MENTOR FUNDS, 485BPOS, 2000-01-27

MENTOR FUNDS
485BPOS, 2000-01-27

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 22 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 24 [X]

MENTOR FUNDS
(Reserve Money Market Funds)
(Exact Name of Registrant as Specified in Charter)

200 Berkeley Street, Boston, Massachusetts 02116-5034
(Address of Principal Executive Offices)

(617) 210-3200
(Registrant's Telephone Number)

The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
(Name and Address of Agent for Service)

It is proposed that this filing will become effective:
[X] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485

If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)

<PAGE>

MENTOR FUNDS

CONTENTS OF
POST-EFFECTIVE AMENDMENT NO. 22
TO
REGISTRATION STATEMENT

This Post-Effective Amendment No. 22 to Registrant's Registration Statement
No. 333-82853 and 811-06555 consists of the following pages, items of
information and documents:

The Facing Sheet

The Contents Page

PART A
------

Prospectus for Evergreen Reserve Money Market Fund
(formerly Mentor Money Market Portfolio)
Evergreen Reserve U.S. Government Money Market Fund
(formerly Mentor U.S. Government Money Market Portfolio)
Evergreen Reserve Tax-Exempt Money Market Fund
(formerly Mentor Tax-Exempt Money Markt Portfolio)
is contained herein.

Prospectus for Mentor Growth Portfolio, Mentor Capital Growth Portfolio, Mentor
Balanced Portfolio,Mentor Income and Growth Portfolio, Mentor Perpetual Global
Portfolio (a globalgrowth fund), Mentor Quality Income Portfolio, Mentor
Municipal Income Portfolio, Mentor Short-Duration Income Portfolio, and Mentor
High Income Portfolio contained in Post-Effective Amendment No. 21 to
Registration Statement No. 33-45315 and 811-6550 filed on November 30, 1998

Prospectus for Mentor Growth Portfolio, Mentor Perpetual Global Portfolio,
Mentor Capital Growth Portfolio, Mentor Balanced Portfolio, Mentor Income and
Grpwth Portfolio, Mentor Municipal Income Portfolio, Mentor Quality Income
Portfolio, Mentor Short-Duration Income Portfolio, Mentor High Income Portfolio
contained in Post-Effective Amendment No. 21 to Registration Statement No.
33-45315 and 811-06550 filed on November 30, 1998

Prospectus for Mentor Funds - Money Market Portfolio, U.S. Government Money
Market Portfolio, and Tax-Exempt Money Market Portfolio contained in
Post-Effective Amendment No. 21 to Registration Statement No. 33-45315 and
811-06550 filed on November 30, 1998

PART B
------

Statement of Additional Information for Evergreen Reserve Money Market Fund
(formerly Mentor Money Market Portfolio)
Evergreen Reserve U.S. Government Money Market Fund
(formerly Mentor U.S. Government Money Market Portfolio)
Evergreen Reserve Tax-Exempt Money Market Fund
(formerly Mentor Tax-Exempt Money Market Portfolio)
is contained herein.

Statement of Additional Information for Mentor Growth Portfolio, Mentor
Perpetual Global Portfolio, Mentor Capital Growth Portfolio, Mentor Balanced
Portfolio, Mentor Income and Grpwth Portfolio, Mentor Municipal Income
Portfolio, Mentor Quality Income Portfolio, Mentor Short-Duration Income
Portfolio, Mentor High Income Portfolio contained in Post-Effective Amendment
No. 21 to Registration Statement No. 33-45315 and 811-06550 filed on November
30, 1998

Statement of Additional Information for Mentor Funds - Money Market Portfolio,
U.S. Government Money Market Portfolio, and Tax-Exempt Money Market Portfolio
contained in Post-Effective Amendment No. 21 to Registration Statement No.
33-45315 and 811-06550 filed on November 30, 1998

PART C
------

Exhibits

Indemnification

Business and Other Connections of Investment Adviser

Principal Underwriter

Location of Accounts and Records

Undertakings

Signatures

<PAGE>

RESERVE MONEY MARKET FUNDS

PART A

PROSPECTUS

<PAGE>

EVERGREEN RESERVE MONEY MARKET FUNDS

Evergreen Reserve Money Market Fund
(formerly Mentor Money Market Portfolio)
Evergreen Reserve Tax-Exempt Money Market Fund
(formerly Mentor Tax-Exempt Money Market Portfolio)
Evergreen Reserve U.S. Government Money Market Fund
(formerly Mentor U.S. Government Money Market Portfolio)

Retail shares
Institutional shares

Prospectus, February 1, 2000
[LOGO OF EVERGREEN FUNDS]

The Securities and Exchange Commission has not determined that the
information in this prospectus is accurate or complete, nor has it approved
or disapproved these securities. Anyone who tells you otherwise is
committing a crime.
<PAGE>

TABLE OF CONTENTS

FUND RISK/RETURN SUMMARIES:

<TABLE>
<S> <C>
Overview of Fund Risks...................................................... 1
Evergreen Reserve Money Market Fund......................................... 2
Evergreen Reserve Tax-Exempt Money Market Fund.............................. 4
Evergreen Reserve U.S. Government Money Market Fund......................... 6

GENERAL INFORMATION:

The Funds' Investment Advisor............................................... 8
Calculating the Share Price................................................. 8
How to Choose an Evergreen Reserve Money Market Fund........................ 8
How to Choose the Share Class That Best Suits You........................... 8
How to Buy Shares........................................................... 9
How to Redeem Shares........................................................ 10
Other Services.............................................................. 11
The Tax Consequences of Investing in the Funds.............................. 11
Fees and Expenses of the Funds.............................................. 12
Financial Highlights........................................................ 13
Other Fund Practices........................................................ 16
</TABLE>
In general, Funds included in this prospectus seek to provide investors with a
high rate of current income consistent with preservation of capital and
maintenance of liquidity and, in the case of Evergreen Reserve Tax-Exempt Money
Market Fund, such income will be exempt from federal income tax.

Fund Summaries Key
Each Fund's summary is organized around the following basic topics and
questions:

INVESTMENT GOAL
What is the Fund's financial objective? You can find clarification on how
the Fund seeks to achieve its objective by looking at the Fund's strategy and
investment policies. The Fund's Board of Trustees can change the investment
objective without a shareholder vote.

INVESTMENT STRATEGY
How does the Fund go about trying to meet its goals? What types of
investments does it contain? What style of investing and investment philosophy
does it follow? Does it have limits on the amount invested in any particular
type of security?

RISK FACTORS
What are the specific risks for an investor in the Fund?

PERFORMANCE
How well has the Fund performed in the past year? The past five years? The
past ten years?

EXPENSES
How much does it cost to invest in the Fund? What is the difference between
sales charges and expenses?

<PAGE>

OVERVIEW OF FUND RISKS

Reserve
Money
Market
Funds

typically rely on a combination of the following strategies:

. maintaining $1.00 per share net asset value;
. investing primarily in U.S. dollar-denominated high quality money market
instruments and other high quality securities meeting credit criteria which
the Fund's investment advisor believes present minimal credit risk.
. maintaining a dollar-weighted average maturity of 90 days or less and
investing in securities with remaining maturities of less than 397 days;
and
. selling a portfolio investment when the investment no longer appears to
meet the Fund's investment objective, when the Fund must meet redemptions,
or for other investment reasons which the portfolio manager deems
necessary.

may be appropriate for investors who:

. are seeking current income consistent with preservation of capital and
maintenance of liquidity.
. are seeking a conservative investment offering maximum liquidity combined
with competitive yields and a portfolio consisting of high quality, liquid
short-term securities.
. are seeking current income exempt from federal income tax (Reserve Tax-
Exempt Money Market Fund).

Following this overview, you will find information on each Reserve Money Market
Fund's specific investment strategies and risks.
................................................................................

Risk Factors For All Mutual Funds
Please remember that mutual fund shares are:
. not guaranteed to achieve their investment goals
. not a deposit with a bank
. not insured, endorsed or guaranteed by the FDIC or any government agency
. subject to investment risks, including possible loss of your original
investment

Although the Reserve Money Market Funds seek to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in
the Funds.

Following are some of the most important factors that may affect the value of
your investment. Other factors may be described in the discussion following
this overview:

Interest Rate Risk
When interest rates go up, the value of debt securities and dividend-paying
stocks tends to fall. Since your Fund invests a significant portion of its
portfolio in debt securities, if interest rates rise, then the value of your
investment may decline. When interest rates go down, interest earned by your
Fund on its investments may also decline, which could cause the Fund to reduce
the dividends it pays.

Credit Risk
The value of a debt security is directly affected by the issuer's ability to
repay principal and pay interest on time. Since your Fund invests in debt
securities, the value of and total return earned on your investment may decline
if an issuer fails to pay an obligation on a timely basis.
RESERVE MONEY MARKET FUNDS

1
<PAGE>

EVERGREEN

Reserve Money Market Fund

FUND FACTS:

Goals:
. High Current Income
. Maintain Liquidity
. Preservation of Capital

Principal Investment:
. High Quality Short-Term Instruments

Classes of Shares Offered in This Prospectus:

. Retail shares
. Institutional shares

Investment Advisor:
. Mentor Investment Advisors, LLC

NASDAQ Symbol:
. None

Dividend Payment Schedule:
. Monthly
................................................................................

INVESTMENT GOAL

The Fund seeks as high a rate of current income as the investment advisor
believes is consistent with preservation of capital and maintenance of
liquidity.

INVESTMENT STRATEGY

The following supplements the investment strategies discussed in the "Overview
of Fund Risks" on page 1.

The Fund will invest in high quality, short-term instruments consisting of any
or all of the following: U.S. Government securities, bankers' acceptances,
prime commercial paper, repurchase agreements with respect to U.S. Government
or agency securities and other short-term obligations of corporate issuers. The
Fund may invest in high quality U.S. dollar- denominated obligations of foreign
issuers and in bank certificates of deposit and bankers' acceptances payable in
U.S. dollars and issued by foreign banks (including U.S. branches of foreign
banks) or by foreign branches of U.S. banks. The Fund can invest without limit
in obligations of domestic branches of U.S. banks and U.S. branches of foreign
banks.

The Fund primarily invests in U.S. dollar-denominated high quality securities
and other U.S. dollar-denominated money market instruments meeting credit
criteria which the Fund's investment advisor believes present minimal credit
risk. "High quality securities," in the case of the Reserve Money Market Funds,
are (i) commercial paper or other short-term obligations rated A-1 by Standard
& Poor's Ratings Services ("S&P") and P-1 by Moody's Investors Service, Inc.
("Moody's") and (ii) obligations rated AAA or AA by S&P and Aaa or Aa by
Moody's at the time of investment.

RISK FACTORS

Your investment in the Fund is subject to the risks discussed in the "Overview
of Fund Risks" on page 1 under the headings:

.Interest Rate Risk
.Credit Risk

If your Fund invests in non-U.S. securities it could be exposed to certain
unique risks of foreign investing. For example, political turmoil and economic
instability in the countries in which the Fund invests could adversely affect
the value of your investment. Certain foreign countries have less developed and
less regulated securities markets and accounting systems than the U.S. This may
make it harder to get accurate information about a security or company, and
increase the likelihood that an investment will not perform as well as
expected.

For further information regarding the Fund's investment strategy and risk
factors see "Other Fund Practices."

RESERVE MONEY MARKET FUNDS

2
<PAGE>

EVERGREEN

PERFORMANCE

The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.

The chart below shows the percentage gain or loss for Institutional shares of
the Fund in each calendar year since its inception on 11/19/1997. It should
give you a general idea of the risks of investing in the Fund by showing how
the Fund's return has varied from year-to-year. This graph includes the effects
of Fund expenses.

Year-by-Year Total Return for Institutional Shares (%)

[CHART]

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

5.39% 5.05%

Best Quarter: 4th Quarter 1999 1.37%
Worst Quarter: 1st Quarter 1999 1.15%

This next table lists the Fund's average annual total return by class over the
past year and since inception (through 12/31/1999). This table is intended to
provide you with some indication of the risks of investing in the Fund.

Average Annual Total Return
(for the period ended 12/31/1999)*

<TABLE>
<CAPTION>
Performance
Inception Since
Date of Class 1 year 5 year 10 year 11/19/1997
<S> <C> <C> <C> <C> <C>
Retail shares 10/15/1998 4.51% N/A N/A 4.93%
Institutional shares 11/19/1997 5.05% N/A N/A 5.25%
</TABLE>

* Historical performance shown for the Retail shares prior to its inception is
based on the performance of the Institutional shares, the original class
offered. These historical returns for the Retail shares have not been
adjusted to reflect the effect of the Retail shares' 0.38% 12b-1 fee. The
Institutional shares do not pay a 12b-1 fee. If these fees had been
reflected, returns would have been lower.

To obtain current yield information call 1-800-343-2898.

EXPENSES

This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

You pay no shareholder transaction fees.

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)+

<TABLE>
<CAPTION>
Total Fund
Management 12b-1 Other Operating
Fees Fees Expenses Expenses
<S> <C> <C> <C> <C>
Retail shares 0.17% 0.38% 0.27% 0.82%
Institutional shares 0.17% 0.00% 0.10% 0.27%

</TABLE>

+Restated for the fiscal year ended 9/30/1999 to reflect current fees.

The table below shows the total expenses you would pay on a $10,000 investment
over one, three, five and ten year periods. The example is intended to help you
compare the cost of investing in this Fund versus other mutual funds and is for
illustration only. The example assumes a 5% average annual return and that you
reinvest all of your dividends and distributions. Your actual costs may be
higher or lower.

Example of Fund Expenses

<TABLE>
<CAPTION>
Assuming Redemption at
End of Period
------------------------------------------------------------------
After: Retail shares Institutional shares
<S> <C> <C>
1 year $ 84 $ 28
3 years $ 262 $ 87
5 years $ 455 $152
10 years $1,014 $343
</TABLE>
RESERVE MONEY MARKET FUNDS

3
<PAGE>

EVERGREEN

Reserve Tax-Exempt Money Market Fund

FUND FACTS:

Goals:
. High Current Income Exempt from Federal Income Tax
. Maintain Liquidity
. Preservation of Capital

Principal Investment:
. Tax-Exempt Securities

Class of Shares Offered in this Prospectus:

. Retail Shares

Investment Advisor:
. Mentor Investment Advisors, LLC

NASDAQ Symbol:
. None

Dividend Payment Schedule:
. Monthly
................................................................................

INVESTMENT GOAL

The Fund seeks as high a rate of current income exempt from federal income tax
as the investment advisor believes is consistent with preservation of capital
and maintenance of liquidity.

INVESTMENT STRATEGY

The following supplements the investment strategies discussed in the "Overview
of Fund Risks" on page 1.

The Fund invests, as a fundamental policy, at least 80% of its net assets in
tax-exempt securities such as: municipal notes, municipal bonds, municipal
securities backed by the U.S. government or any of its agencies or
instrumentalities, tax-exempt commercial paper or participation interests in
any of these securities. The Fund may invest the remainder of its assets in
other U.S. dollar-denominated high quality money market instruments which are
exempt from federal income tax other than the alternative minimum tax.

The Fund also reserves the right to invest more than 25% of its assets in tax-
exempt securities relating to any one or more states (including the District of
Columbia), U.S. territories or possessions, or any of their political
subdivisions.

The Fund may temporarily invest up to 100% of its assets in high quality
taxable money market instruments in response to adverse economic, political or
market conditions. This strategy is inconsistent with the Fund's principal
investment strategy and investment goal, and if employed could result in a
lower return and loss of market opportunity.

