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. 4 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 4 [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:
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[X] 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. 4 TO
REGISTRATION STATEMENT ON FORM N-1A
This Post-Effective Amendment No.4 to Registrant's Registration Statement
No.333-36019/811-08365 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 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 Adjustable Rate Fund,
Evergreen Select Total Return Bond Fund and Evergreen Select Bond Fund contained
herein.
Prospectus for the Charitable shares of Evergreen Select Core Bond Fund
contained herein.
PART B
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,
Evergreen Select Adjustable Rate Fund, Evergreen Select Total Return Bond Fund
and Evergreen Select International Bond Fund contained herein.
Statement of Additional Information for the Charitable Shares of Evergreen
Select Core Bond Fund contained 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 Funds
Evergreen Select Limited Duration Fund Evergreen Select Fixed Income Fund
Evergreen Select Income Plus Fund Evergreen Select Intermediate Municipal Bond
Fund Evergreen Select Core Bond Fund Evergreen Select Total Return Fund
Evergreen Select Adjustable Rate Fund Evergreen Select International Bond Fund
Institutional Shares
Institutional Service Shares
Prospectus, February 1, 1999
The Securities and Exchange Commission has not determined that the information
in this prospectus is accurate or complete, nor has it approved or disapproved
these mutual fund shares. Anyone who tells you otherwise is committing a federal
crime.
FUND SUMMARIES:
Evergreen Select Limited Duration Fund
Evergreen Select Fixed Income Fund
Evergreen Select Income Plus Fund
Evergreen Select Intermediate
Municipal Bond Fund
Evergreen Select Core Bond Fund
Evergreen Select Total Return Fund
Evergreen Select Adjustable Rate Fund
Evergreen Select International Bond Fund
GENERAL INFORMATION: The Funds' Investment Advisors The Funds' Portfolio
Managers Calculating the Share Price How to Choose a Fund How to Choose the
Share Class That Best Suits You How to Buy Shares How to Redeem Shares Other
Services The Tax Consequences of Investing in the Funds Fees and Expenses of the
Funds Financial Highlights Other Fund Practices
In general, Funds included in this prospectus seek to provide investors with
current income and total return consistent with the preservation of capital and
low volatility. The Funds emphasize investments in investment grade debt
securities and mortgage- and asset-backed securities. Intermediate Municipal
Bond Fund primarily seeks to invest in securities exempt from federal income
tax.
FUND SUMMARIES KEY
Each Fund's summary is organized around the following basic topics and
questions:
INVESTMENT GOAL
What is the Fund's financial objective? You can find clarification on how the
Fund seeks to achieve its objective by looking at the Fund's strategy and
investment policies. The Fund's Board of Trustees can change the investment
objective without a shareholder vote.
INVESTMENT STRATEGY
How does the Fund go about trying to meet its goals? What types of investments
does it contain? What style of investing and investment philosophy does it
follow? Does it have limits on the amount invested in any particular type of
security?
RISK FACTORS
What are the specific risks for an investor in the Fund?
PERFORMANCE
How well has the Fund performed in the past year? The past five years? The past
ten years?
EXPENSES
How much does it cost to invest in the Fund? What is the difference between
sales charges and expenses?
OVERVIEW
Select Fixed
Income Funds
typically rely on one or a combination of the following
strategies:
investing primarily in investment grade debt securities, which are bonds rated
within the four highest ratings categories by the nationally recognized
statistical ratings organizations;
investing a portion of their assets in mortgage-backed
securities;
investing in U.S. Treasury or agency obligations; and Intermediate Municipal
Bond Fund invests primarily in securities exempt from federal income tax.
may be appropriate for investors who:
seek high current income consistent with preservation of capital and/or low
volatility;
seek to maximize total return; or
seek current income exempt from federal income taxes (Intermediate Municipal
Bond Fund).
Risk Factors For All Mutual Funds
Please remember that mutual fund
shares are:
not guaranteed to achieve their investment goal
not insured, endorsed or guaranteed by the FDIC, a bank or any
government agency
subject to investment risks, including possible loss of your original
investment
Like most investments, your investment in an Evergreen Select Fixed Income Fund
could fluctuate significantly in value over time and could result in a loss of
money.
Here are the most important factors that may affect the value of your
investment:
Interest Rate Risk
When interest rates go up, the value of debt securities and dividend-paying
stocks tends to fall. If your Fund invests a significant portion of its
portfolio in debt securities or dividend-paying stocks and interest rates rise,
then the value of your investment may decline. The opposite is also true.
Credit Risk
The value of a debt security is directly affected by the issuer's ability to
repay principal and interest on time. Since your Fund invests in debt
securities, then the value of your investment may decline if an issuer fails to
pay an obligation on a timely basis.
Foreign Investment Risk
A Fund's investment in non-U.S. securities could expose it to certain unique
risks of overseas investing. For example, political turmoil and economic
instability in the countries in which the Fund invests could adversely affect
the value of your investment. In addition, if the value of any foreign currency
in which the Fund's investments are denominated declines relative to the U.S.
dollar, the value of your investment in the Fund may decline as well. Certain
foreign countries have less developed and less regulated securities markets and
accounting systems than the U.S. This may make it harder to get accurate
information about a security or company, and increase the likelihood that an
investment will not perform as well as expected.
Below Investment Grade Bond Risk
Below investment grade bonds are commonly referred to as "junk bonds" because
they are usually backed by issuers of less proven or questionable financial
strength. Such issuers are more vulnerable to financial setbacks and less
certain to pay interest and principal than issuers of bonds offering lower
yields and risk. Markets may react to unfavorable news about issuers of below
investment grade bonds causing sudden and steep declines in value.
Mortgage-Backed Securities Risk
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.
Early repayment of mortgages underlying these securities may expose a Fund to a
lower rate of return when it reinvests the principal.
Limited Duration
Fund
FUND FACTS:
Goal:
Current Income
Preservation of Capital
Principal Investments:
Investment Grade Debt Securities
U.S. Treasury and Agency Obligations
Mortgage and Asset-Backed Securities
Foreign Securities
Classes of Shares Offered in This Prospectus:
Institutional
Institutional Service
Investment Advisor:
First Union National Bank
Portfolio Managers:
David Fowley
Sam C. Paddison
Andrew C. Zimmerman
NASDAQ Symbols
ESDIX (Institutional)
ESDSX (Institutional Service)
Dividend Payment Schedule
Monthly
INVESTMENT GOAL
The Fund seeks to provide current income consistent with preservation of capital
and low principal fluctuation.
INVESTMENT STRATEGY
The Fund normally invests at least 65% of its assets in investment grade debt
securities, including debt securities issued or guaranteed by the U.S. Treasury
or by an agency or instrumentality of the U.S. government. In addition, the Fund
may invest in municipal and foreign securities and a variety of derivative
instruments consistent with its investment objective and policies. By
emphasizing the use of high quality corporate, mortgage and asset-backed
securities maturing in less than five years, the Fund seeks to provide investors
a high level of current income while reducing price volatility. The Fund may
invest for temporary defensive purposes up to 100% of its assets in short-term
obligations. Each of the Evergreen Select Fixed Income Funds may invest in high
quality money market instruments in response to adverse economic, political or
market conditions. This strategy is inconsistent with these Funds' principal
investment strategy and investment objective, and if employed could result in a
lower return and loss of market opportunity.
RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:
? Interest Rate Risk
? Credit Risk
? Mortgage-Backed Securities Risk
? Foreign Investment Risk
In addition, your investment may be subject to special risks associated with
investing in municipal securities. The value of municipal bonds tends to go up
when interest rates go down and to go down when interest rates go up. Political
developments or fiscal mismanagement could affect the issuer's ability to make
prompt payments of interest and principal. Those events could also affect the
market value of the security. Moreover, the market for municipal bonds may at
times be inactive and can be temporarily affected by large purchases and sales,
including those by the Fund.
For further information regarding the Fund's investment strategy and risk
factors see "Other Fund Practices." PERFORMANCE The following charts show how
the Fund has performed in the past. Past performance is not an indication of
future results.
The chart below shows the percentage gains or loss for Institutional shares of
the Fund in each calendar year since the Institutional shares' inception on
4/30/94. It should give you a general idea of how the Fund's return has varied
from year-to-year. This graph includes the effects of Fund expenses.
Year-by-Year Total Return for Institutional Shares (%)*
1994** 1995 1996 1997
1.90% 10.28% 4.53% 6.76%
Best Quarter: 2nd Quarter 1995 3.00%
Worst Quarter: 1st Quarter 1996 0.04%
Year to date total return through 9/30/98 is 5.54%.
The next table lists the Fund's average year-by-year return by class over the
past year and since inception (through 12/31/97). This is intended to provide
you with some indication of the risks of investing in the Fund. At the bottom of
the table you can compare this performance with the Merrill Lynch 1-3 Year
Treasury Bond Index. The Merrill Lynch 1-3 Year Treasury Bond Index is a
- ---------------------------------------------.
