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PROSPECTUS October 15, 1998
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EVERGREEN/SM/ MONEY MARKET FUNDS
[LOGO OF EVERGREEN FUNDS/SM/ APPEARS HERE]
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EVERGREEN FLORIDA MUNICIPAL MONEY MARKET FUND
EVERGREEN NEW JERSEY MUNICIPAL MONEY MARKET FUND
(EACH A "FUND," TOGETHER THE "FUNDS")
CLASS A SHARES
The Funds are designed to provide investors with current income,
stability of principal and liquidity. This prospectus provides information
regarding the Class A shares offered by each Fund. Each Fund is a series of an
open-end management investment company. This prospectus sets forth concise
information about the Funds that a prospective investor should know before
investing. The address of the Funds is 200 Berkeley Street, Boston,
Massachusetts 02116.
A statement of additional information ("SAI") for the Funds, dated
October 15, 1998, as supplemented from time to time, has been filed with the
Securities and Exchange Commission ("SEC") and is incorporated by reference
herein. The SAI 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 Evergreen Funds at (800) 343-
2898. There can be no assurance that the investment objective of any Fund will
be achieved. Investors are advised to read this prospectus carefully.
AN INVESTMENT IN THE FUNDS IS NOT A DEPOSIT OR OBLIGATION OF ANY BANK, IS NOT
ENDORSED OR GUARANTEED BY ANY BANK, AND IS NOT INSURED OR OTHERWISE PROTECTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE FUNDS
INVOLVES RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THERE IS 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 NOR HAS THE SECURITIES AND EXCHANGE 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.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
EXPENSE INFORMATION.................................................... 3
DESCRIPTION OF THE FUNDS............................................... 4
Investment Objectives and Policies.................................. 4
Investment Practices and
Restrictions....................................................... 5
ORGANIZATION AND SERVICE PROVIDERS..................................... 8
Organization........................................................ 8
Service Providers................................................... 8
Distribution Plans and Agreements................................... 9
</TABLE>
<TABLE>
<S> <C>
PURCHASE AND REDEMPTION OF SHARES...................................... 10
How to Buy Shares................................................... 10
How to Redeem Shares................................................ 11
Exchange Privilege.................................................. 12
Shareholder Services................................................ 12
Banking Laws........................................................ 13
OTHER INFORMATION...................................................... 14
Dividends, Distributions and Taxes.................................. 14
General Information................................................. 15
</TABLE>
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EXPENSE INFORMATION
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The table and examples below are designed to help you understand the
various expenses that you will bear, directly or indirectly, when you invest
in a Fund. Shareholder transaction expenses are fees paid directly from your
account when you buy or sell shares of a Fund. There are no shareholder
transaction expenses.
Annual operating expenses reflect the normal operating expenses of a
Fund, and include costs such as management, distribution and other fees. The
tables below show for each Fund estimated annual operating expenses for the
fiscal period ending January 31, 1999. The examples show what you would pay if
you invested $1,000 over the periods indicated. The examples assume that you
reinvest all of your dividends and that a Fund's average annual return will be
5%. THE EXAMPLES ARE FOR ILLUSTRATION PURPOSES ONLY AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RETURN. A
FUND'S ACTUAL EXPENSES AND RETURNS WILL VARY. For a more complete description
of the various costs and expenses borne by a Fund see "Organization and
Service Providers."
EVERGREEN FLORIDA MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
ESTIMATED ANNUAL Example
OPERATING EXPENSES -------
------------------
<S> <C> <C> <C>
Management Fees 0.45%
12b-1 Fees 0.30% After 1 Year $ 9
Other Expenses 0.16% After 3 Years $29
----
Total 0.91%
====
</TABLE>
EVERGREEN NEW JERSEY MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
ESTIMATED ANNUAL Example
OPERATING EXPENSES -------
------------------
<S> <C> <C> <C>
Management Fees 0.45%
12b-1 Fees 0.30% After 1 Year $ 9
Other Expenses 0.15% After 3 Years $29
----
Total 0.90%
====
</TABLE>
3
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DESCRIPTION OF THE FUNDS
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INVESTMENT OBJECTIVES AND POLICIES
Each Fund's investment objective is nonfundamental; as a result, each
Fund may change its objective without a shareholder vote. Each Fund has also
adopted certain fundamental investment policies which are mainly designed to
limit a Fund's exposure to risk. The Funds' fundamental policies cannot be
changed without a shareholder vote. See the SAI for more information regarding
each Fund's fundamental investment policies or other related investment
policies. There can be no assurance that the Funds' investment objectives will
be achieved.
In addition to the investment policies detailed below, each Fund may
employ certain additional investment strategies which are discussed in
"Investment Practices and Restrictions" below.
The investment objective of EVERGREEN FLORIDA MUNICIPAL MONEY MARKET FUND
is to seek to provide Florida residents an investment that is, to the extent
possible, exempt from the Florida intangible personal property tax and to seek
as high a level of current income exempt from regular federal income taxes, as
is believed to be consistent with the preservation of capital, maintenance of
liquidity and stability of principal.
The investment objective of EVERGREEN NEW JERSEY MUNICIPAL MONEY MARKET
FUND is to seek as high a level of current income exempt from regular federal
income tax and, to the extent possible, from New Jersey gross income tax, as
is believed to be consistent with the preservation of capital, maintenance of
liquidity and stability of principal.
Each of the Funds seeks to obtain its objective, by investing at least
80% of its net assets in high quality debt obligations issued by or on behalf
of the state for which it is named or its counties, municipalities,
authorities or other political subdivisions, and possessions of the U.S., and
their authorities, agencies, instrumentalities and political subdivisions
("Municipal Securities") and in participation certificates in Municipal
Securities purchased from banks, insurance companies or other financial
institutions.
Each Fund will invest in Municipal Securities determined to present
minimal credit risk and which are, at the time of acquisition, eligible
obligations under Rule 2a-7 under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Fund normally invests its assets so that at
least 80% of its annual interest income is exempt from federal income tax
(other than the federal alternative minimum tax) and income tax of the state
for which it is named.
Each Fund will also comply with the diversification requirements
prescribed by Rule 2a-7. However, the Funds are non-diversified and may invest
a significant percentage of their assets in the obligations of a single
issuer. Since each Fund invests primarily in obligations of the state for
which it is named, its investments will be concentrated in one geographic
area. The Funds will not invest in options, financial futures transactions or
other similar "derivative" instruments except as otherwise provided herein.
Ordinarily, up to 20% of the Fund's annual interest income may be subject
to income tax for the state for which it is named or regular federal income
tax. However, at all times under normal market conditions the percentage of
the Funds' income and corresponding distributions which is tax-exempt will be
very close to 100%. In addition, for temporary defensive purposes, the Funds
may invest up to 100% of their total assets in such taxable obligations when,
in the opinion of the investment advisor, it is advisable to do so because of
market conditions. The types of taxable obligations in which the Funds may
invest are limited to the following money market instruments which have
remaining maturities not exceeding 397 days: (i) obligations of the U.S.
government, its agencies or instrumentalities; (ii) negotiable certificates of
deposit and bankers' acceptances of U.S. banks which have more than $1 billion
in total assets at the time of investment and are members of the Federal
Reserve System or are examined by the Comptroller of the Currency or whose
deposits are insured by the Federal Deposit Insurance Corporation; (iii)
domestic and foreign U.S. dollar-denominated commercial paper rated "P-1" by
Moody's Investors Service ("Moody's") or "A-1" or "A-1+" by Standard and
Poor's Rating Services ("S&P") and (iv) repurchase agreements involving any of
the foregoing portfolio obligations.
The Funds do not intend to concentrate their investments in any one
industry. However, from time to time, the Funds may invest 25% or more of
their total assets in Municipal Securities which are related in such a way
that an economic, business or political development or change affecting one
such obligation would also affect the
4
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others. Two examples of obligations so related are (i) obligations, the
interest on which is paid from revenues of similar type projects and (ii)
obligations whose issuers are located in the same state.
Because the taxable money market is a broader and more liquid market, and
has a greater number of investors, issuers and market makers than the market
for short-term tax-exempt Municipal Securities, the liquidity of the Funds may
not be equal to that of a money market fund which invests exclusively in
short-term taxable money market instruments. The more limited marketability of
short-term tax-exempt Municipal Securities may make it difficult in certain
circumstances to dispose of large investments advantageously. In general, tax-
exempt Municipal Securities are also subject to credit risks such as the loss
of credit ratings or possible default. In addition, an issuer of tax-exempt
Municipal Securities may lose its tax-exempt status in the event of a change
in the current tax laws.
INVESTMENT PRACTICES AND RESTRICTIONS
General. The Funds invest only in securities that have remaining maturities of
397 days (13 months) or less at the date of purchase. For this purpose,
floating rate or variable rate obligations 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 90 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.
The Funds will not invest in any obligations of or loan any of their
portfolio obligations to First Union National Bank ("FUNB") or its affiliates
(as defined in the 1940 Act) or any affiliates of the Funds. Subject to the
limitations described, the Funds are permitted to invest in obligations of
correspondent banks of FUNB (banks with which FUNB maintains a special bank
servicing relationship) which are not affiliates of Evergreen Money Market
Trust, its investment advisors or its distributor, but the Funds will not give
preference in their investment selections to those obligations.
After purchase by a Fund, a security may cease to be rated or its rating
may be reduced below the minimum required for purchase by the Fund. Neither
event will require a sale of such security by the Fund. However, the
investment advisor will consider such event in its determination of whether
the Fund should continue to hold the security. To the extent the ratings given
by Moody's or S&P may change as a result of changes by such organizations of
their rating systems, a Fund will attempt to use comparable ratings as
standards for investments in accordance with the investment policies contained
in this prospectus and in the SAI.
The ability of each Fund to meet its investment objective is necessarily
subject to the ability of the issuers of securities in which the Fund invests
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.
Municipal Securities. Municipal Securities are municipal bonds, notes and
commercial paper issued by or for states, territories and possessions of the
U.S. including the District of Columbia and their political subdivisions,
agencies and instrumentalities. Municipal bonds include fixed, variable or
floating rate general obligation and revenue bonds. General obligation bonds
are used to support the government's general financial needs and are supported
by the full faith and credit of the municipality. General obligation bonds are
repaid from the issuer's general unrestricted revenues. Payment, however, may
be dependent upon legislative approval and may be subject to limitations on
the issuer's taxing power. Revenue bonds are used to finance public works and
certain private facilities. In contrast to general obligation bonds, revenue
bonds are repaid only with the revenue generated by the project financed.
Municipal notes include tax anticipation notes, bond anticipation notes
and revenue anticipation notes. Municipal commercial paper obligations are
unsecured promissory notes issued by municipalities to meet short-term credit
needs.
5
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Since the Funds invest in Municipal Securities, you should be aware of
the risks associated with investing in such securities. The value of municipal
bonds tends to go up when interest rates go down and vice versa. An issuer's
failure to make such payment due to political development or fiscal
mismanagement could affect its ability to make prompt payments of interest and
principal. Those events could also affect the market value of the security.
Moreover, the market for municipal bonds is often thin and can be temporarily
affected by large purchases and sales, including those by a Fund.
Opinions relating to the validity of Municipal Securities and to the
exclusion of interest thereon from federal and state personal income taxes are
rendered by counsel to the respective issuers at the time of issuance. Neither
the Funds, Evergreen Money Market Trust, nor the investment advisor will
review the proceedings relating to the issuance of Municipal Securities or the
basis for such opinions.
Special Risk Factors Related to Investing in Municipal Securities Issued by
the State of Florida or New Jersey.
It should be noted that Municipal Securities may be adversely affected by
local political and economic conditions and developments within a state. For
example, adverse conditions in a significant industry within Florida or New
Jersey may from time to time have a corresponding adverse effect on specific
issuers within that state or on anticipated revenue to the state itself;
conversely, an improving economic outlook for a significant industry may have
a positive effect on such issuers or revenues.
Florida. Under current law, the State of Florida is required to maintain a
balanced budget so that current expenses are met from current revenues.
Florida does not currently impose a tax on personal income. It does impose a
tax on corporate income derived from activities within the State. In addition,
Florida imposes an ad valorem tax on certain intangible property as well as
sales and use taxes. These taxes are the principal source of funds to meet
State expenses, including repayment of, and interest on, obligations backed
solely by the full faith and credit of the State.
Florida's Constitution permits the issuance of state municipal
obligations pledging the full faith and credit of the State, with a concurring
vote by the respective electors, to finance or refinance capital projects
authorized by the Legislature. The State Constitution also provides that the
Legislature shall appropriate monies sufficient to pay debt service on state
bonds pledging the full faith and credit of the State as they become due. All
State tax revenues, other than trust funds dedicated by the State Constitution
for other purposes, are available for such an appropriation, if required.
On the other hand, municipalities and other political subdivisions of the
State principally rely on combination of ad valorem taxes on real property,
user fees and occupational license fees to meet their day-to-day expenses
including the repayment of principal of, and interest on, their obligations
backed by their full faith and credit. (Revenue bonds, of course, are
dependent on the revenue generated by a specific facility or enterprise.)
Florida has experienced substantial population increases as a result of
migration to Florida from other areas of the U.S. and from foreign countries.
This population growth is expected to continue, and it is anticipated that
corresponding increases in State revenues will be necessary during the next
decade to meet increased burdens on the various public and social services
provided by the State.
New Jersey. New Jersey's economic base is diversified, consisting of a variety
of manufacturing, construction and service industries, supplemented by rural
areas with selective commercial agriculture. The State's central location in
the northeastern corridor, the transportation and port facilities and
proximity to New York City make the State an attractive location for corporate
headquarters and international business offices. Historically, New Jersey's
average per capita income has been well above the national average, and in
1996 the State ranked second among the states in per capita personal income.
While New Jersey's economy continued to expand during the late 1980's the
level of growth slowed considerably after 1987. The onset of recession caused
an acceleration of job losses in previously growing sectors. However, in
recent years conditions have slowly improved, and the rate of unemployment has
decreased.
The State operates a General Fund into which all State revenues not
otherwise restricted by statute are deposited and from which appropriations
are made. The largest part of the total financial operations of the State is
accounted for in the General Fund.
Florida and New Jersey's ability to meet increasing expenses will be
dependent in part upon each state's continued ability to foster business and
economic growth. An expanded discussion of the risk factors associated with
investments in each of the states is contained in the SAI.
6
<PAGE>
Floating Rate and Variable Rate Obligations. Each Fund may invest in certain
variable rate and floating rate securities with or without demand features.
These variable rate securities do not have fixed interest rates; rather,
interest 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 repayment 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. Each Fund currently limits 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%
of its net assets.
Stand-by Commitments. The Funds may also acquire "stand-by commitments" with
respect to Municipal Securities held in their portfolio. Under a stand-by
commitment, a dealer agrees to purchase, at a Fund's option, specified
Municipal Securities at a specified price. Failure of the dealer to purchase
such Municipal Securities may result in a Fund incurring a loss or missing an
opportunity to make an alternative investment. Each Fund expects that stand-by
commitments generally will be available without the payment of direct or
indirect consideration. However, if necessary and advisable, a Fund may pay
for stand-by commitments either separately in cash or by paying a higher price
for portfolio securities which are acquired subject to such a commitment (thus
reducing the yield to maturity otherwise available for the same securities).
The total amount paid in either manner for outstanding stand-by commitments
held in each Fund's portfolio will not exceed 10% of the value of the Fund's
total assets calculated immediately after each stand-by commitment is
acquired. The Funds will maintain cash or liquid securities in a segregated
account with its custodian in an amount equal to such commitments. The Funds
will enter into stand-by commitments only with banks and broker-dealers that,
in the judgment of the Funds' investment advisor, present minimal credit
risks.
Repurchase Agreements. The Funds may invest in repurchase agreements. A
repurchase agreement is an agreement by which a Fund purchases a security
(usually U.S. government obligations) for cash and obtains a simultaneous
commitment from the seller (usually a bank or broker-dealer) to repurchase the
security at an agreed-upon price and specified future date. The repurchase
price reflects an agreed-upon interest rate for the time period of the
agreement. The Fund's risk is the inability of the seller to pay the agreed-
upon price on the delivery date. However, this risk is tempered by the ability
of the Fund to sell the security in the open market in the case of a default.
In such a case, the Fund may incur costs in disposing of the security which
would increase Fund expenses. The Fund's investment advisor will monitor the
creditworthiness of the firms with which the Fund enters into repurchase
agreements.
Securities Lending. To generate income and offset expenses, each Fund may lend
obligations to broker-dealers and other financial institutions. Loans of
obligations by a Fund may not exceed 33 1/3% of the value of the Fund's total
assets. While obligations are on loan, the borrower will pay the Fund any
income accruing on the security. Also, the Fund may invest any collateral it
receives in additional obligations. Gains or losses in the market value of a
lent security will affect the Fund and its shareholders. When a Fund lends its
obligations, it runs the risk that it may not be able to retrieve the
obligations on a timely basis possibly losing the opportunity to sell the
obligations at a desirable price. Also, if the borrower files for bankruptcy
or becomes insolvent, the Fund's ability to dispose of the obligations may be
delayed.
When-Issued Securities. Each Fund may enter into transactions whereby it
commits to buying a security, but does not pay for or take delivery of the
security until some specified date in the future. The value of these
securities is subject to market fluctuations during this period and no income
accrues to the Funds until settlement. At the time of settlement, a when-
issued security may be valued at less than its purchase price. When entering
into these transactions, the Funds rely on the other party to consummate the
transaction; if the other party fails to do so, the Funds may be
disadvantaged. Each Fund does not intend to purchase when-issued securities
for speculative purposes, but only in furtherance of its investment objective.
Illiquid Securities. Each Fund may invest up to 10% of its net assets in
illiquid securities and other securities which are not readily marketable.
Repurchase agreements with maturities longer than seven days will be included
for the purpose of the foregoing 10% limit. The inability of the Funds to
dispose of illiquid investments readily or at a reasonable price could impair
the Funds' ability to raise cash for redemptions or other purposes.
Restricted Securities. The Funds may invest in restricted securities,
including securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, as amended (the "1933 Act"). Generally, Rule 144A
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establishes a safe harbor from the registration requirements of the 1933 Act
for resale by large institutional investors of securities not publicly traded
in the U.S. The Funds' investment advisor determines the liquidity of Rule
144A securities according to guidelines and procedures adopted by the Board of
Trustees of Evergreen Money Market Trust. The Board of Trustees monitors the
investment advisor's application of those guidelines and procedures.
Securities eligible for resale pursuant to Rule 144A, which the Funds'
investment advisor has determined to be liquid or readily marketable, are not
subject to the 10% limit on illiquid securities.
Borrowing. Each Fund may borrow from banks in an amount up to 33 1/3% of its
total assets, taken at market value. Each Fund may also borrow an additional
5% of its total assets from banks or others. A Fund may only borrow as a
temporary measure for extraordinary or emergency purposes such as the
redemption of Fund shares. A Fund will not purchase obligations while
outstanding borrowings exceed 5% of its total assets except to exercise prior
commitments and to exercise subscription rights.