RISK FACTORS

Your investment in the Fund is subject to the risks discussed in the "Overview
of Fund Risks" on page 1 under the headings:

.Interest Risk
.Credit Risk

In addition, an investment in a Fund that may concentrate its investments in a
limited number of states entails greater risk than an investment in a Fund that
invests its assets in numerous states. The Fund may be vulnerable to any
development in such states' economies that may weaken or jeopardize the ability
of the states' municipal bond issuers to pay interest and principal on their
bonds. As a result, the Fund's shares may fluctuate more widely in value than
those of a Fund investing in tax-exempt securities from a number of different
states.

In addition, the Fund's ability to achieve its objective depends partially on
the prompt payment by issuers of the interest on and principal of the municipal
bonds held by the Fund. A moratorium, default, or other non-payment of interest
or principal when due on any municipal bond, in addition to affecting the
market value and liquidity of that particular security, could affect the market
value and liquidity of other municipal bonds held by the Fund. In addition, the
market for municipal bonds is often thin and can be temporarily affected by
large purchases and sales, including those by the Fund.

For further information regarding the Fund's investment strategy and risk
factors see "Other Fund Practices."

RESERVE MONEY MARKET FUNDS

4
<PAGE>

EVERGREEN

PERFORMANCE

The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.

The chart below shows the percentage gain or loss for Retail shares of the Fund
in each calendar year since inception on 10/15/1998. It should give you a
general idea of the risks of investing in the Fund by showing how the Fund's
return has varied from year-to-year. This graph includes the effects of Fund
expenses.

Year-by-Year Total Return for Retail Shares (%)

[CHART]

1999
2.63

Best Quarter: 4th Quarter 1999 0.75%
Worst Quarter: 1st Quarter 1999 0.56%

This next table lists the Fund's average annual total return over the past year
and since inception (through 12/31/1999). This table is intended to provide you
with some indication of the risks of investing in the Fund.

Average Annual Total Return
(for the period ended 12/31/1999)

<TABLE>
<CAPTION>
Performance
Inception Since
Date of Class 1 year 5 year 10 year 10/15/98
<S> <C> <C> <C> <C> <C>
Retail shares 10/15/1998 2.63% N/A N/A 2.72%
</TABLE>

To obtain current yield information call 1-800-343-2898.

EXPENSES

This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

You pay no shareholder transaction fees.

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)+

<TABLE>
<CAPTION>
Total Fund
Management 12b-1 Other Operating
Fees Fees Expenses Expenses
<S> <C> <C> <C> <C>
Retail shares 0.21% 0.33% 0.20% 0.74%
</TABLE>
+Actual for the fiscal year ended 9/30/1999.

Example of Fund Expenses

<TABLE>
<CAPTION>
Assuming Redemption at
End of Period
----------------------
After: Retail shares
<S> <C>
1 year $ 76
3 years $237
5 years $412
10 years $920
</TABLE>
RESERVE MONEY MARKET FUNDS

5
<PAGE>

EVERGREEN

Reserve U.S. Government Money Market Fund

FUND FACTS:

Goals:
. High Current Income
. Maintain Liquidity
. Preservation of Capital

Principal Investment:
. U.S. Government Securities

Classes of Shares Offered in this Prospectus:
. Retail shares
. Institutional shares

Investment Advisor:
. Mentor Investment Advisors, LLC

NASDAQ Symbol:
. None

Dividend Payment Schedule:
. Monthly

................................................................................

INVESTMENT GOAL

The Fund seeks as high a rate of current income as is consistent with
preservation of capital and maintenance of liquidity.

INVESTMENT STRATEGY

The following supplements the investment strategies discussed in the "Overview
of Fund Risks" on page 1.

The Fund invests exclusively in U.S. Treasury bills, notes, and bonds, and
other obligations issued or guaranteed as to principal or interest by the U.S.
Government, its agencies, or instrumentalities, and in repurchase agreements
with respect to such obligations.

Certain of the obligations in which the Fund invests, including U.S. Treasury
bills, notes, and bonds, mortgage participation certificates issued or
guaranteed by the Government National Mortgage Association, and Federal Housing
Administration debentures, are supported by the full faith and credit of the
United States. Other U.S. Government securities issued by federal agencies or
government sponsored enterprises are not supported by the full faith and credit
of the United States. These securities include obligations supported by the
right of the issuer to borrow from the U.S. Treasury, such as obligations of
Federal Home Loan Banks, and obligations supported only by the credit of an
instrumentality, such as Federal National Mortgage Association bonds.

Short-term U.S. Government obligations generally are considered among the
safest short-term investments. Because of their added safety, the yields
available from U.S. Government obligations are generally lower than the yields
available from comparable corporate debt securities. The U.S. Government
guarantee of securities owned by the Fund does not guarantee the net asset
value of the Fund's shares, which the Fund seeks to maintain at $1.00 per
share.

RISK FACTORS

Your investment in the Fund is subject to the risks discussed in the "Overview
of Fund Risks" on page 1 under the headings:

.Interest Rate Risk
.Credit Risk

For further information regarding the Fund's investment strategy and risk
factors see "Other Fund Practices."

RESERVE MONEY MARKET FUNDS

6
<PAGE>

EVERGREEN
PERFORMANCE

The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.

The chart below shows the percentage gain or loss for Institutional shares of
the Fund in each calendar year since its inception on 6/27/1997. It should give
you a general idea of the risks of investing in the Fund by showing how the
Fund's return has varied from year-to-year. This graph includes the effects of
Fund expenses.

Year-by-Year Total Return for Institutional Shares (%)

[CHART]

1998 1999
5.28 4.89

Best Quarter: 3rd Quarter 1998 1.33%
Worst Quarter: 1st Quarter 1999 1.14%

Average Annual Total Return
(for the period ended 12/31/1999)*

<TABLE>
<CAPTION>
Inception Performance
Date Since
of Class 1 year 5 year 10 year 6/27/1997
<S> <C> <C> <C> <C> <C>
Retail shares 10/15/1998 4.41% N/A N/A 4.92%
Institutional shares 6/27/1997 4.89% N/A N/A 5.16%
</TABLE>

*Historical performance shown for the Retail shares prior to its inception is
based on the performance of the Institutional shares, the original class
offered. These historical returns for the Retail shares have not been adjusted
to reflect the effect of the Retail shares' 0.38% 12b-1 fee. The Institutional
shares do not pay a 12b-1 fee. If these fees had been reflected, returns would
have been lower.

To obtain current yield information call 1-800-343-2898.

EXPENSES

This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.

You pay no shareholder transaction fees.

Annual Fund Operating Expenses (expenses that are deducted from Fund assets)+

<TABLE>
<CAPTION>
Total Fund
Management 12b-1 Other Operating
Fees Fees Expenses Expenses
<S> <C> <C> <C> <C>
Retail shares 0.17% 0.38% 0.26% 0.81%
Institutional shares 0.17% 0.00% 0.11% 0.28%
</TABLE>

+Restated for the fiscal year ended 9/30/1999 to reflect current fees.

Example of Fund Expenses

<TABLE>
<CAPTION>
Assuming Redemption at
End of Period
------------------------------------------
Retail Institutional
After: shares shares
<S> <C> <C>
1 year $ 83 $ 29
3 years $ 259 $ 90
5 years $ 450 $157
10 years $1,002 $356
</TABLE>

RESERVE MONEY MARKET FUNDS

7
<PAGE>

EVERGREEN

THE FUNDS' INVESTMENT ADVISOR

The investment advisor manages a Fund's investments and supervises its daily
business affairs. There is one investment advisor for the Funds. All investment
advisors for the Evergreen Funds are subsidiaries of First Union Corporation,
the sixth largest bank holding company in the United States, with over $253
billion in consolidated assets of 12/31/1999. First Union Corporation is located
at 301 South College Street, Charlotte, North Carolina 28288-0013.

Mentor Investment Advisors, LLC (Mentor Advisors) is the investment advisor to
the Funds. Mentor Advisors has been managing money for over 15 years and
currently manages over $15.6 billion in assets, including $14.6 in assets for
27 of the Evergreen Funds. Mentor Advisors is located at 901 East Byrd Street,
Richmond, Virginia 23219.

For the fiscal year ended 9/30/1999, the aggregate advisory fee paid to Mentor
Advisors by the Funds were as follows:

<TABLE>
<CAPTION>
% of the Fund's average
Fund daily net assets
<S> <C>
Reserve Money Market Fund 0.17%
Reserve Tax-Exempt Money Market Fund 0.21%
Reserve U.S. Government Money Market Fund 0.17%

</TABLE>

CALCULATING THE SHARE PRICE

The value of one share of a Fund, also known as the net asset value, or NAV, is
calculated twice daily on each day the New York Stock Exchange is open at 12
noon (Eastern time) and as of the time the Exchange closes (normally 4 p.m.
Eastern time). The Fund calculates its share price for each share by adding up
its total assets, subtracting all liabilities, then dividing the result by the
total number of shares outstanding. Each class of shares is calculated
separately. Each security held by a Fund is valued on an amortized cost basis
according to Rule 2a-7 under the Investment Company Act of 1940. Under this
method of valuation, a security is initially valued at its acquisition cost,
and thereafter a constant straightline 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 price per share for a Fund purchase or the amount received for a Fund
redemption is based on the next price calculated after the order is received
and all required information is provided. The value of your account at any
given time is the latest share price multiplied by the number of shares you
own.

HOW TO CHOOSE AN EVERGREEN RESERVE MONEY MARKET FUND

When choosing an Evergreen Fund, you should:
. Most importantly, read the prospectus to see if the Fund is suitable for you.
. Consider talking to an investment professional. He or she is qualified to
give you investment advice based on your investment goals and financial
situation and will be able to answer questions you may have after reading the
Fund's prospectus. He or she can also assist you through all phases of
opening your account.
. Request any additional information you want about the Fund, such as the
Statement of Additional Information, Annual Report or Semi-annual Report by
calling 1-800-343-2898. In addition, any of these documents, with the
exception of the Statement of Additional Information, may be downloaded off
our website at www.evergreen-funds.com.

HOW TO CHOOSE THE SHARE CLASS THAT BEST SUITS YOU

After choosing a Fund, you select a share class. Each Fund in this prospectus
offers up to two different share classes: Retail and Institutional. Pay
particularly close attention to the fee structure of each class so you know how
much you will be paying before you invest.

Retail shares
Each Fund offers Retail shares at net asset value without an initial sales
charge or deferred sales charge. Retail shares are subject to 12b-1 fees. There
is no minimum investment required.

Institutional shares
Each Fund (except Reserve Tax-Exempt Money Market Fund) offers Institutional
shares at net asset value without an initial sales charge, deferred sales
charge or 12b-1 fees. Investors will be required to make minimum initial
investments of $500,000 and minimum subsequent investments of $25,000.
Investments made through advisory accounts maintained with investment advisers
registered under the Investment Advisors Act of 1940, as amended (including
"wrap" accounts), are not subject to these minimum investment requirements. The
Funds reserve the right at any time to change the initial and subsequent
investment minimums required of investors.

RESERVE MONEY MARKET FUNDS

8
<PAGE>

EVERGREEN

HOW TO BUY SHARES

Once you decide on an amount and a share class, simply fill out an application
and send in your payment, or talk to your investment professional. Retail shares
of the Funds are only offered through broker-dealers who have special
distribution agreements with the Funds' distributor, Evergreen Distributor, Inc.
("EDI").
<TABLE>
<CAPTION>
Method Opening an Account Adding to an Account

<C> <S> <C>
By Mail or . Complete and sign the account application. . Make your check payable to
through an . Make the check payable to Evergreen Funds. Evergreen Funds.
Investment . Mail the application and your check to the address below: . Write a note specifying:
Professional Evergreen Service Company Overnight Address: -The Fund name
P.O. Box 2121 Evergreen Service Company -Share class
Boston, MA 02106-2121 200 Berkeley St. -Your account number
Boston, MA 02116-5039 - The name(s) in which the account is
registered.
. Or deliver them to your investment representative (provided . Mail to the address to the left or deliver
he or she has a broker/dealer arrangement with EDI). to your investment representative.

By Phone . Call 1-800-343-2898 to set up an account number and get wiring . Call the Evergreen Express Line at
instructions (call before 12 noon if you want wired funds to be 1-800-346-3858 24 hours a day or
credited that day). 1-800-343-2898 between 8 a.m. and 6 p.m.
Eastern time, on any business day.
. Instruct your bank to wire or transfer your purchase (they may
charge a wiring fee). . If your bank account is set up on file, you
. Complete the account application and mail to: can request either:
Evergreen Service Company Overnight Address: - Federal Funds Wire (offers immediate
P.O. Box 2121 Evergreen Service Company access to funds) or
Boston, MA 02106-2121 200 Berkeley St. - Electronic transfer through the Automated
Boston, MA 02116-5039 Clearing House which avoids wiring fees.
. Wires received after 4 p.m. Eastern time on market trading days
will receive the next market day's closing price.*

By Exchange . You can make an additional investment by exchange from an existing Evergreen Fund's account by contacting your
investment representative or calling the Evergreen Express Line at 1-800-346-3858.**
. You can only exchange shares within the same class.
. There is no sales charge or redemption fee when exchanging Funds within the Evergreen Funds family.***
. Orders placed before 4 p.m. Eastern time on market trading days will receive that day's closing share price (if
not, you will receive the next market day's closing price).*
. Exchanges are limited to three per calendar quarter, but in no event more than five per calendar year.
. Exchanges between accounts which do not have identical ownership must be made in writing with a signature guarantee
(see below).
Systematic . You can transfer money automatically from your bank account into . To establish automatic investing for an
Investment your Fund on a monthly basis. existing account, call 1-800-343-2898
Plan (SIP) . Initial investment minimum is $50 if you invest at least $25 per for an application.
(Retail month with this service. . The minimum is $25 per month or $75 per
shares . To enroll, check off the box on the account application and quarter.
Only) provide: . You can also establish an investing program
- Your bank account information through direct deposit from your paycheck.
- The amount and date of your monthly investment. Call 1-800-343-2898 for details.
</TABLE>

* The Fund's shares may be made available through financial service firms which
are also investment dealers and which have a service agreement with EDI. The
Fund has approved the acceptance of purchase and repurchase request orders
effective as of the time of their receipt by certain authorized financial
intermediaries.
** Once you have authorized either the telephone exchange or redemption
service, anyone with a Personal Identification Number (PIN) and the required
account information (including your broker) can request a telephone transaction
in your account. All calls are recorded or monitored for verification,
recordkeeping and quality-assurance purposes. The Evergreen Funds reserve the
right to terminate the exchange privilege of any shareholder who exceeds the
listed maximum number of exchanges, as well as to reject any large dollar
exchange if placing it would, in the judgment of the portfolio manager,
adversely affect the price of the Fund.
*** This does not apply to exchanges from Class A shares of an Evergreen Money
Market Fund.