Average Annual Total Return
(for the period ended 12/31/97)*
Inception Since
Date 1 year 5 year 10 year Inception
Institutional 4/30/94 6.76% N/A N/A 6.37%
Institutional
Service 4/30/94 6.52% N/A N/A 6.11%
Merrill Lynch 1-3 year
Treasury Bond Index 7.70% 6.01% 7.34% 6.81%***
*The performance information for the shares includes the performance of the
Fund's predecessor common trust fund for periods before the Fund's registration
statement became effective on November 21, 1997. For the period 11/24/97 through
7/28/98 (mutual fund class inception date) the Institutional Service share
performance information is based upon the historical performance of the
Institutional shares and therefore do not reflect 12b-1 fees. Returns for this
period would have been lower had the 12b-1 fees been included. Performance for
the common trust fund has been adjusted to include the effect of estimated
mutual fund expense ratios at the time the Fund was converted to a mutual fund.
**Since inception on 4/30/94 to 12/31/94.
*** From 4/30/94 through 12/31/97.
EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
You pay no shareholder transaction fees.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)*
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses**
Institutional .30% .00% .17% .47%
Institutional
Service .30% .25% .17% .72%
*From time to time, the Fund's investment advisor may, at its discretion, reduce
or waive its fees or reimburse the Fund for certain of its expenses in order to
reduce expense ratios. The Fund's investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating expenses for the Institutional and Institutional
Service shares would be .30% and .55%, respectively.
**Estimated for the fiscal year ending 9/30/99.
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual Funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
Institutional Institutional Service
After 1 year $48 $74
After 3 years $151 $230
After 5 years $263 $401
After 10 years $591 $894
Select Core
Bond Fund
FUND FACTS:
Goal:
Maximize total return
Principal Investment:
Investment Grade Debt Securities
Mortgage and Asset-Backed Securities
U.S. Treasury and Agency Obligations
Classes of Shares Offered in This Prospectus:
Institutional Shares
Institutional Service Shares
Investment Advisor:
First Union National Bank
Portfolio Managers:
Robert Cheshire
Bruce J. Besecker
NASDAQ Symbols
ESBIX (Institutional Shares)
ESBSX (Institutional Service Shares)
Dividend Payment Schedule
Monthly
INVESTMENT GOAL
The Fund seeks to maximize total return through a combination of current income
and capital appreciation, by investing primarily in investment grade fixed
income securities with complimentary investments in high yield foreign and fixed
income securities.
INVESTMENT STRATEGY
The Fund invests at least 65% of its assets in investment grade debt securities,
including debt securities issued or guaranteed by the U.S. Treasury or by an
agency or instrumentality of the U.S. government. In addition, the Fund may
invest in foreign securities and a variety of derivative instruments, including
mortgage and asset-backed securities. Up to 35% of the Fund's total assets may
be invested in below investment grade securities. Each of the Evergreen Select
Fixed Income Funds may invest in high quality money market instruments in
response to adverse economic, political or market conditions. This strategy is
inconsistent with these Funds' principal investment strategy and investment
objective, and if employed could result in a lower return and loss of market
opportunity. RISK FACTORS Your investment in the Fund is subject to the risks
discussed in the "Overview" on page 3 under the headings:
? Interest Rate Risk
? Credit Risk
? Mortgage-Backed Securities Risk
? Foreign Investment Risk
? Below Investment Grade Bond Risk
For further information regarding the Fund's investment strategy and risk
factors see "Other Fund Practices." PERFORMANCE The following charts show how
the Fund has performed in the past. Past performance is not an indication of
future results.
The chart below shows the percentage gains or loss for Institutional shares of
the Fund for the past ten calendar years. It should give you a general idea of
how the Fund's return has varied from year-to-year. This graph includes the
effects of Fund expenses.
Year-by-Year Total Return for Institutional Shares (%)*
1988 1989 1990 1991 1992
7.76% 13.44% 7.96% 17.43% 6.84%
1993 1994 1995 1996 1997
12.18% (4.17)% 16.64% 3.04% 8.50%
Best Quarter: 3rd Quarter 1991 6.56%
Worst Quarter: 1st Quarter 1994 (3.26)%
Year to date total return through 9/30/98 is 7.77%.
The next table lists the Fund's average year-by-year return by class over the
past one, five and ten years and since inception (through 12/31/97). This is
intended to provide you with some indication of the risks of investing in the
Fund. At the bottom of the table you can compare this performance with the
Lehman Brothers Aggregate Bond Index and the Consumer Price Index. The Lehman
Brothers Aggregate Bond Index is
- ----------------------------------
________________. The Consumer Price Index is a ___
- ---------------------------------------------.
Average Annual Total Return
(for the period ended 12/31/97)*
Inception Since
Date 1 year 5 year 10 year Inception
Institutional 2/28/86 8.50% 6.99% 8.79% 8.19%
Institutional 2/28/86 8.26% 6.73% 8.52% 7.93%
Service
Lehman Brothers
Aggregate Bond Index 9.34% 7.02% 9.04% 8.88%**
Consumer Price Index 1.71% 2.60% 3.40% 3.34%**
*The performance information for the shares includes the performance of the
Fund's predecessor common trust fund for periods before the Fund's registration
statement became effective on November 21, 1997. For the period 11/24/97 through
12/19/97 (mutual fund class inception date) the Institutional share performance
information is based upon the historical performance of the Charitable shares.
For the period 11/24/97 through 3/2/98 (mutual fund class inception date) the
Institutional Service share performance information is based upon the historical
performance of the Charitable shares and therefore do not reflect 12b-1 fees.
Institutional Service share returns for this period would have been lower had
the 12b-1 fees been included. Performance for the common trust fund has been
adjusted to include the effect of estimated mutual fund expense ratios at the
time the Fund was converted to a mutual fund.
** From 2/28/86 through 12/31/97.
EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
You pay no shareholder transaction fees.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)*
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses**
Institutional .40% .00% .13% .53%
Institutional
Service .40% .25% .13% .78%
*From time to time, the Fund's investment advisor may, at its discretion, reduce
or waive its fees or reimburse the Fund for certain of its expenses in order to
reduce expense ratios. The Fund's investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating expenses for the Institutional and Institutional
Service shares would be .42% and .67% respectively.
**Estimated for the fiscal year ending 9/30/99.
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
Institutional Institutional Service
After 1 year $54 $80
After 3 years $170 $249
After 5 years $296 $433
After 10 years $665 $966
Select Fixed
Income Fund
FUND FACTS:
Goal:
High Current Income
Preservation of Capital
Principal Investments:
Investment Grade Debt Securities
U.S. Treasury and Agency Obligations
Mortgage and Asset-Backed Securities
Classes of Shares Offered in This Prospectus:
Institutional Shares
Institutional Service Shares
Investment Advisor:
First Union National Bank
Portfolio Manager:
Thomas L. Ellis
NASDAQ Symbols:
ESFIX (Institutional Shares)
EESFSX (Institutional Service Shares)
Dividend Payment Schedule
Monthly
INVESTMENT GOAL
The Fund seeks a high level of current income and a potential for capital
appreciation. As a secondary objective, the Fund seeks preservation of capital.
INVESTMENT STRATEGY
The Fund invests at least 65% of its assets in investment grade debt securities,
including debt securities issued or guaranteed by the U.S. Treasury or by an
agency or instrumentality of the U.S. government. In addition, the Fund may
invest in foreign securities and a variety of derivative instruments, including
mortgage and asset-backed securities. Up to 35% of the Fund's total assets may
be invested in below investment grade securities. Each of the Evergreen Select
Fixed Income Funds may invest in high quality money market instruments in
response to adverse economic, political or market conditions. This strategy is
inconsistent with these Funds' principal investment strategy and investment
objective, and if employed could result in a lower return and loss of market
opportunity. RISK FACTORS Your investment in the Fund is subject to the risks
discussed in the "Overview" on page 3 under the headings:
? Interest Rate Risk
? Credit Risk
? Mortgage-Backed Securities Risk
? Foreign Investment Risk
? Below Investment Grade Bond Risk
For further information regarding the Fund's investment strategy and risk
factors see "Other Fund Practices." PERFORMANCE The following charts show how
the Fund has performed in the past. Past performance is not an indication of
future results.
The chart below shows the percentage gain or loss of the Fund's Institutional
Shares in each of the last ten calendar years. It should give you a general idea
of how the Fund's return has varied from year-to-year. This graph includes the
effects of Fund expenses.
Year-by-Year Total Return for Institutional Shares (%)*
1988 1989 1990 1991 1992
6.04% 11.53% 10.89% 13.80% 5.87%
1993 1994 1995 1996 1997
8.23% (2.48)% 14.65% 3.58% 6.76%
Best Quarter: 2nd Quarter 1989 6.88%
Worst Quarter: 1st Quarter 1994 (2.29)%
Year to date total return through 9/30/98 is 7.53%.
The next table lists the Fund's average year-by-year return by class over the
past one, five and ten years and since inception (through 12/31/97). This is
intended to provide you with some indication of the risks of investing in the
Fund. At the bottom of the table you can compare this performance with the
Lehman Brothers Intermediate Government/Corporate Bond Index. The Lehman
Brothers Intermediate Government/Corporate Bond Index is _______________
- ---------------------------------------------.