Reverse Repurchase Agreements. Each Fund may enter into reverse repurchase
agreements. A reverse repurchase agreement is an agreement by a Fund to sell a
security and repurchase it at a specified time and price. A Fund could lose
money if the market values of the obligations it sold decline below their
repurchase prices. Reverse repurchase agreements may be considered a form of
borrowing, and, therefore, a form of leverage. Leverage may magnify gains or
losses of the Fund.
Investing in Securities of Other Investment Companies. The Funds may invest in
securities of other investment companies. As a shareholder of another
investment company, a Fund would pay its portion of the other investment
company's expenses. These expenses would be in addition to the expenses that
the Fund currently bears concerning its own operations and may result in some
duplication of fees.
Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the SAI.
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ORGANIZATION AND SERVICE PROVIDERS
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ORGANIZATION
Fund Structure. Each Fund is an investment pool, which invests shareholders'
money toward a specified goal. In technical terms, each Fund is a non-
diversified series of an open-end management investment company, called
Evergreen Money Market Trust (the "Trust"). The Trust is a Delaware business
trust organized on September 18, 1997.
Board of Trustees. The Trust is supervised by a Board of Trustees that is
responsible for representing the interests of shareholders. The Trustees meet
periodically throughout the year to oversee the Funds' activities, reviewing,
among other things, each Fund's performance and its contractual arrangements
with various service providers.
Shareholder Rights. All shareholders have equal voting, liquidation and other
rights. Each share is entitled to one vote for each dollar of net asset value
applicable to such share. Shareholders may exchange shares as described under
"Exchanges," but will have no other preference, conversion, exchange or
preemptive rights. When issued and paid for, shares will be fully paid and
nonassessable. Shares of the Funds are redeemable, transferable and freely
assignable as collateral. The Trust may establish additional classes or series
of shares.
The Funds do not hold annual shareholder meetings; the Funds may,
however, hold special meetings for such purposes as electing or removing
Trustees, changing fundamental policies and approving investment advisory
agreements or 12b-1 plans. In addition, the Funds are prepared to assist
shareholders in communicating with one another for the purpose of convening a
meeting to elect Trustees.
SERVICE PROVIDERS
Investment Advisors. The investment advisor of EVERGREEN FLORIDA MUNICIPAL
MONEY MARKET FUND and EVERGREEN NEW JERSEY MUNICIPAL MONEY MARKET FUND is the
Capital Management Group of FUNB, a subsidiary of First Union Corporation
("First Union"). FUNB is located at 201 South College Street, and First Union
is located at 301 South College St., Charlotte, North Carolina 28288-0630.
First Union and its subsidiaries provide a broad range of financial services
to individuals and businesses throughout the U.S.
FUNB manages the investments for and supervises the daily business
affairs of the Funds and, as compensation therefore is entitled to receive an
annual fee of 0.45% of each Fund's average daily net assets.
8
<PAGE>
Administrator. Evergreen Investment Services, Inc. ("EIS"), 200 Berkeley St.,
Boston, Massachusetts, 02116, serves as administrator to the Funds. As
administrator, and subject to the supervision and control of the Trust's Board
of Trustees, EIS provides the Funds with facilities, equipment and personnel.
For its services as administrator, EIS is entitled to receive a fee based on
the aggregate average daily net assets of the Funds at a rate based on the
total assets of all mutual funds administered by EIS for which any affiliate
of FUNB serves as investment advisor. The administration fee is 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
Transfer Agent and Dividend Disbursing Agent. Evergreen Service Company
("ESC"), 200 Berkeley Street, Boston, Massachusetts 02116-5034, acts as the
Funds' transfer agent and dividend disbursing agent. ESC is an indirect,
wholly-owned subsidiary of First Union.
Custodian. State Street Bank and Trust Company ("State Street"), P.O. Box
9021, Boston, Massachusetts 02205-9827, acts as the Funds' custodian.
Principal Underwriter. Evergreen Distributor, Inc. ("EDI"), a subsidiary of
The BISYS Group, Inc., located at 125 West 55th Street, New York, New York
10019, is the principal underwriter of the Funds. EDI is not affiliated with
First Union.
DISTRIBUTION PLANS AND AGREEMENTS
Distribution Plans. Each Fund's Class A shares pay for the expenses associated
with the distribution of such shares according to a distribution plan that it
has adopted pursuant to Rule 12b-1 under the 1940 Act (each a "Plan," or
collectively, the "Plans"). Under the Plans, each Fund may incur distribution-
related and shareholder servicing-related expenses which are based upon a
maximum annual rate of 0.75% (currently limited to 0.30%) of each Fund's
average daily net assets attributable to the Class A shares.
Of the amount that each Fund may pay under its respective Plan, up to
0.25% may constitute a service fee to be used to compensate organizations,
which may include each Fund's investment advisor or its affiliates, for
personal services rendered to shareholders and/or the maintenance of
shareholder accounts. The Funds may not pay any distribution or service fees
during any fiscal period in excess of the amounts set forth above. Amounts
paid under the Plans are used to compensate the Funds' distributor pursuant to
the distribution agreements entered into by each Fund.
Distribution Agreements. Each Fund has also entered into a distribution
agreement (each, a "Distribution Agreement" or collectively the "Distribution
Agreements") with EDI. Pursuant to the Distribution Agreements, each Fund will
compensate EDI for its services as distributor at the annual rate of 0.30% of
each Fund's Class A share average daily net assets.
The Distribution Agreements provide that EDI will use the distribution
fee received from a Fund for payments (i) to compensate broker-dealers or
other persons for distributing shares of a Fund, including interest and
principal payments made in respect of amounts paid to broker-dealers or other
persons that have been financed (EDI may assign its rights to receive
compensation under the Distribution Agreements to secure such financings),
(ii) to otherwise promote the sale of shares of a Fund, and (iii) to
compensate broker-dealers, depository institutions and other financial
intermediaries for providing administrative, accounting and other services
with respect to each Fund's shareholders. FUNB or its affiliates may finance
the payments made by EDI to compensate broker-dealers or other persons for
distributing shares of a Fund.
In the event a Fund acquires the assets of other mutual funds,
compensation paid to EDI under the Distribution Agreements may be paid by EDI
to the distributors of the acquired funds or their predecessors.
Since EDI's compensation under the Distribution Agreements is not
directly tied to the expenses incurred by EDI, the amount of compensation
received by EDI under the Distribution Agreements during any year may be more
or less than its actual expenses and may result in a profit to EDI.
Distribution expenses incurred by EDI in one fiscal year that exceed the level
of compensation paid to EDI for that year may be paid from distribution fees
received from a Fund in subsequent fiscal years.
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PURCHASE AND REDEMPTION OF SHARES
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HOW TO BUY SHARES
You may purchase Class A shares of any Fund through broker-dealers, banks
or other financial intermediaries, or directly through EDI. In addition, you
may purchase Class A shares of a Fund by mailing to that Fund, c/o ESC, P.O.
Box 2121, Boston, Massachusetts 02106-2121, a completed application and a
check payable to the Fund. You may also telephone (800) 343-2898 to obtain the
number of an account to which you can wire or electronically transfer funds
and then send in a completed application. The minimum initial investment is
$1,000, which may be waived in certain situations. Subsequent investments in
any amount may be made by check, by wiring federal funds, by direct deposit or
by an electronic funds transfer.
There is no minimum amount for subsequent investments. Investments of $25
or more are allowed under the Systematic Investment Plan. See the application
for more information. Only Class A shares are offered through this prospectus
(see "General Information"--"Other Classes of Shares").
You may purchase Class A shares of each Fund 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.
There is no size limit on purchases of Class A shares.
How the Funds Value Their Shares. The net asset value of shares of a Fund for
purposes of both purchases and redemptions is determined twice daily, at 12:00
p.m. (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, Martin Luther King, Jr.
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 advisor, are accrued daily. The obligations 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.
In addition to the discount or commission paid to broker-dealers, EDI may
from time to time pay to broker-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 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 broker-dealer
and their immediate family members to urban or resort locations within or
outside the U.S. Such a dealer may elect to receive cash incentives of
equivalent amount in lieu of such payments. EDI may also limit the
availability of such incentives to certain specified dealers. EDI from time to
time sponsors promotions involving First Union Brokerage Services, an
affiliate of each Fund's investment advisor, 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 broker-dealers. Certain
broker-dealers may also receive payments from EDI or a Fund's investment
advisor over and above the usual trail commissions or shareholder servicing
payments applicable to a given class of shares.
Additional Purchase Information. As a condition of this offering, if a
purchase is canceled due to nonpayment or because an investor's check does not
clear, the investor will be responsible for any loss a Fund or its investment
advisor incurs. If such investor is an existing shareholder, a Fund may redeem
shares from an investor's account to reimburse the Fund or its investment
advisor for any loss. In addition, such investors may be prohibited or
restricted from making further purchases in any of the Evergreen 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 30 days.
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HOW TO REDEEM SHARES
You may "redeem" (i.e., sell) your shares in a Fund to the Fund for cash
at their net redemption value on any day the Exchange is open, either directly
by writing to the Fund, c/o ESC, or through your financial intermediary. The
amount you will receive is based on the net asset value adjusted for fractions
of a cent next calculated after the Fund receives your request in proper form.
Proceeds generally will be sent to you within seven days. However, for shares
recently purchased by check, a Fund will not send proceeds until it is
reasonably satisfied that the check has been collected (which may take up to
15 days). Once a redemption request has been telephoned or mailed, it is
irrevocable and may not be modified or canceled.
Redeeming Shares Through Your Financial Intermediary. A Fund must receive
instructions from your financial intermediary before 4:00 p.m. (eastern time)
for you to receive that day's net asset value. Your financial intermediary is
responsible for furnishing all necessary documentation to the 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. You may redeem by mail by
sending a signed letter of instruction or stock power form to a Fund, c/o ESC
(the registrar, transfer agent and dividend-disbursing agent for each Fund).
Stock power forms are available from your financial intermediary, ESC, 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 $50,000. Currently, the requirement for a
signature guarantee has been waived on redemptions of $50,000 or less when the
account address of record has been the same for a minimum period of 30 days.
Each Fund and ESC reserve the right to withdraw this waiver at any time. 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 under the Securities Exchange Act
of 1934 and ESC's policies.
Shareholders may redeem amounts of $1,000 or more (up to $50,000) from
their accounts by calling the telephone number on the front page of this
prospectus between the hours of 8:00 a.m. and 6:00 p.m. (eastern time) each
business day (i.e., any weekday exclusive of days on which the Exchange or
ESC's offices are closed). Redemption requests received 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. If you cannot reach a Fund by
telephone, you should follow the procedures for redeeming by mail or through a
broker-dealer as set forth herein. The telephone redemption service is not
made available to shareholders automatically. Shareholders wishing to use the
telephone redemption service must complete the appropriate sections on the
application and choose how the redemption proceeds are to be paid. Redemption
proceeds will be either (1) mailed by check to the shareholder at the address
in which the account is registered or (2) wired to an account with the same
registration as the shareholder's account in a fund at a designated commercial
bank.
In order to insure that instructions received by ESC are genuine when you
initiate a telephone transaction, you will be asked to verify certain criteria
specific to your account. At the conclusion of the transaction, you will be
given a transaction number confirming your request, and written confirmation
of your transaction will be mailed the next business day. Your telephone
instructions will be recorded. Redemptions by telephone are allowed only if
the address and bank account of record have been the same for a minimum period
of 30 days. Each Fund reserves the right at any time to terminate, suspend, or
change the terms of any redemption method described in this prospectus, except
redemption by mail, and to impose fees.
Except as otherwise noted, the Funds, ESC and EDI will not assume
responsibility for the authenticity of any instructions received by any of
them from a shareholder in writing, over the Evergreen Express Line (described
below), or by telephone. ESC will employ reasonable procedures to confirm that
instructions received over the Evergreen Express Line or by telephone are
genuine. The Funds, ESC and EDI will not be liable when following instructions
received over the Evergreen Express Line or by telephone that ESC reasonably
believes are genuine.
Evergreen Express Line. The Evergreen Express Line offers you specific fund
account information and price and yield quotations as well as the ability to
do account transactions, including investments, exchanges and redemptions. You
may access the Evergreen Express Line by dialing toll-free (800) 346-3858 on
any touch-tone telephone, 24 hours a day, seven days a week.
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General. The sale of shares is a taxable transaction for federal income tax
purposes. The Funds may temporarily suspend the right to redeem their shares
when (1) the Exchange is closed, other than customary weekend and holiday
closings; (2) trading on the Exchange is restricted; (3) an emergency exists
and the Funds cannot dispose of their investments or fairly determine their
value; or (4) the SEC so orders. The Funds reserve the right to close an
account that through redemption has fallen below $1,000 and has remained so
for 30 days. Shareholders will receive 60 days' written notice to increase the
account value to at least $1,000 before the account is closed. The Funds have
elected to be governed by Rule 18f-1 under the 1940 Act 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 90-day period for any
one shareholder.
EXCHANGE PRIVILEGE
How to Exchange Shares. You may exchange some or all of your shares for shares
of the same class in other Evergreen funds through your financial
intermediary, by calling or writing to ESC, or by using the Evergreen Express
Line as described above. 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 fund is subject to the
minimum investment and suitability requirements of each Fund. If you buy Class
A shares of a Fund, you will be charged a sales load upon exchange for Class A
shares of another Evergreen fund.
Each of the Evergreen funds has different investment objectives and
policies. For more complete information, a prospectus of the fund into which
an exchange will be made should be read prior to the exchange. An exchange
order must comply with the requirement for a redemption or repurchase order
and must specify the dollar value or number of shares to be exchanged. An
exchange is treated for federal income tax purposes as a redemption and
purchase of shares and may result in the realization of a capital gain or
loss. Shareholders are limited to five exchanges per calendar year, with a
maximum of three per calendar quarter. This exchange privilege may be modified
or discontinued at any time by a Fund upon 60 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 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 the Fund and may
charge you for this service.
Exchanges By Telephone And Mail. Exchange requests received by a Fund after
4:00 p.m. (eastern time) will be processed using the net asset value
determined at the close of 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 ESC by telephone. If you wish
to use the telephone exchange service you should indicate this on the
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 ESC 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, ESC
or call the toll-free number on the front page of this prospectus. Some
services are described in more detail in the application.
Systematic Investment Plan. Under a Systematic Investment Plan, you may invest
as little as $25 per month to purchase shares of a Fund with no minimum
initial investment required.
Telephone Investment Plan. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 4:00 p.m. (eastern time)
will be credited to a shareholder's account the day the request is received.
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Systematic 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
Systematic Withdrawal Plan (the "Withdrawal Plan") by filling out the
appropriate part of the application. Under this Withdrawal Plan, you may
receive (or designate a third party to receive) a monthly or quarterly fixed-
withdrawal payment in a stated amount of at least $75 and as much as 1.00% per
month or 3.00% per quarter of the total net asset value of the Fund shares in
your account when the Withdrawal Plan was opened. Fund shares will be redeemed
as necessary to meet withdrawal payments. All participants must elect to have
their dividends and capital gains distributions reinvested automatically.
Investments Through Employee Benefit and Savings Plans. Certain qualified and
non-qualified employee benefit and savings plans may make shares of the Funds
and other Evergreen funds available to their participants. The Funds'
investment advisor may provide compensation to organizations providing
administrative and recordkeeping services to plans which make shares of the
Evergreen 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 a Fund at the net asset value per share at the close of business on the
record date, 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.
Dollar Cost Averaging. Through dollar cost averaging you can invest a fixed
dollar amount each month or each quarter in any Evergreen fund. This results
in more shares being purchased when the selected fund's net asset value is
relatively low and fewer shares being purchased when the fund's net asset
value is relatively high and may result in a lower average cost per share than
a less systematic investment approach.
Prior to participating in dollar cost averaging, you must establish an
account in an Evergreen fund. You should designate on the application (i) the
dollar amount of each monthly or quarterly investment you wish to make, and
(ii) the fund in which the investment is to be made. Thereafter, on the first
day of the designated month, an amount equal to the specified monthly or
quarterly investment will automatically be redeemed from your initial account
and invested in shares of the designated fund.
Two Dimensional Investing. You may elect to have income and capital gains
distributions from any class of Evergreen fund shares you own automatically
invested to purchase the same class of shares of any other Evergreen fund. You
may select this service on your application and indicate the Evergreen fund(s)
into which distributions are to be invested.
Tax Sheltered Retirement Plans. The Funds have various retirement plans
available to eligible investors, including Individual Retirement Accounts
(IRAs); Rollover IRAs; Simplified Employee Pension Plans (SEPs); Savings
Incentive Match Plan for Employees (SIMPLEs); Tax Sheltered Annuity Plans;
403(b)(7) Plans; 401(k) Plans; Keogh Plans; Profit-Sharing Plans; Medical
Savings Accounts; Pension and Target Benefit and Money Purchase Plans. For
details, including fees and application forms, call toll-free (800) 247-4075
or write to ESC.
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 obligations 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 advisor, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase
of shares of such an investment company upon the order of their customer. FUNB
and its affiliates 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 FUNB and its affiliates 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 their customers. If FUNB and its affiliates
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
advisor. If this were to occur, it is not anticipated that the shareholders of
any Fund would suffer any adverse financial consequences.
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OTHER INFORMATION
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DIVIDENDS, DISTRIBUTIONS AND TAXES
The Funds declare substantially all of their net income as dividends on
each business day. Such dividends are paid monthly. Net investment 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 obligations are not included in net
investment 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. The amount of dividends may fluctuate from day to day, and
the dividend may be omitted on a day where Fund expenses exceed 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 will be treated as paid in the immediately preceding
December.
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 12:00
p.m. (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 12:00 p.m. (eastern time), and
federal funds are received by 4:00 p.m. (eastern time). All other wire
purchases received after 12:00 p.m. (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 Internal Revenue Code of 1986, as amended (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 the Funds) that
pays exempt-interest dividends.
The Funds will designate and pay exempt-interest dividends derived from
interest earned on qualifying tax-exempt obligations. Such exempt-interest
dividends may be excluded by shareholders of the Funds 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)
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 gains 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 20%. 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 advisor.
Each Fund is required by federal law to withhold 31% of reportable
payments (which may include dividends, capital gains distributions and certain
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, the investor must certify on the application, or on a
separate form supplied by State Street, that the investor's social security
number or taxpayer identification number is correct and that the investor is
not currently subject to backup withholding or is exempt from backup
withholding.
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Set forth below are brief descriptions of the personal income tax status
of an investment in each of the Funds under Florida and New Jersey tax laws
currently in effect. Income from a Fund is not necessarily free from state
income taxes in states other than its designated state. State laws differ on
this issue, and shareholders are urged to consult their own tax advisors
regarding the status of their accounts under state and local laws.
