SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 3 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 3 [X]
EVERGREEN SELECT FIXED INCOME TRUST
___________________________________
(Exact Name of Registrant as Specified in Charter)
200 Berkeley Street, Boston, Massachusetts 02116-5034
(Address of Principal Executive Offices)
(617) 210-3200
(Registrant's Telephone Number)
The Corporation Trust Company
1209 Orange Street
Wilmington, Delaware 19801
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
[X] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
<PAGE>
EVERGREEN SELECT FIXED INCOME TRUST
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 3 TO
REGISTRATION STATEMENT ON FORM N-1A
This Post-Effective Amendment No.3 to Registrant's Registration Statement
No.333-36019/811-08365 consists of the Registrant consists of the following
pages, items of information and documents, together with the exhibits indicated
in Part C as being filed herewith:
Facing Sheet
Contents Page
Cross-Reference Sheet
PART A
Prospectus for the Institutional shares and Institutional Service shares of
Evergreen Select Adjustable Rate Fund contained herein.
Prospectus for the Institutional Shares and Institutional Service Shares of
Evergreen Select International Bond Fund contained in Post-Effective Amendment
No. 2 to Registration Statement No. 333-36019/811-08365 filed on June 8, 1998
is incorporated by reference herein.
Prospectus for the Institutional Shares and Institutional Service Shares of
Evergreen Select Limited Duration Fund, Evergreen Select Fixed Income Fund,
Evergreen Select Income Plus Fund, Evergreen Select Intermediate Tax-Exempt Bond
Fund, Evergreen Select Core Bond Fund and Evergreen Select Intermediate Bond
Fund contained in Pre-Effective Amendment No. 1 to Registration Statement No.
333-36019/811-08365 filed on November 17, 1997 is incorporated by reference
herein.
PART B
Statement of Additional Information for the Institutional shares and
Institutional Service shares of Evergreen Select Adjustable Rate Fund contained
herein.
Statement of Additional Information for the Institutional Shares and
Institutional Service Shares of Evergreen Select International Bond Fund
contained in Post-Effective Amendment No. 2 to Registration Statement No.
333-36019/811-08365 filed on June 8, 1998 is incorporated by reference herein.
Statement of Additional Information for the Institutional Shares and
Institutional Service Shares of Evergreen Select Limited Duration Fund,
Evergreen Select Fixed Income Fund, Evergreen Select Income Plus Fund, Evergreen
Select Intermediate Tax-Exempt Bond Fund, Evergreen Select Core Bond Fund and
Evergreen Select Intermediate Bond Fund contained in Pre-Effective Amendment No.
1 to Registration Statement No. 333-36019/811-08365 filed on November 17, 1997
is incorporated by reference herein.
PART C
Exhibits
Number of Security Holders
Idemnification
Business and Other Connections of Investment Advisors
Principal Underwriter
Location of Accounts and Records
Signatures
<PAGE>
EVERGREEN SELECT FIXED INCOME TRUST
CROSS REFERENCE SHEET
Cross-reference sheet pursuant to Rules 404 and 495
under the Securities Act of 1933
ITEM OF PART A OF FORM N-1A LOCATION IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis and Fee Table Cover Page, Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Fund Descriptions;
5. Management of the Fund Fund Descriptions
6. Capital Stock and Other Securities Fund Descriptions; Buying and
Selling Shares
7. Purchase of Securities Being Offered Buying and Selling Shares
8. Redemption or Repurchase Buying and Selling Shares
9. Pending Legal Proceedings Not Applicable
LOCATION IN STATEMENT OF
ITEM IN PART B OF FORM N-1A ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Policies
14. Management of the Fund Investment Advisory and other
Services
15. Control Persons and Principal Principal holders of Fund shares
Holders of Securities
16. Investment Advisory and Other Services Investment Advisory and Other
Services
17. Brokerage Allocation Brokerage Allocation and Other
Practices
18. Capital Stock and Other Securities Description of Shares; Voting
Rights; Limitation of Trustees'
Liability
19. Purchase, Redemption and Pricing of Purchase, Redemption and Pricing
of Securities Being Offered of Fund Shares
20. Tax Status Additional Tax Information
21. Underwriters Principal Underwriter
22. Calculation of Performance Data Calculation of Performance Data
23. Financial Statements Financial Statements
<PAGE>
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PROSPECTUS July 1, 1998
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[LOGO OF EVERGREEN
EVERGREEN SELECT FIXED INCOME TRUST FUNDS(SM) APPEARS HERE]
- -------------------------------------------------------------------------------
EVERGREEN SELECT ADJUSTABLE RATE FUND
(THE "FUND")
INSTITUTIONAL SHARES
INSTITUTIONAL SERVICE SHARES
This prospectus explains important information about the Institutional
Shares and the Institutional Service Shares of the Fund, including how the
Fund invests and services available to shareholders. Please read this
prospectus before investing, and keep it for future reference.
When you consider investing in the Fund, remember that the higher the
risk of losing money, the higher the potential reward. The reverse is also
generally true: the lower the risk, the lower the potential reward.
By itself, no fund is a complete investment plan. When considering an
investment in the Fund, remember to consider your overall investment
objectives and any other investments you own. You should also carefully
evaluate your ability to handle the risks posed by your investment in the
Fund. You can find information on the risks associated with investing in the
Fund under the section called "Fund Description."
To learn more about the Fund, call 1-800-343-2898 for a free copy of the
Fund's statement of additional information ("SAI") dated July 1, 1998 as
supplemented from time to time. The Fund has filed the SAI with the Securities
and Exchange Commission and has incorporated it by reference (legally included
it) into this prospectus.
PLEASE REMEMBER THAT SHARES OF THE FUND ARE:
. NOT DEPOSITS OR OBLIGATIONS OF ANY BANK.
. NOT ENDORSED OR GUARANTEED BY ANY BANK.
. NOT INSURED OR OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER AGENCY.
. SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT.
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>
EXPENSES............................................................... 3
FINANCIAL HIGHLIGHTS................................................... 4
FUND DESCRIPTION....................................................... 5
Investment Objective................................................ 5
Investment Approach................................................. 5
Securities and Investment Practices
Used By the Fund................................................... 6
BUYING AND SELLING SHARES.............................................. 8
How to Buy Shares................................................... 8
Alternative Sales Options........................................... 9
How to Redeem Shares................................................ 9
Additional Transaction Policies..................................... 10
Exchanges........................................................... 10
Dividends........................................................... 11
Taxes............................................................... 11
Shareholder Services................................................ 11
FUND DETAILS........................................................... 11
Fund Organization and Service Providers............................. 11
Other Information and Policies...................................... 12
Fund Performance.................................................... 13
</TABLE>
2
<PAGE>
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EXPENSES
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The table and examples below are designed to help you understand the
various expenses that you will bear, directly or indirectly, when you invest
in the Fund. Shareholder transaction expenses are fees paid directly from your
account when you buy or sell shares of the Fund. THERE ARE NO SHAREHOLDER
TRANSACTION EXPENSES.
Annual operating expenses reflect the normal operating expenses of the
Fund, and include costs such as management, distribution and other fees. The
table below shows the Fund's annual operating expenses for the fiscal period
ended February 28, 1998. 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 the Fund's average annual return will be 5%. THE
EXAMPLES ARE FOR ILLUSTRATION PURPOSES ONLY AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RETURN. THE FUND'S ACTUAL
EXPENSES AND RETURNS WILL VARY. For a more complete description of the various
costs and expenses borne by the Fund see "Fund Details."
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES MANAGEMENT 12B-1 OTHER TOTAL OPERATING
(AS APERCENTAGE OF AVERAGE DAILY NET ASSETS) FEES FEES EXPENSES EXPENSES
- --------------------------------------------- ---------- ------- -------- ---------------
<S> <C> <C> <C> <C>
Institutional Shares 0.30% None None 0.30%
Institutional Service Shares 0.30% 0.25% None 0.55%
<CAPTION>
EXAMPLE OF FUND EXPENSES 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------ ---------- ------- -------- ---------------
<S> <C> <C> <C> <C>
Institutional Shares $ 3 $ 10 $ 17 $ 38
Institutional Service Shares $ 6 $ 18 $ 31 $ 69
</TABLE>
3
<PAGE>
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FINANCIAL HIGHLIGHTS
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The following tables contain important financial information relating to
the Fund and has been audited by KPMG Peat Marwick LLP, the Fund's independent
auditors. The tables appear in the Fund's Annual Report and should be read in
conjunction with the Fund's financial statements and related notes, which also
appear, together with the independent auditors' report, in the Fund's Annual
Report. The Fund's financial statements, related notes, and independent
auditors' report thereon are incorporated by reference into the SAI.
Additional information about the Fund's performance is contained in its Annual
Report, which will be made available upon request and without charge.
(For a share outstanding throughout each period)
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
FIVE MONTHS
YEAR ENDED ENDED YEAR ENDED SEPTEMBER 30,
FEBRUARY 28, FEBRUARY 28, ---------------------------------------------
1998 1997(A) 1996 1995 1994 1993 1992
------------ ------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
BEGINNING OF PERIOD.... $9.71 $9.68 $9.65 $9.61 $9.93 $9.88 $10.00
------- ------- ------- ------- ------- ------- -------
Income from investment
operations
Net investment income.. 0.64 0.28 0.64(b) 0.63 0.63 0.54 0.67
Net realized and
unrealized gain (loss)
on investments........ 0.04 0(d) 0 0.01 (0.49) (0.01) (0.15)
------- ------- ------- ------- ------- ------- -------
Total from investment
operations............. 0.68 0.28 0.64 0.64 0.14 0.53 0.52
------- ------- ------- ------- ------- ------- -------
Less distributions from
Net investment income.. (0.62) (0.23) (0.60) (0.55) (0.44) (0.48) (0.64)
In excess of net
investment income..... (0.02) (0.02) (0.01) (0.05) (0.02) 0 0
------- ------- ------- ------- ------- ------- -------
Total distributions..... (0.64) (0.25) (0.61) (0.60) (0.46) (0.48) (0.64)
------- ------- ------- ------- ------- ------- -------
Net asset value end of
period................. $9.75 $9.71 $9.68 $9.65 $9.61 $9.93 $9.88
======= ======= ======= ======= ======= ======= =======
TOTAL RETURN............ 7.15% 2.97% 6.86% 6.87% 1.43% 5.53% 5.46%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net
assets
Total expenses......... 0.30% 0.30%(c) 0.30% 0.30% 0.30% 0.30% 0.30%
Net investment income.. 6.63% 6.79%(c) 6.84% 6.61% 5.15% 5.46% 6.83%
Portfolio turnover
rate................... 107% 44% 85% 56% 63% 81% 88%
NET ASSETS END OF PERIOD
(THOUSANDS)............ $25,981 $70,264 $65,974 $23,616 $25,200 $60,035 $51,625
</TABLE>
INSTITUTIONAL SERVICE SHARES
<TABLE>
<CAPTION>
MAY 23, 1994
(DATE OF INITIAL
FIVE MONTHS YEAR ENDED PUBLIC OFFERING)
YEAR ENDED ENDED SEPTEMBER 30, THROUGH
FEBRUARY 28, FEBRUARY 28, ----------------- SEPTEMBER 30,
1998 1997(A) 1996 1995 1994
------------ ------------ ------- ------ ----------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
BEGINNING OF PERIOD.... $9.72 $9.68 $9.65 $9.61 $9.73
------- ------ ------- ------ -----
Income from investment
operations
Net investment income.. 0.59 0.28 0.65(b) 0.64 0.17
Net realized and
unrealized gain (loss)
on investments........ 0.06 0(d) (0.03) (0.02) (0.13)
------- ------ ------- ------ -----
Total from investment
operations............. 0.65 0.28 0.62 0.62 0.04
------- ------ ------- ------ -----
Less distributions from
Net investment income.. (0.59) (0.22) (0.58) (0.53) (0.16)
In excess of net
investment income..... (0.02) (0.02) (0.01) (0.05) 0
------- ------ ------- ------ -----
Total distributions..... (0.61) (0.24) (0.59) (0.58) (0.16)
------- ------ ------- ------ -----
Net asset value end of
period................. $9.76 $9.72 $9.68 $9.65 $9.61
======= ====== ======= ====== =====
TOTAL RETURN............ 6.89% 2.97% 6.60% 6.60% 0.35%
RATIOS/SUPPLEMENTAL DATA
Ratios to average net
assets
Total expenses......... 0.55% 0.55%(c) 0.55% 0.55% 0.43%(c)
Net investment income.. 6.15% 6.39%(c) 6.64% 6.70% 5.03%(c)
Portfolio turnover
rate................... 107% 44% 85% 56% 63%
NET ASSETS END OF PERIOD
(THOUSANDS)............ $10,320 $3,564 $14,361 $2,871 $1
</TABLE>
- -------
(a) The Fund changed its fiscal year end from September 30 to February 28.
(b) Per share calculations based on weighted average shares outstanding.
(c) Annualized.
(d) Amount represents less than $0.01 per share.
4
<PAGE>
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FUND DESCRIPTION
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INVESTMENT OBJECTIVE
The Fund seeks a high level of current income consistent with low
volatility of principal.
The Fund's investment objective is nonfundamental. As a result, the Fund
may change its objective without a shareholder vote. The Fund has also adopted
certain fundamental investment policies which are mainly designed to limit the
Fund's exposure to risk. The Fund's fundamental policies cannot be changed
without a shareholder vote. See the SAI for more information regarding the
Fund's fundamental investment policies or other related investment policies.
INVESTMENT APPROACH
PRINCIPAL INVESTMENTS
Under ordinary circumstances, the Fund invests at least 65% of its assets
in mortgage securities or other securities collateralized by or representing
an interest in a pool of mortgages (collectively, "Mortgage Securities"),
which securities have interest rates that reset at periodic intervals and are
issued or guaranteed by the United States ("U.S.") government, its agencies or
instrumentalities.
The Fund does not attempt to maintain a constant price per share.
However, the Fund follows a strategy that seeks to minimize changes in its net
asset value per share by investing primarily in adjustable rate securities,
whose interest rates are periodically reset when market rates change. The
average dollar weighted reset period of adjustable rate securities held by the
Fund will not exceed one year. The Fund seeks to provide a relatively stable
net asset value while providing high current income relative to high-quality,
short-term investment alternatives.
INVESTMENT POLICIES
The Fund's investment adviser believes that, by investing primarily in
Mortgage Securities with adjustable rates of interest, the Fund will achieve a
less volatile net asset value per share than is characteristic of mutual funds
that invest primarily in U.S. government securities that pay a fixed rate of
interest.
Unlike fixed rate mortgages and loans that generally decline in value
during periods of rising interest rates, adjustable rate Mortgage Securities
("ARMS") allow the Fund to participate in increases in interest rates through
periodic adjustments in the coupons of the underlying mortgages or loans,
resulting in both higher current yields and lower price fluctuations in the
Fund's net asset value per share. The Fund is also affected by decreases in
interest rates through periodic decreases in the coupons of the underlying
mortgages or loans resulting in lower income to the Fund. This downward
adjustment results in lower price fluctuations in the net asset value per
share in a decreasing interest rate environment. As the interest rates on the
mortgages or loans underlying the Fund's investments are reset periodically,
coupons of portfolio securities will gradually align themselves to reflect
changes in market rates and should cause the net asset value per share of the
Fund to fluctuate less dramatically than it would if the Fund invested in more
traditional long-term, fixed rate mortgages.
The portion of the Fund that is not invested in ARMS, if any, is intended
to increase the Fund's total return from changes in market rates while not
materially increasing the volatility of the net asset value per share.
PERMITTED INVESTMENTS
The Fund invests in Mortgage Securities that are issued or guaranteed by
the U.S. government, one of its agencies or instrumentalities, such as the
Government National Mortgage Association ("GNMA"), the Federal National
Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation
("FHLMC"). Securities issued by GNMA, but not those issued by FNMA or FHLMC,
are backed by the full faith and credit of the U.S. government.
The Fund invests in mortgage pass-through securities representing
participation interests in pools of residential mortgage loans originated by
U.S. governmental lenders and guaranteed, to the extent provided in
5
<PAGE>
such securities, by the U.S. government, its agencies or instrumentalities.
Such securities, which are ownership interests in the underlying mortgage
loans, differ from conventional debt securities, which provide for periodic
payment of interest in fixed amounts (usually semiannually) and principal
payments at maturity or on specified call dates. Mortgage pass-through
securities provide for monthly payments that are a "pass-through" of the
monthly interest and principal payments (including any prepayments) made by
the individual borrowers on the pooled mortgage loans, net of any fees paid to
the guarantor of such securities and the servicer of the underlying mortgage
loans.
The guaranteed mortgage pass-through securities in which the Fund invests
include those issued or guaranteed by GNMA, FNMA and FHLMC. GNMA certificates
are direct obligations of the U.S. government and, as such, are backed by the
full faith and credit of the U.S. government. FNMA is a federally chartered,
privately owned corporation. FHLMC is a corporate instrumentality of the U.S.
government. FNMA and FHLMC certificates are not backed by the full faith and
credit of the U.S. government and are supported only by the credit of FNMA and
FHLMC, which have the right to borrow to meet their obligations from an
existing line of credit with the U.S. Treasury. Although their close
relationship with the U.S. government is believed to make them high quality
securities with minimal credit risks, the U.S. government is not obligated by
law to support either FNMA or FHLMC. Historically, however, there have been no
defaults in any FNMA or FHLMC issues.
Certificates for Mortgage Securities evidence an interest in a specific
pool of mortgages. These certificates are, in most cases, "modified pass-
through" instruments, wherein the issuing agency guarantees the payment of
principal and interest on mortgages underlying the certificates, whether or
not such amounts are collected by the issuer on the underlying mortgages.
Adjustable rate mortgages are an important form of residential financing.
Generally, adjustable rate mortgages are mortgages that have a specified
maturity date and amortize in a manner similar to that of a fixed rate
mortgage. As a result, in periods of declining interest rates there is a
reasonable likelihood that adjustable rate mortgages will behave like fixed
rate mortgages in that current levels of prepayments of principal on the
underlying mortgages could accelerate. However, one difference between
adjustable rate mortgages and fixed rate mortgages is that for certain types
of adjustable rate mortgages the rate of amortization of principal, as well as
interest payments, can and does change in accordance with movements in a
particular, pre-specified, published interest rate index. The amount of
interest due a holder of an adjustable rate mortgage is calculated by adding a
specified additional amount (margin) to the index, subject to limitations or
"caps" or "floors" on the maximum and minimum interest rate that is charged to
the mortgagor during the life of the mortgage or to maximum and minimum
changes in that interest rate during a given period. It is these special
characteristics, unique to the adjustable rate mortgages underlying the ARMS
in which the Fund invests, that are believed to make ARMS attractive
investments for seeking to accomplish the Fund's objective.
OTHER PERMITTED INVESTMENTS
The Fund may invest in collateralized mortgage obligations ("CMOs")
issued or guaranteed by the U.S. government, its agencies or
instrumentalities. The Fund intends to invest only in CMOs that, in its
investment adviser's opinion, are suitable in light of the Fund's investment
objective and policies. For further information, see "Additional Investment
Information."
The Fund may also invest up to 35% of its assets under ordinary
circumstances and up to 100% of its assets for temporary defensive purposes in
obligations of the U.S. government, its agencies or instrumentalities, such as
the Federal Home Loan Banks, FNMA, GNMA, FHLMC or the Federal Farm Credit
Banks.
The Fund may assume a temporary defensive position, for example, upon its
investment adviser's determination that market conditions so warrant. The Fund
may not be pursuing its investment objective when it assumes a temporary
defensive position.
SECURITIES AND INVESTMENT PRACTICES USED BY THE FUND
You can find more information about the types of securities in which the
Fund may invest, the types of investment techniques the Fund may employ in
pursuit of its objective and a summary of related risks set forth below. The
Fund's SAI contains additional information about these investments and
investment techniques.
6
<PAGE>
Debt Securities. The Fund may invest in bonds or other instruments used by
corporations or governments to borrow money from investors, including all
kinds of convertible securities. When the Fund buys a debt security, it
expects to earn a variable or fixed rate of interest and it expects the issuer
to repay the amount borrowed at maturity. Some debt securities, such as zero
coupon bonds, do not pay current interest, but are purchased at a discount
from their face values. The main risks of investing in debt securities are:
. Interest Rate Risk: The risk that a bond's prices will fall when
interest rates rise, and vice versa. Debt securities have varying
levels of sensitivity to interest rates. Longer-term bonds are
generally more sensitive to changes in interest rates than short
term bonds.
. Credit Risk: The chance that the issuer of a bond will have its
credit rating downgraded or will default (fail to make scheduled
interest and principal payments), potentially reducing the Fund's
income and/or share price.
Debt securities have varying degrees of quality. Investment grade bonds
are generally rated within the four highest grades as determined by Standard &
Poor's Ratings Group ("S & P") (AAA, AA, A or BBB), Moody's Investors Service
("Moody's") (Aaa, Aa, A or Baa), or Fitch IBCA ("Fitch") (AAA, AA, A or BBB) or
their respective equivalent ratings or, if not rated or rated by another
system, determined by the Fund's adviser to be of equivalent credit quality to
securities so rated.
The Fund is not required to sell or otherwise dispose of any security
that loses its rating or has its rating reduced after the Fund has purchased
it. Also, if S&P, Moody's or Fitch changes its ratings system, the Fund will
try to use comparable ratings as standards according to the Fund's investment
objectives and policies.
U.S. Government Securities. The Fund may buy debt securities that are issued
or guaranteed by the U.S. Treasury or by an agency or instrumentality of the
U.S. government. Some U.S. government securities, such as Treasury bills,
notes and bonds, are supported by the full faith and credit of the U.S.
Others, however, are supported only by the credit of the instrumentality or by
the right of the instrumentality to borrow from the U.S. government. While
U.S. government securities are guaranteed as to principal and interest, their
market value is not guaranteed. Generally, U.S. government securities are
subject to the same interest rate and credit risks as other fixed-income
securities. However, since U.S. government securities are of the highest
credit quality, the credit risk is minimal. THE U.S. GOVERNMENT DOES NOT
GUARANTEE THE NET ASSET VALUE OF THE FUND'S SHARES.
Mortgage-Backed Securities. A mortgage-backed security represents an interest
in a "pool" of commercial or residential mortgages. Payments of interest and
principal made by the individual borrowers on the mortgages that underlie the
securities are passed through to the Fund. The Fund may invest in mortgage-
backed securities and other complex asset backed securities, including CMOs
and stripped mortgage-backed securities.
Early repayment of the mortgages underlying the securities may expose the
Fund to a lower rate of return when it reinvests the principal. The rate of
prepayments will affect the price and volatility of the mortgage-backed
security and may have the effect of shortening or extending the effective
maturity beyond what a fund anticipated at the time of purchase.
Like other debt securities, changes in interest rates generally affect
the value of a mortgage-backed security. Additionally, some mortgage-backed
securities may be structured so that they may be particularly sensitive to
interest rates.
Borrowing. The Fund may borrow from banks in an amount up to 33 1/3% of its
total assets, taken at market value. The Fund may only borrow as a temporary
measure for extraordinary or emergency purposes such as the redemption of Fund
shares. The Fund will not purchase securities while borrowings are outstanding
except to exercise prior commitments and to exercise subscribtion rights.
Securities Lending. To generate income and offset expenses, the Fund may lend
securities to broker-dealers and other financial institutions. Loans of
securities by the Fund may not exceed 30% of the value of the Fund's total
assets. While securities are on loan, the borrower will pay the Fund any
income accruing on the security. Also, the Fund may invest any collateral it
receives in additional securities.
Gains or losses in the market value of a lent security will affect the
Fund and its shareholders. When the Fund lends its securities, it runs the
risk that it could not retrieve the securities on a timely basis, possibly
losing
7
<PAGE>
the opportunity to sell the securities at a desirable price. Also, if the
borrower files for bankruptcy or becomes insolvent, the Fund's ability to
dispose of the securities may be delayed.
Repurchase Agreements. The Fund may enter into repurchase agreements. A
repurchase agreement is an agreement by the Fund to purchase a security and
sell it back for a specified price. The repurchase price reflects an agreed-
upon interest rate for the time period of the agreement. The Fund's risk is
the inability of the seller to pay the agreed-upon price at delivery date.
However, such risk is tempered by the ability of the Fund to sell the security
in the open market in case of default. In such a case, the Fund may incur
costs in disposing of the security which would increase Fund expenses.
Reverse Repurchase Agreements. The Fund may enter into reverse repurchase
agreements. A reverse repurchase agreement is an agreement by the Fund to sell
a security and repurchase it at a specified time and price. The Fund could
lose money if the market value of the securities it sold declines below their
repurchase price. Reverse repurchase agreements may be considered a form of
borrowing, and, therefore, a form of leverage. Leverage may magnify gains or
losses of the Fund.
Investing in Securities of Other Investment Companies. The Fund may invest in
securities in other investment companies. As a shareholder of another
investment company, the Fund would pay its portion of the other investment
company's expenses. These expenses would be in addition to the expenses that
the Fund currently bears concerning its own operations and may result in some
duplication of fees.
When-Issued, Delayed-Delivery and Forward Commitment Transactions. The Fund
may enter into transactions whereby it commits to buying a security, but does
not pay for or take delivery of the security until some specified date in the
future. The value of these securities is subject to market fluctuation during
this period and no income accrues to the Fund until settlement. At the time of
settlement, a when-issued security may be valued at less than its purchase
price. When entering into these transactions, the Fund relies on the other
party to consummate the transaction; if the other party fails to do so, the
Fund may be disadvantaged.
Other Investment Restrictions. The Fund has adopted additional investment
restrictions and guidelines that are set forth in the SAI.
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BUYING AND SELLING SHARES
- -------------------------------------------------------------------------------
HOW TO BUY SHARES
Institutional investors may buy shares of the Fund through broker-
dealers, banks and certain other financial intermediaries, or directly through
the Fund's distributor, Evergreen Distributor, Inc. ("EDI"). Investors may
purchase shares at the public offering price, which equals the class's net
asset value per share ("NAV"). See "Offering Price and Other Purchase
Information" below.
Opening an Account. You may open an account by mailing a signed account
application to the Fund c/o Evergreen Service Company, P.O. Box 2121, Boston,
Massachusetts 02106-2121. You may get an account application by calling 1-800-
343-2898.
Except as provided below, you can only purchase shares by wiring federal
funds to Evergreen Service Company (the "Service Company"). You may obtain
wiring instructions by calling 1-800-343-2898. When you call, the Service
Company representative will ask you for the following information: name of
authorized person; shareholder name; shareholder account number; name of the
Fund and share class; amount being wired; and wiring bank name.
Offering Price and Other Purchase Information. When you buy the Fund's shares,
you pay its NAV next determined after the Fund receives and accepts your
order. To receive that day's offering price, the Fund must receive and accept
your order by the close of regular trading (currently 4:00 p.m. Eastern time);
otherwise, you will receive the next day's offering price. For more
information, see "How the Fund Calculates its NAV."
You may, at the Fund's discretion, pay for shares of the Fund with
securities instead of cash. Additionally, if you want to buy the Fund's shares
equal in amount to $5 million or more, the Fund may require you to pay for
those shares with securities instead of cash. The Fund will only accept
securities that are consistent with its investment objective, policies and
restrictions. Also, the Fund will value the securities in the manner described
under "How the
8
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Fund Calculates its NAV." Investors who receive the Fund's shares for
securities instead of cash may pay such transaction costs as broker's
commissions, taxes or governmental fees.
ALTERNATIVE SALES OPTIONS
The Fund offers two classes of shares.
INSTITUTIONAL SERVICE SHARES
Institutional Service shares are sold without a sales charge at the time
of purchase and are not subject to a sales charge when they are redeemed. The
minimum initial investment in Institutional Service shares is $1 million,
which may be waived in certain situations. There is no minimum amount required
for subsequent purchases.
The Fund has adopted the Institutional Service shares Distribution Plan,
which provides for payments at an annual rate of up to 0.35% of the average
daily net asset value of Institutional Service shares, to pay expenses of the
distribution of Institutional Service shares. Payments are currently limited to
a rate of 0.25% of the average daily net assets of Institutional Service
shares. Amounts paid by the Fund under the Institutional Service shares
Distribution Plan are generally used to pay EDI and others' service fees. The
Fund may also make payments to EDI, broker-dealers and others for activities
that are primarily intended to result in sales of Institutional Service
shares, including, but not limited to, mail promotions and advertising,
including the use of member name and address lists of affinity groups,
professional associations, trade groups, industry associations or other
associations (e.g., credit union trade groups), for which use royalty payments
may be made. As a result, income distributions paid by the Fund with respect
to Institutional Service shares will generally be less than those paid with
respect to Institutional shares.
INSTITUTIONAL SHARES
Institutional shares are sold without a sales charge at the time of
purchase and are not subject to a sales charge when they are redeemed. The
minimum initial investment in Institutional Shares is $1 million, which may be
waived in certain situations. There is no minimum amount required for
subsequent purchases.
HOW TO REDEEM SHARES
You may redeem shares of the Fund by mail, telephone or other types of
telecommunication.
Mail Redemptions. You may redeem shares on each day that the New York Stock
Exchange ("NYSE") is open by mailing a written request to the Service Company
at the following address:
Evergreen Service Company
P.O. Box 2121
Boston, Massachusetts 02106-2121
The signatures on the written request must be properly guaranteed, as
described below.
How To Redeem By Telephone. You may redeem your shares by calling 1-800-343-
2898 between the hours of 9:00 a.m. and 5:00 p.m. (Eastern time) on each
business day. You may also redeem shares by sending a facsimile to (617) 210-
2708 or by other means of wire communication. You must state the Fund and
class from which you want to redeem, the number or dollar amount of shares you
want to redeem and your account number. The telephone redemption service is
not available to you automatically. You must elect to do so on your account
application.
If you are unable to reach the Fund or the Service Company by telephone,
you should redeem by mail.
The Service Company will wire your redemption proceeds to the commercial
bank account designated on the account application. If the Service Company
deems it appropriate, it may require additional documentation.
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<PAGE>
Although at present the Service Company pays the wire costs involved, it
reserves the right at any time to require the shareholder to pay such costs.
Redemption Value and Other Redemption Policies. When you sell shares, you
receive the NAV computed at the close of the NYSE on the day that the Fund
receives your request, if your request is received before 4:00 p.m. Eastern
time. If the Fund receives your redemption request after 4:00 p.m. Eastern
time, you will receive the next day's NAV. Generally, the Fund pays redemption
proceeds within seven days. The Fund may, at any time, change, suspend or
terminate any of the redemption methods described in this prospectus, except
redemptions by mail. For more information, see "How the Fund Calculates its
NAV."
The Fund may, at its discretion, pay your redemption proceeds with
securities instead of cash. However, the Fund is obligated to redeem shares
solely in cash, up to the lesser of $250,000 or 1% of the Fund's total net
assets during any ninety day period for any one shareholder. See the SAI for
further details.