Average Annual Total Return
(for the period ended 12/31/97)*
Inception Since
Date 1 year 5 year 10 year Inception
Institutional 3/31/71 6.76% 6.00% 7.77% 8.53%
Institutional 3/31/71 6.52% 5.74% 7.51% 8.26%
Service
Lehman Brothers Intermediate Government/
Corporate Index 9.12% 6.49% 8.40% N/A
*The performance information for the shares includes the performance of the
Fund's predecessor common trust fund for periods before the Fund's registration
statement became effective on November 21, 1997. For the period 11/24/97 through
3/9/98 (mutual fund class inception date) the Institutional Service share
performance information is based upon the historical performance of the
Institutional shares and therefore do not reflect 12b-1 fees. Returns for this
period would have been lower had the 12b-1 fees been included. Performance for
the common trust fund has been adjusted to include the effect of estimated
mutual fund expense ratios at the time the Fund was converted to a mutual fund.
EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
You pay no shareholder transaction fees.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)*
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses**
Institutional .50% .00% .09% .59%
Institutional
Service .50% .25% .09% .84%
*From time to time, the Fund's investment advisor may, at its discretion, reduce
or waive its fees or reimburse the Fund for certain of its expenses in order to
reduce expense ratios. The Fund's investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating expenses for the Institutional and Institutional
Service shares would be .49% and .74%, respectively.
**Estimated for the fiscal year ending 9/30/99.
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
Institutional Institutional Service
After 1 year $60 $86
After 3 years $189 $268
After 5 years $329 $466
After 10 years $737 $1,037
Select Income
Plus Fund
FUND FACTS:
Goal:
High Current Income
Capital Appreciation
Principal Investments:
Investment Grade Debt Securities
U.S. Treasury and Agency Obligations
Mortgage and Asset-Backed Securities
Classes of Shares Offered in This Prospectus:
Institutional Shares
Institutional Service Shares
Investment Advisor:
First Union National Bank
Portfolio Managers:
George Prattos
J.P. Weaver
NASDAQ Symbols:
ESIIX (Institutional Shares)
ESISX (Institutional Service Shares)
Dividend Payment Schedule
Monthly
INVESTMENT GOAL
The Fund seeks a high level of current income and a potential for capital
appreciation.
INVESTMENT STRATEGY
The Fund seeks to achieve its objective by actively managing portfolio duration
for capital gain opportunities. The Fund invests at least 65% of its assets in
investment grade debt securities, including debt securities issued or guaranteed
by the U.S. Treasury or by an agency or instrumentality of the U.S. government.
In addition, the Fund may invest in foreign securities and a variety of
derivative instruments, including mortgage and asset-backed securities. Up to
35% of the Fund's total assets may be invested in below investment grade
securities.
Each of the Evergreen Select Fixed Income Funds may invest in high quality money
market instruments in response to adverse economic, political or market
conditions. This strategy is inconsistent with these Funds' principal investment
strategy and investment objective, and if employed could result in a lower
return and loss of market opportunity. RISK FACTORS Your investment in the Fund
is subject to the risks discussed in the "Overview" on page 3 under the
headings:
? Interest Rate Risk
? Credit Risk
? Mortgage-Backed Risk
? Foreign Investment Risk
? Below Investment Grade Bond Risk
For further information regarding the Fund's investment strategy and risk
factors see "Other Fund Practices." PERFORMANCE The following charts show how
the Fund has performed in the past. Past performance is not an indication of
future results.
The chart below shows the percentage gains or loss for Institutional shares of
the Fund in each calendar year since the Institutional shares' inception on
8/31/88. It should give you a general idea of how the Fund's return has varied
from year-to-year. This graph includes the effects of Fund expenses.
Year-by-Year Total Return for Institutional Shares (%)*
1988** 1989 1990 1991 1992
1.38% 12.42% 8.56% 15.38% 5.23%
1993 1994 1995 1996 1997
11.18% (4.12)% 18.77% 2.24% 8.97%
Best Quarter: 2nd Quarter 1989 8.01%
Worst Quarter: 1st Quarter 1994 (3.44)%
Year to date total return through 9/30/98 is 8.27%
The next table lists the Fund's average year-by-year return by class over the
past one, five and ten years and since inception (through 12/31/97). This is
intended to provide you with some indication of the risks of investing in the
Fund. At the bottom of the table you can compare this performance with the
Lehman Brothers Government Corporate Bond Index. The Lehman Brothers
Government/Corporate Bond Index is _______
- ---------------------------------------------.
Average Annual Total Return
(for the period ended 12/31/97)*
Inception Since
Date 1 year 5 year 10 year Inception
Institutional 8/31/88 8.97% 7.12% N/A 8.38%
Institutional 8/31/88 % % % %
Service
Lehman Brothers Government/
Corporate Bond Index 9.12% 6.49% 8.40% 8.57%***
*The performance information for the shares includes the performance of the
Fund's predecessor common trust fund for periods before the Fund's registration
statement became effective on November 21, 1997. For the period 11/24/97 through
3/2/98 (mutual fund class inception date) the Institutional Service share
performance information is based upon the historical performance of the
Institutional shares and therefore do not reflect 12b-1 fees. Returns for this
period would have been lower had the 12b-1 fees been included. Performance for
the common trust fund has been adjusted to include the effect of estimated
mutual fund expense ratios at the time the Fund was converted to a mutual fund.
**Since inception on 8/31/88 to 12/31/88.
***From 8/31/88 through 12/31//97.
EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
You pay no shareholder transaction fees.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)*
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses**
Institutional .50% .00% .08% .58%
Institutional
Service .50% .25% .08% .83%
*From time to time, the Fund's investment advisor may, at its discretion, reduce
or waive its fees or reimburse the Fund for certain of its expenses in order to
reduce expense ratios. The Fund's investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating expenses for the Institutional and Institutional
Service shares would be .48% and .73%, respectively.
**Estimated for the fiscal year ending 9/30/99.
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
Institutional Institutional Service
After 1 year $59 $85
After 3 years $186 $265
After 5 years $324 $460
After 10 years $725 $1,025
Select Total Return
Bond Fund
FUND FACTS:
Goal:
Maximize Total Return
Principal Investments:
Investment Grade Debt Securities
U.S. Treasury and Agency Obligations
Mortgage-Backed Securities
Classes of Shares Offered in This Prospectus:
Institutional Shares
Institutional Service Shares
Investment Advisor:
First Union National Bank
Portfolio Managers:
Rollin C. Williams
Richard Cryan
NASDAQ Symbols:
ESTIX (Institutional Shares
ESTSX (Institutional Service Shares)
Dividend Payment Schedule
Monthly
INVESTMENT GOAL
The Fund seeks to maximize total return.
INVESTMENT STRATEGY
The Fund pursues a controlled risk approach which uses duration adjustments,
sector composition and security selection in an effort to exceed the return of
its benchmark, the Lehman Brothers Aggregate Index. The Fund invests at least
65% of its assets in investment grade debt securities, including debt securities
issued or guaranteed by the U.S. Treasury or by an agency or instrumentality of
the U.S. government. In addition, the Fund may invest in foreign securities and
a variety of derivative instruments, including mortgage and asset-backed
securities. Up to 35% of the Fund's total assets may be invested in below
investment grade securities.
Each of the Evergreen Select Fixed Income Funds may invest in high quality money
market instruments in response to adverse economic, political or market
conditions. This strategy is inconsistent with these Funds' principal investment
strategy and investment objective, and if employed could result in a lower
return and loss of market opportunity.
RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:
? Interest Rate Risk
? Credit Risk
? Mortgage-Backed Securities Risk
? Foreign Investment Risk
? Below Investment Grade Bond Risk
For further information regarding the Fund's investment strategy and risk
factors see "Other Fund Practices." PERFORMANCE The information below shows the
total return for the Institutional Shares of the Fund in the calendar period
since the Institutional Shares' inception on 4/20/98 through 9/30/98. Past
performance is not an indication of future results.
Year To Date Total Return for Institutional Shares (%)
1998
2.85%.
EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
You pay no shareholder transaction fees.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)*
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses**
Institutional .40% .00% .15% .55%
Institutional
Service .40% .25% .15% .80%
*From time to time, the Fund's investment advisor may, at its discretion, reduce
or waive its fees or reimburse the Fund for certain of its expenses in order to
reduce expense ratios. The Fund's investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating expenses for the Institutional and Institutional
Service shares would be .50% and .75%, respectively.
**Estimated for the fiscal year ending 9/30/99.
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
Institutional Institutional Service
After 1 year $56 $82
After 3 years $176 $255
After 5 years $307 $444
After 10 years $688 $990
Adjustable Rate
Fund
FUND FACTS:
Goal:
High Current Income
Low Volatility
Principal Investments:
Mortgage Securities
Mortgage-Backed Securities
U.S. Government Obligations
Classes of Shares Offered in This Prospectus:
Institutional
Institutional Service
Investment Advisor:
Evergreen Investment Management Company
Portfolio Managers:
Gary E. Pzegeo
NASDAQ Symbols:
EKIZX (Institutional)
Dividend Payment Schedule
Monthly
INVESTMENT GOAL
The Fund seeks a high level of current income consistent with low volatility of
principal.
