created agencies have statutory
authorization to incur debt for which legislation providing for state
appropriations to pay debt service thereon is not required. The debt of these
agencies is supported solely by assets of, or revenues derived from the various
projects financed and is not an obligation of Pennsylvania. Some of these
agencies, however, are indirectly dependent on Pennsylvania funds through
various state-assisted programs. There can be no assurance that in the future
assistance of the Commonwealth will be available to these agencies. These
entities are as follows: The Delaware River Joint Toll Bridge Commission,
Delaware River Port Authority, Pennsylvania Energy Development Authority,
Pennsylvania Higher Education Assistance Agency, Pennsylvania Infrastructure
Investment Authority, the Pennsylvania State Public School Building Authority,
the Pennsylvania Turnpike Commission, the Pennsylvania Higher Educational
Facilities Authority, the Pennsylvania Industrial Development Authority, the
Philadelphia Regional Port Authority and the Pennsylvania Economic Development
Financing Authority.
Debt of Political Subdivisions and their Authorities. The ability of
Pennsylvania's political subdivisions, such as counties, cites and school
districts, to engage in general obligation borrowing without electorate approval
is generally limited by their recent revenue collection experience, although
generally such subdivisions can levy real property taxes unlimited as to rate or
amount to repay general obligation borrowings.
Political subdivisions can issue revenue obligations which will not affect their
general obligation capacity, but only if such revenue obligations are either
limited as to repayment from a certain type of revenue other than tax revenues
or projected to be repaid solely from project revenues.
Industrial development and municipal authorities, although created by political
subdivisions, can only issue obligations payable solely from the revenues
derived from the financed project. If the user of the project is a political
subdivision, that subdivision's full faith and credit may back the repayment of
the obligations of the industrial development or municipal authority. Often the
user of the project is a nongovernmental entity, such as a not-for-profit
hospital or university, a public utility or an industrial corporation, and there
can be no assurance that it will meet its financial obligations or that the
pledge, if any, of property financed will be adequate. Factors affecting the
business of the user of the project, such as governmental efforts to control
health care costs (in the case of hospitals), declining enrollment and
reductions in governmental financial assistance (in the case of universities),
increasing capital and operational costs (in the case of public utilities) and
economic slowdowns (in the case of industrial corporations) may adversely affect
the ability of the project user to pay the debt service on revenue bonds issued
on its behalf.
45
Many factors affect the financial condition of the Commonwealth and its
counties, cities, school districts and other political subdivisions, such as
social, environmental and economic conditions, many of which are not within the
control of such entities. As is the case with many states and cities, many of
the programs of the Commonwealth and its political subdivisions, particularly
human services programs, depend in part upon federal reimbursements which have
been steadily declining. In recent years the Commonwealth and various of its
political subdivisions (including particularly the City of Philadelphia and the
City of Scranton) have encountered financial difficulty due to a slowdown in the
pace of economic activity in the Commonwealth and to other factors. The Fund is
unable to predict what effect, if any, such factors would have on the Fund's
investments.
46
*******************************************************************************
THE EVERGREEN MONEY MARKET TRUST
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements
Included in Part A of this Registration Statement:
Financial Highlights for the Class Y shares of the Evergreen Money
Market Fund for the fiscal years ended October 31, 1991, 1992 and 1993,
the ten months ended August 31, 1994* and the fiscal years ended
August 31, 1995 and 1996.
Financial Highlights for the Class A shares of the Evergreen Money
Market Fund for the fiscal period from January 4, 1995 (commencement of
class operations) through August 31, 1995, and for the fiscal year
ended August 31, 1996.
Financial Highlights for the Class B shares of the Evergreen Money
Market Fund for the fiscal period from January 26, 1995 (commencement
of class operations) through August 31, 1995, and for the fiscal year
ended August 31, 1996.
________________________
* The Fund changed its fiscal year end from October 31 to August 31
Included in Part B of this Registration Statement:*
Statement of Investments as of August 31, 1996.
Statement of Assets and Liabilities of Evergreen Money Market Fund as
of August 31, 1996.
Statement of Assets and Liabilities of Evergreen of Evergreen
Institutional Money Market fund and Evergreen Institutional Treasury
Money Market Fund as of September 6, 1996.
