EVERGREEN EQUITY TRUST /DE/, 497, 1999-10-29

EVERGREEN EQUITY TRUST /DE/
497, 1999-10-29

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<PAGE>

- -------------------------------------------------------------------------------
PROSPECTUS December 15, 1998, as amended October 22, 1999
- -------------------------------------------------------------------------------

Evergreen Equity and Income Funds
[EVERGREEN LOGO]
- -------------------------------------------------------------------------------

Evergreen Capital Balanced Fund (Formerly Mentor Balanced Fund)
Evergreen Capital Growth Fund (Formerly Mentor Capital Growth Portfolio)
Evergreen Growth Fund (Formerly Mentor Growth Portfolio)
Evergreen High Income Fund (Formerly Mentor High Income Portfolio)
Evergreen Perpetual Global Fund (Formerly Mentor Perpetual Global Portfolio)
Evergreen Quality Income Fund (Formerly Mentor Quality Income Portfolio)

CLASS A
CLASS B
CLASS C
CLASS Y

The Funds provide investors an opportunity to design their own investment
programs by investing in a variety of Funds offering a wide array of
investment strategies. Each Fund pursues its investment objectives through the
investment policies described in this Prospectus.

This Prospectus provides information regarding the Class A, Class B,
Class C and Class Y shares offered by the Funds. Each Fund is a series of an
Evergreen Trust (the "Trusts"), each an open-end, management investment
company. This Prospectus sets forth concisely the information about the Funds
that a prospective investor should know before investing. Please read this
Prospectus carefully and retain it for future reference.

A Statement of Additional Information ("SAI") for the Funds dated
December 15, 1998, as supplemented from time to time, has been filed with the
Securities and Exchange Commission ("SEC") and is incorporated into this
Prospectus by reference. The SAI provides information regarding certain
matters discussed in this Prospectus and other matters which may be of
interest to investors, and may be obtained without charge by calling the Funds
at 1-800-343-2898. There can be no assurance that the investment objective of
any Fund will be achieved. Investors are advised to read this Prospectus
carefully.

The shares offered by this Prospectus are not deposits or obligations of or
guaranteed or endorsed by, any bank, and are not insured or otherwise
protected by the U.S. Government, the Federal Deposit Insurance Corporation,
the Federal Reserve Board or any other government agency. An investment in the
Funds involves risks, including possible loss of principal.

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

TABLE OF CONTENTS
-----------------
<TABLE>

<S> <C>
EXPENSE SUMMARY........................................................... 3

FINANCIAL HIGHLIGHTS...................................................... 5

INVESTMENT OBJECTIVES AND POLICIES........................................ 16

OTHER INVESTMENT PRACTICES AND RISK FACTORS............................... 20

MANAGEMENT................................................................ 27

OTHER SERVICE PROVIDERS................................................... 28

VALUING THE FUNDS' SHARES................................................. 29

DISTRIBUTION PLANS AND AGREEMENTS......................................... 29

HOW TO CHOOSE THE SHARE CLASS THAT BEST SUITS YOU......................... 30

HOW TO BUY SHARES......................................................... 32

HOW TO REDEEM SHARES...................................................... 33

OTHER SERVICES............................................................ 34

THE TAX CONSEQUENCES OF INVESTING IN THE FUNDS............................ 34

GENERAL INFORMATION....................................................... 35

APPENDIX.................................................................. 37
</TABLE>

2
<PAGE>

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

EXPENSE SUMMARY

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

Expenses are one of several factors to consider when investing in a Fund.
The tables on this page and the next are provided to help you understand the
expenses of investing in each of the Funds and your share of the operating
expenses of each of the Funds. Expenses shown for each Fund's Class A, Class C
and Class Y shares (with certain exceptions) are actual expenses incurred for
the fiscal year ended September 30, 1998. For the Class A shares of Evergreen
Capital Balanced Fund and the Class A and Class C shares of Evergreen High
Income Fund, expenses shown are estimated for the fiscal year ended September
30, 1999. The expenses shown for each Fund's Class B shares are estimated for
the Funds' upcoming fiscal year. The Examples show the cumulative expenses
attributable to a hypothetical $1,000 investment in each of the Portfolios
over specified periods.

<TABLE>
<CAPTION>
Shareholder Transaction Expenses Class A Class B Class C Class Y
- -------------------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a % of offering price) 4.75% None None None
Maximum Contingent Deferred Sales Charge
(as a % of original purchase price or
redemption proceeds, whichever is lower) None(1) 5.00%(2) 1.00%(2) None
</TABLE>
- -----
(1) Investments of $1 million or more are not subject to a front-end sales
charge, but may be subject to a contingent deferred sales charge upon
redemption within one year after the month of purchase.
(2) The deferred sales charge on Class B shares declines from 5% to 1% on
amounts redeemed within six years after the month of purchase. The
deferred sales charge on Class C shares is 1% on amounts redeemed within
one year after the month of purchase. No sales charge is imposed on
redemptions made thereafter. As a result of asset-based sales charges,
long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted under the rules of the National
Association of Securities Dealers, Inc. ("NASD").

Annual Operating Expenses (as a percentage of average net assets)

Evergreen Growth Fund

<TABLE>
<CAPTION>
Class A Class B Class C Class Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees 0.70% 0.70% 0.70% 0.70%
12b-1 Fees 0.25% 1.00% 1.00% 0.00%
Other Expenses 0.31% 0.31% 0.31% 0.31%
---- ---- ---- ----
Total 1.26% 2.01% 2.01% 1.01%

Evergreen Capital Growth Fund

<CAPTION>
Class A Class B Class C Class Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees 0.80% 0.80% 0.80% 0.80%
12b-1 Fees 0.25% 1.00% 1.00% 0.00%
Other Expenses 0.29% 0.29% 0.29% 0.29%
---- ---- ---- ----
Total 1.34% 2.09% 2.09% 1.09%

Evergreen Quality Income Fund

<CAPTION>
Class A Class B Class C Class Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management
Fees(3) 0.48% 0.48% 0.48% 0.48%
12b-1 Fees 0.25% 1.00% 1.00% 0.00%
Other Expenses 0.32% 0.32% 0.32% 0.32%
---- ---- ---- ----
Total(3) 1.05% 1.80% 1.80% 0.80%
</TABLE>

Evergreen Perpetual Global Fund

<TABLE>
<CAPTION>
Class A Class B Class C Class Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees 1.05% 1.05% 1.05% 1.05%
12b-1 Fees 0.25% 1.00% 1.00% 0.00%
Other Expenses 0.45% 0.45% 0.45% 0.45%
---- ---- ---- ----
Total 1.75% 2.50% 2.50% 1.50%

Evergreen Capital Balanced Fund

<CAPTION>
Class A Class B Class C Class Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees 0.75% 0.75% 0.75% 0.75%
12b-1 Fees 0.25% 1.00% 1.00% 0.00%
Other Expenses 0.37% 0.37% 0.37% 0.37%
---- ---- ---- ----
Total 1.37% 2.12% 2.12% 1.12%

Evergreen High Income Fund

<CAPTION>
Class A Class B Class C Class Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management
Fees(3) 0.35% 0.35% 0.35% 0.35%
12b-1 Fees 0.25% 1.00% 1.00% 0.00%
Other Expenses 0.35% 0.35% 0.35% 0.35%
---- ---- ---- ----
Total(3) 0.95% 1.70% 1.70% 0.70%
</TABLE>
- -----
(3) Mentor Investment Advisors, LLC has agreed to limit its Management Fees
from Quality Income and High Income. In the absence of these expense
limitations, Management Fees for Quality Income and High Income would be
0.60% and 0.70%, respectively. Without these expense limitations, Total
Operating Expenses for Quality Income would be: 1.17% for Class A, 1.92%
for Class B, 1.92% for Class C and 0.92% for Class Y, and for High Income
would be: 1.30% for Class A, 2.05% for Class B, 2.05% for Class C and
1.05% for Class Y.

3
<PAGE>

Examples
- --------

The examples show what you would pay if you invested $1,000 over the
periods indicated. The examples assume that you reinvest all of your dividends
and that each Fund's average annual return will be 5%. The examples are for
illustration purposes only and should not be considered a representative of
past or future expenses or annual return. The Funds' actual expenses and
returns will vary.

Evergreen Growth Fund

<TABLE>
<CAPTION>
Assuming Redemption Assuming no
At End of Period Redemption
------------------------------- ---------------
Class A Class B Class C Class Y Class B Class C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1 Year $ 60 $ 70 $ 30 $ 10 $ 20 $ 20
3 Year $ 86 $ 93 $ 63 $ 32 $ 63 $ 63
5 Year $113 $128 $108 $ 56 $108 $108
10 Years $193 $205 $234 $124 $205 $234

Evergreen Capital Growth Fund

<CAPTION>
Assuming Redemption Assuming no
At End of Period Redemption
------------------------------- ---------------
Class A Class B Class C Class Y Class B Class C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1 Year $ 61 $ 71 $ 31 $ 11 $ 21 $ 21
3 Year $ 88 $ 95 $ 65 $ 35 $ 65 $ 65
5 Year $117 $132 $112 $ 60 $112 $112
10 Years $201 $214 $242 $133 $214 $242

Evergreen Quality Income Fund

<CAPTION>
Assuming Redemption Assuming no
At End of Period Redemption
------------------------------- ---------------
Class A Class B Class C Class Y Class B Class C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1 Year $ 58 $ 68 $ 28 $ 8 $ 18 $ 18
3 Year $ 79 $ 87 $ 57 $ 26 $ 57 $ 57
5 Year $103 $117 $ 97 $ 44 $ 97 $ 97
10 Years $170 $183 $212 $ 99 $183 $212
</TABLE>

Evergreen Perpetual Global Fund

<TABLE>
<CAPTION>
Assuming Redemption Assuming no
At End of Period Redemption
------------------------------- ---------------
Class A Class B Class C Class Y Class B Class C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1 Year $ 64 $ 75 $ 35 $ 15 $ 25 $ 25
3 Year $100 $108 $ 78 $ 47 $ 78 $ 78
5 Year $138 $153 $133 $ 82 $133 $133
10 Years $244 $257 $284 $179 $257 $284

Evergreen Capital Balanced Fund

<CAPTION>
Assuming Redemption Assuming no
At End of Period Redemption
------------------------------- ---------------
Class A Class B Class C Class Y Class B Class C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1 Year $ 61 $ 72 $ 32 $ 11 $ 22 $ 22
3 Year $ 89 $ 96 $ 66 $ 36 $ 66 $ 66
5 Year $119 $134 $114 $ 62 $114 $114
10 Years $204 $217 $245 $136 $217 $245

Evergreen High Income Fund

<CAPTION>
Assuming Redemption Assuming no
At End of Period Redemption
------------------------------- ---------------
Class A Class B Class C Class Y Class B Class C
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
1 Year $ 57 $ 67 $ 27 $ 7 $ 17 $ 17
3 Year $ 76 $ 84 $ 54 $ 22 $ 54 $ 54
5 Year $ 98 $112 $ 92 $ 39 $ 92 $ 92
10 Years $159 $172 $201 $ 87 $172 $201
</TABLE>

4
<PAGE>

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

FINANCIAL HIGHLIGHTS
(for a share outstanding throughout each period)

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

The following tables have been derived from the Financial Highlights
included in Mentor Funds' (the "Mentor Trust") financial statements, which
have been audited by KPMG LLP, the Mentor Trust's independent auditors. The
report of KPMG LLP, along with the Mentor Trust's financial statements and
notes thereto, is included in the SAI, which may be obtained in the manner
described on the cover page of this prospectus. See "Financial Statements" in
the SAI. Each Fund's Class B shares are offered only as of the date of this
prospectus. Therefore, no financial highlights are currently available for
those shares.

Evergreen Capital Balanced Fund

<TABLE>
<CAPTION>
Period
Ended
Class A Shares 9/30/98*
- -------------- --------
<S> <C>
Per share operating performance
Net asset value, beginning of period............................... $ 13.69
-------
Income from investment operations
Net investment income (loss)....................................... 0.00(b)
Net realized and unrealized gain (loss) on investments............. 0.00(b)
-------
Total from investment operations................................... 0.00(b)
-------
Less distributions
Distributions from net investment income........................... --
Distributions from capital gains................................... --
-------
Total distributions................................................ --
-------
Net asset value, end of period..................................... $ 13.69
=======
Total Return(c).................................................... 0.00%
Ratios/supplemental data
Net assets, end of period (in thousands)........................... $ 3,534
Ratio of expenses to average net assets............................ 1.35%(a)
Ratio of expenses to average net assets excluding waiver........... --
Ratio of net investment income (loss) to average net assets........ 1.52%(a)
Portfolio turnover rate............................................ 89%
Average commission rate on portfolio transactions.................. $0.0687
</TABLE>

<TABLE>
<CAPTION>
Year Year Year Period Period
Ended Ended Ended Ended Ended
Class C Shares+ 9/30/98 9/30/97 9/30/96 9/30/95** 12/31/94***
- --------------- ------- ------- ------- --------- -----------
<S> <C> <C> <C> <C> <C>
Per share operating
performance
Net asset value,
beginning of period..... $ 17.61 $ 16.28 $ 14.85 $12.44 $12.50
------- ------- ------- ------ ------
Income from investment
operations
Net investment income
(loss).................. 0.45 0.43 0.42 0.36 0.22
Net realized and
unrealized gain (loss)
on investments.......... 1.43 3.35 2.09 2.08 (0.09)
------- ------- ------- ------ ------
Total from investment
operations.............. 1.88 3.78 2.51 2.44 0.13
------- ------- ------- ------ ------
Less distributions
Distributions from net
investment income....... (0.71) (0.43) (0.48) (0.03) (0.19)
Distributions from
capital gains........... (5.09) (2.02) (0.60) -- --
------- ------- ------- ------ ------
Total Distributions...... (5.80) (2.45) (1.08) (0.03) (0.19)
------- ------- ------- ------ ------
Net asset value, end of
period.................. $ 13.69 $ 17.61 $ 16.28 $14.85 $12.44
======= ======= ======= ====== ======
Total Return(c).......... 11.86% 26.09% 18.00% 19.28% 1.00%
Ratios/supplemental data
Net assets, end of period
(in thousands).......... $ 5,645 $ 4,102 $ 3,825 $3,210 $2,911
Ratio of expenses to
average net assets...... 0.52% 0.50% 0.50% 0.50%(a) 0.50%(a)
Ratio of expenses to
average net assets
excluding waiver........ 2.12% 2.13% 2.06% 2.12%(a) 2.72%(a)
Ratio of net investment
income to average net
assets (loss)........... 2.63% 2.78% 2.83% 3.26%(a) 3.32%(a)
Portfolio turnover rate.. 89% 80% 103% 65% 71%
Average commission rate
on portfolio
transactions............ $0.0687 $0.0696 $0.0694 -- --
</TABLE>
- -------
* For the period from September 16, 1998 (initial offering of Class A) to
September 30, 1998.
** For the period from January 1, 1995 to September 30, 1995.
*** For the period from June 21, 1994 (commencement of operations) to December
31, 1994.
(a) Annualized.
(b) Income for period was less than $0.01 per share.
(c) Total return does not reflect sales commissions and is not annualized.
+ Designated "Class B" shares prior to October 18, 1999.