EVERGREEN NEW JERSEY MUNICIPAL MONEY MARKET FUND. For individual
shareholders in any year in which the Fund satisfies the requirements for
treatment as a "qualified investment fund" under New Jersey law, distributions
from the Fund will be exempt from the New Jersey Gross Income Tax to the
extent such distributions are attributable to interest or gains from (i)
obligations issued by or on behalf of the State of New Jersey or any county,
municipality, school or other district, agency, authority, commission,
instrumentality, public corporation, corporate body or political subdivision
of New Jersey or (ii) obligations that are otherwise statutorily exempt from
state or local taxation or under the laws of the U.S. To be classified as a
qualified investment fund, at least 80% of the Fund's investments must consist
of such obligations. Distributions by a qualified investment fund that are
attributable to most other sources will be subject to the New Jersey gross
income tax. If the Fund continues to qualify as a qualified investment fund,
any gain realized on the redemption or sale of its shares will not be subject
to the New Jersey gross income tax. Corporate shareholders will be subject to
a corporate franchise tax on distributions from and on gains from sales of the
shares in the Fund. The Fund's shares are not subject to property taxation by
New Jersey or its political subdivisions.
EVERGREEN FLORIDA MUNICIPAL MONEY MARKET FUND. Florida does not currently
impose a state income tax on individuals. Thus, individual shareholders of the
Fund will not be subject to any Florida state income tax on distributions
received from the Fund. However, certain distributions will be taxable to
corporate shareholders which are subject to Florida corporate income tax.
Florida currently imposes an intangibles tax at the annual rate of 0.20% on
certain securities and other intangible assets owned by Florida residents.
Certain types of tax exempt securities of Florida issuers, U.S. government
securities and tax exempt securities issued by certain U.S. territories and
possessions are exempt from this intangibles tax. Shares of the Fund will also
be exempt from the Florida intangibles tax if the portfolio consists
exclusively of securities exempt from the intangibles tax on the last business
day of the calendar year. If the portfolio consists of any assets which are
not so exempt on the last business day of the calendar year, however, only the
portion of the shares of the Fund which relate to securities issued by the
U.S. and its possessions and territories will be exempt from the Florida
intangibles tax, and the remaining portion of such shares will be fully
subject to the intangibles tax, even if they partly relate to Florida tax
exempt securities.
Statements describing the tax status of shareholders' dividends and
distributions will be mailed annually by the Funds. These statements will set
forth the amount of income exempt from federal and if applicable, state
taxation, and the amount, if any, subject to federal and state taxation.
Moreover, to the extent necessary, these statements will indicate the amount
of exempt-interest dividends which are a specific preference item for purposes
of the federal individual and corporate alternative minimum taxes. The
exemption of interest income for federal income tax purposes does not
necessarily result in exemption under the income or other tax law of any state
or local taxing authority.
The foregoing discussion of federal and state income tax consequences is
based on tax laws and regulations in effect on the date of this prospectus and
is subject to change by legislative or administrative action. As the foregoing
discussion is for general information only, you should also review the
discussion of "Additional Tax Information" contained in the SAI.
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.
Other Classes of Shares. The Funds each offer two classes of shares, Class A
and Class Y. Class Y shares are offered through a separate prospectus. Class Y
shares are available only to (i) persons who at or prior to December 31, 1994,
owned shares in a mutual fund advised by Evergreen Asset Management Corp.
("Evergreen Asset"), (ii) certain institutional investors and (iii) investment
advisory clients of FUNB, Evergreen Asset or their affiliates. The dividends
payable with respect to Class A shares will be less than those payable with
respect to Class Y shares due to the distribution and shareholder servicing
related expenses borne by Class A shares and the fact that such expenses are
not borne by Class Y shares. Investors should call the telephone number on the
front page of this prospectus to obtain more information on other classes of
shares.
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Performance Information. From time to time, a Fund may quote its yield in
advertisements, reports or other communications to shareholders. Yield is
computed separately for each class of shares. 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 SAI.
Before investing in a 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 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. EDI may also reprint, and
use as advertising and sales literature, articles from Evergreen Events, a
quarterly magazine provided to Evergreen fund shareholders.
Year 2000 Risks. Like other investment companies, financial and business
organizations and individuals around the world, the Funds could be adversely
affected if the computer systems used by the Funds' investment advisor and the
Funds' other service providers do not properly process and calculate date-
related information and data from and after January 1, 2000. This is commonly
known as the "Year 2000 Problem." The Funds' investment advisor is taking
steps to address the Year 2000 Problem with respect to the computer systems
that it uses and to obtain assurances that comparable steps are being taken by
the Funds' other major service providers. At this time, however, there can be
no assurance that these steps will be sufficient to avoid any adverse impact
on the Funds.
Additional Information. This prospectus and the SAI, which has been
incorporated by reference herein, do not contain all the information set forth
in the Registration Statement filed by the Trust with the SEC under the 1933
Act, as amended. Copies of the Registration Statement 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.
16
<PAGE>
INVESTMENT ADVISOR
Capital Management Group of First Union National Bank, 201 South College
Street, Charlotte, North Carolina 28288-0630
CUSTODIAN
State Street Bank and Trust Company, P.O. Box 9021, Boston, Massachusetts
02205-9827
TRANSFER AGENT
Evergreen Service Company, 200 Berkeley Street, Boston, Massachusetts, 02116-
5034
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110
DISTRIBUTOR
Evergreen Distributor, Inc., 125 W. 55th Street, New York, New York 10019
60641 545466RV0
<PAGE>
- -------------------------------------------------------------------------------
PROSPECTUS October 15, 1998
- -------------------------------------------------------------------------------
EVERGREEN/SM/ MONEY MARKET FUNDS
[LOGO OF EVERGREEN FUNDS/SM/ APPEARS HERE]
- -------------------------------------------------------------------------------
EVERGREEN FLORIDA MUNICIPAL MONEY MARKET FUND
EVERGREEN NEW JERSEY MUNICIPAL MONEY MARKET FUND
(EACH A "FUND," TOGETHER THE "FUNDS")
CLASS Y SHARES
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 each Fund. Each Fund is a series of an
open-end management investment company. This prospectus sets forth concise
information about the Funds that a prospective investor should know before
investing. The address of the Funds is 200 Berkeley Street, Boston,
Massachusetts 02116.
A statement of additional information ("SAI") for the Funds, dated
October 15, 1998, as supplemented from time to time, has been filed with the
Securities and Exchange Commission ("SEC") and is incorporated by reference
herein. The SAI 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 Evergreen Funds at (800) 343-
2898. There can be no assurance that the investment objective of any Fund will
be achieved. Investors are advised to read this prospectus carefully.
AN INVESTMENT IN THE FUNDS IS NOT A DEPOSIT OR OBLIGATION OF ANY BANK, IS NOT
ENDORSED OR GUARANTEED BY ANY BANK, AND IS NOT INSURED OR OTHERWISE PROTECTED
BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THE FUNDS
INVOLVES RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THERE IS 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 NOR HAS THE SECURITIES AND EXCHANGE 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>
EXPENSE INFORMATION.................................................... 3
DESCRIPTION OF THE FUNDS............................................... 4
Investment Objectives and Policies.................................. 4
Investment Practices and
Restrictions....................................................... 5
ORGANIZATION AND SERVICE PROVIDERS..................................... 8
Organization........................................................ 8
Service Providers................................................... 8
</TABLE>
<TABLE>
<S> <C>
PURCHASE AND REDEMPTION OF SHARES...................................... 9
How to Buy Shares................................................... 9
How to Redeem Shares................................................ 10
Exchange Privilege.................................................. 11
Shareholder Services................................................ 11
Banking Laws........................................................ 12
OTHER INFORMATION...................................................... 13
Dividends, Distributions and Taxes.................................. 13
General Information................................................. 14
</TABLE>
2
<PAGE>
- -------------------------------------------------------------------------------
EXPENSE INFORMATION
- -------------------------------------------------------------------------------
The table and examples below are designed to help you understand the
various expenses that you will bear, directly or indirectly, when you invest
in a Fund. Shareholder transaction expenses are fees paid directly from your
account when you buy or sell shares of a Fund. There are no shareholder
transaction expenses.
Annual operating expenses reflect the normal operating expenses of a
Fund, and include costs such as management, distribution and other fees. The
tables below show for each Fund estimated annual operating expenses for the
fiscal period ending January 31, 1999. The examples show what you would pay if
you invested $1,000 over the periods indicated. The examples assume that you
reinvest all of your dividends and that a Fund's average annual return will be
5%. THE EXAMPLES ARE FOR ILLUSTRATION PURPOSES ONLY AND SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RETURN. A
FUND'S ACTUAL EXPENSES AND RETURNS WILL VARY. For a more complete description
of the various costs and expenses borne by a Fund see "Organization and
Service Providers."
EVERGREEN FLORIDA MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
ESTIMATED ANNUAL Example
OPERATING EXPENSES -------
------------------
<S> <C> <C> <C>
Management Fees 0.45% After 1 Year $ 6
12b-1 Fees -- After 3 Years $20
Other Expenses 0.16%
----
Total 0.61%
====
</TABLE>
EVERGREEN NEW JERSEY MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
ESTIMATED ANNUAL Example
OPERATING EXPENSES -------
------------------
<S> <C> <C> <C>
Management Fees 0.45% After 1 Year $ 6
12b-1 Fees -- After 3 Years $19
Other Expenses 0.15%
----
Total 0.60%
====
</TABLE>
3
<PAGE>
- -------------------------------------------------------------------------------
DESCRIPTION OF THE FUNDS
- -------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND POLICIES
Each Fund's investment objective is nonfundamental; as a result, each
Fund may change its objective without a shareholder vote. Each Fund has also
adopted certain fundamental investment policies which are mainly designed to
limit a Fund's exposure to risk. The Funds' fundamental policies cannot be
changed without a shareholder vote. See the SAI for more information regarding
each Fund's fundamental investment policies or other related investment
policies. There can be no assurance that the Funds' investment objectives will
be achieved.
In addition to the investment policies detailed below, each Fund may
employ certain additional investment strategies which are discussed in
"Investment Practices and Restrictions" below.
The investment objective of EVERGREEN FLORIDA MUNICIPAL MONEY MARKET FUND
is to seek to provide Florida residents an investment that is, to the extent
possible, exempt from the Florida intangible personal property tax and to seek
as high a level of current income exempt from regular federal income taxes, as
is believed to be consistent with the preservation of capital, maintenance of
liquidity and stability of principal.
The investment objective of EVERGREEN NEW JERSEY MUNICIPAL MONEY MARKET
FUND is to seek as high a level of current income exempt from regular federal
income tax and, to the extent possible, from New Jersey gross income tax, as
is believed to be consistent with the preservation of capital, maintenance of
liquidity and stability of principal.
Each of the Funds seeks to obtain its objective, by investing at least
80% of its net assets in high quality debt obligations issued by or on behalf
of the state for which it is named or its counties, municipalities,
authorities or other political subdivisions, and possessions of the U.S., and
their authorities, agencies, instrumentalities and political subdivisions
("Municipal Securities") and in participation certificates in Municipal
Securities purchased from banks, insurance companies or other financial
institutions.
Each Fund will invest in Municipal Securities determined to present
minimal credit risk and which are, at the time of acquisition, eligible
obligations under Rule 2a-7 under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Fund normally invests its assets so that at
least 80% of its annual interest income is exempt from federal income tax
(other than the federal alternative minimum tax) and income tax of the state
for which it is named.
Each Fund will also comply with the diversification requirements
prescribed by Rule 2a-7. However, the Funds are non-diversified and may invest
a significant percentage of their assets in the obligations of a single
issuer. Since each Fund invests primarily in obligations of the state for
which it is named, its investments will be concentrated in one geographic
area. The Funds will not invest in options, financial futures transactions or
other similar "derivative" instruments except as otherwise provided herein.
Ordinarily, up to 20% of the Fund's annual interest income may be subject
to income tax for the state for which it is named or regular federal income
tax. However, at all times under normal market conditions the percentage of
the Funds' income and corresponding distributions which is tax-exempt will be
very close to 100%. In addition, for temporary defensive purposes, the Funds
may invest up to 100% of their total assets in such taxable obligations when,
in the opinion of the investment advisor, it is advisable to do so because of
market conditions. The types of taxable obligations in which the Funds may
invest are limited to the following money market instruments which have
remaining maturities not exceeding 397 days: (i) obligations of the U.S.
government, its agencies or instrumentalities; (ii) negotiable certificates of
deposit and bankers' acceptances of U.S. banks which have more than $1 billion
in total assets at the time of investment and are members of the Federal
Reserve System or are examined by the Comptroller of the Currency or whose
deposits are insured by the Federal Deposit Insurance Corporation; (iii)
domestic and foreign U.S. dollar-denominated commercial paper rated "P-1" by
Moody's Investors Service ("Moody's") or "A-1" or "A-1+" by Standard and
Poor's Rating Services ("S&P") and (iv) repurchase agreements involving any of
the foregoing portfolio obligations.
The Funds do not intend to concentrate their investments in any one
industry. However, from time to time, the Funds may invest 25% or more of
their total assets in Municipal Securities which are related in such a way
that an economic, business or political development or change affecting one
such obligation would also affect the
4
<PAGE>
others. Two examples of obligations so related are (i) obligations, the
interest on which is paid from revenues of similar type projects and (ii)
obligations whose issuers are located in the same state.
Because the taxable money market is a broader and more liquid market, and
has a greater number of investors, issuers and market makers than the market
for short-term tax-exempt Municipal Securities, the liquidity of the Funds may
not be equal to that of a money market fund which invests exclusively in
short-term taxable money market instruments. The more limited marketability of
short-term tax-exempt Municipal Securities may make it difficult in certain
circumstances to dispose of large investments advantageously. In general, tax-
exempt Municipal Securities are also subject to credit risks such as the loss
of credit ratings or possible default. In addition, an issuer of tax-exempt
Municipal Securities may lose its tax-exempt status in the event of a change
in the current tax laws.
INVESTMENT PRACTICES AND RESTRICTIONS
General. The Funds invest only in securities that have remaining maturities of
397 days (13 months) or less at the date of purchase. For this purpose,
floating rate or variable rate obligations 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 90 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.
The Funds will not invest in any obligations of or loan any of their
portfolio obligations to First Union National Bank ("FUNB") or its affiliates
(as defined in the 1940 Act) or any affiliates of the Funds. Subject to the
limitations described, the Funds are permitted to invest in obligations of
correspondent banks of FUNB (banks with which FUNB maintains a special bank
servicing relationship) which are not affiliates of Evergreen Money Market
Trust, its investment advisors or its distributor, but the Funds will not give
preference in their investment selections to those obligations.
After purchase by a Fund, a security may cease to be rated or its rating
may be reduced below the minimum required for purchase by the Fund. Neither
event will require a sale of such security by the Fund. However, the
investment advisor will consider such event in its determination of whether
the Fund should continue to hold the security. To the extent the ratings given
by Moody's or S&P may change as a result of changes by such organizations of
their rating systems, a Fund will attempt to use comparable ratings as
standards for investments in accordance with the investment policies contained
in this prospectus and in the SAI.
The ability of each Fund to meet its investment objective is necessarily
subject to the ability of the issuers of securities in which the Fund invests
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.
Municipal Securities. Municipal Securities are municipal bonds, notes and
commercial paper issued by or for states, territories and possessions of the
U.S. including the District of Columbia and their political subdivisions,
agencies and instrumentalities. Municipal bonds include fixed, variable or
floating rate general obligation and revenue bonds. General obligation bonds
are used to support the government's general financial needs and are supported
by the full faith and credit of the municipality. General obligation bonds are
repaid from the issuer's general unrestricted revenues. Payment, however, may
be dependent upon legislative approval and may be subject to limitations on
the issuer's taxing power. Revenue bonds are used to finance public works and
certain private facilities. In contrast to general obligation bonds, revenue
bonds are repaid only with the revenue generated by the project financed.
Municipal notes include tax anticipation notes, bond anticipation notes
and revenue anticipation notes. Municipal commercial paper obligations are
unsecured promissory notes issued by municipalities to meet short-term credit
needs.
5
<PAGE>
Since the Funds invest in Municipal Securities, you should be aware of
the risks associated with investing in such securities. The value of municipal
bonds tends to go up when interest rates go down and vice versa. An issuer's
failure to make such payment due to political development or fiscal
mismanagement could affect its ability to make prompt payments of interest and
principal. Those events could also affect the market value of the security.
Moreover, the market for municipal bonds is often thin and can be temporarily
affected by large purchases and sales, including those by a Fund.
Opinions relating to the validity of Municipal Securities and to the
exclusion of interest thereon from federal and state personal income taxes are
rendered by counsel to the respective issuers at the time of issuance. Neither
the Funds, Evergreen Money Market Trust, nor the investment advisor will
review the proceedings relating to the issuance of Municipal Securities or the
basis for such opinions.
Special Risk Factors Related to Investing in Municipal Securities Issued by
the State of Florida or New Jersey
It should be noted that Municipal Securities may be adversely affected by
local political and economic conditions and developments within a state. For
example, adverse conditions in a significant industry within Florida or New
Jersey may from time to time have a corresponding adverse effect on specific
issuers within that state or on anticipated revenue to the state itself;
conversely, an improving economic outlook for a significant industry may have
a positive effect on such issuers or revenues.
Florida. Under current law, the State of Florida is required to maintain a
balanced budget so that current expenses are met from current revenues.
Florida does not currently impose a tax on personal income. It does impose a
tax on corporate income derived from activities within the State. In addition,
Florida imposes an ad valorem tax on certain intangible property as well as
sales and use taxes. These taxes are the principal source of funds to meet
State expenses, including repayment of, and interest on, obligations backed
solely by the full faith and credit of the State.
Florida's Constitution permits the issuance of state municipal
obligations pledging the full faith and credit of the State, with a concurring
vote by the respective electors, to finance or refinance capital projects
authorized by the Legislature. The State Constitution also provides that the
Legislature shall appropriate monies sufficient to pay debt service on state
bonds pledging the full faith and credit of the State as they become due. All
State tax revenues, other than trust funds dedicated by the State Constitution
for other purposes, are available for such an appropriation, if required.
On the other hand, municipalities and other political subdivisions of the
State principally rely on combination of ad valorem taxes on real property,
user fees and occupational license fees to meet their day-to-day expenses
including the repayment of principal of, and interest on, their obligations
backed by their full faith and credit. (Revenue bonds, of course, are
dependent on the revenue generated by a specific facility or enterprise.)
Florida has experienced substantial population increases as a result of
migration to Florida from other areas of the U.S. and from foreign countries.
This population growth is expected to continue, and it is anticipated that
corresponding increases in State revenues will be necessary during the next
decade to meet increased burdens on the various public and social services
provided by the State.