RESERVE MONEY MARKET FUNDS

9
<PAGE>

EVERGREEN

HOW TO REDEEM SHARES

We offer you several convenient ways to redeem your shares in any of the
Evergreen Funds:

<TABLE>
<CAPTION>
Methods Requirements
<C> <S> <C> <C>
Call Us . Call the Evergreen Express Line at 1-800-346-3858 24 hours a day or
1-800-343-2898 between 8 a.m. and 6 p.m. Eastern time, on any business day.
. This service must be authorized ahead of time, and is only available for
regular accounts**
. All authorized requests made before 4 p.m. Eastern time on market trading days
will be processed at that day's closing price. Requests made after 4 p.m. will be
processed the following business day.*
. We can either:
-wire the proceeds into your bank account (service charges may apply)
-electronically transmit the proceeds to your bank account via the Automated
Clearing House service
-mail you a check.
. All telephone calls are recorded for your protection. We are not responsible
for acting on telephone orders we believe are genuine.
. See exceptions list below for requests that must be made in writing.
Write Us . You can mail a Evergreen Service Company Overnight Address:
redemption request to: P.O. Box 2121 Evergreen Service Company
Boston, MA 02106-2121 200 Berkeley St.
Boston, MA 02116-5039

. Your letter of instructions must:
-list the Fund name and the account number
-indicate the number of shares or dollar value you wish to redeem
-be signed by the registered owner(s).
. See exceptions list below for requests that must be signature guaranteed.
. To redeem from an IRA or other retirement account, call 1-800-343-2898 for a
special application.
Sell Your . You may also redeem your shares through participating broker-dealers by
Shares in delivering a letter as described above to your broker-dealer.
Person . A fee may be charged for this service.
Systematic . You can transfer money automatically from your Fund account on a monthly or
Withdrawal quarterly basis -- without redemption fees.
Plan (SWP) . The withdrawal can be mailed to you, or deposited directly to your bank
account.
(Retail . The minimum is $75 per month.
shares
Only) . The maximum is 1% of your account per month or 3% per quarter.
. To enroll, call 1-800-343-2898 for an application.
</TABLE>

* The Fund's shares may be made available through financial service firms
which are also investment dealers and which have a service agreement with
EDI. The Fund has approved the acceptance of purchase and repurchase
request orders effective as of the time of their receipt by certain
authorized financial intermediaries.
** Once you have authorized either the telephone exchange or redemption
service, anyone with a Personal Identification Number (PIN) and the
required account information (including your broker) can request a
telephone transaction in your account. All calls are recorded or monitored
for verification, recordkeeping and quality-assurance purposes. The
Evergreen Funds reserve the right to terminate the exchange privilege of
any shareholder who exceeds the listed maximum number of exchanges, as well
as to reject any large dollar exchange if placing it would, in the judgment
of the portfolio manager, adversely affect the price of the Fund.

Timing of Proceeds
Normally, we will send your redemption proceeds on the next business day after
we receive your request; however, we reserve the right to wait up to seven
business days to redeem any investments made by check and five business days
for investments made by Automated Clearing House transfer.

We also reserve the right to redeem in kind by paying you the proceeds of a
redemption in securities rather than in cash, and to redeem the remaining
amount in the account if your redemption brings the account balance below the
initial minimum of $1,000.

Exceptions: Redemption Requests That Require A Signature Guarantee
To protect you and the Evergreen Funds against fraud, certain redemption
requests must be made in writing with your signature guaranteed. A signature
guarantee can be obtained at most banks and securities dealers. A notary public
is not authorized to provide a signature guarantee. The following circumstances
require signature guarantees:

.You are redeeming more than $50,000. (Retail shares)
.You want the proceeds transmitted to a bank account not listed on the account.
.You want the proceeds payable to anyone other than the registered owner(s) of
the account.
.Either your address or the address of your bank account has been changed within
30 days.
.The account is registered in the name of a fiduciary corporation or any other
organization. In these cases, additional documentation is required: (Retail
shares) corporate accounts: certified copy of corporate resolution fiduciary
accounts: copy of the power of attorney or other governing document

Who Can Provide A Signature Guarantee:
.Commercial Bank
.Trust Company
.Savings Association
.Credit Union
.Member of a U.S. stock exchange

RESERVE MONEY MARKET FUNDS

10
<PAGE>

EVERGREEN

OTHER SERVICES

Automatic Reinvestment of Dividends
For the convenience of investors, all dividends and capital gains distributions
are automatically reinvested, unless you request otherwise. Distributions can
be made by check or electronic transfer through the Automated Clearing House to
your bank account. The details of your dividends and other distributions will
be included on your statement.

Payroll Deduction (Retail shares only)
If you want to invest automatically through your paycheck, call us to find out
how you can set up direct payroll deductions. The amounts deducted will be
invested in your Fund account using the Electronic Funds Transfer System. We
will provide the Fund account number. Your payroll department will let you know
the date of the pay period when your investment begins.

Telephone Investment Plan
You may make additional investments electronically in an existing Fund account
at amounts of not less than $100 or more than $10,000 per investment. Telephone
requests received by 4 p.m. Eastern time will be invested the day the request
is received.

Dividend Exchange
You may elect on the application to reinvest capital gains and/or dividends
earned in one Evergreen Fund into an existing account in another Evergreen Fund
in the same share class--automatically. Please indicate on the application the
Evergreen Fund(s) into which you want to invest the distributions.

Reinvestment Privileges
Under certain circumstances, shareholders may, within one year of redemption,
reinstate their accounts at the current price. This is the Fund's net asset
value, also sometimes referred to as the Fund's "NAV."

THE TAX CONSEQUENCES OF INVESTING IN THE FUNDS

You may be taxed in two ways:
.On Fund distributions (dividends and capital gains)
. On any profit you make when you sell any or all of your shares.

Fund Distributions
A mutual fund passes along to all of its shareholders the net income or profits
it receives from its investments. The shareholders of the fund then pay any
taxes due, whether they receive these distributions in cash or elect to have
them reinvested. The Evergreen Reserve Tax-Exempt Money Market Fund expects
that substantially all of its regular dividends will be exempt from federal
income tax including the alternative minimum tax. Otherwise, the Funds will
distribute two types of taxable income to you:

.Dividends. To the extent that the regular dividends are derived from interest
that is not tax exempt, or from short-term capital gains, you will have to
include them in your federal taxable income. Each Fund pays a monthly dividend
from the dividends, interest and other income on the securities in which it
invests.

.Capital Gains. When a mutual fund sells a security it owns for a profit, the
result is a capital gain. Evergreen Reserve Money Market Funds generally
distribute capital gains, if any, at least once a year, near the end of the
calendar year. Short-term capital gains reflect securities held by the Fund for
a year or less and are considered ordinary income just like dividends. Profits
on securities held longer than 12 months are considered long-term capital gains
and are taxed at a special tax rate (20% for most taxpayers). It is not
anticipated that any significant capital gains will be realized by the Funds.

Dividend and Capital Gain Reinvestment
Unless you choose otherwise on the account application, all dividend and
capital gain payments will be reinvested to buy additional shares. Distribution
checks that are returned and distribution checks that are uncashed when the
shareholder has failed to respond to mailings from the shareholder servicing
agent will automatically be reinvested to buy additional shares. No interest
will accrue on amounts represented by uncashed distribution or redemption
checks.

We will send you a statement each January with the federal tax status of
dividends and distributions paid by each Fund during the previous calendar
year.

Profits You Realize When You Redeem Shares
When you sell shares in a mutual fund, whether by redeeming or exchanging, you
have created a taxable event. You must report any gain or loss on your tax

RESERVE MONEY MARKET FUNDS

11
<PAGE>

EVERGREEN

return unless the transaction was entered into by a tax-deferred retirement
plan. Investments in money market funds typically do not generate capital
gains. It is your responsibility to keep accurate records of your mutual fund
transactions. You will need this information when you file your income tax
return, since you must report any capital gains or losses you incur when you
sell shares. Remember, an exchange is a purchase and a sale for tax purposes.

Tax Reporting
Evergreen Service Company provides you with a tax statement of your dividend
and capital gains distributions for each calendar year on Form 1099 DIV.
Proceeds from a sale are reported on Form 1099B. You must report these on your
tax return. Since the IRS receives a copy as well, you could pay a penalty if
you neglect to report them.

Evergreen Service Company will send you a tax information guide each year
during tax season, which may include a cost basis statement detailing the gain
or loss on taxable transactions you had during the year. Please consult your
own tax advisor for further information regarding the federal, state and local
tax consequences of an investment in the Funds.

Retirement Plans
You may invest in each Fund through various retirement plans, including IRAs,
401(k) plans, Simplified Employee Plans, (SEPs), IRAs, 403(b) plans, 457 plans
and others. For special rules concerning these plans, including applications,
restrictions, tax advantages, and potential sales charge waivers, contact your
broker-dealer. To determine if a retirement plan may be appropriate for you,
consult your tax advisor.

FEES AND EXPENSES OF THE FUNDS

Every mutual fund has fees and expenses that are assessed either directly or
indirectly. This section describes each of those fees.

Management Fee
The management fee pays for the normal expenses of managing the fund, including
portfolio manager salaries, research costs, corporate overhead expenses and
related expenses.

12b-1 Fees
The Trustees of the Evergreen Funds have approved a policy to assess 12b-1 fees
for Retail shares of the Funds. Currently the 12b-1 fees for Retail shares is
limited to 0.38% (for all funds except Reserve Tax-Exempt Money Market Fund
which is 0.33%) of the average daily net assets of the class. These fees
increase the cost of your investment. The purpose of these 12b-1 fees is to
promote the sale of more shares of the Funds to the public. The Funds might use
these fees for advertising and marketing and as "service fees" to the broker-
dealer for additional shareholder services.

Other Expenses
Other expenses include miscellaneous fees from affiliated and outside service
providers. These may include legal, audit, custodial and safekeeping fees, the
printing and mailing of reports and statements, automatic reinvestment of
distributions and other conveniences for which the shareholder pays no
transaction fees.

Total Fund Operating Expenses
The total cost of running the Fund is called the expense ratio. As a
shareholder, you are not charged these fees directly; instead they are taken
out before the Fund's net asset value is calculated, and are expressed as a
percentage of the Fund's average daily net assets. The effect of these fees is
reflected in the performance results for that share class. Because these fees
are "invisible," investors should examine them closely in the prospectus,
especially when comparing one fund with another fund in the same investment
category. There are three things to remember about expense ratios: 1) your
total return in the Fund is reduced in direct proportion to the fees; 2)
expense ratios can vary greatly between funds and fund families, from under
0.25% to over 3.0%; and 3) a Fund's advisor may waive a portion of the Fund's
expenses for a period of time, reducing its expense ratio.

RESERVE MONEY MARKET FUNDS

12
<PAGE>
FINANCIAL HIGHLIGHTS
This section looks in detail at the results for one share in each share class
of the Funds--how much income it earned, how much of this income was passed
along as a distribution and how much the return was reduced by expenses. The
tables have been derived from financial information audited by KPMG LLP, the
Fund's independent auditors. For a more complete picture of the Funds'
financial statements, please see the Funds' Annual Report as well as the
Statement of Additional Information.

EVERGREEN
Reserve Money Market Fund
(formerly Mentor Money Market Portfolio)

<TABLE>
<CAPTION>
Period Ended
September 30,
1999 (a)
<S> <C>
RETAIL SHARES
Net asset value, beginning of period $ 1.00
--------
Income from investment operations
Net investment income 0.04
Less distributions to shareholders from net investment income (0.04)
--------
Net asset value, end of period $ 1.00
--------
Total return 4.93%
Ratios and supplemental data
Net assets, end of period (thousands) $323,392
Ratios to average net assets
Expenses 0.83%+
Net investment income 4.32%+
</TABLE>

<TABLE>
<CAPTION>
Year Ended September 30,
----------------------------
1999 1998 (b)
<S> <C> <C>
INSTITUTIONAL SHARES
Net asset value, beginning of period $ 1.00 $ 1.00
------------ ------------
Income from investment operations
Net investment income 0.05 0.05
Less distributions to shareholders from net
investment income (0.05) (0.05)
------------ ------------
Net asset value, end of period $ 1.00 $ 1.00
------------ ------------
Total return 4.95% 4.74%
Ratios and supplemental data
Net assets, end of period (thousands) $ 37,506 $ 40,970
Ratios to average net assets
Expenses 0.32% 0.33%+
Net investment income 4.82% 5.35%+
</TABLE>
(a) For the period from October 15, 1998 (commencement of class operations) to
September 30, 1999.
(b) For the period from November 19, 1997 (commencement of class operations) to
September 30, 1998.
+ Annualized.

RESERVE MONEY MARKET FUNDS

13
<PAGE>

EVERGREEN
Reserve Tax-Exempt Money Market Fund
(formerly Mentor Tax-Exempt Money Market Portfolio)

<TABLE>
<CAPTION>
Period Ended
September 30,
1999 (a)
<S> <C>
RETAIL SHARES
Net asset value, beginning of period $ 1.00
-------
Income from investment operations
Net investment income 0.03
Less distributions to shareholders from net investment income (0.03)
-------
Net asset value, end of period $ 1.00
-------
Total return 2.53%
Ratios and supplemental data
Net assets, end of period (thousands) $66,047
Ratios to average net assets
Expenses 0.74%+
Net investment income 2.51%+
</TABLE>
(a) For the period from October 15, 1998 (commencement of class operations) to
September 30, 1999.
+ Annualized.

RESERVE MONEY MARKET FUNDS

14
<PAGE>

EVERGREEN
Reserve U.S. Government Money Market Fund
(formerly Mentor U.S. Government Money Market Portfolio)

<TABLE>
<CAPTION>
Period Ended
September 30,
1999 (a)
<S> <C>
RETAIL SHARES
Net asset value, beginning of period $ 1.00
-------
Income from investment operations
Net investment income 0.04
Less distributions to shareholders from net investment income (0.04)
-------
Net asset value, end of period $ 1.00
-------
Total return 4.93%
Ratios and supplemental data
Net assets, end of period (thousands) $99,417
Ratios to average net assets
Expenses 0.80%+
Net investment income 4.23%+
</TABLE>

<TABLE>
<CAPTION>
Year Ended September 30,
---------------------------
1999 1998 1997 (b)
<S> <C> <C> <C>
INSTITUTIONAL SHARES
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
-------- -------- -------
Income from investment operations
Net investment income 0.05 0.05 0.01
Less distributions to shareholders from net
investment income (0.05) (0.05) (0.01)
-------- -------- -------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
-------- -------- -------
Total return 4.80% 5.42% 1.39%
Ratios and supplemental data
Net assets, end of period (thousands) $109,102 $106,273 $61,805
Ratios to average net assets
Expenses 0.33% 0.33% 0.33%+
Net investment income 4.69% 5.27% 5.26%+
</TABLE>
(a) For the period from October 15, 1998 (commencement of class operations) to
September 30, 1999.
(b) For the period from June 27, 1997 (commencement of class operations) to
September 30, 1997.
+ Annualized.

RESERVE MONEY MARKET FUNDS

15
<PAGE>

EVERGREEN

OTHER FUND PRACTICES

The Funds may purchase securities on a when-issued or delayed delivery basis
and may purchase or sell securities on a forward commitment basis. Settlement
of such transactions normally occurs within a month or more after the purchase
or sale commitment is made. Purchases made under such conditions may involve
the risk that the security may be valued at less than its purchase price,
causing an unrealized loss to the Fund. In addition, when the Fund engages in
such purchases, it relies on the other party to consummate the sale, if the
other party fails to perform its obligations, the Fund may be disadvantaged.
The Funds do not intend to purchase when-issued securities for speculative
purposes.

The Funds may invest in repurchase agreements. Under a repurchase agreement, a
Fund purchases a debt instrument for a relatively short period (usually not
more than one week), which the seller agrees to repurchase at a fixed time and
price, representing the Fund's cost plus interest.