5
<PAGE>

Evergreen Capital Balanced Fund

<TABLE>
<CAPTION>
Period
Ended
Class Y Shares 9/30/98*
- -------------- --------
<S> <C>
Per share operating performance
Net asset value, beginning of period............................... $ 13.69
-------
Income from investment operations
Net investment income (loss)....................................... 0.01
Net realized and unrealized gain (loss) on investments............. (0.01)
-------
Total from investment operations................................... 0.00
-------
Less distributions
Distributions from net investment income........................... --
Distributions from capital gains................................... --
-------
Total distributions................................................ --
-------
Net asset value, end of period..................................... $ 13.69
=======
Total Return....................................................... 0.00%
Ratios/supplemental data
Net assets, end of period (in thousands)........................... $ 3,642
Ratio of expenses to average net assets............................ 1.10%(a)
Ratio of expenses to average net assets excluding waiver........... 1.10%(a)
Ratio of net investment income (loss) to average net assets........ 2.31%(a)
Portfolio turnover rate............................................ 89%
Average commission rate on portfolio transactions.................. $0.0687
</TABLE>
- -------
* For the period from September 16, 1998 (initial offering of Class Y) to
September 30, 1998.
(a) Annualized.

6
<PAGE>

Evergreen Capital Growth Fund

<TABLE>
<CAPTION>
Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended
Class A Shares 9/30/98 9/30/97 9/30/96 9/30/95 9/30/94 9/30/93 9/30/92*
- -------------- -------- -------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per share operating
performance
Net asset value,
beginning of period.... $ 22.42 $ 19.36 $ 16.02 $ 14.88 $ 15.26 $ 14.21 $ 14.18
Income from investment
operations
Net investment income
(loss)................. (0.10) (0.02) 0.11 0.02 0.09 0.14 0.08
Net realized and
unrealized gain (loss)
on investments......... 2.34 5.87 3.73 2.91 (0.30) 1.02 0.03
-------- -------- ------- ------- ------- ------- -------
Total from investment
operations............. 2.24 5.85 3.84 2.93 (0.21) 1.16 0.11
-------- -------- ------- ------- ------- ------- -------
Less distributions
Distributions from net
investment income...... (0.01) -- -- -- (0.04) (0.11) (0.08)
Distributions from
capital gains.......... (1.94) (2.79) (0.50) (1.79) (0.13) -- --
-------- -------- ------- ------- ------- ------- -------
Total distributions..... (1.95) (2.79) (0.50) (1.79) (0.17) (0.11) (0.08)
-------- -------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 22.71 $ 22.42 $ 19.36 $ 16.02 $ 14.88 $ 15.26 $ 14.21
======== ======== ======= ======= ======= ======= =======
Total return(b)......... 10.72% 34.78% 24.63% 20.18% (1.37%) 8.21% 0.78%
======== ======== ======= ======= ======= ======= =======
Ratios/supplemental data
Net assets, end of
period (in thousands).. $145,117 $ 65,703 $31,889 $29,582 $21,181 $31,360 $20,864
Ratio of expenses to
average net assets..... 1.34% 1.41% 1.43% 1.87% 1.70% 1.49% 1.14%(a)
Ratio of expenses to
average net assets
excluding waiver....... 1.34% 1.41% 1.43% 1.87% 1.70% 1.59% 1.43%(a)
Ratio of net investment
income (loss) to
average net assets..... 0.06% 0.53% 0.51% 0.27% 0.53% 0.96% 1.54%(a)
Portfolio turnover
rate................... 104% 64% 98% 157% 149% 192% 61%
Average commission rate
on portfolio
transactions........... $ 0.0692 $ 0.0697 $0.0688 -- -- -- --
<CAPTION>
Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended
Class C Shares+ 9/30/98 9/30/97 9/30/96 9/30/95 9/30/94 9/30/93 9/30/92*
- --------------- -------- -------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per share operating
performance
Net asset value,
beginning of period.... $ 21.68 $ 18.92 $ 15.79 $ 14.80 $ 15.23 -$14.22 $ 14.18
Income from investment
operations
Net investment income
(loss)................. (0.08) -- (0.04) 0.25 (0.04) 0.05 0.46
Net realized and
unrealized gain (loss)
on investments......... 2.07 5.55 3.67 2.53 (0.26) 1.02 0.04
-------- -------- ------- ------- ------- ------- -------
Total from investment
operations............. 1.99 5.55 3.63 2.78 (0.30) 1.07 0.50
-------- -------- ------- ------- ------- ------- -------
Less distributions
Distributions from net
investment income...... (0.01) -- -- -- -- (0.06) (0.46)
Distributions from
capital gains.......... (1.94) (2.79) (0.50) (1.79) (0.13) -- --
-------- -------- ------- ------- ------- ------- -------
Total distributions..... (1.95) (2.79) (0.50) (1.79) (0.13) (0.06) (0.46)
-------- -------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 21.72 $ 21.68 $ 18.92 $ 15.79 $ 14.80 $ 15.23 $ 14.22
======== ======== ======= ======= ======= ======= =======
Total return(b)......... 9.86% 33.88% 23.64% 19.26% (2.00%) 7.52% 0.61%
======== ======== ======= ======= ======= ======= =======
Ratios/supplemental data
Net assets, end of
period (in thousands).. $196,751 $113,587 $68,213 $57,648 $41,106 $57,030 $25,468
Ratio of expenses to
average net assets..... 2.09% 2.16% 2.18% 2.56% 2.46 2.24% 1.86%(a)
Ratio of expenses to
average net assets
excluding waiver....... 2.09% 2.16% 2.18% 2.56% 2.46% 2.34% 2.16%(a)
Ratio of net investment
income to average net
assets (loss).......... (0.70%) (0.22%) (0.24%) (0.41%) (0.22%) 0.21% 0.83%(a)
Portfolio turnover
rate................... 104% 64% 98% 157% 149% 192% 61%
Average commission rate
on portfolio
transactions........... $ 0.0692 $ 0.0697 $0.0688 -- -- -- --
</TABLE>
- -------
* Reflects operations for the period from April 29, 1992 (commencement of
operations) to September 30, 1992.
(a) Annualized.
(b) Total return does not reflect sales commissions and is not annualized.
+ Designated "Class B" shares prior to October 25, 1999.

7
<PAGE>

Evergreen Capital Growth Fund

<TABLE>
<CAPTION>
Period
Ended
Class Y Shares 9/30/98*
- -------------- --------
<S> <C>
Per share operating performance
Net asset value, beginning of period............................... $ 20.81
Income from investment operations
Net investment income (loss)....................................... 0.02
Net realized and unrealized gain (loss) on investments............. 2.16
-------
Total from investment operations................................... 2.18
-------
Less distributions
Distributions from net investment income .......................... --
Distributions from capital gains................................... (0.25)
-------
Total distributions................................................ (0.25)
-------
Net asset value, end of period .................................... $ 22.74
=======
Total return....................................................... 10.56%
=======
Ratios/supplemental data
Net assets, end of period (in thousands)........................... $ 1
Ratio of expenses to average net assets............................ 1.09%(a)
Ratio of expenses to average net assets excluding waiver........... 1.09%(a)
Ratio of net investment income (loss) to average net assets........ 0.38%(a)
Portfolio turnover rate............................................ 104%
Average commission rate on portfolio transactions.................. $0.0692
</TABLE>
- -------
* For the period from November 19, 1997 (initial offering of Class Y shares) to
September 30, 1998.
(a) Annualized.

8
<PAGE>

Evergreen Growth Fund

<TABLE>
<CAPTION>
Year Year Year Period
Ended Ended Ended Ended
Class A Shares 9/30/98 9/30/97 9/30/96 9/30/95*
- -------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of
period........................ $ 19.94 $ 18.47 $ 16.08 $ 13.37
-------- -------- -------- --------
Income from investment
operations
Net investment income (loss)... (0.12) (0.17) (0.10) (0.01)
Net realized and unrealized
gain (loss) on investments.... (4.03) 4.19 4.23 2.72
-------- -------- -------- --------
Total from investment
operations.................... (4.15) 4.02 4.13 2.71
-------- -------- -------- --------
Less distributions
Distributions from net
investment income............. -- -- -- --
Distributions from capital
gains......................... (1.19) (2.55) (1.74) --
-------- -------- -------- --------
Total Distributions............ (1.19) (2.55) (1.74) --
-------- -------- -------- --------
Net asset value, end of
period........................ $ 14.60 $ 19.94 $ 18.47 $ 16.08
======== ======== ======== ========
Total Return(b)................ (22.08%) 25.81% 29.15% 20.27%
Ratios/supplemental data
Net assets, end of period (in
thousands).................... $ 77,720 $105,033 $ 40,272 $ 20,368
Ratio of expenses to average
net assets.................... 1.26% 1.28% 1.28% 1.36% (a)
Ratio of expenses to average
net assets excluding waiver... 1.26% 1.28% 1.28% 1.36% (a)
Ratio of net investment income
(loss) to average net assets.. (0.56%) (0.67%) (0.39%) (0.65%)(a)
Portfolio turnover rate........ 88% 77% 105% 70%
Average commission rate on
portfolio transactions........ $ 0.0658 $ 0.0651 $ 0.0602 --
<CAPTION>
Year Year Year Period
Ended Ended Ended Ended
Class C Shares+ 9/30/98 9/30/97 9/30/96 9/30/95*
- --------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Per share operating performance
Net asset value, beginning of
period........................ $ 19.53 $ 18.29 $ 16.05 $ 12.15
-------- -------- -------- --------
Income from investment
operations
Net investment income (loss)... (0.23) (0.22) (0.17) (0.13)
Net realized and unrealized
gain (loss) on investments.... (3.93) 4.01 4.15 4.03
-------- -------- -------- --------
Total from investment
operations.................... (4.16) 3.79 3.98 3.90
-------- -------- -------- --------
Less distributions
Distributions from net
investment income............. -- -- -- --
Distributions from capital
gains......................... (1.19) (2.55) (1.74) --
-------- -------- -------- --------
Total Distributions............ (1.19) (2.55) (1.74) --
-------- -------- -------- --------
Net asset value, end of
period........................ $ 14.18 $ 19.53 $ 18.29 $ 16.05
======== ======== ======== ========
Total Return(b)................ (22.62%) 24.66% 28.18% 32.10%
Ratios/supplemental data
Net assets, end of period (in
thousands).................... $383,188 $506,230 $371,578 $246,326
Ratio of expenses to average
net assets.................... 2.01% 2.03% 2.03% 2.08% (a)
Ratio of expenses to average
net assets excluding waiver... 2.01% 2.03% 2.03% 2.08% (a)
Ratio of net investment income
(loss) to average net assets.. (1.30%) (1.42%) (1.13%) (1.20%)(a)
Portfolio turnover rate........ 88% 77% 105% 70%
Average commission rate on
portfolio transactions........ $ 0.0658 $ 0.0651 $ 0.0602 --
</TABLE>
- -------
* For the period from June 5, 1995 (initial offering of Class A shares) to
September 30, 1995.
(a) Annualized.
(b) Total return does not reflect sales commissions and is not annualized.
+ Designated "Class B" shares prior to October 18, 1999.