Except as otherwise noted, neither the Fund, the Service Company nor the
Fund's distributor assumes responsibility for the authenticity of any
instructions received by any of them from a shareholder by telephone. The
Service Company will employ reasonable procedures to confirm that instructions
received over the telephone or otherwise are genuine. Neither the Fund, the
Service Company nor the Fund's distributor will be liable when following
instructions received by telephone or otherwise that the Service Company
reasonably believes to be genuine.
Shareholders may only change information contained in their account
registration (such as the bank account designated to receive wire redemption
proceeds) by writing to the Service Company. Signatures on such written
instructions must be guaranteed.
ADDITIONAL TRANSACTION POLICIES
How the Fund Calculates its NAV. The Fund's NAV equals the value of its share
without sales charges. The Fund calculates its NAV by adding up the total
value of its investments and other assets, subtracting its liabilities and
then dividing the result by the number of shares outstanding. The Fund
computes its NAV as of the close of regular trading (generally 4:00 p.m.
Eastern time) on each day that the NYSE is open.
The Fund's assets are valued primarily on the basis of market quotations.
Short-term securities with remaining maturities of sixty days or less for
which quotations are not readily available are valued on the basis of
amortized cost. In addition, securities for which quotations are not readily
available, including fixed-income securities, are valued by a method that the
Board of Trustees believes accurately reflects fair value.
Signature Guarantee. For your protection, signatures on stock powers, and
written orders or authorizations must have a signature guarantee. A signature
guarantee can be provided by a U.S. stock exchange member, a bank, or other
persons eligible to guarantee signatures under the Securities Exchange Act of
1934 and the Service Company's policies. The Service Company may waive this
requirement or may require additional documentation in certain cases.
EXCHANGES
You may exchange shares of the Fund for shares of the same class of any
other Evergreen Select Fund. You may exchange your shares through your broker-
dealer, by mail or by telephone. All exchange orders must comply with the
applicable requirements for purchases and redemptions and must include your
account number, the number or value of shares to be exchanged, the class of
shares, and the funds to and from which you wish to exchange.
Signatures on exchange orders must be guaranteed, as described above.
The Fund reserves the right to change or revoke the exchange privilege of
any shareholder or to limit or revoke any exchange. Currently, you may not
make more than five exchanges in a year or three exchanges in a calendar
quarter.
Please read the prospectus of the fund that you want to exchange into
before requesting your exchange.
For federal income tax purposes, an exchange is treated as a sale for
taxable investors.
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<PAGE>
DIVIDENDS
As a shareholder, you are entitled to your share of earnings on the
Fund's investments. You receive such earnings as either an income dividend or
a capital gains distribution. Income dividends come from the dividends that
the Fund earns from its stocks plus any interest it receives from its bonds.
The Fund realizes a capital gain whenever it sells a security for a higher
price than its tax basis.
Dividend Schedule. The Fund declares dividends from its net investment income
daily and pays such dividends monthly. The Fund pays shareholders its net
capital gains at least once a year.
Payment Options. Unless you select another option on your account application,
your dividends and capital gains will be reinvested in additional shares of
the same class of the Fund.
You may elect to receive some or all of your dividends and capital gains
in cash. Should you select this option, a check will be mailed to you or your
agent or trustee no later than seven days after the payment date.
TAXES
The Fund intends to qualify as a regulated investment company (a "RIC")
under Subchapter M of the Internal Revenue Code of 1986, as amended. As long
as the Fund qualifies as a RIC and distributes substantially all of its net
investment income and capital gains, it will not pay federal income taxes on
the earnings it distributes to shareholders.
Distributions to shareholders, whether taken in cash or reinvested in
shares, are generally considered taxable for federal income tax purposes as
follows:
. Income distributions and net short-term capital gains are taxable as
ordinary income.
. Long-term capital gains distributions are taxable as capital gains,
regardless of how long you have held your shares.
After each calendar year, the Service Company will mail you a statement
indicating which of that year's distributions you should treat as ordinary
income and which you should treat as capital gains. Distributions of income or
capital gains may also be subject to state and local taxes. You should always
consult your tax adviser for specific guidance as to the tax consequences of
your investment in the Fund.
SHAREHOLDER SERVICES
Details on all shareholder services may be obtained from the Service
Company by calling toll free 1-800-343-2898 or by writing to the Service
Company.
Subaccount. Special processing has been arranged with the Service Company for
banks and other institutions that wish to open multiple accounts (a master
account and subaccounts). An investor wishing to avail himself or herself of
the Service Company's subaccounting facilities will be required to enter into
a separate agreement, with the charges to be determined on the basis of the
level of services to be rendered. Subaccounts may be opened with the initial
investment or at a later date and may be established by an investor with
registration either by name or by number.
- -------------------------------------------------------------------------------
FUND DETAILS
- -------------------------------------------------------------------------------
FUND ORGANIZATION AND SERVICE PROVIDERS
Fund Structure. The Fund is an investment pool, which invests shareholders'
money towards a specified goal. The Fund is a diversified series of an open-
end, investment management company, called "Evergreen Select Fixed Income
Trust" (the "Trust"). The Trust is a Delaware business trust organized on
September 18, 1997.
Board of Trustees. The Trust is supervised by a Board of Trustees that is
responsible for representing the interests of shareholders. The Trustees meet
periodically throughout the year to oversee the Fund's activities,
11
<PAGE>
reviewing, among other things, its performance and its contractual
arrangements with various service providers.
Shareholder Rights. All shareholders have equal voting, liquidation and other
rights. Each share is entitled to one vote for each dollar of net asset value
applicable to such share. Shareholders may exchange shares as described under
"Exchanges," but will have no other preference, conversion, exchange or
preemptive rights. When issued and paid for, your shares will be fully paid
and nonassessable. Shares of the Fund are redeemable, transferable and freely
assignable as collateral. The Trust may establish additional classes or series
of shares.
The Fund does not hold annual shareholder meetings; the 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 Fund is prepared to assist
shareholders in communicating with one another for the purpose of convening a
meeting to elect Trustees.
Adviser. The investment adviser to the Fund is Keystone Investment Management
Company ("Keystone"), located at 200 Berkeley Street, Boston, Massachusetts
02116-5034, an indirect wholly-owned subsidiary of First Union National Bank
("FUNB"). FUNB is a subsidiary of First Union Corporation ("First Union").
First Union is located at 301 South College Street, and FUNB at 201 South
College Street, Charlotte, North Carolina 28288-0630. First Union and its
subsidiaries provide a broad range of financial services to individuals and
businesses throughout the U.S.
The Fund pays Keystone a fee for its services at an annual rate of 0.30% of
the Fund's average daily net assets.
Portfolio Managers. The portfolio managers of the Fund are Christopher P.
Conkey and Gary E. Pzegeo.
Christopher Conkey. Mr. Conkey has been the Fund's portfolio manager since
1991. He is a Keystone Senior Vice President and Chief Investment Officer
for Fixed Income. He is also Group Leader for the high grade fixed income
area. Mr. Conkey joined Keystone as a fixed income portfolio manager in
1988.
Gary Pzegeo. Mr. Pzegeo has been a Keystone Vice President and Portfolio
Manager since 1997 and has been co-portfolio manager of the Fund since
April 1997. Mr. Pzegeo has been an investment professional at Keystone
since 1990.
Distributor. Evergreen Distributor, Inc. ("EDI") is the Fund's distributor.
EDI is located at 125 West 55th Street, New York, New York 10019 and is a
subsidiary of The BISYS Group, Inc. EDI markets the Fund and distributes its
shares through broker-dealers, financial planners and other financial
representatives. EDI is not affiliated with First Union.
Transfer Agent. Evergreen Service Company (the "Service Company") is the
Fund's transfer agent. The Service Company is a subsidiary of First Union and
is located at 200 Berkeley Street, Boston, MA 02116-5034. The Service Company
handles shareholder services, including record keeping and account statements,
distribution of dividends and capital gains and processing of transactions.
OTHER INFORMATION AND POLICIES
Banking Laws. The Glass-Steagall Act and other banking laws and regulations
presently prohibit a bank holding company or its affiliates (a "Bank") from
sponsoring, organizing, controlling, or distributing the shares of a
registered open-end investment company such as the Fund. However, a Bank may
act as investment adviser, transfer agent or custodian to a registered open-
end investment company. A Bank may also purchase shares of such company and
pay third parties for performing these functions.
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<PAGE>
Securities Transactions. Under policies established by the Trust's Board of
Trustees, the Fund's investment adviser selects broker-dealers to execute
portfolio transactions subject to the receipt of best execution. In so doing,
the Fund's investment adviser may select broker-dealers who are affiliated
with the adviser. Moreover, the Fund may pay higher commissions to broker-
dealers that provide research services, which the adviser may use in advising
the Fund or its other clients.
Portfolio Turnover. The Fund's annual portfolio turnover rate for the fiscal
period ended February 28, 1998 is 107%.
Code of Ethics. The Fund and its investment adviser have adopted a code of
ethics incorporating policies on personal securities trading. In general, these
codes of ethics require that certain personnel of the Fund and its investment
adviser (1) abstain from engaging in certain personal trading practices and
(2) report certain personal trading activities.
Year 2000 Risks. Like other investment companies, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Fund's investment adviser and the
Fund's 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 Fund's investment adviser is taking
steps to address the Year 2000 Problem with respect to the computer systems
that it uses and to obtain assurances that comparable steps are being taken by
the Fund's 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 Fund.
FUND PERFORMANCE
Total Return. Total return is the change in value of an investment in the Fund
over a given period, assuming that dividends and capital gains are reinvested
and that recurring charges are deducted. A cumulative total return reflects
actual performance over a stated period of time. An average annual total
return is a hypothetical rate of return that, if achieved annually, would have
produced the same cumulative total return if performance had been constant
over the entire period. Average annual total returns smooth out variations in
performance; they are not the same as actual year-by-year results.
Yield. Yield is the income generated by an investment in the Fund over a given
period of time, expressed as an annual percentage rate. Yields are calculated
according to a standard that is required for all stock and bond funds. Because
this differs from other accounting methods, the quoted yield may not equal the
income actually paid to shareholders.
General. The Fund may include comparative performance information in
advertising or in marketing the Fund's shares. Such information could include
data from Lipper Analytical Services, Inc., Morningstar, Inc., CDA
Weisenberger and Value Line, other industry publications or various indexes,
such as the Lehman Brothers Aggregate Bond Index.
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<PAGE>
INVESTMENT ADVISER
Keystone Investment Management Company, 200 Berkeley Street, Boston,
Massachusetts 02116-5034
CUSTODIAN
State Street Bank and Trust Company, P.O. Box 9021, Boston, Massachusetts
02205-9827
TRANSFER AGENT
Evergreen Service Company, 200 Berkeley Street, Boston, Massachusetts,
02116-5034
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110
DISTRIBUTOR
Evergreen Distributor, Inc., 125 West 55th Street, New York, New York 10019
63152 541908
<PAGE>
EVERGREEN SELECT FIXED INCOME TRUST
200 Berkeley Street
Boston, Massachusetts 02116
(800) 633-2700
STATEMENT OF ADDITIONAL INFORMATION
July 1, 1998
Evergreen Select Adjustable Rate Fund
(The "Fund")
The Fund is a series of an open-end management investment company known as
"Evergreen Select Fixed Income Trust" (the "Trust").
The Fund offers two classes of shares: Institutional Shares and
Institutional Service Shares, both of which are offered through the same
prospectus. This statement of additional information ("SAI") provides additional
information about both classes of shares of the Fund. It is not a prospectus and
you should read it in conjunction with the Fund's prospectus dated July 1, 1998,
as supplemented from time to time. You may obtain a copy of the prospectus from
Evergreen Distributor, Inc.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT POLICIES...............................................................................................3
Fundamental Investment Policies..........................................................................3
Additional Information on Securities and Investment Practices............................................5
MANAGEMENT OF THE TRUST..........................................................................................10
PRINCIPAL HOLDERS OF FUND SHARES.................................................................................12
INVESTMENT ADVISORY AND OTHER SERVICES...........................................................................14
Investment Adviser......................................................................................14
Distributor.............................................................................................15
Additional Service Providers............................................................................16
BROKERAGE ALLOCATION AND OTHER PRACTICES.........................................................................16
Selection of Brokers....................................................................................16
Brokerage Commissions...................................................................................17
General Brokerage Policies..............................................................................17
TRUST ORGANIZATION...............................................................................................17
Form of Organization....................................................................................17
Description of Shares...................................................................................17
Voting Rights...........................................................................................18
Limitation of Trustees' Liability.......................................................................18
PURCHASE, REDEMPTION AND PRICING OF FUND SHARES..................................................................18
Exchanges...............................................................................................18
How and When the Fund Calculates its Net Asset Value Per Share ("NAV")..................................18
How the Fund Values the Securities it Owns..............................................................19
Shareholder Services....................................................................................19
PRINCIPAL UNDERWRITER............................................................................................19
ADDITIONAL TAX INFORMATION.......................................................................................20
Requirements for Qualification as a Regulated Investment Company........................................20
Taxes on the Sale or Exchange of Fund Shares............................................................21
Taxes on Distributions..................................................................................21
Other Tax Considerations................................................................................22
CALCULATION OF PERFORMANCE DATA..................................................................................22
ADDITIONAL INFORMATION...........................................................................................23
FINANCIAL STATEMENTS.............................................................................................23
APPENDIX........................................................................................................A-1
</TABLE>
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INVESTMENT POLICIES
FUNDAMENTAL INVESTMENT POLICIES
The Fund has adopted the fundamental investment restrictions set forth
below which may not be changed without the vote of a majority of the Fund's
outstanding shares, as defined in the Investment Company Act of 1940 (the"1940
Act"). Where necessary, an explanation beneath a fundamental policy describes
the Fund's practices with respect to that policy, as allowed by current law. If
the law governing a policy changes, the Fund's practices may change accordingly
without a shareholder vote. Unless otherwise stated, all references to the
assets of the Fund are in terms of current market value.
1. Diversification
The Fund may not make any investment that is inconsistent with its
classification as a diversified investment company under the 1940 Act.
Further Explanation of Diversification Policy:
To remain classified as a diversified investment company under the 1940
Act, the Fund must conform with the following: With respect to 75% of its total
assets, a diversified investment company may not invest more than 5% of its
total assets, determined at market or other fair value at the time of purchase,
in the securities of any one issuer, or invest in more than 10% of the
outstanding voting securities of any one issuer, determined at the time of
purchase. These limitations do not apply to investments in securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities.
2. Concentration
The Fund may not concentrate its investments in the securities of
issuers primarily engaged in any particular industry (other than securities that
are issued or guaranteed by the U.S.
government or its agencies or instrumentalities).
Further Explanation of Concentration Policy:
The Fund may not invest more than 25% of its total assets, taken at
market value , in the securities of issuers primarily engaged in any particular
industry (other than securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities).
3. Issuing Senior Securities
Except as permitted under the 1940 Act, the Fund may not issue senior
securities.
4. Borrowing
The Fund may not borrow money, except to the extent permitted by
applicable law.
Further Explanation of Borrowing Policy: The Fund may borrow from banks
in an amount up to 33 1/3% of its total assets, taken at market value. The Fund
also may borrow up to an additional 5% of its total assets from banks or others.
The Fund may borrow only as a temporary
24322
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measure for extraordinary or emergency purposes such as the redemption of Fund
shares. The Fund may not purchase securities while borrowings are outstanding
except to exercise prior commitments and to exercise subscription rights (as
defined in the 1940 Act) or enter into reverse repurchase agreements, in amounts
up to 33 1/3 % of its total assets (including the amount borrowed). The Fund may
obtain such short-term credit as may be necessary for the clearance of purchases
and sales of portfolio securities. The Fund may purchase securities on margin
and engage in short sales to the extent permitted by applicable law
5. Underwriting
The Fund may not underwrite securities of other issuers, except insofar
as the Fund may be deemed to be an underwriter in connection with the
disposition of its portfolio securities.
6. Real Estate
The Fund may not purchase or sell real estate, except that, to the
extent permitted by applicable law, the Fund may invest in (a) securities that
are directly or indirectly secured by real estate, or (b) securities issued by
issuers that invest in real estate.
7. Commodities
The Fund may not purchase or sell commodities or contracts on
commodities, except to the extent that the Fund may engage in financial futures
contracts and related options and currency contracts and related options and may
otherwise do so in accordance with applicable law and without registering as a
commodity pool operator under the Commodity Exchange Act.
8. Lending
The Fund may not make loans to other persons, except that the Fund may
lend its portfolio securities in accordance with applicable law. The acquisition
of investment securities or other investment instruments shall not be deemed to
be the making of a loan.
Further Explanation of Lending Policy:
To generate income and offset expenses, the Fund may lend portfolio
securities to broker-dealers and other financial institutions in an amount up to
33 1/3% of its total assets, taken at market value. While securities are on
loan, the borrower will pay the Fund any income accruing on the security. The
Fund may invest any collateral it receives in additional portfolio securities,
such as U.S. Treasury notes, certificates of deposit, other high-grade,
short-term obligations or interest bearing cash equivalents. Gains or losses in
the market value of a security lent will affect the Fund and its shareholders.
When a Fund lends its securities, it will require the borrower to give
the Fund collateral in cash or government securities. The Fund will require
collateral in an amount equal to at least 100% of the current market value of
the securities lent, including accrued interest. The Fund has the right to call
a loan and obtain the securities lent any time on notice of not more than five
business days. The Fund may pay reasonable fees in connection with such loans.
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ADDITIONAL INFORMATION ON SECURITIES AND INVESTMENT PRACTICES
The investment objective of the Fund and a description of the
securities in which the Fund may invest is set forth in the Fund's prospectus.
The following expands upon the discussion in the prospectus regarding certain
investments of the Fund.
Master Demand Notes
Master demand notes are unsecured obligations that permit the
investment of fluctuating amounts by the Fund at varying rates of interest
pursuant to direct arrangements between the Fund, as lender, and the issuer, as
borrower. Master demand notes may permit daily fluctuations in the interest rate
and daily changes in the amounts borrowed. The Fund has the right to increase
the amount under the note at any time up to the full amount provided by the note
agreement, or to decrease the amount. The borrower may repay up to the full
amount of the note without penalty. Notes purchased by the Fund permit the Fund
to demand payment of principal and accrued interest at any time (on not more
than seven days' notice). Notes acquired by the Fund may have maturities of more
than one year, provided that (1) the Fund is entitled to payment of principal
and accrued interest upon not more than seven days' notice, and (2) the rate of
interest on such notes is adjusted automatically at periodic intervals, which
normally will not exceed 31 days, but may extend up to one year. The notes are
deemed to have a maturity equal to the longer of the period remaining to the
next interest rate adjustment or the demand notice period. Because these types
of notes are direct lending arrangements between the lender and borrower, such
instruments are not normally traded and there is no secondary market for these
notes, although they are redeemable and thus repayable by the borrower at face
value plus accrued interest at any time. Accordingly, the Fund's right to redeem
is dependent on the ability of the borrower to pay principal and interest on
demand. In connection with master demand note arrangements, the Fund's Adviser
9as defined below) considers, under standards established by the Board of
Trustees, earning power, cash flow and other liquidity ratios of the borrower
and will monitor the ability of the borrower to pay principal and interest on
demand. These notes are not typically rated by credit rating agencies. Unless
rated, the Fund may invest in them only if at the time of an investment the
issuer meets the criteria established for commercial paper discussed in this SAI
(which limits such investments to commercial paper rated A-1 by S&P, Prime-1 by
Moody's or F-1 by Fitch Investors Service, L.P.).
Investment Company Securities
Securities of other investment companies may be acquired by the Fund to
the extent permitted under the Investment Company Act of 1940, as amended (the
"1940 Act"). These limits require that, as determined immediately after a
purchase is made, (i) not more than 5% of the Fund's total assets will be
invested in the securities of any one investment company, (ii) not more than 10%
of the value of its total assets will be invested in the aggregate in securities
of investment companies as a group, and (iii) not more than 3% of the
outstanding voting stock of any one investment company will be owned by the
Fund. As a shareholder of another investment company, the Fund would bear, along
with other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees. These expenses would be in addition to the
advisory and other expenses that the Fund bears directly in connection with its
own operations. However, the Fund may invest all of its investable assets in
securities of a single open-end management investment company with substantially
the same fundamental investment objectives, polices and limitations as the Fund.
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Repurchase Agreements
The Fund may enter into repurchase agreements with entities that are
registered U.S. government securities dealers, including member banks of the
Federal Reserve System having at least $1 billion in assets, primary dealers in
U.S. government securities or other financial institutions believed by the
Fund's Adviser to be creditworthy. A repurchase agreement is an agreement by
which a person (e.g., the Fund) obtains a security and simultaneously commits to
return the security to the seller (a member bank of the Federal Reserve System
or recognized securities dealer) at an agreed upon price (including principal
and interest) on an agreed upon date within a number of days (usually not more
than seven) from the date of purchase. The resale price reflects the purchase
price plus an agreed upon market rate of interest which is unrelated to the
coupon rate or maturity of the underlying security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect secured by the value of the underlying security.
The Fund or its custodian will take possession of the securities
subject to repurchase agreements, and these securities will be marked to market
daily. To the extent that the original seller does not repurchase the securities
from the Fund, the Fund could receive less than the repurchase price on any sale
of such securities. In the event that such a defaulting seller filed for
bankruptcy or became insolvent, disposition of such securities by the Fund might
be delayed pending court action. The Fund believes that under the regular
procedures normally in effect for custody of the Fund's portfolio securities
subject to repurchase agreements, a court of competent jurisdiction would rule
in favor of the Fund and allow retention or disposition of such securities. The
Fund will only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker-dealers, which are deemed by the Adviser
to be creditworthy pursuant to guidelines established by the Trustees.
Reverse Repurchase Agreements
The Fund may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase agreement,
the Fund transfers possession of a portfolio instrument to another person, such
as a financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable the Fund to avoid
selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the
Fund, in a dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These securities are marked to
market daily and maintained until the transaction is settled.
Illiquid and Restricted Securities
The Fund may not invest more than 15% of its net assets in securities
that are illiquid. A security is illiquid when the Fund cannot dispose of it in
the ordinary course of business within seven days at approximately the value at
which the Fund has the investment on its books.
24304
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<PAGE>
The Fund may invest in "restricted" securities, i.e., securities
subject to restrictions on resale under federal securities laws. Rule 144A under
the Securities Act of 1933 ("Rule 144A") allows certain restricted securities to
trade freely among qualified institutional investors. Since Rule 144A securities
may have limited markets, the Board of Trustees will determine whether such
securities should be considered illiquid for the purpose of determining a Fund's
compliance with the limit on illiquid securities indicated above. In determine
the liquidity of Rule 144A securities, the Trustees will consider: (1) the
frequency of trades and quotes for the security; (2) the number of dealers
willing to purchase or sell the security and the number of other potential
buyers; (3) dealer undertakings to make a market in the security; and (4) the
nature of the security and the nature of the marketplace trades.
When-Issued, Delayed-Delivery and Forward Commitment Transactions
The Fund may purchase securities on a when-issued or delayed delivery
basis and may purchase or sell securities on a forward commitment basis. These
transactions involve the purchase of debt obligations with delivery and payment
normally taking place within a month or more after the date of commitment to
purchase. The Fund will only make commitments to purchase obligations on a
when-issued basis with the intention of actually acquiring the securities, but
may sell them before the settlement date. The when-issued securities are subject
to market fluctuation, and no interest accrues on the security to the purchaser
during this period. The payment obligation and the interest rate that will be
received on the securities are each fixed at the time the purchaser enters into
the commitment.
Segregated accounts will be established and the Fund will maintain
liquid assets in an amount at least equal in value to the Fund's commitments to
purchase when-issued securities. If the value of these assets declines, the Fund
will place additional liquid assets in the account on a daily basis so that the
value of the assets in the account is equal to the amount of such commitments.
Purchasing obligations on a when-issued basis is a form of leveraging
and can involve a risk that the yields available in the market when the delivery
takes place may actually be higher than those obtained in the transaction
itself. In that case there could be an unrealized loss at the time of delivery.
The Fund uses when-issued, delayed-delivery and forward commitment
transactions to secure what it considers to be an advantageous price and yield
at the time of purchase. When the Fund engages in when-issued, delayed-delivery
and forward commitment transactions, it relies on the buyer or seller, as the
case may be, to consummate the sale. If the buyer or seller fails to complete
the sale, then the Fund may miss the opportunity to obtain the security at a
favorable price or yield.
Typically, no income accrues on securities the Fund has committed to
purchase prior to the time delivery of the securities is made, although the Fund
may earn income on securities it has in a segregated account. When purchasing a
security on a when-issued, delayed delivery, or forward commitment basis, the
Fund assumes the rights and risks of ownership of the security, including the
risk of price and yield fluctuations, and takes such fluctuations into account
when determining its net asset value. Because the Fund is not required to pay
for the security until the delivery date, these risks are in addition to the
risks associated with the Fund's other investments.
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<PAGE>
U.S. Government Obligations
The types of U.S. government obligations in which the Fund may invest
generally include obligations that the U.S. government agencies or
instrumentalities issued or guaranteed.
These securities are backed by:
(1) the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities; or
(2) the credit of the agency or instrumentality issuing the
obligations. Examples of agencies and instrumentalities that may not always
receive financial support from the U.S. government are:
(i) Farm Credit System, including the National Bank for
Cooperatives, Farm Credit Banks and Banks for
Cooperatives;
(ii) Farmers Home Administration;
(iii) Federal Home Loan Banks;
(iv) Federal Home Loan Mortgage Corporation;
(v) Federal National Mortgage Association;
(vi) Government National Mortgage Association; and
(vii) Student Loan Marketing Association
GNMA Securities
The Fund may invest in securities issued by the Government National
Mortgage Association ("GNMA"), a wholly-owned U.S. Government corporation, which
guarantees the timely payment of principal and interest, but not premiums paid
to purchase these instruments. The market value and interest yield of these
instruments can vary due to market interest rate fluctuations and early
prepayments of underlying mortgages. These securities represent ownership in a
pool of federally insured mortgage loans. GNMA certificates consist of
underlying mortgages with a maximum maturity of 30 years. However, due to
scheduled and unscheduled principal payments, GNMA certificates have a shorter
average maturity and, therefore, less principal volatility than a comparable
30-year bond. Since prepayment rates vary widely, it is not possible to
accurately predict the average maturity of a particular GNMA pool. The scheduled
monthly interest and principal payments relating to mortgages in the pool will
be "passed through" to investors. GNMA securities differ from conventional bonds
in that principal is paid back to the certificate holders over the life of the
loan rather than at maturity. As a result, there will be monthly scheduled
payments of principal and interest. In addition, there may be unscheduled
principal payments representing prepayments on the underlying mortgages.
Although GNMA certificates may offer yields higher than those available
from other types of U.S. Government securities, GNMA certificates may be less
effective than other types of securities as a means of "locking in" attractive
long-term rates because of the prepayment feature. For instance, when interest
rates decline, the value of a GNMA certificate likely will not rise as much as
comparable debt securities due to the prepayment feature. In addition, these
prepayments can cause the price of a GNMA certificate originally purchased at a
premium to decline in price compared to its par value, which may result in a
loss.
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<PAGE>
Mortgage-Backed or Asset-Backed Securities
The Fund may invest in mortgage-backed securities and asset-backed
securities. Two principal types of mortgage-backed securities are collateralized
mortgage obligations ("CMOs") and real estate mortgage investment conduits
("REMICs"). CMOs are securities collateralized by mortgages, mortgage
pass-throughs, mortgage pay-through bonds (bonds representing an interest in a
pool of mortgages where the cash flow generated from the mortgage collateral
pool is dedicated to bond repayment), and mortgage-backed bonds (general
obligations of the issuers payable out of the issuers' general funds and
additionally secured by a first lien on a pool of single family detached
properties). Many CMOs are issued with a number of classes or series which have
different maturities and are retired in sequence.
Investors purchasing CMOs in the shortest maturities receive or are
credited with their pro rata portion of the scheduled payments of interest and
principal on the underlying mortgages plus all unscheduled prepayments of
principal up to a predetermined portion of the total CMO obligation. Until that
portion of such CMO obligation is repaid, investors in the longer maturities
receive interest only. Accordingly, the CMOs in the longer maturity series are
less likely than other mortgage pass-throughs to be prepaid prior to their
stated maturity. Although some of the mortgages underlying CMOs may be supported
by various types of insurance, and some CMOs may be backed by GNMA certificates
or other mortgage pass-throughs issued or guaranteed by U.S. Government agencies
or instrumentalities, the CMOs themselves are not generally guaranteed.
REMICs, which were authorized under the Tax Reform Act of 1986, are
private entities formed for the purpose of holding a fixed pool of mortgages
secured by an interest in real property. REMICs are similar to CMOs in that they
issue multiple classes of securities.
In addition to mortgage-backed securities, the Fund may invest in
securities secured by other assets including company receivables, truck and auto
loans, leases, and credit card receivables. These issues may be traded
over-the-counter and typically have a short-intermediate maturity structure
depending on the pay down characteristics of the underlying financial assets
which are passed through to the security holder.
Credit card receivables are generally unsecured and the debtors are
entitled to the protection of a number of state and federal consumer credit
laws, many of which give such debtors the right to set off certain amounts owed
on the credit cards, thereby reducing the balance due. Most issuers of
asset-backed securities backed by automobile receivables permit the servicers of
such receivables to retain possession of the underlying obligations. If the
servicer were to sell these obligations to another party, there is a risk that
the purchaser would acquire an interest superior to that of the holders of the
rated asset-backed securities. In addition, because of the large number of
vehicles involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of asset-backed securities backed by
automobile receivables may not have a proper security interest in all of the
obligations backing such receivables. Therefore, there is the possibility that
recoveries on repossessed collateral may not, in some cases, be available to
support payments on these securities.
In general, issues of asset-backed securities are structured to include
additional collateral and/or additional credit support to protect against the
risk that a portion of the collateral supporting the asset-backed securities may
default and/or may suffer from these defects. In evaluating the strength of
particular issues of asset-backed securities, the Adviser considers the
financial strength of the guarantor or other provider of credit support, the
type and extent of credit enhancement provided as well as the documentation and
structure of the issue itself and the credit support.
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<PAGE>
MANAGEMENT OF THE TRUST
Set forth below are the Trustees and officers of the Trust and their
principal occupations and some of their affiliations over the last five years.
Unless otherwise indicated, the address for each Trustee and officer is 200
Berkeley Street, Boston, Massachusetts, 02116. Each Trustee is also a Trustee of
each of the other Trusts in the Evergreen Fund complex.