A Fund will enter into repurchase agreements only with commercial banks and
with registered broker-dealers who are members of a national securities
exchange or market makers in government securities, and only if the debt
instrument subject to the repurchase agreement is a U.S. Government security. A
Fund bears a risk of loss if the other party defaults on its obligation and the
Fund is delayed or prevented from exercising its rights to dispose of the
collateral. If the other party should become involved in bankruptcy or
insolvency proceedings, it is possible that a Fund may be treated as an
unsecured creditor and required to return the collateral to the other party's
estate.

Please consult the Statement of Additional Information for more
information regarding these and other investment practices used by the
Funds, including risks.

RESERVE MONEY MARKET FUNDS

16
<PAGE>

[LOGO]

Notes
GROWTH AND INCOME FUNDS

17
<PAGE>

[QUICK REFERENCE GUIDE]

1 Investor Services
Call 1-800-343-2898
Monday through Friday, 8 a.m. to 6 p.m. Eastern time to
. buy, redeem or exchange shares
. order applications
. get assistance with your account

2 Information Line for Hearing and Speech Impaired (TTY/TDD)
Call 1-800-343-2888
Monday through Friday, 8 a.m. to 6 p.m. Eastern time

3 Write us a letter
Evergreen Service Company
P.O. Box 2121
Boston, MA 02106-2121
. to buy, redeem or exchange shares
. to change the registration on your account
. for general correspondence

4 For express, registered or certified mail:
Evergreen Service Company
200 Berkeley Street
Boston, MA 02116-5039

5 Visit us on-line:
www.evergreen-funds.com

6 Regular communications you will receive:

Account Statements -- You will receive quarterly statements for each
Fund you own.

Confirmation Notices -- We send a confirmation of any transaction you
make within five days of the transaction.

Annual and Semi-annual reports -- You will receive a detailed financial
report on your Fund(s) twice a year.

Tax Forms -- Each January you will receive any tax forms you need to
file your taxes as well as the Evergreen Tax Information Guide.
<PAGE>

For More Information About the Funds, Ask for:

The Funds' most recent Annual or Semi-annual Report, which contains a
complete financial accounting for each Fund and a complete list of the
Fund's holdings as of a specific date, as well as commentary from the Fund's
portfolio manager. This Report discusses the market conditions and
investment strategies that significantly affected the Fund's performance
during the most recent fiscal year or period.

The Statement of Additional Information (SAI), which contains more detailed
information about the policies and procedures of the Funds. The SAI has been
filed with the Securities and Exchange Commission (SEC) and its contents are
legally considered to be part of this prospectus.

For questions, other information, or to request a copy, without charge, of
any of the documents, call 1-800-343-2898 or ask your investment
representative. We will mail material within three business days. In
addition, any of these documents, with the exception of the SAI, may be
downloaded off our website at www.evergreen-funds.com.

Information about these Funds (including the SAI) is also available on the
SEC's Internet website at http://www.sec.gov. Copies of this material may be
obtained, for a duplication fee, by writing the SEC Public Reference
Section, Washington, D.C. 20549-6009, or by electronic request at the
following e-mail address: [email protected]. This material can also be
reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
For information about the operation of the Public Reference Room, call the
SEC at 1-202-942-8090.

Evergreen Distributor, Inc.
90 Park Avenue
New York, New York 10016

SEC File No.: 333-82853
61284

552237 1/2000

----------------
BULK RATE
U.S.
POSTAGE
PAID
PERMIT NO. 19
[Evergreen Logo] HUDSON, MA
----------------

401 South Tryon St.
Charlotte, NC 28288

<PAGE>

RESERVE MONEY MARKET FUNDS

PART B

STATEMENT OF ADDITIONAL INFORMATION

<PAGE>

EVERGREEN RESERVE MONEY MARKET FUNDS

200 Berkeley Street
Boston, Massachusetts 02116
(800) 633-2700

STATEMENT OF ADDITIONAL INFORMATION

February 1, 2000

Evergreen Reserve Money Market Fund ("Reserve Money Fund")
Evergreen Reserve Tax-Exempt Money Market Fund ("Reserve Tax-Exempt Fund")
Evergreen Reserve U.S. Government Money Market Fund ("Reserve U.S. Government
Fund")

(Each a "Fund"; together, the "Funds")

Each Fund is a series of Mentor Funds
(the "Trust").

This statement of additional information ("SAI") pertains to all
classes of shares of the Funds. It is not a prospectus but should be read in
conjunction with the prospectus dated February 1, 2000 for the Fund in which you
are interested. The Funds are offered through one single prospectus offering
Retail shares and Institutional shares of the Funds. You may obtain the
prospectus without charge by calling (800) 343-2898.

Certain information may be incorporated by reference to the Funds'
Annual Report dated September 30, 1999. You may obtain a copy of the Annual
Report without charge by calling (800) 343-2898 or downloading it off our
website at www.evergreen-funds.com.

<PAGE>

TABLE OF CONTENTS

TRUST HISTORY.............................................................1
INVESTMENT RESTRICTIONS...................................................1
OTHER SECURITIES AND INVESTMENT PRACTICES.................................2
EXPENSES..................................................................6
MANAGEMENT OF TRUST.......................................................7
PRINCIPAL HOLDERS OF FUND SHARES.........................................10
PERFORMANCE..............................................................11
SERVICE PROVIDERS........................................................12
PURCHASE AND REDEMPTION OF SHARES .......................................13
PRICING OF SHARES........................................................14
PERFORMANCE CALCULATIONS.................................................14
PRINCIPAL UNDERWRITER....................................................15
DISTRIBUTION EXPENSES UNDER RULE 12b-1 16
TAX INFORMATION..........................................................18
FINANCIAL STATEMENTS.....................................................21
BROKERAGE................................................................21
ORGANIZATION.............................................................22
INVESTMENT ADVISORY AGREEMENT............................................23
CORPORATE AND MUNICIPAL BOND RATINGS.....................................24
ADDITIONAL INFORMATION...................................................36

<PAGE>

1
TRUST HISTORY

The Mentor Funds is an open-end management investment company, which
was organized as a Massachusetts business trust on January 20, 1992. Each Fund
is a diversified series of the Trust. A copy of the Declaration of Trust is on
file as an exhibit to the Trust's Registration Statement, of which this SAI is a
part. On October 29, 1999, in connection with the reorganization of the Mentor
Funds, Evergreen Reserve Money Market Fund (formerly Mentor Money Market
Portfolio), Evergreen Reserve U.S. Government Money Market Fund (formerly Mentor
U.S. Government Money Market Portfolio) and Evergreen Reserve Tax-Exempt Money
Market Fund (formerly Mentor Tax-Exempt Money Market Portfolio) changed their
names.

INVESTMENT RESTRICTIONS

As fundamental investment restrictions, which may not be changed
with respect to a Fund without approval by the holders of a majority of the
outstanding shares of that Fund, a Fund may not:

1. Purchase any security (other than U.S. Government securities)
if as a result: (i) as to 75% of such Fund's total assets, more than 5% of the
Fund's total assets (taken at current value) would then be invested in
securities of a single issuer, or (ii) more than 25% of the Fund's total assets
would be invested in a single industry; except that the Reserve Money Fund may
invest up to 100% of its assets in securities of issuers in the banking
industry.

2. Acquire more than 10% of the voting securities of any issuer.

3. Act as underwriter of securities of other issuers except to the
extent that, in connection with the disposition of portfolio securities, it may
be deemed to be an underwriter under certain federal securities laws.

4. Issue any class of securities which is senior to the Fund's
shares of beneficial interest.

5. Purchase or sell real estate or interest in real estate,
including real estate mortgage loans, although it may purchase and sell
securities which are secured by real estate and securities of companies that
invest or deal in real estate or real estate limited partnership interests. (For
purpose of this restriction, investments by a Fund in mortgage-backed securities
and other securities representing interest in mortgage pools shall not
constitute the purchase or sale of real estate or interests in real estate or
real estate mortgage loans.)

6. Borrow money in excess of 5% of the value (taken at the lower
of cost or current value) of its total assets (not including the amount
borrowed) at the time the borrowing is made, and then only from banks as a
temporary measure to facilitate the meeting of redemption requests (not for
leverage) which might otherwise require the untimely disposition of portfolio
investments or for extraordinary or emergency purposes.

7. Purchase or sell commodities or commodity contracts, except
that a Fund may purchase or sell financial futures contracts, options on futures
contracts, forward contracts, and options with respect to foreign currencies,
and may enter into swap transactions.

8. Make loans, except by purchase of debt obligations in which the
Fund may invest consistent with its investment policies, by entering into
repurchase agreements or by lending its portfolio securities.

In addition, it is contrary to the current policy of each Fund,
which policy may be changed without shareholder approval, to invest in (a)
securities which at the time of such investment are not readily marketable, (b)
securities restricted as to resale (excluding securities determined by the
Trustees of the Trust (or the person designated by the Trustees to make such
determinations) to be readily marketable), and (c) repurchase agreements
maturing in more than seven days, if, as a result, more than 10% of the Fund's
net assets (taken at current value) would then be invested in securities
described in (a), (b) and (c).

All percentage limitations on investment will apply at the time of
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment. Except
for the investment restrictions listed above as fundamental or to the extent
designated as such in a prospectus with respect to a Fund, the other investment
policies described in this SAI or in a prospectus are not fundamental and may be
changed by approval of the Trustees.

The Investment Company Act of 1940, as amended (the "1940 Act"),
provides that a "vote of a majority of the outstanding voting securities" of a
Fund means the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Fund, and (2) 67% or more of the shares present at a
meeting if more than 50% of the outstanding shares are represented at the
meeting in person or by proxy.

OTHER SECURITIES AND INVESTMENT PRACTICES

Listed below are securities and investment practices the Funds may use
in addition to those discussed in the prospectus. The information below applies
to all Funds unless otherwise noted.

Money Market Instruments

The Fund may invest up to 100% of its assets in high quality money
market instruments, such as notes, certificates of deposit, commercial paper,
banker's acceptances, bank deposits or U.S. government securities if, in the
opinion of the investment advisor, market conditions warrant a temporary
defensive investment strategy.

U.S. Government Securities

The Fund may invest in securities issued or guaranteed by U.S.
Government agencies or instrumentalities.

These securities are backed by (1) the discretionary authority of the
U.S. Government to purchase certain obligations of agencies or instrumentalities
or (2) the credit of the agency or instrumentality issuing the obligations.

Some government agencies and instrumentalities may not receive
financial support from the U.S. Government. Examples of such agencies are:

(i) Farm Credit System, including the National Bank for Cooperatives,
Farm Credit Banks and Banks for Cooperatives;

(ii) Farmers Home Administration;

(iii)Federal Home Loan Banks;

(iv) Federal Home Loan Mortgage Corporation;

(v) Federal National Mortgage Association; and Student Loan Marketing
Association.

Securities Issued by the Government National Mortgage Association ("GNMA"). The
Fund may invest in securities issued by the GNMA, a corporation wholly-owned by
the U.S. Government. GNMA securities or "certificates" represent ownership in a
pool of underlying mortgages. The timely payment of principal and interest due
on these securities is guaranteed.

Unlike conventional bonds, the principal on GNMA certificates is not
paid at maturity but over the life of the security in scheduled monthly
payments. While mortgages pooled in a GNMA certificate may have maturities of up
to 30 years, the certificate itself will have a shorter average maturity and
less principal volatility than a comparable 30-year bond.

The market value and interest yield of GNMA certificates can vary due
not only to market fluctuations, but also to early prepayments of mortgages
within the pool. Since prepayment rates vary widely, it is impossible to
accurately predict the average maturity of a GNMA pool. In addition to the
guaranteed principal payments, GNMA certificates may also make unscheduled
principal payments resulting from prepayments on the underlying mortgages.

Although GNMA certificates may offer yields higher than those available
from other types of U.S. Government securities, they may be less effective as a
means of locking in attractive long-term rates because of the prepayment
feature. For instance, when interest rates decline, prepayments are likely to
increase as the holders of the underlying mortgages seek refinancing. As a
result, the value of a GNMA certificate is not likely to rise as much as the
value of a comparable debt security would in response to same decline. In
addition, these prepayments can cause the price of a GNMA certificate originally
purchased at a premium to decline in price compared to its par value, which may
result in a loss.

When-Issued, Delayed-Delivery and Forward Commitment Transactions

The Fund may purchase securities on a when-issued or delayed delivery
basis and may purchase or sell securities on a forward commitment basis.
Settlement of such transactions normally occurs within a month or more after the
purchase or sale commitment is made.

The Fund may purchase securities under such conditions only with the
intention of actually acquiring them, but may enter into a separate agreement to
sell the securities before the settlement date. Since the value of securities
purchased may fluctuate prior to settlement, the Fund may be required to pay
more at settlement than the security is worth. In addition, the purchaser is not
entitled to any of the interest earned prior to settlement.

Upon making a commitment to purchase a security on a when-issued,
delayed delivery or forward commitment basis the Fund will hold liquid assets
worth at least the equivalent of the amount due. The liquid assets will be
monitored on a daily basis and adjusted as necessary to maintain the necessary
value.

Purchases made under such conditions may involve the risk that yields
secured at the time of commitment may be lower than otherwise available by the
time settlement takes place, causing an unrealized loss to the Fund. In
addition, when the Fund engages in such purchases, it relies on the other party
to consummate the sale. If the other party fails to perform its obligations, the
Fund may miss the opportunity to obtain a security at a favorable price or
yield.

Repurchase Agreements

The Fund may enter into repurchase agreements with entities that are
registered as 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
investment advisor to be creditworthy. In a repurchase agreement the Fund
obtains a security and simultaneously commits to return the security to the
seller at a set price (including principal and interest) within a period of time
usually not exceeding seven days. 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 the 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 the Fund
might be delayed pending court action. The Fund's investment advisor 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. The Fund will only enter into repurchase agreements with
banks and other recognized financial institutions, such as broker-dealers, which
are deemed by the investment advisor to be creditworthy pursuant to guidelines
established by the Board of Trustees.

Reverse Repurchase Agreements

As described herein, the Fund may also enter into reverse repurchase
agreements. These transactions are similar to borrowing cash. In a reverse
repurchase agreement, the 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 the 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 the 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 the
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

The Fund may not invest more than 10% of its net assets in securities
that are illiquid. A security is illiquid when the 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.

The 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 the
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.

Securities Lending

A Fund may lend its portfolio securities, provided: (1) the loan is
secured continuously by collateral consisting of U.S. Government Securities,
cash, or cash equivalents adjusted daily to have market value at least equal to
the current market value of the securities loaned; (2) the Fund may at any time
call the loan and regain the securities loaned; (3) a Fund will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate
market value of securities of any Fund loaned wil not at any time exceed
one-third (or such other limit as the Trustee may establish) of the total assets
of the Fund. Cash collateral received by a Fund may be invested in any
securities in which the Fund may invest consistent with its investment policies.
In addition, it is anticipated that a Fund may share with the borrower some of
the income received on the collateral for the loan or that it will be paid a
premium for the loan. Before a Fund enters into a loan, its investment advisor
considers all relevant facts and circumstances including the creditworthiness of
the borrowr. The risks in lending portfolio securities, as with other extensions
of credit, consistent of possible delay in recovery of the securities or
possible loss of rights in the collateral should the borrower fail financially.
Although voting rights or rights to consent with respect to the loaned
securities pass to the borrower, a Fund retains the right to call the loans at
any time on reasonable notice, and it will do so in order that the securities
may be voted by a Fund if the holders of such securities are asked to vote upon
or consent to matters materially affecting the investment. A Fund will not lend
portfolio securities to borrowers affiliated with the Fund.