9
<PAGE>

Evergreen Growth Fund

<TABLE>
<CAPTION>
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
Class C Shares (cont.) 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89
- ---------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Per share operating
performance
Net asset value,
beginning of period.... $ 13.78 $ 12.81 $ 12.16 $ 8.37 $ 9.63 $ 8.54
-------- -------- -------- -------- ------- --------
Income from investment
operations
Net investment income
(loss)................. (0.15) (0.08) (0.06) (0.09) 0.02 0.13
Net realized and
unrealized gain (loss)
on investments......... (0.47) 2.07 1.94 4.30 (1.10) 1.35
-------- -------- -------- -------- ------- --------
Total from investment
operations............. (0.62) 1.99 1.88 4.21 (1.08) 1.48
-------- -------- -------- -------- ------- --------
Less distributions
Distributions from net
investment income...... -- -- -- -- (0.05) (0.12)
Distributions from
capital gains.......... (1.01) (1.02) (1.23) (0.42) (0.13) (0.27)
-------- -------- -------- -------- ------- --------
Total Distributions..... (1.01) (1.02) (1.23) (0.42) (0.18) (0.39)
-------- -------- -------- -------- ------- --------
Net asset value, end of
period................. $ 12.15 $ 13.78 $ 12.81 $ 12.16 $ 8.37 $ 9.63
======== ======== ======== ======== ======= ========
Total Return(b)......... (4.48%) 15.60% 15.46% 50.30% (11.21%) 17.33%
Ratios/supplemental data
Net assets, end of
period (in thousands).. $190,126 $186,978 $136,053 $108,719 $83,540 $107,315
Ratio of expenses to
average net assets..... 2.01% 2.02% 2.05% 2.17% 2.25% 2.24%
Ratio of expenses to
average net assets
excluding waiver....... 2.01% 2.02% 2.05% 2.17% 2.25% --
Ratio of net investment
income (loss) to
average net assets..... (1.20%) (1.12%) (0.76%) (0.80%) 0.26% 1.36%
Portfolio turnover
rate................... 77% 64% 50% 40% 50% 26%
Average commission rate
on portfolio
transactions........... -- -- -- -- -- --
</TABLE>

<TABLE>
<CAPTION>
Period
Ended
Class Y Shares 9/30/98*
- -------------- --------
<S> <C>
Per share operating performance
Net asset value, beginning of period.............................. $ 18.12
-------
Income from investment operations
Net investment income (loss)...................................... (0.02)
Net realized and unrealized gain (loss) on investments............ (3.28)
-------
Total from investment operations.................................. (3.30)
-------
Less distributions
Distributions from net investment income.......................... --
Distributions from capital gains.................................. (0.19)
-------
Total distributions............................................... (0.19)
-------
Net asset value, end of period.................................... $ 14.63
=======
Total Return...................................................... (18.36%)
Ratios/supplemental data
Net assets, end of period (in thousands).......................... $25,353
Ratio of expenses to average net assets........................... 1.01% (a)
Ratio of expenses to average net assets excluding waiver.......... 1.01% (a)
Ratio of net investment income (loss) to average net assets....... (0.04%)(a)
Portfolio turnover rate........................................... 88%
Average commission rate on portfolio transactions................. $0.0658
</TABLE>
- -------
* For the period from November 19, 1997 (initial offering of Class Y shares) to
September 30, 1998.
(a) Annualized.
(b) Total return does not reflect sales commissions and is not annualized.

10
<PAGE>

Evergreen High Income Fund

<TABLE>
<CAPTION>
Period Ended
Class A Shares 9/30/98*
- -------------- ------------
<S> <C>
Per share operating performance
Net asset value, beginning of period............................. $ 12.00
-------
Income from investment operations
Net investment income (loss)..................................... 0.24
Net realized and unrealized gain (loss) on investments........... (1.04)
-------
Total from investment operations................................. (0.80)
-------
Less distributions
Distributions from net investment income......................... (0.28)
Distributions from capital gains................................. --
-------
Total Distributions.............................................. (0.28)
-------
Net asset value, end of period................................... $ 10.92
=======
Total Return(b).................................................. (6.75%)
Ratios/supplemental data
Net assets, end of period (in thousands)......................... $50,887
Ratio of expenses to average net assets.......................... 0.60%(a)
Ratio of expenses to average net assets excluding waiver......... 1.30%(a)
Ratio of net investment income (loss) to average net assets...... 7.36%(a)
Portfolio turnover rate.......................................... 27%
</TABLE>

<TABLE>
<CAPTION>
Period Ended
Class C Shares+ 9/30/98*
- --------------- ------------
<S> <C>
Per share operating performance
Net asset value, beginnning of period............................ $ 12.00
-------
Income from investment operations
Net investment income (loss)..................................... 0.22
Net realized and unrealized gain (loss) on investments........... (1.05)
-------
Total from investment operations................................. (0.83)
-------
Less distributions
Distributions from net investment income......................... (0.26)
Distributions from capital gains................................. --
-------
Total Distributions.............................................. (0.26)
-------
Net asset value, end of period................................... $ 10.91
=======
Total Return(b).................................................. (6.95%)
Ratios/supplemental data
Net assets, end of period (in thousands)......................... $62,869
Ratio of expenses to average net assets.......................... 1.10%(a)
Ratio of expenses to average net assets excluding waiver......... 1.80%(a)
Ratio of net investment income (loss) to average net assets...... 6.87%(a)
Portfolio turnover rate.......................................... 27%
</TABLE>
- -------
* For the period from June 23, 1998 (commencement of operations) to September
30, 1998.
(a) Annualized.
(b) Total return does not reflect sales commissions and is not annualized.
+ Designated "Class B" shares prior to October 18, 1999.

11
<PAGE>

Evergreen Perpetual Global Fund

<TABLE>
<CAPTION>
Year Year Year Year Period
Ended Ended Ended Ended Ended
Class A Shares 9/30/98 9/30/97 9/30/96 9/30/95 9/30/94*
- -------------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Per share operating
performance
Net asset value, beginning
of period................. $ 20.94 $ 17.86 $ 15.88 $14.23 $14.18
------- ------- ------- ------ ------
Income from investment
operations
Net investment income
(loss).................... (0.03) 0.04 (0.04) 0.05 (0.01)
Net realized and unrealized
gain (loss) on
investments............... (0.97) 3.67 2.82 1.60 0.06
------- ------- ------- ------ ------
Total from investment
operations................ (1.00) 3.71 2.78 1.65 0.05
------- ------- ------- ------ ------
Less distributions
Distributions from net
investment income......... -- -- -- -- --
Distributions from capital
gains..................... (1.02) (0.63) (0.80) -- --
------- ------- ------- ------ ------
Total distributions........ (1.02) (0.63) (0.80) -- --
------- ------- ------- ------ ------
Net asset value, end of
period.................... $ 18.92 $ 20.94 $ 17.86 $15.88 $14.23
======= ======= ======= ====== ======
Total return(b)............ (4.97%) 21.59% 18.40% 11.60% 0.35%
Ratios/supplemental data
Net assets, end of period
(in thousands)............ $59,012 $46,556 $13,098 $6,854 $8,882
Ratio of expenses to
average net assets........ 1.75% 1.89% 1.95% 2.06% 2.09% (a)
Ratio of expenses to
average net assets
excluding waiver.......... 1.75% 1.89% 1.95% 2.11% 3.18% (a)
Ratio of net investment
income (loss) to average
net assets................ (0.01%) 0.07% (0.21%) 0.26% (0.10%)(a)
Portfolio turnover rate.... 162% 128% 130% 155% 2%
Average commission rate on
portfolio transactions.... $0.0188 $0.0319 $0.0320 -- --
</TABLE>

<TABLE>
<CAPTION>
Year Year Year Year Year
Ended Ended Ended Ended Ended
Class C Shares+ 9/30/98 9/30/97 9/30/96 9/30/95 9/30/94*
- --------------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Per share operating
performance
Net asset value,
beginning of period..... $ 20.32 $ 17.46 $ 15.67 $ 14.15 $14.18
------- ------- ------- ------- ------
Income from investment
operations
Net investment income
(loss).................. (0.12) (0.02) (0.05) (0.05) (0.04)
Net realized and
unrealized gain (loss)
on investments.......... (0.97) 3.51 2.64 1.57 0.01
------- ------- ------- ------- ------
Total from investment
operations.............. (1.09) 3.49 2.59 1.52 (0.03)
------- ------- ------- ------- ------
Less distributions
Distributions from net
investment income....... -- -- -- -- --
Distributions from
capital gains........... (1.02) (0.63) (0.80) -- --
------- ------- ------- ------- ------
Total distributions...... (1.02) (0.63) (0.80) -- --
------- ------- ------- ------- ------
Net asset value, end of
period.................. $ 18.21 $ 20.32 $ 17.46 $ 15.67 $14.15
======= ======= ======= ======= ======
Total return(b).......... (5.65%) 20.74% 17.39% 10.74% (0.21%)
Ratios/supplemental data
Net assets, end of period
(in thousands).......... $99,277 $89,030 $42,131 $12,667 $7,987
Ratio of expenses to
average net assets...... 2.50% 2.64% 2.70% 2.72% 2.79% (a)
Ratio of expenses to
average net assets
excluding waiver........ 2.51% 2.64% 2.70% 2.79% 3.93% (a)
Ratio of net investment
income (loss) to average
net assets.............. (0.77%) (0.68%) (0.91%) (0.40%) (0.82%)(a)
Portfolio turnover rate.. 162% 128% 130% 155% 2%
Average commission rate
on portfolio
transactions............ $0.0188 $0.0319 $0.0320 -- --
</TABLE>
- -------
* Reflects operations for the period from March 29, 1994 (commencement of
operations) to September 30, 1994.
(a) Annualized.
(b) Total return does not reflect sales commissions and is not annualized.
+ Designated "Class B" shares prior to October 18, 1999.

12
<PAGE>

Evergreen Perpetual Global Fund

<TABLE>
<CAPTION>
Period Ended
Class Y Shares 9/30/98*
- -------------- ------------
<S> <C>
Per share operating performance
Net asset value, beginning of period............................ $ 18.81
-------
Income from investment operations
Net investment income (loss).................................... 0.00(b)
Net realized and unrealized gain (loss) on investments.......... 0.30
-------
Total from investment operations................................ 0.30
-------
Less distributions
Distributions from net investment income........................ --
Distributions from capital gains................................ (0.15)
-------
Total distributions............................................. (0.15)
-------
Net asset value, end of period.................................. $ 18.96
=======
Total return.................................................... 1.60%
Ratios/supplemental data
Net assets, end of period (in thousands)........................ $ 1
Ratio of expenses to average net assets......................... 1.50% (a)
Ratio of expenses to average net assets excluding waiver........ 1.50% (a)
Ratio of net investment income (loss) to average net assets..... (0.02%)(a)
Portfolio turnover rate......................................... 162%
Average commission rate on portfolio transactions............... $0.0188
</TABLE>
- -------
* For the period from November 19, 1997 (initial offering of Class Y shares) to
September 30, 1998.
(a) Annualized.
(b) Income is less than $0.005 per share.

13
<PAGE>

Evergreen Quality Income Fund

<TABLE>
<CAPTION>
Year Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended Ended
Class C Shares+ 9/30/98 9/30/97 9/30/96 9/30/95 9/30/94 9/30/93 9/30/92*
- --------------- -------- ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per share operating
performance
Net asset value,
beginning of period.... $ 13.18 $ 12.93 $ 13.31 $ 12.76 $ 14.06 $ 14.40 $ 14.30
Income from investment
operations
Net investment income
(loss)................. 0.72 0.86 0.84 0.79 0.82 0.99 0.41
Net realized and
unrealized gain (loss)
on investments......... 0.48 0.30 (0.38) 0.61 (1.37) (0.31) 0.10
-------- ------- ------- ------- ------- -------- -------
Total from investment
operations............. 1.20 1.16 0.46 1.40 (0.55) 0.68 0.51
Less distributions
Distributions from net
investment income...... (0.77) (0.91) (0.84) (0.85) (0.75) (1.02) (0.41)
Distributions from
capital gains.......... -- -- -- -- -- -- --
-------- ------- ------- ------- ------- -------- -------
Total Distributions..... (0.77) (0.91) (0.84) (0.85) (0.75) (1.02) (0.41)
-------- ------- ------- ------- ------- -------- -------
Net asset value, end of
period................. $ 13.61 $ 13.18 $ 12.93 $ 13.31 $ 12.76 $ 14.06 $ 14.40
======== ======= ======= ======= ======= ======== =======
Total Return(b)......... 9.46% 9.29% 3.57% 11.33% (3.97%) 4.86% 3.24%
Ratios/supplemental data
Net assets, end of
period (in thousands).. $112,901 $75,046 $58,239 $62,155 $77,888 $127,346 $65,661
Ratio of expenses to
average net assets..... 1.55% 1.55% 1.55% 1.74% 1.88% 1.54% 0.83%(a)
Ratio of expenses to
average net assets
excluding waiver....... 1.67% 1.68% 1.81% 1.79% 1.90% 1.72% 1.67%(a)
Ratio of net investment
income (loss) to
average net assets..... 5.22% 6.51% 6.36% 6.24% 6.21% 6.81% 7.53%(a)
Portfolio turnover
rate................... 114% 100% 254% 368% 455% 102% 9%
Average commission rate
on portfolio
transactions........... -- -- -- -- -- -- --
</TABLE>
- -------
* Reflects operations for the period from April 29, 1992 (commencement of
operations) to September 30, 1992.
(a) Annualized.
(b) Total return does not reflect sales commissions and is not annualized.
+ Designated "Class B" shares prior to October 18, 1999.

14
<PAGE>

Evergreen Quality Income Fund

<TABLE>
<CAPTION>
Period
ended
Class Y Shares 9/30/98*
- -------------- --------
<S> <C>
Per share operating performance
Net asset value, beginning of period................................ $13.20
Income from investment operations
Net investment income (loss)........................................ 0.78
Net realized and unrealized gain (loss) on investments.............. 0.39
------
Total from investment operations.................................... 1.17
Less distributions
Distributions from net investment income............................ (0.68)
Distributions from capital gains.................................... --
------
Total distributions................................................. (0.68)
------
Net asset value, end of period...................................... $13.69
======
Total Return........................................................ 8.94%
Ratios/supplemental data
Net assets, end of period (in thousands)............................ $ 1
Ratio of expenses to average net assets............................. 0.80%(a)
Ratio of expenses to average net assets excluding waiver............ 0.93%(a)
Ratio of net investment income (loss) to average net assets......... 7.09%(a)
Portfolio turnover rate............................................. 114%
</TABLE>
- -------
* For the period from November 19, 1997 (initial offering of Class Y shares) to
September 30, 1998.
(a) Annualized.