<TABLE>
<CAPTION>
<S> <C> <C>
Name Position with Trust Principal Occupations for Last Five Years
- ------------------------------- ------------------------- --------------------------------------------------------------
Laurence B. Ashkin Trustee Real estate developer and construction consultant;
(DOB: 2/2/28) and President of Centrum Equities and Centrum
Properties, Inc.
Charles A. Austin III Trustee Investment Counselor to Appleton Partners, Inc.;
(DOB: 10/23/34) former Director, Executive Vice President and
Treasurer, State Street Research & Management
Company (investment advice); Director, The
Andover Companies (Insurance); and Trustee,
Arthritis Foundation of New England
K. Dun Gifford Trustee Trustee, Treasurer and Chairman of the Finance Committee,
(DOB: 10/12/38) Cambridge College; Chairman Emeritus and Director, American
Institute of Food and Wine; Chairman and President, Oldways
Preservation and Exchange Trust (education); former Chairman
of the Board, Director, and Executive Vice President, The
London Harness Company; former Managing Partner, Roscommon
Capital Corp.; former Chief Executive Officer, Gifford Gifts
of Fine Foods; former Chairman, Gifford, Drescher &
Associates (environmental consulting); and former Director,
Keystone Investments, Inc.
James S. Howell Chairman of the Former Chairman of the Distribution Foundation for
(DOB: 8/13/24) Board of Trustees the Carolinas; and former Vice President of Lance
Inc. (food manufacturing).
Leroy Keith, Jr. Trustee Chairman of the Board and Chief Executive Officer, Carson
(DOB: 2/14/39) Products Company; Director of Phoenix Total Return Fund and
Equifax, Inc.; Trustee of Phoenix Series Fund, Phoenix
Multi-Portfolio Fund, and The Phoenix Big Edge Series Fund;
and former President, Morehouse College.
Gerald M. McDonnell Trustee Sales Representative with Nucor-Yamoto, Inc.
(DOB: 7/14/39) (steel producer).
Thomas L. McVerry Trustee Former Vice President and Director of Rexham
(DOB: 8/2/39) Corporation; and former Director of Carolina
Cooperative Federal Credit Union.
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<PAGE>
Name Position with Trust Principal Occupations for Last Five Years
- ------------------------------- ------------------------- --------------------------------------------------------------
William Walt Pettit Trustee Partner in the law firm of William Walt Pettit, P.A.
(DOB: 8/26/55)
David M. Richardson Trustee Vice Chair and former Executive Vice President,
(DOB: 9/14/41) DHR International, Inc. (executive recruitment);
former Senior Vice President, Boyden International
Inc. (executive recruitment); and Director,
Commerce and Industry Association of New
Jersey, 411 International, Inc., and J&M Cumming
Paper Co.
Russell A. Salton, III MD Trustee Medical Director, U.S. Health Care/Aetna Health
(DOB: 6/2/47) Services; former Managed Health Care Consultant;
and former President, Primary Physician Care.
Michael S. Scofield Trustee Attorney, Law Offices of Michael S. Scofield.
(DOB: 2/20/43)
Richard J. Shima Trustee Former Chairman, Environmental Warranty, Inc. (insurance
(DOB: 8/11/39) agency); Executive Consultant, Drake Beam Morin, Inc.
(executive outplacement); Director of Connecticut Natural Gas
Corporation, Hartford Hospital, Old State House Association,
Middlesex Mutual Assurance Company, and Enhance Financial
Services, Inc.; Chairman, Board of Trustees, Hartford
Graduate Center; Trustee, Greater Hartford YMCA; former
Director, Vice Chairman and Chief Investment Officer, The
Travelers Corporation; former Trustee, Kingswood- Oxford
School; and former Managing Director and Consultant, Russell
Miller, Inc.
William J. Tomko* President and Senior Vice President and Operations Executive,
(DOB: 8/30/58) Treasurer BISYS Fund Services.
Nimish S. Bhatt* Vice President and Vice President, Tax, BISYS Fund Services; former Assistant
(DOB: 6/6/63) Assistant Treasurer Vice President, Evergreen Asset Management Corp./First Union
National Bank; former Senior Tax Consulting/Acting Manager,
Investment Companies Group, Price Waterhouse LLP, New York.
Bryan Haft* Vice President Team Leader, Fund Administration,
BISYS Fund (DOB: 1/23/65) Services. D'Ray Moore* Secretary
Vice President, Client Services, BISYS Fund (DOB: 3/30/59)
Services.
</TABLE>
*Address: BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219-8001
11
<PAGE>
Listed below is the estimated Trustee compensation for the fiscal year
ended February 28, 1998.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Pension Or
Retirement
Aggregate Benefits Total Compensation
Compensation Accrued As Part Estimated Annual From Registrant And
From Of Fund Benefits Upon Fund Complex Paid To
Name Of Person Registrant Expenses Retirement Directors
<S> <C> <C> <C> <C>
Laurence B. Ashkin $770.75 $0 $0 $70,838.040
Charles A. Austin $770.75 $0 $0 $44,134.96
K. Dun Gifford $739.27 $0 $0 $56,386.06
James S. Howell $1,074.71 $0 $0 $110,819.46
Leroy Keith Jr. $739.27 $0 $0 $40,427.31
Gerald M. McDonnell $770.75 $0 $0 $96,987.58
Thomas L. McVerry $909.25 $0 $0 $98,502.35
William Walt Pettit $739.27 $0 $0 $94,266.18
David M. Richardson $739.27 $0 $0 $43,719.44
Russell A. Salton, III $796.07 $0 $0 $97,526.26
Michael S. Scofield $821.39 $0 $0 $100,289.50
Richard J. Shima $739.27 $0 $0 $64,560.08
</TABLE>
PRINCIPAL HOLDERS OF FUND SHARES
As of the date of this SAI, the officers and Trustees of the Trust
owned as a group less than 1% of the outstanding shares of any class of the
Fund.
Set forth below is information with respect to each person who, to each
Fund's knowledge, owned beneficially or of record more than 5% of a class of a
Fund's outstanding shares as of May 31, 1998
Evergreen Select Adjustable Rate Fund
Institutional Class
Ampex Retirement Master Trust 71.888%
P.O. Box 1992
Boston, MA 02105-1992
12
<PAGE>
First Union National Bank/EB/INT 18.172%
Reinvest Account
ATTN Trust Operations Fund Group
401 S. Tryon St. 3rd FL CMG 1151
Charlotte, NC 28202-1911
Buffalo Color Corp 8.912%
Master Trust
P.O. Box 1992
Boston, MA 02105-1992
Evergreen Select Adjustable Rate Fund
Institutional Service Class
Wexford Clearing Serv. Corp. 21.887%
FBO Carl F. McLarand
695 Town Center Dr. STE 300
Costa Mesa, CA 92626-1924
William H. Morgan Jr. 12.028%
906 Weightman
Greenwood, MS 38930-2438
Skyline Telephone Membership Corp 11.302%
ATTN Hobart G.Davis
P.O. Box 759
Jefferson, NC 28640-2438
Wexford Clearing Serv. Corp. 9.905%
FBO McLarand Vasquez Partners
695 Town Center Dr. STE 300
Costa Mesa, CA 92626-1924
Star Telephone Membership Corp. 9.200%
Milton R. Tew, Exec
P.O. Box 348
3900 N US 421 Hwy
Clinton, NC 28329-0348
Wexford Clearing Serv. Corp. 7.762%
Neil T. Watanabe & Betty Watanabe JT
TEN
30231 Cheret Pl.
Rncho Pls Vrd, CA 92275-5727
M&M Farms 5.855%
906 Weightman
Greenwood, MS 38930-2438
13
<PAGE>
Wexford Clearing Services Corp 5.773%
Karen Hosking Morrison TTEE
The KarenHosking Morrison TR
UA DTD 08/19/93
16472 Grimaud Ln.
Huntington BH, CA 92649-1827
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
Keystone Investment Management Company ("Keystone") is the investment
adviser (the "Adviser") to the Fund. Keystone, located at 200 Berkeley Street,
Boston, Massachusetts 02116- 5034, is an indirect wholly-owned subsidiary of
First Union National Bank ("FUNB"). FUNB is a subsidiary of First Union
Corporation ("First Union"), a bank holding company. First Union and its
subsidiaries provide a broad range of financial services to individuals and
businesses throughout the United States. First Union is located at 301 South
College Street, and FUNB at 201 South College Street, Charlotte North Carolina
28288-0630.
Pursuant to the advisory agreement (the "Advisory Agreement") between
the Trust and the Adviser, and subject to the supervision of the Trust's Board
of Trustees, the Adviser furnishes to the Fund investment advisory, management
and administrative services, office facilities, and equipment in connection with
its services for managing the investment and reinvestment of the Fund's assets.
The Adviser pays for all of the expenses incurred in connection with the
provision of its services.
The Fund pays all charges and expenses, other than those specifically
referred to as being borne by the Adviser, including, but not limited to, (1)
custodian charges and expenses; (2) bookkeeping and independent auditors'
charges and expenses; (3) transfer agent charges and expenses; (4) fees and
expenses of Independent Trustees; (5) brokerage commissions, brokers' fees and
expenses; (6) issue and transfer taxes; (7) costs and expenses under the
Distribution Plan; (8) taxes and trust fees payable to governmental agencies;
(9) the cost of share certificates; (10) fees and expenses of the registration
and qualification of the Fund and its shares with the Securities and Exchange
Commission ("SEC") or under state or other securities laws; (11) expenses of
preparing, printing and mailing prospectuses, SAIs, notices, reports and proxy
materials to shareholders of the Fund; (12) expenses of shareholders' and
Trustees' meetings; (13) charges and expenses of legal counsel for the Fund and
for the Independent Trustees of the Trust on matters relating to the Fund; (14)
charges and expenses of filing annual and other reports with the SEC and other
authorities; and (15) all extraordinary charges and expenses of the Fund.
The Fund pays the Adviser and annual fee for its services equal to
0.30% of the Fund's assets.
For each of the Fund's fiscal periods, the table below lists the total
dollar amounts paid by the Fund to Keystone for investment advisory services
rendered.
14
<PAGE>
Percentage of Fund's Average
Fee Paid to Keystone under Net Assets Represented by
the Advisory Agreement Keystone's Fee
---------------------------- ---------------------------
Fiscal Period Ended
February 28, 1998 $137,489 0.30%
Fiscal Period Ended
February 28, 1997 $101,412 0.30%
Fiscal Year Ended
September 30, 1996 $121,105 0.30%
Under the Advisory Agreement, any liability of the Adviser in
connection with rendering services thereunder is limited to situations involving
its willful misfeasance, bad faith, gross negligence or reckless disregard of
its duties.
The Advisory Agreement continues in effect for two years from its
effective date and, thereafter, from year to year only if approved at least
annually by the Board of Trustees of the Trust or by a vote of a majority of the
Fund's outstanding shares (as defined in the 1940 Act). In either case, the
terms of the Advisory Agreement and continuance thereof must be approved by the
vote of a majority of the Independent Trustees (Trustees who are not interested
persons of the Fund, as defined in the 1940 Act, and who have no direct or
indirect financial interest in the Fund's Distribution Plan or any agreement
related thereto) cast in person at a meeting called for the purpose of voting on
such approval. The Advisory Agreement may be terminated, without penalty, on 60
days' written notice by the Trust's Board of Trustees or by a vote of a majority
of outstanding shares. The Advisory Agreement will terminate automatically upon
its "assignment" as that term is defined in the 1940 Act.
DISTRIBUTOR
Evergreen Distributor, Inc. (the "Distributor") markets the Fund
through broker-dealers and other financial representatives. Its address is 125
55th Street, New York, NY 10019.
DISTRIBUTION PLAN
Rule 12b-1 under the 1940 Act permits investment mutual funds to use
their assets to pay for distributing their shares. However, to take advantage of
Rule 12b-1, the 1940 Act requires that mutual funds comply with various
conditions, including adopting a distribution plan. The Fund has adopted a
distribution plan for its Institutional Service Shares (the "Plan") that permits
the Fund to deduct up to 0.35% of the Institutional Service class' average net
assets to pay for shareholder services. Payments are currently limited to a rate
of 0.25% of the average daily net assets of Institutional Service shares. The
Board of Trustees, including a majority of the Independent Trustees has approved
the Plan.
The National Association of Securities Dealers, Inc. ("NASD") limits
the amount that a mutual fund may pay annually in distribution costs for sale of
its shares and shareholder service fees. The NASD limits annual expenditures to
1.00% of the aggregate average daily net asset value of its shares, of which
0.75% may be used to pay such distribution costs and 0.25% may be used to pay
shareholder service fees. The NASD also limits the aggregate amount that the
Fund may pay for such distribution costs to 6.25% of gross share sales since the
inception of the distribution plan,
15
<PAGE>
plus interest at the prime rate plus 1.00% on such amounts remaining unpaid from
time to time.
The Independent Trustees or a majority of the outstanding voting shares
of the Fund's Institutional Service Class may terminate the Plan.
The Fund cannot change the Plan in a way that materially increases the
distribution expenses of the Institutional Service Class without obtaining
shareholder approval. Otherwise, the Trustees may amend the Plan.
Management must report the amounts and purposes of expenditures under
the Plan to the Independent Trustees quarterly.
While the Plan is in effect, the Fund will be required to commit the
selection and nomination of candidates for Independent Trustees to the
discretion of the Independent Trustees.
The Independent Trustees of the Trust have determined that the Fund
will benefit from the Plan.
During the fiscal periods ended February 28, 1998, February 28, 1997
and the year ended September 30, 1996, the Fund paid $17,676, $9,161 and
$23,210, respectively, under the Plan.
ADDITIONAL SERVICE PROVIDERS
Transfer Agent
Evergreen Service Company ("ESC"), a subsidiary of First Union
Corporation, is the Fund's transfer agent. The transfer agent issues and redeems
shares, pays dividends and performs other duties in connection with the
maintenance of shareholder accounts. The transfer agent's address is 200
Berkeley Street, Boston, Massachusetts 02116-5034.
Independent Auditors
KPMG Peat Marwick LLP audits the Fund's financial statements. The
auditor's address is 99 High Street, Boston, Massachusetts 02110.
Custodian
State Street Bank and Trust Company is the Fund's custodian. The bank
keeps custody of the Fund's securities and cash and performs other related
duties. The custodian's address is Box 9021, Boston, Massachusetts 02205-9827.
Legal Counsel
Sullivan & Worcester LLP provides legal advice to the Fund. Its
address is 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
BROKERAGE ALLOCATION AND OTHER PRACTICES
SELECTION OF BROKERS
16
<PAGE>
In effecting transactions in portfolio securities for the Fund, the
Adviser seeks the best execution of orders at the most favorable prices. The
Adviser determines whether a broker has provided the Fund with best execution
and price in the execution of a securities transaction by evaluating, among
other things, the broker's ability to execute large or potentially difficult
transactions, and the financial strength and stability of the broker.
BROKERAGE COMMISSIONS
The Fund expects to buy and sell itsr fixed-income securities through
principal transactions, that is, directly from the issuer or from an underwriter
or market maker for the securities. Generally, the Fund will not pay brokerage
commissions for such purchases. Usually, when the Fund buys a security from an
underwriter, the purchase price will include underwriting commission or
concession. The purchase price for securities bought from dealers serving as
market makers will similarly include the dealer's mark up or reflect a dealer's
mark down. When the Fund executes transactions in the over-the-counter market,
it will deal with primary market makers unless more favorable prices are
otherwise obtainable.
The Fund paid no brokerage commissions for the fiscal periods ended
February 28, 1998, February 27, 1997 and September 30, 1996.
GENERAL BROKERAGE POLICIES
The Adviser makes investment decisions for the Fund independently from
those of its other clients. It may frequently develop, however, that the Adviser
will make the same investment decision for more than one client. Simultaneous
transactions are inevitable when the same security is suitable for the
investment objective of more than one account. When two or more of its clients
are engaged in the purchase or sale of the same security, the Adviser will
allocate the transactions according to a formula that is equitable to each of
its clients. Although, in some cases, this system could have a detrimental
effect on the price or volume of the Fund's securities, the Fund believes that
in other cases its ability to participate in volume transactions will produce
better executions. In order to take advantage of the availability of lower
purchase prices, the Fund may occasionally participate in group bidding for the
direct purchase from an issuer of certain securities.
The Board of Trustees periodically reviews the Fund's brokerage policy.
Because of the possibility of further regulatory developments affecting the
securities exchanges and brokerage practices generally, the Board of Trustees
may change, modify or eliminate any of the foregoing practices.
TRUST ORGANIZATION
FORM OF ORGANIZATION
The Trust was formed as a Delaware business trust on September 18, 1997
(the "Declaration of Trust"). A copy of the Declaration of Trust is on file as
an exhibit to the Trust's Registration Statement, of which this SAI is a part.
This summary is qualified in its entirety by reference to the Declaration of
Trust.
DESCRIPTION OF SHARES
17
<PAGE>
The Declaration of Trust authorizes the issuance of an unlimited number
of shares of beneficial interest of series and classes of shares. Each share of
a Fund represents an equal proportionate interest with each other share of that
series and/or class. Upon liquidation, shares are entitled to a pro rata share
of the Trust based on the relative net assets of each series and/or class.
Shareholders have no preemptive or conversion rights. Shares are redeemable and
transferable.
VOTING RIGHTS
Under the terms of the Declaration of Trust, the Trust is not required
to hold annual meetings. At meetings called for the initial election of Trustees
or to consider other matters, each share is entitled to one vote for each dollar
of net asset value applicable to such share. Shares generally vote together as
one class on all matters. Classes of shares of a Fund have equal voting rights.
No amendment may be made to the Declaration of Trust that adversely affects any
class of shares without the approval of a majority of the votes applicable to
the shares of that class. Shares have non-cumulative voting rights, which means
that the holders of more than 50% of the votes applicable to shares voting for
the election of Trustees can elect 100% of the Trustees to be elected at a
meeting and, in such event, the holders of the remaining shares voting will not
be able to elect any Trustees.
After the initial meeting as described above, no further meetings of
shareholders for the purpose of electing Trustees will be held, unless required
by law, unless and until such time as less than a majority of the Trustees
holding office have been elected by shareholders, at which time the trustees
then in office will call a shareholders' meeting for the election of Trustees.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee will not be liable for
errors of judgment or mistakes of fact or law, but nothing in the Declaration of
Trust protects a Trustee against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his duties involved in the conduct of his office.
PURCHASE, REDEMPTION AND PRICING OF FUND SHARES
EXCHANGES
Investors may exchange shares of the Fund for shares of the same class
of any other Evergreen "Select" fund, as described under Exchanges in the Fund's
prospectus. Before you make an exchange, you should read the prospectus of the
"Select" fund into which you wish to exchange. The Trust reserves the right to
discontinue, alter or limit the exchange privilege at any time.
HOW AND WHEN THE FUND CALCULATES ITS NET ASSET VALUE PER SHARE
("NAV")
The Fund computes its NAV once daily on Monday through Friday, as
described in the prospectus. The Fund will not compute its NAV on days on which
there have been no purchases or sales of its shares. Also, the Fund will not
compute its NAV on the day the following legal holidays are observed: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
18
<PAGE>
Each class of shares of the Fund calculates its NAV per share by adding
up its investments and other assets, subtracting its liabilities and then
dividing the result by the number of shares outstanding.
HOW THE FUND VALUES THE SECURITIES IT OWNS
Current values for the Fund's portfolio securities are determined in
the following manner:
(1) securities that are traded on a national securities exchange or the
over-the-counter National Market System ("NMS") are valued on the basis of the
last sales price on the exchange where primarily traded or NMS prior to the time
of the valuation, provided that a sale has occurred;
(2) securities traded in the over-the-counter market, other than on
NMS, are valued at the mean of the bid and asked prices at the time of
valuation;
(3) short-term investments maturing in more than sixty days for which
market quotations are readily available, are valued at such quotations;
(4) short-term investments maturing in sixty days or less (including
all master demand notes) are valued at amortized cost (original purchase cost as
adjusted for amortization of premium or accretion of discount), which, when
combined with accrued interest, approximates market;
(5) short-term investments maturing in more than sixty days when
purchased that are held on the sixtieth day prior to maturity are valued at
amortized cost (market value on the sixtieth day adjusted for amortization of
premium or accretion of discount), which, when combined with accrued interest,
approximates market; and
(6) securities, including restricted securities, for which complete
quotations are not readily available; listed securities or those on NMS if, in
the Fund's opinion, the last sales price does not reflect a current market value
or if no sale occurred; and other assets are valued at prices deemed in good
faith to be fair under procedures established by the Board of Trustees.
SHAREHOLDER SERVICES
As described in the Fund's prospectus, a shareholder may elect to
receive his or her dividends and capital gains distributions in cash instead of
shares. However, ESC will automatically convert a shareholder's distribution
option so that the shareholder reinvests all dividends and distributions in
additional shares when it learns that the postal or other delivery service is
unable to deliver checks or transaction confirmations to the shareholder's
address of record. The Fund will hold the returned distribution or redemption
proceeds in a non interest-bearing account in the shareholder's name until the
shareholder updates his or her address. Therefore, no interest will accrue on
amounts represented by uncashed distribution or redemption checks.
PRINCIPAL UNDERWRITER
The Distributor, a subsidiary of The BISYS Group, Inc., is the
principal underwriter for the Trust and each class of shares of the Fund. The
Trust has entered into a Principal Underwriting Agreement ("Underwriting
Agreement") with the Distributor with respect to each class of the Fund.
The Distributor, as agent, has agreed to use its best efforts to find
purchasers for the shares.
19
<PAGE>
The Distributor may retain and employ representatives to promote distribution of
the shares and may obtain orders from broker-dealers, and others, acting as
principals, for sales of shares to them. The Underwriting Agreement provides
that the Distributor will bear the expense of preparing, printing, and
distributing advertising and sales literature and prospectuses used by it.
All subscriptions and sales of shares by the Distributor are at the
public offering price of the shares, which is determined in accordance with the
provisions of the Trust's Declaration of Trust, By-Laws, current prospectuses
and SAI. All orders are subject to acceptance by the respective Fund and Fund
reserves the right, in its sole discretion, to reject any order received. Under
the Underwriting Agreement, the Fund is not liable to anyone for failure to
accept any order.
The Trust has agreed under the Underwriting Agreement to pay all expenses in
connection with the registration of its shares with the SEC and auditing.
The Distributor has agreed that it will, in all respects, duly comply
with all state and federal laws applicable to the sale of the Fund's shares. The
Distributor and the Fund have both agreed to indemnify and hold each other
harmless and each person who has been, is, or may be a Trustee or officer of the
Trust against expenses reasonably incurred by any of them in connection with any
claim, action, suit, or proceeding to which any of them may be a party that
arises out of or is alleged to arise out of any misrepresentation or omission to
state a material fact on the part of the Distributor or any other person for
whose acts the Distributor is responsible or is alleged to be responsible,
unless such misrepresentation or omission was made in reliance upon written
information furnished by the Trust.
The Underwriting Agreement provides that it will remain in effect as
long as its terms and continuance are approved annually (i) by a vote of a
majority of the Trust's Independent Trustees, and (ii) by vote of a majority of
the Trust's Trustees, in each case, cast in person at a meeting called for that
purpose.
The Underwriting Agreement may be terminated, without penalty, on 60
days' written notice by the Board of Trustees or by a vote of a majority of
outstanding shares subject to such agreement. The Underwriting Agreement will
terminate automatically upon its "assignment," as that term is defined in the
1940 Act.
From time to time, if, in the Distributor's judgment, it could benefit
the sales of shares, the Distributor may provide to selected broker-dealers
promotional materials and selling aids, including, but not limited to, personal
computers, related software, and data files.
ADDITIONAL TAX INFORMATION
REQUIREMENTS FOR QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The Fund has qualified and intends to qualify for and elect the tax
treatment applicable to regulated investment companies ("RIC") under Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"). (Such
qualification does not involve supervision of management or investment practices
or policies by the Internal Revenue Service.) In order to qualify as a RIC, the
Fund must, among other things, (i) derive at least 90% of its gross income from
dividends, interest, payments with respect to proceeds from securities loans,
gains from the sale or other
20
<PAGE>
disposition of securities or foreign currencies and other income (including
gains from options, futures or forward contracts) derived with respect to its
business of investing in such securities; (ii) derive less than 30% of its gross
income from the sale or other disposition of securities, options, futures or
forward contracts (other than those on foreign currencies), or foreign
currencies (or options, futures or forward contracts thereon) that are not
directly related to the RIC's principal business of investing in securities (or
options and futures with respect thereto) held for less than three months (this
requirement is repealed for Fund fiscal years beginning after August 5, 1997);
and (iii) diversify its holdings so that, at the end of each quarter of its
taxable year, (a) at least 50% of the market value of the Fund's total assets is
represented by cash, U.S. Government securities and other securities limited in
respect of any one issuer, to an amount not greater than 5% of the Fund's total
assets and 10% of the outstanding voting securities of such issuer, and (b) not
more than 25% of the value of its total assets is invested in the securities of
any one issuer (other than U.S. Government securities and securities of other
regulated investment companies). By so qualifying, the Fund is not subject to
federal income tax if it timely distributes its investment company taxable
income and any net realized capital gains. A 4% nondeductible excise tax will be
imposed on the Fund to the extent it does not meet certain distribution
requirements by the end of each calendar year. The Fund anticipates meeting such
distribution requirements.
TAXES ON THE SALE OR EXCHANGE OF FUND SHARES
Upon a sale or exchange of Fund shares, a shareholder may realize a
taxable gain or loss depending on his or her basis in the shares. A shareholder
must treat such gains or losses as a capital gain or loss if the shareholder
held the shares as capital assets. Also, a shareholder must treat as long-term
capital gains or losses any capital gains or losses on Fund shares held for more
than one year. Capital gain on assets held for more than eighteen months is
generally subject to a maximum federal income tax rate of 20% for an individual.
The maximum capital gains tax rate for capital assets held by an individual for
more than twelve months but not more than eighteen months is generally 28%.
Generally, the Code will not allow a shareholder to realize a loss on shares he
or she has sold or exchanged and replaced within a sixty-one-day period
beginning thirty days before and ending thirty days after he or she sold or
exchanged the shares. The Code will not allow a shareholder to realize a loss on
the sale of Fund shares held by the shareholder for six months or less to the
extent the shareholder received exempt-interest dividends on such shares.
Moreover, the Code will treat a shareholder's loss on shares held for six months
or less as a long-term capital loss to the extent the shareholder received
distributions of net capital gains on such shares.
Shareholders who fail to furnish their taxpayer identification numbers
to the Fund and to certify as to its correctness and certain other shareholders
may be subject to a 31% federal income tax backup withholding requirement on
dividends, distributions of capital gains and redemption proceeds paid to them
by the Fund. If the withholding provisions are applicable, any such dividends or
capital gain distributions to these shareholders, whether taken in cash or
reinvested in additional shares, and any redemption proceeds will be reduced by
the amounts required to be withheld. Investors may wish to consult their own tax
advisers about the applicability of the backup withholding provisions.
TAXES ON DISTRIBUTIONS
Distributions will be taxable to shareholders whether made in shares or
in cash. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the net asset value of a share of the Fund
21
<PAGE>
on the reinvestment date.
To calculate ordinary income for federal income tax purposes,
shareholders must generally include dividends paid by the Fund from its
investment company taxable income (net investment income plus net realized
short-term capital gains, if any). Since none of the Fund's income will consist
of corporate dividends, no distributions will qualify for the 70% corporate
dividends received deduction.
From time to time, the Fund will distribute the excess of its net
long-term capital gains over its short-term capital losses to shareholders. For
federal tax purposes, shareholders must include such distributions when
calculating their long-term capital gains. The Fund will inform its shareholders
of the portion if any of a long-term capital gain distribution which is subject
to tax at the maximum 28% rate and the portion if any of long-term capital gain
distribution which is subject to tax at the maximum 20% rate. Distributions of
long-term capital gains are taxable as such to a shareholder, no matter how long
the shareholder has held the shares.
All distributions, whether received in shares or cash, must be reported
by each shareholder on his or her federal income tax return. Each shareholder
should consult his or her own tax adviser to determine the state and local tax
implications of Fund distributions.
OTHER TAX CONSIDERATIONS
The foregoing discussion relates solely to U.S. federal income tax law
as applicable to U.S. persons (i.e., U.S. citizens and residents and U.S.
domestic corporations, partnerships, trusts and estates). It does not reflect
the special tax consequences to certain taxpayers (e.g., banks, insurance
companies, tax exempt organizations and foreign persons). Shareholders are
encouraged to consult their own tax advisers regarding specific questions
relating to federal, state and local tax consequences of investing in shares of
the Fund. Each shareholder who is not a U.S. person should consult his or her
tax adviser regarding the U.S. and foreign tax consequences of ownership of
shares of the Fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 30% (or at a lower rate under a
tax treaty) on amounts treated as income from U.S. sources under the Code.
CALCULATION OF PERFORMANCE DATA
Total return quotations for a class of shares of the Fund as they may
appear from time to time in advertisements are calculated by finding the average
annual compounded rates of return over one-, five- and ten-year periods, or the
time periods for which such class of shares has been outstanding, whichever is
relevant, on a hypothetical $1,000 investment that would equate the initial
amount invested in the class to the ending redeemable value. All dividends and
distributions are added to the initial investment and all recurring fees charged
to all shareholder accounts are deducted. The ending redeemable value assumes a
complete redemption at the end of the relevant periods.
The annual total returns of the Fund as of February 28, 1998 are as
follows:
<TABLE>
<CAPTION>
One Year Five Years Ten Years or Since Inception Date
Class Inception
- ----------------------------------- -------------- --------------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Institutional Shares 7.15% 5.69% 5.63% October 1, 1991
Institutional Service Shares 6.89% -- 6.22% May 23, 1994
</TABLE>
22
<PAGE>
Current yield quotations as they may appear, from time to time, in
advertisements will consist of a quotation based on a 30-day period ended on the
date of the most recent balance sheet of the Fund, computed by dividing the net
investment income per share earned during the period by the maximum offering
price per share on the last day of the base period. The current yields for
Institutional Service and Institutional shares for the 30-day period ended
February 28, 1998 were 6.65% and 6.90%, respectively.
Any given yield or total return quotation should not be considered
representative of the Fund's yield or total return for any future period.
ADDITIONAL INFORMATION
Except as otherwise stated in its prospectus or required by law, the
Fund reserves the right to change the terms of the offer stated in its
prospectus without shareholder approval, including the right to impose or change
fees for services provided.
No dealer, salesman or other person is authorized to give any
information or to make any representation not contained in the Fund's
prospectus, SAI or in supplemental sales literature issued by the Fund or the
Distributor, and no person is entitled to rely on any information or
representation not contained therein.
The Fund's prospectus and SAI omit certain information contained in the
Trust's registration statement, which you may obtain for a fee from the SEC in
Washington, D.C.