Stand-by Commitments (Reserve Tax-Exempt Fund only)

When the Fund purchases tax-exempt securities, it has the authority to
acquire stand-by commitments from banks and broker-dealers with respect to those
tax-exempt securities. A stand-by commitment may be considered a security
independent of the state tax-exempt security to which it relates. The amount
payable by a bank or dealer during the time a stand-by commitment is
exercisable, absent unusual circumstances, would be substantially the same as
the market value of the underlying tax-exempt securities to a third party at any
time. The Fund expects that stand-by commitments generally will be available
without the payment of direct or indirect consideration. The Fund does not
expect to assign any value to stand-by commitments.

Foreign Securities (Reserve Money Fund only)

The Fund may invest in obligations of foreign issuers and in bank
certificates of deposit and bankers' acceptances payable in U.S. dollars and
issued by foreign banks (including U.S. branches of foreign banks) or by foreign
branches of U.S. banks. These investments subject the Fund to investment risks
different from those associated with domestic investment. Such risks include
adverse political and economic developments in foreign countries, the imposition
of withholding taxes on interest income, seizure or nationalization of foreign
deposits, or the adoption of other governmental restrictions which may adversely
affect the payment of principal and interest on such obligations. Legal remedies
available to investors in certain foreign countries may be more limited than
those available with respect to investments in the U.S. or in other foreign
countries. Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in payment or delivery of securities or in the
recovery of the Fund's assets held abroad) and expenses not present in the
settlement of domestic investments. In addition, foreign securities may be less
liquid than U.S. securities, and foreign accounting and disclosure standards may
differ from U.S. standards. Special tax considerations apply to foreign
investments.

Tax-Exempt Securities (Reserve Tax-Exempt Fund only)

The term "Tax-Exempt Securities" includes debt obligations issued by a
state, its political subdivisions (for example, counties, cities, towns
villages, districts and authorities) and their agencies, instrumentalities or
other governmental units, the interest from which is, in the opinion of bond
counsel, exempt from federal income tax. Such obligations are issued to obtain
funds for various public purposes, including the construction of a wide range of
public facilities, such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which tax-exempt securities may be issued include the refunding of
outstanding obligations or the payment of general operating expenses. Short-term
tax-exempt securities are generally issued by state and local governments and
public authorities as interim financing in anticipation of tax collections,
revenue receipts, or bond sales to finance such public purposes. In addition,
certain types of "private activity" bonds may be issued by public authorities to
finance such projects as privately operated housing facilities and certain local
facilities for water supply, gas, electricity or sewage or solid waste disposal,
student loans, or the obtaining of funds to lend to public or private
institutions for the construction of facilities such as educational, hospital
and housing facilities. Other types of private activity bonds, the proceeds of
which are used for the construction, constitute tax-exempt securities, although
the current federal tax laws place substantial limitations on the size of such
issues. Tax-exempt securities also include tax-exempt commercial paper, which
are promissory notes issued by municipalities to enhance their cash flows.

The two principal classifications of tax-exempt securities are general
obligation and special obligation (or revenue) securities. General obligation
securities involve the credit of an issuer possessing taxing power and are
payable from the issuer's general unrestricted revenues. Special obligations are
payable only from the revenues derived from a particular facility or class of
facilities, or a specific revenue source and generally are not payable from the
unrestricted revenues of the issuer.

Participation Interests (Reserve Tax-Exempt Fund only)

The Fund may invest in tax-exempt securities either by purchasing them
directly or by purchasing certificates of accrual or similar instruments
evidencing direct ownership of interest payments or principal payments, or both,
on tax-exempt securities, provided that, in the opinion of counsel to the
initial seller of each such certificate or instrument, any discount accruing on
the certificate or instrument that is purchased at a yield not greater than the
coupon rate of interest on the related tax-exempt securities will be exempt from
federal income tax to the same extent as interest on the tax-exempt securities.
The Fund may also invest in tax-exempt securities by purchasing from banks
participation interests in all or part of specific holdings of tax-exempt
securities. These participations may be backed in whole or in part by an
irrevocable letter of credit or guarantee of the selling bank. The selling bank
may receive a fee from the Fund in connection with the arrangement.

EXPENSES

Advisory Fees

The Funds investment advisor is Mentor Investment Advisors, LLC
("Mentor Advisors"). For more information, see "Investment Advisory Agreements"
herein.

Mentor Advisors serves as investment advisor to each Fund pursuant to a
Management Contract with the Trust. Subject to the supervision and direction of
the Trustees, Mentor Advisors manages a Fund's portfolio in accordance with the
stated policies of that Fund and of the Trust. Mentor Advisors makes investment
decisions for the Funds and places the purchase and sale orders for portfolio
transactions. Mentor Advisors bears all of its expenses in connection with the
performance of its services. In addition, Mentor Advisors pays the salaries of
all officers and employees who are employed by it and the Trust.

Mentor Advisors is entitled to receive an annual fee based on each
Fund's average daily net assets as follows:

Average Daily Net Assets Fee

First $500 million 0.22%

Next $500 million 0.20%

Next $1 billion 0.175%

Next $1 billion 0.16%

Over $3 billion 0.15%

Advisory Fees Paid

Below are the advisory fees paid by each Fund for the last three fiscal
periods.

Year or Period Ended September 30, 1999 Advisory Fee

Reserve Money Fund $307,339

Reserve Tax-Exempt Fund $64,707

Reserve U.S. Government Fund $301,770

Year or Period Ended September 30, 1998

Reserve Money Fund $52,000

Reserve Tax-Exempt Fund NA

Reserve U.S. Government Fund $202,000

Year or Period Ended September 30, 1997

Reserve Money Fund N/A

Reserve Tax-Exempt Fund N/A

Reserve U.S. Government Fund 29,982

Brokerage Commissions

The Funds paid no brokerage commissions during the fiscal year or
period ended September 30, 1997, 1998 and 1999.

Underwriting Commissions

For each Fund, there are no Underwriting Commissions for the last three
fiscal periods. For more information, see "Principal Underwriter" herein.

12b-1 Fees

Below are the 12b-1 fees paid by each Fund with respect to the Retail
shares of the Funds for the fiscal year ended September 30, 1999. For more
information, see "Distribution Expenses Under Rule 12b-1" herein.

Fund Service Fees

Reserve Money Fund $527,195

Reserve Tax-Exempt Fund $100,106

Reserve U.S. Government Fund $180,368

MANAGEMENT OF THE TRUST

The Trust is supervised by a Board of Trustees that is responsible for
representing the interest of the shareholders. The Trustees meet periodically
throughout the year to oversee the Fund's activities, reviewing, among other
things, the Fund's performance and its contractual arrangements with various
service providers.

The Trust has an Executive Committee which consists of the Chairman of the
Board, Michael S. Scofield, and K. Dun Gifford and Russell Salton, each of whom
is an Independent Trustee. The Executive Committee recommends Trustees to fill
vacancies, prepares the agenda for Board Meetings and acts on routine matters
between scheduled Board meetings.

Set forth below are the Trustees and officers of the Trust and their
principal occupations and 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 eleven other Trusts in the Evergreen Fund complex.

<TABLE>

Name Position with Trust Principal Occupations for Last Five Years
<S> <C> <C>
Laurence B. Ashkin Trustee Real estate developer and construction consultant; and
(DOB: 2/2/28) President of Centrum Equities (real estate development) and
Centrum Properties, Inc.(real estate development).

Charles A. Austin III Trustee Investment Counselor to Appleton Partners, Inc.(investment
(DOB: 10/23/34) advice); 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.

Arnold H. Dreyfuss Trustee Chairman, Eskimo Pie Corporation; Trustee, Mentor Funds,
(DOB: 9/2/28) Mentor Variable Investment Portfolios, Mentor Institutional
Trust, and Cash Resource Trust; Director, America's
Utility Fund, Inc.; Formerly, Chairman and Chief
Executive Officer, Hamilton Beach/Proctor-Silex, Inc.

K. Dun Gifford Trustee Trustee, Treasurer and Chairman of the Finance Committee,
(DOB: 10/12/38) 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 (leather
goods purveyor); former Managing Partner, Roscommon
Capital Corp.; former Chief Executive Officer, Gifford
Gifts of Fine Foods; former Chairman, Gifford, Drescher
& Associates (environmental consulting).

Leroy Keith, Jr. Trustee Chairman of the Board and Chief Executive Officer, Carson
(DOB: 2/14/39) Products Company (manufacturing); Director of Phoenix Total
Return Fund and Equifax, Inc. (worldwide information
management); 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 and Marketing Management with Nucor-Yamoto, Inc.
(DOB: 7/14/39) (steel producer).

Thomas L. McVerry Trustee Former Vice President and Director of Rexham Corporation
(DOB: 8/2/39) (manufacturing); and Director of Carolina Cooperative
Credit Union.

Louis W. Moelchert, Jr. (DOB: Trustee President, Private Advisors, LLC; Vice President for
12/20/41) Investments, University of Richmond; Director, America's
Utility Fund, Inc.; Trustee, The Common Fund, Mentor
Variable Investment Portfolios, Mentor Funds, Mentor In
stitutional Trust, and Cash Resource Trust.

William Walt Pettit Trustee Partner in the law firm of William Walt Pettit, P.A.
(DOB: 8/26/55)

David M. Richardson Trustee President, Richardson & Runden & Company (executive search
(DOB: 9/14/41) and advisory services); former Vice Chairman, 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.
(communications), and J&M Cumming Paper Co.

Russell A. Salton, III MD Trustee Medical Director, U.S. Health Care/Aetna Health Services;
(DOB: 6/2/47) former Managed Health Care Consultant; and former
President, Primary Physician Care.

Michael S. Scofield Chairman of the Board Attorney, Law Offices of Michael S. Scofield.
(DOB: 2/20/43) of Trustees

Richard J. Shima Trustee Independent Consultant; former Chairman, Environmental
(DOB: 8/11/39) Warranty, Inc. (insurance agency); former Executive
Consultant, Drake Beam Morin, Inc. (executive
outplacement); Director of CTG Resources, Inc. (natural
gas), Hartford Hospital, Old State House Association, and
Enhance Financial Services, Inc.; former Director Middlesex
Mutual Assurance Company; former Chairman, Board of
Trustees, Hartford Graduate Center; Trustee, Greater
Hartford YMCA.

Richard K. Wagoner, CFA Trustee Former Chief Investment Officer, Executive Vice President
(DOB: 12/12/37) and Head of Capital Management Group, First Union
Corporation; former consultant to the Board of Trustees
of the Evergreen Funds; former member, New York Stock
Exchange; member, North Carolina Securities Traders
Association; member, Financial Analysts Society.

Anthony J. Fischer* President and Vice President/Client Services, BISYS Fund Services.
(DOB: 2/10/59) Treasurer

Nimish S. Bhatt** Vice President and Vice President, Tax, BISYS Fund Services; former Assistant
(DOB: 6/6/63) Assistant Treasurer Vice President, EAMC/First Union National Bank; former
Senior Tax Consulting/Acting Manager, Investment Companies
Group, PricewaterhouseCoopers LLP, New York.

Bryan Haft** Vice President Team Leader, Fund Administration, BISYS Fund Services.
(DOB: 1/23/65)
Senior Vice President and Assistant General Counsel, First
Michael H. Koonce Secretary Union Corporation; former Senior Vice President and General
(DOB: 4/20/60) Counsel, Colonial Management Associates, Inc.

* Address: BISYS Fund Services, 90 Park Avenue, New York, New York 10016
** Address: BISYS, 3435 Stelzer Road, Columbus, Ohio 43219-8001
</TABLE>

Trustee Compensation

Listed below is the Trustee compensation paid by the Trust individually
for the fiscal year ended September 30, 1999 and by the Trust and the eleven
other trusts in the in the Evergreen Fund Complex for the calendar year ended
December 31, 1999. The Trustees do not receive pension or retirement benefits
from the Funds.
<TABLE>

Total Compensation from the Trust
and Fund Complex Paid to Trustees
for the calendar year ended
Trustee Aggregate Compensation from 12/31/1999
Mentor Funds for the fiscal
year ended 9/30/1999
<S> <C> <C>

Laurence B. Ashkin $18,251 $75,000

Charles A. Austin, III $18,448 $75,000

Arnold H. Dreyfuss** N/A N/A

K. Dun Gifford $18,519 $75,000

James S. Howell*** $24,363 $97,000

Leroy Keith, Jr. $18,323 $75,000

Gerald M. McDonnell $18,447 $75,000

Thomas L. McVerry $21,216 $85,000

Louis W. Moelchert, Jr.** N/A N/A

William Walt Pettit $18,323 $75,000

David M. Richardson $18,519 $75,000

Russell A. Salton, III $19,565 $77,000

Michael S. Scofield* $24,354 $102,000

Richard J. Shima $18,519 $75,000

Richard K. Wagoner N/A N/A

*Certain Trustees have elected to defer all or part of their total
compensation for the calendar year ended December 31, 1999. The amounts
listed below will be payable in later years to the respective Trustees.
**Arnold H. Dreyfuss, Louis W. Moelchert, Jr. and Richard K. Wagoner were
elected to the Board of Trustees on December 16, 1999.
***As of January 1, 2000, James S. Howell retired and became Trustee Emeritus.

Austin $ 11,250
Howell $ 77,600
McDonnell $ 75,000
McVerry $ 85,000
Petit $ 75,000
Salton $ 77,000
Scofield $ 61,200
</TABLE>

PRINCIPAL HOLDERS OF FUND SHARES

As of January 1, 2000 the officers and Trustees of the Trust owned as a
group less than 1% of the outstanding shares of any class of each Fund.

Set forth below is information with respect to each person who, to each
Fund's knowledge, owned beneficially or of record more than 5% of the
outstanding shares of any class of each Fund as of January 1, 2000.

- --------------------------------------------------------------------------------
Reserve Money Fund - Retail shares
- --------------------------------------------------------------------------------
First Union National Bank 0.00%
Cap Accounts
230 S. Tryon Street
Charlotte, NC 28202-3215
- --------------------------------------------------------------------------------
Reserve Money Fund - Institutional shares
- --------------------------------------------------------------------------------
Sussex County 12.596%
P.O. Box 1399
Sussex, VA 23884-0399

City of Hopewell 11.829%
300 N. Main Street
Hopewell, VA 23860-2740

Orange County 9.034%
112 West Main Street
P.O. Box 469
Orange, VA 22960-0276

Dinwiddie County 7.676%
P.O. Box 178
Dinwiddie, VA 23841-0178

Lunenburg County 6.168%
11512 Courthouse Road
Lunenburg, VA 23952

Franklin County 6.004%
c/o Treasurer Office
275 South Main Street
Rocky Mount, VA 24151-1539

New Kent County 5.465%
P.O. Box 109
New Kent, VA 23124-0109
- --------------------------------------------------------------------------------
Reserve Tax-Exempt Fund - Retail shares
- --------------------------------------------------------------------------------
First Union National Bank 0.00%
Cap Accounts
230 S. Tryon Street
Charlotte, NC 28202-3215
- --------------------------------------------------------------------------------
Reserve U.S. Government Fund - Retail shares
- --------------------------------------------------------------------------------
First Union National Bank 0.00%
Cap Accounts
230 South Tryon Street
Charlotte, NC 28202-3215
- --------------------------------------------------------------------------------
Reserve U.S. Government Fund - Institutional shares
- --------------------------------------------------------------------------------
Smyth County Community Foundation 53.194%
VP Finance
Attn: Sam Morgan
P.O. Box 880
700 Park Blvd.
Marion, VA 24354-0880

Amelia County Landfill 7.278%
Attn: Pamela Conyers-Treasurer
P.O. Box 730
Amelia CT HSE, VA 23002-0730

Terry L. Parkinson 6.985%
1359 Pompano Drive
Clive, IA 50325

Vintage Properties, LP 5.772%
Special Account
3366 Overland Road
Boise, ID 83705-3048

PERFORMANCE

Current, Effective and Tax Equivalent Yields

Below are the yields for each class of shares of the Funds for the
seven-day period ended September 30, 1999. With respect to the tax-equivalent
yield of the Reserve Tax-Exempt Fund, a combined federal and state rate of
(36.0%) is assumed.