15
<PAGE>

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

INVESTMENT OBJECTIVES AND POLICIES

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

Each Fund's investment objectives are nonfundamental; as a result a Fund
may change its objectives without a shareholder vote. Each Fund has also
adopted certain fundamental investment policies which are mainly designed to
limit a Fund's exposure to risk. These fundamental policies cannot be changed
without a shareholder vote. See the SAI for more information regarding a
Fund's fundamental investment policies or other related investment policies.
There can be no assurance that any Fund's investment objectives will be
achieved.

In addition to the investment policies detailed below, each Fund may
employ certain additional investment strategies which are discussed in "Other
Investment Practices and Risk Factors" below.

Any percentage limitation on a Fund's investments will apply only at the
time of investment; a Fund would not be considered to have violated any such
limitation, unless an excess or deficiency occurs or exists immediately after
and as a result of an investment. In addition, a Fund will not necessarily
dispose of a security when its rating is reduced below any applicable minimum
rating, although the investment adviser of the Fund will monitor the
investment to determine whether continued investment in the security will
assist in meeting the Fund's investment objective.

Evergreen Capital Balanced Fund

Evergreen Capital Balanced Fund's investment objective is to seek capital
growth and current income. The Fund invests in a diversified portfolio of
equity and fixed-income securities which Mentor Investment Advisors, LLC
("Mentor Advisors") believes will produce both capital growth and current
income.

The Fund may invest in almost any type of security. The Fund's securities
will include some securities selected primarily to provide for growth in
value, others selected for current income, and others for stability of
principal.

Mentor Advisors will adjust the proportions of the Fund's assets invested
in the different types of securities in response to changing market
conditions. For example, under certain market conditions, Mentor Advisors may
judge that most of the Fund's assets should be invested in equity securities,
and that only a relatively small portion of the Fund's assets should be
invested in fixed-income securities. At other times, Mentor Advisors may
invest most of the Fund's assets in fixed-income securities, with a
corresponding reduction in the portion of the Fund's assets invested in equity
securities. Under normal circumstances, the Fund will invest at least 25% of
its assets in fixed-income securities and 25% of its assets in equity
securities.

The Fund will invest in debt securities and preferred stocks of
investment grade, and the Fund will seek under normal market conditions to
maintain a portfolio of such securities with a dollar-weighted average rating
of A or better. A security will be considered to be of "investment grade" if,
at the time of investment by the Fund, it is rated at least Baa3 by Moody's
Investors Service, Inc. ("Moody's") or BBB- by Standard & Poor's Ratings
Services ("S&P") or the equivalent by another nationally recognized rating
organization or, if unrated, determined by Mentor Advisors to be of comparable
quality. Securities rated Baa or BBB lack outstanding investment
characteristics and have speculative characteristics and are subject to
greater credit and market risks than higher-rated securities. See the Appendix
for descriptions of securities ratings assigned by Moody's and S&P.

At times Mentor Advisors may decide that conditions in the securities
markets make pursuing the Fund's basic investment strategy inconsistent with
the best interests of its shareholders. At such times, Mentor Advisors may
temporarily use alternative investment strategies primarily designed to reduce
fluctuations in the value of the Fund's assets. In implementing these
"defensive" strategies, the Fund would be permitted to hold all or any portion
of its assets in high quality fixed-income securities, cash, or money market
instruments. It is impossible to predict when, or for how long, the Fund will
use these alternative strategies.

Evergreen Capital Growth Fund

The investment objective of Evergreen Capital Growth Fund is to provide
long-term appreciation of capital. The Fund may invest in a wide variety of
securities which Mentor Advisors believes offer the potential for capital
appreciation over both the intermediate- and long-term. The Fund does not
invest for current income.

16
<PAGE>

The Fund invests primarily in common stocks of companies believed by
Mentor Advisors to have the potential for capital appreciation. The Fund may
invest without limit in preferred stocks, investment grade bonds, convertible
preferred stocks, convertible debentures, and any other class or type of
security Mentor Advisors believes offers the potential for capital
appreciation. In selecting investments, Mentor Advisors will attempt to
identify securities it believes will provide capital appreciation over the
intermediate- or long-term due to changes in the financial condition of
issuers, changes in financial conditions generally, or other factors. The Fund
also may invest in fixed-income securities, and cash or money market
investments, for temporary defensive purposes.

Evergreen Growth Fund

Evergreen Growth Fund's investment objective is long-term capital growth.
Although the Fund may receive current income from dividends, interest, and
other sources, income is only an incidental consideration.

The Fund attempts to achieve long-term capital growth by investing in a
diversified portfolio of securities. Under normal circumstances at least 75%
of the Fund's assets will be invested in common stocks of companies domiciled
or located in the United States. Although the Fund may invest in companies of
any size, the Fund invests principally in common stocks of small to mid-sized
companies. The Fund invests in companies that, in the opinion of Mentor
Advisors, have demonstrated earnings, asset values, or growth potential not
yet reflected in their market price. A key indication of such undervaluation
considered by Mentor Advisors is earnings growth which is above average
compared to the S&P 500 Index. Other important factors in selecting
investments include a strong balance sheet and product leadership in niche
markets. Mentor Advisors believes that such investments may offer better than
average potential for long-term capital growth.

Small and mid-size companies may present greater opportunities for
capital growth than do larger companies because of high potential earnings
growth, but may also involve greater risk. They may have limited product
lines, markets, or financial resources, or may depend on a limited management
group. Their securities may trade less frequently and in limited volume, and
only in the over-the-counter market or on a regional securities exchange. As a
result, these securities may change in value more than those of larger, more
established companies.

Evergreen High Income Fund

Evergreen High Income Fund's investment objective is to seek high current
income. Capital growth is a secondary objective when consistent with the
objective of seeking high current income.

The Fund may invest in both lower-rated and higher-rated fixed-income
securities, including debt securities, convertible securities, and preferred
stocks that are consistent with its primary investment objective of high
current income. The Fund's remaining assets may be held in cash or money
market instruments, or invested in common stocks and other equity securities.
The Fund may at times hold a substantial portion of its assets in mortgage-
backed and other asset-backed securities.

The Fund may invest in securities of any maturity. Mentor Advisors will
adjust the expected average life of the investments held in the Fund from time
to time, depending on its assessment of relative yields and risks of
securities of different maturities and its expectations of future changes in
interest rates. At times when the expected average life of the investments
held by the Fund is longer, the values of the securities held by the Fund will
generally change more in response to changes in interest rates than at times
when the expected average life is shorter.

Differing yields on fixed-income securities of the same maturity are a
function of several factors, including the relative financial strength of
their issuers. Higher yields are generally available from securities in the
lower categories of recognized rating agencies: Baa or lower by Moody's or BBB
or lower by S&P. The Fund may invest any portion of its assets (and normally
will invest at least 65% of its assets) in such securities and in unrated
securities determined by Mentor Advisors to be of comparable quality. The Fund
will normally invest a substantial portion of its assets in securities rated
below Baa by Moody's or BBB by S&P and in unrated securities determined by
Mentor Advisors to be of comparable quality. Securities rated below Baa by
Moody's or BBB by S&P are considered to be predominantly speculative with
respect to capacity to pay interest and repay principal in accordance with the
terms of the obligations. Securities in the lowest rating categories may have
extremely

17
<PAGE>

poor prospects of attaining any real investment standing and may be in
default. The rating services' descriptions of securities in the lower rating
categories, including their speculative characteristics, are set forth in the
Appendix to this Prospectus. See "Other Investment Practices and Risk
Factors--Lower-Rated Securities," below.

The Fund may at times invest up to 10% of its assets in securities rated
in the lowest grades (Ca or C in the case of Moody's and CC, C, or D in the
case of S&P) or in unrated securities determined by Mentor Advisors to be of
comparable quality, if Mentor Advisors believes that there are prospects for
an upgrade in a security's rating or a favorable conversion of a security into
other securities. The Fund might also invest in such securities if Mentor
Advisors were to believe that, upon completion of any contemplated exchange
offer or reorganization involving a security or its issuer, the Fund would
receive securities or other assets offering significant opportunities for
capital appreciation or future high rates of current income.

Securities ratings are based largely on the issuer's historical financial
condition and the rating agencies' investment analysis at the time of rating.
Consequently, the rating assigned to any particular security is not
necessarily a reflection of the issuer's current financial condition, which
may be better or worse than the rating would indicate.

The Fund seeks its secondary objective of capital growth, when consistent
with its primary objective of seeking high current income, by investing in
securities which may be expected to appreciate in value as a result of
declines in long-term interest rates or of favorable developments affecting
the business or prospects of the issuer which may improve the issuer's
financial condition and credit rating.

At times, Mentor Advisors may judge that conditions in the securities
markets make pursuing the Fund's basic investment strategy inconsistent with
the best interests of its shareholders. At such times Mentor Advisors may
temporarily use alternative strategies, primarily designed to reduce
fluctuations in the value of the Fund's assets. In implementing these
"defensive" strategies, the Fund may invest without limitation in money market
instruments and in U.S. government or agency obligations, or invest in any
other fixed-income security Mentor Advisors considers consistent with such
defensive strategies. It is impossible to predict when, or for how long, the
Fund will use such alternative strategies.

The Fund will not invest more than 15% of its net assets (determined at
the time of investment) in securities determined to be illiquid. Certain
securities that are restricted as to resale may nonetheless be resold by the
Fund in accordance with Rule 144A under the Securities Act of 1933, as
amended. Such securities may be determined by Mentor Advisors to be liquid for
purposes of compliance with the limitation on the Fund's investment in
illiquid securities. There can, however, be no assurance that the Fund will be
able to sell such securities at any time when Mentor Advisors deems it
advisable to do so or at prices prevailing for comparable securities that are
more widely held.

Evergreen Perpetual Global Fund

The investment objective of Evergreen Perpetual Global Fund is to seek
long-term growth of capital through a diversified portfolio of marketable
securities made up primarily of equity securities, including common stocks,
preferred stocks, securities convertible into common stocks, and warrants. The
Fund may also invest in debt securities and other fixed-income securities of
private or governmental issuers (including zero-coupon securities) which
Mentor Perpetual Advisors, LLC ("Mentor Perpetual") believes to be consistent
with the Fund's objective.

It is expected that the Fund's investments will normally be spread
broadly around the world, although (except as described in the next sentence)
there is no limit on the amount of the Fund's assets that may be invested in
any single country. Under normal circumstances, the Fund will invest at least
65% of the value of its total assets in securities of at least three
countries, one of which may be the United States. The Fund may invest all of
its assets in securities of issuers outside the U.S., and for temporary
defensive purposes may at times invest all of its assets in securities of U.S.
issuers. To the extent that the Fund invests a substantial portion of its
assets in securities of issuers located in a single country, it will be more
susceptible to adverse economic, business, political, or regulatory conditions
in or affecting that country than if it were to invest in a geographically
more diverse portfolio. The Fund may invest in closed-end investment companies
holding foreign securities. The Fund also may hold a portion of its assets in
cash or cash equivalents, including foreign and domestic money market
instruments.

18
<PAGE>

It is likely that, at times, a portion of the Fund's assets will be
invested in securities of issuers in emerging markets, including under-
developed and developing nations. Investments in emerging markets are subject
to the same risks applicable to foreign investments generally although those
risks may be increased due to conditions in such markets. For example, the
securities markets and legal systems in emerging markets may only be in a
developmental stage and may provide few, or none, of the advantages or
protections of markets or legal systems available in more developed countries.
Although many of the securities in which the Fund may invest are traded on
securities exchanges, they may trade in limited volume, and the exchanges may
not provide all of the conveniences or protections provided by securities
exchanges in more developed markets. The Fund may also invest a portion of its
assets in securities traded in the over-the-counter markets and not on any
exchange, which may affect the liquidity of the investment and expose the Fund
to the credit risk of its counterparties in trading those investments. See
"Other Investment Practices and Risk Factors--Foreign Securities."

Mentor Perpetual may seek investment opportunities in securities of
large, widely traded companies as well as securities of small, less well-known
companies. Small companies may present greater opportunities for investment
return, but may also involve greater risk. They may have limited product
lines, markets, or financial resources, or may depend on a limited management
group. Their securities may trade less frequently and in limited volume. As a
result the prices of these securities may fluctuate more than prices of
securities of larger, more established companies.

Except as described below, debt and fixed-income securities in which the
Fund may invest will be investment grade securities or those of equivalent
quality as determined by Mentor Perpetual. The Fund may invest up to 5% of its
total assets in debt securities rated Baa or below by Moody's, or BBB or below
by S&P, or deemed by Mentor Perpetual to be of comparable quality, and may
invest in securities rated as low as C by Moody's or D by S&P. Securities
rated Baa or BBB lack outstanding investment characteristics and have
speculative characteristics and are subject to greater credit and market risks
than higher-rated securities. Securities rated below investment grade are
commonly referred to as "junk bonds" and are predominately speculative.
Securities rated D may be in default with respect to payment of principal or
interest. A description of securities ratings is contained in the Appendix to
this Prospectus.