Statement of Operations for the period ended August 31, 1996
Statements of Changes in Net Assets for the fiscal years ended
August 31, 1995 and August 31, 1996
Financial Highlights
Notes to Financial Statements
Reports of Independent Auditors
Statements, schedules and historical information other than those
listed above have been omitted since they are either not applicable or
are not required or the required information is shown in the financial
statements or notes thereto.
b. Exhibits
Number Description
1(A) Amended and Restated Declaration of Trust**
1(B) Form of Instrument providing for the Establishment
and Designation of Classes**
1(C) Form Amendment to Declaration of Trust
and Certification of Designation**
2 By-Laws**
3 None
4 Instruments Defining Rights of Shareholders**
5(A) Investment Advisory Agreement**
5(B) Investment Subadvisory Agreement**
6 Form of Amended Distribution Agreement**
7 None
8 Custodian Agreement**
9 None
10 Opinion of Counsel
11 Consent of Price Waterhouse, independent accountants
12 None
13 None
14 None
15 Rule 12b-1 Distribution Plans**
16 None
17 Financial Data Schedules+
- --------------------------
* Incorporated by reference to the Annual Report to Shareholders for
the fiscal period ended August 31, 1996 which has been previously
filed with the Commission and by reference to the Annual Report of
Registrant on form NSAR for the aforementioned period.
** Incorporated by reference to Registrant's previous filings on Form
N-1A.
+ All exhibits have been filed electronically.
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant
None
Item 26. Number of Holders of Securities (as of October 32, 1996)
(1) (2)
Number of Record
Title of Class Shareholders
Evergreen Money Market Fund
Class Y Shares of Beneficial Interest ($0.0001 par value) 13,185
Class A Shares of Beneficial Interest ($0.0001 par value) 17,299
Class B Shares of Beneficial Interest ($0.0001 par value) 377
Evergreen Institutional Money Market Fund
Institutional Shares ($0.0001 par value) 4
Institutional Service Shares ($0.0001 par value) 0
Evergreen Institutional Treasury Money Market Fund
Institutional Shares ($0.0001 par value) 4
Institutional Service Shares ($0.0001 par value) 0
Item 27. Indemnification
Article XI of the Registrant's By-laws contains the following
provisions regarding indemnification of Trustees and officers:
SECTION 11.1 Actions Against Trustee or Officer. The Trust shall
indemnify any individual who is a present or former Trustee or officer of the
Trust and who, by reason of his position as such, was, is, or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
any action or suit by or in the right of the Trust) against expenses, including
attorneys' fees, judgments, fines, and amounts paid in settlement, actually and
reasonably incurred by him in connection with the claim, action, suit, or
proceeding, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon the plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
SECTION 11.2 Derivative Actions Against Trustees or Officers. The Trust
shall indemnify any individual who is a present or former Trustee or officer of
the Trust and who, by reason of his position as such, was, is, or is threatened
to be made a party to any threatened, pending or completed action or suit by or
on behalf of the Trust to obtain a judgment or decree in its favor, against
expenses, including attorneys' fees, actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust, except that no indemnification shall be made in
respect of any claim, issue or matter as to which the individual has been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Trust, except to the extent that the court in which the action or
suit was brought determines upon application that, despite the adjudication of
liability but in view of all circumstances of the case, the person is fairly and
reasonably entitled to indemnity for those expenses which the court shall deem
proper, provided such Trustee or officer is not adjudged to be liable by reason
of his willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.
SECTION 11.3 Expenses of Successful Defense. To the extent that a
Trustee or officer of the Trust has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in Section 11.1 or 11.2
or in defense of any claim, issue, or matter therein, he shall be indemnified
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection therewith.
SECTION 11.4 Required Standard of Conduct.
(a) Unless a court orders otherwise, any indemnification under Section
11.1 or 11.2 may be made by the Trust only as authorized in the specific case
after a determination that indemnification of the Trustee or officer is proper
in the circumstances because he has met the applicable standard of conduct set
forth in Section 11.1 or 11.2. The determination shall be made by: (i) the
Trustees, by a majority vote of a quorum consisting of Trustees who were not
parties to the action, suit or proceeding; or if the required quorum is not
obtainable, or if a quorum of disinterested Trustees so directs, (ii) an
independent legal counsel in a written opinion.