FINANCIAL STATEMENTS
The financial statements and the independent auditors' report
thereon are hereby incorporated by reference to the Fund's Annual Report, a copy
of which may be obtained without charge from ESC by calling toll-free
1-800-633-2700 or by writing to ESC at P.O. Box 2121, Boston, Massachusetts
02106-2121.
23
<PAGE>
APPENDIX A
DESCRIPTION OF BOND RATINGS
Standard & Poor's Ratings Group ("S&P").
An S&P corporate or municipal bond rating is a current assessment of
the creditworthiness of an obligor with respect to a specific obligation. This
assessment of credit worthiness may take into consideration obligors such as
guarantors, insurers or lessees. The debt rating is not a recommendation to
purchase, sell or hold a security, inasmuch as it does not comment as to market
price or suitability for a particular investor.
The ratings are based on current information furnished to S&P by the
issuer or obtained by S&P from other sources it considers reliable. S&P does not
perform any audit in connection with the ratings and may, on occasion, rely on
unaudited financial information. The ratings may be changed, suspended or
withdrawn as a result of changes in or unavailability of such information, or
due to other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
1. Likelihood of default-capacity and willingness of the obligor to
make timely payment of interest and repayment of principal in
accordance with the terms of the obligation.
2. Nature of and provisions of the obligation.
3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or their arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.
AAA - This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay interest and repay any principal.
AA - Debt rated AA also qualifies as high quality debt obligations. Capacity to
pay interest and repay principal is very strong and in the majority of instances
it differs from AAA issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this category
than in higher rated categories.
BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC and C is regarded, on a balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large
A-1
<PAGE>
uncertainties or major risk exposures to adverse conditions.
BB - Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB - rating.
B - Debt rated B has greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
CCC - Debt rated CCC has a currently indefinable vulnerability to default, and
is dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC - The rating CC is typically applied to debt subordinated to senior debt that
is assigned an actual or implied CCC rating.
C - The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
C1 - The rating C1 is reserved for income bonds on which no interest is being
paid.
D - Debt rated D is in payment default. It is used when interest payments or
principal payments are not made on a due date even if the applicable grace
period has not expired, unless S&P believes that such payments will be made
during such grace periods; it will also be used upon a filing of a bankruptcy
petition if debt service payments are jeopardized.
Plus (+) or Minus (-) - To provide more detailed indications of credit quality,
the ratings from AA to CCC may be modified by the addition of a plus or minus
sign to show relative standing within the major rating categories.
NR - indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy. Debt obligations of issuers
outside the United States and its territories are rated on the same basis as
domestic corporate and municipal issues. The ratings measure the
creditworthiness of the obligor but do not take into account currency exchange
and related uncertainties.
Bond Investment Quality Standards: Under present commercial bank regulations
issued by the Comptroller of the Currency, bonds rated in the top four
categories (AAA, AA, A and BBB, commonly known as "Investment Grade" ratings)
are generally regarded as eligible for bank investment. In addition, the Legal
Investment Laws of various states may impose certain rating or other standards
for obligations eligible for investment by savings banks, trust companies,
insurance companies and fiduciaries generally.
Moody's Investors Service, Inc. ("Moody's").
A-2
<PAGE>
A brief description of the applicable Moody's rating symbols and their
meanings follows:
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge". Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Some bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. NOTE: Bonds within the above
categories which possess the strongest investment attributes are designated by
the symbol "1" following the rating.
Ba - Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during good and bad times over the future. Uncertainty of position characterizes
bonds in this Class.
B - Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds which are rated Ca represent obligations which are speculative to a
high degree. Such issues are often in default or have other marked shortcomings.
C - Bonds which are rated C are the lowest rated Class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Duff & Phelps, Inc.: AAA - highest credit quality, with negligible risk factors;
AA -- high credit quality, with strong protection factors and modest risk, which
may vary very slightly from time to time because of economic conditions; A -
average credit quality with adequate protection factors, but with greater and
more variable risk factors in periods of economic stress. The indicators "+" and
"-" to the AA and A categories indicate the relative position of credit within
those rating categories.
Fitch IBCA: AAA - highest credit quality, with an exceptionally strong ability
to pay interest and
A-3
<PAGE>
repay principal; AA - very high credit quality, with very strong ability to pay
interest and repay principal; A - high credit quality, considered strong as
regards principal and interest protection, but may be more vulnerable to adverse
changes in economic conditions and circumstances. The indicators "+" and "-" to
the AA, A and BBB categories indicate the relative position of credit within
those rating categories.
A-4
<PAGE>
<PAGE>
EVERGREEN SELECT FIXED INCOME TRUST
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
Item 24(a). Financial Statements
The financial statements listed below are included in Part A of this
Amendment to the Registration Statement.
Evergreen Select Adjustable Rate Fund Financial Highlight for:
Institutional Shares For the fiscal year ended February 28, 1998,
for the five-month period ended February 28,
1997 and for each of the fiscal years ending
September 30, 1996, 1995, 1994, 1993 and 1992
Institutional Service Shares For the fiscal year ended February 28, 1998,
for the five-month period ended February 28,
1997,for each of the fiscal years ending
September 30, 1996 and 1995, and for the
period May 23, 1994 (Date of Initial Public
Offering) through September 30, 1994
The financial statements listed below are incorporated by reference in
Part B of this Amendment to the Registration Statement.
Evergreen Select Adjustable Rate Fund
Financial Highlights For the same periods included in Part A
Schedule of Investments As of February 28, 1998
Statement of Assets and
Liabilities As of February 28, 1998
Statement of Operations For the fiscal year ended February 28, 1998
Statements of Changes in For the fiscal year ended February 28, 1998,
Net Assets for the five-month period ended February 28,
1997 and for the fiscal year ended
September 30, 1996
Combined Notes to Financial
Statements As of February 28, 1998
Independent Auditors' Report
Item 24(b). Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- ------- ----------- -----------
<S> <C> <C>
1 Declaration of Trust Incorporated by reference to
Registrant's Pre-Effective Amendment No. 1
Filed on November 17, 1997
2 By-laws Incorporated by reference to
Registrant's Pre-Effective Amendment
No. 1 filed on November 17, 1997
3 Not applicable
4 Provisions of instruments defining the rights Included as part of Exhibits 1 and 2
of holders of the securities being registered of Registrant's Pre-Effective Amendment
are contained in the Declaration of Trust No. 1 Filed on November 17, 1997
Articles II, V, VI, VIII, IX and By-laws
Articles II and VI
5(a) Investment Advisory Agreement between
the Registrant and First Union National Bank
5(b) Investment Advisory Agreement between the
Registrant and Keystone Investment Management
Company
5(c) Form of Investment Advisory Agreement between First Incorporated by reference to
Union National Bank and AnalyticoTSA Registrant's Post-Effective Amendment
International Inc. No. 2 filed on June 8, 1998
6 Principal Underwriting Agreement between the
Registrant and Evergreen Distributor, Inc.
7 Form of Deferred Compensation Plan Incorporated by reference to
Registrant's Pre-Effective Amendment
No. 1 filed on November 17, 1997
8 Custodian Agreement between the Registrant
and State Street Bank and Trust Company
9(a) Administration Agreement between Evergreen
Investment Services, Inc. and the Registrant
9(b) Transfer Agent Agreement between the
Registrant and Evergreen Service Company
10 Opinion and Consent of Sullivan & Worcester LLP Incorporated by reference to
Registrant's Post-Effective
Amendment No. 1 filed on
December 12, 1997
11 Consent of KPMG Peat Marwick LLP
12 Not applicable
13 Not applicable
14 Not applicable
15 12b-1 Distribution Plan for the
Institutional Service Shares
16(a) Calculation of yield - Evergreen Select
Adjustable Rate Fund/Institutional Shares
16(b) Calculation of performance - Evergreen Select
Adjustable Rate Fund/Institutional Shares
16(c) Calculation of yield - Evergreen Select
Adjustable Rate Fund/Institutional Service Shares
16(d) Calculation of performance - Evergreen Select
Adjustable Rate Fund/Institutional Service Shares
17(a) Financial Data Schedules - Evergreen Select
Adjustable Rate Fund/Institutional Shares
17(b) Financial Data Schedule - Evergreen Select
Adjustable Rate Fund/Institutional Service
Shares
18 Multiple Class Plan Incorporated by reference to
Registrant's Pre-Effective Amendment No. 1
Filed on November 17, 1997
19 Powers of Attorney Incorporated by reference to
Registrant's Post-Effective
Amendment No. 2 filed on
June 8, 1998
</TABLE>
Item 25. Persons Controlled by or Under Common Control with Registrant.
None
Item 26. Number of Holders of Securities (as of May 31, 1998)
Evergreen Select Limited Duration Fund
Institutional Shares 2
Institutional Service Shares 0
Evergreen Select Fixed Income Fund
Institutional Shares 2
Institutional Service Shares 63
Evergreen Select Income Plus Fund
Institutional Shares 2
Institutional Service Shares 60
Evergreen Select Intermediate Tax
Exempt Bond Fund
Institutional Shares 2
Institutional Service Shares 37
Evergreen Select Core Bond Fund
Institutional Shares 2
Institutional Service Shares 2
Charitable Shares 2
Evergreen Select Total Return Bond Fund
Institutional Shares 2
Institutional Service Shares 0
Evergreen Select Adjustable Rate Fund
Institutional Shares 4
Institutional Service Shares 54
Evergreen Select International Bond Fund
Institutional Shares 0
Institutional Service Shares 0
Item 27. Indemnification.
Provisions for the indemnification of the Registrant's Trustees and
officers are contained the Registrant's Declaration of Trust, incorporated by
reference to Registrant's Pre-Effective Amendment No. 1 filed on November 17,
1997.
Provisions for the indemnification of the Registrant's Investment
Advisors are contained in their respective Investment Advisory and Management
Agreements, contained herein.
Provisions for the indemnification of Evergreen Distributor, Inc., the
Registrant's principal underwriter, are contained in the Principal Underwriting
Agreement between Evergreen Distributor, Inc. and the Registrant, contained
herein.
Item 28. Business or Other Connections of Investment Advisor.
(a) For the information required by this item with respect to the
Capital Management Group of First Union National Bank, see the
section entitled "Management of the Fund - Investment Advisor"
in Part A.
The Directors and principal executive officers of First Union National Bank
are:
Edward E. Crutchfield, Jr. Chairman and Chief Executive Officer,
First Union Corporation; Chief Executive
Officer and Chairman, First Union National
Bank
John R. Georgius Vice Chairman, First Union Corporation;
Vice Chairman, First Union National Bank
Marion A. Cowell, Jr. Executive Vice President, Secretary &
General Counsel, First Union Corporation;
Secretary and Executive Vice President,
First Union National Bank
Robert T. Atwood Executive Vice President and Chief Financial
Officer, First Union Corporation; Chief
Financial Officer and Executive Vice
President
All of the above persons are located at the following address: First Union
National Bank, One First Union Center, Charlotte, NC 28288.
The information required by this item with respect to Keystone Investment
Management Company is incorporated by reference to the Form ADV (File No.
801-5436) of Keystone Investment Management Company
The information required by this item with respect to AnalyticoTSA
International, Inc. is incorporated by reference to the Form ADV (File No.
801-42427) of AnalyticoTSA
International, Inc.
Item 29. Principal Underwriters.
The Directors and principal executive officers of Evergreen Distributor,
Inc. are:
Lynn C. Mangum Director, Chairman and Chief Executive
Officer
J. David Huber President
Kevin J. Dell Vice President, General Counsel and Secretary
Mark J. Rybarczyk Senior Vice President
Dennis Sheehan Senior Vice President
All of the above persons are located at the following address: Evergreen
Distributor, Inc., 125 West 55th Street, New York, New York 10019.
Evergreen Distributor, Inc. acts as principal underwriter for each
registered investment company or series thereof that is a part of the Evergreen
"fund complex" as such term is defined in Item 22(a) of Schedule 14A
under the Securities Exchange Act of 1934.
Item 30. Location of Accounts and Records.
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Evergreen Investment Services, Inc., Evergreen Service Company and Keystone
Investment Management Company, all located at 200 Berkeley Street, Boston,
Massachusetts 02110
First Union National Bank, One First Union Center, 301 S. College Street,
Charlotte, North Carolina 28288
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase,
New York 10577
AnalyticoTSA International, Inc., 25/28 Old Burlington Street, London
W1X 1LB, England
Iron Mountain, 3431 Sharp Slot Road, Swansea, Massachusetts 02777
State Street Bank and Trust Company, 2 Heritage Drive, North Quincy,
Massachusetts 02171
Item 31. Management Services.
Not Applicable
Item 32. Undertakings.
The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Columbus, and State of Ohio, on the 30th day of
June, 1998.
EVERGREEN SELECT FIXED INCOME TRUST
By: /s/ William J. Tomko
-----------------------------
Name: William J. Tomko
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 8th day of June, 1998.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/William J. Tomko /s/ Laurence B. Ashkin /s/ Charles A. Austin, III
- ------------------------- ----------------------------- --------------------------------
William J. Tomko Laurence B. Ashkin* Charles A. Austin III*
President amd Treasurer (Principal Trustee Trustee
Financial and Accounting Officer)
/s/ K. Dun Gifford /s/ James S. Howell /s/ William Walt Pettit
- ---------------------------- ---------------------------- --------------------------------
K. Dun Gifford* James S. Howell* William Walt Pettit*
Trustee Trustee Trustee
/s/Gerald M. McDonnell /s/ Thomas L. McVerry /s/ Michael S. Scofield
- ------------------------------- ----------------------------- --------------------------------
Gerald M. McDonell* Thomas L. McVerry* Michael S. Scofield*
Trustee Trustee Trustee
/s/ David M. Richardson /s/ Russell A. Salton, III MD
- ------------------------------ -------------------------------
David M. Richardson* Russell A. Salton, III MD*
Trustee Trustee
/s/ Richard J. Shima /s/ Leroy Keith, Jr.
- ------------------------------ ------------------------------
Richard J. Shima* Leroy Keith, Jr.*
Trustee Trustee
</TABLE>
*By: /s/ Maureen E. Towle
- -------------------------------
Maureen E. Towle
Attorney-in-Fact
*Maureen E. Towle, by signing her name hereto, does hereby sign this
document on behalf of each of the above-named individuals pursuant to powers of
attorney duly executed by such persons and incorporated by reference to Exhibit
19 to the Registrant's Post-Effective Amendment No. 2 filed on June 8, 1998.
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- ------- -------
5(a) Investment Advisory Agreement between the Registrant and First
Union National Bank
5(b) Investment Advisory Agreement between the
Registrant and Keystone Investment Management Company
6 Principal Underwriting Agreement between the Registrant and
Evergreen Distributor, Inc.
8 Custodian Agreement between the Registrant and State Street Bank
and Trust Company
9(a) Administration Agreement between Evergreen Investment Services,
Inc. and the Registrant
9(b) Transfer Agent Agreement between the Registrant and Evergreen
Service Company
11 Consent of KPMG Peat Marwick LLP
15 12b-1 Distribution Plan for the Institutional Service Shares
16(a) Calculation of yield - Evergreen Select Adjustable Rate Fund/
Institutional Shares
16(b) Calculation of performance - Evergreen Select Adjustable Rate
Fund/Institutional Shares
16(c) Calculation of yield - Evergreen Select Adjustable Rate Fund/
Institutional Service Shares
16(d) Calculation of performance - Evergreen Select Adjustable Rate
Fund/Institutional Service Shares
17(a) Financial Data Schedules - Evergreen Select Adjustable Rate Fund/
Institutional Shares
17(b) Financial Data Schedule - Evergreen Select Adjustable Rate Fund/
Institutional Service Shares
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
AGREEMENT made the 18th day of September 1997, by and between EVERGREEN
SELECT FIXED INCOME TRUST, a Delaware business trust (the "Trust") and THE
CAPITAL MANAGEMENT GROUP OF FIRST UNION NATIONAL BANK, a national banking
association (the "Adviser").
WHEREAS, the Trust and the Adviser wish to enter into an Agreement
setting forth the terms on which the Adviser will perform certain services for
the Trust, its series of shares as listed on Schedule 1 to this agreement and
each series of shares subsequently issued by the Trust (each singly a "Fund" or
collectively the "Funds").
THEREFORE, in consideration of the promises and the mutual agreements
hereinafter contained, the Trust and the Adviser agree as follows:
1. (a) The Trust hereby employs the Adviser to manage and administer
the operation of the Trust and each of its Funds, to supervise the provision of
the services to the Trust and each of its Funds by others, and to manage the
investment and reinvestment of the assets of each Fund of the Trust in
conformity with such Fund's investment objectives and restrictions as may be set
forth from time to time in the Fund's then current prospectus and statement of
additional information, if any, and other governing documents, all subject to
the supervision of the Board of Trustees of the Trust, for the period and on the
terms set forth in this Agreement. The Adviser hereby accepts such employment
and agrees during such period, at its own expense, to render the services and to
assume the obligations set forth herein, for the compensation provided herein.
The Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
(b) In the event that the Trust establishes one or more Funds, in
addition to the Funds listed on Schedule 1, for which it wishes the Adviser to
perform services hereunder, it shall notify the Adviser in writing. If the
Adviser is willing to render such services, it shall notify the Trust in writing
and such Fund shall become a Fund hereunder and the compensation payable to the
Adviser by the new Fund will be as agreed in writing at the time.
2. The Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of each Fund with broker-dealers selected
by the Adviser. In executing portfolio transactions and selecting
broker-dealers, the Adviser will use its best efforts to seek best execution on
behalf of each Fund. In assessing the best execution available for any
transaction, the Adviser shall consider all factors it deems relevant, including
the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker-dealer, and the
reasonableness of the commission, if any (all for the specific transaction and
on a continuing basis). In evaluating the best execution available, and in
selecting the broker-dealer to execute a particular transaction, the Adviser may
also consider the brokerage and research services (as those terms are used in
Section 28(e) of the Securities Exchange Act of 1934 (the "1934 Act")) provided
to a Fund and/or other accounts over which the Adviser or an affiliate of the
Adviser exercises investment discretion. The Adviser is authorized to pay a
broker-dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for a Fund which is in excess of the amount of
commission another broker-dealer would have charged for effecting that
transaction if, but only if, the Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer viewed in terms of that particular
transaction or in terms of all of the accounts over which investment discretion
is so exercised.
3. The Adviser, at its own expense, shall furnish to the Trust office
space in the offices of the Adviser or in such other place as may be agreed upon
by the parties from time to time, all necessary office facilities, equipment and
personnel in connection with its services hereunder, and shall arrange, if
desired by the Trust, for members of the Adviser's organization to serve without
salaries from the Trust as officers or, as may be agreed from time to time, as
agents of the Trust. The Adviser assumes and shall pay or reimburse the Trust
for:
(a) the compensation (if any) of the Trustees of the Trust who are
affiliated with the Adviser or with its affiliates, or with any adviser retained
by the Adviser, and of all officers of the Trust as such, and
(b) all expenses of the Adviser incurred in connection with its
services hereunder.
The Trust assumes and shall pay all other expenses of the Trust and its
Funds, including, without limitation:
(a) all charges and expenses of any custodian or depository appointed
by the Trust for the safekeeping of the cash, securities and other property of
any of its Funds;
(b) all charges and expenses for bookkeeping and auditors;
(c) all charges and expenses of any transfer agents and registrars
appointed by the Trust;
(d) all fees of all Trustees of the Trust who are not affiliated with
the Adviser or any of its affiliates, or with any adviser retained by the
Adviser;
(e) all brokers' fees, expenses, and commissions and issue and transfer
taxes chargeable to a Fund in connection with transactions involving securities
and other property to which the Fund is a party;
(f) all costs and expenses of distribution of shares of its Funds
incurred pursuant to Plans of Distribution adopted under Rule 12b-1 under the
Investment Company Act of 1940 ("1940 Act");
(g) all taxes and trust fees payable by the Trust or its Funds to
Federal, state, or other governmental agencies;
(h) all costs of certificates representing shares of the Trust or its
Funds;
(i) all fees and expenses involved in registering and maintaining
registrations of the Trust, its Funds and of their shares with the Securities
and Exchange Commission (the "Commission") and registering or qualifying the
Funds' shares under state or other securities laws, including, without
limitation, the preparation and printing of registration statements,
prospectuses, and statements of additional information for filing with the
Commission and other authorities;
(j) expenses of preparing, printing, and mailing prospectuses and
statements of additional information to shareholders of each Fund of the Trust;
(k) all expenses of shareholders' and Trustees' meetings and of
preparing, printing, and mailing notices, reports, and proxy materials to
shareholders of the Funds;
(l) all charges and expenses of legal counsel for the Trust and its
Funds and for Trustees of the Trust in connection with legal matters relating to
the Trust and its Funds, including, without limitation, legal services rendered
in connection with the Trust and its Funds' existence, trust, and financial
structure and relations with its shareholders, registrations and qualifications
of securities under Federal, state, and other laws, issues of securities,
expenses which the Trust and its Funds has herein assumed, whether customary or
not, and extraordinary matters, including, without limitation, any litigation
involving the Trust and its Funds, its Trustees, officers, employees, or agents;
(m) all charges and expenses of filing annual and other reports with
the Commission and other authorities; and
(n) all extraordinary expenses and charges of the Trust and its Funds.
In the event that the Adviser provides any of these services or pays
any of these expenses, the Trust and any affected Fund will promptly reimburse
the Adviser therefor.
The services of the Adviser to the Trust and its Funds hereunder are
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others.
4. As compensation for the Adviser's services to the Trust with respect
to each Fund during the period of this Agreement, the Trust will pay to the
Adviser a fee at the annual rate set forth on Schedule 2 for such Fund.
The Adviser's fee is computed as of the close of business on each
business day.
A pro rata portion of the Trust's fee with respect to a Fund shall be
payable in arrears at the end of each day or calendar month as the Adviser may
from time to time specify to the Trust. If and when this Agreement terminates,
any compensation payable hereunder for the period ending with the date of such
termination shall be payable upon such termination. Amounts payable hereunder
shall be promptly paid when due.
5. The Adviser may enter into an agreement to retain, at its own
expense, a firm or firms ("SubAdviser") to provide the Trust with respect to all
or any of its Funds all of the services to be provided by the Adviser hereunder,
if such agreement is approved as required by law. Such agreement may delegate to
such SubAdviser all of Adviser's rights, obligations, and duties hereunder.
6. The Adviser shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Trust or any of its Funds in connection
with the performance of this Agreement, except a loss resulting from the
Adviser's willful misfeasance, bad faith, gross negligence, or from reckless
disregard by it of its obligations and duties under this Agreement. Any person,
even though also an officer, Director, partner, employee, or agent of the
Adviser, who may be or become an officer, Trustee, employee, or agent of the
Trust, shall be deemed, when rendering services to the Trust or any of its Funds
or acting on any business of the Trust or any of its Funds (other than services
or business in connection with the Adviser's duties hereunder), to be rendering
such services to or acting solely for the Trust or any of its Funds and not as
an officer, Director, partner, employee, or agent or one under the control or
direction of the Adviser even though paid by it.
7. The Trust shall cause the books and accounts of each of its Funds to
be audited at least once each year by a reputable independent public accountant
or organization of public accountant or organization of public accountants who
shall render a report to the Trust.
8. Subject to and in accordance with the Declaration of Trust of the
Trust, the governing documents of the Adviser and the governing documents of any
SubAdviser, it is understood that Trustees, Directors, officers, agents and
shareholders of the Trust or any Adviser are or may be interested in the Adviser
(or any successor thereof) as Directors and officers of the Adviser or its
affiliates, as stockholders of First Union Corporation or otherwise; that
Directors, officers and agents of the Adviser and its affiliates or stockholders
of First Union Corporation are or may be interested in the Trust or any Adviser
as Trustees, Directors, officers, shareholders or otherwise; that the Adviser
(or any such successor) is or may be interested in the Trust or any SubAdviser
as shareholder, or otherwise; and that the effect of any such adverse interests
shall be governed by the Declaration of Trust of the Trust, governing documents
of the Adviser and governing documents of any SubAdviser.
9. This Agreement shall continue in effect for two years from the date
set forth above and after such date (a) such continuance is specifically
approved at least annually by the Board of Trustees of the Trust or by a vote of
a majority of the outstanding voting securities of the Trust, and (b) such
renewal has been approved by the vote of the majority of Trustees of the Trust
who are not interested persons, as that term is defined in the 1940 Act, of the
Adviser or of the Trust, cast in person at a meeting called for the purpose of
voting on such approval.
10. On sixty days' written notice to the Adviser, this Agreement may be
terminated at any time without the payment of any penalty by the Board of
Trustees of the Trust or by vote of the holders of a majority of the outstanding
voting securities of the unaffected Funds; and on sixty days' written notice to
the Trust, this Agreement may be terminated at any time without the payment of
any penalty by the Adviser. This Agreement shall automatically terminate upon
its assignment (as that term is defined in the 1940 Act). Any notice under this
Agreement shall be given in writing, addressed and delivered, or mailed postage
prepaid, to the other party at the main office of such party.
11. This Agreement may be amended at any time by an instrument in
writing executed by both parties hereto or their respective successors, provided
that with regard to amendments of substance such execution by the Trust shall
have been first approved by the vote of the holders of a majority of the
outstanding voting securities of the affected Funds and by the vote of a
majority of Trustees of the Trust who are not interested persons (as that term
is defined in the 1940 Act) of the Adviser, any predecessor of the Adviser, or
of the Trust, cast in person at a meeting called for the purpose of voting on
such approval. A "majority of the outstanding voting securities of the Trust or
the affected Funds" shall have, for all purposes of this Agreement, the meaning
provided therefor in the 1940 Act.
12. Any compensation payable to the Adviser hereunder for any period
other than a full year shall be proportionately adjusted.
13. The provisions of this Agreement shall be governed, construed, and
enforced in accordance with the laws of The State of Delaware.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.
EVERGREEN SELECT FIXED INCOME TRUST
By: JOHN J. PILEGGI
Name: John J. Pileggi
Title: President
THE CAPITAL MANAGEMENT GROUP
OF FIRST UNION NATIONAL BANK
By: T. HAL CLARKE
Name: T. Hal Clarke
Title: Senior Vice President
<PAGE>
Schedule 1
Evergreen Select Core Bond Fund
Evergreen Select Fixed Income Fund
Evergreen Select Income Plus Fund
Evergreen Select Intermediate Bond Fund
Evergreen Select Intermediate Tax-Exempt Bond Fund
Evergreen Select Limited Duration Fund
<PAGE>
Schedule 2
As compensation for the Adviser's services to each Fund during the period
of this Agreement, each Fund will pay to the Adviser a fee at the annual rate
of:
I. Evergreen Select Core Bond Fund and
Evergreen Select Intermediate Bond Fund
_______________________________________
0.40% of Average Daily Net Assets of the Fund
II. Evergreen Select Fixed Income Fund and
Evergreen Select Income Plus Fund
______________________________________
0.50% of Average Daily Net Assets of the Fund
III. Evergreen Select Intermediate Tax-Exempt Bond Fund
__________________________________________________
0.60% of Average Daily Net Assets of the Fund
IV. Evergreen Select Limited Duration Fund
______________________________________
0.30% of Average Daily Net Assets of the Fund
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
AGREEMENT made the 18th day of September 1997, by and between EVERGREEN
SELECT FIXED INCOME TRUST, a Delaware business trust (the "Trust") and KEYSTONE
INVESTMENT MANAGEMENT COMPANY, a Delaware corporation (the "Adviser").
WHEREAS, the Trust and the Adviser wish to enter into an Agreement
setting forth the terms on which the Adviser will perform certain services for
the Trust, its series of shares as listed on Schedule 1 to this agreement and
each series of shares subsequently issued by the Trust (each singly a "Fund" or
collectively the "Funds").
THEREFORE, in consideration of the promises and the mutual agreements
hereinafter contained, the Trust and the Adviser agree as follows:
1. (a) The Trust hereby employs the Adviser to manage and administer
the operation of the Trust and each of its Funds, to supervise the provision of
the services to the Trust and each of its Funds by others, and to manage the
investment and reinvestment of the assets of each Fund of the Trust in
conformity with such Fund's investment objectives and restrictions as may be set
forth from time to time in the Fund's then current prospectus and statement of
additional information, if any, and other governing documents, all subject to
the supervision of the Board of Trustees of the Trust, for the period and on the
terms set forth in this Agreement. The Adviser hereby accepts such employment
and agrees during such period, at its own expense, to render the services and to
assume the obligations set forth herein, for the compensation provided herein.
The Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
(b) In the event that the Trust establishes one or more Funds, in
addition to the Funds listed on Schedule 1, for which it wishes the Adviser to
perform services hereunder, it shall notify the Adviser in writing. If the
Adviser is willing to render such services, it shall notify the Trust in writing
and such Fund shall become a Fund hereunder and the compensation payable to the
Adviser by the new Fund will be as agreed in writing at the time.
2. The Adviser shall place all orders for the purchase and sale of
portfolio securities for the account of each Fund with broker-dealers selected
by the Adviser. In executing portfolio transactions and selecting
broker-dealers, the Adviser will use its best efforts to seek best execution on
behalf of each Fund. In assessing the best execution available for any
transaction, the Adviser shall consider all factors it deems relevant, including
the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker-dealer, and the
reasonableness of the commission, if any (all for the specific transaction and
on a continuing basis). In evaluating the best execution available, and in
selecting the broker-dealer to execute a particular transaction, the Adviser may
also consider the brokerage and research services (as those terms are used in
Section 28(e) of the Securities Exchange Act of 1934 (the "1934 Act")) provided
to a Fund and/or other accounts over which the Adviser or an affiliate of the
Adviser exercises investment discretion. The Adviser is authorized to pay a
broker-dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for a Fund which is in excess of the amount of
commission another broker-dealer would have charged for effecting that
transaction if, but only if, the Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer viewed in terms of that particular
transaction or in terms of all of the accounts over which investment discretion
is so exercised.
3. The Adviser, at its own expense, shall furnish to the Trust office
space in the offices of the Adviser or in such other place as may be agreed upon
by the parties from time to time, all necessary office facilities, equipment and
personnel in connection with its services hereunder, and shall arrange, if
desired by the Trust, for members of the Adviser's organization to serve without
salaries from the Trust as officers or, as may be agreed from time to time, as
agents of the Trust. The Adviser assumes and shall pay or reimburse the Trust
for:
(a) the compensation (if any) of the Trustees of the Trust who are
affiliated with the Adviser or with its affiliates, or with any adviser retained
by the Adviser, and of all officers of the Trust as such, and
(b) all expenses of the Adviser incurred in connection with its
services hereunder.