New Jersey. New Jersey's economic base is diversified, consisting of a variety
of manufacturing, construction and service industries, supplemented by rural
areas with selective commercial agriculture. The State's central location in
the northeastern corridor, the transportation and port facilities and
proximity to New York City make the State an attractive location for corporate
headquarters and international business offices. Historically, New Jersey's
average per capita income has been well above the national average, and in
1996 the State ranked second among the states in per capita personal income.
While New Jersey's economy continued to expand during the late 1980's the
level of growth slowed considerably after 1987. The onset of recession caused
an acceleration of job losses in previously growing sectors. However, in
recent years conditions have slowly improved, and the rate of unemployment has
decreased.
The State operates a General Fund into which all State revenues not
otherwise restricted by statute are deposited and from which appropriations
are made. The largest part of the total financial operations of the State is
accounted for in the General Fund.
Florida and New Jersey's ability to meet increasing expenses will be
dependent in part upon each state's continued ability to foster business and
economic growth. An expanded discussion of the risk factors associated with
investments in each of the states is contained in the SAI.
6
<PAGE>
Floating Rate and Variable Rate Obligations. Each Fund may invest in certain
variable rate and floating rate securities with or without demand features.
These variable rate securities do not have fixed interest rates; rather,
interest 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 repayment 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. Each Fund currently limits 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%
of its net assets.
Stand-by Commitments. The Funds may also acquire "stand-by commitments" with
respect to Municipal Securities held in their portfolio. Under a stand-by
commitment, a dealer agrees to purchase, at a Fund's option, specified
Municipal Securities at a specified price. Failure of the dealer to purchase
such Municipal Securities may result in a Fund incurring a loss or missing an
opportunity to make an alternative investment. Each Fund expects that stand-by
commitments generally will be available without the payment of direct or
indirect consideration. However, if necessary and advisable, a Fund may pay
for stand-by commitments either separately in cash or by paying a higher price
for portfolio securities which are acquired subject to such a commitment (thus
reducing the yield to maturity otherwise available for the same securities).
The total amount paid in either manner for outstanding stand-by commitments
held in each Fund's portfolio will not exceed 10% of the value of the Fund's
total assets calculated immediately after each stand-by commitment is
acquired. The Funds will maintain cash or liquid securities in a segregated
account with its custodian in an amount equal to such commitments. The Funds
will enter into stand-by commitments only with banks and broker-dealers that,
in the judgment of the Funds' investment advisor, present minimal credit
risks.
Repurchase Agreements. The Funds may invest in repurchase agreements. A
repurchase agreement is an agreement by which a Fund purchases a security
(usually U.S. government obligations) for cash and obtains a simultaneous
commitment from the seller (usually a bank or broker-dealer) to repurchase the
security at an agreed-upon price and specified future date. The repurchase
price reflects an agreed-upon interest rate for the time period of the
agreement. The Fund's risk is the inability of the seller to pay the agreed-
upon price on the delivery date. However, this risk is tempered by the ability
of the Fund to sell the security in the open market in the case of a default.
In such a case, the Fund may incur costs in disposing of the security which
would increase Fund expenses. The Fund's investment advisor will monitor the
creditworthiness of the firms with which the Fund enters into repurchase
agreements.
Securities Lending. To generate income and offset expenses, each Fund may lend
obligations to broker-dealers and other financial institutions. Loans of
obligations by a Fund may not exceed 33 1/3% of the value of the Fund's total
assets. While obligations are on loan, the borrower will pay the Fund any
income accruing on the security. Also, the Fund may invest any collateral it
receives in additional obligations. Gains or losses in the market value of a
lent security will affect the Fund and its shareholders. When a Fund lends its
obligations, it runs the risk that it may not be able to retrieve the
obligations on a timely basis possibly losing the opportunity to sell the
obligations at a desirable price. Also, if the borrower files for bankruptcy
or becomes insolvent, the Fund's ability to dispose of the obligations may be
delayed.
When-Issued Securities. Each Fund may enter into transactions whereby it
commits to buying a security, but does not pay for or take delivery of the
security until some specified date in the future. The value of these
securities is subject to market fluctuations during this period and no income
accrues to the Funds until settlement. At the time of settlement, a when-
issued security may be valued at less than its purchase price. When entering
into these transactions, the Funds rely on the other party to consummate the
transaction; if the other party fails to do so, the Funds may be
disadvantaged. Each Fund does not intend to purchase when-issued securities
for speculative purposes, but only in furtherance of its investment objective.
Illiquid Securities. Each Fund may invest up to 10% of its net assets in
illiquid securities and other securities which are not readily marketable.
Repurchase agreements with maturities longer than seven days will be included
for the purpose of the foregoing 10% limit. The inability of the Funds to
dispose of illiquid investments readily or at a reasonable price could impair
the Funds' ability to raise cash for redemptions or other purposes.
Restricted Securities. The Funds may invest in restricted securities,
including securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, as amended (the "1933 Act"). Generally, Rule 144A
establishes a safe harbor from the registration requirements of the 1933 Act
for resale by large institutional investors of securities not publicly traded
in the U.S. The Funds' investment advisor determines the liquidity of
7
<PAGE>
Rule 144A securities according to guidelines and procedures adopted by the
Board of Trustees of Evergreen Money Market Trust. The Board of Trustees
monitors the investment advisor's application of those guidelines and
procedures. Securities eligible for resale pursuant to Rule 144A, which the
Funds' investment advisor has determined to be liquid or readily marketable,
are not subject to the 10% limit on illiquid securities.
Borrowing. Each Fund may borrow from banks in an amount up to 33 1/3% of its
total assets, taken at market value. Each Fund may also borrow an additional
5% of its total assets from banks or others. A Fund may only borrow as a
temporary measure for extraordinary or emergency purposes such as the
redemption of Fund shares. A Fund will not purchase obligations while
outstanding borrowings exceed 5% of its total assets except to exercise prior
commitments and to exercise subscription rights.
Reverse Repurchase Agreements. Each Fund may enter into reverse repurchase
agreements. A reverse repurchase agreement is an agreement by a Fund to sell a
security and repurchase it at a specified time and price. A Fund could lose
money if the market values of the obligations it sold decline below their
repurchase prices. Reverse repurchase agreements may be considered a form of
borrowing, and, therefore, a form of leverage. Leverage may magnify gains or
losses of the Fund.
Investing in Securities of Other Investment Companies. The Funds may invest in
securities of other investment companies. As a shareholder of another
investment company, a Fund would pay its portion of the other investment
company's expenses. These expenses would be in addition to the expenses that
the Fund currently bears concerning its own operations and may result in some
duplication of fees.
Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the SAI.
- -------------------------------------------------------------------------------
ORGANIZATION AND SERVICE PROVIDERS
- -------------------------------------------------------------------------------
ORGANIZATION
Fund Structure. Each Fund is an investment pool, which invests shareholders'
money toward a specified goal. In technical terms, each Fund is a non-
diversified series of an open-end management investment company, called
Evergreen Money Market Trust (the "Trust"). The Trust is a Delaware business
trust organized on September 18, 1997.
Board of Trustees. The Trust is supervised by a Board of Trustees that is
responsible for representing the interests of shareholders. The Trustees meet
periodically throughout the year to oversee the Funds' activities, reviewing,
among other things, each Fund's performance and its contractual arrangements
with various service providers.
Shareholder Rights. All shareholders have equal voting, liquidation and other
rights. Each share is entitled to one vote for each dollar of net asset value
applicable to such share. Shareholders may exchange shares as described under
"Exchanges," but will have no other preference, conversion, exchange or
preemptive rights. When issued and paid for, shares will be fully paid and
nonassessable. Shares of the Funds are redeemable, transferable and freely
assignable as collateral. The Trust may establish additional classes or series
of shares.
The Funds do not hold annual shareholder meetings; the Funds may,
however, hold special meetings for such purposes as electing or removing
Trustees, changing fundamental policies and approving investment advisory
agreements or 12b-1 plans. In addition, the Funds are prepared to assist
shareholders in communicating with one another for the purpose of convening a
meeting to elect Trustees.
SERVICE PROVIDERS
Investment Advisors. The investment advisor of EVERGREEN FLORIDA MUNICIPAL
MONEY MARKET FUND and EVERGREEN NEW JERSEY MUNICIPAL MONEY MARKET FUND is the
Capital Management Group of FUNB, a subsidiary of First Union Corporation
("First Union"). FUNB is located at 201 South College Street, and First Union
is located at 301 South College St., Charlotte, North Carolina 28288-0630.
First Union and its subsidiaries provide a broad range of financial services
to individuals and businesses throughout the U.S.
FUNB manages the investments for and supervises the daily business
affairs of the Funds and, as compensation therefore is entitled to receive an
annual fee of 0.45% of each Fund's average daily net assets.
8
<PAGE>
Administrator. Evergreen Investment Services, Inc. ("EIS"), 200 Berkeley St.,
Boston, Massachusetts, 02116, serves as administrator to the Funds. As
administrator, and subject to the supervision and control of the Trust's Board
of Trustees, EIS provides the Funds with facilities, equipment and personnel.
For its services as administrator, EIS is entitled to receive a fee based on
the aggregate average daily net assets of the Funds at a rate based on the
total assets of all mutual funds administered by EIS for which any affiliate
of FUNB serves as investment advisor. The administration fee is 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
Transfer Agent and Dividend Disbursing Agent. Evergreen Service Company
("ESC"), 200 Berkeley Street, Boston, Massachusetts 02116-5034, acts as the
Funds' transfer agent and dividend disbursing agent. ESC is an indirect,
wholly-owned subsidiary of First Union.
Custodian. State Street Bank and Trust Company ("State Street"), P.O. Box
9021, Boston, Massachusetts 02205-9827, acts as the Funds' custodian.
Principal Underwriter. Evergreen Distributor, Inc. ("EDI"), a subsidiary of
The BISYS Group, Inc., located at 125 West 55th Street, New York, New York
10019, is the principal underwriter of the Funds. EDI is not affiliated with
First Union.
- -------------------------------------------------------------------------------
PURCHASE AND REDEMPTION OF SHARES
- -------------------------------------------------------------------------------
HOW TO BUY SHARES
Eligible investors may purchase Class Y shares of any Fund through
broker-dealers, banks or other financial intermediaries, or directly through
EDI. In addition, investors may purchase Class Y shares of a Fund by mailing
to that Fund, c/o ESC, P.O. Box 2121, Boston, Massachusetts 02106-2121, a
completed application and a check payable to the Fund. You may also telephone
(800) 343-2898 to obtain the number of an account to which you can wire or
electronically transfer funds and then send in a completed application. The
minimum initial investment is $1,000, which may be waived in certain
situations. Subsequent investments in any amount may be made by check, by
wiring federal funds, by direct deposit or by an electronic funds transfer.
Class Y shares are offered at net asset value without a front-end sales
charge or a contingent deferred sales load. Class Y shares are only offered to
(1) persons who at or prior to December 31, 1994, owned shares in a mutual
fund advised by Evergreen Asset Management Corp. ("Evergreen Asset"), (2)
certain institutional investors and (3) investment advisory clients of FUNB,
Evergreen Asset or their affiliates.
There is no minimum amount for subsequent investments. Investments of $25
or more are allowed under the Systematic Investment Plan. Share certificates
are not issued. See the application for more information. Only Class Y shares
are offered through this prospectus (see "General Information"--"Other Classes
of Shares").
How the Funds Value Their Shares. The net asset value of shares of a Fund for
purposes of both purchases and redemptions is determined twice daily, at 12:00
p.m. (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, Martin Luther King, Jr.
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 advisor, are accrued daily. The obligations 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.
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Additional Purchase Information. As a condition of this offering, if a
purchase is canceled due to nonpayment or because an investor's check does not
clear, the investor will be responsible for any loss a Fund or its investment
advisor incurs. If such investor is an existing shareholder, a Fund may redeem
shares from an investor's account to reimburse the Fund or its investment
advisor for any loss. In addition, such investors may be prohibited or
restricted from making further purchases in any of the Evergreen 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 30 days.
HOW TO REDEEM SHARES
You may "redeem" (i.e., sell) your shares in a Fund to the Fund for cash
at their net redemption value on any day the Exchange is open, either directly
by writing to the Fund, c/o ESC, or through your financial intermediary. The
amount you will receive is based on the net asset value adjusted for fractions
of a cent next calculated after the Fund receives your request in proper form.
Proceeds generally will be sent to you within seven days. However, for shares
recently purchased by check, a Fund will not send proceeds until it is
reasonably satisfied that the check has been collected (which may take up to
15 days). Once a redemption request has been telephoned or mailed, it is
irrevocable and may not be modified or canceled.
Redeeming Shares Through Your Financial Intermediary. A Fund must receive
instructions from your financial intermediary before 4:00 p.m. (eastern time)
for you to receive that day's net asset value. Your financial intermediary is
responsible for furnishing all necessary documentation to the 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. You may redeem by mail by
sending a signed letter of instruction or stock power form to a Fund, c/o ESC
(the registrar, transfer agent and dividend-disbursing agent for each Fund).
Stock power forms are available from your financial intermediary, ESC, 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 $50,000. Currently, the requirement for a
signature guarantee has been waived on redemptions of $50,000 or less when the
account address of record has been the same for a minimum period of 30 days.
Each Fund and ESC reserve the right to withdraw this waiver at any time. 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 under the Securities Exchange Act
of 1934 and ESC's policies.
Shareholders may redeem amounts of $1,000 or more (up to $50,000) from
their accounts by calling the telephone number on the front page of this
prospectus between the hours of 8:00 a.m. and 6:00 p.m. (eastern time) each
business day (i.e., any weekday exclusive of days on which the Exchange or
ESC's offices are closed). Redemption requests received 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. If you cannot reach a Fund by
telephone, you should follow the procedures for redeeming by mail or through a
broker-dealer as set forth herein. The telephone redemption service is not
made available to shareholders automatically. Shareholders wishing to use the
telephone redemption service must complete the appropriate sections on the
application and choose how the redemption proceeds are to be paid. Redemption
proceeds will be either (1) mailed by check to the shareholder at the address
in which the account is registered or (2) wired to an account with the same
registration as the shareholder's account in a fund at a designated commercial
bank.
In order to insure that instructions received by ESC are genuine when you
initiate a telephone transaction, you will be asked to verify certain criteria
specific to your account. At the conclusion of the transaction, you will be
given a transaction number confirming your request, and written confirmation
of your transaction will be mailed the next business day. Your telephone
instructions will be recorded. Redemptions by telephone are allowed only if
the address and bank account of record have been the same for a minimum period
of 30 days. Each Fund reserves the right at any time to terminate, suspend, or
change the terms of any redemption method described in this prospectus, except
redemption by mail, and to impose fees.
Except as otherwise noted, the Funds, ESC and EDI will not assume
responsibility for the authenticity of any instructions received by any of
them from a shareholder in writing, over the Evergreen Express Line (described
below), or by telephone. ESC will employ reasonable procedures to confirm that
instructions received over the Evergreen Express Line or by telephone are
genuine. The Funds, ESC and EDI will not be liable when
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following instructions received over the Evergreen Express Line or by
telephone that ESC reasonably believes are genuine.
Evergreen Express Line. The Evergreen Express Line offers you specific fund
account information and price and yield quotations as well as the ability to
do account transactions, including investments, exchanges and redemptions. You
may access the Evergreen Express Line by dialing toll-free (800) 346-3858 on
any touch-tone telephone, 24 hours a day, seven days a week.
General. The sale of shares is a taxable transaction for federal income tax
purposes. The Funds may temporarily suspend the right to redeem their shares
when (1) the Exchange is closed, other than customary weekend and holiday
closings; (2) trading on the Exchange is restricted; (3) an emergency exists
and the Funds cannot dispose of their investments or fairly determine their
value; or (4) the SEC so orders. The Funds reserve the right to close an
account that through redemption has fallen below $1,000 and has remained so
for 30 days. Shareholders will receive 60 days' written notice to increase the
account value to at least $1,000 before the account is closed. The Funds have
elected to be governed by Rule 18f-1 under the 1940 Act 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 90-day period for any
one shareholder.
EXCHANGE PRIVILEGE
How to Exchange Shares. You may exchange some or all of your shares for shares
of the same class in other Evergreen funds through your financial
intermediary, by calling or writing to ESC, or by using the Evergreen Express
Line as described above. 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 fund is subject to the
minimum investment and suitability requirements of each Fund.
Each of the Evergreen funds has different investment objectives and
policies. For more complete information, a prospectus of the fund into which
an exchange will be made should be read prior to the exchange. An exchange
order must comply with the requirement for a redemption or repurchase order
and must specify the dollar value or number of shares to be exchanged. An
exchange is treated for federal income tax purposes as a redemption and
purchase of shares and may result in the realization of a capital gain or
loss. Shareholders are limited to five exchanges per calendar year, with a
maximum of three per calendar quarter. This exchange privilege may be modified
or discontinued at any time by a Fund upon 60 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 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 the Fund and may
charge you for this service.
Exchanges By Telephone And Mail. Exchange requests received by a Fund after
4:00 p.m. (eastern time) will be processed using the net asset value
determined at the close of 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 ESC by telephone. If you wish
to use the telephone exchange service you should indicate this on the
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 ESC 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, ESC
or call the toll-free number on the front page of this prospectus. Some
services are described in more detail in the application.
Systematic Investment Plan. Under a Systematic Investment Plan, you may invest
as little as $25 per month to purchase shares of a Fund with no minimum
initial investment required.
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Telephone Investment Plan. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 4:00 p.m. (eastern time)
will be credited to a shareholder's account the day the request is received.
Systematic 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
Systematic Withdrawal Plan (the "Withdrawal Plan") by filling out the
appropriate part of the application. Under this Withdrawal Plan, you may
receive (or designate a third party to receive) a monthly or quarterly fixed-
withdrawal payment in a stated amount of at least $75 and as much as 1.00% per
month or 3.00% per quarter of the total net asset value of the Fund shares in
your account when the Withdrawal Plan was opened. Fund shares will be redeemed
as necessary to meet withdrawal payments. All participants must elect to have
their dividends and capital gains distributions reinvested automatically.
Automatic Reinvestment Plan. For the convenience of investors, all dividends
and distributions are automatically reinvested in full and fractional shares
of a Fund at the net asset value per share at the close of business on the
record date, 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.
Dollar Cost Averaging. Through dollar cost averaging you can invest a fixed
dollar amount each month or each quarter in any Evergreen fund. This results
in more shares being purchased when the selected fund's net asset value is
relatively low and fewer shares being purchased when the fund's net asset
value is relatively high and may result in a lower average cost per share than
a less systematic investment approach.
Prior to participating in dollar cost averaging, you must establish an
account in an Evergreen fund. You should designate on the application (i) the
dollar amount of each monthly or quarterly investment you wish to make, and
(ii) the fund in which the investment is to be made. Thereafter, on the first
day of the designated month, an amount equal to the specified monthly or
quarterly investment will automatically be redeemed from your initial account
and invested in shares of the designated fund.
Two Dimensional Investing. You may elect to have income and capital gains
distributions from any class of Evergreen fund shares you own automatically
invested to purchase the same class of shares of any other Evergreen fund. You
may select this service on your application and indicate the Evergreen fund(s)
into which distributions are to be invested.