(b) Nothing contained in this Article XI shall be construed to protect
any Trustee or officer of the Trust against any liability to the Trust or its
Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office (any such conduct being hereinafter called
"Disabling Conduct"). No indemnification shall be made pursuant to this Article
XI unless:
(i) There is a final determination on the merits by a court or
other body before whom the action, suit or proceeding was brought that the
individual to be indemnified was not liable by reason of Disabling Conduct; or
(ii) In the absence of such a judicial determination, there is
a reasonable determination, based upon a review of the facts, that such
individual was not liable by reason of Disabling Conduct, which determination
shall be made by:
(A) A majority of a quorum of Trustees who are neither
"interested persons" of the Trust, as defined in section 2(a) (19) of the 1940
Act, nor parties to the action, suit or proceeding; or
(B) An independent legal counsel in a written opinion.
SECTION 11.5 Advance Payments. Notwithstanding any provision of this
Article XI, any advance payment of expenses by the Trust to any Trustee or
officer of the Trust shall be made only upon the undertaking by or on behalf of
such Trustee or officer to repay the advance unless it is ultimately determined
that he is entitled to indemnification as above provided, and only if one of the
following conditions is met:
(a) the Trustee or officer to be indemnified provides a
security for his undertaking; or
(b) The Trust is insured against losses arising by reason of
any lawful advances; or
(c) There is a determination, based on a review of readily
available facts, that there is reason to believe that the Trustee or officer to
be indemnified ultimately will be entitled to indemnification, which
determination shall be made by:
(i) A majority of a quorum of Trustees who are neither
"interested persons" of the Trust, as defined in Section 2(a) (19) of the 1940
Act, nor parties to the action, suit or proceeding; or
(ii) An independent legal counsel in a written opinion.
SECTION 11.6 Former Trustees and Officers. The indemnification provided
by this Article XI shall continue as to an individual who has ceased to be a
Trustee or officer of the Trust and inure to the benefit of the legal
representatives of such individual and shall not be deemed exclusive of any
other rights to which any Trustee, officer, employee or agent of the Trust may
be entitled under any agreement, vote of Trustees or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding office as such; provided, that no Person may satisfy any right of
indemnity granted herein or to which he may be otherwise entitled, except out of
the Trust Property, and no Shareholder shall be personally liable with respect
to any claim for indemnity.
SECTION 11.7 Insurance. The Trust may purchase and maintain insurance
on behalf of any person who is or was a Trustee, officer, employee, or agent of
the Trust, against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such. However, the Trust shall
not purchase insurance to indemnify any Trustee or officer against liability for
any conduct in respect of which the 1940 Act prohibits the Trust itself from
indemnifying him.
SECTION 11.8 Other Rights to Indemnification. The indemnification
provided for herein shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any By-Law, agreement, vote
of Shareholders or disinterested Trustees or otherwise.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer, or controlling person of the Registrant in
connection with the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business or Other Connections of Investment Adviser
(a) For a description of the other business of the investment adviser, see
the section entitled "Management of the Funds-Investment Adviser" in Part A.
Evergreen Asset Management Corp., the Registrant's investment adviser, and
Lieber and Company, the Registrant's sub-adviser also act as such to the
Evergreen Trust, The Evergreen Total Return Fund, The Evergreen Limited Market
Fund, Inc., Evergreen Growth and Income Fund, The Evergreen Money Market Trust,
The Evergreen American Retirement Trust, The Evergreen Municipal Trust,
Evergreen Equity Trust, Evergreen Foundation Trust and Evergreen Variable Trust
all, registered investment companies. Stephen A. Lieber, Theodore J. Israel,
Jr., Nola Maddox Falcone and officers of the Adviser and Lieber and Company,
were, prior to June 30, 1994 officers and/or directors or trustees of the
Registrant and the other funds for which the Adviser acts as investment adviser.
Evergreen Asset Management Corp. and Lieber and Company are wholly- owned
subsidiaries of First Union National Bank Of North Carolina.
The Trustees and principal executive officers of First Union National Bank
of North Carolina, parent of the Registrants's investment adviser and
sub-adviser, and the Directors of First Union National Bank of North Carolina,
are set forth in the following tables:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
BOARD OF DIRECTORS
Ben Mayo Boddie Raymond A. Bryan, Jr.