The Trust assumes and shall pay all other expenses of the Trust and its
Funds, including, without limitation:
(a) all charges and expenses of any custodian or depository appointed
by the Trust for the safekeeping of the cash, securities and other property of
any of its Funds;
(b) all charges and expenses for bookkeeping and auditors;
(c) all charges and expenses of any transfer agents and registrars
appointed by the Trust;
(d) all fees of all Trustees of the Trust who are not affiliated with
the Adviser or any of its affiliates, or with any adviser retained by the
Adviser;
(e) all brokers' fees, expenses, and commissions and issue and transfer
taxes chargeable to a Fund in connection with transactions involving securities
and other property to which the Fund is a party;
(f) all costs and expenses of distribution of shares of its Funds
incurred pursuant to Plans of Distribution adopted under Rule 12b-1 under the
Investment Company Act of 1940 ("1940 Act");
(g) all taxes and trust fees payable by the Trust or its Funds to
Federal, state, or other governmental agencies;
(h) all costs of certificates representing shares of the Trust or its
Funds; (i) all fees and expenses involved in registering and maintaining
registrations of the Trust, its Funds and of their shares with the Securities
and Exchange Commission (the "Commission") and registering or qualifying the
Funds' shares under state or other securities laws, including, without
limitation, the preparation and printing of registration statements,
prospectuses, and statements of additional information for filing with the
Commission and other authorities;
(j) expenses of preparing, printing, and mailing prospectuses and
statements of additional information to shareholders of each Fund of the Trust;
(k) all expenses of shareholders' and Trustees' meetings and of
preparing, printing, and mailing notices, reports, and proxy materials to
shareholders of the Funds;
(l) all charges and expenses of legal counsel for the Trust and its
Funds and for Trustees of the Trust in connection with legal matters relating to
the Trust and its Funds, including, without limitation, legal services rendered
in connection with the Trust and its Funds' existence, trust, and financial
structure and relations with its shareholders, registrations and qualifications
of securities under Federal, state, and other laws, issues of securities,
expenses which the Trust and its Funds has herein assumed, whether customary or
not, and extraordinary matters, including, without limitation, any litigation
involving the Trust and its Funds, its Trustees, officers, employees, or agents;
(m) all charges and expenses of filing annual and other reports with
the Commission and other authorities; and
(n) all extraordinary expenses and charges of the Trust and its Funds.
In the event that the Adviser provides any of these services or pays
any of these expenses, the Trust and any affected Fund will promptly reimburse
the Adviser therefor.
The services of the Adviser to the Trust and its Funds hereunder are
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others.
4. As compensation for the Adviser's services to the Trust with respect
to each Fund during the period of this Agreement, the Trust will pay to the
Adviser a fee at the annual rate set forth on Schedule 2 for such Fund.
The Adviser's fee is computed as of the close of business on each
business day.
A pro rata portion of the Trust's fee with respect to a Fund shall be
payable in arrears at the end of each day or calendar month as the Adviser may
from time to time specify to the Trust. If and when this Agreement terminates,
any compensation payable hereunder for the period ending with the date of such
termination shall be payable upon such termination. Amounts payable hereunder
shall be promptly paid when due.
5. The Adviser may enter into an agreement to retain, at its own
expense, a firm or firms ("SubAdviser") to provide the Trust with respect to all
or any of its Funds all of the services to be provided by the Adviser hereunder,
if such agreement is approved as required by law. Such agreement may delegate to
such SubAdviser all of Adviser's rights, obligations, and duties hereunder.
6. The Adviser shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Trust or any of its Funds in connection
with the performance of this Agreement, except a loss resulting from the
Adviser's willful misfeasance, bad faith, gross negligence, or from reckless
disregard by it of its obligations and duties under this Agreement. Any person,
even though also an officer, Director, partner, employee, or agent of the
Adviser, who may be or become an officer, Trustee, employee, or agent of the
Trust, shall be deemed, when rendering services to the Trust or any of its Funds
or acting on any business of the Trust or any of its Funds (other than services
or business in connection with the Adviser's duties hereunder), to be rendering
such services to or acting solely for the Trust or any of its Funds and not as
an officer, Director, partner, employee, or agent or one under the control or
direction of the Adviser even though paid by it.
7. The Trust shall cause the books and accounts of each of its Funds to
be audited at least once each year by a reputable independent public accountant
or organization of public accountant or organization of public accountants who
shall render a report to the Trust.
8. Subject to and in accordance with the Declaration of Trust of the
Trust, the governing documents of the Adviser and the governing documents of any
SubAdviser, it is understood that Trustees, Directors, officers, agents and
shareholders of the Trust or any Adviser are or may be interested in the Adviser
(or any successor thereof) as Directors and officers of the Adviser or its
affiliates, as stockholders of First Union Corporation or otherwise; that
Directors, officers and agents of the Adviser and its affiliates or stockholders
of First Union Corporation are or may be interested in the Trust or any Adviser
as Trustees, Directors, officers, shareholders or otherwise; that the Adviser
(or any such successor) is or may be interested in the Trust or any SubAdviser
as shareholder, or otherwise; and that the effect of any such adverse interests
shall be governed by the Declaration of Trust of the Trust, governing documents
of the Adviser and governing documents of any SubAdviser.
9. This Agreement shall continue in effect for two years from the date
set forth above and after such date (a) such continuance is specifically
approved at least annually by the Board of Trustees of the Trust or by a vote of
a majority of the outstanding voting securities of the Trust, and (b) such
renewal has been approved by the vote of the majority of Trustees of the Trust
who are not interested persons, as that term is defined in the 1940 Act, of the
Adviser or of the Trust, cast in person at a meeting called for the purpose of
voting on such approval.
10. On sixty days' written notice to the Adviser, this Agreement may be
terminated at any time without the payment of any penalty by the Board of
Trustees of the Trust or by vote of the holders of a majority of the outstanding
voting securities of the unaffected Funds; and on sixty days' written notice to
the Trust, this Agreement may be terminated at any time without the payment of
any penalty by the Adviser. This Agreement shall automatically terminate upon
its assignment (as that term is defined in the 1940 Act). Any notice under this
Agreement shall be given in writing, addressed and delivered, or mailed postage
prepaid, to the other party at the main office of such party.
11. This Agreement may be amended at any time by an instrument in
writing executed by both parties hereto or their respective successors, provided
that with regard to amendments of substance such execution by the Trust shall
have been first approved by the vote of the holders of a majority of the
outstanding voting securities of the affected Funds and by the vote of a
majority of Trustees of the Trust who are not interested persons (as that term
is defined in the 1940 Act) of the Adviser, any predecessor of the Adviser, or
of the Trust, cast in person at a meeting called for the purpose of voting on
such approval. A "majority of the outstanding voting securities of the Trust or
the affected Funds" shall have, for all purposes of this Agreement, the meaning
provided therefor in the 1940 Act.
12. Any compensation payable to the Adviser hereunder for any period
other than a full year shall be proportionately adjusted.
13. The provisions of this Agreement shall be governed, construed, and
enforced in accordance with the laws of The State of Delaware.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the day and year first above written.
EVERGREEN SELECT FIXED INCOME TRUST
By: JOHN J. PILEGGI
Name: John J. Pileggi
Title: President
KEYSTONE INVESTMENT MANAGEMENT COMPANY
By: ALBERT H. ELFNER
Name: Albert H. Elfner
Title: Chief Executive Officer
<PAGE>
Schedule 1
Evergreen Select Adjustable Rate Fund
<PAGE>
Schedule 2
As compensation for the Adviser's services to each Fund during the period
of this Agreement, each Fund will pay to the Adviser a fee at the annual rate
of:
I. Evergreen Select Adjustable Rate Fund
_____________________________________
0.30% of the Average Net Assets of the Fund
PRINCIPAL UNDERWRITING AGREEMENT
EVERGREEN SELECT FIXED INCOME TRUST
AGREEMENT made this 18th day of September, 1997 by and between
Evergreen Select Fixed Income Trust on behalf of its series listed on Exhibit A
attached hereto and made a part hereof (such Trust and series referred to herein
as "Fund" individually or "Funds" collectively) and Evergreen Distributor, Inc.,
a Delaware corporation ("Principal Underwriter").
It is hereby mutually agreed as follows:
1. The Fund hereby appoints Principal Underwriter a principal
underwriter of the Charitable shares, Institutional shares and Institutional
Service shares of beneficial interest of the Fund ("Shares") as an independent
contractor upon the terms and conditions hereinafter set forth. Except as the
Fund may from time to time agree, Principal Underwriter will act as agent
for the Fund and not as principal.
2. Principal Underwriter will use its best efforts to find purchasers
for the Shares, to promote distribution of the Shares and may obtain orders from
brokers, dealers or other persons for sales of Shares to them. No such broker,
dealer or other person shall have any authority to act as agent for the Fund;
such dealer, broker or other person shall act only as principal in the sale of
Shares.
3. Sales of Shares by Principal Underwriter shall be at the applicable
public offering price determined in the manner set forth in the prospectus
and/or statement of additional information of the Fund current at the time of
the Fund's acceptance of the order for Shares; provided that Principal
Underwriter also shall have the right to sell Shares at net asset value, if such
sale is permissible under and consistent with applicable statutes, rules,
regulations and orders. All orders shall be subject to acceptance by the Fund,
and the Fund reserves the right in its sole discretion to reject any order
received. The Fund shall not be liable to anyone for failure to accept any
order.
4. On all sales of Shares, the Fund shall receive the current net asset
value. Principal Underwriter shall be entitled to receive fees specified
in Exhibit B.
5. Payment to the Fund for Shares shall be in New York or Boston
Clearing House funds received by Principal Underwriter within three (3) business
days after notice of acceptance of the purchase order and the amount of the
applicable public offering has been given to the purchaser. If such payment is
not receivbed within such three-day period, the Fund reserves the right, without
further notice, forthwith to cancel its acceptance of any such order. The Fund
shall pay such issue taxes as may be required by law in connection with the
issuance of the Shares.
6. Principal Underwriter shall not make in connection with any sale or
solicitation of a sale of the Shares any representations concerning the Shares
except those contained in the then current prospectus and/or statement of
additional information covering the Shares and in printed information approved
by the Fund as information supplemental to such prospectus and statement of
additional information. Copies of the then current prospectus and statement of
additional information will be supplied by the Fund to Principal Underwriter in
reasonable quantities upon request.
7. Principal Underwriter agrees to comply with the Business Conduct
Rules of the National Association of Securities Dealers, Inc.
8. The Fund appoints Principal Underwriter as its agent to accept
orders for redemptions and repurchases of Shares at values and in the manner
determined in accordance with the then current prospectus and/or statement of
additional information of the Fund.
9. The Fund agrees to indemnify and hold harmless the Principal
Underwriter, its officers and Directors and each person, if any, who controls
the Principal Underwriter within the meaning of Section 15 of the Securities Act
of 1933 ("1933 Act"), against any losses, claims, damages, liabilities and
expenses (including the cost of any legal fees incurred in connection therewith)
which the Principal Underwriter, its officers, Directors or any such controlling
person may incur under the 1933 Act, under any other statute, at common law or
otherwise, arising out of or based upon
a) any untrue statement or alleged untrue statement of a material
fact contained in the Fund's registration statement,
prospectus or statement of additional information (including
amendments and supplements thereto), or
b) any omission or alleged omission to state a material fact
required to be stated in the Fund's registration statement,
prospectus or statement of additional information necessary to
make the statements therein not misleading, provided, however,
that insofar as losses, claims, damages, liabilities or
expenses arise out of or are based upon any such untrue
statement or omission or alleged untrue statement or omission
made in reliance and in conformity with information furnished
to the Fund by the Principal Underwriter for use in the Fund's
registration statement, prospectus or statement of
additional information, such indemnification is not
applicable. In no case shall the Fund indemnify the
Principal Underwriter or its controlling person as to any
amounts incurred for any liability arising out of or based
upon any action for which the Principal Underwriter, its
officers and Directors or any controlling person would
otherwise be subject to liability by reason of willful
misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of the reckless disregard of its
obligations and duties under this Agreement.
10. The Principal Underwriter agrees to indemnify and hold harmless the
Fund, its officers, Trustees and each person, if any, who controls the Fund
within the meaning of Section 15 of the 1933 Act against any loss, claims,
damages, liabilities and expenses (including the cost of any legal fees incurred
in connection therewith) which the Fund, its officers, Trustees or any such
controlling person may incur under the 1933 Act, under any other statute, at
common law or otherwise arising out of the acquisition of any Shares by any
person which
a) may be based upon any wrongful act by the Principal Underwriter
or any of its employees or representatives, or
b) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Fund's
registration statement, prospectus or statement of additional
information (including amendments and supplements thereto), or
any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, if such statement or
omission was made in reliance upon information furnished or
confirmed in writing to the Fund by the Principal Underwriter.
11. The Fund agrees to execute such papers and to do such acts and
things as shall from time to time be reasonably requested by Principal
Underwriter for the purpose of qualifying the Shares for sale under the
so-called "blue sky" laws of any state or for registering Shares under the 1933
Act or the Fund under the Investment Company Act of 1940 ("1940 Act"). Principal
Underwriter shall bear the expense of preparing, printing and distributing
advertising, sales literature, prospectuses and statements of additional
information. The Fund shall bear the expense of registering Shares under the
1933 Act and the Fund under the 1940 Act, qualifying Shares for sale under the
so-called "blue sky" laws of any state, the preparation and printing of
prospectuses, statements of additional information and reports required to be
filed with the Securities and Exchange Commission and other authorities, the
preparation, printing and mailing of prospectuses and statements of additional
information to shareholders of the Fund and the direct expenses of the issue of
Shares.
12. To the extent required by the Fund's 12b-1 Plans, Principal
Underwriter shall provide to the Board of Trustees of the Fund in connection
with such 12b-1 Plans, not less than quarterly, a written report of the amounts
expended pursuant to such 12b-1 Plans and the purposes for which such
expenditures were made.
13. The term of this Agreement shall begin on the date hereof and
unless sooner terminated or continued as provided below, shall expire after
two years. This Agreement shall continue in effec after such term if its
continuance is specifically approved by a majority of the Trustees of the Fund
at least annually in accordance with the 1940 Act and the rules and regulations
thereunder.
This Agreement may be terminated at any time, without payment of any
penalty, by vote of a majority of any Rule 12b-1 Trustees or by a vote of a
majority of the Fund's outstanding Shares on not more than sixty (60) days
written notice to any other party to the Agreement; and shall terminate
automatically in the event of its assignment (as defined in the 1940 Act).
14. This Agreement shall be construed in accordance with the laws of
The Commonwealth of Massachusetts. All sales hereunder are to be made and title
to the Shares shall pass, in Boston, Massachusetts.
15. The Fund is a series of a Delaware business trust established under
a Declaration of Trust, as it may be amended from time to time. The obligations
of the Fund are not personally binding upon, nor shall recourse be had against,
the private property of any of the Trustees, shareholders, officers, employees
or agents of the Fund, but only the property of the Fund shall be bound.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized at Boston,
Massachusetts, as of the day and year first written above.
EVERGREEN SELECT FIXED INCOME TRUST
By: JOHN J. PILEGGI
EVERGREEN DISTRIBUTOR, INC.
By: WILLIAM TOMKO
<PAGE>
EXHIBIT A
EVERGREEN SELECT FIXED INCOME TRUST
Evergreen Select Limited Duration Fund
Evergreen Select Fixed Income Fund
Evergreen Select Income Plus Fund
Evergreen Select Intermediate Tax-Exempt Bond Fund
Evergreen Select Core Bond Fund
Evergreen Select Intermediate Bond Fund
Evergreen Select Adjustable Rate Fund
<PAGE>
EXHIBIT B
TO
PRINCIPAL UNDERWRITING AGREEMENT
DATED
SEPTEMBER 18, 1997
Schedule of Commissions
Institutional Shares pay up to 0.25% annually of the average daily net asset
shares of a Fund
CUSTODIAN AGREEMENT
This Agreement between EVERGREEN SELECT FIXED INCOME TRUST, a business
trust organized and existing under the laws of Delaware with its principal place
of business at 200 Berkeley Street, Boston, Massachusetts 02116 (the "Fund"),
and STATE STREET BANK and TRUST COMPANY, a Massachusetts trust company with its
principal place of business at 225 Franklin Street, Boston, Massachusetts 02110
(the "Custodian"),
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends that this Agreement be applicable to the
series set forth on Schedule C hereto (such series together with all other
series subsequently established by the Fund and made subject to this Agreement
in accordance with Section 18, be referred to herein as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Fund's
Declaration of Trust. The Fund on behalf of the Portfolio(s) agrees to deliver
to the Custodian all securities and cash of the Portfolios, and all payments of
income, payments of principal or capital distributions received by it with
respect to all securities owned by the Portfolio(s) from time to time, and the
cash consideration received by it for such new or treasury shares of beneficial
interest of the Fund representing interests in the Portfolios ("Shares") as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (as such term is defined in
Section 6 hereof), the Custodian shall on behalf of the applicable Portfolio(s)
from time to time employ one or more sub-custodians located in the United
States, but only in accordance with an applicable vote by the Board of Trustees
of the Fund (the "Board of Trustees") on behalf of the applicable Portfolio(s),
and provided that the Custodian shall have no more or less responsibility or
liability to the Fund on
<PAGE>
account of any actions or omissions of any sub-custodian so employed than any
such sub-custodian has to the Custodian. The Custodian may employ as
sub-custodian for the Fund's foreign securities on behalf of the applicable
Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedules A and B hereto but only in accordance with
the applicable provisions of Sections 3 and 4.
SECTION 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
THE CUSTODIAN IN THE UNITED STATES
SECTION 2.1 HOLDING SECURITIES. The Custodian shall hold and physically
segregate for the account of each Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to Section
2.8 in a clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the Treasury (each, a
"U.S. Securities System") and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent ("Direct Paper")
which is deposited and/or maintained in the Direct Paper System of the Custodian
(the "Direct Paper System") pursuant to Section 2.9.
SECTION 2.2 DELIVERY OF SECURITIES. The Custodian shall release and
deliver domestic securities owned by a Portfolio held by the Custodian or in a
U.S. Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only upon
receipt of Proper Instructions on behalf of the applicable Portfolio, which may
be continuing instructions when deemed appropriate by the parties, and only in
the following cases:
1) Upon sale of such securities for the account of the Portfolio
and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a U.S. Securities
System, in accordance with the provisions of Section 2.8
hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee
<PAGE>
name of any agent appointed pursuant to Section 2.7 or into
the name or nominee name of any sub-custodian appointed
pursuant to Section 1; or for exchange for a different number
of bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in
any such case, the new securities are to be delivered to the
Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Portfolio, but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the
receipt of such collateral;
11) For delivery as security in connection with any borrowing by
the Fund on behalf of the Portfolio requiring a pledge of
assets by the Fund on behalf of the Portfolio, but only
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance
<PAGE>
with the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Portfolio
of the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by
the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent for the
Fund (the "Transfer Agent") for delivery to such Transfer
Agent or to the holders of Shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund related to the Portfolio
(the "Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper trust purpose, but only upon receipt of,
in addition to Proper Instructions from the Fund on behalf of
the applicable Portfolio, a copy of a resolution of the Board
of Trustees or of the Executive Committee thereof signed by an
officer of the Fund and certified by the Secretary or an
Assistant Secretary thereof (a "Certified Resolution"),
specifying the securities of the Portfolio to be delivered,
setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper trust purpose, and
naming the person or persons to whom delivery of such
securities shall be made.
SECTION 2.3 REGISTRATION OF SECURITIES. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the Portfolio
or of any nominee of the Custodian which nominee shall be assigned exclusively
to the Portfolio, unless the Fund has authorized in writing the appointment of a
nominee to be used in common with other registered investment companies having
the same investment adviser as the Portfolio, or in the name or nominee name of
any agent appointed pursuant to Section 2.7 or in the name or nominee name of
any sub-custodian appointed pursuant to Section 1. All securities accepted by
the Custodian on behalf of the Portfolio under the terms of this Agreement shall
be in "street name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of calls, maturities,
tender or exchange offers.
SECTION 2.4 BANK ACCOUNTS. The Custodian shall open and maintain
a separate bank account or accounts in the United States in the name of each
Portfolio of the Fund, subject only to
<PAGE>
draft or order by the Custodian acting pursuant to the terms of this Agreement,
and shall hold in such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the Portfolio, other than
cash maintained by the Portfolio in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of 1940, as amended
(the "1940 Act"). Funds held by the Custodian for a Portfolio may be deposited
by it to its credit as Custodian in the Banking Department of the Custodian or
in such other banks or trust companies as it may in its discretion deem
necessary or desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the 1940 Act and that each such
bank or trust company and the funds to be deposited with each such bank or trust
company shall on behalf of each applicable Portfolio be approved by vote of a
majority of the Board of Trustees. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
SECTION 2.5 COLLECTION OF INCOME. Subject to the provisions of Section
2.3, the Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and other
payments with respect to bearer domestic securities if, on the date of payment
by the issuer, such securities are held by the Custodian or its agent thereof
and shall credit such income, as collected, to such Portfolio's custodian
account. Without limiting the generality of the foregoing, the Custodian shall
detach and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when due on
securities held hereunder. Income due each Portfolio on securities loaned
pursuant to the provisions of Section 2.2 (10) shall be the responsibility of
the Fund. The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data as may
be necessary to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is properly entitled.
SECTION 2.6 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions
on behalf of the applicable Portfolio, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay out monies of a
Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the 1940 Act
to act as a custodian and has been designated by the Custodian
as its agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
U.S. Securities System, in accordance with the conditions
<PAGE>
set forth in Section 2.8 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.9; (d) in the case of
repurchase agreements entered into between the Fund on behalf
of the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery
of the securities either in certificate form or through an
entry crediting the Custodian's account at the Federal Reserve
Bank with such securities or (ii) against delivery of the
receipt evidencing purchase by the Portfolio of securities
owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from
the Portfolio or (e) for transfer to a time deposit account of
the Fund in any bank, whether domestic or foreign; such
transfer may be effected prior to receipt of a confirmation
from a broker and/or the applicable bank pursuant to Proper
Instructions from the Fund as defined herein;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued as set forth
in Section 5 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares declared pursuant
to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper trust purpose, but only upon receipt of,
in addition to Proper Instructions from the Fund on behalf of
the Portfolio, a copy of a Certified Resolution specifying the
amount of such payment, setting forth the purpose for which
such payment is to be made, declaring such purpose to be a
proper trust purpose, and naming the person or persons to whom
such payment is to be made.
SECTION 2.7 APPOINTMENT OF AGENTS. The Custodian may at any time or
times in its discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the 1940 Act to act as a
custodian, as its agent to carry out such of the provisions of this Section 2 as
the Custodian may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian of its responsibilities
or liabilities hereunder.
SECTION 2.8 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The
Custodian may deposit and/or maintain securities owned by a Portfolio in a
clearing agency registered with the
<PAGE>
United States Securities and Exchange Commission (the "SEC") under Section 17A
of the Exchange Act , which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of the Treasury and certain
federal agencies, collectively referred to herein as "U.S. Securities System" in
accordance with applicable Federal Reserve Board and SEC rules and regulations,
if any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are
represented in an account of the Custodian in the U.S.
Securities System (the "U.S. Securities System Account") which
account shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System
shall identify by book-entry those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the
U.S. Securities System that such securities have been
transferred to the U.S. Securities System Account, and (ii)
the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the
Portfolio. The Custodian shall transfer securities sold for
the account of the Portfolio upon (i) receipt of advice from
the U.S. Securities System that payment for such securities
has been transferred to the U.S. Securities System Account,
and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account
of the Portfolio. Copies of all advices from the U.S.
Securities System of transfers of securities for the account
of the Portfolio shall identify the Portfolio, be maintained
for the Portfolio by the Custodian and be provided to the Fund
at its request. Upon request, the Custodian shall furnish the
Fund on behalf of the Portfolio confirmation of each transfer
to or from the account of the Portfolio in the form of a
written advice or notice and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction sheets
reflecting each day's transactions in the U.S. Securities
System for the account of the Portfolio;
4) The Custodian shall provide the Fund with any report obtained
by the Custodian on the U.S. Securities System's accounting
system, internal accounting control and procedures for
safeguarding securities deposited in the U.S. Securities
System;
5) The Custodian shall have received from the Fund on behalf of
the Portfolio the initial or annual certificate, as the case
may be, required by Section 15 hereof;
<PAGE>
6) Anything to the contrary in this Agreement notwithstanding,
the Custodian shall be liable to the Fund for the benefit of
the Portfolio for any loss or damage to the Portfolio
resulting from use of the U.S. Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or
any of its agents or of any of its or their employees or from
failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the U.S.
Securities System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with
respect to any claim against the U.S. Securities System or any
other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the
Portfolio has not been made whole for any such loss or damage.
SECTION 2.9 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM.
The Custodian may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented in
the Direct Paper System Account, which account shall not
include any assets of the Custodian other than assets held as
a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to the
Portfolio;
4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the
Portfolio upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for
the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio, in the form of a written advice or notice,
of Direct Paper on the next business day following such
transfer and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting each
day's transaction in the Direct Paper System for the account
of the Portfolio;
<PAGE>
6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal accounting
control as the Fund may reasonably request from time to time.
SECTION 2.10 SEGREGATED ACCOUNT. The Custodian shall upon receipt of
Proper Instructions on behalf of each applicable Portfolio establish and
maintain a segregated account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by the Custodian
pursuant to Section 2.8 hereof, (i) in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Portfolio, (ii) for purposes of segregating cash or
government securities in connection with options purchased, sold or written by
the Portfolio or commodity futures contracts or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by the Portfolio
with the procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the SEC relating to the maintenance of
segregated accounts by registered investment companies and (iv) for other proper
trust purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a copy of a Certified Resolution setting forth the purpose or
purposes of such segregated account and declaring such purpose(s) to be a proper
trust purpose.
SECTION 2.11 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian
shall execute ownership and other certificates and affidavits for all federal
and state tax purposes in connection with receipt of income or other payments
with respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
SECTION 2.12 PROXIES. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by the registered
holder of such securities, if the securities are registered otherwise than in
the name of the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting materials
and all notices relating to such securities.
SECTION 2.13 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject
to the provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund for each Portfolio all written information (including, without limitation,
pendency of calls and maturities of domestic securities and expirations of
rights in connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian from
issuers of the securities being held for the
<PAGE>
Portfolio. With respect to tender or exchange offers, the Custodian shall
transmit promptly to the Portfolio all written information received by the
Custodian from issuers of the securities whose tender or exchange is sought and
from the party (or his agents) making the tender or exchange offer. If the
Portfolio desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, the Portfolio shall notify the Custodian
at least three business days prior to the date on which the Custodian is to take
such action.
SECTION 3. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER OF THE PORTFOLIOS
SECTION 3.1. DEFINITIONS. The following capitalized terms shall have
the indicated meanings:
"Country Risk" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's political environment; economic and financial infrastructure
(including financial institutions such as any Mandatory Securities Depositories
operating in the country); prevailing or developing custody and settlement
practices; and laws and regulations applicable to the safekeeping and recovery
of Foreign Assets held in custody in that country.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule
17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as
defined in Rule 17f-5), a bank holding company meeting the requirements of an
Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of the SEC, or a foreign branch of a Bank (as defined in Section 2(a)(5)
of the 1940 Act) meeting the requirements of a custodian under Section 17(f) of
the 1940 Act, except that the term does not include Mandatory Securities
Depositories.
"Foreign Assets" means any of the Portfolios' investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Portfolios'
transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2) of Rule
17f-5.
"Mandatory Securities Depository" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used if the
Fund, on the Portfolios' behalf, determines to place Foreign Assets in a country
outside the United States (i) because required by law or regulation; (ii)
because securities cannot be withdrawn from such foreign securities depository
or clearing agency; or (iii) because maintaining or effecting trades in
securities outside the foreign securities depository or clearing agency is not
consistent with prevailing or developing custodial or market practices.
SECTION 3.2. DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
The Fund, by resolution adopted by the Board of Trustees, hereby delegates to
the Custodian with
<PAGE>
respect to the Portfolios, subject to Section (b) of Rule 17f-5, the
responsibilities set forth in this Section 3 with respect to Foreign Assets of
the Portfolios held outside the United States, and the Custodian hereby accepts
such delegation, as Foreign Custody Manager with respect to the Portfolios.
SECTION 3.3. COUNTRIES COVERED. The Foreign Custody Manager shall be
responsible for performing the delegated responsibilities defined below only
with respect to the countries and custody arrangements for each such country
listed on Schedule A of this Contract, which may be amended from time to time by
the Foreign Custody Manager. The Foreign Custody Manager shall list on Schedule
A the Eligible Foreign Custodians selected by the Foreign Custody Manager to
maintain the assets of the Portfolios. Mandatory Securities Depositories are
listed on Schedule B to this Contract, which may be amended from time to time by
the Foreign Custody Manager. The Foreign Custody Manager will provide amended
versions of Schedules A and B in accordance with Section 3.7 hereof.
Upon the receipt by the Foreign Custody Manager of Proper Instructions
to open an account or to place or maintain Foreign Assets in a country listed on
Schedule A, and the fulfillment by the Fund on behalf of the Portfolios of the
applicable account opening requirements for the country, the Foreign Custody
Manager shall be deemed to have been delegated by the Board of Trustees on
behalf of the Portfolios responsibility as Foreign Custody Manager with respect
to that country and to have accepted such delegation. Following the receipt of
Proper Instructions directing the Foreign Custody Manager to close the account
of a Portfolio with the Eligible Foreign Custodian selected by the Foreign
Custody Manager in a designated country, the delegation by the Board of Trustees
on behalf of the Portfolios to the Custodian as Foreign Custody Manager for that
country shall be deemed to have been withdrawn and the Custodian shall
immediately cease to be the Foreign Custody Manager of the Portfolios with
respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice to the
Fund. Thirty days (or such longer period as to which the parties agree in
writing) after receipt of any such notice by the Fund, the Custodian shall have
no further responsibility as Foreign Custody Manager to the Fund with respect to
the country as to which the Custodian's acceptance of delegation is withdrawn.
SECTION 3.4. SCOPE OF DELEGATED RESPONSIBILITIES.
3.4.1. Selection of Eligible Foreign Custodians. Subject to the
provisions of this Section 3, the Portfolios' Foreign Custody Manager may place
and maintain the Foreign Assets in the care of the Eligible Foreign Custodian
selected by the Foreign Custody Manager in each country listed on Schedule A, as
amended from time to time.