INVESTMENT STRATEGY
The Fund seeks to provide a relatively stable 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.
Normally 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, which securities have interest rates that reset at periodic intervals
and are issued or guaranteed by the U.S. government, its agencies or
instrumentalities, including collateralized mortgage obligations. The Fund may
also invest up to 35% of its assets (or 100% for temporary defensive purposes)
in obligations of the U.S. government, its agencies or instrumentalities
Each of the Evergreen Select Fixed Income Funds may invest in high quality money
market instruments in response to adverse economic, political or market
conditions. This strategy is inconsistent with these Funds' principal investment
strategy and investment objective, and if employed could result in a lower
return and loss of market opportunity.
RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:
? Interest Rate Risk
? Credit Risk
? Mortgage-Backed Securities Risk
For further information regarding the Fund's investment strategy and risk
factors see "Other Fund Practices." PERFORMANCE The following charts show how
the Fund has performed in the past. Past performance is not an indication of
future results.
The chart below shows the percentage gain or loss of the Fund's Institutional
shares in each calendar year since the inception of the Institutional shares on
10/1/91. It should give you a general idea of how the Fund's return has varied
from year-to-year. This graph includes the effects of Fund expenses.
Year-by-Year Total Return for Institutional Shares (%)
1991* 1992 1993 1994 1995 1996 1997
1.88% 4.13% 5.37% 1.06% 8.67% 6.92% 7.23%
Best Quarter: 1st Quarter 1995 3.13%
Worst Quarter: 2nd Quarter 1994 0.26%
*Since inception on 10/1/91 to 12/31/91 Year to date total return through
9/30/98 is 3.89%.
The next table lists the Fund's average year-by-year return by class over the
past one and five years or since inception (through 12/31/97). This is intended
to provide you with some indication of the risks of investing in the Fund. At
the bottom of the table you can compare this performance with the 6 month
Treasury Bill Index and the Consumer Price Index. The Lehman Brothers 1-3 Year
Government Bond Index is ___________________________. The Consumer Price Index
is_____________________________________.
Average Annual Total Return
(for the period ended 12/31/97)
Inception Since
Date 1 year 5 year 10 year Inception
Institutional 10/1/91 7.23% 5.82% N/A 5.62%
Institutional
Service 10/1/94 6.96% 5.56% N/A 5.41%
Lehman Brothers 1-3 year
Government Bond Index 7.54% 6.02% 7.38% 6.40%*
Consumer Price Index 1.71% 2.60% 3.40% 2.62%*
*From 9/30/91 through 12/31/97.
EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
You pay no shareholder transaction fees.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses*
Institutional .30% .00% .03% .33%
Institutional
Service .30% .25% .02% .57%
*Estimated for the fiscal year ending 9/30/99.
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
Institutional Institutional Service
After 1 year $34 $58
After 3 years $106 $183
After 5 years $185 $318
After 10 years $418 $714
Intermediate
Municipal Bond
Fund
FUND FACTS:
Goal:
Current Income exempt from federal income taxes
Principal Investments:
Municipal Securities
Mortgage-Backed Securities
High-Yield, High-Risk Bonds
Classes of Shares Offered in This Prospectus:
Institutional
Institutional Service
Investment Advisor:
First Union National Bank
Portfolio Manager:
Richard K. Marrone
NASDAQ Symbols:
ESTIX (Institutional)
ESTSX (Institutional Service)
Dividend Payment Schedule
Monthly
INVESTMENT GOAL
The Fund seeks the highest possible current income, exempt from federal income
taxes, consistent with the Fund's maturity and preservation of capital.
INVESTMENT STRATEGY
The Fund normally invests at least 80% of its assets in securities exempt from
federal income tax (including the alternative minimum tax) and up to 20% of its
assets in securities subject to the alternative minimum tax and/or taxable
obligations. The Fund may invest up to 20% of its assets in high-yield,
high-risk bonds (not rated below B). In addition, the Fund may invest in a
variety of derivative instruments consistent with its investment objective and
policies, including mortgage and asset-backed securities. The Fund will maintain
a dollar-weighted average maturity of three to ten years.
Each of the Evergreen Select Fixed Income Funds may invest in high quality money
market instruments in response to adverse economic, political or market
conditions. This strategy is inconsistent with these Funds' principal investment
strategy and investment objective, and if employed could result in a lower
return and loss of market opportunity.
RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:
? Interest Rate Risk
? Credit Risk
? Mortgage-Backed Securities Risk
In addition, your investment may be subject to special risks associated with
investing in municipal securities. The value of municipal bonds tends to go up
when interest rates go down and to go down when interest rates go up. Political
developments or fiscal mismanagement could affect the issuer's ability to make
prompt payments of interest and principal. Those events could also affect the
market value of the security. Moreover, the market for municipal bonds may at
times be inactive and can be temporarily affected by large purchases and sales,
including those by a Fund.
For further information regarding the Fund's investment strategy and risk
factors see "Other Fund Practices."
PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gains or loss for Institutional shares of
the Fund in each of the last ten calendar years. It should give you a general
idea of how the Fund's return has varied from year-to-year. This graph includes
the effects of Fund expenses.
Year-by-Year Total Return for Institutional Shares (%)*
1988 1989 1990 1991 1992
7.36% 8.33% 6.20% 8.99% 7.52%
1993 1994 1995 1996 1997
9.34% (2.64)% 11.98% 3.96% 8.64%
Best Quarter: 2nd Quarter 1989 4.28%
Worst Quarter: 1st Quarter 1994 (2.66)%
Year to date total return through 9/30/98 is 5.64%.
The next table lists the Fund's average year-by-year
return by class over the past one, five and ten years or
since inception (through 12/31/97). This is intended to
provide you with some indication of the risks of investing
in the Fund. At the bottom of the table you can compare
this performance with the Lehman Brothers Municipal
Bond 10-Year Index. The Lehman Brothers Municipal
Bond 10-Year Index is__________________
- -------------------------------------.
Average Annual Total Return
(for the period ended 12/31/97)*
Inception Since
Date 1 year 5 year 10 year Inception
Institutional 1/31/84 8.64% 6.13% 6.90% 7.42%
Institutional
Service 1/31/84
Lehman Brothers Muni
Bond 10-Year Index 8.28% 6.49% 8.18% 6.28%**
*The performance information for the shares includes the performance of the
Fund's predecessor common trust fund for periods before the Fund's registration
statement became effective on November 21, 1997. For the period 11/24/97 through
the 3/2/98 (mutual fund class inception date) the Institutional Service share
performance information is based upon the historical performance of the
Institutional shares and therefore do not reflect 12b-1 fees. Returns for this
period would have been lower had the 12b-1 fees been included. Performance for
the common trust fund has been adjusted to include the effect of estimated
mutual fund expense ratios at the time the Fund was converted to a mutual fund.
** From 1/31/94 through 12/31/97.
EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
You pay no shareholder transaction fees.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)*
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses**
Institutional .60% .00% .09% .69%
Institutional
Service .60% .25% .09% .94%
*From time to time, the Fund's investment advisor may, at its discretion, reduce
or waive its fees or reimburse the Fund for certain of its expenses in order to
reduce expense ratios. The Fund's investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating expenses for the Institutional and Institutional
Service shares would be .59% and .84%, respectively.
**Estimated for the fiscal year ending 9/30/99.
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
Institutional Institutional Service
After 1 year $70 $96
After 3 years $221 $300
After 5 years $384 $520
After 10 years $965 $1,155
International
Bond Fund
FUND FACTS:
Goal:
Current Income
Capital Appreciation
Principal Investments:
Investment Grade or Debt Obligations of Foreign Issuers
Classes of Shares Offered in This Prospectus:
Institutional
Institutional Service
Investment Advisor:
First International Advisers, Ltd.
Portfolio Manager:
George McNeill
Dividend Payment Schedule
Quarterly
INVESTMENT GOAL
The Fund seeks capital appreciation and current income.
INVESTMENT STRATEGY
The Fund will invest at least 65% of its total assets in securities or
obligations of supranational agencies (such as the World Bank) or issuers or
governments located in at least three countries other than the U.S. No more than
5% of the Fund's assets will be invested in debt obligations or similar
securities denominated in the currencies of developing countries. Up to 35% of
the Fund's total assets may be invested in mortgage and asset-backed securities
and/or bank obligations. In addition the Fund may invest in warrants and in a
variety of derivative instruments.
Each of the Evergreen Select Fixed Income Funds may invest in high quality money
market instruments in response to adverse economic, political or market
conditions. This strategy is inconsistent with these Funds' principal investment
strategy and investment objective, and if employed could result in a lower
return and loss of market opportunity.
RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:
? Interest Rate Risk
? Credit Risk
? Foreign Investment Risk
? Mortgage-Backed Securities Risk
For further information regarding the Fund's investment strategy and risk
factors see "Other Fund Practices."
PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gains or loss for Institutional shares of
the Fund in each calendar year since the Institutional shares' inception on
12/16/93. It should give you a general idea of how the Fund's return has varied
from year-to-year. This graph includes the effects of Fund expenses.
Year-by-Year Total Return for Institutional Shares (%)
1993* 1994 1995 1996 1997
0.60% (9.81)% 17.68% 5.61% 3.72%
*Since inception on 12/15/93 to 12/31/93.
The next table lists the Fund's average year-by-year
return by class over the past year and since inception
(through 12/31/97). This is intended to provide you with
some indication of the risks of investing in the Fund. At
the bottom of the table you can compare this performance
with the J.P. Morgan Global Government Bond Non-U.S.
Index. The J.P. Morgan Global Government Bond
Non-U.S. Index is a
- -------------------------------------.
Average Annual Total Return
(for the period ended 12/31/97)
Inception Since
Date 1 year 5 year 10 year Inception
Institutional 12/15/93 3.72% N/A N/A 3.95%
Institutional
Service 12/15/93 3.47% N/A N/A 3.71%
JP Morgan Global Government
Bond Non U.S. Index 14.9% 6.69% 8.51% 8.87%*
*From 1/1/93 to 12/31/97.
Best Quarter: 1st Quarter 1995 5.50%
Worst Quarter: 1st Quarter 1994 (5.96)%
Year to date total return through 9/30/98 is 5.95%.
EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
You pay no shareholder transaction fees.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)*
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses**
Institutional .60% .00 .32% .92%
Institutional
Service .60% .25% .32% 1.17%
* From time to time, the Fund's investment advisor may, at its discretion,
reduce or waive its fees or reimburse the Fund for certain of its expenses in
order to reduce expense ratios. The Fund's investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating expenses for the Institutional and Institutional
Service shares would be .65% and .90%, respectively.
**Estimated for the fiscal year ending 9/30/99.
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
Institutional Institutional Service
After 1 year $94 $119
After 3 years $293 $372
After 5 years $ $
After 10 years $ $
THE FUNDS' INVESTMENT ADVISORS
Each investment advisor manages a Fund's investments and supervises its daily
business affairs. There are three different investment advisors for the
Evergreen Select Fixed Income Funds. All investment advisors for the Evergreen
Funds are subsidiaries of First Union Corporation, the sixth largest bank
holding company in the United States, with over $220 billion in consolidated
assets as of {date}. First Union Corporation is located at 301 South College
Street, Charlotte, North Carolina 28288-0013.
Evergreen Investment Management Company ("EIMC"), is the investment advisor to
Adjustable Rate Fund. EIMC has been managing mutual funds and private accounts
since 1932 and currently manages over $8.5 billion in assets for 26 of the
Evergreen Funds. EIMC is located at 200 Berkeley Street, Boston, Massachusetts
02116-5034.
First Union National Bank ("FUNB"), is the investment advisor to Limited
Duration Fund, Core Bond Fund, Fixed Income Fund, Income Plus Fund, Total Return
Fund and Intermediate Municipal Bond Fund. FUNB has been managing mutual funds
since xxx and currently manages $xx in assets for xx of the Evergreen Funds.
FUNB is located at 201 South College Street, Charlotte, North Carolina 28288.
First International Advisers, Ltd. ("FIA"), is the investment advisor to
International Bond Fund and the sub-advisor to the Total Return Bond Fund. FIA
is a specialist manager of fixed income securities and cash for institutional
investors. FIA, formerly known as Analytic?TSA International, Inc., was acquired
by FUNB on August 28, 1998. FIA currently manages $58 million in assets for two
of the Evergreen Funds. FIA is located at 25/28 Old Burlington Street, London
W1X 1LB, England.
Year 2000 Compliance
The investment advisors and other service providers for the Evergreen Funds are
taking steps to address any potential Year 2000-related computer problems.
However, there is some risk that these problems could disrupt the Funds'
operations or financial markets generally.
European Currency Conversion Risk Certain countries in Europe will be converting
their different currencies to a single, common currency beginning January 1,
1999. In connection with this change, investment advisors, mutual funds and
their service providers will need to modify their accounting and recordkeeping
systems to handle the new currency. Your investment in the Fund may be adversely
affected if these technical modifications are not implemented properly. Also,
the conversion to a single currency could impair the markets for securities
denominated in the currencies being eliminated, which could also adversely
impact your investment.
THE FUNDS' PORTFOLIO MANAGERS
Limited Duration
David K. Fowley, CFA, has been a portfolio manager of the Fund since October
1994. Mr. Fowley has over 5 years of investment experience. Mr. Fowley joined
FUNB in July 1992 as a Trust Investment Associate before becoming a Trust
Investment Officer in October 1994. Prior to becoming an Assistant Vice
President and portfolio manager of FUNB in October 1997, Mr. Fowley served as a
Trust Investment Officer from 1994-1997.
Sam Paddison has been a portfolio manager of the Fund since November 1998. Mr.
Paddison has over 25 years of institutional investment experience. Since joining
FUNB in 1996, Mr. Paddison has been Senior Vice President and Managing Director
of the Specialty Fixed Income Group- Northern Region. Prior to joining FUNB, Mr.
Paddison was Head of Strategic Asset and Liability Management for First Fidelity
Bank from 1987 to 1996.
Andrew Zimmerman has been a portfolio manager of the
Fund since November 1998. Mr. Zimmerman joined
FUNB in 1992 as an Investment Officer of the Specialty
Fixed Income Group.
Fixed Income
Thomas L. Ellis has over 29 years of experience in investments. Since joining
FUNB in 1985, Mr. Ellis has been a Vice President and Senior Portfolio Manager.
At FUNB he is responsible for the portfolio management of over $1 billion in
taxable fixed income assets, including the Fund and Evergreen Short-Intermediate
Bond Fund, each a mutual fund; and 17 separate accounts.
Income Plus
George Prattos has over 18 years of investment experience. Since joining FUNB in
1991, Mr. Prattos has been a Vice President and Director of the Specialty Fixed
Income Group. He is primarily responsible for managing specialty fixed income
products throughout the FUNB system. Mr. Prattos recently became a Senior Vice
President of FUNB in 1997.
J.P. Weaver has over 12 years of market experience in
fixed income investments. Since joining FUNB in 1994,
Mr. Weaver has been a Vice President and Director of
Fixed Income Research. In addition, he manages several
separate accounts within the Specialty Fixed Income
Group.
Intermediate Municipal Bond
Richard K. Marrone has over 15 years of investment and market experience. Since
joining FUNB in 1993, Mr. Marrone has been a Vice President and senior portfolio
manager.
Core Bond
Since joining First Fidelity Bank in 1990, which was acquired by FUNB in 1995,
Robert Cheshire has been a Vice President and Senior Portfolio Manager. He is
head of the Newark Taxable Fixed Income Unit and manages the Evergreen
Intermediate Term Government Securities Fund.
Bruce J. Besecker, CFA has been investing in the fixed income market since 1979,
with over 7 years experience in managing or co-managing fixed income mutual
funds. The $1.5 billion his group manages in Philadelphia includes one mutual
fund and over 40 individual account relationships. Since joining FUNB in 1987,
Mr. Besecker has served as a Vice President, senior fixed income portfolio
manager and unit leader.
Total Return
Rollin Williams, CFA and Sr. Vice President of FUNB, has over 29 years of
investment and banking management experience. In addition to managing FUNB's
Diversified Bond Group Trust, Stable Portfolio Group Trust, Evergreen U.S.
Government Fund and bond management for the Evergreen Select Balanced Fund, he
is also responsible for the management of over $2.2 billion in fixed income
portfolios. Mr. Williams was the head of fixed income investment at Dominion
Trust Company in Roanoke, VA, from 1988 until 1993, at which time Dominion was
acquired by FUNB and Mr. Williams was named Vice President and Senior Portfolio
Manager.
Richard Cryan, Vice President and Sr. Portfolio Manager,
has been managing the Fund since April 1998. Mr. Cryan
has been employed by FUNB since April 1992.
Investment decisions for the foreign bond component of the Fund are made by a
committee of three investment professionals at FIA.
Adjustable Rate
Gary E. Pzegeo have been a 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 EIMC since 1990.
International Bond
George McNeill has been Managing Director of FIA since 1992. Prior to joining
FIA, he served as Director for Axe-Houghton, Ltd. From 1989 to 1992.
CALCULATING THE SHARE PRICE
The value of one share of a Fund, also known as the net asset value, or NAV, is
calculated on each day the New York Stock Exchange is open as of the time the
Exchange closes (normally 4:00 p.m. Eastern time). We calculate the share price
for each share by adding up the total assets of the Fund, subtracting all
liabilities, then dividing the result by the total number of shares outstanding.