Chairman & CEO Chairman & CEO
Boddie-Noell Enterprises, Inc. T.A. Loving Company
P.O. Box 1908 P.O. Drawer 919
Rocky Mount, NC 27802 Goldsboro, NC 27530
John F.A.V. Cecil John W. Copeland
President President
Biltmore Dairy Farms, Inc. Ruddick Corporation
P.O. Box 5355 2000 Two First Union Center
Asheville, NC 28813 Charlotte, NC 28282
John Crosland, Jr. J. William Disher
Chairman of the Board Chairman & President
The Crosland Group, Inc. Lance Incorporated
135 Scaleybark Road P.O. Box 32368
Charlotte, NC 28209 Charlotte, NC 28232
Frank H. Dunn Malcolm E. Everett, III
Chairman and CEO President
First Union National Bank First Union National Bank
of North Carolina of North Carolina
One First Union Center 310 S. Tryon Street
Charlotte, NC 28288-0006 Charlotte, NC 28288-0156
James F. Goodmon Shelton Gorelick
President & Chief President
Executive Officer SGIC, Inc.
Capitol Broadcasting 741 Kenilworth Ave., Suite 200
Company, Inc. Charlotte, NC 28204
2619 Western Blvd.
Raleigh, NC 27605
Charles L. Grace James E. S. Hynes
President Chairman
Cummins Atlantic, Inc. Hynes Sales Company, Inc.
P.O. Box 240729 P.O. Box 220948
Charlotte, NC 28224-0729 Charlotte, NC 28222
Daniel W. Mathis Earl N. Phillips, Jr.
Vice Chairman President
First Union National Bank First Factors Corporation
of North Carolina P.O. Box 2730
One First Union Center High Point, NC 27261
Charlotte, NC 28288-0009
J. Gregory Poole, Jr. John P. Rostan, III
Chairman & President Senior Vice President
Gregory Poole Equipment Company Waldensian Bakeries, Inc.
P.O. Box 469 P.O. Box 220
Raleigh, NC 27602 Valdese, NC 28690
Nelson Schwab, III Charles M. Shelton, Sr.
Chairman & CEO Chairman & CEO
Paramount Parks The Shelton Companies, Inc
8720 Red Oak Boulevard, Suite 315 3600 One First Union Center
Charlotte, NC 28217 Charlotte, NC 28202
George Shinn Harley F. Shuford, Jr.
Owner and Chairman President and CEO
Shinn Enterprises, Inc. Shuford Industries
One Hive Drive P.O. Box 608
Charlotte, NC 28217 Hickory, NC 28603
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
EXECUTIVE OFFICERS
James Maynor, President, First Union Mortgage Corporation; Austin
A. Adams, Executive Vice President; Howard L. Arthur, Senior Vice
President; Robert T. Atwood, Executive Vice President and Chief
Financial Officer; Marion A. Cowell, Jr., Executive Vice
President, Secretary and General Counsel; Edward E. Crutchfield,
Jr., Chairman, CEO, First Union Corporation; Frank H. Dunn, Jr.,
Chairman and CEO; Malcolm E. Everett, III, President; John R.
Georgius, President, First Union Corporation; James Hatch, Senior
Vice President and Corporate Controller; Don R. Johnson,
Executive Vice President; Mark Mahoney, Senior Vice President;
Barbara K. Massa, Senior Vice President; Daniel W. Mathis, Vice
Chairman; H. Burt Melton, Executive Vice President; Malcolm T.
Murray, Jr., Executive Vice President; Alvin T. Sale, Executive
Vice President; Louis A. Schmitt, Jr., Executive Vice President;
Ken Stancliff, Senior Vice President and Corporate Treasurer;
Richard K. Wagoner, Executive Vice President and General Fund
Officer.
All of the Executive Officers are located at the following
address: First Union National Bank of North Carolina, One First
Union Center, Charlotte, NC 28288.
Item 29. Principal Underwriters
Evergreen Funds Distributor, Inc. The Director and principal
executive officers are:
Director Michael C. Petrycki
Officers Robert A. Hering President
Michael C. Petrycki Vice President
Gordon Forrester Vice President
Lawrence Wagner VP, Chief Financial Officer
Steven D. Blecher VP, Treasurer, Secretary
Elizabeth Q. Solazzo Assistant Secretary
Thalia M. Cody Assistant Secretary
Evergreen Funds Distributor, Inc. acts as Distributor for the
following registered investment companies or separate series thereof:
Evergreen Trust
Evergreen Fund
Evergreen Aggressive Growth Fund
Evergreen Equity Trust:
Evergreen Global Real Estate Equity Fund
Evergreen U.S. Real Estate Equity Fund
Evergreen Global Leaders Fund
The Evergreen Limited Market Fund, Inc.