<TABLE>

Fund/Class Current Effective Tax-Equivalent Yield
<S> <C> <C> <C>

Reserve Money Market Fund

Retail shares 4.58% 4.68% N/A

Institutional shares 5.21% 5.34% N/A

Reserve U.S. Government Money Market Fund

Retail shares 4.53% 4.64% N/A

Institutional shares 5.04% 5.17% N/A

Reserve Tax-Exempt Money Market Fund

Retail shares 3.00% 3.04% 4.69%

</TABLE>

Total Return

Below are the average annual total returns for each class of shares of
the Funds (including applicable sales charges) as of September 30, 1999. For
more information, see "Total Return" under "Performance Calculations" herein.

<TABLE>

Fund/Class One Year Five Years Ten Years or Since Inception Date
Inception
<S> <C> <C> <C> <C>

Reserve Money Fund (1)

4.43% N/A 4.93% 10/15/1998
Retail shares

4.95% N/A 5.21% 11/19/1997
Institutional shares

Reserve U.S. Government Fund (1)

4.31% N/A 4.93% 10/15/1998
Retail shares

4.80% N/A 5.15% 06/27/1997
Institutional shares

Reserve Tax-Exempt Fund

N/A N/A 2.53% 10/15/1998
Retail shares

</TABLE>
(1) Historical performance shown for the Retail shares prior to its inception is
based on the performance of the Institutional shares, the original class
offered. These historical returns for the Retail shares have not been adjusted
to reflect the effect of the Class' 0.38% 12b-1 fee. The Institutional shares do
not pay a 12b-1 fee. If these fees had been reflected, returns would have been
lower.

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 from each Fund at the annual rate of 0.02% of the
Fund's average daily net assets.

Transfer Agent

Evergreen Service Company ("ESC"), a subsidiary of First Union
Corporation, is the Funds' transfer agent. ESC issues and redeems shares, pays
dividends and performs other duties in connection with the maintenance of
shareholder accounts. The transfer agent's address is P.O. Box 2121, Boston,
Massachusetts 02106-2121. The Fund pays ESC annual fees as follows:

Annual Fee Per Annual Fee Per
Fund Type Open Account* Closed Account**

Monthly Dividend Funds $25.50 $9.00

Quarterly Dividend Funds $24.50 $9.00

Semiannual Dividend Funds $23.50 $9.00

Annual Dividend Funds $23.50 $9.00

Money Market Funds $25.50 $9.00

*For shareholder accounts only. Each Fund pays ESC cost plus 15% for broker
accounts.
**Closed account are maintained on the system in order to facilitate historical
and tax information.

PURCHASE AND REDEMPTION OF SHARES

You may buy shares of each Fund through Evergreen Distributor, Inc.
("EDI"), broker-dealers that have entered into special agreements with EDI or
certain other financial institutions. The Funds (with the exception of Reserve
Tax-Exempt Fund which offers one class of shares) offer two classes of shares
that differ primarily with respect to distribution fees.

Retail Shares

Each Fund offers Retail shares at net asset value without an initial
sales charge or deferred sales charge. Retail shares are subject to 12b-1 fees.
There is no minimum investment required.

Institutional Shares

Each Fund (except Reserve Tax-Exempt Fund) offers Institutional shares
at net asset value without an initial sales charge, deferred sales charge or
12b-1 fees. Investors will be required to make minimum initial investments of
$500,000 and minimum subsequent investments of $25,000. Investments made through
advisory accounts maintained with investment advisers registered under the
Investment Advisors Act of 1940, as amended (including "wrap" accounts), are not
subject to these minimum investment requirements. The Funds reserve the right at
any time to change the initial and subsequent investment minimums required of
investors.

Exchanges

Investors may exchange shares of a Fund for shares of the same class of
any other Evergreen Reserve Money Market Fund. See "By Exchange" under "How to
Buy Shares" in the prospectus. Before you make an exchange, you should read the
prospectus of the Evergreen Reserve Money Market Funds 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.

Automatic Reinvestment

As described in the prospectus, a shareholder may elect to receive
dividends and capital gains distributions in cash instead of shares. However,
ESC will automatically reinvest 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. When a check is returned, the Fund will hold the check amount in a
no-interest account in the shareholder's name until the shareholder updates his
or her address or automatic reinvestment begins. Uncashed or returned redemption
checks will also be handled in the manner described above.

PRICING OF SHARES

Calculation of Net Asset Value

Each Fund calculates its net asset value ("NAV") twice daily on Monday
through Friday, as described in the prospectus. Each Fund will not compute its
NAV on the days the New York Stock Exchange is closed: 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 the Fund's
net assets attributable to that class by all of the shares issued for that
class.

Valuation of Portfolio Securities

Current values for a Fund's portfolio securities are determined as
follows:

(1) Securities that are traded on an established securities exchange or
the over-the-counter National Market System ("NMS") are valued on the
basis of the last sales price on the exchange where primarily traded or
on the NMS prior to the time of the valuation, provided that a sale has
occurred.

(2) Securities traded on an established securities exchange or in the
over-the-counter market for which there has been no sale and other
securities traded in the over-the-counter market are valued at the mean
of the bid and asked prices at the time of valuation.

(3) Short-term investments maturing in more than 60 days, for which
market quotations are readily available, are valued at current market
value.

(4) Short-term investments maturing in sixty days or less are valued at
amortized cost, which approximates market.

(5) Securities, including restricted securities, for which market
quotations are not readily available; listed securities or those on NMS
if, in the investment advisor's opinion, the last sales price does not
reflect an accurate current market value; and other assets are valued
at prices deemed in good faith to be fair under procedures established
by the Board of Trustees.

(6) Tax-exempt securities are valued by an independent pricing service
at fair value using a variety of factors which may include yield,
liquidity, interest rate risk, credit quality, coupon, maturity and
type of issue.

Foreign securities are generally valued on the basis of valuations provided by a
pricing service, approved by the Trust's Board of Trustees, which uses
information with respect to transactions in such securities, quotations from
broker-dealers, market transactions in comparable securities, and various
relationships between securities and yield to maturity in determining value.

PERFORMANCE CALCULATIONS

Total Return

Total return quotations for a class of shares of the Funds as they may
appear from time to time in advertisements are calculated by finding the average
annual compounded rates of return over one, five and ten year periods, or the
time periods for which such class of shares has been effective, whichever is
relevant, on a hypothetical $1,000 investment that would equate the initial
amount invested in the class to the ending redeemable value. To the initial
investment all dividends and distributions are added, and all recurring fees
charged to all shareholder accounts are deducted. The ending redeemable value
assumes a complete redemption at the end of the relevant periods.

The following is the formula used to calculate average annual total
return:

[OBJECT OMITTED]

P = initial payment of $1,000 T = average annual total return N =
number of years
ERV = ending redeemable value of the initial $1,000

Yield

Described below are yield calculations the Funds may use. Yield
quotations are expressed in annualized terms and may be quoted on a compounded
basis. Yields based on these calculations do not represent the Fund's yield for
any future period.

30-Day Yield

If the Fund invests primarily in bonds, it may quote its 30-day yield
in advertisements or in reports or other communications to shareholders. It is
calculated by dividing the net investment income per share earned during the
period by the maximum offering price per share on the last day of the period,
according to the following formula:

[OBJECT OMITTED] [OBJECT OMITTED]

Where:
a = Dividends and interest earned during the period b = Expenses
accrued for the period (net of reimbursements) c = The average daily
number of shares outstanding during the period
that were entitled to receive dividends
d = The maximum offering price per share on the last day of the period

7-Day Current and Effective Yield

If the Fund invests primarily in money market instruments, it may quote
its 7-day current yield or effective yield in advertisements or in reports or
other communications to shareholders.

The current yield is calculated by determining the net change,
excluding capital changes and income other than investment income, in the value
of a hypothetical, pre-existing account having a balance of one share at the
beginning of the 7-day base period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and dividing the difference by the value
of the account at the beginning of the base period to obtain the base period
return, and then multiplying the base period return by (365/7).

The effective yield is based on a compounding of the current yield,
according to the following formula:

[OBJECT OMITTED]

Tax Equivalent Yield

If a Fund invests primarily in tax-exempt securities, it may quote in
advertisements or in reports or other communications to shareholders a tax
equivalent yield, which is what an investor would generally need to earn from a
fully taxable investment in order to realize, after income taxes, a benefit
equal to the tax free yield provided by the Fund. Tax equivalent yield is
calculated using the following formula:

[OBJECT OMITTED]

The quotient is then added to that portion, if any, of the
Fund's yield that is not tax exempt. Depending on the Fund's objective, the
income tax rate used in the formula above may be federal or a combination of
federal and state.

PRINCIPAL UNDERWRITER

EDI is the principal underwriter for the Trust and with respect to each
class of shares of the Funds. The Trust has entered into a Principal
Underwriting Agreement ("Underwriting Agreement") with EDI with respect to each
class of the Funds. EDI is a subsidiary of The BISYS Group, Inc.

EDI, as agent, has agreed to use its best efforts to find purchasers
for the shares. EDI 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 EDI will bear the expense of preparing, printing, and
distributing advertising and sales literature and prospectuses used by it.

All subscriptions and sales of shares by EDI 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 Funds and each Fund reserves the right,
in its sole discretion, to reject any order received. Under the Underwriting
Agreement, each Fund is not liable to anyone for failure to accept any order.

EDI has agreed that it will, in all respects, duly conform with all
state and federal laws applicable to the sale of the shares. EDI 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 EDI or any other person for whose acts EDI 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 Trustees who are not interested persons of the Funds, as
defined in the 1940 Act (the "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 that term is defined in the
1940 Act.

From time to time, if, in EDI's judgment, it could benefit the sales of
shares, EDI may provide to selected broker-dealers promotional materials and
selling aids, including, but not limited to, personal computers, related
software, and data files.

DISTRIBUTION EXPENSES UNDER RULE 12b-1

Each Fund bears some of the costs of selling its Retail shares,
including certain advertising, marketing and shareholder service expenses,
pursuant to Rule 12b-1 of the 1940 Act. These 12b-1 fees are indirectly paid by
the shareholder, as shown by each Fund's expense table in the prospectus.

Under the Distribution Plan (the "Plan") that each Fund has adopted for
its Retail shares, the Fund may incur expenses for 12b-1 fees of 0.38% (0.33%
for Reserve Tax-Exempt Fund) of average daily net assets attributable to the
class.

The 12b-1 fee serves to compensate organizations, which may include the
Fund's investment advisor or its affiliates, for personal services provided to
shareholders and the maintenance of shareholder accounts. Each Fund may not,
during any fiscal period, pay service fees greater than the amounts above.
Service fees are accrued daily and paid at least annually on Class Retail and
are charged as class expenses, as accrued.

Amounts paid under a Plan are used to compensate EDI pursuant to a
Distribution Agreement (the "Agreement") that each Fund has entered into with
respect to its Retail shares.

Each Agreement provides that EDI will use the service fees received
from the Fund for the following purposes:

(1) to compensate broker-dealers or other persons for distributing
Fund shares;

(2) to compensate broker-dealers, depository institutions and
other financial intermediaries for providing administrative,
accounting and other services with respect to the Fund's
shareholders; and

(3) to otherwise promote the sale of Fund shares.

Each Agreement also provides that EDI may use service fees to make
interest and principal payments in respect of amounts that have been financed to
pay broker-dealers or other persons for servicing Fund shares. EDI may assign
its rights to receive compensation under each Plan to secure such financings.
FUNB or its affiliates may finance payments made by EDI to compensate
broker-dealers or other persons for servicing shares of the Fund.

In the event a Fund acquires the assets of another mutual fund,
compensation paid to EDI under the Agreement may be paid by EDI to the acquired
fund's distributor or its predecessor.

Since EDI's compensation under each Agreement is not directly tied to
the expenses incurred by EDI, the compensation received by it under the
Agreement during any fiscal year may be more or less than its actual expenses
and may result in a profit to EDI. Servicing expenses incurred by EDI in one
fiscal year that exceed the compensation paid to EDI for that year may be paid
from service fees received from the Fund in subsequent fiscal years.

Service fees are accrued daily and paid at least annually on Retail
shares and are charged as class expenses, as accrued. The service fees
attributable to the Retail shares are designed to permit an investor to purchase
such shares through broker-dealers without the assessment of a front-end sales
charge, while at the same time permitting EDI to compensate broker-dealers in
connection with the sale of such shares. [check validity of last sentence]

Under each Plan, the Treasurer of the Trust reports the amounts
expended under the Plan 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.

The investment advisor may from time to time from its own funds or such
other resources as may be permitted by rules of the SEC make payments for
services to EDI; the latter may in turn pay part or all of such compensation to
brokers or other persons for their distribution assistance.

Each Plan and the Agreement will continue in effect for successive
12-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.

Each Plan permits the payment of fees to brokers and others for
shareholder-related administrative services and to broker-dealers, depository
institutions, financial intermediaries and administrators for administrative
services as to Retail shares. Each Plan is designed to (i) stimulate brokers to
provide administrative support services to the Fund and holders of Retail shares
and (ii) stimulate administrators to render administrative support services to
the Fund and holders of Retail 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 Retail shares; assisting clients in
changing dividend options, account designations, and addresses; and providing
such other services as the Fund reasonably requests for its Retail shares.

In the event that the Plan or Agreement is terminated or not continued
with respect to the Retail shares of a Fund, (i) no service fees (other than
current amounts accrued but not yet paid) would be owed by the Fund to EDI and
(ii) the Fund would not be obligated to pay EDI for any amounts expended under
the Agreement not previously recovered by EDI from services fees in respect of
Retail shares of such class or classes.

All material amendments to any Plan or 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 Agreement may not be amended in
order to increase materially the costs that a particular class of shares of the
Fund may bear pursuant to the Plan or Agreement without the approval of a
majority of the holders of the outstanding voting shares of the class affected.
Any Plan or Agreement may be terminated (i) by the 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 EDI. To terminate any Agreement, any party must give the
other parties 60 days' written notice; to terminate a Plan only, the Fund need
give no notice to EDI. Any Agreement will terminate automatically in the event
of its assignment. For more information about 12b-1 fees, see "Expenses" in the
prospectus and "12b-1 Fees" under "Expenses" herein.