Tax Sheltered Retirement Plans. The Funds have various retirement plans
available to eligible investors, including Individual Retirement Accounts
(IRAs); Rollover IRAs; Simplified Employee Pension Plans (SEPs); Savings
Incentive Match Plan for Employees (SIMPLEs); Tax Sheltered Annuity Plans;
403(b)(7) Plans; 401(k) Plans; Keogh Plans; Profit-Sharing Plans; Medical
Savings Accounts; Pension and Target Benefit and Money Purchase Plans. For
details, including fees and application forms, call toll-free (800) 247-4075
or write to ESC.
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 obligations 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 advisor, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase
of shares of such an investment company upon the order of their customer. FUNB
and its affiliates 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 FUNB and its affiliates 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 their customers. If FUNB and its affiliates
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
advisor. If this were to occur, it is not anticipated that the shareholders of
any Fund would suffer any adverse financial consequences.
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OTHER INFORMATION
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DIVIDENDS, DISTRIBUTIONS AND TAXES
The Funds declare substantially all of their net income as dividends on
each business day. Such dividends are paid monthly. Net investment 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 obligations are not included in net
investment 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. The amount of dividends may fluctuate from day to day, and
the dividend may be omitted on a day where Fund expenses exceed 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 will be treated as paid in the immediately preceding
December.
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 12:00
p.m. (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 12:00 p.m. (eastern time), and
federal funds are received by 4:00 p.m. (eastern time). All other wire
purchases received after 12:00 p.m. (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 Internal Revenue Code of 1986, as amended (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 the Funds) that
pays exempt-interest dividends.
The Funds will designate and pay exempt-interest dividends derived from
interest earned on qualifying tax-exempt obligations. Such exempt-interest
dividends may be excluded by shareholders of the Funds 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)
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 gains 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 20%. 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 advisor.
Each Fund is required by federal law to withhold 31% of reportable
payments (which may include dividends, capital gains distributions and certain
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, the investor must certify on the application, or on a
separate form supplied by State Street, that the investor's social security
number or taxpayer identification number is correct and that the investor is
not currently subject to backup withholding or is exempt from backup
withholding.
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Set forth below are brief descriptions of the personal income tax status
of an investment in each of the Funds under Florida and New Jersey tax laws
currently in effect. Income from a Fund is not necessarily free from state
income taxes in states other than its designated state. State laws differ on
this issue, and shareholders are urged to consult their own tax advisors
regarding the status of their accounts under state and local laws.
EVERGREEN NEW JERSEY MUNICIPAL MONEY MARKET FUND. For individual
shareholders in any year in which the Fund satisfies the requirements for
treatment as a "qualified investment fund" under New Jersey law, distributions
from the Fund will be exempt from the New Jersey Gross Income Tax to the
extent such distributions are attributable to interest or gains from (i)
obligations issued by or on behalf of the State of New Jersey or any county,
municipality, school or other district, agency, authority, commission,
instrumentality, public corporation, corporate body or political subdivision
of New Jersey or (ii) obligations that are otherwise statutorily exempt from
state or local taxation or under the laws of the U.S. To be classified as a
qualified investment fund, at least 80% of the Fund's investments must consist
of such obligations. Distributions by a qualified investment fund that are
attributable to most other sources will be subject to the New Jersey gross
income tax. If the Fund continues to qualify as a qualified investment fund,
any gain realized on the redemption or sale of its shares will not be subject
to the New Jersey gross income tax. Corporate shareholders will be subject to
a corporate franchise tax on distributions from and on gains from sales of the
shares in the Fund. The Fund's shares are not subject to property taxation by
New Jersey or its political subdivisions.
EVERGREEN FLORIDA MUNICIPAL MONEY MARKET FUND. Florida does not currently
impose a state income tax on individuals. Thus, individual shareholders of the
Fund will not be subject to any Florida state income tax on distributions
received from the Fund. However, certain distributions will be taxable to
corporate shareholders which are subject to Florida corporate income tax.
Florida currently imposes an intangibles tax at the annual rate of 0.20% on
certain securities and other intangible assets owned by Florida residents.
Certain types of tax exempt securities of Florida issuers, U.S. government
securities and tax exempt securities issued by certain U.S. territories and
possessions are exempt from this intangibles tax. Shares of the Fund will also
be exempt from the Florida intangibles tax if the portfolio consists
exclusively of securities exempt from the intangibles tax on the last business
day of the calendar year. If the portfolio consists of any assets which are
not so exempt on the last business day of the calendar year, however, only the
portion of the shares of the Fund which relate to securities issued by the
U.S. and its possessions and territories will be exempt from the Florida
intangibles tax, and the remaining portion of such shares will be fully
subject to the intangibles tax, even if they partly relate to Florida tax
exempt securities.
Statements describing the tax status of shareholders' dividends and
distributions will be mailed annually by the Funds. These statements will set
forth the amount of income exempt from federal and if applicable, state
taxation, and the amount, if any, subject to federal and state taxation.
Moreover, to the extent necessary, these statements will indicate the amount
of exempt-interest dividends which are a specific preference item for purposes
of the federal individual and corporate alternative minimum taxes. The
exemption of interest income for federal income tax purposes does not
necessarily result in exemption under the income or other tax law of any state
or local taxing authority.
The foregoing discussion of federal and state income tax consequences is
based on tax laws and regulations in effect on the date of this prospectus and
is subject to change by legislative or administrative action. As the foregoing
discussion is for general information only, you should also review the
discussion of "Additional Tax Information" contained in the SAI.
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.
Other Classes of Shares. The Funds each offer two classes of shares, Class A
and Class Y. Class A shares are offered through a separate prospectus.
Investors should call the telephone number on the front page of this
prospectus to obtain more information on other classes of shares. The
dividends payable with respect to Class A shares will be less than those
payable with respect to Class Y shares due to the distribution and shareholder
servicing related expenses borne by Class A shares and the fact that such
expenses are not borne by Class Y shares.
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<PAGE>
Performance Information. From time to time, a Fund may quote its yield in
advertisements, reports or other communications to shareholders. Yield is
computed separately for each class of shares. 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 SAI.
Before investing in a 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 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. EDI may also reprint, and
use as advertising and sales literature, articles from Evergreen Events, a
quarterly magazine provided to Evergreen fund shareholders.
Year 2000 Risks. Like other investment companies, financial and business
organizations and individuals around the world, the Funds could be adversely
affected if the computer systems used by the Funds' investment advisor and the
Funds' other service providers do not properly process and calculate date-
related information and data from and after January 1, 2000. This is commonly
known as the "Year 2000 Problem." The Funds' investment advisor is taking
steps to address the Year 2000 Problem with respect to the computer systems
that it uses and to obtain assurances that comparable steps are being taken by
the Funds' other major service providers. At this time, however, there can be
no assurance that these steps will be sufficient to avoid any adverse impact
on the Funds.
Additional Information. This prospectus and the SAI, which has been
incorporated by reference herein, do not contain all the information set forth
in the Registration Statement filed by the Trust with the SEC under the 1933
Act, as amended. Copies of the Registration Statement 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.
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INVESTMENT ADVISOR
Capital Management Group of First Union National Bank, 201 South College
Street, Charlotte, North Carolina 28288-0630
CUSTODIAN
State Street Bank and Trust Company, P.O. Box 9021, Boston, Massachusetts
02205-9827
TRANSFER AGENT
Evergreen Service Company, 200 Berkeley Street, Boston, Massachusetts, 02116-
5034
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110
DISTRIBUTOR
Evergreen Distributor, Inc., 125 W. 55th Street, New York, New York 10019
37427 545467RV0
EVERGREEN MONEY MARKET TRUST
200 Berkeley Street
Boston, Massachusetts 02116
(800) 633-2700
STATEMENT OF ADDITIONAL INFORMATION
October 15, 1998
Evergreen Florida Municipal Money Market Fund ("Florida Fund")
Evergreen New Jersey Municipal Money Market Fund ("New Jersey Fund")
(Each a "Fund"; together, the "Funds")
Each Fund is a series of an open-end management investment company
known as Evergreen Money Market Trust (the "Trust").
This statement of additional information ("SAI") pertains to all
classes of shares of the Funds listed above. It is not a prospectus and should
be read in conjunction with the prospectuses dated October 15, 1998 for the Fund
in which you are making or contemplating an investment. The Funds are offered
through two separate prospectuses: one offering class A shares of each Fund and
one offering class Y shares of each Fund. You may obtain any of these
prospectuses from Evergreen Distributor, Inc.
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TABLE OF CONTENTS
INVESTMENT POLICIES.......................................................... 3
Fundamental Investment Policies......................................... 3
Additional Information on Securities and Investment Practices........... 5
MANAGEMENT OF THE TRUST...................................................... 8
PRINCIPAL HOLDERS OF FUND SHARES.............................................12
INVESTMENT ADVISORY AND OTHER SERVICES.......................................12
Investment Advisor......................................................12
Investment Advisory Agreements..........................................12
Distributor.............................................................13
Distribution Plans and Agreements.......................................13
Additional Service Providers............................................14
BROKERAGE....................................................................15
Selection of Brokers....................................................15
Brokerage Commissions...................................................15
General Brokerage Policies..............................................15
TRUST ORGANIZATION...........................................................16
Form of Organization....................................................16
Description of Shares...................................................16
Voting Rights...........................................................16
Limitation of Trustees' Liability.......................................17
PURCHASE, REDEMPTION AND PRICING OF SHARES...................................17
How the Funds Offer Shares to the Public................................17
Purchase Alternatives...................................................17
Exchanges...............................................................17
Calculation of Net Asset Value Per Share ("NAV")....................... 18
Valuation of Portfolio Securities.......................................18
Shareholder Services....................................................18
PRINCIPAL UNDERWRITER........................................................18
ADDITIONAL TAX INFORMATION...................................................19
Requirements for Qualification as a Regulated Investment Company........19
Taxes on Distributions..................................................20
Other Tax Considerations................................................20
PERFORMANCE..................................................................21
Current, Effective and Tax-Equivalent Yields............................21
ADDITIONAL INFORMATION.......................................................22
APPENDIX A..................................................................A-1
APPENDIX B..................................................................B-2
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INVESTMENT POLICIES
FUNDAMENTAL INVESTMENT POLICIES
Each Fund has adopted the fundamental investment restrictions set forth
below which may not be changed without the vote of a majority of the Fund's
outstanding shares, as defined in the Investment Company Act of 1940, as amended
(the "1940 Act"). Where necessary, an explanation beneath a fundamental policy
describes a Fund's practices with respect to that policy, as allowed by current
law. If the law governing a policy changes, the Fund's practices may change
accordingly without a shareholder vote. Unless otherwise stated, all references
to the assets of a Fund are in terms of current market value.
1. Diversification
Each Fund may not make any investment that is inconsistent with its
classification as a non-diversified investment company under the 1940 Act.
Further Explanation of Diversification Policy:
As a non-diversified investment company, the Funds are not subject to
the limitations imposed on diversified investment companies under the 1940 Act,
but it must meet other diversification requirements as a regulated investment
company (a "RIC") under Subchapter M of the Internal Revenue Code of 1986 (the
"Code"). Under the Code, a RIC is permitted to invest 50% of its total assets in
two issuers (i.e., 25% each); the remaining 50% of its total assets must be
diversified according to the 5% and 10% limits described above.
2. Concentration
Each Fund may not concentrate its investments in the securities of
issuers primarily engaged in any particular industry (other than securities that
are issued or guaranteed by the U.S.
government or its agencies or instrumentalities).
Further Explanation of Concentration Policy:
Each Fund may not invest more than 25% of its total assets, taken at
market value, in the securities of issuers primarily engaged in any particular
industry (other than securities issued or guaranteed by the U.S. government or
its agencies or instrumentalities).
3. Issuing Senior Securities
Except as permitted under the 1940 Act, each Fund may not issue senior
securities.
4. Borrowing
Each Fund may not borrow money, except to the extent permitted by
applicable law.
Further Explanation of Borrowing Policy:
Each Fund may borrow from banks in an amount up to 33 1/3% of
its total assets, taken at market value. Each Fund may also borrow up to an
additional 5% of its total assets from
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banks or others. Each Fund may borrow only as a temporary measure for
extraordinary or emergency purposes such as the redemption of Fund shares. Each
Fund may not purchase securities while outstanding borrowings exceed 5% of its
total assets except to exercise prior commitments and to exercise subscription
rights (as defined in the 1940 Act) or enter into reverse repurchase agreements,
in amounts up to 33 1/3 % of its total assets (including the amount borrowed).
Each Fund may obtain such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities. Each Fund may purchase
securities on margin and engage in short sales to the extent permitted by
applicable law.
5. Underwriting
Each Fund may not underwrite securities of other issuers, except
insofar as each Fund may be deemed to be an underwriter in connection with the
disposition of its portfolio securities.
6. Real Estate
Each Fund may not purchase or sell real estate, except that, to the
extent permitted by applicable law, each Fund may invest in (a) securities that
are directly or indirectly secured by real estate, or (b) securities issued by
issuers that invest in real estate.
7. Commodities
Each Fund may not purchase or sell commodities or contracts on
commodities, except to the extent that each Fund may engage in financial futures
contracts and related options and currency contracts and related options and may
otherwise do so in accordance with applicable law and without registering as a
commodity pool operator under the Commodity Exchange Act.
8. Lending
Each Fund may not make loans to other persons, except that each Fund
may lend its portfolio securities in accordance with applicable law. The
acquisition of investment securities or other investment instruments shall not
be deemed to be the making of a loan.
Further Explanation of Lending Policy:
To generate income and offset expenses, each Fund may lend portfolio
securities to broker-dealers and other financial institutions in an amount up to
33 1/3% of its total assets, taken at market value. While securities are on
loan, the borrower will pay each Fund any income accruing on the security. Each
Fund may invest any collateral it receives in additional portfolio securities,
such as U.S. Treasury notes, certificates of deposit, other high-grade,
short-term obligations or interest bearing cash equivalents. Gains or losses in
the market value of a security lent will affect each Fund and its shareholders.
When a Fund lends its securities, it will require the borrower to give
the Fund collateral in cash or government securities. Each Fund will require
collateral in an amount equal to at least 100% of the current market value of
the securities lent, including accrued interest. Each Fund has the right to call
a loan and obtain the securities lent any time on notice of not more than five
business days. Each Fund may pay reasonable fees in connection with such loans.
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9. Investments in Federally Tax-Exempt Securities
Each Fund will, during periods of normal market conditions, invest its
assets in accordance with applicable guidelines issued by the Securities and
Exchange Commission ("SEC") or its staff concerning investment in tax-exempt
securities for funds with the words tax-exempt, tax free or municipal in their
names.
ADDITIONAL INFORMATION ON SECURITIES AND INVESTMENT
PRACTICES
The investment objectives of each Fund and a description of the
securities in which each Fund may invest are set forth in the Funds'
prospectuses. The following expands upon the discussion in the prospectuses
regarding certain investments of the Funds.
Municipal Securities
The Fund will invest in municipal securities determined to present
minimal credit risk and which are, at the time of acquisition, eligible
securities pursuant to Rule 2a-7 under the 1940 Act, as amended. The Fund will
also comply with the diversification requirements prescribed by Rule 2a-7. The
Fund, under normal circumstances, invests its assets so that at least 80% of its
annual interest income is exempt from federal income tax other than the
alternative minimum tax.
For the purpose of certain requirements under 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 tax 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, bond anticipation notes, revenue anticipation notes, 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.
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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 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 on investments in illiquid securities set
forth under "Illiquid and Restricted Securities" contained herein. The Board of
Trustees of the Trust under which each Fund operates may adopt guidelines and
delegate to the Advisor (as defined below) the daily function of determining and
monitoring the liquidity of municipal leases. In making such determination, the
Board and the Advisor may consider such factors as the frequency of trades for
the obligations, the number of dealers willing to purchase or sell the
obligations, 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.
As described in each Fund's prospectus, each 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 Advisor, 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 Advisor 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
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.
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.
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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.
Investment Company Securities
Securities of other investment companies may be acquired by a Fund to
the extent permitted under the 1940 Act. These limits require that, as
determined immediately after a purchase is made, (i) not more than 5% of a
Fund's total assets will be invested in the securities of any one investment
company, (ii) not more than 10% of the value of its total assets will be
invested in the aggregate in securities of investment companies as a group, and
(iii) not more than 3% of the outstanding voting stock of any one investment
company will be owned by a Fund. As a shareholder of another investment company,
a Fund would bear, along with other shareholders, its pro rata portion of the
other investment company's expenses, including advisory fees. These expenses
would be in addition to the advisory and other expenses that the Fund bears
directly in connection with its own operations. However, a Fund may invest all
of its investable assets in securities of a single open-end management
investment company with substantially the same fundamental investment
objectives, polices and limitations as the Fund.
Repurchase Agreements
A Fund may enter into repurchase agreements with entities that are
registered U.S. government securities dealers, including member banks of the
Federal Reserve System having at least $1 billion in assets, primary dealers in
U.S. government securities or other financial institutions believed by the
Fund's Advisor to be creditworthy. A repurchase agreement is an agreement by
which a person (e.g., a Fund) obtains a security and simultaneously commits to
return the security to the seller (a member bank of the Federal Reserve System
or recognized securities dealer) at an agreed upon price (including principal
and interest) on an agreed upon date within a number of days (usually not more
than seven) from the date of purchase. The resale price reflects the purchase
price plus an agreed upon market rate of interest which is unrelated to the
coupon rate or maturity of the underlying security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect secured by the value of the underlying security.
The Fund's custodian or a third party will take possession of the
securities subject to repurchase agreements, and these securities will be marked
to market daily. To the extent that the original seller does not repurchase the
securities from a Fund, the Fund could receive less than the repurchase price on
any sale of such securities. In the event that such a defaulting seller filed
for bankruptcy or became insolvent, disposition of such securities by a Fund
might be delayed pending court action. A Fund believes that under the regular
procedures normally in effect for custody of the Fund's portfolio securities
subject to repurchase agreements, a court of competent jurisdiction would rule
in favor of the Fund and allow retention or disposition of such securities. A
Fund will only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker-dealers, which are deemed by the Advisor
to be creditworthy pursuant to guidelines established by the Trustees.
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Reverse Repurchase Agreements
A Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase agreement, a
Fund transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future a Fund will repurchase the portfolio instrument by remitting the original
consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable a Fund to avoid
selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of a Fund,
in a dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These securities are marked to
market daily and maintained until the transaction is settled.
Illiquid and Restricted Securities
A Fund may not invest more than 10% of its net assets in securities
that are illiquid. A security is illiquid when a Fund cannot dispose of it in
the ordinary course of business within seven days at approximately the value at
which the Fund has the investment on its books.