Evergreen Quality Income Fund

Evergreen Quality Income Fund's investment objective is to seek high
current income consistent with what Mentor Advisors believes to be prudent
risk. The Fund may invest in debt securities, including both U.S. government
and corporate obligations, and in other income-producing securities, including
preferred stocks and dividend-paying common stocks. The Fund may also hold a
portion of its assets in cash or money market instruments.

The Fund will normally invest at least 80% of its assets in U.S.
Government securities and in other securities rated at least A by Moody's or
S&P, or at a comparable rating by another nationally recognized rating
organization, or, if unrated, determined by Mentor Advisors to be of
comparable quality. The Fund may invest the remaining 20% of its assets in
lower-rated securities, including securities rated below investment grade (or,
if unrated, determined by Mentor Advisors to be of comparable quality).
Securities rated below investment grade are considered to be of poor standing
and predominantly speculative. Assurance of interest and principal payments or
of maintenance of other terms of the securities' contract over any long period
of time may be small. The Fund will not invest more than 10% of its assets in
securities rated Ca or below by Moody's or CC or below by S&P. See "Other
Investment Practices and Risk Factors--Lower-Rated Securities." A description
of securities ratings is contained in the Appendix to this Prospectus.

Mentor Advisors may take full advantage of the entire range of maturities
of the securities in which the Fund may invest and may adjust the average
maturity of the Fund's securities from time to time, depending on its
assessment of relative yields on securities of different maturities and
expectations of future changes in interest rates. The Fund may invest any
portion of its assets in mortgage-backed certificates and other securities
representing ownership interests in mortgage pools, including collateralized
mortgage obligations ("CMOs") and certain stripped mortgage-backed securities
(including certain "residual" interests), and in other asset-backed securities
which involve certain risks. The Fund may also invest any portion of its
assets in securities representing secured or unsecured interests in other
types of assets, such as automobile finance or credit card receivables. See
"Other Investment Practices and Risk Factors--Mortgage-Backed Securities;
Other Asset-Backed Securities" and "--Other Mortgage-Related Securities"
below.

19
<PAGE>

The Fund may borrow money to invest in additional securities; this
practice involves risks. See "Other Investment Practices and Risk Factors--
Leverage," below. The Fund may also engage in a variety of interest rate
transactions, including swaps, caps, floors, and collars. See "Other
Investment Practices and Risk Factors--Interest Rate Transactions" below for a
description of risks associated with these transactions.

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

OTHER INVESTMENT PRACTICES AND RISK FACTORS

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

Each of the Funds (except as noted below) may engage in the other
investment practices described below. See the SAI for a more detailed
description of these practices and certain risks they may involve.

Mortgage-Backed Securities; Other Asset-Backed Securities. (Balanced, High
- ----------------------------------------------------------
Income, Quality Income) Each Fund may invest in mortgage-backed certificates
and other securities representing ownership interests in mortgage pools,
including CMOs and, in the case of the Quality Income Fund, "residual"
interests therein (described more fully below). Interest and principal
payments on the mortgages underlying mortgage-backed securities are passed
through to the holders of the mortgage-backed securities. Mortgage-backed
securities currently offer yields higher than those available from many other
types of fixed-income securities but because of their prepayment aspects,
their price volatility and yield characteristics will change based on changes
in prepayment rates. As a result, mortgage-backed securities are less
effective than other securities as a means of "locking in" long-term interest
rates. Generally, prepayment rates increase if interest rates fall and
decrease if interest rates rise. For many types of mortgage-backed securities,
this can result in unfavorable changes in price and yield characteristics in
response to changes in interest rates and other market conditions. For
example, as a result of their prepayment aspects, mortgage-backed securities
have less potential for capital appreciation during periods of declining
interest rates than other fixed-income securities of comparable maturities,
although such obligations may have a comparable risk of decline in market
value during periods of rising interest rates.

Mortgage-backed securities have yield and maturity characteristics that
are dependent upon the mortgages underlying them. Thus, unlike traditional
debt securities, which may pay a fixed rate of interest until maturity when
the entire principal amount comes due, payments on these securities may
include both interest and a partial payment of principal. In addition to
scheduled loan amortization, payments of principal may result from the
voluntary prepayment, refinancing, or foreclosure of the underlying mortgage
loans. Such prepayments may significantly shorten the effective durations of
mortgage-backed securities, especially during periods of declining interest
rates. Similarly, during periods of rising interest rates, a reduction in the
rate of prepayments may significantly lengthen the effective durations of such
securities.

Each Fund may invest in stripped mortgage-backed securities. Stripped
mortgage-backed securities are usually structured with two classes that
receive different portions of the interest and principal distributions on a
pool of mortgage assets. A Fund may invest in both the interest-only--or
"IO"--class and the principal-only--or "PO"--class. The yield to maturity and
price of an IO class is extremely sensitive to the rate of principal payments
(including prepayments) on the related underlying mortgage assets, and a rapid
rate of principal payments may have a material adverse effect on the
Portfolio's net asset value. This would typically be the case in an
environment of falling interest rates. If the underlying mortgage assets
experience greater than anticipated prepayments of principal, a Fund may under
some circumstances fail to fully recoup its initial investment in these
securities. Conversely, POs tend to increase in value if prepayments are
greater than anticipated and decline if prepayments are slower than
anticipated. The secondary market for stripped mortgage-backed securities may
be more volatile and less liquid than that for other mortgage-backed
securities, potentially limiting a Fund's ability to buy or sell those
securities at any particular time.

Certain mortgage-backed securities held by the Funds may permit the
issuer at its option to "call," or redeem, its securities. If an issuer were
to redeem securities held by a Fund during a time of declining interest rates,
the Fund may not be able to reinvest the proceeds in securities providing the
same investment return as the securities redeemed.

Each Fund may invest in securities representing interests in other types
of financial assets, such as automobile-finance receivables or credit-card
receivables. Such securities may or may not be secured by the

20
<PAGE>

receivables themselves or may be unsecured obligations of their issuers. The
ability of an issuer of asset-backed securities to enforce its security
interest in the underlying assets may be limited. For example, the laws of
certain states may prevent or restrict repossession of collateral from a
debtor.

The Funds may also invest in other types of mortgage-related securities,
including any securities that directly or indirectly represent a participation
in, or are secured by and payable from, mortgage loans or real property,
including CMO "residual" interests. "Residual" interests represent the right
to any excess cash flow remaining after all other payments are made among the
various tranches of interests issued by structured mortgage-backed vehicles.
The values of such interests are extremely sensitive to changes in interest
rates and in prepayment rates on the underlying mortgages. In the event of a
significant change in interest rates or other market conditions, the value of
an investment by the Fund in such interests could be substantially reduced and
the Fund may be unable to dispose of the interests at prices approximating the
values the Fund had previously assigned to them or to recoup its initial
investment in the interests. The Funds may invest in new types of mortgage-
related securities that may be developed and marketed from time to time. If
any of the Funds were to invest in such newly developed securities,
shareholders would, where appropriate, be notified and this Prospectus would
be revised accordingly.

Mortgage-backed securities and other asset-backed securities are
"derivative" securities and present certain special risks. The Funds may
invest in a wide variety of such securities, including mortgage-backed and
other asset-backed securities that will pay principal or interest only under
certain circumstances, or in amounts that may increase or decrease
substantially depending on changes in interest rates or other market factors.
Such securities may experience extreme price volatility in response to changes
in interest rates or other market factors; this may be especially true in the
case of securities where the amounts of principal or interest paid, or the
timing of such payments, varies widely depending on prevailing interest rates.

A Fund's investment adviser may not be able to obtain current market
quotations for certain mortgage-backed or asset-backed securities at all
times, or to obtain market quotations believed by it to reflect the values of
such securities accurately. In such cases, a Fund's investment adviser may be
required to estimate the value of such a security using quotations provided by
pricing services or securities dealers making a market in such securities, or
based on other comparable securities or other bench-mark securities or
interest rates. Mortgage-backed and other asset-backed securities in which a
Fund may invest may be highly illiquid, and a Fund may not be able to sell
such a security at a particular time or at the value it has placed on that
security.

In calculating the value and duration of mortgage-backed or other asset-
backed securities, a Fund's investment adviser will be required to estimate
the extent to which the values of the securities are likely to change in
response to changes in interest rates or other market conditions, and the rate
at which prepayments on the underlying mortgages or other assets are likely to
occur under different scenarios. There can be no assurance that a Fund's
investment adviser will be able to predict the amount of principal or interest
to be paid on any security under different interest rate or market conditions
or that its predictions will be accurate, nor can there be any assurance that
a Fund will recover the entire amount of the principal paid by it to purchase
any such securities.

Zero-Coupon Bonds. (Global, Balanced, High Income, Quality Income) Each Fund
- ------------------
may at times invest in so-called "zero-coupon" bonds. Zero-coupon bonds are
issued at a significant discount from face value and pay interest only at
maturity rather than at intervals during the life of the security. Because
zero-coupon bonds do not pay current interest, their value is subject to
greater fluctuation in response to changes in market interest rates than bonds
that pay interest currently. Zero-coupon bonds allow an issuer to avoid the
need to generate cash to meet current interest payments. Accordingly, such
bonds may involve greater credit risks than bonds that pay interest currently.
Even though such bonds do not pay current interest in cash, a Fund is
nonetheless required for federal income tax purposes to accrue interest income
on such investments and to distribute such amounts at least annually to
shareholders. Thus, a Fund could be required at times to liquidate other
investments in order to satisfy this distribution requirement.

Premium Securities. The Funds may at times invest in securities bearing coupon
- -------------------
rates higher than prevailing market rates. Such "premium" securities are
typically purchased at prices greater than the principal amount payable on
maturity. Although a Fund generally amortizes the amount of any such premium
into income, the Fund may recognize a capital loss if such premium securities
are called or sold prior to maturity and the call or sale price is less than
the purchase price. Additionally, a Fund may recognize a capital loss if it
holds such securities to maturity.

21
<PAGE>

Lower-Rated Securities. (Quality Income, High Income) Investors should
- -----------------------
carefully consider their ability to assume the risks of owning shares of a
mutual fund that invests in lower-rated securities (sometimes referred to as
"junk bonds") before making an investment. The lower ratings of lower-rated
securities held by a Fund reflect a greater possibility that adverse changes
in the financial condition of the issuer, or in general economic conditions,
or both, or an unanticipated rise in interest rates, may impair the ability of
the issuer to make payments of interest and principal. The inability (or
perceived inability) of issuers to make timely payment of interest and
principal would likely make the values of securities held by a Fund more
volatile and could limit a Fund's ability to sell its securities at prices
approximating the values the Fund had placed on such securities. It is
possible that legislation may be adopted in the future limiting the ability of
certain financial institutions to purchase lower-rated securities; such
legislation may adversely affect the liquidity of such securities. In the
absence of a liquid trading market for securities held by it, a Fund may be
unable at times to establish the fair market value of such securities. The
rating assigned to a security by Moody's or S&P does not reflect an assessment
of the volatility of the security's market value or of the liquidity of an
investment in the security. For more information about the rating services'
descriptions of lower-rated securities, see the Appendix to this Prospectus.

Like those of other fixed-income securities, the values of lower-rated
securities fluctuate in response to changes in interest rates. Thus, a
decrease in interest rates will generally result in an increase in the value
of a Fund's assets. Conversely, during periods of rising interest rates, the
value of a Fund's assets will generally decline. In addition, the values of
such securities are also affected by changes in general economic conditions
and business conditions affecting the specific industries of their issuers.
Changes by recognized rating services in their ratings of any fixed-income
security and in the ability of an issuer to make payments of interest and
principal may also affect the values of these investments. Changes in the
values of portfolio securities generally will not affect cash income derived
from such securities, but will affect a Fund's net asset value. A Fund will
not necessarily dispose of a security when its rating is reduced below its
rating at the time of purchase, although Mentor Advisors will monitor the
investment to determine whether continued investment in the security will
assist in meeting a Fund's investment objectives.

Issuers of lower-rated securities are often highly leveraged, so that
their ability to service their debt obligations during an economic downturn or
during sustained periods of rising interest rates may be impaired. In
addition, such issuers may not have more traditional methods of financing
available to them, and may be unable to repay debt at maturity by refinancing.
The risk of loss due to default in payment of interest or principal by such
issuers is significantly greater because such securities frequently are
unsecured and subordinated to the prior payment of senior indebtedness.
Certain of the lower-rated securities in which a Fund may invest are issued to
raise funds in connection with the acquisition of a company, in so-called
"leveraged buy-out" transactions. The highly leveraged capital structure of
such issuers may make them especially vulnerable to adverse changes in
economic conditions.

A Fund may invest in lower-rated securities which trade infrequently or
in more limited volume than higher-rated securities (including illiquid
securities), or which are restricted as to resale. In addition, a substantial
portion of a Fund's assets may at times be invested in securities as to which
the Fund, by itself or together with other accounts managed by Mentor Advisors
and its affiliates, holds a major portion or all of such securities, which may
limit the liquidity of such securities. A Fund could find it difficult or
impossible to sell illiquid securities when Mentor Advisors believes it
advisable to do so or may be able to sell such securities only at prices lower
than if such securities were more widely held. In many cases, such securities
may be purchased in private placements and, accordingly, will be subject to
restrictions on resale as a matter of contract or under securities laws. Under
such circumstances, it may also be more difficult to determine the fair value
of such securities for purposes of computing a Fund's net asset value. In
order to enforce its rights in the event of a default under securities in
cases where a Fund holds a major portion or all of the outstanding issue, a
Fund may be required to take possession of and manage assets securing the
issuer's obligations on such securities, which may increase the Fund's
operating expenses and adversely affect the Fund's net asset value. A Fund may
also be limited in its ability to enforce its rights and may incur greater
costs in enforcing its rights in the event an issuer becomes the subject of
bankruptcy proceedings.