Evergreen Growth and Income Fund
The Evergreen Total Return Fund
The Evergreen American Retirement Trust:
The Evergreen American Retirement Fund
Evergreen Small Cap Equity Income Fund
The Evergreen Foundation Trust:
Evergreen Foundation Fund
Evergreen Tax Strategic Foundation Fund
The Evergreen Municipal Trust:
Evergreen Short-Intermediate Municipal Fund
Evergreen Short-Intermediate Municipal Fund-CA
Evergreen Florida High Income Municipal Bond Fund
Evergreen Tax Exempt Money Market Fund
Evergreen Institutional Tax Exempt Money Market Fund
Evergreen Money Market Trust
Evergreen Money Market Fund
Evergreen Institutional Money Market Fund
Evergreen Institutional Treasury Money Market Fund
Evergreen Investment Trust
Evergreen Emerging Markets Growth Fund*
Evergreen International Equity Fund*
Evergreen Balanced Fund*
Evergreen Value Fund*
Evergreen Utility Fund*
Evergreen Short-Intermediate Bond Fund*(formerly Evergreen Fixed Income)
Evergreen U.S. Government Fund*
Evergreen Florida Municipal Bond Fund*
Evergreen Georgia Municipal Bond Fund*
Evergreen North Carolina Municipal Bond Fund*
Evergreen South Carolina Municipal Bond Fund*
Evergreen Virginia Municipal Bond Fund*
Evergreen High Grade Tax Free Fund*
Evergreen Treasury Money Market Fund*
The Evergreen Lexicon Fund:
Evergreen Intermediate-Term Government Securities Fund**
Evergreen Intermediate-Term Bond Fund**
Evergreen Tax Free Trust:
Evergreen Pennsylvania Tax Free Money Market Fund***
Evergreen New Jersey Tax Free Income Fund***
Evergreen Variable Trust:
Evergreen VA Fund
Evergreen VA Growth and Income Fund
Evergreen VA Foundation Fund
Evergreen VA Global Leaders Fund
* Prior to July 7, 1995, each Fund was named "First Union" instead of
"Evergreen".
** Prior to January 19, 1996, each Fund was a series of The FFB Lexicon Fund.
*** Prior to January 19, 1996, each Fund was a series of FFB Fund Trust.
Item 30. Location of Accounts and Records
All accounts and records required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and the Rules 31a-1 through 31a-3
promulgated thereunder are maintained at one of the following locations:
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase,
New York 10577.
First Union National Bank of North Carolina, One First Union Center,
301 S. College Street, Charlotte, North Carolina 28288.
State Street Bank and Trust Company, 2 Heritage Drive, North Quincy,
Massachusetts 02171.
Item 31. Management Services
All management-related service contracts entered into by Registrant are
discussed in Parts A and B of this Registration Statement.
Item 32. Undertakings:
Registrant undertakes to file a post-effective amendment to this
Registration Statement containing unaudited financial information with
respect to Evergreen Institutional Money Market Fund and Evergreen
Institutional Treasury Money Market Fund within four to six months of
October 1, 1996.
Registrant hereby undertakes to comply with the provision of Section
16(c) of the 1940 Act with respect to the removal of Trustees and the
calling of special shareholder meetings by shareholders.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant certifies that it
has duly caused this Post-Effective Amendment No. 13 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in The City of New York, State of New York, on the 31st day of
October, 1996.