Each security held by a Fund is valued using the most recent market quote for
that security. If no market quotation is available for a given security, we will
price that security at fair value according to policies established by the
Fund's Board of Trustees. Short-term securities with maturities of 60 days or
less will be valued on the basis of amortized cost.
The price relative for a Fund purchase or the amount you received for a Fund
redemption is based on the next price calculated after the order is received and
all required information is provided. The value of your account at any given
time is the latest share price multiplied by the number of shares you own. Your
account balance may change daily because the share price may change daily.
HOW TO CHOOSE AN EVERGREEN FUND When choosing an Evergreen Fund, you should: ?
Most importantly, read the prospectus to see if the Fund is suitable for you. ?
Consider talking to an investment professional. He or she is qualified to give
you investment advice based on your investment goals and financial situation and
will be able to answer questions you may have after reading the Fund's
prospectus. He or she can also assist you through all phases of opening your
account.
HOW TO CHOOSE THE SHARE
CLASS THAT BEST SUITS YOU
After choosing a Fund, you select a share class. All of the Funds offer two
different institutional classes. Each institutional class of shares has its own
expenses. Pay particularly close attention to this fee structure so you know how
much you will be paying before you invest.
Each class of shares is sold without a front-end sales charge or contingent
deferred sales charge. Institutional Service shares pay an ongoing service fee.
The minimum initial investment in either class of shares is $1 million, which
may be waived in certain situations. There is no minimum amount required for
subsequent purchases.
The Institutional Service shares have adopted a distribution plan which provides
for the payment of expenses associated with the distribution of the
Institutional Service shares. 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.
HOW TO BUY SHARES
Institutional investors may buy shares through broker-dealers, banks and certain
other financial intermediaries, or directly through the Funds' distributor
Evergreen Distributor, Inc. ("EDI").
Method
Opening an Account
Adding to an Account
By Phone
? Call 1-800-343-2898 to set up an account number and get wiring instructions
(call before 12 noon if you want wired funds to be credited that day).
? Instruct your bank to wire or transfer your purchase (they may charge a
wiring fee).
? Complete the account application and mail to:
Evergreen Service Company Overnight Address:
P.O. Box 2121 Evergreen Service Company
Boston, MA 02106-2121 200 Berkeley St.
Boston, MA 02116
? Wires received after 4:00 p.m. Eastern time on market trading days will
receive the next market day's closing price.
? Call the Evergreen Express Line* at 1-800-346-3858 24 hours a day or
1-800-343-2898 between 8 a.m. and 6 p.m. Eastern time, on any business day.
? If your bank account is set up on file, you can request either:
? Federal Funds Wire (offers immediate access to funds) or
? Electronic transfer through the Automated Clearing House which avoids
wiring fees.
By Exchange
? You can make an additional investment by exchange from an existing Evergreen
Fund's account by contacting your investment representative or calling
the Evergreen Express Line* at 1-800-346-3858.**
? You can only exchange shares within the same class.
? There is no sales charge or redemption fee when exchanging funds within
the Evergreen Fund's family.
? Orders placed before 4 p.m. Eastern time on market trading days will receive
that day's closing share price (if not, you will receive the next market
day's closing price).
? Exchanges are limited to three per calendar quarter, and five per calendar
year.
? Exchanges between accounts that do not have identical ownership must be in
writing with a signature guarantee (see below).
HOW TO REDEEM SHARES
We offer you several convenient ways to redeem your shares in any of the
Evergreen Funds:
Methods Requirements
Call Us
? Call the Evergreen Express Line* at 1-800-346-3858 24 hours a day or
1-800-343-2898 between 8 a.m. and 6 p.m.Eastern time, on any business day.**
? This service must be authorized ahead of time, and is only available for
regular accounts.
? All authorized requests made before 4 p.m. Eastern time on market trading
days will be processed at that day's closing price. Requests after 4 p.m.
will be processed the following business day.
? We can either:
? wire the proceeds into your bank account (service charges may apply)
? electronically transmit the proceeds to your bank account via the Automated
Clearing House service
? mail you a check.
? All telephone calls are recorded for your protection. We are not responsible
for acting on telephone orders we believe are genuine.
? See exceptions list below for requests that must be made in writing.
Write Us
? You can mail a redemption request to:
Evergreen Service Company Overnight Address:
P.O. Box 2121 Evergreen Service Company
Boston, MA 02106-2121 200 Berkeley St.
Boston, MA 02116
? Your letter of instructions must:
? list the Fund name and the account number
? indicate the number of shares or dollar value you wish to redeem
? be signed by the registered owner(s)
? See exceptions list below for requests that must be signature guaranteed.
Redeem Your Shares in Person
? You may also redeem your shares through participating broker-dealers by
delivering a letter as described above to your broker-dealer.
? A fee may be charged for this service.
* The Evergreen Express Lime is only available to Institutional Service shares.
** Once you have authorized either the telephone exchange or redemption service,
anyone with a Personal Identification Number (PIN) and the required account
information (including your broker) can request a telephone transaction in your
account. All calls are recorded or monitored for verification, recordkeeping and
quality-assurance purposes. The Evergreen Funds reserve the right to terminate
the exchange privilege of any shareholder who exceeds the listed maximum number
of exchanges, as well as to reject any large dollar exchange if placing it
would, in the judgment of the portfolio manager, adversely affect the price of
the Fund.
Timing of Proceeds
Normally, we will send your redemption proceeds on the next business day after
we receive your request; however, we reserve the right to wait up to seven
business days to redeem any investments made by check and five business days for
investments made by Automated Clearing House transfer. We also reserve the right
to redeem in kind, and to redeem the remaining amount in the account if your
redemption brings the account balance below the initial minimum of $1,000,000.
Exceptions: Redemption Requests That Require A Signature Guarantee
To protect you and Evergreen Funds against fraud, certain redemption requests
must be in writing with your signature guaranteed. A signature guarantee can be
obtained at most banks and securities dealers. A notary public is not authorized
to provide a signature guarantee. The following circumstances require signature
guarantees:
? You want the proceeds transmitted to a bank account not listed on the account
? You want the proceeds payable to anyone other than the registered owner(s)
of the account
? Either your address or the address of your bank account has been changed
within 30 days
Who Can Provide A Signature Guarantee:
Commercial Bank
? Trust Company
? Savings Association
? Credit Union
? Member of a U.S. stock exchange
OTHER SERVICES
Evergreen Express Line
(Institutional Service shares only)
Use our automated, 24-hour service to check the value of your investment in a
Fund; purchase, redeem or exchange Fund shares; find a Fund's price, yield or
total return; order a statement or duplicate tax form; or hear market commentary
from Evergreen portfolio managers.
Automatic Reinvestment of Dividends
For the convenience of investors, all dividends and capital gains distributions
are automatically reinvested, unless you request otherwise. Distributions can be
made by check or electronic transfer through the Automated Clearing House to
your bank account. The details of your dividends and other distributions will be
included on your statement.
Telephone Investment Plan
You may make additional investments electronically in an existing Fund account.
Telephone requests received by 4:00 p.m. Eastern time will be invested the day
the request is received.
Dividend Exchange
You may elect on the application to reinvest capital gains and/or dividends
earned in one Evergreen Fund into an existing account in another Evergreen Fund
in the same share class - automatically. Please indicate on the application the
Evergreen Fund(s) into which you want to invest the distributions.
Reinvestment Privileges
Under certain circumstances, shareholders may, within one year of redemption,
reinstate their accounts at the current price (NAV).
THE TAX CONSEQUENCES OF INVESTING IN THE FUNDS You may be taxed in two ways:
On Fund distributions (capital gain and dividends)
On any profit you make when you sell any or all of
your shares.
Fund Distributions
A mutual fund passes along to all of its shareholders the net income or profits
it receives from its investments. The shareholders of the Fund then pay any
taxes due, whether they receive these distributions in cash or elect to have
them reinvested. Otherwise, the Funds will distribute two types of taxable
income to you: ? Dividends. To the extent the regular dividends are derived from
interest that is not tax exempt, or from short term capital gains, you will have
to include them in your federal taxable income. The Fund pays either a monthly,
quarterly or yearly dividend from the dividends, interest and other income on
the securities in which it invests. The frequency of dividends for the Fund is
listed under the Fund's Investment Strategy section in the summary of the Fund
previously presented. ? Capital Gain. When a mutual fund sells a security it
owns for a profit, the result is a capital gain. Evergreen Fixed Income Funds
generally distribute capital gain at least once a year, near the end of the
calendar year. Short-term capital gain reflects securities held by the Fund for
a year or less and are considered ordinary income just like dividends. Profits
on securities held longer than 12 months are considered long-term capital gain
and are taxed at a special tax rate (20% for most taxpayers, on sales made after
January 1, 1998).
Distributions generally will cause a Fund's share price to drop by the amount of
the distribution.
Dividend and Capital Gain Reinvestment Unless you choose otherwise on the
account application, all dividend and capital gain payments will be reinvested
to buy additional shares. Distribution checks that are returned and distribution
checks that are uncashed when the shareholder has failed to respond to mailings
from the shareholder servicing agent will automatically be reinvested to buy
additional shares.