A Fund may invest in "restricted" securities, i.e., securities subject
to restrictions on resale under federal securities laws. Rule 144A under the
Securities Act of 1933 ("Rule 144A") allows certain restricted securities to
trade freely among qualified institutional investors. Since Rule 144A securities
may have limited markets, the Board of Trustees will determine whether such
securities should be considered illiquid for the purpose of determining a Fund's
compliance with the limit on illiquid securities indicated above. In determining
the liquidity of Rule 144A securities, the Trustees will consider: (1) the
frequency of trades and quotes for the security; (2) the number of dealers
willing to purchase or sell the security and the number of other potential
buyers; (3) dealer undertakings to make a market in the security; and (4) the
nature of the security and the nature of the marketplace trades.
Short Sales
Each Fund may not make short sales of securities or maintain a short
position unless, 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
issue as, and equal in amount to, the securities sold short. Each Fund may
effect a short sale in connection with an underwriting in which a Fund is a
participant.
MANAGEMENT OF THE TRUST
Set forth below are the Trustees and officers of the Trust and their
principal occupations and some of their affiliations over the last five years.
Unless otherwise indicated, the address for each Trustee and officer is 200
Berkeley Street, Boston, Massachusetts 02116. Each Trustee is also a Trustee of
each of the other Trusts in the Evergreen Fund complex, other than Evergreen
Variable Trust of which Messrs. Howell, Salton and Scofield are the only
Trustees.
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<TABLE>
<CAPTION>
<S> <C> <C>
Name Position with Trust Principal Occupations for Last Five Years
- ------------------------------- -------------------------- -------------------------------------------------------------
Laurence B. Ashkin Trustee Real estate developer and construction consultant;
(DOB: 2/2/28) and President of Centrum Equities and Centrum
Properties, Inc.
Charles A. Austin III Trustee Investment Counselor to Appleton Partners, Inc.;
(DOB: 10/23/34) former Director, Executive Vice President and Treasurer,
State Street Research & Management Company (investment advice);
Director, The Andover Companies (Insurance); and Trustee,
Arthritis Foundation of New England.
K. Dun Gifford Trustee Trustee, Treasurer and Chairman of the Finance Committee,
Cambridge College; Chairman Emeritus and Director, American
Institute of Food and Wine; Chairman and President, Oldways
Preservation and Exchange Trust (education); former Chairman
of the Board, Director, and Executive Vice President,
The London Harness Company; former Managing Partner,
Roscommon Capital Corp.; former Chief Executive Officer,
Gifford Gifts of Fine Foods; and former Chairman, Gifford,
Drescher & Associates (environmental consulting).
James S. Howell Chairman of the Former Chairman of the Distribution Foundation for
(DOB: 8/13/24) Board of Trustees the Carolinas; and former Vice President of Lance
Inc. (food manufacturing).
Leroy Keith, Jr. Trustee Chairman of the Board and Chief Executive Officer, Carson
Products Company; Director of Phoenix Total Return Fund and
Equifax, Inc.; Trustee of Phoenix Series Fund, Phoenix
Multi-Portfolio Fund, and The Phoenix Big Edge Series Fund;
and former President, Morehouse College.
Gerald M. McDonnell Trustee Sales Representative with Nucor-Yamoto, Inc.
(DOB: 7/14/39) (steel producer).
Thomas L. McVerry Trustee Former Vice President and Director of Rexham
(DOB: 8/2/39) Corporation; and former Director of Carolina
Cooperative Federal Credit Union.
William Walt Pettit Trustee Partner in the law firm of William Walt Pettit, P.A.
(DOB: 8/26/55)
David M. Richardson Trustee Vice Chair and former Executive Vice President,
(DOB: 9/14/41) DHR International, Inc. (executive recruitment);
former Senior Vice President, Boyden International
Inc. (executive recruitment); and Director,
Commerce and Industry Association of New
Jersey, 411 International, Inc., and J&M Cumming
Paper Co.
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<PAGE>
Name Position with Trust Principal Occupations for Last Five Years
- ------------------------------- -------------------------- -------------------------------------------------------------
Russell A. Salton, III MD Trustee Medical Director, U.S. Health Care/Aetna Health
(DOB: 6/2/47) Services; former Managed Health Care Consultant;
and former President, Primary Physician Care.
Michael S. Scofield Trustee Attorney, Law Offices of Michael S. Scofield.
(DOB: 2/20/43)
Richard J. Shima Trustee Former Chairman, Environmental Warranty, Inc.
(DOB: 8/11/39) (insurance agency); Executive Consultant, Drake
Beam Morin, Inc.(executive outplacement); Director of
Connecticut Natural Gas Corporation, Hartford Hospital,
Old State House Association, Middlesex Mutual Assurance
Company, and Enhance Financial Services, Inc.; Chairman,
Board of Trustees, Hartford Graduate Center; Trustee, Greater
Hartford YMCA; former Director, Vice Chairman and Chief
Investment Officer, The Travelers Corporation; former
Trustee, Kingswood-Oxford School; and former Managing
Director and Consultant, Russell Miller, Inc.
William J. Tomko* President and Senior Vice President and Operations Executive,
(DOB:8/30/58) Treasurer BISYS Fund Services.
Nimish S. Bhatt* Vice President and Vice President, Tax, BISYS Fund Services; former
(DOB: 6/6/63) Assistant Treasurer Assistant Vice President, Evergreen Asset
Management Corp./First Union Bank; former Senior
Tax Consulting/Acting Manager, Investment
Companies Group, Price Waterhouse LLP, New
York.
Bryan Haft* Vice President Team Leader, Fund Administration, BISYS Fund
(DOB: 1/23/65) Services.
Michael H. Koonce** Secretary Senior Vice President and Assistant General
(DOB: 4/20/60) Counsel, First Union Corporation; former Senior
Vice President and General Counsel, Colonial
Management Associates, Inc.
Maureen E. Towle** Assistant Secretary Vice President and Counsel, First Union
(DOB: 4/2/66) Corporation; former Senior Paralegal, First Union
Corporation; and former Paralegal, Keystone
Investments, Inc.
Sally E. Ganem** Assistant Secretary Vice President and Counsel, First Union
(DOB: 11/19/66) Corporation; former Compliance Officer, State
Street Bank; and former First Line Manager, State Street Bank.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Name Position with Trust Principal Occupations for Last Five Years
- ------------------------------- -------------------------- -------------------------------------------------------------
Catherine F. Foley** Assistant Secretary Vice President and Counsel, First Union
(DOB: 3/11/69) Corporation; former Associate, Sullivan And
Worcester, LLP; and former Legal Product
Manager, Boston Company Advisors, Inc.
Beth K. Werths** Assistant Secretary Vice President and Counsel, First Union
(DOB: 10/21/68) Corporation; former Associate, Drinker Biddle &
Reath LLP; and former Counsel, Harrison-Richards,
Inc.
Beth F. Marino** Assistant Secretary Senior Legal Product Manager, First Union
(DOB: 11/27/52) Corporation; and former Senior Paralegal, Putnam
Investments, Inc.
</TABLE>
*Address: BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219-8001
**Address: Evergreen Funds, 200 Berkeley Street, Boston, MA 02116
Trustee Compensation
Listed below is the compensation paid to Trustees for the fiscal year
ended March 31, 1998.
Aggregate Compensation Compensation from Trust
Trustee from the Funds and Fund Complex
Laurence B. Ashkin $ 0 $ 72,681
Charles A. Austin III 0 49,297(a)
K. Dun Gifford 0 46,061
James S. Howell 0 109,570(b)
Leroy Keith Jr. 0 46,461
Gerald M. McDonnell 0 94,500*
Thomas L. McVerry 0 96,805*
William Walt Pettit 0 86,613*
David M. Richardson 0 48,673
Russell A. Salton, III 0 95,031*
Michael S. Scofield 0 97,794
Richard J. Shima 0 67,325
(a) $7,395 of this amount payable in later years as deferred compensation.
(b) $87,656 of this amount payable in later years as deferred compensation.
* Entire amount payable in later years as deferred compensation.
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<PAGE>
PRINCIPAL HOLDERS OF FUND SHARES
As of the date of this SAI, the officers and Trustees of the Trust
owned as a group less than 1% of the outstanding Class A or Class Y shares, as
applicable, of the Funds.
As of the same date, no person, to the Fund's knowledge, owned
beneficially or of record more than 5% of a class of the Funds' outstanding
shares.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISOR
The advisor to the Funds is the Capital Management Group ("the
Advisor") of First Union National Bank ("FUNB"), 201 South College Street,
Charlotte, North Carolina 28288-0630. FUNB is entitled to receive from each Fund
an annual fee of 0.45% of the Fund's average daily net assets.
The Advisor is a subsidiary of First Union Corporation ("First Union"),
a bank holding company headquartered at 301 South College Street, Charlotte,
North Carolina 28288-0630. First Union and its subsidiaries provide a broad
range of financial services to individuals and businesses throughout the United
States.
INVESTMENT ADVISORY AGREEMENTS
On behalf of each of its Funds, the Trust has entered into an
investment advisory agreement with the Advisor (the "Advisory Agreements").
Under the Advisory Agreements, and subject to the supervision of the Trust's
Board of Trustees, the Advisor furnishes to the Funds investment advisory,
management and administrative services, office facilities, and equipment in
connection with its services for managing the investment and reinvestment of the
Fund's assets. The Advisor pays for all of the expenses incurred in connection
with the provision of its services. Each Fund pays for all charges and expenses,
other than those specifically referred to as being borne by the Advisor,
including, but not limited to: (1) custodian charges and expenses; (2)
bookkeeping and auditors' charges and expenses; (3) transfer agent charges and
expenses; (4) fees and expenses of Independent Trustees (Trustees who are not
interested persons of a Fund, as defined in the 1940 Act); (5) brokerage
commissions, brokers' fees and expenses; (6) issue and transfer taxes; (7) costs
and expenses under the Distribution Plan (as applicable); (8) taxes and trust
fees payable to governmental agencies; (9) the cost of share certificates; (10)
fees and expenses of the registration and qualification of such Fund and its
shares with the SEC or under state or other securities laws; (11) expenses of
preparing, printing and mailing prospectuses, SAIs, notices, reports and proxy
materials to shareholders of the Fund; (12) expenses of shareholders' and
Trustees' meetings; (13) charges and expenses of legal counsel for the Fund and
for the Independent Trustees of the Trust on matters relating to such Fund; (14)
charges and expenses of filing annual and other reports with the SEC and other
authorities; and (15) all extraordinary charges and expenses of such Fund.
Each Advisory Agreement continues in effect for two years from its
effective date and, thereafter, from year to year only if approved at least
annually by the Board of Trustees of the Trust or by a vote of a majority of
each Fund's outstanding shares. In either case, the terms of the Advisory
Agreement and continuance thereof must be approved by the vote of a majority of
the Independent Trustees cast in person at a meeting called for the purpose of
voting on such approval.
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<PAGE>
The Advisory Agreements may be terminated, without penalty, on 60 days' written
notice by the Trust's Board of Trustees or by a vote of a majority of
outstanding shares. Each Advisory Agreement will terminate automatically upon
its "assignment" as that term is defined in the 1940 Act.
Transactions among Advisory Affiliates
The Trust has adopted procedures pursuant to Rule 17a-7 under the 1940
Act ("Rule 17a-7 Procedures"). The Rule 17a-7 Procedures permit a Fund to buy or
sell securities from another investment company for which a subsidiary of First
Union is an investment advisor. The Rule 17a-7 Procedures also allow the Funds
to buy or sell securities from other advisory clients for whom a subsidiary of
First Union is an investment advisor. The Funds may engage in such transactions
if they are equitable to each participant and consistent with each participant's
investment objective.
DISTRIBUTOR
Evergreen Distributor, Inc. (the "Distributor") markets the Funds through
broker-dealers and other financial representatives. Its address is 125 West 55th
Street, New York, NY 10019.
DISTRIBUTION PLANS AND AGREEMENTS
Distribution fees are accrued daily and paid monthly on Class A shares
of each Fund. The fees are charged as class expenses, as accrued.
The National Association of Securities Dealers, Inc. ("NASD") limits
the amount that a mutual fund may pay annually in distribution costs for sale of
its shares and shareholder service fees. The NASD limits annual expenditures to
1.00% of the aggregate average daily net asset value of its shares, of which
0.75% may be used to pay such distribution costs and 0.25% may be used to pay
shareholder service fees. The NASD also limits the aggregate amount that the
Fund may pay for such distribution costs to 6.25% of gross share sales since the
inception of the distribution plan, plus interest at the prime rate plus 1.00%
on such amounts remaining unpaid from time to time.
Under the Rule 12b-1 Distribution Plans that have been adopted by each
Fund with respect to its Class A shares (each a "Plan" and collectively, the
"Plans"), the Treasurer of each Fund reports the amounts expended under the
Plans and the purposes for which such expenditures were made to the Trustees of
the Trust for their review on a quarterly basis. Also, each Plan provides that
the selection and nomination of the Independent Trustees are committed to the
discretion of such Independent Trustees then in office.
Each Advisor may from time to time and from its own funds or such other
resources as may be permitted by rules of the SEC 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.
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 the Trust or by vote
of the holders of a majority of the outstanding voting securities of that class
and, in either case, by a majority of the Independent Trustees of the Trust who
have no direct or indirect financial interest in the operation of the Plan or
any agreement related thereto.
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<PAGE>
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 Class A shares. The Plans are
designed to (i) stimulate brokers to provide distribution and administrative
support services to each Fund and holders of such class A shares and (ii)
stimulate administrators to render administrative support services to the Fund
and holders of such class A 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 such Class A shares; assisting
clients in changing dividend options, account designations, and addresses; and
providing such other services as the Fund reasonably requests for its Class A
shares.
In the event that a Plan or Distribution Agreement is terminated or not
continued, (i) no distribution fees (other than current amounts accrued but not
yet paid) would be owed by the Fund to the Distributor with respect to that
class or classes, and (ii) the Fund would not be obligated to pay the
Distributor for any amounts expended under the Distribution Agreement not
previously recovered by the Distributor from distribution services fees in
respect of shares of such class or classes through deferred sales charges.
All material amendments to any Plan or Distribution Agreement must be
approved by a vote of the Trustees of the Trust or the holders of the Fund's
outstanding voting securities, voting separately by class, and in either case,
by a majority of the Independent 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 (i) 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 Independent Trustees, or
(ii) 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.
ADDITIONAL SERVICE PROVIDERS
Administrator
Evergreen Investment Services, Inc. ("EIS") serves as administrator to
the Funds subject to the supervision and control of the Trust's Board of
Trustees. EIS provides the Funds with facilities, equipment and personnel and is
entitled to receive a fee based on the aggregate average daily net assets of the
Funds at a rate based on the total assets of all mutual funds administered by
EIS for which any affiliate of FUNB serves as investment advisor. The fee paid
to EIS is calculated in accordance with the following schedule: 0.050% on the
first $7 billion; 0.035% on the next $3 billion; 0.030% on the next $5 billion;
0.020% on the next $10 billion; 0.015% on the next $5 billion and 0.010% on
assets in excess of $30 billion.
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Transfer Agent
Evergreen Service Company ("ESC"), a subsidiary of First Union, is the
Funds' transfer agent. The transfer agent issues and redeems shares, pays
dividends and performs other duties in connection with the maintenance of
shareholder accounts. The transfer agent's address is 200 Berkeley Street,
Boston, Massachusetts 02116.
Independent Auditors/Accountants
KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110,
audits the financial statements of the Funds.
Custodian
State Street Bank and Trust Company is the Funds' custodian. The bank
keeps custody of each Fund's securities and cash and performs other related
duties. The custodian's address is P.O. Box 9021, Boston, Massachusetts
02205-9827.
Legal Counsel
Sullivan & Worcester LLP provides legal advice to the Funds. Its address is
1025 Connecticut Avenue, N.W., Washington, D.C. 20036.
BROKERAGE
SELECTION OF BROKERS
In effecting transactions in portfolio securities for each Fund, the
Advisor seeks the best execution of orders at the most favorable prices. The
Advisor determines whether a broker has provided each Fund with best execution
and price in the execution of a securities transaction by evaluating, among
other things, the broker's ability to execute large or potentially difficult
transactions, and the financial strength and stability of the broker.
BROKERAGE COMMISSIONS
Each Fund expects to buy and sell its fixed-income securities through
principal transactions, that is, directly from the issuer or from an underwriter
or market maker for the securities. Generally, a Fund will not pay brokerage
commissions for such purchases. Usually, when a Fund buys a security from an
underwriter, the purchase price will include an underwriting commission or
concession. The purchase price for securities bought from dealers serving as
market makers will similarly include the dealer's mark up or reflect a dealer's
mark down. When a Fund executes transactions in the over-the-counter market, it
will deal with primary market makers unless more favorable prices are otherwise
obtainable.
GENERAL BROKERAGE POLICIES
The Advisor makes investment decisions for each Fund independently from
those of its other clients. It may frequently develop, however, that the Advisor
will make the same investment
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decision for more than one client. Simultaneous transactions are inevitable when
the same security is suitable for the investment objective of more than one
account. When two or more of its clients are engaged in the purchase or sale of
the same security, the Advisor will allocate the transactions according to a
formula that is equitable to each of its clients. Although, in some cases, this
system could have a detrimental effect on the price or volume of a Fund's
securities, each Fund believes that in other cases its ability to participate in
volume transactions will produce better executions. In order to take advantage
of the availability of lower purchase prices, the Funds may occasionally
participate in group bidding for the direct purchase from an issuer of certain
securities.
The Board of Trustees periodically reviews each Fund's brokerage
policy. Because of the possibility of further regulatory developments affecting
the securities exchanges and brokerage practices generally, the Board of
Trustees may change, modify or eliminate any of the foregoing practices.
TRUST ORGANIZATION
FORM OF ORGANIZATION
Each Fund is a series of an open-end management investment company,
known as Evergreen Money Market Trust (the "Trust"). The Trust was formed as a
Delaware business trust under an Agreement and Declaration of Trust on September
18, 1997 (the "Declaration of Trust"). A copy of the Declaration of Trust is on
file at the SEC as an exhibit to the Trust's Registration Statement, of which
this SAI is a part. This summary is qualified in its entirety by reference to
the Declaration of Trust.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number
of shares of beneficial interest of series and classes of shares. Each share of
each Fund represents an equal proportionate interest with each other share of
that series and/or class. Upon liquidation, shares are entitled to a pro rata
share of the Trust based on the relative net assets of each series and/or class.
Shareholders have no preemptive or conversion rights. Shares are redeemable and
transferable.
VOTING RIGHTS
Under the terms of the Declaration of Trust, the Trust is not required
to hold annual meetings. At meetings called for the initial election of Trustees
or to consider other matters, each share is entitled to one vote for each dollar
of net asset value applicable to such share. Shares generally vote together as
one class on all matters. Classes of shares of each Fund have equal voting
rights. No amendment may be made to the Declaration of Trust that adversely
affects any class of shares without the approval of a majority of the votes
applicable to the shares of that class. Shares have non-cumulative voting
rights, which means that the holders of more than 50% of the votes applicable to
shares voting for the election of Trustees can elect 100% of the Trustees to be
elected at a meeting and, in such event, the holders of the remaining shares
voting will not be able to elect any Trustees.