<PAGE>
In performing its delegated responsibilities as Foreign Custody Manager
to place or maintain Foreign Assets with an Eligible Foreign Custodian, the
Foreign Custody Manager shall determine that the Foreign Assets will be subject
to reasonable care, based on the standards applicable to custodians in the
country in which the Foreign Assets will be held by that Eligible Foreign
Custodian, after considering all factors relevant to the safekeeping of such
assets, including, without limitation:
(i) the Eligible Foreign Custodian's practices, procedures, and
internal controls, including, but not limited to, the physical
protections available for certificated securities (if
applicable), its methods of keeping custodial records, and its
security and data protection practices;
(ii) whether the Eligible Foreign Custodian has the financial
strength to provide reasonable care for Foreign Assets;
(iii) the Eligible Foreign Custodian's general reputation and
standing and, in the case of a foreign securities depository
or clearing agency which is not a Mandatory Securities
Depository, the foreign securities depository's or clearing
agency's operating history and the number of participants in
the foreign securities depository or clearing agency; and
(iv) whether the Fund will have jurisdiction over and be able to
enforce judgments against the Eligible Foreign Custodian, such
as by virtue of the existence of any offices of the Eligible
Foreign Custodian in the United States or the Eligible Foreign
Custodian's consent to service of process in the United
States.
3.4.2. Contracts With Eligible Foreign Custodians. The Foreign Custody
Manager shall determine that the contract (or the rules or established practices
or procedures in the case of an Eligible Foreign Custodian that is a foreign
securities depository or clearing agency) governing the foreign custody
arrangements with each Eligible Foreign Custodian selected by the Foreign
Custody Manager will provide reasonable care for the Foreign Assets held by that
Eligible Foreign Custodian based on the standards applicable to custodians in
the particular country. Each such contract shall include provisions that
provide:
(i) for indemnification or insurance arrangements (or any
combination of the foregoing) such that each Portfolio will be
adequately protected against the risk of loss of the Foreign
Assets held in accordance with such contract;
(ii) that the Foreign Assets will not be subject to any right,
security interest, or lien or claim of any kind in favor of
the Eligible Foreign Custodian or its creditors except a claim
of payment for their safe custody or administration or, in the
case of cash deposits, liens or rights in favor of creditors
of the Eligible Foreign Custodian arising under bankruptcy,
insolvency, or similar laws;
<PAGE>
(iii) that beneficial ownership of the Foreign Assets will be freely
transferable without the payment of money or value other than
for safe custody or administration;
(iv) that adequate records will be maintained identifying the
Foreign Assets as belonging to the applicable Portfolio or as
being held by a third party for the benefit of such Portfolio;
(v) that the independent public accountants for each Portfolio
will be given access to those records or confirmation of the
contents of those records; and
(vi) that the Fund will receive periodic reports with respect to
the safekeeping of the Foreign Assets, including, but not
limited to, notification of any transfer of the Foreign Assets
to or from a Portfolio's account or a third party account
containing the Foreign Assets held for the benefit of the
Portfolio,
or, in lieu of any or all of the provisions set forth in (i) through (vi) above,
such other provisions that the Foreign Custody Manager determines will provide,
in their entirety, the same or greater level of care and protection for the
Foreign Assets as the provisions set forth in (i) through (vi) above, in their
entirety.
3.4.3. Monitoring. In each case in which the Foreign Custody Manager
maintains Foreign Assets with an Eligible Foreign Custodian selected by the
Foreign Custody Manager, the Foreign Custody Manager shall establish a system to
monitor (i) the appropriateness of maintaining the Foreign Assets with such
Eligible Foreign Custodian and (ii) the contract governing the custody
arrangements established by the Foreign Custody Manager with the Eligible
Foreign Custodian. In the event the Foreign Custody Manager determines that the
custody arrangements with an Eligible Foreign Custodian it has selected are no
longer appropriate, the Foreign Custody Manager shall notify the Board of
Trustees in accordance with Section 3.7 hereunder.
SECTION 3.5. GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For
purposes of this Section 3, the Board of Trustees shall be deemed to have
considered and determined to accept such Country Risk as is incurred by placing
and maintaining the Foreign Assets in each country for which the Custodian is
serving as Foreign Custody Manager of the Portfolios. The Fund, on behalf of the
Portfolios, and the Custodian each expressly acknowledge that the Foreign
Custody Manager shall not be delegated any responsibilities under this Section 3
with respect to Mandatory Securities Depositories.
<PAGE>
SECTION 3.6. STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF THE
PORTFOLIOS. In performing the responsibilities delegated to it, the Foreign
Custody Manager agrees to exercise reasonable care, prudence and diligence such
as a person having responsibility for the safekeeping of assets of management
investment companies registered under the 1940 Act would exercise.
SECTION 3.7. REPORTING REQUIREMENTS. The Foreign Custody Manager shall
report the withdrawal of the Foreign Assets from an Eligible Foreign Custodian
and the placement of such Foreign Assets with another Eligible Foreign Custodian
by providing to the Board of Trustees amended Schedules A or B at the end of the
calendar quarter in which an amendment to either Schedule has occurred. The
Foreign Custody Manager shall make written reports notifying the Board of
Trustees of any other material change in the foreign custody arrangements of the
Portfolios described in this Article 3 after the occurrence of the material
change.
SECTION 3.8. REPRESENTATIONS WITH RESPECT TO RULE 17f-5. The Foreign
Custody Manager represents to the Fund that it is a U.S. Bank as defined in
section (a)(7) of Rule 17f-5. The Fund represents to the Custodian that the
Board of Trustees has determined that it is reasonable for the Board of Trustees
to rely on the Custodian to perform the responsibilities delegated pursuant to
this Agreement to the Custodian as the Foreign Custody Manager of the
Portfolios.
SECTION 3.9. EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN
CUSTODY MANAGER. The Board of Trustees' delegation to the Custodian as Foreign
Custody Manager of the Portfolios shall be effective as of the date of execution
of this Agreement and shall remain in effect until terminated at any time,
without penalty, by written notice from the terminating party to the
non-terminating party. Termination will become effective thirty (30) days after
receipt by the non-terminating party of such notice. The provisions of Section
3.3 hereof shall govern the delegation to and termination of the Custodian as
Foreign Custody Manager of the Portfolios with respect to designated countries.
SECTION 4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE PORTFOLIOS
HELD OUTSIDE OF THE UNITED STATES
SECTION 4.1 DEFINITIONS. Capitalized terms in this Section 4 shall
-----------
have the following meanings:
"Foreign Securities System" means either a clearing agency or a securities
depository listed on Schedule A hereto or a Mandatory Securities Depository
listed on Schedule B hereto.
"Foreign Sub-Custodian" means a foreign banking institution serving as an
Eligible Foreign Custodian.
<PAGE>
SECTION 4.2. HOLDING SECURITIES. The Custodian shall identify on its
books as belonging to the Portfolios the foreign securities held by each Foreign
Sub-Custodian or Foreign Securities System. The Custodian may hold foreign
securities for all of its customers, including the Portfolios, with any Foreign
Sub-Custodian in an account that is identified as belonging to the Custodian for
the benefit of its customers, provided however, that (i) the records of the
Custodian with respect to foreign securities of the Portfolios which are
maintained in such account shall identify those securities as belonging to the
Portfolios and (ii) the Custodian shall require that securities so held by the
Foreign Sub-Custodian be held separately from any assets of such Foreign
Sub-Custodian or of other customers of such Foreign Sub-Custodian.
SECTION 4.3. FOREIGN SECURITIES SYSTEMS. Foreign securities shall be
maintained in a Foreign Securities System in a designated country only through
arrangements implemented by the Foreign Sub-Custodian in such country pursuant
to the terms of this Agreement.
SECTION 4.4. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1. Delivery of Foreign Securities. The Custodian or a Foreign
Sub-Custodian shall release and deliver foreign securities of the Portfolios
held by such Foreign Sub-Custodian, or in a Foreign Securities System account,
only upon receipt of Proper Instructions, which may be continuing instructions
when deemed appropriate by the parties, and only in the following cases:
(i) upon the sale of such foreign securities for the Portfolios in
accordance with reasonable market practice in the country
where such foreign securities are held or traded, including,
without limitation: (A) delivery against expectation of
receiving later payment; or (B) in the case of a sale effected
through a Foreign Securities System in accordance with the
rules governing the operation of the Foreign Securities
System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other
similar offers for foreign securities of the Portfolios;
(iv) to the issuer thereof or its agent when such foreign
securities are called, redeemed, retired or otherwise become
payable;
(v) to the issuer thereof, or its agent, for transfer into the
name of the Custodian (or the name of the respective Foreign
Sub-Custodian or of any nominee of the Custodian or such
Foreign Sub-Custodian) or for exchange for a different number
of bonds, certificates or other evidence representing the same
aggregate face amount or number of units;
<PAGE>
(vi) to brokers, clearing banks or other clearing agents for
examination or trade execution in accordance with market
custom; provided that in any such case the Foreign
Sub-Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from
the Foreign Sub-Custodian's own negligence or willful
misconduct;
(vii) for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
(viii) in the case of warrants, rights or similar foreign securities,
the surrender thereof in the exercise of such warrants, rights
or similar securities or the surrender of interim receipts or
temporary securities for definitive securities;
(ix) or delivery as security in connection with any borrowing by
the Portfolios requiring a pledge of assets by the Portfolios;
(x) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii) for any other proper trust purpose, but only upon receipt of,
in addition to Proper Instructions, a copy of a Certified
Resolution specifying the foreign securities to be delivered,
setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper trust purpose, and
naming the person or persons to whom delivery of such
securities shall be made.
4.4.2. Payment of Portfolio Monies. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed appropriate by
the parties, the Custodian shall pay out, or direct the respective Foreign
Sub-Custodian or the respective Foreign Securities System to pay out, monies of
a Portfolio in the following cases only:
(i) upon the purchase of foreign securities for the Portfolio,
unless otherwise directed by Proper Instructions, by (A)
delivering money to the seller thereof or to a dealer therefor
(or an agent for such seller or dealer) against expectation of
receiving later delivery of such foreign securities; or (B) in
the case of a purchase effected through a Foreign Securities
System, in accordance with the rules governing the operation
of such Foreign Securities System;
<PAGE>
(ii) in connection with the conversion, exchange or surrender of
foreign securities of the Portfolio;
(iii) for the payment of any expense or liability of the Portfolio,
including but not limited to the following payments: interest,
taxes, investment advisory fees, transfer agency fees, fees
under this Agreement, legal fees, accounting fees, and other
operating expenses;
(iv) for the purchase or sale of foreign exchange or foreign
exchange contracts for the Portfolio, including transactions
executed with or through the Custodian or its Foreign
Sub-Custodians;
(v) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(vii) in connection with the borrowing or lending of foreign
securities; and
(viii) for any other proper trust purpose, but only upon receipt of,
in addition to Proper Instructions, a copy of a Certified
Resolution specifying the amount of such payment, setting
forth the purpose for which such payment is to be made,
declaring such purpose to be a proper trust purpose, and
naming the person or persons to whom such payment is to be
made.
4.4.3. Market Conditions. Notwithstanding any provision of this
Agreement to the contrary, settlement and payment for Foreign Assets received
for the account of the Portfolios and delivery of Foreign Assets maintained for
the account of the Portfolios may be effected in accordance with the customary
established securities trading or processing practices and procedures in the
country or market in which the transaction occurs, including, without
limitation, delivering Foreign Assets to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) with the expectation of
receiving later payment for such Foreign Assets from such purchaser or dealer.
SECTION 4.5. REGISTRATION OF FOREIGN SECURITIES. The foreign securities
maintained in the custody of a Foreign Custodian (other than bearer securities)
shall be registered in the name of the applicable Portfolio or in the name of
the Custodian or in the name of any Foreign Sub-Custodian or in the name of any
nominee of the foregoing, and the Fund on behalf of such Portfolio agrees to
hold any such nominee harmless from any liability as a holder of record of such
foreign securities. The Custodian or a Foreign Sub-Custodian shall not be
obligated to accept securities on behalf of a Portfolio under the terms of this
Agreement unless the form of such securities and the manner in which they are
delivered are in accordance with reasonable market practice.
<PAGE>
SECTION 4.6. BANK ACCOUNTS. A bank account or bank accounts opened and
maintained outside the United States on behalf of a Portfolio with a Foreign
Sub-Custodian shall be subject only to draft or order by the Custodian or such
Foreign Sub-Custodian, acting pursuant to the terms of this Agreement to hold
cash received by or from or for the account of the Portfolio.
SECTION 4.7. COLLECTION OF INCOME. The Custodian shall use reasonable
endeavors to collect all income and other payments in due course with respect to
the Foreign Assets held hereunder to which the Portfolios shall be entitled and
shall credit such income, as collected, to the applicable Portfolio. In the
event that extraordinary measures are required to collect such income, the Fund
and the Custodian shall consult as to such measures and as to the compensation
and expenses of the Custodian relating to such measures.
SECTION 4.8. PROXIES. The Custodian will generally with respect to the
foreign securities held under this Section 4 use its reasonable endeavors to
facilitate the exercise of voting and other shareholder proxy rights, subject
always to the laws, regulations and practical constraints that may exist in the
country where such securities are issued. The Fund acknowledges that local
conditions, including lack of regulation, onerous procedural obligations, lack
of notice and other factors may have the effect of severely limiting the ability
of the Fund to exercise shareholder rights.
SECTION 4.9. COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The
Custodian shall transmit promptly to the Fund written information (including,
without limitation, pendency of calls and maturities of foreign securities and
expirations of rights in connection therewith) received by the Custodian via the
Foreign Sub-Custodians from issuers of the foreign securities being held for the
account of the Portfolios. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Fund written information so received by
the Custodian from issuers of the foreign securities whose tender or exchange is
sought or from the party (or its agents) making the tender or exchange offer.
The Custodian shall not be liable for any untimely exercise of any tender,
exchange or other right or power in connection with foreign securities or other
property of the Portfolios at any time held by it unless (i) the Custodian or
the respective Foreign Sub-Custodian is in actual possession of such foreign
securities or property and (ii) the Custodian receives Proper Instructions with
regard to the exercise of any such right or power, and both (i) and (ii) occur
at least three (3) business days prior to the date on which such right or power
is to be exercised.
<PAGE>
SECTION 4.10. LIABILITY OF FOREIGN SUB-CUSTODIANS AND FOREIGN
SECURITIES SYSTEMS. Each agreement pursuant to which the Custodian employs as a
Foreign Sub-Custodian shall, to the extent possible, require the Foreign
Sub-Custodian to exercise reasonable care in the performance of its duties and,
to the extent possible, to indemnify, and hold harmless, the Custodian from and
against any loss, damage, cost, expense, liability or claim arising out of or in
connection with the Foreign Sub-Custodian's performance of such obligations. At
the Fund's election, the Portfolios shall be entitled to be subrogated to the
rights of the Custodian with respect to any claims against a Foreign
Sub-Custodian as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Portfolios have not been made
whole for any such loss, damage, cost, expense, liability or claim.
SECTION 4.11. TAX LAW. The Custodian shall have no responsibility or
liability for any obligations now or hereafter imposed on the Fund, the
Portfolios or the Custodian as custodian of the Portfolios by the tax law of the
United States or of any state or political subdivision thereof. It shall be the
responsibility of the Fund to notify the Custodian of the obligations imposed on
the Fund with respect to the Portfolios or the Custodian as custodian of the
Portfolios by the tax law of countries other than those mentioned in the above
sentence, including responsibility for withholding and other taxes, assessments
or other governmental charges, certifications and governmental reporting. The
sole responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with respect to any claim for exemption or
refund under the tax law of countries for which the Fund has provided such
information.
SECTION 4.12. CONFLICT. If the Custodian is delegated the
responsibilities of Foreign Custody Manager pursuant to the terms of Section 3
hereof, in the event of any conflict between the provisions of Sections 3 and 4
hereof, the provisions of Section 3 shall prevail.
SECTION 5. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent and deposit into the account of the appropriate Portfolio
such payments as are received for Shares thereof issued or sold from time to
time by the Fund. The Custodian will provide timely notification to the Fund on
behalf of each such Portfolio and the Transfer Agent of any receipt by it of
payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Fund's Declaration of Trust and any applicable votes of the
Board of Trustees pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares, the Custodian is authorized upon receipt of instructions
from the Transfer Agent to wire funds to or through a
<PAGE>
commercial bank designated by the redeeming shareholders. In connection with the
redemption or repurchase of Shares, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
SECTION 6. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Agreement means a writing
signed or initialed by one or more person or persons as the Board of Trustees
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees accompanied
by a detailed description of procedures approved by the Board of Trustees,
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board of Trustees and
the Custodian are satisfied that such procedures afford adequate safeguards for
the Portfolios' assets. For purposes of this Section, Proper Instructions shall
include instructions received by the Custodian pursuant to any three - party
agreement which requires a segregated asset account in accordance with Section
2.10.
SECTION 7. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Agreement, provided that all such payments
shall be accounted for to the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Portfolio except as otherwise directed by the Board of
Trustees.
<PAGE>
SECTION 8. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the Fund.
The Custodian may receive and accept a Certified Resolution as conclusive
evidence (a) of the authority of any person to act in accordance with such
resolution or (b) of any determination or of any action by the Board of Trustees
pursuant to the Fund's Declaration of Trust as described in such resolution, and
such resolution may be considered as in full force and effect until receipt by
the Custodian of written notice to the contrary.
SECTION 9. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees to keep the books of
account of each Portfolio and/or compute the net asset value per Share of the
outstanding Shares or, if directed in writing to do so by the Fund on behalf of
the Portfolio, shall itself keep such books of account and/or compute such net
asset value per Share. If so directed, the Custodian shall also calculate daily
the net income of the Portfolio as described in the Prospectus and shall advise
the Fund and the Transfer Agent daily of the total amounts of such net income
and, if instructed in writing by an officer of the Fund to do so, shall advise
the Transfer Agent periodically of the division of such net income among its
various components. The calculations of the net asset value per Share and the
daily income of each Portfolio shall be made at the time or times described from
time to time in the Prospectus.
SECTION 10. RECORDS
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Agreement in
such manner as will meet the obligations of the Fund under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the SEC. The Custodian shall, at the Fund's request, supply the Fund with a
tabulation of securities owned by each Portfolio and held by the Custodian and
shall, when requested to do so by the Fund and for such compensation as shall be
agreed upon between the Fund and the Custodian, include certificate numbers in
such tabulations.
SECTION 11. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
<PAGE>
The Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund's independent accountants with respect
to its activities hereunder in connection with the preparation of the Fund's
Form N-1A, and Form N-SAR or other annual reports to the SEC and with respect to
any other requirements thereof.
SECTION 12. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a U.S. Securities System or a Foreign Securities System (collectively
referred to herein as the "Securities Systems"), relating to the services
provided by the Custodian under this Agreement; such reports, shall be of
sufficient scope and in sufficient detail, as may reasonably be required by the
Fund to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
SECTION 13. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund on behalf of each applicable Portfolio and the Custodian.
SECTION 14. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Agreement,
but shall be kept indemnified by and shall be without liability to the Fund for
any action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice. The Custodian shall be
without liability to the Fund and the Portfolios for any loss, liability, claim
or expense resulting from or caused by anything which is (A) part of Country
Risk (as defined in Section 3 hereof), including without limitation
nationalization, expropriation, currency restrictions, or acts of war,
revolution, riots or terrorism,
<PAGE>
or (B) part of the "prevailing country risk" of the Portfolios, as such term is
used in SEC Release Nos. IC-22658; IS-1080 (May 12, 1997) or as such term or
other similar terms are now or in the future interpreted by the SEC or by the
staff of the Division of Investment Management thereof.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, work
stoppages, natural disasters, or other similar events or acts; (ii) errors by
the Fund or the Investment Advisor in their instructions to the Custodian
provided such instructions have been in accordance with this Agreement; (iii)
the insolvency of or acts or omissions by a Securities System; (iv) any delay or
failure of any broker, agent or intermediary, central bank or other commercially
prevalent payment or clearing system to deliver to the Custodian's sub-custodian
or agent securities purchased or in the remittance or payment made in connection
with securities sold; (v) any delay or failure of any company, corporation, or
other body in charge of registering or transferring securities in the name of
the Custodian, the Fund, the Custodian's sub-custodians, nominees or agents or
any consequential losses arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
any disorder in market infrastructure with respect to any particular security or
Securities System; and (vii) changes to any existing, or any provision of any
future, law or regulation or order of the United States of America, or any state
thereof, or any other country, or political subdivision thereof or of any court
of competent jurisdiction.
The Custodian shall be liable for the acts or omissions of a Foreign
Sub-Custodian (as defined in Section 4 hereof) to the same extent as set forth
with respect to sub-custodians generally in this Agreement.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement) or
in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the
<PAGE>
performance of this Agreement, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Portfolio shall
be security therefor and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
SECTION 15. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Agreement shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than sixty (60) days after the date of such delivery or mailing; provided,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.8 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Trustees has approved the
initial use of a particular Securities System by such Portfolio, as required by
Rule 17f-4 under the 1940 Act and that the Custodian shall not with respect to a
Portfolio act under Section 2.9 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Trustees has approved the initial use of the Direct Paper System by such
Portfolio; provided further, however, that the Fund shall not amend or terminate
this Agreement in contravention of any applicable federal or state regulations,
or any provision of the Fund's Declaration of Trust, and further provided, that
the Fund on behalf of one or more of the Portfolios may at any time by action of
its Board of Trustees (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Agreement, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
SECTION 16. SUCCESSOR CUSTODIAN
If a successor custodian for one or more Portfolios shall be appointed
by the Board of Trustees, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed and in the
form for transfer, all securities of each applicable Portfolio then held by it
hereunder and shall transfer to an account of the successor custodian all of the
securities of each such Portfolio held in a Securities System.
<PAGE>
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a Certified Resolution, deliver at the office of
the Custodian and transfer such securities, funds and other properties in
accordance with such resolution.
In the event that no written order designating a successor custodian or
Certified Resolution shall have been delivered to the Custodian on or before the
date when such termination shall become effective, then the Custodian shall have
the right to deliver to a bank or trust company, which is a "bank" as defined in
the 1940 Act, doing business in Boston, Massachusetts, or New York, New York, of
its own selection, having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian on behalf of each
applicable Portfolio and all instruments held by the Custodian relative thereto
and all other property held by it under this Agreement on behalf of each
applicable Portfolio, and to transfer to an account of such successor custodian
all of the securities of each such Portfolio held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Agreement.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the Certified Resolution to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such securities, funds
and other properties and the provisions of this Agreement relating to the duties
and obligations of the Custodian shall remain in full force and effect.
SECTION 17. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Agreement, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Agreement as may in their joint opinion be consistent with the general tenor of
this Agreement. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Fund's Declaration of
Trust. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Agreement.
SECTION 18. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to those set forth on Schedule C with respect to which it desires to
have the Custodian render services as
<PAGE>
custodian under the terms hereof, it shall so notify the Custodian in writing,
and if the Custodian agrees in writing to provide such services, such series of
Shares shall become a Portfolio hereunder.
SECTION 19. MASSACHUSETTS LAW TO APPLY
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
SECTION 20. PRIOR AGREEMENTS
This Agreement supersedes and terminates, as of the date hereof, all
prior Agreements between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
SECTION 21. NOTICES.
Any notice, instruction or other instrument required to be given
hereunder may be delivered in person to the offices of the parties as set forth
herein during normal business hours or delivered prepaid registered mail or by
telex, cable or telecopy to the parties at the following addresses or such other
addresses as may be notified by any party from time to time.
To the Fund: EVERGREEN SELECT FIXED INCOME TRUST
c/o First Union Corporation - Legal Division
200 Berkeley Street
Boston, Massachusetts 02116-5034
Attention: Terrence J. Cullen, Esq.
Telephone: 617-210-3200
Telecopy: 617-210-3468
To the Custodian: STATE STREET BANK AND TRUST COMPANY
One Heritage Drive, 3rd Floor South
North Quincy, Massachusetts 02171
Attention: Ronald F. Mauriello
Telephone: 617-985-1891
Telecopy: 617-537-5203
Such notice, instruction or other instrument shall be deemed to have
been served in the case of a registered letter at the expiration of five
business days after posting, in the case of cable twenty-four hours after
dispatch and, in the case of telex, immediately on dispatch and if
<PAGE>
delivered outside normal business hours it shall be deemed to have been received
at the next time after delivery when normal business hours commence and in the
case of cable, telex or telecopy on the business day after the receipt thereof.
Evidence that the notice was properly addressed, stamped and put into the post
shall be conclusive evidence of posting.
SECTION 22. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
SECTION 23. SHAREHOLDER COMMUNICATIONS ELECTION
SEC Rule 14b-2 requires banks which hold securities for the account of
customers to respond to requests by issuers of securities for the names,
addresses and holdings of beneficial owners of securities of that issuer held by
the bank unless the beneficial owner has expressly objected to disclosure of
this information. In order to comply with the rule, the Custodian needs the Fund
to indicate whether it authorizes the Custodian to provide the Fund's name,
address, and share position to requesting companies whose securities the Fund
owns. If the Fund tells the Custodian "no", the Custodian will not provide this
information to requesting companies. If the Fund tells the Custodian "yes" or
does not check either "yes" or "no" below, the Custodian is required by the rule
to treat the Fund as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established by the Fund.
For the Fund's protection, the Rule prohibits the requesting company from using
the Fund's name and address for any purpose other than corporate communications.
Please indicate below whether the Fund consents or objects by checking one of
the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name, address,
and share positions.
NO [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of September 18, 1997.
EVERGREEN SELECT FIXED INCOME TRUST FUND SIGNATURE ATTESTED TO BY:
By: /s/ John J. Pileggi By: /s/ George O. Martinez
--------------------------- ---------------------------
Name: John J. Pileggi Name: George O. Martinez
Title: President Title: Secretary
STATE STREET BANK AND TRUST COMPANY SIGNATURE ATTESTED TO BY:
By: /s/ Ronald E. Logue By: /s/ Glenn Ciotti
--------------------------- ---------------------------
Name: Ronald E. Logue Name: Glenn Ciotti
Title: Executive Vice President Title: VP and Assoc. Counsel
<PAGE>
SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Non-Mandatory
Country Subcustodian Depositories
- --------- ------------ -------------
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria Erste Bank der oesterreichischen --
Sparkasen AG
Bahrain The British Bank of the Middle East --
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank --
Belgium Generale Bank --
Bermuda The Bank of Bermuda Limited --
Bolivia Banco Boliviano Americano --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
Canada Canada Trustco Mortgage Company --
Chile Citibank, N.A. --
People's Republic The Hongkong and Shanghai --
of China Banking Corporation Limited,
Shanghai and Shenzhen branches
Colombia Cititrust Colombia S.A. --
Sociedad Fiduciaria
Croatia Privredana banka Zagreb d.d --
Cyprus Barclays Bank PLC --
Cyprus Offshore Banking Unit
Czech Republic Ceskoslovenska Obchodni --
Banka A.S.
Denmark Den Danske Bank --
Ecuador Citibank, N.A. --
Egypt National Bank of Egypt --
Estonia Hansabank --
Finland Merita Bank Ltd. --
France Banque Paribas --
Germany Dresdner Bank AG --
Ghana Barclays Bank of Ghana Limited --
Greece National Bank of Greece S.A Bank of Greece
Hong Kong Standard Chartered Bank --
Hungary Citibank Budapest Rt. --
India Deutsche Bank AG; --
The Hongkong and Shanghai
Banking Corporation Limited
Indonesia Standard Chartered Bank --
Ireland Bank of Ireland --
Israel Bank Hapoalim B.M. --
Italy Banque Paribas --
Ivory Coast Societe Generale de Banques --
en Cote d'Ivoire
Jamaica Scotiabank Trust and Merchant Bank --
Japan The Daiwa Bank, Limited; Japan Securities
The Fuji Bank, Limited Depository
Center;
Jordan The British Bank of the Middle East --
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Kenya Barclays Bank of Kenya Limited --
Republic of Korea The Hongkong and Shanghai Banking --
Corporation Limited
Latvia Hansabank --
Lebanon The British Bank of the Middle East Custodian and
(as delegate of the Hongkong and Clearing Center
Shanghai Banking Corporation Limited) of Financial
Instruments
for Lebanon
(MIDCLEAR)
S.A.L.;
Lithuania Vilniaus Bankas AB --
Malaysia Standard Chartered Bank --
Malaysia Berhad
Mauritius The Hongkong and Shanghai --
Banking Corporation Limited
Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa -
The Netherlands MeesPierson N.V. --
New Zealand ANZ Banking Group --
(New Zealand) Limited
Norway Christiania Bank og --
Kreditkasse
Oman The British Bank of the Middle East --
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank AG --
Peru Citibank, N.A. --
Philippines Standard Chartered Bank --
Poland Citibank Poland S.A. --
Portugal Banco Comercial Portugues --
Romania ING Bank, N.V. --
Russia Credit Suisse First Boston, Zurich --
via Credit Suisse First Boston
Limited, Moscow
Singapore The Development Bank --
of Singapore Ltd.
Slovak Republic Ceskoslovenska Obchodna -
Banka A.S.
Slovenia Banka Creditanstalt d.d. --
South Africa Standard Bank of South Africa Limited --
Spain Banco Santander, S.A. --
Sri Lanka The Hongkong and Shanghai --
Banking Corporation Limited
Swaziland Barclays Bank of Swaziland Limited --
Sweden Skandinaviska Enskilda Banken --
Switzerland Union Bank of Switzerland --
Taiwan - R.O.C. Central Trust of China --
Thailand Standard Chartered Bank --
Trinidad & Tobago Republic Bank Ltd. --
Tunisia Banque Internationale Arabe de Tunisie --
Turkey Citibank, N.A. --
United Kingdom State Street Bank and Trust --
Uruguay Citibank, N.A. --
Venezuela Citibank, N.A. --
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
Euroclear (The Euroclear System)
Cedel (Cedel Bank, societe anonyme)
INTERSETTLE (for EASDAQ Securities)
<PAGE>
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
Country Mandatory Depositories
- ---------- ------------------------------------------
Argentina -Caja de Valores S.A.;
-CRYL
Australia -Austraclear Limited;
-Reserve Bank Information and
Transfer System
Austria -Oesterreichische Kontrollbank AG
(Wertpapiersammelbank Division)
Belgium -Caisse Interprofessionnelle de Depots et
de Virements de Titres S.A.;
-Banque Nationale de Belgique
Brazil - Camara de Liquidacao de Sao Paulo, (Calispa);
-Bolsa de Valores de Rio de Janeiro
- All SSB clients presently use Calispa
-Central de Custodia e de Liquidacao Financeira
de Titulos
-Banco Central do Brasil,
Systema Especial de Liquidacao e
Custodia
Bulgaria - Central Depository AD
Canada -The Canadian Depository
for Securities Limited; West Canada
Depository Trust Company [depositories linked]
People's Republic -Shanghai Securities Central Clearing and
of China Registration Corporation;
-Shenzhen Securities Central Clearing Co., Ltd.