No interest will accrue on amounts represented by uncashed distribution or
redemption checks.
We will send you a statement each January with the federal tax status of
dividends and distributions paid by each Fund during the previous calendar year.
Profits You Realize When You Redeem Shares When you sell shares in a mutual
fund, whether by redeeming or exchanging, you have created a taxable event. You
must report any gain or loss on your tax return unless the transaction was
entered into by a tax-deferred retirement plan or occurred in a money market
fund. It is your responsibility to keep accurate records of your mutual fund
transactions. You will need this information when you file your income tax
return, since you must report any capital gains or losses you incur when you
sell shares. Remember, an exchange is a purchase and a sale for tax purposes.
Tax Reporting
Evergreen Service Company provides you with a tax statement of your dividend and
capital gains distributions for each calendar year on Form 1099 DIV. Proceeds
from a sale are reported on Form 1099B. You must report these on your tax
return. Since the IRS receives a copy as well, you could pay a penalty if you
neglect to report them.
Evergreen Service Company will send you a tax information guide each year during
tax season, which may include a cost basis statement detailing the gain or loss
on taxable transactions you had during the year. Please consult your own tax
advisor for further information regarding the federal, state and local tax
consequences of an investment in the Funds.
FEES AND EXPENSES OF THE FUNDS
Every mutual fund has fees and expenses that are assessed either directly or
indirectly. This section describes each of those fees.
Management Fee
The management fee pays for the normal expenses of managing the Fund, including
portfolio manager salaries, research costs, investment advisory fees and related
expenses. 12b-1 Fee The Trustees of the Evergreen Funds have approved a policy
to assess 12b-1 fees for Institutional Service shares. These fees will increase
the cost of your investment. The purpose of the 12b-1 fee is to promote the sale
of more shares of the Funds to the public. The Fund may use this fee as a
"service fee" to the broker-dealer for additional shareholder services.
Other Expenses
Other expenses include miscellaneous fees from outside service providers. These
may include legal, audit, custodial and safekeeping fees, the printing and
mailing of reports and statements, automatic reinvestment of distributions and
other conveniences for which the shareholder pays no transaction fees.
Total Fund Operating Expenses
The total cost of running the Fund is called the expense ratio. As a
shareholder, you are not charged these fees directly; instead they are taken out
before the Fund's price is calculated, and are expressed as a percentage of the
Fund's net assets. The effect of these fees is reflected in the performance
results for that share class. Because these fees are "invisible," investors
should examine them closely in the prospectus, especially when comparing one
Fund with another fund in the same investment category. There are two things to
remember about expense ratios: 1) your total return in the Fund is reduced in
direct proportion to the fees; and 2) expense ratios can vary greatly between
funds and fund families, from under .25% to over 3%.
FINANCIAL HIGHLIGHTS
This section looks in detail at the results for one share in each share class of
the Funds - how much income it earned, how much of this income was passed along
as a distribution and how much the return was reduced by expenses
[To be incorporated in 485(b) filing in January.]
OTHER FUND PRACTICES
The Funds may invest in a variety of derivative instruments. Derivatives are
financial contracts whose value is based on an underlying asset, such as a stock
or a bond, or an underlying economic factor, such as an index or an interest
rate. Small price movements in the underlying asset can result in immediate and
substantial gains or losses in the value of derivatives.
The Funds may invest in futures and options. Such practices are used to hedge a
Fund's portfolio. Although this is intended to increase returns, these practices
may actually reduce returns or increase volatility.
The Funds may also invest in other investment companies. This practice may
expose a Fund to duplicate expenses and lower its value.
In addition, the Funds may borrow money and lend their securities. Borrowing is
a form of leverage that may magnify a Fund's gain or loss. Lending securities
may cause the Fund to lose the opportunity to sell these securities at the most
desirable price and, therefore, lose money.
Please consult the Statement of Additional Information for more information
regarding these and other investment practices used by the Funds, including
risks.
Notes
Evergreen Select Funds
Select Money Market
Select Money Market Fund
Select Treasury Money Market Fund
Select Municipal Money Market Fund
Select 100% Treasury Money Market Fund
Select U.S. Government Money Market Fund
Select Fixed Income
Select Limited Duration Fund
Select Fixed Income Fund
Select Income Plus Fund
Select Intermediate Bond Fund
Select Core Bond Fund
Select Total Return Fund
Select Adjustable Rate Fund
Select International Bond Fund
Select Equity Trust
Select Strategic Value Fund
Select Large Cap Blend Fund
Select Strategic Growth Fund
Select Social Principles Fund
Select Equity Income Fund
Select Small Company Value Fund
Select Common Stock Fund
Select Small Cap Growth
Select Balanced Fund
Select Diversified Value Fund
Select Special Equity Fund
Select Equity Index Fund
Express Line
800.346.3858
Investor Services
800.343.2898
Retirement Plan Services
800.247.4075
www.evergreen-funds.com
Evergreen Express Line (Institutional Service shares only)
Call 1-800-346-3858
24 hours a day to
check your account
order a statement
get a Fund's current price, yield and
total return
buy, redeem or exchange Fund shares
Account holders
Call 1-800-343-2898
Each business day, 8 a.m. to 6 p.m. Eastern time to
buy, redeem or exchange shares
order applications
get assistance with your account
Information Line for Hearing and Speech Impaired
(TTY/TDD)
Call 1-800-343-2888
Each business day, 8 a.m. to 6 p.m. Eastern time
Write us a letter
Evergreen Service Company
P.O. Box 2121
Boston, MA 02106-2121
to buy, redeem or exchange shares
to change the registration on your account
for general correspondence
For express, registered, or certified mail:
Evergreen Service Company
200 Berkeley Street
Boston, MA 02116-5039
Contact us on-line:
www.evergreen-funds.com
Regular communications you'll receive:
Account Statements - You'll receive quarterly statements for each Fund you
invest in.
Confirmation Notices - We send a confirmation of any transaction you make
within five days of the transaction.
Annual and Semiannual reports - You'll receive a detailed financial report on
each Fund you invest in twice a year.
Tax Forms - Each January you'll receive any Fund tax information you need
to include in your tax return as well as the
Evergreen Tax Information Guide.
Evergreen Events - You'll receive a periodic newsletter published exclusively
for Evergreen Funds' shareholders.
For More Information About the Evergreen Select Fixed Income Funds, Ask for:
The Funds' most recent Annual or Semi-Annual Report, which contains a complete
financial accounting for each Fund and a complete list of portfolio holdings as
of a specific date, as well as commentary from the portfolio manager. This
Report discusses the market conditions and investment strategies that
significantly affected the Fund's performance during the most recent fiscal year
or period.
The Statement of Additional Information (SAI), which contains more detailed
information about the policies and procedures of the Funds. The SAI has been
filed with the Securities and Exchange Commission ("SEC") and its contents are
legally considered to be part of this prospectus.
For questions, other information, or to request a copy of either document, call
1-800-343-2898 or ask your investment representative. We will mail material
within three business days.
Information about these Funds (including the SAI) is also available on the SEC's
Internet web site at http://www.sec.gov, or, for a duplication fee, by writing
the SEC Public Reference Section, Washington DC 20549-6009. This material can be
reviewed and copied at the SEC's Public Reference Room in Washington, DC. For
more information, call the SEC at 1-800-SEC-0330.
[LOGO OF EVERGREEN FUNDS APPEARS HERE]
Evergreen Distributor, Inc.
125 W. 55th Street
New York, New York 10019
30
EVERGREEN
Select Fixed
Income Funds
Evergreen Select Core Bond Fund
Charitable Shares
Prospectus, February 1, 1999
The Securities and Exchange Commission has not determined that the information
in this prospectus is accurate or complete, nor has it approved or disapproved
these mutual fund shares. Anyone who tells you otherwise is committing a federal
crime.
FUND SUMMARIES:
Evergreen Select Core Bond Fund
GENERAL INFORMATION:
The Fund's Investment Advisor
The Fund's Portfolio Managers
Calculating the Share Price
How to Choose a Fund
How to Choose the Share Class
That Best Suits You
How to Buy Shares
How to Redeem Shares
Other Services
The Tax Consequences of
Investing in the Fund
Fees and Expenses of the Fund
Financial Highlights
Other Fund Practices
In general, the Fund included in this prospectus seeks to provide investors with
maximum total return. The Fund emphasizes investments in investment grade debt
securities, mortgage and asset-backed securities and below investment grade
bonds.
Fund Summaries Key
The Fund's summary is organized around the following basic topics and questions:
INVESTMENT GOAL
What is the Fund's financial objective? You can find clarification on how the
Fund seeks to achieve its objective by looking at the Fund's strategy and
investment policies. The Fund's Board of Trustees can change the investment
objective without a shareholder vote.
INVESTMENT STRATEGY
How does the Fund go about trying to meet its goals? What types of investments
does it contain? What style of investing and investment philosophy does it
follow? Does it have limits on the amount invested in any particular type of
security?
RISK FACTORS
What are the specific risks for an investor in the Fund?