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After the initial meeting as described above, no further meetings of
shareholders for the purpose of electing Trustees will be held, unless required
by law, unless and until such time as less than a majority of the Trustees
holding office have been elected by shareholders, at which time, the Trustees
then in office will call a shareholders' meeting for the election of Trustees.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee will not be liable for
errors of judgment or mistakes of fact or law, but nothing in the Declaration of
Trust protects a Trustee against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his duties involved in the conduct of his office.
PURCHASE, REDEMPTION AND PRICING OF SHARES
HOW THE FUNDS OFFER SHARES TO THE PUBLIC
You may buy shares of a Fund through the Distributor, broker-dealers
that have entered into special agreements with the Distributor or certain other
financial institutions. Each Fund offers two classes of shares, that differ
primarily with respect to sales charges and distribution fees. Depending upon
the class of shares, you may pay a a 12b-1 fee when you buy Class A shares, or
no sales charges at all.
PURCHASE ALTERNATIVES
Class A Shares
Each Fund offers Class A shares at net asset value without an initial
sales charge. However, certain broker-dealers and other financial institutions
may impose a fee in connection with Class A purchases of the Funds.
Class Y Shares
No contingent deferred sales charge ("CDSC") is imposed on the
redemption of Class Y shares. Class Y shares are not offered to the general
public and are available only to (1) persons who at or prior to December 31,
1994 owned shares in a mutual fund advised by Evergreen Asset Management Corp.,
(2) certain institutional investors and (3) investment advisory clients of FUNB,
Evergreen Asset Management Corp. or their affiliates. Class Y shares are offered
at net asset value without a front-end or back-end sales charge and do not bear
any Rule 12b-1 distribution expenses.
EXCHANGES
Investors may exchange shares of a Fund for shares of the same class of
any other Evergreen fund, as described under the section entitled "Exchanges" in
a Fund's prospectus. Before you make an exchange, you should read the prospectus
of the Evergreen fund into which you want to exchange. The Trust's Board of
Trustees reserves the right to discontinue, alter or limit the exchange
privilege at any time.
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CALCULATION OF NET ASSET VALUE PER SHARE ("NAV")
Each Fund computes its NAV twice daily on Monday through Friday, as
described in the prospectus. A Fund will not compute its NAV on the day the
following legal holidays are observed: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
The NAV of each Fund is calculated by dividing the value of a Fund's
net assets attributable to that class by all of the shares issued for that
class.
VALUATION OF PORTFOLIO SECURITIES
The securities in a Fund's portfolio are valued on an amortized cost
basis. Under this method of valuation, a security is intially 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 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.
SHAREHOLDER SERVICES
As described in the prospectus, a shareholder may elect to receive his
or her dividends and capital gains distributions in cash instead of shares.
However, ESC will automatically convert a shareholder's distribution option so
that the shareholder reinvests all dividends and distributions in additional
shares when it learns that the postal or other delivery service is unable to
deliver checks or transaction confirmations to the shareholder's address of
record. The Funds will hold the returned distribution or redemption proceeds in
a non interest-bearing account in the shareholder's name until the shareholder
updates his or her address. No interest will accrue on amounts represented by
uncashed distribution or redemption checks.
PRINCIPAL UNDERWRITER
The Distributor is the principal underwriter for the Trust and with
respect to each class of each Fund. The Trust has entered into a Principal
Underwriting Agreement ("Underwriting Agreement") with the Distributor with
respect to each class of each Fund. The Distributor is a subsidiary of The BISYS
Group, Inc.
The Distributor, as agent, has agreed to use its best efforts to find
purchasers for the shares. The Distributor may retain and employ representatives
to promote distribution of the shares and may obtain orders from broker-dealers,
and others, acting as principals, for sales of shares to them. The Underwriting
Agreement provides that the Distributor will bear the expense of preparing,
printing, and distributing advertising and sales literature and prospectuses
used by it.
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All subscriptions and sales of shares by the Distributor are at the
public offering price of the shares, which is determined in accordance with the
provisions of the Trust's Declaration of Trust, By-Laws, current prospectuses
and SAI. All orders are subject to acceptance by the Trust and the Trust
reserves the right, in its sole discretion, to reject any order received. Under
the Underwriting Agreement, the Trust is not liable to anyone for failure to
accept any order.
The Distributor has agreed that it will, in all respects, duly comply
with all state and federal laws applicable to the sale of the shares. The
Distributor has also agreed that it will indemnify and hold harmless the Trust
and each person who has been, is, or may be a Trustee or officer of the Trust
against expenses reasonably incurred by any of them in connection with any
claim, action, suit, or proceeding to which any of them may be a party that
arises out of or is alleged to arise out of any misrepresentation or omission to
state a material fact on the part of the Distributor or any other person for
whose acts the Distributor is responsible or is alleged to be responsible,
unless such misrepresentation or omission was made in reliance upon written
information furnished by the Trust.
The Underwriting Agreement provides that it will remain in effect as
long as its terms and continuance are approved annually (i) by a vote of a
majority of the Trust's Independent Trustees, and (ii) by vote of a majority of
the Trust's Trustees, in each case, cast in person at a meeting called for that
purpose.
The Underwriting Agreement may be terminated, without penalty, on 60
days' written notice by the Board of Trustees or by a vote of a majority of
outstanding shares subject to such agreement. The Underwriting Agreement will
terminate automatically upon its assignment, as defined in the 1940 Act.
From time to time, if, in the Distributor's judgment, it could benefit
the sales of shares, the Distributor may provide to selected broker-dealers
promotional materials and selling aids, including, but not limited to, personal
computers, related software, and data files.
ADDITIONAL TAX INFORMATION
REQUIREMENTS FOR QUALIFICATION AS A REGULATED
INVESTMENT COMPANY
The Funds intend to qualify for and elect the tax treatment applicable
to a RIC under Subchapter M of the Code. (Such qualification does not involve
supervision of management or investment practices or policies by the Internal
Revenue Service.) In order to qualify as a RIC, a Fund must, among other things,
(i) 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 contracts) derived with respect to its
business of investing in such securities; and (ii) diversify its holdings so
that, at the end of each quarter of its taxable year, (a) at least 50% of the
market value of a 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 a Fund's total assets and 10% of the outstanding
voting securities of such issuer, and (b) 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
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does not meet certain distribution requirements by the end of each calendar
year. Each Fund anticipates meeting such distribution requirements.
TAXES ON DISTRIBUTIONS
Distributions will be taxable to shareholders 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.
To calculate ordinary income for federal income tax purposes,
shareholders must generally include dividends paid by the Fund from its
investment company taxable income (net investment income plus net realized
short-term capital gains, if any). Since none of a Fund's income will consist of
corporate dividends, no distributions will qualify for the 70% corporate
dividends received deduction.
From time to time, each Fund will distribute the excess of its net
long-term capital gains over its short-term capital losses to shareholders. For
federal tax purposes, shareholders must include such distributions when
calculating their long-term capital gains. Each Fund will inform its
shareholders of the portion if any of a long-term capital gain distribution
which is subject to tax at the maximum 20% rate and the portion if any of a
long-term capital gain distribution which is subject to tax at the maximum 20%
rate. Distributions of long-term capital gains are taxable as such to a
shareholder, no matter how long the shareholder has held the 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 advisor to determine the state and local tax
implications of Fund distributions.
Shareholders who fail to furnish their taxpayer identification numbers
to a Fund and to certify as to its correctness and certain other shareholders
may be subject to a 31% federal income tax backup withholding requirement on
dividends, distributions of capital gains and certain 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 advisors about the applicability of the backup withholding
provisions.
OTHER TAX CONSIDERATIONS
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 advisors 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 advisor
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 30% (or at a lower rate under a tax treaty) on
amounts treated as income from U.S. sources under the Code.
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PERFORMANCE
CURRENT, EFFECTIVE AND TAX-EQUIVALENT YIELDS
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 (shown as
"beginning account value" in the formula below), 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
Each Fund may also quote a "tax-equivalent yield" from time to time, a
tax-equivalent yield is calculated, reflecting the rate an investor would need
to earn from a fully taxable investment to equal the yield the Fund would
provide after federal taxes. The following formula is used:
Tax-Equivalent Yield = Effective Yield
----------------------------
1 - Federal Tax Rate
Yield fluctuations may reflect changes in a Fund's net investment
income. Portfolio changes resulting from net purchases or net redemptions of the
Fund's shares may also affect the yield. Accordingly, a Fund's yield may vary
from day to day. The yield stated for a particular past period is not
necessarily representative of its future yield. Since each Fund uses the
amortized cost method of net asset value computation, it does not anticipate any
change in yield resulting from 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 (1) the kind and quality of the instruments a Fund holds, (2)
portfolio maturity, (3) operating expenses and (4) market conditions.
In periods of declining interest rates, yields will tend to be somewhat
higher than prevailing market rates. In periods of rising interest rates, 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.
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ADDITIONAL INFORMATION
Except as otherwise stated in its prospectus or required by law, each
Fund reserves the right to change the terms of the offer stated in its
prospectus without shareholder approval, including the right to impose or change
fees for services provided.
No dealer, salesman or other person is authorized to give any
information or to make any representation not contained in a Fund's prospectus,
SAI or in supplemental sales literature issued by such Fund or the Distributor,
and no person is entitled to rely on any information or representation not
contained therein.
Each Fund's prospectus and SAI omit certain information contained in
the Trust's registration statement, which you may obtain for a fee from the SEC
in Washington, D.C.
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APPENDIX A
DESCRIPTION OF BOND RATINGS
Standard & Poor's Rating Services ("S&P").
An S&P corporate or municipal bond rating is a current assessment of
the creditworthiness 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 S&P by the
issuer or obtained by S&P from other sources it considers reliable. S&P 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 or unavailability of such information, or
due to other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
1. Likelihood of default-capacity and willingness of the obligor to
make timely payment of interest and repayment of principal in accordance with
the terms of the obligation.
2. Nature of and provisions of the obligation.
3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or their arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
AAA - This is the highest rating assigned by S&P 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
it differs 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 it normally exhibits 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 in 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.
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BB indicates the lowest degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB - rating.
B - Debt rated B has greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC - Debt rated CCC has a currently indefinable vulnerability to default, and
is dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC - The rating CC is typically applied to debt subordinated to senior debt that
is assigned an actual or implied CCC rating.
C - The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
C1 - The rating C1 is reserved for income bonds on which no interest is being
paid.
D - Debt rated D is in payment default. It is used when interest payments or
principal payments are not made on a due date even if the applicable grace
period has not expired, unless S&P 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 S&P 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
creditworthiness 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 and 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.
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Moody's Investors Service, Inc. ("Moody's").
A brief description of the applicable Moody's rating symbols and their
meanings follows:
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge". Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Some bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. NOTE: Bonds within the above
categories which possess the strongest investment attributes are designated by
the symbol "1" following the rating.
Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B - Bonds which are rated B generally lack characteristics of a 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 to 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 credit within
those rating
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categories.
Fitch IBCA, 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
An S&P note rating reflects the liquidity concerns and market access
risks unique to notes. Notes due in three years or less will likely receive a
note rating. Notes maturing beyond three years will most likely receive a
long-term debt rating. The following criteria will be used in making that
assessment.
o Amortization schedule (the larger the final maturity relative to other
maturities the more likely it will be treated as a note).
o Source of Payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note.) Note rating symbols
are as follows:
o SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.
o SP-2 Satisfactory capacity to pay principal and interest.
o SP-3 Speculative capacity to pay principal and interest.
Moody's Short-Term Loan Ratings - Moody's ratings for state and municipal
short-term obligations will be designated Moody's Investment Grade (MIG). This
distinction is in recognition of the differences between short-term credit risk
and long-term risk. Factors affecting the liquidity of the borrower are
uppermost in importance in short-term borrowing, while various factors of major
importance in bond risk are of lesser importance over the short run.
Rating symbols and their meanings follow:
o MIG 1 - This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
o MIG 2 - This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
o MIG 3 - This designation denotes favorable quality. All security elements are
accounted for but this is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
o MIG 4 - This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
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COMMERCIAL PAPER RATINGS
Moody's: 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.
S&P: "A" is the highest commercial paper rating category utilized by S&P, 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
risk factors larger and subject to more variation.
Fitch IBCA, Inc.: F-1+ -- denotes exceptionally strong credit quality given to
issues regarded as having the strongest degree of assurance for timely payment;
F-1 -- very strong, with only a 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.
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APPENDIX B
RISK FACTORS RELATED TO INVESTMENTS IN FLORIDA AND NEW
JERSEY ISSUERS
EVERGREEN FLORIDA MUNICIPAL MONEY MARKET FUND
The performance of the Florida Municipal Money Market Fund is
susceptible to various statutory, political and economic factors unique to the
State of Florida. The information summarized below describes some of the more
significant factors that could affect the ability of the bond issuers to repay
interest and principal on securities acquired by the Fund. Such information is
derived from various public sources all of which are available to investors
generally and which the Fund believes to be accurate.
State Economy
General. Florida is the nation's fourth most populous state with an
estimated population of 14,400,000 as of April 1, 1996. Only California, New
York and Texas have populations larger than Florida. The State's population grew
from 6,800,000 in 1970 to 12,900,000 in 1990 and to an estimated 14,400,000 in
1996. This represents an 11.4% growth since the 1990 Census. Florida's
population is primarily an urban population with approximately 85% of its
population located in urbanized areas. The University of Florida, Bureau of
Economic and Business Research projects Florida's population will exceed
17,800,000 by April 1, 2010.
Economic Condition and Outlook. The current Florida Economic Consensus
Estimating Conference (February 28, 1997) forecast shows that the Florida
economy is expected to grow at a moderate pace along with the nation, but will
continue to outperform the U.S. as a whole as a result of relatively rapid
population growth. Total non-farm employment is expected to increase 2.8% for
fiscal year ("FY") 1997-98 fiscal year which began July 1, 1997. By the end of
1997-98, non-farm employment is expected to reach an average of 6.5 million.
Trade and service employment, the two largest sectors, account for more than
half of total non-farm employment. Florida's unemployment rate is forecasted at
5.1% for 1997, then to rise to 5.2% in 1998 and 5.3% in 1999. Payrolls are
projected to increase 3.2% for 1997-98, 2.7% for 1998-99 and 2.5% for 1999-2000.
Tourism is an important element of Florida's economy and the number of
out-of-state visitors grew 5.2% during 1996, surpassing the 43 million visitor
count for the first time. 1997 estimates project an increase of 1.7% or 720,000
visitors over 1996's record level.
Florida's Budget Process
Balanced Budget Requirement. Florida's constitution requires an annual
balanced budget. In addition, the constitution requires a Budget Stabilization
Fund equal to 4% of the last fully completed fiscal year's net revenue
collections for the General Revenue Fund for FY 1997-1998 and 5% for FY
1998-1999 and thereafter.
State Revenue Limitations. On November 8, 1994, the citizens of Florida
enacted a Constitutional Amendment on state revenue. This amendment provides
that the rate of growth in state revenues is limited to no more than the growth
rate in Florida personal income. Revenue
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growth in excess of the limitation is to be deposited into the Budget
Stabilization Fund unless two-thirds of the members of both houses of the
Legislature vote to raise the limit. The revenue limit is determined by
multiplying the average annual growth rate in Florida personal income over the
previous year.
State revenues are defined as taxes, licenses, fees, and charges for
services. Based on current estimates by the Revenue Estimating Conference, the
maximum amount of state revenue permitted in FY 1997-98 is calculated at
$22,619.9 million. The Revenue Estimating Conferences's projection of state
revenues subject to the limitation for FY 1997-98 is $21,848.2 million, leaving
excess capacity available under the limit of $771.7 million.
Budget Stabilization Fund. The Budget Stabilization Fund was
established in FY 1994-95 with an amount equal to 1 percent of the prior fiscal
year's net revenue collections. This fund is scheduled to receive a higher
percentage from the General Revenue Fund every fiscal year with a minimum of 5
percent by FY 1998-99. In the Governor's Recommended Budget, the Budget
Stabilization Fund is required to be funded at 4 percent, or $586 million.
Budget Process. Chapter 216, Florida Statutes ("FS"), promulgates the
process used to develop the budget for the State of Florida. By September 1 of
each year, the head of each State agency and the Chief Justice of the Supreme
Court for the Judicial Branch submit a final annual legislative budget request
to the Governor and Legislature. Then, at least 45 days before the scheduled
annual legislative session in each year, the Governor, as Chief Budget Officer,
submits his recommended budget to each legislator.
The Governor also provides estimates of revenues sufficient to fund the
recommended appropriations. Estimates for the General Revenue Fund, Budget
Stabilization Fund and Working Capital Fund are made by the Revenue Estimating
Conference. This group includes members of the executive and legislative
branches with forecasting experience who develop official information regarding
anticipated State and local government revenues as needed for the State
budgeting process. In addition to the Revenue Estimating Conference, other
consensus estimating conferences cover national and state economics, national
and state demographics, the state public education system, criminal justice
system, social services system, transportation planning and budgeting, the child
welfare system, the juvenile justice system and the career education planning
process.
The Governor's recommended budget forms the basis of the appropriations
bill. As amended and approved by the Legislature (subject to the line-item veto
power of the Governor and override authority of the Legislature), this bill
becomes the General Appropriations Act.
The Governor and the Comptroller are responsible for detecting
conditions which could lead to a deficit in any agency's funds and reporting
that fact to the Administration Commission and the Chief Justice of the Supreme
Court. The Constitution of the State, Article VII, Section 1(d), states,
"Provision shall be made by law for raising sufficient revenue to defray the
expenses of the State for each fiscal year."
The Legislature is responsible for annually providing direction in the
General Appropriations Act regarding the use of the Working Capital Fund to
offset General Revenue Fund deficits. Absent any specific direction to the
contrary, the Governor and the Chief Justice of the Supreme Court shall comply
with guidelines provided in Section 216.221(5), FS, for reductions in the
approved operating budgets of the executive branch and the judicial branch.
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The State of Florida is progressing toward full implementation of a
performance-based budgeting system. Chapter 216., FS, designates when each
department will be phased into this new budgeting method. Some agencies are
already subject to the performance-based budgeting standards and all agencies
will be under this new system by the fiscal year ended June 30, 2002. With
performance-based budgeting, a department receives a lump-sum appropriation from
the Legislature for each designated program at the beginning of the year. The
Governor for State agencies or the Chief Justice for the judicial branch is
responsible for allocating the amounts among the traditional appropriation
categories so that specified performance standards can be met. At any time
during the year, the agency head or Chief Justice may transfer appropriations
between categories within the performance-based program with no limit on the
amount of the transfer in order for the designated program to accomplish its
objectives. However, no transfer from any other budget entity may be made into
the performance-based program, nor may any funds be transferred from the
performance-based program to another budget entity, except pursuant to Section
216.77, FS
Line Item Veto. Florida's Constitution grants the Governor the power to
veto any specific appropriation in a general appropriation bill, but the
Governor may not veto any qualification or restriction without also vetoing the
appropriation to which it relates. A statement identifying the items vetoed and
containing his or her objections thereto must be delivered to the appropriate
house in which the bill originated, if in session, otherwise to the Secretary of
State. The legislature may reconsider and reinstate the vetoed specific
appropriation items by a two-thirds vote of each house.