Croatia Ministry of Finance
Czech Republic --Stredisko cennych papiru;
-Czech National Bank
Denmark -Vaerdipapircentralen - The Danish
Securities Center
Egypt -Misr Company for Clearing, Settlement,
and Central Depository
Estonia - Eesti Vaartpaberite Keskdepositooruim
Finland -The Finnish Central Securities
Depository
France -Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres;
-Banque de France,
Saturne System
Germany -The Deutscher Kassenverein AG
Greece -The Central Securities Depository
(Apothetirion Titlon A.E.);
Hong Kong -The Central Clearing and
Settlement System;
-The Central Money Markets Unit
Hungary -The Central Depository and Clearing
House (Budapest) Ltd.
[Mandatory for Gov't Bonds only;
SSB does not use for other securities]
India The National Securities Depository Limited
Indonesia -Bank of Indonesia
Ireland -The Central Bank of Ireland,
The Gilt Settlement Office
Israel -The Clearing House of the
Tel Aviv Stock Exchange;
-Bank of Israel
Italy -Monte Titoli S.p.A.;
-Banca d'Italia
Japan -Bank of Japan Net System
Republic of Korea -Korea Securities Depository Corporation
Latvia - The Latvian Central Depository
Lebanon -The Central Bank of Lebanon
Lithuania - The Central Securities Depository of Lithuania
Malaysia -Malaysian Central Depository Sdn.
Bhd.;
-Bank Negara Malaysia,
Scripless Securities Trading and Safekeeping
Systems
Mauritius -The Central Depository & Settlement
Co. Ltd.
Mexico -S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito de
Valores);
The Netherlands -Nederlands Centraal Instituut voor
Giraal Effectenverkeer B.V. ("NECIGEF");
New Zealand -New Zealand Central Securities
Depository Limited
Norway -Verdipapirsentralen - The Norwegian
Registry of Securities
Oman -Muscat Securities Market
Peru -Caja de Valores y Liquidaciones
(CAVALI, S.A.)
Philippines -The Philippines Central Depository Inc.
-The Book-Entry-System of Bangko
Sentral ng Pilipinas;
-The Registry of Scripless Securities of the
Bureau of the Treasury
Poland -The National Depository of Securities
(Krajowy Depozyt Papierow Wartos'ciowych);
-National Bank of Poland
Portugal -Central de Valores Mobiliarios
Romania -National Securities Clearing, Settlement and
Depository Co.;
-Bucharest Stock Exchange;
-National Bank of Romania
Singapore -The Central Depository (Pvt.)
Limited;
-Monetary Authority of Singapore
Slovak Republic -Stredisko Cennych Papierov;
-National Bank of Slovakia
Slovenia - Klirinsko Depotna Bruzba
South Africa -The Central Depository Limited
Spain -Servicio de Compensacion y
Liquidacion de Valores, S.A.;
-Banco de Espana,
Anotaciones en Cuenta
Sri Lanka -Central Depository System
(Pvt) Limited
Sweden -Vardepapperscentralen VPC AB -
The Swedish Central Securities Depository
Switzerland -Schweizerische Effekten - Giro AG;
Taiwan - R.O.C. -The Taiwan Securities Central
Depository Company, Ltd.
Thailand -Thailand Securities Depository
Company Limited
Tunisia -STICODEVAM;
-Central Bank of Tunisia;
-Tunisian Treasury
Turkey -Takas ve Saklama Bankasi A.S.;
-Central Bank of Turkey
United Kingdom -The Bank of England,
The Central Gilts Office;
The Central Moneymarkets Office
Uruguay -Central Bank of Uruguay
Zambia -Lusaka Central Depository
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
<PAGE>
SCHEDULE C
Pursuant to the custodian agreement between Evergreen Select Fixed Income Trust
(the "Fund") and State Street Bank and Trust Company dated September 18, 1997
(the "Agreement"), as of September 18, 1997, the Fund had made the following
Portfolios (as such term is defined in the Agreement) subject to the Agreement:
Evergreen Select Limited Duration Fund
Evergreen Select Fixed Income Fund
Evergreen Select Income Plus Fund
Evergreen Select Intermediate Tax Exempt Bond Fund
Evergreen Select Core Bond Fund
Evergreen Select Intermediate Bond Fund
Evergreen Select Adjustable Rate Fund
ADMINISTRATIVE SERVICES AGREEMENT
EVERGREEN SELECT FIXED INCOME TRUST
This Administrative Services Agreement is made as of this 18th day of
September, 1997 between Evergreen Select Fixed Income Trust, a Delaware business
trust (herein called the "Trust"), and Evergreen Investment Services, Inc., a
Delaware corporation (herein called "EIS").
W I T N E S S E T H:
WHEREAS, the Trust is a Delaware business trust consisting of one or
more portfolios which operates as an open-end management investment company and
is so registered under the Investment Company Act of 1940; and
WHEREAS, the Trust desires to retain EIS as its Administrator to
provide it with administrative services, and EIS is willing to render such
services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR. The Trust hereby appoints EIS as
administrator of the Trust and each of its portfolios listed on SCHEDULE A
attached hereto on the terms and conditions set forth in this Agreement; and EIS
hereby accepts such appointment and agrees to perform the services and duties
set forth in Section 2 of this Agreement in consideration of the compensation
provided for in Section 4 hereof.
2. SERVICES AND DUTIES. As Administrator, and subject to the
supervision and control of the Trustees of the Trust, EIS will hereafter provide
facilities, equipment and personnel to carry out the following administrative
services for operation of the business and affairs of the Trust and each of its
portfolios:
(a) prepare, file and maintain the Trust's governing documents,
including the Declaration of Trust (which has previously been
prepared and filed), the By-laws, minutes of meetings of
Trustees and shareholders, and proxy statements for meetings
of shareholders;
(b) prepare and file with the Securities and Exchange Commission
and the appropriate state securities authorities the
registration statements for the Trust and the Trust's shares
and all amendments thereto, reports to regulatory authorities
and shareholders, prospectuses, proxy statements, and such
other documents as may be necessary or convenient to enable
the Trust to make a continuous offering of its shares;
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(c) prepare, negotiate and administer contracts on behalf of the
Trust with, among others, the Trust's distributor, custodian
and transfer agent;
(d) supervise the Trust's fund accounting agent in the maintenance
of the Trust's general ledger and in the preparation of the
Trust's financial statements, including oversight of expense
accruals and payments and the determination of the net asset
value of the Trust's assets and of the Trust's shares, and of
the declaration and payment of dividends and other
distributions to shareholders;
(e) calculate performance data of the Trust for dissemination to
information services covering the investment company industry;
(f) prepare and file the Trust's tax returns;
(g) examine and review the operations of the Trust's custodian and
transfer agent;
(h) coordinate the layout and printing of publicly disseminated
prospectuses and reports;
(i) prepare various shareholder reports;
(j) assist with the design, development and operation of new
portfolios of the Trust;
(k) coordinate shareholder meetings;
(l) provide general compliance services; and
(m) advise the Trust and its Trustees on matters concerning the Trust
and its affairs.
The foregoing, along with any additional services that EIS shall agree
in writing to perform for the Trust hereunder, shall hereafter be referred to as
"Administrative Services." Administrative Services shall not include any duties,
functions, or services to be performed for the Trust by the Trust's investment
adviser, distributor, custodian or transfer agent pursuant to their agreements
with the Trust.
3. EXPENSES. EIS shall be responsible for expenses incurred in
providing office space, equipment and personnel as may be necessary or
convenient to provide the Administrative Services to the Trust. The Trust shall
be responsible for all other expenses incurred by EIS on behalf of the Trust,
including without limitation postage and courier expenses, printing expenses,
registration fees, filing fees, fees of outside counsel and independent
auditors, insurance premiums, fees payable to Trustees who are not EIS
employees, and trade association dues.
4. COMPENSATION. For the Administrative Services provided, the
Trust hereby
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<PAGE>
agrees to pay and EIS hereby agrees to accept as full compensation for its
services rendered hereunder an administrative fee, calculated daily and payable
monthly, at an annual rate determined in accordance with the table below.
Aggregate Daily Net Assets of Funds
Administered by EIS for Which Any
Affiliate of First Union National Bank
Administrative Fee Serves as Investment Adviser
------------------ ----------------------------
.050% on the first $7 billion
.035% on the next $3 billion
.030% on the next $5 billion
.020% on the next $10 billion
.015% on the next $5 billion
.010% on assets in excess of $30 billion
Each portfolio of the Trust shall pay a portion of the administrative fee equal
to the rate determined above times that portfolio's average annual daily net
assets.
5. RESPONSIBILITY OF ADMINISTRATOR. EIS shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates, except a loss
resulting from wilful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. EIS shall be entitled to rely on
and may act upon advice of counsel (who may be counsel for the Trust) on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. Any person, even though also an officer,
director, partner, employee or agent of EIS, who may be or become an officer,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with the duties of EIS hereunder) to be
rendering such services to or acting solely for the Trust and not as an officer,
director, partner, employee or agent or one under the control or direction of
EIS even though paid by EIS.
6. DURATION AND TERMINATION.
(a) This Agreement shall shall continue in effect from year to
year thereafter, provided it is approved, at least annually,
by a vote of a majority of Trustees of the Trust including a
majority of the disinterested Trustees.
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(b) This Agreement may be terminated at any time, without payment
of any penalty, on sixty (60) day's prior written notice by a
vote of a majority of the Trust's Trustees or by EIS.
7. AMENDMENT. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which an enforcement of the change, waiver, discharge or
termination is sought.
8. NOTICES. Notices of any kind to be given to the Trust hereunder by
EIS shall be in writing and shall be duly given if delivered to the Trust and to
its investment adviser at the following address: First Union National Bank, One
First Union Center, Charlotte, North Carolina 28288. Notices of any kind to be
given to EIS hereunder by the Trust shall be in writing and shall be duly given
if delivered to EIS at 200 Berkeley Street, Boston, Massachusetts 02116.
Attention: Chief Administrative Officer.
9. LIMITATION OF LIABILITY. EIS is hereby expressly put on notice of
the limitation of liability as set forth in the Declaration of Trust and agrees
that the obligations pursuant to this Agreement of a particular portfolio and of
the Trust with respect to that particular portfolio be limited solely to the
assets of that particular portfolio, and EIS shall not seek satisfaction of any
such obligation from the assets of any other portfolio, the shareholders of any
portfolio, the Trustees, officers, employees or agents of the Trust, or any of
them.
10. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court or
regulatory agency decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. Subject to the provisions of Section 5
hereof, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by
Delaware law; provided, however, that nothing herein shall be construed in a
manner inconsistent with the Investment Company Act of 1940 or any rule or
regulation promulgated by the Securities and Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Administrative
Services Agreement to be executed by their officers designated below as of the
day and year first above written.
EVERGREEN SELECT FIXED INCOME TRUST
ATTEST:_______________________ By:_____________________________
Name:
Title:
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EVERGREEN INVESTMENT SERVICES, INC.
ATTEST:_______________________ By:_____________________________
Name:
Title:
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<PAGE>
SCHEDULE A
EVERGREENSELECT FIXED INCOME TRUST
Evergreen Select Limited Duration Fund
Evergreen Select Fixed Income Fund
Evergreen Select Income Plus Fund
Evergreen Select Intermediate Tax Exempt Bond Fund
Evergreen Select Core Bond Fund
MASTER TRANSFER AND RECORDKEEPING AGREEMENT
AGREEMENT made as of the 18th day of September, 1997 by and between
each of the parties listed on Exhibit A which is attached hereto and made a part
hereof (each a "Fund" or "Funds"), each for itself and not jointly, each having
its principal place of business at 200 Berkeley Street, Boston, Massachusetts
02116, and Evergreen Service Company ("ESC"), having its principal place of
business at 200 Berkeley Street, Boston, Massachusetts 02116.
W I T N E S S E T H T H A T
WHEREAS, each Fund desires ESC to perform certain services for the
Fund, and ESC is willing to perform such services.
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, each party, for itself and not jointly, agrees as follows:
1. ADDITIONAL PARTIES - Any other registered investment company for
which Keystone Investment Management Company (KIMCO), Evergreen Asset Management
Corp. ("Evergreen Asset"), First Union National Bank or one of its affiliates
serves as investment adviser, trustee or manager may become a Fund party to this
Agreement, for itself and not jointly, by giving written notice to ESC that it
has elected to become a Fund party hereto, to which election ESC has given its
written consent.
2. SERVICES - ESC shall perform for each Fund the services set forth on
Exhibit B which is attached hereto and made a part hereof. ESC shall also
perform for each Fund, without additional charge, any services which it
customarily performs in the ordinary course of business without additional
charge for the investment companies for which ESC acts as transfer agent,
dividend disbursing agent, or shareholder servicing and recordkeeping agent.
ESC shall perform such other services in addition to those set forth on
Exhibit B hereto as a Fund shall request in writing. Any of the services to be
performed hereunder, and the manner in which such services are to be performed,
shall be changed only pursuant to a written agreement signed by the parties
hereto.
ESC will undertake no activity which, in its judgment, will adversely
effect the performance of its obligations to a Fund under this Agreement.
3. FEES - Each Fund shall pay ESC for the services to be performed
pursuant to this Agreement in accordance with and in the manner set forth with
respect to such Fund on Exhibit C attached hereto and made a part hereof.
4. EFFECTIVE DATE - This Agreement shall become effective as of the
date set forth above and shall become effective as to each Fund which gives
written notice to ESC
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<PAGE>
pursuant to Paragraph 1 hereof that it elects to become a party hereto as of the
date of such notice.
5. TERM - This Agreement shall be in effect until terminated in
accordance with Section 17 hereof.
6. USE OF ESC'S NAME - The Funds will not use ESC's name in any sales
literature or other material in a manner not approved by ESC in writing before
such use, unless a similar use was previously approved. Notwithstanding the
foregoing, ESC hereby consents to all uses of ESC's name which merely refer in
accurate terms to ESC's appointments hereunder or which are required by the
Securities and Exchange Commission or a state securities commission, and
provided, further, that in no case will such approval be unreasonably withheld
or delayed.
7. STANDARD OF CARE - ESC shall at all times use its best efforts and
act in good faith and in a non-negligent manner in performing all services
pursuant to this Agreement.
8. UNCONTROLLABLE EVENTS - ESC shall not be liable for damage, loss of
data, delays or errors occurring by reason of circumstances beyond its control,
including, but not limited to, acts of civil or military authority, national
emergencies, fire, flood or catastrophe, acts of God, insurrection, war, riots,
or failure of transportation, communication or power supply. However, ESC shall
keep in a separate and safe place additional copies of all records required to
be maintained pursuant to this Agreement or additional tapes or discs necessary
to reproduce all such records. Furthermore, at all times during this Agreement,
ESC shall maintain an arrangement whereby ESC will have a backup computer
facility available for its use in providing the services required hereunder in
the event circumstances beyond ESC's control result in ESC not being able to
process the necessary work at its principal computer facility. ESC shall, from
time to time, upon request from any Fund provide written evidence and details of
its arrangement for obtaining the use of such a backup computer facility. ESC
shall use reasonable care to minimize the likelihood of all damage, loss of
data, delays and errors resulting from an uncontrollable event. Should such
damage, loss of data, delays or errors occur, ESC shall use its best efforts to
mitigate the effects of such occurrence. Representatives of each Fund shall be
entitled to inspect the ESC premises and operating capabilities within
reasonable business hours and upon reasonable notice to ESC.
9. INDEMNIFICATION - Each Fund shall indemnify and hold ESC, its
employees and agents harmless against any losses, claims, damages, judgments,
liabilities or expenses (including reasonable counsel fees and expenses)
resulting from (1) transactions which occurred prior to the date ESC began
serving as Transfer Agent to the Fund; (2) action taken or permitted by ESC in
good faith with due care and without negligence in reliance upon instructions
received from such Fund in accordance with Section 10 hereof or with respect to
a Fund upon the opinion of counsel for the Fund, as to anything arising in
connection with its performance under this Agreement; or (3) any act done or
suffered by ESC with respect to a Fund in good faith with due care and without
negligence in connection with its performance under this Agreement in reliance
upon any instruction, order, stock certificate or other instrument reasonably
believed by it to be
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<PAGE>
genuine and to bear the genuine signature of any person or persons authorized to
sign, countersign, or execute same, and which complies with all applicable
requirements of the Fund's current prospectus(es) and statement of additional
information, this Agreement and instructions and other governing documents
provided to ESC by the Fund. For purposes of this indemnification, it is
specifically agreed that if any instruction received by ESC in accordance with
Section 10 hereof differs from the requirements set forth in the Fund's current
prospectus(es) or statement of additional information then, with regard to that
difference, the instruction, order, stock certificate or other instrument relied
upon by ESC, ESC need only comply with such instruction (and not the current
prospectus(es) or statement of additional information).
In the event that ESC requests any Fund to indemnify or hold it
harmless hereunder, ESC shall use its best efforts to inform the Fund of the
relevant facts concerning the matter in question. ESC shall use reasonable care
to identify and promptly notify a Fund concerning any matter which ESC believes
may result in a claim for indemnification against such Fund, and shall notify
the Fund within seven days of notice to ESC of the filing of any suit or other
legal action or the institution by a government agency of any administrative
action or investigation against ESC which involves its duties under this
Agreement. Each Fund shall have the election of defending ESC against any claim
with respect to such Fund which may be the subject of indemnification or holding
it harmless hereunder. In the event a Fund so elects, it will so notify ESC.
Thereupon the Fund shall take over defense of the claim, and, if so requested by
a Fund, ESC shall incur no further legal or other expenses related thereto for
which it shall be entitled to indemnity or holding harmless hereunder; provided,
however, that nothing herein shall prevent ESC from retaining counsel to defend
any claim at ESC's own expense.
Except with the prior written consent of a Fund, ESC shall in no event
confess any claim or make any compromise in any matter in which such Fund will
be asked to indemnify or hold ESC harmless hereunder. ESC shall be without
liability to a Fund with respect to anything done or omitted to be done in
accordance with the terms of this Agreement or instructions properly received
pursuant hereto if done in good faith and without negligence or willful or
wanton misconduct. In no event shall ESC be liable for consequential damages,
lost profits, or other special damages, even if ESC has been informed of the
possibility of such damage or loss by the Fund or by third parties.
Notwithstanding the foregoing, ESC shall be liable to each Fund for
any damage or losses suffered by such Fund as a result of a delay or negligence
on the part of ESC in processing a purchase or liquidation transaction or in
making payment to a shareholder of such Fund; it being agreed that, without in
any way limiting ESC's liability for other transactions hereunder, that such
damages shall not be deemed to be consequential or special.
10. INSTRUCTIONS - ESC shall comply with all instructions issued by a
Fund in the form prescribed below which are permitted or required under Exhibit
B attached hereto. Whenever ESC takes action hereunder pursuant to instructions
from a Fund, ESC shall be entitled to rely upon such instructions only when such
instructions are signed by the President or Treasurer of
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<PAGE>
the Fund or by an individual designated in writing by the President or Treasurer
as a person authorized to give instructions hereunder. A Fund may waive the
requirement that all instructions be in writing, if such waiver defines the
occurrences not requiring written instruction, indicates the persons authorized
to give such non-written instructions, and is signed by one of the persons
pursuant to the immediately preceding sentence of this Section 10. In the event
ESC obtains a Fund's written waiver, it may rely on non-written instructions
received pursuant thereto.
11. CONFIDENTIALITY - ESC agrees to treat as confidential all records
and other information relative to a Fund and the Fund's shareholders. ESC, on
behalf of itself and its employees, agrees to keep confidential all such
information, except, after prior notification to and approval by a Fund (which
approval shall not be unreasonably withheld and may not be withheld where ESC
may be exposed to civil or criminal contempt proceedings) when requested to
divulge such information by duly constituted authorities or when requested by a
shareholder of a Fund seeking information about his own or an appropriately
related account.
12. REPORTS - ESC will furnish to each Fund and to properly authorized
auditors, examiners, investment companies, dealers, salesmen, insurance
companies, transfer agents, registrars, investors, and others designated by each
Fund in writing, such reports at such times as are prescribed for each service
in Exhibit B.
13. RIGHT OF OWNERSHIP - ESC agrees that all records and other data
received, computed, developed, used and/or stored pursuant to this Agreement are
the exclusive property of each respective Fund and that all such records and
other data will be furnished without additional charge to a Fund in available
machine readable data form immediately upon termination of this Agreement with
respect to such Fund for any reason whatsoever. Furthermore, upon a Fund's
request at any time or times while this Agreement is in effect, ESC shall
deliver to such Fund, at the Fund's expense, any or all of the data and records
held by ESC pursuant to this Agreement, in the form as requested by the Fund. On
the effective date of termination of this Agreement with respect to a Fund or,
if later, on the date a Fund ceases to use ESC's services, ESC will promptly
return to the Fund any and all records and other data belonging to the Fund free
of any claim or retention of rights by ESC.
14. REDEMPTION OF SHARES - The parties hereto agree that ESC shall
process liquidations, redemptions or repurchases of shares of each Fund, as the
agent for such Fund, in the manner described in the then current prospectus(es)
and statement of additional information for the Fund. Notwithstanding the
foregoing, ESC shall be liable for any losses, damages, claims or expenses
resulting from ESC's failure to obtain the appropriate signature guarantee with
regard to any redemption or transfer processed by ESC even if the current
prospectus(es) or statement of additional information authorizes ESC to waive
the requirement of a signature guarantee unless ESC is authorized in writing by
an appropriate party to waive such a requirement.
15. SUBCONTRACTING - Each Fund may require that ESC, or ESC may, with
the prior written consent of such Fund, subcontract with one or more of its
affiliated or other persons to
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perform all or part of its obligations hereunder, provided, however, that,
notwithstanding any such subcontract, ESC shall be fully responsible to each
Fund hereunder.
16. ASSIGNMENT - This Agreement and the rights and duties hereunder
shall not be assignable by ESC or any of the Fund parties hereto except by the
specific written consent of the other party.
17. TERMINATION - This Agreement may be terminated with respect to a
Fund on such date on which ESC has given such Fund not less than 180 days prior
written notice or on which such Fund has given ESC not less than 90 days prior
written notice. Upon such termination, ESC will use its best efforts to
cooperate and assist in accomplishing a timely, efficient and accurate
conversion to the person or firm which will provide the services described
hereunder. This Agreement may be terminated by any Fund without the payment of
any penalty, forfeiture, compulsory buyout amount or performance of any other
obligation which could deter termination; provided, however, that for the
purpose of this Section 17 any amount due under Section 3 of this Agreement
which is undisputed is not considered a penalty, forfeiture, compulsory buyout
amount or performance of any other obligation which could deter termination.
This Agreement may be terminated with respect to a Fund after written
notice to ESC by the Fund if there is a material breach or violation of this
Agreement or if ESC fails to perform any of its obligations under this Agreement
and the failure continues for more than 30 days after the Fund gives notice of
the failure to ESC or bankruptcy or insolvency proceedings of any nature are
instituted by or against ESC.
18. INSURANCE - ESC shall maintain throughout the term of this
Agreement a fidelity bond(s) in an amount in excess of the minimum amount
required to be obtained by the Funds which are parties hereto pursuant to Rule
17g-1 under the Investment Company Act of 1940 (the "1940 Act") covering the
acts of its officers, employees or agents in performing any and all of the
services required to be performed hereunder. ESC agrees to promptly notify each
Fund in writing of any material amendment or cancellation of such bond(s). ESC
shall at such times as the Fund may request, but at least once each year, notify
each Fund of any claims made pursuant to such bond(s).
19. AMENDMENT - This Agreement may be amended at any time by an
instrument in writing executed by both ESC and any Fund which is a party hereto,
or each of their respective successors, provided that any such amendment will
conform to the requirements set forth in the 1940 Act and the rules and
regulations thereunder.
20. NOTICE - Any notice shall be sufficiently given when sent by
registered or certified mail to any party at the address of such party set forth
above or at such other address as such party may from time to time specify in
writing to the other party.
21. SECTION HEADINGS - Section headings are included for convenience
only and are not
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to be used to construe or interpret this Agreement.
22. INTERPRETIVE PROVISIONS - In connection with the operation of this
Agreement, ESC and one or more of the Funds may agree with respect to such Funds
and ESC from time to time on such provisions interpretive of or in addition to
the provisions of this Agreement as may in their combined opinion be consistent
with the general tenor of this Agreement. Furthermore, ESC and such Fund(s) may
agree to add to, delete from or change the services set forth with respect to
such Fund(s) in Exhibit B of the Agreement. Each such interpretive or additional
provision, and each addition, deletion or change is to be signed by all parties
affected and annexed hereto, and no such provision, addition, deletion or change
shall contravene any applicable federal or state law or regulation and no such
provision, addition, deletion or change shall be deemed to be an amendment of
any provision of this Agreement with the exception of Exhibit B hereto.
23. GOVERNING LAW - This Agreement shall be governed by and its
provisions shall be construed in accordance with the laws of The Commonwealth of
Massachusetts.
24. DELAWARE BUSINESS TRUST - Each of the Funds listed on Exhibit A
attached hereto is a Delaware business trust established under a Declaration of
Trust. The obligations of such Funds are not personally binding upon, nor shall
recourse be had against the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Funds, but only the property
of such Funds shall be bound.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
EVERGREEN SERVICE COMPANY
By: /s/ Edward J. Falvey
------------------------
Edward J. Falvey
President
Evergreen Select Fixed Income Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Select Limited Duration Fund Evergreen Select Fixed Income
Fund Evergreen Select Income Plus Fund Evergreen Select Intermediate
Tax Exempt Bond Fund Evergreen Select Core Bond Fund Evergreen Select
Intermediate Bond Fund Evergreen Select Adjustable Rate Fund
Evergreen Select Equity Trust, a Delaware Business Trust consisting of the
following series:
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Evergreen Select Strategic Value Fund Evergreen Select Large Cap Blend
Fund Evergreen Select Strategic Growth Fund Evergreen Select Social
Principles Fund Evergreen Select Equity Income Fund Evergreen Select
Small Company Value Fund Evergreen Select Common Stock Fund Evergreen
Select Small Cap Growth Fund Evergreen Select Balanced Fund Evergreen
Select Diversified Value Fund
Evergreen Select Money Market Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Select 100% Treasury Money Market Fund
Evergreen Institutional Money Market Fund
Evergreen Institutional Tax Exempt Money Market Fund
Evergreen Institutional Treasury Money Market Fund
Evergreen Municipal Trust, a Delaware Business Trust consisting of the
following series:
Evergreen California Tax Free Fund Evergreen Connecticut Municipal Bond
Fund Evergreen Florida High Income Municipal Bond Fund Evergreen
Florida Municipal Bond Fund Evergreen Georgia Municipal Bond Fund
Evergreen Massachusetts Tax Free Fund Evergreen Missouri Tax Free Fund
Evergreen New Jersey Tax Free Income Fund Evergreen New York Tax Free
Fund Evergreen North Carolina Municipal Bond Fund Evergreen
Pennsylvania Tax Free Fund Evergreen South Carolina Municipal Bond Fund
Evergreen Virginia Municipal Bond Fund Evergreen High Grade Tax Free
Fund Evergreen Short-Intermediate Municipal Fund Evergreen Tax Free
Fund
Evergreen Equity Trust, a Delaware Business Trust consisting of the following
series:
Evergreen Aggressive Growth Fund Evergreen Fund Evergreen Micro Cap
Fund Evergreen Omega Fund Evergreen Small Company Growth Fund Keystone
Strategic Growth Fund (K-2) Evergreen American Retirement Fund
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Evergreen Foundation Fund Evergreen Tax Strategic Foundation Fund
Evergreen Balanced Fund Evergreen Fund for Total Return Evergreen
Growth & Income Fund Evergreen Income & Growth Fund Evergreen Small Cap
Equity Income Fund Evergreen Value Fund Evergreen Utility Fund Keystone
Growth and Income Fund (S-1)
Evergreen Fixed Income Trust, a Delaware Business Trust consisting of the
following series:
Evergreen U.S. Government Fund
Evergreen Strategic Income Fund
Evergreen Diversified Bond Fund
Keystone High Income Bond Fund (B-4)
Evergreen Capital Preservation and Income Fund
Evergreen Intermediate Term Bond Fund
Evergreen Intermediate-Term Government Securities Fund
Evergreen Short-Intermediate Bond Fund
Evergreen International Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Emerging Markets Growth Fund Evergreen Global Leaders Fund
Evergreen Global Opportunities Fund Evergreen International Equity Fund
Evergreen Latin America Fund Evergreen Natural Resources Fund Keystone
Precious Metals Holdings Keystone International Fund
Evergreen Money Market Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Money Market Fund
Evergreen Pennsylvania Tax Free Money Market Fund
Evergreen Tax Exempt Money Market Fund
Evergreen Treasury Money Market Fund
By: /s/ John Pileggi
------------------------------------
John Pileggi
President and Treasurer of each
Delaware Business Trust listed above
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EXHIBIT A
Evergreen Select Fixed Income Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Select Limited Duration Fund Evergreen Select Fixed Income
Fund Evergreen Select Income Plus Fund Evergreen Select Intermediate
Tax Exempt Bond Fund Evergreen Select Core Bond Fund Evergreen Select
Intermediate Bond Fund Evergreen Select Adjustable Rate Fund
Evergreen Select Equity Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Select Strategic Value Fund Evergreen Select Large Cap Blend
Fund Evergreen Select Strategic Growth Fund Evergreen Select Social
Principles Fund Evergreen Select Equity Income Fund Evergreen Select
Small Company Value Fund Evergreen Select Common Stock Fund Evergreen
Select Small Cap Growth Fund Evergreen Select Balanced Fund Evergreen
Select Diversified Value Fund
Evergreen Select Money Market Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Select 100% Treasury Money Market Fund
Evergreen Institutional Money Market Fund
Evergreen Institutional Tax Exempt Money Market Fund
Evergreen Institutional Treasury Money Market Fund
Evergreen Municipal Trust, a Delaware Business Trust consisting of the following
series:
Evergreen California Tax Free Fund Evergreen Connecticut Municipal Bond
Fund Evergreen Florida High Income Municipal Bond Fund Evergreen
Florida Municipal Bond Fund Evergreen Georgia Municipal Bond Fund
Evergreen Massachusetts Tax Free Fund Evergreen Missouri Tax Free Fund
Evergreen New Jersey Tax Free Income Fund Evergreen New York Tax Free
Fund Evergreen North Carolina Municipal Bond Fund
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Evergreen Pennsylvania Tax Free Fund
Evergreen South Carolina Municipal Bond Fund
Evergreen Virginia Municipal Bond Fund
Evergreen High Grade Tax Free Fund
Evergreen Short-Intermediate Municipal Fund
Evergreen Tax Free Fund
Evergreen Equity Trust, a Delaware Business Trust consisting of the following
series:
Evergreen Aggressive Growth Fund Evergreen Fund Evergreen Micro Cap
Fund Evergreen Omega Fund Evergreen Small Company Growth Fund Keystone
Strategic Growth Fund (K-2) Evergreen American Retirement Fund
Evergreen Foundation Fund Evergreen Tax Strategic Foundation Fund
Evergreen Balanced Fund Evergreen Fund for Total Return Evergreen
Growth & Income Fund Evergreen Income & Growth Fund Evergreen Small Cap
Equity Income Fund Evergreen Value Fund Evergreen Utility Fund Keystone
Growth and Income Fund (S-1)
Evergreen Fixed Income Trust, a Delaware Business Trust consisting of the
following series:
Evergreen U.S. Government Fund
Evergreen Strategic Income Fund
Evergreen Diversified Bond Fund
Keystone High Income Bond Fund (B-4)
Evergreen Capital Preservation and Income Fund
Evergreen Intermediate Term Bond Fund
Evergreen Intermediate-Term Government Securities Fund
Evergreen Short-Intermediate Bond Fund
Evergreen International Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Emerging Markets Growth Fund
Evergreen Global Leaders Fund
Evergreen Global Opportunities Fund
Evergreen International Equity Fund
Evergreen Latin America Fund
Evergreen Natural Resources Fund
23146
A-2
<PAGE>
Keystone Precious Metals Holdings
Keystone International Fund
Evergreen Money Market Trust, a Delaware Business Trust consisting of the
following series:
Evergreen Money Market Fund
Evergreen Pennsylvania Tax Free Money Market Fund
Evergreen Tax Exempt Money Market Fund
Evergreen Treasury Money Market Fund
23146
A-2
<PAGE>
EXHIBIT B
The services provided for in this Agreement shall be performed by ESC,
or any agent appointed by ESC pursuant to Section 15 of this Agreement, under
the name of Evergreen Service Company (ESC) and this name or any similar name or
logo will not be used by ESC or its agents for any purposes other than those
related to this Agreement or to any other agreement which ESC may enter into
with any of the Fund (s) or with companies affiliated with the Fund (s).