TAX INFORMATION

Requirements for Qualifications as a Regulated Investment Company

Each Fund intends to qualify for and elect the tax treatment applicable
to regulated investment companies ("RIC") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). (Such qualification does not
involve supervision of management or investment practices or policies by the
Internal Revenue Service.) In order to qualify as a RIC, the 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 the Fund's total assets is represented by cash, U.S.
government securities and other securities limited in respect of any one issuer,
to an amount not greater than 5% of the Fund's total assets and 10% of the
outstanding voting securities of such issuer, and (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 the Fund to the
extent it does not meet certain distribution requirements by the end of each
calendar year. Each Fund anticipates meeting such distribution requirements.

Taxes on Distributions

Unless a Fund is a tax-exempt money market fund, 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 the 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 taxable investment income plus net
realized short-term capital gains, if any). Each Fund will include dividends it
receives from domestic corporations when the Fund calculates its gross
investment income. Unless the Fund is a municipal bond fund or U.S. Treasury or
U.S. Government money market fund, it anticipates that all or a portion of the
ordinary dividends which it pays will qualify for the 70% dividends-received
deduction for corporations. Each Fund will inform shareholders of the amounts
that so qualify. If the Fund is a tax-exempt money market fund, none of its
income will consist of corporate dividends; therefore, none of its distributions
will qualify for the 70% dividends-received deduction for corporations.

From time to time, each Fund will distribute the excess of its net
long-term capital gains over its short-term capital loss to shareholders (i.e.,
capital gain dividends). For federal tax purposes, shareholders must include
such capital gain dividends when calculating their net long-term capital gains.
Capital gain dividends are taxable as net long-term capital gains to a
shareholder, no matter how long the shareholder has held the shares.

Distributions by a Fund reduce its NAV. A distribution that reduces the
Fund's NAV below a shareholder's cost basis is taxable as described above,
although from an investment standpoint, it is a return of capital. In
particular, if a shareholder buys Fund shares just before the Fund makes a
distribution, when the Fund makes the distribution the shareholder will receive
what is in effect a return of capital. Nevertheless, the shareholder may incur
taxes on the distribution. Therefore, shareholders should carefully consider the
tax consequences of buying Fund shares just before a distribution.

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 a tax advisor to determine the state and local tax implications
of Fund distributions.

If more than 50% of the value of a Fund's total assets at the end of a
fiscal year is represented by securities of foreign corporations and the Fund
elects to make foreign tax credits available to its shareholders, a shareholder
will be required to include in his gross income both cash dividends and the
amount the Fund advises him is his pro rata portion of income taxes withheld by
foreign governments from interest and dividends paid on the Fund's investments.
The shareholder may be entitled, however, to take the amount of such foreign
taxes withheld as a credit against his U.S. income tax, or to treat the foreign
tax withheld as an itemized deduction from his gross income, if that should be
to his advantage. In substance, this policy enables the shareholder to benefit
from the same foreign tax credit or deduction that he would have received if he
had been the individual owner of foreign securities and had paid foreign income
tax on the income therefrom. As in the case of individuals receiving income
directly from foreign sources, the credit or deduction is subject to a number of
limitations.

Taxes on The Sale or Exchange of Fund Shares

Upon a sale or exchange of Fund shares, a shareholder will realize a
taxable gain or loss depending on his or her basis in the shares. A shareholder
must treat such gains or losses as a capital gain or loss if the shareholder
held the shares as capital assets. Capital gain on assets held for more than 12
months is generally subject to a maximum federal income tax rate of 20% for an
individual. Generally, the Code will not allow a shareholder to realize a loss
on shares he or she has sold or exchanged and replaced within a 61-day period
beginning 30 days before and ending 30 days after he or she sold or exchanged
the shares. The Code will not allow a shareholder to realize a loss on the sale
of Fund shares held by the shareholder for six months or less to the extent the
shareholder received exempt interest dividends on such shares. Moreover, the
Code will treat a shareholder's loss on shares held for six months or less as a
long-term capital loss to the extent the shareholder received distributions of
net capital gains on such shares.

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

Evergreen Distributor, Inc. ("EDI") markets the Funds through
broker-dealers and other financial representatives. Its address is 125 W. 55th
Street, New York, NY 10019.

Independent Auditor

KPMG LLP, 99 High Street, Boston, Massachusetts 02110, audits the
financial statements of each Fund.

Custodian

State Street Bank and Trust Company keeps custody of each Fund's
securities and cash and performs other related duties. The custodian's address
is 225 Franklin Street, Boston, Massachusetts 02110.

Legal Counsel

Sullivan & Worcester LLP provides legal advice to the Funds. Its address is
1025 Connecticut Avenue, N.W., Washington, D.C. 20036.

FINANCIAL STATEMENTS

The audited financial statements and the reports thereon are hereby
incorporated by reference to the Funds' Annual Report, a copy of which may be
obtained without charge from ESC, P.O. Box 2121, Boston, Massachusetts
02106-2121.

BROKERAGE

Brokerage Commissions

Each Fund expects to buy and sell fixed income securities directly from
the issuer or an underwriter or market maker for the securities. Generally, the
Funds will not pay brokerage commissions for such purchases. When a Fund buys a
security from an underwriter, the purchase price will usually 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.

Selection of Brokers

When buying and selling portfolio securities, the investment advisor
seeks brokers who can provide the most benefit to the Fund. When selecting a
broker, the investment advisor will primarily look for the best price at the
lowest commission, but in the context of the broker's:

1. ability to provide the best net financial result to the Fund;
2. efficiency in handling trades;
3. ability to trade large blocks of securities;
4. readiness to handle difficult trades;
5. financial strength and stability; and
6. provision of "research services," defined as (a) reports and
analyses concerning issuers, industries, securities and
economic factors and (b) other information useful in making
investment decisions.

The Funds may pay higher brokerage commissions to a broker providing it
with research services, as defined in item 6, above. Pursuant to Section 28(e)
of the Securities Exchange Act of 1934, this practice is permitted if the
commission is reasonable in relation to the brokerage and research services
provided. Research services provided by a broker to the investment advisor do
not replace, but supplement, the services the investment advisor is required to
deliver to the Fund. It is impracticable for the investment advisor to allocate
the cost, value and specific application of such research services among its
clients because research services intended for one client may indirectly benefit
another.

When selecting a broker for portfolio trades, the investment advisor
may also consider the amount of Fund shares a broker has sold, subject to the
other requirements described above.

Simultaneous Transactions

The investment advisor makes investment decisions for each Fund
independently of decisions made for its other clients. When a security is
suitable for the investment objective of more than one client, it may be prudent
for the investment advisor to engage in a simultaneous transaction, that is, buy
or sell the same security for more than one client. The investment advisor
strives for an equitable result in such transactions by using an allocation
formula. The high volume involved in some simultaneous transactions can result
in greater value to a Fund, but the ideal price or trading volume may not always
be achieved for the Fund.

ORGANIZATION

The foregoing is qualified in its entirety by reference to the Trust's
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
a 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 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.

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 (for such reasons as electing or removing Trustees, changing fundamental
policies, and approving advisory agreements or 12b-1 plans), 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.

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 Trust. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment 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 its 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
the Fund by its customers. If FUNB and its affiliates were prevented from
continuing to provide for services called for under the investment advisory
agreement, it is expected that the Trustees would identify, and call upon the
Fund's shareholders to approve a new investment advisor. If this were to occur,
it is not anticipated that the shareholders of the Fund would suffer any adverse
financial consequences.

INVESTMENT ADVISORY AGREEMENT

On behalf of each Fund, the Trust has entered into an investment
advisory agreement with the Fund's investment advisor (the "Management
Contract"). Under the Management Contract, and subject to the supervision of the
Trust's Board of Trustees, the investment advisor furnishes to the Fund
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 investment 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 investment 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; (5) brokerage commissions, brokers'
fees and expenses; (6) issue and transfer taxes; (7) applicable costs and
expenses under the Plan (as described above) (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 the 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 on matters relating to the 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 the Fund.

Each Management Contract 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 the
Fund's outstanding shares. In either case, the terms of the Management Contract
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. Each Management Contract 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 Management Contract 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 of the 1940 Act
("Rule 17a-7 Procedures"). The Rule 17a-7 Procedures permit the Fund to buy or
sell securities from another investment company for which a subsidiary of First
Union Corporation is an investment advisor. The Rule 17a-7 Procedures also allow
the Fund to buy or sell securities from other advisory clients for whom a
subsidiary of First Union Corporation is an investment advisor. The Fund may
engage in such transaction if it is equitable to each participant and consistent
with each participant's investment objective.

CORPORATE AND MUNICIPAL BOND RATINGS

Each Fund relies on ratings provided by independent rating services to
help determine the credit quality of bonds and other obligations the Fund
intends to purchase or already owns. A rating is an opinion of an issuer's
ability to pay interest and/or principal when due. Ratings reflect an issuer's
overall financial strength and whether it can meet its financial commitments
under various economic conditions.

If a security held by a Fund loses its rating or has its rating reduced
after the Fund has purchased it, the Fund is not required to sell or otherwise
dispose of the security, but may consider doing so.

The principal rating services, commonly used by the Fund and investors
generally, are S&P and Moody's. The Fund may also rely on ratings provided by
Fitch. Rating systems are similar among the different services. As an example,
the chart below compares basic ratings for long-term bonds. The "Credit Quality"
terms in the chart are for quick reference only. Following the chart are the
specific definitions each service provides for its ratings.

<TABLE>

COMPARISON OF LONG-TERM BOND RATINGS

MOODY'S S&P FITCH Credit Quality
<S> <C> <C> <C>

Aaa AAA AAA Excellent Quality (lowest risk)

Aa AA AA Almost Excellent Quality (very low risk)

A A A Good Quality (low risk)

Baa BBB BBB Satisfactory Quality (some risk)

Ba BB BB Questionable Quality (definite risk)

B B B Low Quality (high risk)

Caa/Ca/C CCC/CC/C CCC/CC/C In or Near Default

D DDD/DD/D In Default

</TABLE>

CORPORATE BONDS

LONG-TERM RATINGS

Moody's Corporate Long-Term Bond Ratings

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
edged." 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 fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than the 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 some time 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. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

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 both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

C Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to Caa. The modifier 1 indicates that the company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range raking and the modifier 3 indicates that the company ranks in the
lower end of its generic rating category.

S&P Corporate Long-Term Bond Ratings

AAA An obligation rated AAA has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation is
extremely strong.

AA An obligation rated AA differs from the highest-rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.

A An obligation rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.

BBB An obligation rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.

BB, B, CCC, CC and C: As described below, obligations rated BB, B, CCC, CC, and
C are regarded as having significant speculative characteristics. BB indicates
the least degree of speculation and C the highest. While such obligations will
likely have some quality and protective characteristics, these may be outweighed
by large uncertainties or major exposures to adverse conditions.

BB An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions, which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.

B An obligation rated B is more vulnerable to nonpayment than obligations rated
BB, but the obligor currently has the capacity to meet its financial commitment
on the obligation. Adverse business, financial, or economic conditions will
likely impair the obligor's capacity or willingness to meet it financial
commitment on the obligation.

CCC An obligation rated CCC is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.

CC An obligation rated CC is currently highly vulnerable to nonpayment.

C The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.

D The D rating, unlike other ratings, is not prospective; rather, it is used
only where a default has actually occurred--and not where a default is only
expected. S&P changes ratings to D either:

! On the day an interest and/or principal payment is due and is not paid.
An exception is made if there is a grace period and S&P believes that a
payment will be made, in which case the rating can be maintained; or

! Upon voluntary bankruptcy filing or similar action. An exception is
made if S&P expects that debt service payments will continue to be made
on a specific issue. In the absence of a payment default or bankruptcy
filing, a technical default (i.e., covenant violation) is not
sufficient for assigning a D rating.

Plus (+) or minus (-) 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.

Fitch Corporate Long-Term Bond Ratings

Investment Grade

AAA Highest credit quality. AAA ratings denote the lowest expectation of credit
risk. They are assigned only in case of exceptionally strong capacity for timely
payment of financial commitments. This capacity is highly unlikely to be
adversely affected by foreseeable events.

AA Very high credit quality. AA ratings denote a very low expectation of credit
risk. They indicate very strong capacity for timely payment of financial
commitments. This capacity is not significantly vulnerable to foreseeable
events.

A High credit quality. A ratings denote a lower expectation of credit risk. The
capacity for timely payment of financial commitments is considered strong. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.

BBB Good credit quality. BBB ratings indicate that there is currently a low
expectation of credit risk. The capacity for timely payment of financial
commitments is considered adequate, but adverse changes in circumstances and in
economic conditions are more likely to impair this capacity. This is the lowest
investment-grade category.

Speculative Grade

BB Speculative. BB ratings indicate that there is a possibility of credit risk
developing, particularly as the result of adverse economic change over time;
however, business or financial alternatives may be available to allow financial
commitments to be met.
Securities rated in this category are not investment grade.

B Highly speculative. B ratings indicate that significant credit risk is
present, but a limited margin of safety remains. Financial commitments are
currently being met; however, capacity for continued payment is contingent upon
a sustained, favorable business and economic environment.

CCC, CC, C High default risk. Default is a real possibility. Capacity for
meeting financial commitment is solely reliant upon sustained, favorable
business or economic developments. A CC rating indicates that default of some
kind appears probable. C ratings signal imminent default.

DDD, DD, D Default. Securities are not meeting current obligations and
are extremely speculative. DDD designates the highest potential for recovery of
amounts outstanding on any securities involved. For U.S. corporates, for
example, DD indicates expected recovery of 50%-90% of such outstandings, and D
the lowest recovery potential, i.e. below 50%.

+ or - may be appended to a rating to denote relative status within major rating
categories. Such suffixes are not added to the AAA rating category or to
categories below CCC.

CORPORATE SHORT-TERM RATINGS

Moody's Corporate Short-Term Issuer Ratings

Prime-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics.

- -- Leading market positions in well-established industries.

- -- High rates of return on funds employed.

- -- Conservative capitalization structure with moderate reliance on debt and
ample asset protection.

- -- Broad margins in earnings coverage of fixed financial changes and high
internal cash generation.

- -- Well-established access to a range of financial markets and assured sources
of alternate liquidity.

Prime-2 Issuers rated Prime-2 (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

Prime-3 Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.

Not Prime Issuers rated Not Prime do not fall within any of the Prime rating
categories.

S&P Corporate Short-Term Obligation Ratings

A-1 A short-term obligation rated A-1 is rated in the highest category by S&P.
The obligor's capacity to meet its financial commitment on the obligation is
strong. Within this category certain obligations are designated with a plus sign
(+). This indicates that the obligor's capacity to meet its financial commitment
on these obligations is extremely strong.

A-2 A short-term obligation rated A-2 is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.

A-3 A short-term obligation rated A-3 exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.

B A short-term obligation rated B is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.

C A short-term obligation rated C is currently vulnerable to nonpayment and is
dependent upon favorable business, financial, and economic conditions for the
obligor to meet its financial commitment on the obligation.

D The D rating, unlike other ratings, is not prospective; rather, it is used
only where a default has actually occurred--and not where a default is only
expected. S&P changes ratings to D either:

! Upon voluntary bankruptcy filing or similar action, An exception is
made if S&P expects that debt service payments will continue to be made
on a specific issue. In the absence of a payment default or bankruptcy
filing, a technical default (i.e., covenant violation) is not
sufficient for assigning a D rating.

Fitch Corporate Short-Term Obligation Ratings

F1 Highest credit quality. Indicates the strongest capacity for timely payment
of financial commitments; may have an added "+" to denote any exceptionally
strong credit feature.

F2 Good credit quality. A satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of the
higher ratings.