Revenues. The State accounts for its receipts using fund accounting. It
has established the General Revenue Fund, the working Capital Fund and various
other trust funds, which are maintained for the receipt of monies which under
law or trust agreements must be maintained separately. The General Revenue Fund
consists of all monies received by the State from every source whatsoever which
are not allocable to the other funds. Major sources of tax revenues for the
General Revenue Fund are the sales and use tax, the corporate income tax, and
the intangible personal property tax, which are projected for FY 1997-98 to
amount to 71%, 8% and 4%, respectively, of the total receipts of that fund. The
Florida Constitution and its statutes mandate that the State budget as a whole
and each separate fund within the State budget be kept in balance from currently
available revenues for each fiscal year.
Sales and Use Tax. The greatest single source of tax receipts in
Florida is the sales and use tax, which is projected to amount to $11.0 billion
for fiscal year 1997-98. The sales tax rate is 6% of the sales price of tangible
personal property sold at retail in the state. The use tax rate is 6% of the
cash price of fair market value of tangible personal property when it is not
sold but is used, or stored for use, in the State. In other words, the use tax
applies to the use of tangible personal property in Florida, which was purchased
in another state but would have been subject to the sales tax if purchased in
Florida. Approximately 10% of the sales tax is designated for local governments
and is distributed to the respective counties in which collected for use by such
counties and municipalities therein. In addition to this distribution, local
governments may (by referendum) assess a 1% sales surtax within their county.
Proceeds from this local option sales surtax can be earmarked for funding county
wide bus and rapid transit systems, local infrastructure construction and
maintenance, medical care for indigents and capital projects for county school
districts as set forth in Section 212.055(2), of the Florida Statutes.
The two taxes, sales and use, stand as complements to each other, and
taken together provide a uniform tax upon either the sale at retail or the use
of all tangible personal property irrespective of where it may have been
purchased. The sales tax also includes a levy on the following: (1) rentals on
tangible personal property and accommodations in hotels, motels, some
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apartments, offices, real estate, parking and storage places in parking lots,
garages and marinas for motor vehicles or boats; (ii) admissions to places of
amusements, most sports and recreation events; (iii) utilities, except those
used in homes; and (iv) restaurant meals and expendables used in radio and
television broadcasting. Exemptions include: groceries; medicines; hospital
rooms and meals; seeds, feeds, fertilizers and farm crop protection materials;
purchases by religious, charitable and educational nonprofit institutions;
professional services, insurance and certain personal service transaction;
newspapers; apartments used as permanent dwellings; and kindergarten through
community college athletic contests or amateur plays.
Other State Taxes. Other taxes which Florida levies include the motor
fuel tax, intangible property tax, documentary stamp tax, gross receipts
utilities tax and severance tax on the production of oil and gas and the mining
of solid minerals, such as phosphate and sulfur.
Government Debt. Florida maintains a high bond rating from Moody's
(Aa), S&P (AA) and Fitch. (AA) on all State general obligation bonds.
Outstanding general obligations bonds have been issued to finance capital outlay
for educational projects of local school districts, community colleges and state
universities, environmental protection and highway construction.
Numerous government units, counties, cities, school districts and
special taxing districts, issue general obligation bonds backed by their taxing
power. State and local government units may issue revenue obligations, which are
supported by the revenues generated from the particular projects or enterprises.
Examples include obligations issued to finance the construction of water and
sewer systems, health care facilities and educational facilities. In some cases,
sewer or water revenue obligations are issued to finance the construction of
water and sewer systems, health care facilities and educational facilities. In
some cases, sewer or water revenue obligations may be additionally secured by
the full faith and credit of the State.
Florida's Constitution generally limits State bonds pledging the full
faith and credit of the State, to those necessary to finance or refinance the
cost of state fixed capital outlay projects authorized by law, and then only
upon approval by a vote of the electors. The state constitution further limits
the total outstanding principal of such bonds to no more than 50% of the total
tax revenues of the State for the two preceding fiscal years, excluding any tax
revenues held in trust. Exceptions to the requirement for voter approval are:
(i) bonds issued for pollution control and abatement and solid waste disposal
facilities and other water facilities authorized by general law and operated by
State or local governmental agencies; and (ii) bonds issued to finance or
refinance the cost of acquiring real property or rights thereto for State roads
as defined by law, or to finance or refinance the cost of State bridge
construction.
State revenue bonds may be issued without a vote of the electors to
finance or refinance the cost of State fixed capital outlay projects authorized
by law, as long as they are payable solely from funds derived directly from
sources other than State tax revenues. Revenue bonds may be issued to establish
a student loan fund, as well as to finance or refinance housing and related
facilities so long as repayments come solely from revenues derived from the fund
or projects so financed. The state constitution imposes no limit on the
principal amount of revenue bonds which may be issued by the State on and Local
Governmental Agency. Local Governmental Agencies, such as counties, school
boards or municipalities may issue bonds, certificates of indebtedness or any
form of tax anticipation certificate, payable from ad valorem taxes and maturing
more than 12 months from the date of issuance only: (i) to finance or refinance
capital projects authorized by law, and only when approved by a vote of the
electors who are property owners living within boundaries of the agency.
Generally, ad valorem taxes levied by a Local Governmental Agency may not exceed
10 mills on the value of real estate and tangible personal property unless
approved by the electors. Local Governmental Agencies may issue revenue bonds to
finance or refinance the
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cost of capital projects for airports or port facilities or for industrial or
manufacturing plants, without the vote of electors, so long as the revenue bonds
are payable solely from revenues derived from the projects.
Other Factors. The performance of the obligations issued by Florida,
its municipalities, subdivisions and instrumentalities are in part tied to
state-wide, regional and local conditions within Florida. Adverse changes to
state-wide, regional or local economies may adversely affect the
creditworthiness of Florida municipal bond issuers. Also, some revenue
obligations may be issued to finance construction of capital projects which are
leased to nongovernmental entities. Adverse economic conditions might affect
those lessees' ability to meet their obligations to the respective governmental
authority which in turn might jeopardize the repayment of the principal of, or
the interest on, the revenue obligations.
Litigation
Due to its size and broad range of activities, the State is involved in
numerous routine legal actions. The ultimate disposition and fiscal consequences
of these lawsuits are not presently determinable; however, according to the
departments involved, the results of such litigation pending or anticipated will
not materially affect the State of Florida's financial position. The information
disclosed in this Litigation Section has been deemed material by the Florida
Auditor General and has been derived from information disclosed in the Florida
Comptroller's Annual Report dated January 1, 1997. No assurance can be made that
other litigation has not been filed or is not pending which may have a material
impact of the State's financial position.
A. Coastal Petroleum v. State of Florida
Case No. 90-3195, 2nd Judicial Circuit. This is an inverse condemnation
case claiming that the action of the Trustees and Legislature constitute a
taking of Coastal's leases for which compensation is due. The Circuit judge
granted the State's motion for summary judgment finding that as a matter of law,
the State had not deprived Coastal of any royalty they might have. Coastal
appealed to the First District Court of Appeals, but the case was remanded to
Circuit Court for trial. On August 6, 1996, final judgment was made in favor of
the State; however, Coastal has appealed the judgment to the First District
Court of Appeals.
B. Florida Department of Transportation v. 745 Property Investments, CSX
Transportation, Inc. and Continental Equities
Case No. 94-17739 CA 27, Dade County Circuit Court. This cases involves
the Florida Department of Transportation (FDOT) and CSX Transportation, Inc.
FDOT has filed an action against the adjoining property owners seeking a
declaratory judgment from the Dade County Circuit Court that the Department is
not the owner of the property that is subject to a claim by the U.S.
Environmental Protection Agency (EPA). The case was dismissed and FDOT's appeal
of the order of dismissal is pending in the Third District Court of Appeal.
The EPA is seeking clean-up costs, pursuant to the Comprehensive
Environmental Response Compensation and Liability Act, regarding property which
the EPA alleges is owned by the FDOT (and formerly owned by CSX Transportation,
Inc.). The EPA has agreed to await the outcome of the Department's declaratory
action before proceeding further. If the Department is unsuccessful in its
actions, the possible clean-up costs could exceed $25 million.
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C. Jenkins v. Florida Department of Health and Rehabilitative Services
Case No. 79-102-CIV-J-16, United States District Court. This is a class
action suit on behalf of clients of residential placement for the
developmentally disabled seeking refunds for services where children were
entitled to free education under the Education for Handicapped Act. The district
court held that the State could not charge maintenance fees for children between
the ages of 5 and 17 based on the Education for Handicapped Act. The State's
potential cost of refunding these charges could exceed $42 million. However,
there are no active negotiations going on with regard to this matter.
D. Nathan M. Hameroff, M.D., et. al. v. Agency for Health Care
Administration, et. al.
Case No. 95-5036, Leon County Circuit Court. The plaintiffs challenge
the constitutionality of the Public Medical Assistance Trust Fund (PMATF) annual
assessment on net operating revenue of free-standing out-patient facilities
offering sophisticated radiology services. A trial has not been scheduled.
Plaintiff filed a Notice of Pendency of Class Action on July 29, 1997. If the
State is unsuccessful in its actions, the potential refund liability could
amount to approximately $70 million.
E. Walden v. Department of Corrections
Case No. 95-40357-WS (USDC N.D. Fla.) This action is brought by one
captain and one lieutenant in the Department of Corrections seeking declaratory
judgment that they (and potentially 700 similarly situated others) are not
exempt employees under the Fair Labor Standards Act (FLSA) and, therefore, are
entitled to overtime compensation at a rate of not less than one and one-half
times their regular rate of pay for overtime hours worked since April 1, 1992,
forward and including liquidated damages. The U.S. District Court for the
Northern District of Florida entered an order dismissing the case for lack of
jurisdiction on June 24, 1996. Plaintiffs filed a lawsuit against the Department
(Case No. 96-3955) in July 1996 at the State level (Circuit Court, Second
Judicial Circuit), making the same allegations at that level which plaintiffs
previously made before the U.S. District Court for the Northern District of
Florida. On December 20, 1996, that Court determined that it has jurisdiction
over the FLSA claim. Plaintiffs have filed a notice of hearing for October 28,
1997.
EVERGREEN NEW JERSEY MUNICIPAL MONEY MARKET FUND
New Jersey Municipal Securities
The financial condition of the State of New Jersey, its public
authorities (the "Authorities") and its local governments, could affect the
market values and marketability of, and therefore the net asset value per share
and the interest income of New JerseyMunicipal Money Market Fund, or result in
the default of existing obligations, including obligations which may be held by
the Fund. The following section provides only a brief summary of the complex
factors affecting the financial situation in New Jersey and is based on
information obtained from New Jersey, certain of its Authorities and certain
other localities, as publicly available on the date of this Statement of
Additional Information. The information contained in such publicly available
documents has not been independently verified. It should be noted that the
creditworthiness of obligations issued by local issuers may be unrelated to the
creditworthiness of New Jersey, and that there is no obligation on the part of
New Jersey to make payment on such local obligations in the event of default in
the absence of a specific guarantee or pledge provided by New Jersey.
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Economic Factors
New Jersey is the ninth largest state in population and the fifth
smallest in land area. With an average of 1,077 people per square mile, it is
the most densely populated of all the states. The State's economic base is
diversified, consisting of a variety of manufacturing, construction and service
industries, supplemented by rural areas with selective commercial agriculture.
The extensive facilities of the Port Authority of New York and New Jersey, the
Delaware River Port Authority and the South Jersey Port Corporation across the
Delaware River from Philadelphia augment the air, land and water transportation
complex which has influenced much of the State's economy. The State's central
location in the northeastern corridor, the transportation and port facilities
and proximity to New York City make the State an attractive location for
corporate headquarters and international business offices. According to the
United States Bureau of the Census, the population of New Jersey was 7,170,000
in 1970, 7,365,000 in 1980, 7,730,000 in 1990 and 7,988,000 in 1996.
Historically, New Jersey's average per capita income has been well above the
national average, and in 1996 the State ranked second among the states in per
capita personal income ($31,053).
While New Jersey's economy continued to expand during the late 1980s,
the level of growth slowed considerably after 1987. By the beginning of the
national recession in July 1990 (according to the National Bureau of Economic
Research), construction activity had already been declining in New Jersey for
nearly two years, growth had tapered off markedly in the service sectors and the
long-term downward trend of factory employment had accelerated, partly because
of a leveling off of industrial demand nationally. The onset of recession caused
an acceleration of New Jersey's job losses in construction and manufacturing, as
well as an employment downturn in such previously growing sectors as wholesale
trade, retail trade, finance, utilities and trucking and warehousing. The net
effect was a decline in the State's total nonfarm wage and salary employment
from a peak of 3,689,800 in 1989 to a low of 3,457,900 in 1992. This loss has
been followed by an employment gain of 255,600 from May 1992 to June 1997, a
recovery of 97.5% of the jobs lost during the recession. In July 1991, S&P
lowered the State's general obligation bond rating from AAA to AA+.
Reflecting the downturn, the rate of unemployment in the State rose
from a low of 3.6% during the first quarter of 1989 to a recessionary peak of
8.5% during 1992. Since then, the unemployment rate fell to 6.2% during 1996 and
5.5% for the six month period from January 1997 through June 1997.
For the recovery period as a whole, May 1992 to June 1997,
service-producing employment in New Jersey has expanded by 283,500 jobs. Hiring
has been reported by food stores, wholesale distributors, trucking and
warehousing firms, security and commodity brokers, business and
engineering/management service firms, hotels/hotel-casinos, social service
agencies and health care providers other than hospitals. Employment growth was
particularly strong in business services and its personnel supply component with
increases of 17,300 and 7,500, respectively, in the 12-month period ending June
1997.
In the manufacturing sector, employment losses slowed between 1992 and
1994. After an average annual job loss of 33,500 from 1989 through 1992, New
Jersey's factory job losses fell to 13,300 during 1993 and 7,300 during 1994.
During 1995 and 1996, however, manufacturing job losses increased slightly to
10,100 and 13,900 respectively, reflecting a slowdown in national manufacturing
production activity. While experiencing growth in the number of production
workers in 1994, the number declined in 1995 at the same time that managerial
and office staff were also reduced as part of nationwide downsizing. Through
August 1996, layoffs of white collar workers
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and corporate downsizing appear to be abating.
Conditions have slowly improved in the construction industry, where
employment has risen by 18,600 since its low in May 1992. Between 1992 and 1996,
this sector's hiring rebound was driven primarily by increased homebuilding and
nonresidential projects. During 1996 and the first five months of 1997, public
works projects and homebuilding became the growth segments while nonresidential
construction lessened but remained positive.
State Finances
The State operates on a fiscal year beginning July 1 and ending June
30. For example, "Fiscal Year 1999" refers to the State's fiscal year beginning
July 1, 1998 and ending June 30, 1999.
The General Fund is the fund into which all State revenues not
otherwise restricted by statute are deposited and from which appropriations are
made. The largest part of the total financial operations of the State is
accounted for in the General Fund. Revenues received from taxes and unrestricted
by statute, most federal revenue and certain miscellaneous revenue items are
recorded in the General Fund. The appropriations act provides the basic
framework for the operation of the General Fund. Undesignated Fund Balances are
available for appropriation in succeeding fiscal years. There have been positive
Undesignated Fund Balances in the General Fund at the end of each year since the
State Constitution was adopted in 1947. The estimates for Fiscal Year 1998 and
Fiscal Year 1999 reflect the amounts contained in the Governor's Fiscal Year
1999 Budget Message delivered on February 10, 1998.
In Fiscal Years 1996 and 1997, the actual General Fund balances were
$442.0 million and $280.5 million, respectively, and total Undesignated Fund
Balances were $882.2 million and $1,106.4 million. For Fiscal Years 1998 and
1999 General Fund balances are estimated to be $268.7 million and $144.0
million, respectively, and total Undesignated Fund Balances are estimated to be
$1,021.3 million and $6750.0 million.
Fiscal Years 1998 and 1999 State Revenue Estimates
Sales and Use Tax. The revised estimate forecasts Sales and Use tax
collections for Fiscal Year 1998 as $4,720.0 million, a 6.9% increase from the
Fiscal Year 1997 revenue. The Fiscal Year 1999 estimate of $4,928.0 million, is
a 4.4% increase from the Fiscal Year 1998 estimate.
Gross Income Tax. The revised estimate forecasts Gross Income Tax
collections for Fiscal Year 1998 of $5,340.0 million, a 10.7% increase from
Fiscal Year 1997 revenue. The Fiscal Year 1999 estimate of $5,860.0 million, is
a 9.7% increase from the Fiscal Year 1998 estimate. Included in the Fiscal Year
1998 estimate and the Fiscal Year 1999 estimate is the enactment of a property
tax deduction, to be phased in over a three-year period, permitting a deduction
by resident taxpayers against gross income tax of a percentage of their property
taxes.
Corporation Business Tax. The revised estimate forecasts Corporation
Business Tax collection for Fiscal Year 1998 as $1,315.1 million, a 2.2%
decrease from Fiscal Year 1997 revenue. The Fiscal Year 1999 estimate of
$1,431.0 million, is an 8.8% increase from the Fiscal Year 1998 estimate.
General Considerations. Estimated receipts from State taxes and revenues,
including the three principal taxes set forth above, are forecasts based on the
best information available at the
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time of such forecasts. Changes in economic activity in the State and the
nation, consumption of durable goods, corporate financial performance and other
factors that are difficult to predict may result in actual collections being
more or less than forecasted.
Should revenues be less than the amount anticipated in the budget for a
fiscal year, the Governor may, pursuant to statutory authority, prevent any
expenditure under any appropriation. There are additional means by which the
Governor may ensure that the State is operated efficiently and does not incur a
deficit. No supplemental appropriation may be enacted after adoption of an
appropriations act except where there are sufficient revenues on hand or
anticipated, as certified by the Governor, to meet such appropriation. In the
past when actual revenues have been less than the amount anticipated in the
budget, the Governor has exercised her plenary powers leading to, among other
actions, implementation of a hiring freeze for all State departments and the
discontinuation of programs for which appropriations were budgeted but not yet
spent. Under the State Constitution, no general appropriations law or other law
appropriating money for any State purpose may be enacted if the amount of money
appropriated therein, together with all other prior appropriations made for the
same fiscal year, exceeds the total amount of revenue on hand and anticipated to
be available for such fiscal year, as certified by the Governor.
24465
B-9