A Fund may at times invest in so-called "payment-in-kind" bonds. Payment-
in-kind bonds allow the issuer, at its option, to make current interest
payments on the bonds either in cash or in additional bonds. Payment-in-kind
bonds allow an issuer to avoid the need to generate cash to meet current
interest payments. Accordingly, such bonds may involve greater credit risks
than bonds that pay interest currently. Even though such

22
<PAGE>

bonds do not pay current interest in cash, a Fund is nonetheless required for
Federal income tax purposes to accrue interest income on such investments and
to distribute such amounts at least annually to shareholders. Thus, a Fund
could be required at times to liquidate other investments in order to satisfy
this distribution requirement.

Certain securities held by a Fund may permit the issuer at its option to
"call," or redeem, its securities. If an issuer were to redeem securities held
by a Fund during a time of declining interest rates, the Fund may not be able
to reinvest the proceeds in securities providing the same investment return as
the securities redeemed.

A Fund may at times invest in securities bearing coupon rates higher than
prevailing market rates. Such "premium" securities are typically purchased at
prices greater than the principal amounts payable on maturity. A Fund does not
amortize the premium paid for such securities in calculating its net
investment income. Consequently, if such premium securities are called or sold
prior to maturity, a Fund may recognize a capital loss to the extent the call
or sale price is less than the purchase price. Additionally, a Fund will
recognize a capital loss if its holds such securities to maturity.

Mentor Advisors seeks to minimize the risks involved in investing in
lower-rated securities through diversification and careful investment
analysis. When a Fund invests in high yield securities in the lower rating
categories, achievement of the Fund's goals depends more on its adviser's
investment analysis than would be the case if the Fund were investing in
securities in the higher rating categories.

Options and Futures. Each Fund may buy and sell call and put options on
- --------------------
securities it owns to hedge against changes in net asset value or to realize a
greater current return. In addition, through the purchase and sale of futures
contracts and related options, the Funds may at times seek to hedge against
fluctuations in net asset value and, to the extent consistent with applicable
law, to increase its investment return. In addition, the Funds may buy and
sell options and futures contracts (including index futures contracts,
described below) to implement changes in its asset allocations among various
market sectors, pending the sale of its existing investments and reinvestment
in new securities.

The Funds' ability to engage in options and futures strategies will
depend on the availability of liquid markets in such instruments. It is
impossible to predict the amount of trading interest that may exist in various
types of options or futures contracts. Therefore, there is no assurance that
the Funds will be able to utilize these instruments effectively for the
purposes stated above. Although the Funds will only engage in options and
futures transactions for limited purposes, those transactions involve certain
risks which are described below and in the SAI. Transactions in options and
futures contracts involve brokerage costs and may require the Funds to
segregate assets to cover its outstanding positions. For more information, see
the SAI.

Index Futures and Options. Each Fund may buy and sell index futures contracts
- --------------------------
("index futures") and options on index futures and indices for hedging
purposes (or may purchase warrants whose value is based on the value from time
to time of one or more foreign securities indices). An "index futures"
contract is a contract to buy or sell units of a particular bond or stock
index at an agreed price on a specified future date. Depending on the change
in value of the index between the time when a Fund enters into and terminates
an index futures or option transaction, the Fund realizes a gain or loss. The
Funds may also, to the extent consistent with applicable law, buy and sell
index futures and options to increase investment return.

Risks Related to Options and Future Strategies. Options and futures
- -----------------------------------------------
transactions involve costs and may result in losses. Certain risks arise
because of the possibility of imperfect correlation between movements in the
prices of futures and options and movements in the prices of the underlying
security or index or of the securities held by a Fund that is the subject of a
hedge. The successful use by a Fund of the strategies described above further
depends on the ability of its investment adviser to forecast market movements
correctly. Other risks arise from a Fund's potential inability to close out
futures or options positions. Although a Fund will enter into options or
futures transactions only if its investment adviser believes that a liquid
secondary market exists for such option or futures contract, there can be no
assurance that a Fund will be able to effect closing transactions at any
particular time or at an acceptable price. Transactions in options and futures
contracts involve brokerage costs and may require a Fund to segregate assets
to cover its outstanding positions. For more information, see the SAI. Federal
tax considerations may also limit a Fund's ability to engage in options and
futures transactions.

23
<PAGE>

Each Fund's options and futures contract transactions will generally be
conducted on recognized exchanges. However, a Fund may purchase and sell
options in transactions in the over-the-counter markets. A Fund's ability to
terminate options in the over-the-counter markets may be more limited than for
exchange-traded options and may also involve the risk that securities dealers
participating in such transactions would be unable to meet their obligations
to the Fund. A Fund will, however, engage in over-the-counter transactions
only when appropriate exchange-traded transactions are not appropriate and
when, in the opinion of its investment adviser, the pricing mechanism and
liquidity of the over-the-counter markets are satisfactory and the
participants are responsible parties likely to meet their contractual
obligations.

The Funds will not purchase futures or options on futures or sell futures
if as a result the sum of the initial margin deposits on the Funds' existing
futures positions and premiums paid for outstanding options on futures
contracts would exceed 5% of the Funds' assets. (For options that are "in-the-
money" at the time of purchase, the amount by which the option is "in-the-
money" is excluded from this calculation.)

Securities Loans and Repurchase Agreements. Each Fund may lend portfolio
- -------------------------------------------
securities and may enter into repurchase agreements with banks,
broker/dealers, and other recognized financial institutions. Each Fund may
enter into each type of transaction on up to one-third of its assets. These
transactions must be fully collateralized at all times, but involve some risk
to a Fund if the other party should default on its obligations and the Fund is
delayed or prevented from recovering the collateral.

Leverage. (Quality Income, High Income, Balanced) Each Fund may borrow money
- ---------
to invest in additional securities. Certain other Funds may engage in reverse
repurchase agreements, forward commitments, and dollar-roll transactions
described below and in the SAI, which may have the same economic effect as if
the Funds had borrowed money.

The use of borrowed money, known as "leverage," increases a Fund's market
exposure and risk and may result in losses. When a Fund has borrowed money for
leverage and its investments increase or decrease in value, its net asset
value will normally increase or decrease more than if it had not borrowed
money for this purpose. The interest that the Fund must pay on borrowed money
will reduce its net investment income, and may also either offset any
potential capital gains or increase any losses. The Funds currently intend to
use leverage in order to adjust the dollar-weighted average duration of their
portfolios. A Fund will not always borrow money for investment and the extent
to which a Fund will borrow money, and the amount it may borrow, depends on
market conditions and interest rates. Successful use of leverage depends on an
investment adviser's ability to predict market movements correctly. The amount
of leverage (including leverage to the extent employed by a Fund through
"reverse repurchase agreements," "dollar-roll" transactions, and "forward
commitments," described below) that can exist at any one time will not exceed
one-third of the value of a Fund's total assets (less all liabilities of the
Fund other than the leverage).

Reverse Repurchase Agreements; Forward Commitments. (Capital Growth, Quality
- ---------------------------------------------------
Income, Balanced, High Income, Global) Each Fund may enter into "reverse"
repurchase agreements. Each Fund may do so with respect to up to one-third of
its assets. "Reverse" repurchase agreements generally involve the sale by a
Fund of securities held by it and an agreement to repurchase the securities at
an agreed-upon price, date, and interest payment. Each Fund also may enter
into forward commitments, in which a Fund buys securities for future delivery.
Reverse repurchase agreements and forward commitments involve leverage, and
may increase a Fund's overall investment exposure. Their use by a Fund may
result in losses. Quality Income Fund may enter into reverse repurchase
agreements to create investment leverage.

Dollar-Roll Transactions. (Capital Growth, Quality Income, Balanced, High
- -------------------------
Income, Global) In order to enhance portfolio returns and manage prepayment
risks, each Fund may engage in dollar-roll transactions with respect to
mortgage-related securities issued by Government National Mortgage
Association, Federal National Mortgage Association, and Federal Home Loan
Mortgage Association. In a dollar-roll transaction, a Fund sells a mortgage-
related security to a financial institution, such as a bank or broker/dealer,
and simultaneously agrees to repurchase a substantially similar (i.e., same
type, coupon, and maturity) security from the institution at a later date at
an agreed upon price. The mortgage-related securities that are repurchased
will bear the same interest rate as those sold, but generally will be
collateralized by different pools of mortgages with different prepayment
histories. Dollar-roll transactions involve leverage, and may increase a
Fund's overall investment exposure. Their use by a Fund may result in losses.

24
<PAGE>

Foreign Securities. (Capital Growth, Quality Income, Balanced, High Income,
- -------------------
Global) Each Fund may invest in securities principally traded in foreign
markets. Capital Growth Fund will limit such investments to 15% of its total
assets. (Those percentage limitations do not apply to American Depository
Receipts ("ADRs"), Global Depository Receipts ("GDRs"), and other U.S. dollar-
denominated securities of issuers located outside the United States.) Since
foreign securities are normally denominated and traded in foreign currencies,
the values of a Fund's assets may be affected favorably or unfavorably by
changes in currency exchange rates and by exchange control regulations. There
may be less information publicly available about a foreign company than about
a U.S. company, and foreign companies are not generally subject to accounting,
auditing, and financial reporting standards and practices comparable to those
in the United States. The securities of some foreign companies are less liquid
and at times more volatile than securities of comparable U.S. companies.
Foreign brokerage commissions and other fees are also generally higher than in
the United States. Foreign settlement procedures and trade regulations may
involve certain risks (such as delay in payment or delivery of securities or
in the recovery of a Fund's assets held abroad) and expenses not present in
the settlement of domestic investments.

In addition, there may be a possibility of nationalization or
expropriation of assets, imposition of currency exchange controls,
confiscatory taxation, political or financial instability, and diplomatic
developments which could affect the value of a Fund's investments in certain
foreign countries. Legal remedies available to investors in certain foreign
countries may be more limited than those available with respect to investments
in the United States or in other foreign countries. The laws of some foreign
countries may limit a Fund's ability to invest in securities of certain
issuers located in those foreign countries. Special tax considerations apply
to foreign securities. A Fund may buy or sell foreign currencies and options
and futures contracts on foreign currencies for hedging purposes in connection
with its foreign investments as described more fully below.

A Fund may invest in ADRs and GDRs, which represent interests in foreign
securities held by a bank, trust company, or other organization. Investments
in ADRs and GDRs are subject to many of the same risks of investing in foreign
securities generally.

The risks described above are typically increased to the extent that a
Fund invests in securities traded in underdeveloped and developing nations,
which are sometimes referred to as "emerging markets."

Foreign Currency Exchange Transactions. Each Fund that may invest in foreign
- ---------------------------------------
securities may engage in foreign currency exchange transactions to protect
against uncertainty in the level of future currency exchange rates. A Fund may
engage in foreign currency exchange transactions in connection with the
purchase and sale of portfolio securities ("transaction hedging") and to
protect against changes in the value of specific portfolio positions
("position hedging").

A Fund also may engage in transaction hedging to protect against a change
in foreign currency exchange rates between the date on which a Fund contracts
to purchase or sell a security and the settlement date, or to "lock in" the
U.S. dollar equivalent of a dividend or interest payment in a foreign
currency. A Fund may purchase or sell a foreign currency on a spot (or cash)
basis at the prevailing spot rate in connection with transaction hedging.

A Fund may also enter into contracts to purchase or sell foreign
currencies at a future date ("forward contracts") and may purchase and sell
foreign currency futures contracts, for hedging and not for speculation. A
foreign currency forward contract is a negotiated agreement to exchange
currency at a future time at a rate or rates that may be higher or lower than
the spot rate. Foreign currency futures contracts are standardized exchange-
traded contracts and have margin requirements. For transaction hedging
purposes, a Fund may also purchase and sell call and put options on foreign
currency futures contracts and on foreign currencies. A Fund may engage in
position hedging to protect against a decline in value relative to the U.S.
dollar of the currencies in which its portfolio securities are denominated or
quoted (or an increase in value of a currency in which securities the
Portfolio intends to buy are denominated). For position hedging purposes, a
Fund may purchase or sell foreign currency futures contracts and foreign
currency forward contracts, and may purchase and sell put and call options on
foreign currency futures contracts and on foreign currencies. In connection
with position hedging, a Fund may also purchase or sell foreign currencies on
a spot basis.

Although there is no limit to the amount of a Fund's assets that may be
invested in foreign currency exchange and foreign currency forward contacts, a
Fund will only enter into such transactions to the extent necessary to effect
the hedging transactions described above.

25
<PAGE>

Interest Rate Transactions. (Global, Balanced, High Income, Quality Income) In
- ---------------------------
order to attempt to protect the value of its portfolio from interest rate
fluctuations and to adjust the interest-rate sensitivity of its portfolio,
each Fund may enter into interest rate swaps and other interest rate
transactions, such as interest rate caps, floors, and collars. Interest rate
swaps involve the exchange by a Fund with another party of different types of
interest-rate streams (e.g. an exchange of floating rate payments for fixed
rate payments with respect to a notional amount of principal). The purchase of
an interest rate cap entitles the purchaser to receive payments on a notional
principal amount from the party selling the cap to the extent that a specified
index exceeds a predetermined interest rate or amount. The purchase of a floor
entitles the purchaser to receive payments on a notional principal amount from
the party selling the floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and
a floor that preserves a certain return within a predetermined range of
interest rates or values. Each Fund intends to use these interest rate
transactions as a hedge and not as a speculative investment. A Fund's ability
to engage in certain interest rate transactions may be limited by tax
considerations.