F3 Fair credit quality. The capacity for timely payment of financial commitments
is adequate; however, near-term adverse changes could result in a reduction to
non-investment grade.

B Speculative. Minimal capacity for timely payment of financial commitments,
plus vulnerability to near-term adverse changes in financial and economic
conditions.

C High default risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.

D Default. Denotes actual or imminent payment default.

MUNICIPAL BONDS

LONG-TERM RATINGS

Moody's Municipal Long-Term Bond Ratings

Aaa Bonds 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 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 fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than the Aaa securities.

A Bonds 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 some time in the future.

Baa Bonds 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.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Ba Bonds 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 both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.

B Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.

Caa Bonds 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 rated Ca represent obligations which are speculative in a high degree.
Such issues are often in default or have other marked shortcomings.

C Bonds 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.

Note: Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa to B. The modifier 1 indicates that the company ranks in
the higher end of its generic rating category; the modifier 2 indicates a
mid-range raking and the modifier 3 indicates that the company ranks in the
lower end of its generic rating category.

S&P Municipal Long-Term Bond Ratings

AAA An obligation rated AAA has the highest rating assigned by S&P. The
obligor's capacity to meet its financial commitment on the obligation is
extremely strong.

AA An obligation rated AA differs from the highest-rated obligations only in
small degree. The obligor's capacity to meet its financial commitment on the
obligation is very strong.

BB, B, CCC, CC and C: As described below, obligations rated BB, B, CCC,
CC, and C are regarded as having significant speculative characteristics. BB
indicates the least degree of speculation and C the highest. While such
obligations will likely have some quality and protective characteristics, these
may be outweighed by large uncertainties or major exposures to adverse
conditions.

CC An obligation rated CC is currently highly vulnerable to nonpayment.

C The C rating may be used to cover a situation where a bankruptcy petition has
been filed or similar action has been taken, but payments on this obligation are
being continued.

D An obligation rated D is in payment default. The D rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition or the taking of a similar action if payments on
an obligation are jeopardized.

Plus (+) or minus (-) 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.

Fitch Municipal Long-Term Bond Ratings

Investment Grade

Speculative Grade

CCC, CC, C High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon sustained, favorable
business or economic developments. A CC rating indicates that default of some
kind appears probable. C ratings signal imminent default.

DDD, DD, D Default. Securities are not meeting current obligations and are
extremely speculative. DDD designates the highest potential for recovery of
amounts outstanding on any securities involved. DD designates lower recovery
potential and D the lowest.

+ or - may be appended to a rating to denote relative status within major rating
categories. Such suffixes are not added to the AAA rating category or to
categories below CCC.

SHORT-TERM MUNICIPAL RATINGS

Moody's Municipal Short-Term Issuer Ratings

- -- Leading market positions in well-established industries.

- -- High rates of return on funds employed.

- -- Conservative capitalization structure with moderate reliance on debt and
ample asset protection.

- -- Broad margins in earnings coverage of fixed financial changes and high
internal cash generation.

- -- Well-established access to a range of financial markets and assured sources
of alternate liquidity.

Not Prime Issuers rated Not Prime do not fall within any of the Prime rating
categories.

Moody's Municipal Short-Term Loan Ratings

MIG 1 This designation denotes best quality. There is strong protection by
established cash flows, superior liquidity support, or demonstrated broad-based
access to the market for refinancing.

MIG 2 This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.

MIG 3 This designation denotes favorable quality. Liquidity and cash-flow
protection may be narrow and market access for refinancing is likely to be less
well established.

SG This designation denotes speculative quality. Debt instruments in this
category may lack margins of protection.

S&P Commercial Paper Ratings

A-1 This designation indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.

A-2 Capacity for timely payment on issues with this designation is satisfactory.
However, the relative degree of safety is not as high as for issues designated
A-1.

A-3 Issues carrying this designation have an adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes in
circumstances than obligations carrying the higher designations.

B Issues rated B are regarded as having only speculative capacity for timely
payment.

C This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.

D Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes such payments
will be made during such grace period.

S&P Municipal Short-Term Obligation Ratings

SP-1 Strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a plus (+)
designation.

SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.

SP-3 Speculative capacity to pay principal and interest.

Fitch Municipal Short-Term Obligation Ratings

F1 Highest credit quality. Indicates the strongest capacity for timely payment
of financial commitments; may have an added "+" to denote any exceptionally
strong credit feature.

F2 Good credit quality. A satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of the
higher ratings.

F3 Fair credit quality. The capacity for timely payment of financial commitments
is adequate; however, near-term adverse changes could result in a reduction to
non-investment grade.

B Speculative. Minimal capacity for timely payment of financial commitments,
plus vulnerability to near-term adverse changes in financial and economic
conditions.

C High default risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.

D Default. Denotes actual or imminent payment default.

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 the Funds'
prospectus, SAI or in supplemental sales literature issued by the Funds or EDI,
and no person is entitled to rely on any information or representation not
contained therein.

The Funds' 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.

<PAGE>
EVERGREEN RESERVE MONEY MARKET FUNDS

PART C

OTHER INFORMATION

Item 23 Exhibits

Unless otherwise indicated, each of the Exhibits listed below is filed
herewith.

<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>

(1)(i) Conformed copy of Declaration of Trust
of the Registrant, with Amendments No. 1 and
2(2); Amendment No. 5 to the Declaration of
Trust of the Registrant (4);

(ii) Amendment No. 5 to the Declaration of Trust of
the Registrant (4);

(iii) Form of Amendment to the Declaration of Trust
of the Registrant (5);

(iv) Form of Proposed Amendment to the Declaration of
Trust of the Registrant to be dated as of May 12,
1998 (6);

(v) Amendment No. 6 to the Declaration of Trust of
the Registrant (8);

(vi) Amendment No. 7 to the Declaration of Trust of
the Registrant (9);

(vii) Amendment No. 8 to the Declaration of Trust of
the Registrant (9);

(viii) Amendment No. 9 to the Declaration of Trust of
the Registrant (9);

(2)(i) Copy of By-Laws of the Registrant (1);

(ii) Amendment to By-Laws (8);

(3) Not Applicable

(4) Agreement and Plan of Reorganization. Exhibit D
to the Prospectus contained in Part A of this
Registration Statement;

(5) Applicable Sections of Registrant's Declaration
of Trust and By-Laws (1)(2)(4)(5);

(6)(i) Form of Investment Advisory Agreement
(Income and Growth Portfolio) (6);

(7) Form of Investment Advisory and Management
Agreement (Balanced Portfolio) (6);

(8) Form of Distribution Agreement of the Registrant (6);

(9) Not applicable

(10)(i) Conformed copy of Custodian Contract of the Registrant
with Investors Fiduciary Trust Company (2);

(ii) Conformed copy of Custodian Contract of the Registrant
with State Street Bank and Trust Company (2);

(iii) Form of Administration Agreement of the Registrant
in respect of certain Portfolios (9);

(iv) Form of Custodian Contract with State Street Bank
and Trust Company in respect of foreign securities
(3);

(11)(i) Plan of Distribution (10);

(ii) Amended and Restated Rule 18f-3(d) Plan

(12) Opinion and Consent of Counsel as to legality of
the Securities being registered (11);

(13) Opinion and Consent of counsel as to tax matters (11);

(14) Not applicable;

(15) Consent of Independent Auditors (12)

(16) Not applicable

(17) Powers of Attorney (8);

(18) Form of Proxy Card (11).
- ----------------------------------------------------------
Location:
- --------
(1) Incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed April 14, 1992

(2) Incorporated by reference to Registrant's Post-Effective
Amendment No. 3 on Form N-1A filed May 14, 1993.

(3) Incorporated by reference to Registrant's Post-Effective
Amendment No. 10 on Form N-1A filed January 15, 1996

(4) Incorporated by reference to Registrant's Post-Effective
Amendment 15 on Form N-1A filed December 22, 1997

(5) Incorporated by reference to Registrant's Post-Effective
Amendment 16 on Form N-1A filed January 30, 1998.

(6) Incorporated by reference to Registrant's Post-Effective
Amendment No. 17 filed on May 12, 1998.

(7) Incorporated by reference to Registrant's Post-Effective
Amendment No. 20 filed on July 10, 1998.

(8) Incorporated by reference to Registrant's Post-Effective
Amendment No. 21 filed on November 30, 1998.

(9) Previously filed

(10) Incorporated by reference to Registrant's Post-Effective
Amendment No. 22 filed on January 29, 1999.

(11) Incorporated by reference to Registrant's Post-Effective
Amendment No. 1 filed on August 26, 1999.

(12) Filed herewith

</TABLE>

Item 24. Persons Controlled by or Under Common Control with Registrant.

None

Item 25. Indemnification.

Registrant has obtained from a major insurance carrier a trustees and
officers liability policy covering certain types of errors and ommissions.

Provisions for the indemnification of the Registrant's Trustees and
officers are also contained in the Registrant's Declaration of Trust.

Provisions for the indemnification of the Registrant's Investment
Advisors are contained in their respective Investment Advisory and Management
Agreements.

Provisions for the indemnification of Evergreen Distributor, Inc., the
Registrant's principal underwriter, are contained in the Principal Underwriting
Agreement between Evergreen Distributor, Inc. and the Registrant.

Provisions for the indemnification of Evergreen Service Company, the
Registrant's transfer agent, are contained in the Master Transfer and
Recordkeeping Agreement between Evergreen Service Company and the Registrant.

Provisions for the indemnification of State Street Bank and Trust Co., the
Registrant's custodian, are contained in the Custodian Agreement between State
Street Bank and Trust Co., and the Registrant.

Item 26. Business or Other Connections of Investment Adviser.

The Directors and principal executive officers of First Union National Bank
are:

Edward E. Crutchfield, Jr. Chairman and Chief Executive Officer,
First Union Corporation; Chief Executive
Officer and Chairman, First Union National
Bank

G. Kennedy Thompson Director, First Union Corporation,
Director, First Union National Bank

Mark C. Treanor Executive Vice President, Secretary &
General Counsel, First Union Corporation

Robert T. Atwood Executive Vice President and Chief Financial
Officer, First Union Corporation; Chief
Financial Officer and Executive Vice
President

All of the above persons are located at the following address: First Union
National Bank, One First Union Center, Charlotte, NC 28288.

The information required by this item with respect to Evergreen Asset
Management Corp. is incorporated by reference to the Form ADV (File No.
801-46522) of Evergreen Asset Management Corp.

The information required by this item with respect to Evergreen Investment
Management Company (formerly Keystone Investment Management Company) is
incorporated by reference to the Form ADV (File No. 801-5436) of Evergreen
Investment Management Company.

The information required by this item with respect to Meridian Investment
Company is incorporated by reference to the Form ADV (File No. 801-8327) of
Meridian Investment Company.

The information required by this item with respect to Mentor Investment
Advisors, LLC is incorporated by reference to the Form ADV (File No. 801-40384)
of Mentor Investment Advisors, LLC.

Item 27. Principal Underwriters.

Evergreen Distributor, Inc. acts as principal underwriter for each
registered investment company or series thereof that is a part of the Evergreen
"fund Complex" as such term is defined in Item 22(a) of Schedule 14A under the
Securities Exchange Act of 1934.

The Directors and principal executive officers of Evergreen Distributor,
Inc. are:

Lynn C. Mangum Director, Chairman and Chief Executive
Officer

Dennis Sheehan Director, Chief Financial Officer

Maryann Bruce President

Kevin J. Dell Vice President, General Counsel and Secretary

Messrs. Sheehan and Dell are located at the following address: Evergreen
Distributor, Inc., 90 Park Aveneu, New York, New York 10019.

Ms. Bruce is located at 201 South College Street, Charlotte, NC 28288.

The Registrant has not paid, directly or indirectly, any commissions or
other compensation to the Principal Underwriters in the last fiscal year.

Item 28. Location of Accounts and Records.

All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules 31a-1 through 31a-3
promulgated thereunder are maintained at one of the following
locations:

Evergreen Investment Services, Inc., Evergreen Service Company and
Evergreen Investment Management Company (formerly Keystone Investment
Management Company), all located at 200 Berkeley Street, Boston,
Massachusetts 02110

First Union National Bank, One First Union Center, 301 S. College Street,
Charlotte, North Carolina 28288

Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase,
New York 10577

Mentor Investment Advisors, LLC, 901 East Byrd Street, Richmond, Virginia
23219

Iron Mountain, 3431 Sharp Slot Road, Swansea, Massachusetts 02777

State Street Bank and Trust Company, 2 Heritage Drive, North Quincy,
Massachusetts 02171

Meridian Investment Co., 55 Valley Stream Parkway, Malvern, Pennsylvania
19355

Item 29. Management Services.

Not Applicable

Item 30. Undertakings.

The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of New York, and State of New York, on the 26th day of
January, 2000.

MENTOR FUNDS

By: /s/ Anthony J. Fischer
-----------------------------
Name: Anthony J. Fischer
Title: President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 26th day of January, 2000.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/Anthony J. Fischer /s/ Laurence B. Ashkin /s/ Charles A. Austin, III
- ------------------------- ----------------------------- --------------------------------
Anthony J. Fischer Laurence B. Ashkin* Charles A. Austin III*
President and Treasurer (Principal Trustee Trustee
Financial and Accounting Officer)

/s/ Arnold H. Dreyfuss /s/ K. Dun Gifford /s/ William Walt Pettit
- ---------------------------- ---------------------------- --------------------------------
Arnold H. Dreyfuss* K. Dun Gifford* William Walt Pettit*
Trustee Trustee Trustee

/s/Gerald M. McDonnell /s/ Thomas L. McVerry /s/ Louis M. Moelchert, Jr.
- ------------------------------- ----------------------------- --------------------------------
Gerald M. McDonell* Thomas L. McVerry* Louis M. Moelchert, Jr.*
Trustee Trustee Trustee

/s/ Michael S. Scofield /s/ David M. Richardson /s/ Russell A. Salton, III MD
- ------------------------------ ----------------------------- --------------------------------
Michael S. Scofield David M. Richardson* Russell A. Salton, III MD*
Chairman of the Board Trustee Trustee
and Trustee

/s/ Leroy Keith, Jr. /s/ Richard J. Shima
- ------------------------------ -------------------------------
Lerory Keith, Jr.* Richard J. Shima*
Trustee Trustee

</TABLE>

*By: /s/ Catherine Foley
- -------------------------------
Catherine Foley
Attorney-in-Fact

*Catherine Foley, by signing her name hereto, does hereby sign this
document on behalf of each of the above-named individuals pursuant to powers of
attorney duly executed by such persons.

<PAGE>

INDEX TO EXHIBITS

Exhibit Number Exhibit
- -------------- -------
(15) Consent of KPMG LLP

CONSENT OF INDEPENDENT AUDITORS

The Trustees and Shareholders
Mentor Funds:

We consent to the use of our report dated November 5, 1999 for Evergreen Reserve
Money Market Fund (formerly Mentor Money Market Portfolio), Evergreen Reserve
U.S. Government Money Market Fund (formerly Mentor U.S. Government Money Market
Portfolio) and Evergreen Reserve Tax-Exempt Money Market Fund (formerly Mentor
Tax-Exempt Money Market Portfolio), portfolios of Mentor Funds incorporated
herein by reference and to the references to our firm under the captions
"FINANCIAL HIGHLIGHTS" in the prospectus and "Independent Auditors" in the
Statement of Additional Information.

/s/ KPMG LLP
KPMG LLP
Boston, Massachusetts
January 26, 2000