The offices of ESC shall be open to perform the services pursuant to
this Agreement on all days when the Fund is open to transact business.
ESC will perform all services normally provided to investment companies
such as the Fund(s), and the quality of such services shall be equal to or
better than that provided to the other investment companies serviced by ESC.
With respect to each Fund, by way of illustration, but not limitation, these
services will include:
1. Establishing, maintaining, safeguarding and reporting on
shareholder account information and account histories,
(including registration, name and address recorded in
generally accepted form, dealer, representative, branch, and
territory information, mailing address, distribution address,
various codes and specific information relating to (if
applicable); withdrawal plans, letters of intent, systematic
investing, insured redemptions plans, account groupings for
rights of accumulation discount processing, and for account
group reporting for plan accounts and other accounts grouped
for master sub-account reporting.)
2. Recording and controlling shares outstanding in certificate
("issued") and non-certificate ("unissued") form.
3. Maintaining a record for each certificate issued to include
certificate number, account number, issued date, number of
shares, canceled date or stop date, where appropriate.
4. Reconciling the number of outstanding shares of each Fund on a
daily basis with the Fund and the Fund's custodian, promptly
correcting any differences noted.
5. Establishing and maintaining a trade file on behalf of each
Fund based on trade information furnished to the transfer
agent by the Fund or its distributors.
23146
B-1
<PAGE>
6. Accepting and processing direct cash investments however
received and investing such investments promptly in
shareholder accounts.
7. Passing upon the adequacy of documents properly endorsed and
guaranteed submitted by or on behalf of a shareholder to
transfer ownership or redeem shares.
8. Transferring ownership of shares upon the books of each Fund.
9. Redeeming shares and preparing and mailing redemption checks
or wire proceeds as instructed.
10. Preparing and promptly mailing account statements to the
shareholder or such other authorized address and, when
appropriate, as instructed by a Fund, to the dealer or dealer
branch, whenever transaction activity effecting share balances
are posted to a Fund account that is of the type that should
receive such statement.
11. Checking surrendered certificates for stop transfer
instructions.
12. Canceling certificates surrendered.
13. Issuing certificates as replacements for those canceled, or as
an original issue of additional shares or upon the reduction
of an equal number of unissued shares.
14. Maintaining and updating a stop transfer file, promptly
placing stop transfer codes upon notification of possible
loss, destruction or disappearance of a certificate. Upon
receipt of proper documentation obtaining necessary insurance
forms and issuing replacement certificates.
15. Balancing outstanding shares of record with the custodian
prior to each distribution and calculating and paying or
reinvesting distributions to shareholders of record and to
open trade receivables and free stock.
16. Processing exchanges of shares of one Fund or Portfolio for
another, calculating proper sales charges and collecting fees
as required.
17. Processing withdrawal plan liquidations according to plan
instructions.
18. Reporting to each Fund and its custodian daily the capital
stock activities and dollar amounts of transactions.
19. Promptly answering inquiries from shareholders, dealers, Fund
personnel, and others as requested in accordance with the
terms of this Agreement as to account
23146
B-2
<PAGE>
matters, referring policy or investment matters to the Fund.
20. Mailing reports and special mailings, as directed by a Fund,
to all shareholders or selected holders or dealers.
21. Providing services with regard to the annual or special
meetings of a Fund, including preparation and timely mailing
of proxy material to shareholders of record and others as
directed by the Fund, and receiving, examining and recording
all properly executed proxies and performing such follow-up as
required by the Fund.
22. Providing periodic listings and tallies of shareholder votes
and certifying the final tally.
23. Providing an inspector of elections at the annual or any
special meetings of a Fund.
24. Maintaining tax information for each account, deducting
amounts where required and furnishing to a Fund, its
shareholders, dealers and, when appropriate, regulatory
bodies, the necessary tax information, all in compliance with
the various applicable laws.
25. Maintaining records of account and distribution information
for checks and confirmations returned as undeliverable by the
Post Office.
26. Maintaining records and reporting sales information for Blue
Sky reporting purposes.
27. Calculating and processing Fund mergers or stock dividends, as
directed by a Fund.
28. Maintaining all Fund records as outlined in the record and
tape retention schedule delivered by a Fund.
29. Reconciling all investment, distribution and redemption
accounts.
30. Providing for the replacement of uncashed distribution or
redemption checks.
31. Maintaining and safeguarding an inventory of unissued blank
stock certificates, checks and other Fund records.
32. Making available to a Fund and its distributors at their
locations devices which will provide immediate electronic
access to computerized records maintained for a Fund.
23146
B-3
<PAGE>
33. Providing space and such technical expertise as may be
required to enable a Fund and its properly authorized
auditors, examiners and others designated by the Fund in
writing to properly understand and examine all books, records,
computer files, microfilm and other items maintained pursuant
to this Agreement, and to assist as required in such
examination.
34. Assigning a single account number to each shareholder
regardless of the number of Funds or Portfolios owned for
which Keystone Investment Management Company, Evergreen Asset
Management Corp., First Union National Bank or one of its
affiliates is the trustee, investment adviser or manager
(except as instructed otherwise.)
35. Mailing prospectuses to existing accounts on receipt of the
first direct investment transaction after a new prospectus has
been issued by a Fund.
36. Mailing cash election notices when required prior to capital
gains distributions.
37. Maintaining information, performing the necessary research and
producing reports required to comply with all applicable state
escheat or abandoned property laws.
With respect to each Fund, the Transfer Agent will produce reports as requested
by a Fund including, but not limited to, the following:
Shareholder Account Confirmation As required
Redemption Checks When redemption is made
Certificates When requested
Withdrawal plan payment checks On payment cycle
Distribution checks As required
Name and address labels
(per account registration) As requested
Proxy When required
1099 Annually
23146
B-4
<PAGE>
1042-S Annually
Transaction journals Daily
Record date position control Daily
Daily and (monthly) cash proof Daily
Daily and (monthly) share proof Daily
Daily master control Daily
Blue Sky exception Daily
Blue Sky master list Monthly and whenever a new
permit is issued by a state
Blue Sky sales report Cycle as designated in
advance by distributor
Check register Daily
Account information reports When requested
(Monthly) Cumulative Monthly
transaction
New account list Monthly
Shareholder master list When requested
Sales by State Monthly
Activities statistics Monthly
Distribution journals As required
Proxy tallies and vote listings When requested
Withdrawal plan account check Monthly
reconciliation
23146
B-5
<PAGE>
Dividend account check As required
reconciliation
23146
B-6
<PAGE>
EXHIBIT C
TRANSFER AGENT FEE SCHEDULE
CHARGES TO FUNDS
GROUP 1 - MONTHLY DIVIDEND FUNDS
Per open account per year $26.50
Per closed account per year 9.00
Per new account 10.00
GROUP 2 - QUARTERLY DIVIDEND FUNDS
Per open account per year $25.50
Per closed account per year 9.00
Per new account 10.00
GROUP 3 - SEMI-ANNUAL AND ANNUAL DIVIDEND FUNDS
Per open account per year $24.50
Per closed account per year 9.00
Per new account 10.00
GROUP 4 - MONEY MARKET FUNDS
Per open account per year $26.50
Per closed account per year 9.00
Per new account 10.00
CHARGES TO SHAREHOLDERS
GROUP 5 - ERISA*
Per IRA participant per year $10.00 with a maximum of $20.00**
Per Keogh participant per year $10.00 with a maximum of $20.00
Per TSA per year $10.00 with a maximum of $20.00
*These fees are not borne by the Funds, but are direct shareholder charges.
**Fee waived for participants with assets in excess of $25,000. Funds that have
"seed" capital only will not be charged until the Fund has public shareholders.
23146
C-1
<PAGE>
This Fee Schedule is exclusive of out-of-pocket reimbursable expenses.
Out-of-pocket expenses include but are not limited to the following:
Stationery and supplies
Checks
Express Delivery
Postage
Printing of forms
Telephone
Photocopies and Microfilm
C-2
23146
<PAGE>
EVERGREEN VARIABLE ANNUITY TRUST
200 Berkeley Street
Boston, Massachusetts 02116
March 9, 1998
Evergreen Service Company
200 Berkeley Street
Boston, Massachusetts 02116
To Whom It May Concern:
Pursuant to Paragraph 1 of the Master Transfer and Recordkeeping Agreement dated
September 18, 1997 between Evergreen Service Company and various Funds (the
"Agreement"), as defined in the Agreement, this is to notify Evergreen Service
Company that the Evergreen Select Fixed Income Trust, on behalf of each of
its series listed on Exhibit A attached hereto, hereby elects to become a Fund
party to such Agreement.
EVERGREEN VARIABLE ANNUITY TRUST
on behalf of each of its Series
listed on Exhibit A
By: /s/ William J. Tomko
----------------------------
William J. Tomko
President
Accepted and Agreed:
EVERGREEN SERVICE COMPANY
By: /s/ Edward J. Falvey
------------------------
Name: Edward J. Falvey
Title: President
Dated: March 9, 1998
23666
<PAGE>
EXHIBIT A
EVERGREEN VARIABLE ANNUITY TRUST
SERIES
Evergreen VA Fund
Evergreen VA Growth and Income Fund
Evergreen VA Foundation Fund
Evergreen VA Global Leaders Fund
Evergreen VA Strategic Income Fund
Evergreen VA Aggressive Growth Fund
Evergreen VA Small Cap Equity Fund
(Each Series for itself and not jointly)
Dated: March 9, 1998
23666
CONSENT OF INDEPENDENT AUDITORS
The Trustees and Shareholders
Evergreen Select Fixed Income Trust:
We consent to the use of our report dated March 27, 1998 for Evergreen Select
Adjustable Rate Fund incorporated herein by reference and to the references to
our firm under the captions "FINANCIAL HIGHLIGHTS" in the prospectus and
"Independent Auditors" in the statement of additional information.
KPMG Peat Marwick LLP
Boston, Massachusetts
June 30, 1998
DISTRIBUTION PLAN OF INSTITUTIONAL SERVICE CLASS SHARES
EVERGREEN SELECT FIXED INCOME TRUST
SECTION 1. The Evergreen Select Fixed Income Trust (the "Trust")
individually and/or on behalf of its series (each a "Fund") referred to in
Exhibit A to this Rule 12b-1 Plan of Distribution (the "Plan") may act as the
distributor of securities which are issued in respect of the Fund's
Institutional Service Class shares ("Shares"), pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "1940 Act") according to the terms of this
Plan.
SECTION 2. The Trust on behalf of each Fund may expend daily amounts at
an annual rate of 0.75% of the average daily net asset value of the Shares of
the Fund. Such amounts may be expended to finance activity which is principally
intended to result in the sale of Shares including, without limitation,
expenditures consisting of payments to a principal underwriter of the Fund
("Principal Underwriter") or others in order (i) to make payments to the
Principal Underwriter or others of sales commissions, other fees or other
compensation for services provided or to be provided, to enable payments to be
made by the Principal Underwriter or others for any activity primarily intended
to result in the sale of Shares, to pay interest expenses associated with
payments in connection with the sale of Shares and to pay any expenses of
financing permitted by this clause (i); (ii) to enable the Principal Underwriter
or others to receive, pay or to have paid to others who have sold Shares, or who
provide services to holders of Shares, a service fee, maintenance or other fee
in respect of such services, at such intervals as the Principal Underwriter or
such others may determine, in respect of Shares previously sold and remaining
outstanding during the period in respect of which such fee is or has been paid;
and/or (iii) to compensate the Principal Underwriter or others for efforts
(including without limitation any financing of payments under (i) and (ii) for
the sale of shares) in respect of sales of Shares since inception of the Plan or
any predecessor plan. Appropriate adjustments shall be made to the payments made
pursuant to this Section 2 to the extent necessary to ensure that no payment is
made by Trust on behalf of each Fund with respect to the Class in excess of the
applicable limit imposed on asset based, front end and deferred sales charges
under subsection (d) of Rule 2830 of the Business Conduct Rules of the National
Association of Securities Dealers Regulation, Inc. (The "NASDR"). In addition,
to the extent any amounts paid hereunder fall within the definition of an "asset
based sales charge" under said NASDR Rule such payments shall be limited to 0.75
of 1% of the aggregate net asset value of the Shares on an annual basis and, to
the extent that any such payments are made in respect of "shareholder services"
as that term is defined in the NASDR Rule, such payments shall be limited to .25
of 1% of the aggregate net asset value of the Shares on an annual basis and
shall only be made in respect of shareholder services rendered during the period
in which such amounts are accrued.
SECTION 3. This Plan shall not take effect until it has been approved
together with any related agreements by votes of a majority of both (a) the
Board of Trustees of the Trust and (b) those Trustees of the Trust who are not
"interested persons" of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or any
agreements related to this Plan ("Rule 12b-1 Trustees"), cast in person at a
meeting called for the purpose of voting on this Plan or such agreements.
<PAGE>
SECTION 4. Unless sooner terminated pursuant to Section 6, this Plan
shall continue in effect for a period of one year from the date it takes effect
and thereafter shall continue in effect so long as such continuance is
specifically approved at least annually in the manner provided for approval of
this Plan in Section 3.
SECTION 5. Any person authorized to direct the disposition of monies
paid or payable by Trust on behalf of each Fund pursuant to this Plan or any
related agreement shall provide to the Trust's Board of Trustees and the Board
shall review at least quarterly a written report of the amounts so expended and
the purposes for which such expenditures were made.
SECTION 6. This Plan may be terminated as to any Fund at any time by
vote of a majority of the Rule 12b-1 Trustees or by vote of a majority of the
outstanding Shares of such Fund.
SECTION 7. Any agreement related to this Plan shall be in writing and
shall provide:
(a) that such agreement may be terminated as to any Fund at any
time, without payment of any penalty, by vote of a majority of
the Rule 12b-1 Trustees or by a vote of a majority of such
Fund's outstanding Shares on not more than sixty days written
notice to any other party to the agreement; and
(b) that such agreement shall terminate automatically in the event of
its assignment.
SECTION 8. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in Section 2 hereof unless such
amendments approved by a vote of at least a majority (as defined in the 1940
Act) of the Fund's outstanding Shares and no material amendment to this Plan
shall be made unless approved in the manner provided for in Section 3 hereof.
F:\DC\CEF\SALEM006\AGREEMEN\EVSFIIS.PLN:2/6/98
<PAGE>
TOTAL INCOME FOR PERIOD 151763.36
PRICING DATE 2/28/98 TOTAL EXPENSES FOR PERIO 6649.89
AVERAGE SHARES OUTSTANDING 2657124.213
30 DAY YTM 6.82% LAST PRICE DURING PERIOD 9.75
PRICE ST VARIABLE LONG TERM GAIN/LOSS TOTAL DIV
DATE INCOME INCOME INCOME FACTOR
1/29/98
1 1/30/98 269.93 6789.15 7059.08 72.31147
2 1/31/98 269.93 6789.15 7059.08 72.31147
3 2/1/98 269.93 6789.15 7059.08 72.31147
4 2/2/98 267.59 7623.47 7891.06 72.31895
5 2/3/98 261.42 7623.28 7884.7 72.31893
6 2/4/98 41.4 7844.42 7885.82 72.31952
7 2/5/98 41.48 7844.31 7885.79 72.31952
8 2/6/98 41.1 7844.39 7885.49 72.31952
9 2/7/98 41.1 7844.39 7885.49 72.31952
10 2/8/98 41.09 7844.4 7885.49 72.31952
11 2/9/98 42.01 7844.48 7886.49 72.31951
12 2/10/98 41.86 7844.34 7886.2 72.31953
13 2/11/98 57.97 7721.97 7779.94 72.12109
14 2/12/98 57.08 7834.2 7891.28 72.13196
15 2/13/98 26.27 7876.72 7902.99 72.12099
16 2/14/98 26.27 7876.72 7902.99 72.12099
17 2/15/98 26.27 7876.72 7902.99 72.12099
18 2/16/98 26.27 7876.73 7903 72.12099
19 2/17/98 71.75 6948.71 7020.46 72.13194
20 2/18/98 69.63 7822.19 7891.82 72.13194
21 2/19/98 68.38 7827.04 7895.42 72.13193
22 2/20/98 125.87 7723.25 7849.12 72.15226
23 2/21/98 125.87 7723.25 7849.12 72.15226
24 2/22/98 125.87 7723.24 7849.11 72.15226
25 2/23/98 133.42 7757.73 7891.15 72.15226
26 2/24/98 103.79 7203.83 7307.62 71.92074
27 2/25/98 0 6564.21 6564.21 70.22731
28 2/26/98 29.3 7586.13 7615.43 70.37647
29 2/27/98 54.02 7322.64 7376.66 70.05832
30 2/28/98 54.02 7322.64 -19523.9 -12147.3 70.05832
2810.89 0 227112.9 0 -19523.9 210399.8 2158.192
ADJUSTED DAILY DAILY DAILY ACCUMULATE ACCUMULATED ACCUMULATED
INCOME EXPENSES SHARES PRICE INCOME EXPENSES SHARES
0 0 0
5104.52 222.42 2677758.334 9.77 5104.52 222.42 2677758.334
5104.52 222.42 2677758.334 9.77 10209.04 444.84 5355516.668
5104.52 222.42 2677758.334 9.77 15313.56 667.26 8033275.002
5706.73 223.29 2689664.328 9.78 21020.29 890.55 10722939.33
5702.13 224.3 2689664.328 9.77 26722.42 1114.85 13412603.66
5702.99 224.21 2689743.99 9.77 32425.41 1339.06 16102347.65
5702.97 224.21 2689743.99 9.77 38128.38 1563.27 18792091.64
5702.75 224.1766667 2689743.99 9.77 43831.13 1787.446667 21481835.63
5702.75 224.1766667 2689743.99 9.77 49533.88 2011.623333 24171579.62
5702.75 224.1766667 2689743.99 9.77 55236.63 2235.8 26861323.61
5703.47 224.15 2689743.99 9.77 60940.1 2459.95 29551067.6
5703.26 224.07 2689743.99 9.77 66643.36 2684.02 32240811.59
5610.98 223.53 2689743.99 9.77 72254.34 2907.55 34930555.58
5692.14 224.17 2689743.99 9.77 77946.48 3131.72 37620299.57
5699.71 224.125 2689743.99 9.78 83646.19 3355.845 40310043.56
5699.71 224.125 2689743.99 9.78 89345.9 3579.97 42999787.55
5699.71 224.125 2689743.99 9.78 95045.61 3804.095 45689531.54
5699.72 224.125 2689743.99 9.78 100745.33 4028.22 48379275.53
5063.99 224.3 2689743.99 9.77 105809.32 4252.52 51069019.52
5692.52 224.23 2689743.99 9.77 111501.84 4476.75 53758763.51
5695.12 224.05 2689743.99 9.77 117196.96 4700.8 56448507.5
5663.32 224.1133333 2689743.99 9.77 122860.28 4924.913333 59138251.49
5663.32 224.1133333 2689743.99 9.77 128523.6 5149.026667 61827995.48
5663.31 224.1133333 2689743.99 9.77 134186.91 5373.14 64517739.47
5693.64 224.09 2689743.99 9.76 139880.55 5597.23 67207483.46
5255.69 223.2 2659006.285 9.74 145136.24 5820.43 69866489.74
4609.87 215.9 2448718.811 9.74 149746.11 6036.33 72315208.55
5359.47 204.5 2466172.61 9.74 155105.58 6240.83 74781381.16
5167.96 204.53 2466172.61 9.75 160273.54 6445.36 77247553.77
- -8510.18 204.53 2466172.61 9.75 151763.36 6649.89 79713726.38
6649.89
151763.36 6649.89 2657124.213
Z
ACCOUNT Z AVERAGE
YEARS VALUE CLASS ANNNUAL
28-Feb-98 BLANK 1,421.39 0.00%
31-Jan-98 1 MO 1,416.72 0.33% 0.33%
30-Nov-97 QTR 1,398.35 1.65% 1.65%
31-Dec-97 YTD 1,407.63 0.98% 0.98%
28-Feb-97 1 1,326.49 7.15% 7.15%
28-Feb-95 3 1,156.0 22.96% 7.13%
28-Feb-93 5 1,077.61 31.90% 5.69%
29-Feb-88 10
1-Oct-91 INCEPT. 1,000.00 42.14% 5.63%
INCEPTION FACTOR: 6.4192
PRICING DATE 2/28/98 TOTAL INCOME FOR PERIOD 58636.44
TOTAL EXPENSES FOR PERIOD 4666.52
30 DAY YTM 6.50% AVERAGE SHARES OUTSTANDING 1034832.178
LAST PRICE DURING PERIOD 9.76
PRICE ST VARIABLE LONG TERM TOTAL DIV
DATE INCOME INCOME INCOME FACTOR
1 1/30/98 269.93 0 6789.15 0 0 7059.08 27.68853
2 1/31/98 269.93 0 6789.15 0 0 7059.08 27.68853
3 2/1/98 269.93 0 6789.15 0 0 7059.08 27.68853
4 2/2/98 267.59 0 7623.47 0 0 7891.06 27.68105
5 2/3/98 261.42 0 7623.28 0 0 7884.7 27.68107
6 2/4/98 41.4 0 7844.42 0 0 7885.82 27.68048
7 2/5/98 41.48 0 7844.31 0 0 7885.79 27.68048
8 2/6/98 41.1 0 7844.39 0 0 7885.49 27.68048
9 2/7/98 41.1 0 7844.39 0 0 7885.49 27.68048
10 2/8/98 41.09 0 7844.4 0 0 7885.49 27.68048
11 2/9/98 42.01 0 7844.48 0 0 7886.49 27.68049
12 2/10/98 41.86 0 7844.34 0 0 7886.2 27.68047
13 2/11/98 57.97 0 7721.97 0 0 7779.94 27.87891
14 2/12/98 57.08 0 7834.2 0 0 7891.28 27.86804
15 2/13/98 26.27 0 7876.72 0 0 7902.99 27.87901
16 2/14/98 26.27 0 7876.72 0 0 7902.99 27.87901
17 2/15/98 26.27 0 7876.72 0 0 7902.99 27.87901
18 2/16/98 26.27 0 7876.73 0 0 7903 27.87901
19 2/17/98 71.75 0 6948.71 0 0 7020.46 27.86806
20 2/18/98 69.63 0 7822.19 0 0 7891.82 27.86806
21 2/19/98 68.38 0 7827.04 0 0 7895.42 27.86807
22 2/20/98 125.87 0 7723.25 0 0 7849.12 27.84774
23 2/21/98 125.87 0 7723.25 0 0 7849.12 27.84774
24 2/22/98 125.87 0 7723.24 0 0 7849.11 27.84774
25 2/23/98 133.42 0 7757.73 0 0 7891.15 27.84774
26 2/24/98 103.79 0 7203.83 0 0 7307.62 28.07926
27 2/25/98 0 0 6564.21 0 0 6564.21 29.77269
28 2/26/98 29.3 0 7586.13 0 0 7615.43 29.62353
29 2/27/98 54.02 0 7322.64 0 0 7376.66 29.94168
30 2/28/98 54.02 0 7322.64 -19523.9 0 -12147.3 29.94168
0
2810.89 0 227112.9 -19523.9 0 210399.8 841.8081
ADJUSTED DAILY DAILY DAILY ACCUMULATED ACCUMULATED ACCUMULATED
INCOME EXPENSES SHARES PRICE INCOME EXPENSES SHARES
0 0 0
1954.56 153.6 1024444.223 9.78 1954.56 153.6 1024444.223
1954.56 153.6 1024444.223 9.78 3909.12 307.2 2048888.446
1954.56 153.6 1024444.223 9.78 5863.68 460.8 3073332.669
2184.33 154.1 1028613.774 9.78 8048.01 614.9 4101946.443
2182.57 154.48 1028613.774 9.78 10230.58 769.38 5130560.217
2182.83 154.74 1028613.774 9.78 12413.41 924.12 6159173.991
2182.82 154.71 1028613.774 9.78 14596.23 1078.83 7187787.765
2182.74 154.7033333 1028613.774 9.78 16778.97 1233.533333 8216401.539
2182.74 154.7033333 1028613.774 9.78 18961.71 1388.236667 9245015.313
2182.74 154.7033333 1028613.774 9.78 21144.45 1542.94 10273629.09
2183.02 154.67 1028613.774 9.77 23327.47 1697.61 11302242.86
2182.94 154.64 1028613.774 9.78 25510.41 1852.25 12330856.64
2168.96 155.26 1038838.723 9.78 27679.37 2007.51 13369695.36
2199.14 155.48 1038273.723 9.78 29878.51 2162.99 14407969.08
2203.28 156.205 1038839.461 9.79 32081.79 2319.195 15446808.54
2203.28 156.205 1038839.461 9.79 34285.07 2475.4 16485648
2203.28 156.205 1038839.461 9.79 36488.35 2631.605 17524487.46
2203.28 156.205 1038839.461 9.79 38691.63 2787.81 18563326.93
1956.47 156.24 1038274.461 9.78 40648.1 2944.05 19601601.39
2199.3 156.22 1038274.461 9.78 42847.4 3100.27 20639875.85
2200.3 156.13 1038274.461 9.78 45047.7 3256.4 21678150.31
2185.8 155.9566667 1037224.461 9.78 47233.5 3412.356667 22715374.77
2185.8 155.9566667 1037224.461 9.78 49419.3 3568.313333 23752599.23
2185.8 155.9566667 1037224.461 9.78 51605.1 3724.27 24789823.69
2197.51 155.94 1037224.461 9.77 53802.61 3880.21 25827048.15
2051.93 156.59 1037224.461 9.75 55854.54 4036.8 26864272.61
1954.34 160.93 1037224.461 9.75 57808.88 4197.73 27901497.07
2255.96 155.37 1037224.461 9.75 60064.84 4353.1 28938721.54
2208.7 156.71 1053121.897 9.76 62273.54 4509.81 29991843.43
- -3637.1 156.71 1053121.897 9.76 58636.44 4666.52 31044965.33
4666.52
58636.44 4666.52 1034832.178
Y
ACCOUNT Y AVERAGE
YEARS VALUE CLASS ANNNUAL
28-Feb-98 BLANK 1,255.79 0.00%
31-Jan-98 1 MO 1,251.90 0.31% 0.31%
30-Nov-97 QTR 1,236.19 1.59% 1.59%
31-Dec-97 YTD 1,242.86 1.04% 1.04%
28-Feb-97 1 1,174.90 6.89% 6.89%
28-Feb-95 3 1,027.97 22.16% 6.90%
28-Feb-93 5
29-Feb-88 10
23-May-94 INCEPT. 1,000.00 25.58% 6.22%
INCEPTION FACTOR: 3.7753
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 101
<NAME> EVERGREEN SELECT FIXED INCOME FUND CLASS I
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> NOV-24-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 470,523,671
<INVESTMENTS-AT-VALUE> 477,946,725
<RECEIVABLES> 8,050,144
<ASSETS-OTHER> 55,294
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 486,052,163
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,981,046
<TOTAL-LIABILITIES> 2,981,046
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 474,043,385
<SHARES-COMMON-STOCK> 80,776,312
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 63,011
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,423,019
<NET-ASSETS> 481,529,415
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,057,827
<OTHER-INCOME> 0
<EXPENSES-NET> (859,087)
<NET-INVESTMENT-INCOME> 10,198,740
<REALIZED-GAINS-CURRENT> 63,011
<APPREC-INCREASE-CURRENT> 228,405
<NET-CHANGE-FROM-OPS> 10,490,156
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10,198,740)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 84,970,265
<NUMBER-OF-SHARES-REDEEMED> (4,208,940)
<SHARES-REINVESTED> 14,987
<NET-CHANGE-IN-ASSETS> 481,529,415
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (826,045)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (1,029,447)
<AVERAGE-NET-ASSETS> 471,124,520
<PER-SHARE-NAV-BEGIN> 5.96
<PER-SHARE-NII> 0.13
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.13)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.96
<EXPENSE-RATIO> 0.52
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ACCOUNTING
RECORDS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH ACCOUNTING
RECORDS.
</LEGEND>
<SERIES>
<NUMBER> 102
<NAME> EVERGREEN SELECT FIXED INCOME FUND CLASS IS
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> NOV-24-1997
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 470,523,671
<INVESTMENTS-AT-VALUE> 477,946,725
<RECEIVABLES> 8,050,144
<ASSETS-OTHER> 55,294
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 486,052,163
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,981,046
<TOTAL-LIABILITIES> 2,981,046
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,541,693
<SHARES-COMMON-STOCK> 258,653
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (26)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 35
<NET-ASSETS> 1,541,702
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,025
<OTHER-INCOME> 0
<EXPENSES-NET> (691)
<NET-INVESTMENT-INCOME> 5,334
<REALIZED-GAINS-CURRENT> (26)
<APPREC-INCREASE-CURRENT> 35
<NET-CHANGE-FROM-OPS> 5,343
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5,334)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 270,377
<NUMBER-OF-SHARES-REDEEMED> (12,313)
<SHARES-REINVESTED> 589
<NET-CHANGE-IN-ASSETS> 1,541,702
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (461)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (785)
<AVERAGE-NET-ASSETS> 1,086,325
<PER-SHARE-NAV-BEGIN> 5.97
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> (0.01)
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.96
<EXPENSE-RATIO> 0.77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