The use of interest rate swaps and other interest rate transactions is a
highly specialized activity which involves investment techniques and risks
different from those associated with ordinary portfolio securities
transactions. If a Fund's investment adviser is incorrect in its forecasts of
market values, interest rates, or other applicable factors, the investment
performance of a Fund would be less favorable than it would have been if this
investment technique were not used.

Indexed Securities. (Global) The Fund may invest in indexed securities, the
- -------------------
values of which are linked to currencies, interest rates, commodities,
indices, or other financial indicators. Investment in indexed securities
involves certain risks. In addition to the credit risk of the securities
issuer and normal risks of price changes in response to changes in interest
rates, the principal amount of indexed securities may decrease as a result of
changes in the value of the reference instruments. Also, in the case of
certain indexed securities where the interest rate is linked to a reference
instrument, the interest rate may be reduced to zero and any further declines
in the value of the security may then reduce the principal amount payable on
maturity. Further, indexed securities may be more volatile than the reference
instruments underlying indexed securities.

Portfolio Turnover. The length of time a Fund has held a particular security
- -------------------
is not generally a consideration in investment decisions. A change in the
securities held by a Fund is known as "portfolio turnover." As a result of
each Fund's investment policies, under certain market conditions its portfolio
turnover rate may be higher than that of other mutual funds. Portfolio
turnover generally involves some expense to a Fund, including brokerage
commissions or dealer mark-ups and other transaction costs on the sale of
securities and reinvestment in other securities. Such transactions may result
in realization of taxable gains. The portfolio turnover rate for the High
Income Fund is not expected to exceed 200% for the current fiscal year.
Portfolio turnover rates for the ten most recent fiscal years (or for the life
of a Fund if shorter) for the other Funds are contained in the section
"Financial Highlights."

26
<PAGE>

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

MANAGEMENT

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

Fund Structure. Each Fund is an investment pool, which invests shareholders'
- ---------------
money towards a specified goal. Each Fund is a diversified series of Evergreen
International Trust, Evergreen Equity Trust or Evergreen Fixed-Income Trust,
each an open-end, management investment company. Each Evergreen Trust was
organized as a Delaware business trust on September 18, 1997.

Board of Trustees. Each Evergreen Trust is supervised by a Board of Trustees
- ------------------
that is responsible for representing the interests of shareholders. The
Trustees meet periodically throughout the year to oversee each Fund's
activities, reviewing, among other things, each Fund's performance and its
contractual arrangements with various service providers. The Trustees are
responsible for generally overseeing the conduct of each Trust's business.

Shareholder Rights. All shareholders have equal voting, liquidation and other
- -------------------
rights. Each share is entitled to one vote for each dollar of net asset value
applicable to such share. Shareholders may exchange shares as described under
"How to Buy Shares", but will have no other preference, conversion, exchange
or preemptive rights. When issued and paid for, shares will be fully paid and
nonassessable. Shares of the Funds are redeemable, transferable and freely
assignable as collateral. The Evergreen Trusts may establish additional
classes and series of shares.

The Funds do not hold annual shareholder meetings; a Fund may, however,
hold special meetings for such purposes as electing or removing trustees,
changing fundamental policies and approving investment advisory agreements or
12b-1 plans. In addition, the Funds are prepared to assist shareholders in
communicating with one another for the purpose of convening a meeting to elect
trustees.

Investment Advisors. Mentor Advisors is the investment adviser to each of the
- --------------------
Funds other than Evergreen Perpetual Global Fund. Mentor Perpetual is the
investment adviser to Evergreen Perpetual Global Fund. Each of the investment
advisers is located at 901 East Byrd Street, Richmond, Virginia 23219.

Mentor Advisors has over $15 billion in assets under management and is a
subsidiary of First Union Corporation, the sixth largest bank holding company
in the United States, with over $230 billion in consolidated assets as of
6/30/99. First Union Corporation ("First Union") is located at 301 South
College Street, Charlotte, North Carolina 28288-0013. Mentor Perpetual, an
investment advisory firm organized in 1995, is owned equally by Perpetual plc,
a diversified financial services holding company, and Mentor Advisors. The
Perpetual organization currently serves as investment adviser for assets of
more than $14 billion. Its clients include 28 unit and investment trusts and
other public investment pools including private individuals, charities,
pension plans, and life assurance companies.

Each of the Funds (other than Evergreen Perpetual Global Fund) pays
management fees to Mentor Advisors at the annual rates described above under
"Expense Summary--Annual Portfolio Operating Expenses". Evergreen Perpetual
Global Fund pays fees to Mentor Perpetual at an annual rate of 1.10% of its
average daily net assets up to and including $75 million and 1.00% of its
average daily net assets in excess of $75 million. An investment adviser may
from time to time voluntarily waive some or all of its investment advisory
fees and may terminate any such voluntary waiver at any time in its sole
discretion.

Portfolio Managers. The portfolio managers of Evergreen Growth Fund are
- -------------------
Theodore W. Price, CFA, Linda A. Ziglar, CFA and Jeffrey S. Drummond, CFA. Mr.
Price is a Managing Director, portfolio manager and Leader of the Small
Capitalization Growth Team of Mentor Advisors. He has 30 years of investment
management experience, including ten years as vice chairman and portfolio
manager of Wheat Investment Advisors. Ms. Ziglar is a Managing Director and
portfolio manager joining Mentor Advisors in 1991. Mr. Drummond is a Senior
Vice President and portfolio manager joining Mentor Advisors in 1993.

The portfolio managers of Evergreen Capital Growth Fund are John G.
Davenport, CFA, Richard H. Skeppstrom, II, Steven A. Certo, E. Craig Dauer,
and John G. Jordan, III, CFA. Mr. Davenport is Managing Director, portfolio
manager and Team Leader for the Large Capitalization Growth Team joining
Mentor Advisors in 1992. Mr. Skeppstrom is Senior Vice President and portfolio
manager for the Large Capitalization Growth Team

27
<PAGE>

joining Mentor Advisors in 1992. Mr. Certo is Vice President and portfolio
manager for the Large Capitalization Growth Team joining Mentor Advisors in
1997. Prior to joining Mentor Advisors he was a research analyst with the
Equity Research department of Wheat First Union. Mr. Dauer is an Assistant
Vice President and portfolio manager with the Large Capitalization Growth Team
joining Mentor Advisors in 1999 after previous employment as an equity
research analyst at Wheat First Union. Mr. Jordan is a portfolio manager with
the Large Capitalization Growth Team of Mentor Advisors. He joined the team in
1999 after previous employment as a portfolio manager at Thompson Siegel &
Walmsey.

The portfolio managers for Evergreen Perpetual Global Fund are: Robert
Stephens, Scott McGlashan, Ian Brady, Kathryn Langridge, Margaret Roddan, Mark
Turner, Stephen Whittaker. Mr. Stephens is Managing Director of Mentor
Perpetual and global investment specialist based in Richmond, Virginia. He has
30 years of experience in international asset management. Mr. McGlashan is Far
East Team Leader for the Fund, focusing on the Japanese market. He has 20
years management experience and has been with Perpetual, plc since 1987. Mr.
Brady is America Team Leader for the Fund. He has over 11 years of investment
management experience. Ms. Langridge is Southeast Asia and Emerging Markets
Team Leader for the Fund, focusing on equity investment in the non-Japanese
stock markets of the Far East and the emerging markets of Eastern Europe and
Latin America. She has 16 years of investment management experience, joining
Perpetual, plc in 1990. Ms. Roddan is Europe Team Leader. She has 12 years of
investment experience and has been with Perpetual, plc since 1994. Mr. Turner
has 9 years of investment management experience, joining Perpetual, plc in
1993. Mr. Whittaker is UK Team Leader. He has 18 years of investment
management experience and has been with Perpetual, plc since 1988.

The portfolio managers for Evergreen Balanced Fund are John G. Davenport,
CFA and P. Michael Jones, CFA. Mr. Davenport is a Managing Director, equity
portfolio manager and Team Leader for the Large Capitalization Growth Team
joining Mentor Advisors in 1992. His team is responsible for managing the
equity portion of the Fund. Mr. Jones is a Managing Director, fixed-income
portfolio manager and Team Leader for the Fixed Income Team joining Mentor
Advisors in 1993. His team is responsible for managing the fixed income
portion of the Fund.

The portfolio managers for Evergreen Quality Income Fund are P. Michael
Jones, CFA and Todd C. Kuimjian. Mr. Jones is a Managing Director, fixed-
income portfolio manager and Team Leader for the Fixed Income Team joining
Mentor Advisors in 1993. Mr. Kuimjian is an Assistant Vice President and
portfolio manager joining Mentor Advisors in 1994.

The portfolio managers of Evergreen High Income Fund are P. Michael
Jones, CFA and Timothy Anderson, CFA. Mr. Jones is a Managing Director, fixed-
income portfolio manager and Team Leader for the Fixed Income Team joining
Mentor Advisors in 1993. Mr. Anderson is Senior Vice President and portfolio
manager. He has 9 years of investment management experience.

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

OTHER SERVICE PROVIDERS

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

Administrative Services. Evergreen Investment Services, Inc. ("EIS") located
- ------------------------
at 200 Berkeley Street, Boston, Massachusetts 02116, provides each Fund with
certain administrative personnel and services necessary to operate each Fund,
such as bookkeeping and accounting services. EIS provides these services to
each of the Equity Funds at an annual rate of 0.15% of the Funds' average
daily net assets and for the Fixed Income Funds at an annual rate of 0.10% of
the Fund's average daily net assets.

Transfer Agent and Dividend Disbursing Agent. Evergreen Service Company
- ---------------------------------------------
("ESC"), 200 Berkeley Street, Boston, Massachusetts 02116-5034, acts as each
Fund's transfer agent and dividend disbursing agent. ESC is an indirect,
wholly owned subsidiary of First Union.

Custodian. State Street Bank and Trust Company, P.O. Box 9021, Boston,
- ----------
Massachusetts 02205-9827 acts as each Fund's custodian.

Principal Underwriter. Evergreen Distributor, Inc. ("EDI"), a subsidiary of
- ----------------------
The BISYS Group, Inc., located at 90 Park Avenue, New York, New York 10016, is
the principal underwriter of each Fund.

28
<PAGE>

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

VALUING THE FUNDS' SHARES

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

The net asset value ("NAV") of each class of shares of a Fund is
calculated by dividing the value of the amount of a Fund's net assets
attributable to that class by the number of outstanding shares of that class.
Shares are value each day the New York Stock Exchange (the "Exchange") is open
as of the close of regular trading (currently 4:00 p.m. eastern time). The
securities in a Fund are valued at their current market value determined on
the basis of market quotations or, if such quotations are not readily
available, such other methods as the Trustees believe would accurately reflect
fair value. Non-dollar denominated securities will be valued as of the close
of the Exchange at the closing price of such securities in their principal
trading market. Securities quoted in foreign currencies are translated into
U.S. dollars at the current exchange rates or at such other rates as may be
used in accordance with procedures approved by the Trustees. As a result,
fluctuations in the values of such currencies in relation to the U.S. dollar
will affect the NAV of a Fund's shares even though there has not been any
change in the values of such securities as quoted in such foreign currencies.

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

DISTRIBUTION PLANS AND AGREEMENTS

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

Distribution Plans. Each Fund's Class A, Class B and Class C shares pay for
- -------------------
the expenses associated with the distribution of its shares according to a
distribution plan that it has adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (each a "Plan" or collectively the "Plans").
Under the Plans, each Fund may incur distribution-related and shareholder
servicing-related expenses which are based upon the following maximum annual
rates: 0.75% for Class A shares, currently limited to 0.25%, 1.00% for Class B
shares, and 1.00% for Class C shares.

Of the amount that each class may under its respective Plan, up to 0.25%
may constitute a service fee to be used to compensate organizations, which may
include each Fund's investment advisor or its affiliates, for personal
services rendered to shareholders and/or the maintenance of shareholder
accounts. The Funds may not pay any distribution or services fee during any
fiscal period in excess of the amounts set forth above. Amounts paid by the
Plans are used to compensate the Funds' distributor pursuant to the
Distribution Agreements entered into by each Fund.

The Plans are in compliance with the Conduct Rules of the NASD which
effectively limit the annual asset-based sales charges and service fees that a
mutual fund may pay on a class of shares to an annual rate of 0.75% for Class
B and Class C and 0.25% for Class A of the average aggregate annual net assets
attributable to that class. The rules also limit the aggregate of all front-
end, deferred and asset-based sales charges imposed with respect to a class of
shares by a mutual fund that also charges a service fee to 6.25% of cumulative
gross sales of shares of that class, plus interest on the unpaid amount at the
prime rate plus 1% per annum.

Distribution Agreements. Each Fund has also entered into distribution
- ------------------------
agreements (each a "Distribution Agreement" or collectively the "Distribution
Agreements") with EDI. Pursuant to the Distribution Agreements, a Fund will
compensate EDI for its services as distributor based upon the maximum annual
rate as a percentage of each Fund's average daily net assets attributable to
the class, as follows: 0.25% for Class A shares, 1.00% for Class B shares, and
1.00% for Class C shares.