EVERGREEN MONEY MARKET TRUST
/s/ John J. Pileggi
by-----------------------------
John J. Pileggi, President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 13 to the Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
Signatures Title Date
- ----------- ----- ----
/s/John J. Pileggi
- ----------------------- President and October 31, 1996
John J. Pileggi Treasurer
by James P. Wallin
Attorney - In - Fact
/s/Joan V. Fiore
- ----------------------- Secretary October 31, 1996
Joan V. Fiore
by James P. Wallin
Attorney - In - Fact
/s/ Foster Bam
- ----------------------- Trustee October 31, 1996
Foster Bam
by James P. Wallin
Attorney - In - Fact
/s/ Laurence B. Ashkin
- ----------------------- Trustee October 31, 1996
Laurence B. Ashkin
by James P. Wallin
Attorney - In - Fact
/s/James S. Howell
- ----------------------- Trustee October 31, 1996
James S. Howell
by James P. Wallin
Attorney - In - Fact
/s/Gerald M. McDonnell
- ----------------------- Trustee October 31, 1996
Gerald M. McDonnell
by James P. Wallin
Attorney - In - Fact
/s/Thomas L. McVerry
- ----------------------- Trustee October 31, 1996
Thomas L. McVerry
by James P. Wallin
Attorney - In - Fact
/s/William Walt Pettit
- ----------------------- Trustee October 31, 1996
William Walt Pettit
by James P. Wallin
Attorney - In - Fact
/s/Russell A. Salton, III, M.D
- ------------------------------ Trustee October 31, 1996
Russell A. Salton, III, M.D
by James P. Wallin
Attorney - In - Fact
/s/Michael S. Scofield
- ----------------------- Trustee October 31, 1996
Michael S. Scofield
by James P. Wallin
Attorney - In - Fact
<PAGE>
JAMES P. WALLIN, ESQ.
2500 WESTCHESTER AVENUE
Purchase, New York 10577
October 31, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re Post-Effective Amendment of
EVERGREEN MONEY MARKET FUND
Registration No. 33-16706; Investment Company File No.811-5300
Commissioners:
I have acted as counsel to the above-referenced registrant which proposes
to file, pursuant to paragraph (b) of Rule 485 (the "Rule"), Post-Effective
Amendment No.13 (the "Amendment") to its registration statement under the
Securities Act of 1933, as amended.
Pursuant to paragraph (b)(4) of the Rule, I represent that
the Amendment does not contain disclosures which would render it ineligible to
become effective pursuant to paragraph (b) of the Rule.
Very truly yours,
/s/James P. Wallin
---------------------
James P. Wallin
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
11 Consent of Independent
Accountants
17 Financial Data Schedules
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 13 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated October 18, 1996, relating to the financial
statements and financial highlights appearing in the August 31, 1996 Annual
Report to Shareholders of the Evergreen Money Market Fund, which are also
incorporated by reference into the Registration Statement and to the use in the
Statement of Additional Information of our report dated September 6, 1996,
relating to the statements of assets and liabilities at September 6, 1996 of
Evergreen Institutional Money Market Fund and Evergreen Institutional Treasury
Money Market Fund, which appear in the Statement of Additional Information. We
also consent to the references to us under the heading "Financial Highlights" in
the Prospectus and under the headings "Independent Auditors" and "Financial
Statements" in the Statement of Additional Information.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
October 30, 1996
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 6
<NAME> Evergreen Money Market Cl. A
<SERIES>
<NUMBER> 001
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Aug-31-1995
<PERIOD-START> Sep-01-1994
<PERIOD-END> Aug-31-1995
<INVESTMENTS-AT-COST> 977,521,033
<INVESTMENTS-AT-VALUE> 977,521,033
<RECEIVABLES> 2,193,819
<ASSETS-OTHER> 605,669
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 980,320,521
<PAYABLE-FOR-SECURITIES> 0
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<OTHER-ITEMS-LIABILITIES> 4,570,294
<TOTAL-LIABILITIES> 4,570,294
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<PAID-IN-CAPITAL-COMMON> 976,271,292
<SHARES-COMMON-STOCK> 685,140,995
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<ACCUMULATED-NET-GAINS> (521,065)
<OVERDISTRIBUTION-GAINS> 0
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<INTEREST-INCOME> 21,475,028
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<EXPENSES-NET> 2,229,087
<NET-INVESTMENT-INCOME> 19,245,941
<REALIZED-GAINS-CURRENT> 19,987
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 19,265,928
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,909,735
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 840,902,082
<NUMBER-OF-SHARES-REDEEMED> 156,830,783
<SHARES-REINVESTED> 1,073,970
<NET-CHANGE-IN-ASSETS> 702,634,736
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 1,831,518
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<GROSS-EXPENSE> 2,979,172
<AVERAGE-NET-ASSETS> 142,090,214
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<S> <C>
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<NAME> Evergreen Money Market Cl. B
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<S> <C>
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<NAME> Evergreen Money Market Cl. Y
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