The Distribution Agreements provide that EDI will use the distribution
fee received from the Fund for payments (1) to compensate broker-dealers or
other persons for distributing shares of the Fund, including interest and
principal payments made in respect of amounts paid to broker-dealers or other
persons that have been financial (EDI may assign its rights to receive
compensation under the Plans to secure such financings), (2) to otherwise
promote the sales of shares of the Fund, and (3) to compensate broker-dealers,
depository institutions and other financial intermediaries for providing
administrative, accounting and other services with respect to a Fund's
shareholders. First Union National Bank or its affiliates may finance the
payments made by EDI to compensate broker-dealers or other persons for
distributing shares of a Fund.

29
<PAGE>

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

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

HOW TO CHOOSE THE SHARE CLASS THAT BEST SUITS YOU

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

After choosing a Fund, you select a share class. Each Fund offers four
different share classes: Class A, Class B, Class C and Class Y. Each class
except Class Y has its own sales charge. Pay particularly close attention to
the fee structure of each class so you know how much you will be paying before
you invest.

Class A Shares. If you select Class A shares, you may pay a front-end sales
- ---------------
charge of up to 4.75%. This charge is deducted from your investment before it
is invested. The actual charge depends on the amount invested, as shown below:

<TABLE>
<CAPTION>
As a % of As a % Dealer
Your NAV excluding of your commission
Investment sales charge investment as a % of NAV
---------- ------------- ---------- -------------
<S> <C> <C> <C>
Up to $49,999 4.75% 4.99% 4.25%
$50,000-$99,999 4.50% 4.71% 4.25%
$100,000-$249,999 3.75% 3.90% 3.25%
$250,000-$499,999 2.50% 2.56% 2.00%
$500,000-$999,999 2.00% 2.04% 1.75%
$1,000,000 and over 0% 0% 1.00 to .25%
</TABLE>

Although no front-end sales charge applies to purchases of $1,000,000 and
over, you will pay a 1% deferred sales charge if you redeem any such shares
within 13 months of purchase.

Two ways you can reduce your Class A sales charges:

1. Rights of Accumulation allow you to combine your investment with all
existing investments in all your Evergreen Fund accounts when
determining whether you meet the threshold for a reduced Class A sales
charge.

2. Letter of Intent. If you agree to purchase at least $50,000 over a 13-
month period, you pay the same sales charge as if you had invested the
full amount all at once. The Fund will hold a certain portion of your
investment in escrow until your commitment is met.

Contact your broker or ESC at 1-800-343-2898 if you think you may qualify for
either of these services.

The Fund may also sell Class A shares at net asset value without any
initial or contingent sales charge to the Directors, Trustees, officers and
employees of the Fund and the advisory affiliates of First Union, and to
members of their immediate families, to registered representatives of firms
with dealer agreements with EDI, and to a bank or trust company acting as
trustee for a single account.

Class B Shares. If you select Class B shares, you do not pay a front-end sales
- ---------------
charge, so the entire amount of your purchase is invested in the Fund.
However, your shares are subject to an additional expense, known as the 12b-1
fee. In addition, you may pay a deferred sales charge if you redeem your
shares within 6 years after the month of purchase. The amount of the deferred
sales charge depends on the length of time the shares were held, as shown
below:

<TABLE>
<CAPTION>
Time Held Contingent Deferred Sales Charge
--------- --------------------------------
<S> <C>
Month of Purchase + First 12 Month
Period 5.00%
Month of Purchase + Second 12 Month
Period 4.00%
Month of Purchase + Third 12 Month
Period 3.00%
Month of Purchase + Fourth 12 Month
Period 3.00%
Month of Purchase + Fifth 12 Month
Period 2.00%
Month of Purchase + Sixth 12 Month
Period 1.00%
Thereafter 0%
After 7 years Converts to Class A
Dealer Allowance 4.00%
</TABLE>

30
<PAGE>

The deferred sales charge percentage is applied to the value of the
shares when purchased or when redeemed, whichever is less. No deferred sales
charge is paid on shares purchased through dividend or capital gain
reinvestments or on any gains in the value of your shares.

Class C Shares. Class C shares are similar to Class B shares, except the
- ---------------
deferred sales charge is less and only applies if shares are redeemed within
the first year after the month of purchase. Also, these shares do not convert
to Class A shares and so the higher 12b-1 fee continues for the life of the
account.

<TABLE>
<CAPTION>
Time Held Contingent Deferred Sales Charge
--------- --------------------------------
<S> <C>
Month of Purchase + Less than 1 year 1.00%
Month of Purchase + 1 year or more 0%
</TABLE>

Waiver of Class B or Class C Sales Charges:

You will not be assessed a deferred sales charge for Class B or Class C
shares if you redeem shares in the following situations:

. When the shares were purchased through reinvestment of dividends/capital
gains

. Death or disability

. Lump-sum distribution from a 401(k) plan or other benefit plan qualified
under ERISA

. Automatic IRA withdrawals if your age is at least 59 1/2

. Automatic withdrawals of up to 1.0% of the account balance per month

. Loan proceeds and financial hardship distributions from a retirement
plan

. Returns of excess contributions or excess deferral amounts made to a
retirement plan participant

Class Y Shares. Each Fund offers Class Y shares at net asset value without an
- ---------------
initial sales charge, deferred sales charge or 12b-1 fees. Class Y shares are
only offered to persons who owned shares in an Evergreen Fund advised by
Evergreen Asset Management Corp. on or before December 31, 1994; certain
institutional investors; and investment advisory clients of an investment
advisor of an Evergreen Fund (or the investment advisor's affiliates).

31
<PAGE>

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

HOW TO BUY SHARES

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

Evergreen Funds' low investment minimums make investing easy. 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.

<TABLE>
<CAPTION>
Minimum Investments Initial Additional
------------------- ------- ----------
<S> <C> <C>
Regular Accounts $1,000 None
IRAs $ 250 None
Systematic Investment Plan $ 50 $25
</TABLE>

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

By Phone . Call 1-800-343-2898 to set up an . Call the Evergreen Express Line at 1-
account number and get wiring 800-346-3858 24 hours a day or 1-800-
instructions (call before 12 noon if 343-2898 between 8 a.m. and 6 p.m.
you want wired funds to be credited Eastern time, on any business day.
that day). . If your bank account is set up on
. Instruct your bank to wire or transfer file, you can request either:
your purchase (they may charge a - Federal Funds Wire (offers immediate
wiring fee). access to funds) or
. Complete the account application and mail to: - Electronic transfer through the
Evergreen Service Company Overnight Address: Automated Clearing House which avoids wiring
P.O. Box 2121 Evergreen Service Company fees.
Boston, MA 02106-2121 200 Berkeley St.
Boston, MA 02116-5039
. 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
Funds 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 . To establish automatic investing for
Investment from your bank account into your Fund an existing account, call 1-800-343-
Plan on a monthly basis. 2898 for an application.
(SIP) . Initial investment minimum is $50 if . The minimum is $25 per month or $75
you invest at least $25 per month with this service. per quarter.
. To enroll, check off the box on the . You can also establish an investing
account application and provide: program through direct deposit from your
- Your bank account information paycheck. Call 1-800-343-2898 for details.
- The amount and date of your monthly
investment.
</TABLE>
- -------
* A Fund's shares may be made available through financial service firms
which are also investment dealers and which have a service agreement with
EDI. Each 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 a Fund.
*** This does not apply to exchanges from Class A of an Evergreen Money Market
Fund.

32
<PAGE>

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

HOW TO REDEEM SHARES

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

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

Methods Requirements

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 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 redemption request to:
Evergreen Service Company Overnight Address:
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.

Redeem Your . You may also redeem your shares through participating broker-
Shares in dealers by delivering a letter as described above to your
Person broker-dealer.
. A fee may be charged for this service.

Systematic . You can transfer money automatically from your Fund account on
Withdrawal a monthly or quarterly basis--without redemption fees.
Plan (SWP) . The withdrawal can be mailed to you, or deposited directly to
your bank account.
. The minimum is $75 per month.
. The maximum is 1% of your account per month or 3% per quarter.
. To enroll, call 1-800-343-2898 for an application.

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 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. Who Can Provide A
. You want the proceeds transmitted to a bank Signature Guarantee:
account not listed on the account.

. You want the proceeds payable to anyone other . Commercial Bank
than the registered owner(s) of the account. . Trust Company
. Either your address or the address of your bank . Savings Association
account has been changed within 30 days. . Credit Union
. The account is registered in the name of a . Member of a U.S. stock
fiduciary corporation or any other organization. exchange

In these cases, additional documentation is required:
corporate accounts: certified copy of corporate resolution
fiduciary accounts: copy of the power of attorney or other governing document

33
<PAGE>

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

OTHER SERVICES

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Evergreen Express Line. Use our automated, 24-hour service to check the value
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of your investment in a Fund; purchase, redeem or exchange Fund shares; find a
Fund's price, yield or total return; order a statement or duplicate tax form;
or hear market commentary from Evergreen portfolio managers.

Automatic Reinvestment of Dividends. For the convenience of investors, all
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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 (Class A, Class B and Class C Only). If you want to invest
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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
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
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in an existing Fund account at amounts of not less than $100 or more than
$10,000 per investment. Telephone requests received by 4:00 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
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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
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one year of redemption, reinstate their accounts at the current price (NAV).

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THE TAX CONSEQUENCES OF INVESTING IN THE FUNDS

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You may be taxed in two ways:

. On Fund distributions (capital gains and dividends)

. 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
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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 Funds may distribute two types of
taxable income to you:

. Dividends. To the extent that 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. The Fund pays
either a monthly, quarterly, or yearly 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. The Fund generally distributes
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).

Dividend and Capital Gain Reinvestment. Unless you choose otherwise on the
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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.

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

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GENERAL INFORMATION

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Performance Information. The Funds may quote their "total return" or "yield"
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for specified periods in advertisements, reports, or other communications to
shareholders. Total return and yield are computed separately for each Class of
shares. Performance data for one or more classes may be included in any
advertisement or sales literature using performance data of a Fund.

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

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

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

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In marketing a Fund's shares, information may be provided that is
designed to help individuals understand their investment goals and explore
various financial strategies. Such information may include publications
describing general principles of investing, such as asset allocation,
diversification, risk tolerance, and goal setting; a questionnaire designed to
help create personal financial profile; and an action plan offering investment
alternatives. The information provided to investors may also include
discussions of other Evergreen funds, products, and services, which may
include: retirement investing; brokerage products and services; the effects of
periodic investment plans and dollar cost averaging; saving for college; and
charitable giving. In addition, the information provided to investors may
quote financial or business publications and periodicals, including model
portfolios or allocations, as they relate to fund management, investment
philosophy, and investment techniques. EDI may also reprint, and use as
advertising and sales literature, articles from Evergreen Events, a quarterly
magazine provided free of charge to Evergreen fund shareholders.

Year 2000 Risks. Like other investment companies, financial and business
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organizations and individuals around the world, the Funds could be adversely
affected if the computer systems used by the Funds' investment advisors and
the Funds' other service providers do not properly process and calculate date-
related information and data from and after January 1, 2000. This is commonly
known as the "Year 2000 Problem." The Funds' investment advisors are taking
steps to address the Year 2000 Problem with respect to the computer systems
that they use and to obtain assurances that comparable steps are being taken
by the Funds' other major service providers. At this time, however, there can
be no assurance that these steps will be sufficient to avoid any adverse
impact on the Funds.

Additional Information. This Prospectus and the SAI, which has been
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incorporated by reference herein, do not contain all the information set forth
in the Registration Statement filed by the Trust with the SEC under the
Securities Act of 1933 Act, as amended. Copies of the Registration Statement
may be obtained at a reasonable charge from the SEC or may be examined,
without charge, at the offices of the SEC in Washington, D.C.

36
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APPENDIX

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MOODY'S, 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 risks appear somewhat larger than in Aaa
securities.

A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future.

Baa--Bonds which are rated Baa are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

Ba--Bonds which are 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.

S&P, 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.

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Obligations rated BB, B, CCC, CC and C are regarded as having significant
speculative characteristics. BB indicates the lowest degree of speculation and
C the highest. While such obligations will likely have some quality and
protective characteristics, these are 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 obligations. Adverse business, financial, or economic
conditions will likely impair the obligor's capacity or willingness to meet
its 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--An obligation 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 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.

MOODY'S, NOTE RATINGS

MIG1/VMIG1--This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broadbased access to the market for refinancing.

MIG2/VMIG2--This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.

S&P, NOTE RATINGS

SP-1--Strong capacity to pay principal and interest. Issues determined to
possess overwhelming safety characteristics are given a plus sign (+)
designation.

SP-2--Satisfactory capacity to pay principal and interest.

SP-3--Speculative capacity to pay principal and interest.

MOODY'S, COMMERCIAL PAPER RATINGS

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 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 charges and high
internal cash generation.

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

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 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.

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S&P, COMMERCIAL PAPER RATINGS

A-1--This highest category 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 adequate capacity for timely
payment. They are, however, more vulnerable to the adverse effects of changes
in circumstances than obligations carrying the higher designations.

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Investment Advisors
Mentor Investment Advisors, 901 E. Byrd Street, Richmond, Virginia 23219
(Evergreen Capital Balanced Fund, Evergreen Capital Growth Fund,
Evergreen Growth Fund, Evergreen High Income Fund, Evergreen Quality
Income Fund)
Mentor Perpetual Investment Advisors, 901 E. Byrd Street, Richmond Virginia
23219
(Evergreen Perpetual Global Fund)

Custodian
State Street Bank and Trust Company, Box 9021, Boston, Massachusetts 02205-9827

Transfer Agent
Evergreen Service Company, Box 2121, Boston, Massachusetts 02106-2121

Legal Counsel
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036

Independent Auditors
KPMG LLP, 99 High Street, Boston, Massachusetts 02110

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

31168 551174