PERFORMANCE
How well has the Fund performed in the past year? The past five years? The past
ten years?
EXPENSES
How much does it cost to invest in the Fund? What is the difference between
sales charges and expenses?
Evergreen
Select Core
Bond Fund
typically relies on the following strategies:
investing primarily in investment grade debt securities, which are bonds
rated within the four highest ratings categories by the nationally recognized
statistical ratings organizations;
investing in a variety of derivative instruments, including mortgage and
asset-backed securities; and
investing a portion of its assets in below investment grade debt securities.
may be appropriate for investors who:
seek to maximize total return.
Risk Factors For All Mutual Funds
Please remember that mutual fund shares are:
not guaranteed to achieve their investment goal
not insured, endorsed or guaranteed by the FDIC, a bank or any
government agency
subject to investment risks, including possible loss of your original
investment
Like most investments, your investment in Evergreen Select Core Bond Fund could
fluctuate significantly in value over time and could result in a loss of money.
Here are the most important factors that may affect the value of your
investment:
Interest Rate Risk
When interest rates go up, the value of debt securities and dividend paying
stocks tends to fall. Since your Fund invests a significant portion of its
portfolio in debt securities or dividend paying stocks and interest rates rise,
then the value of your investment may decline. The opposite is also true.
Credit Risk
The value of a debt security is directly affected by the issuer's ability to
repay principal and interest on time. Since your Fund invests in debt
securities, then the value of your investment may decline if an issuer fails to
pay an obligation on a timely basis.
Foreign Investment Risk
A Fund's investment in non-U.S. securities could expose it to certain unique
risks of overseas investing. For example, political turmoil and economic
instability in the countries in which the Fund invests could adversely affect
the value of your investment. In addition, if the value of any foreign currency
in which the Fund's investments are denominated declines relative to the U.S.
dollar, the value of your investment in the Fund may decline as well. Certain
foreign countries have less developed and less regulated securities markets and
accounting systems than the U.S. This may make it harder to get accurate
information about a security or company, and increase the likelihood that an
investment will not perform as well as expected.
Below Investment Grade Bond Risk
Below investment grade bonds are commonly referred to as "junk bonds" because
they are usually backed by issuers of less proven or questionable financial
strength. Such issuers are more vulnerable to financial setbacks and less
certain to pay interest and principal than issuers of bonds offering lower
yields and risk. Markets may react to unfavorable news about issuers of below
investment grade bonds causing sudden and steep declines in value.
Mortgage-Backed Securities Risk
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.
Select Core
Bond Fund
FUND FACTS:
Goal:
Maximize total return
Principal Investments:
Investment Grade Debt Securities
Mortgage and Asset-Backed Securities
U.S. Treasury and Agency Obligations
Class of Shares Offered in This Prospectus:
Charitable Shares
Investment Advisor:
First Union National Bank
Portfolio Managers:
Robert Cheshire
Bruce J. Besecker
NASDAQ Symbol:
ESBCX (Charitable Shares)
Dividend Payment Schedule:
Monthly
INVESTMENT GOAL
The Fund seeks to maximize total return through a combination of current income
and capital appreciation, by investing primarily in investment grade fixed
income securities with complimentary investments in high yield foreign and fixed
income securities.
INVESTMENT STRATEGY
The Fund invests at least 65% of its assets in investment grade debt securities,
including debt securities issued or guaranteed by the U.S. Treasury or by an
agency or instrumentality of the U.S. government. In addition, the Fund may
invest in foreign securities and a variety of derivative instruments, including
mortgage and asset-backed securities. Up to 35% of the Fund's total assets may
be invested in below investment grade securities.
The Evergreen Select Core Bond Fund may invest in high quality money market
instruments in response to adverse economic, political or market conditions.
This strategy is inconsistent with these Fund's principal investment strategies,
and if employed could result in a lower return and loss of market opportunity.
RISK FACTORS
Your investment in the Fund is subject to the risks discussed in the "Overview"
on page 3 under the headings:
? Interest Rate Risk
? Credit Risk
? Mortgage-Backed Securities Risk
? Foreign Investment Risk
? Below Investment Grade Bond Risk
For further information regarding the Fund's investment strategy and risk
factors see "Other Fund Practices."
PERFORMANCE
The following charts show how the Fund has performed in the past. Past
performance is not an indication of future results.
The chart below shows the percentage gains or loss for Charitable shares of the
Fund in each of the last ten calendar years. It should give you a general idea
of how the Fund's return has varied from year-to-year. This graph includes the
effects of Fund expenses.
Year-by-Year Total Return for Charitable Shares (%)
1988 1989 1990 1991 1992
7.76% 13.44% 7.96% 17.43% 6.84%
1993 1994 1995 1996 1997
12.18% (4.17)% 16.64% 3.04% 8.50%
Best Quarter: 3rd Quarter 1991 6.56%
Worst Quarter: 1st Quarter 1994 (3.26)%
Year to date total return through 9/30/98 is ____%.
The next table lists the Fund's average year-by-year return for the Charitable
shares over the past one, five and ten years and since inception (through
12/31/97). This table is intended to provide you with some indication of the
risks of investing in the Fund. At the bottom of the table you can compare this
performance with the Lehman Brothers Aggregate Bond Index and the Consumer Price
Index. The Lehman Brothers Aggregate Bond Index is
- ----------------------------------
________________. The Consumer Price Index is a ___
- ---------------------------------------------.
Average Annual Total Return
(for the period ended 12/31/97)*
Inception Since
Date 1 year 5 year 10 year Inception
Charitable 2/28/86 8.50% 6.99% 8.79% 8.19%
Lehman Brothers
Aggregate Bond Index 9.34% 7.02% 9.04% 8.88%**
Consumer Price Index 1.71% 2.60% 3.40% 3.34%**
*The performance information for the shares includes the performance of the
Fund's predecessor common trust fund for periods before the Fund's registration
statement became effective on November 21, 1997. Performance for the common
trust fund has been adjusted to include the effect of estimated mutual fund
expense ratios at the time the Fund was converted to a mutual fund.
** From 2/28/86 through 12/31/97.
EXPENSES
This section describes the fees and expenses you would pay if you bought and
held shares of the Fund.
You pay no shareholder transaction fees.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)*
Management 12b-1 Other Total Fund
Fees Fees Expenses Operating Expenses**
Charitable .40% .00% .14% .56%
*From time to time, the Fund's investment advisor may, at its discretion, reduce
or waive its fees or reimburse the Fund for certain of its expenses in order to
reduce expense ratios. The Fund's investment advisor may cease these
reimbursements at any time. The annual operating expenses do not reflect fee
waivers and expense reimbursements. Including current fee waivers and expense
reimbursements, total operating expenses for the shares would be .__%.
**Estimated for the fiscal year ending 9/30/99.
The table below shows the total expenses you would pay on a $10,000 investment
over one-, three-, five- and ten-year periods. The example is intended to help
you compare the cost of investing in this Fund versus other mutual funds and is
for illustration only. The example assumes a 5% average annual return and that
you reinvest all of your dividends. Your actual costs may be higher or lower.
Example of Fund Expenses
After 1 year $55
After 3 years $173
After 5 years $302
After 10 years $677
THE FUND'S INVESTMENT ADVISOR
The investment advisor manages a Fund's investments and supervises its daily
business affairs. All investment advisors for the Evergreen Funds are
subsidiaries of First Union Corporation, the sixth largest bank holding company
in the United States, with over $220 billion in consolidated assets as of
{date}. First Union Corporation is located at 301 South College Street,
Charlotte, North Carolina 28288-0013.
First Union National Bank ("FUNB") has been managing mutual funds since xxx and
currently manages $xx in assets for xx of the Evergreen Funds. FUNB is located
at 201 South College Street, Charlotte, North
Carolina 28288.
Year 2000 Compliance
The investment advisors and other service providers for the Evergreen Funds are
taking steps to address any potential Year 2000-related computer problems.
However, there is some risk that these problems could disrupt the Funds'
operations or financial markets generally.
European Currency Conversion Risk Certain countries in Europe will be converting
their different currencies to a single, common currency beginning January 1,
1999. In connection with this change, investment advisors, mutual funds and
their service providers will need to modify their accounting and recordkeeping
systems to handle the new currency. Your investment in the Fund may be adversely
affected if these technical modifications are not implemented properly. Also,
the conversion to a single currency could impair the markets for securities
denominated in the currencies being eliminated, which could also adversely
impact your investment.
THE FUND'S PORTFOLIO MANAGERS
Since joining First Fidelity Bank in 1990, which was acquired by FUNB in 1995,
Robert Cheshire has been a Vice President and Senior Portfolio Manager. He is
head of the Newark Taxable Fixed Income Unit and manages the Evergreen
Intermediate Term Government Securities Fund.
Bruce J. Besecker, CFA has been investing in the fixed income market since 1979,
with over 7 years experience in managing or co-managing fixed income mutual
funds. The $1.5 billion his group manages in Philadelphia includes one mutual
fund and over 40 individual account relationships. Since joining FUNB in 1987,
Mr. Besecker has served as a Vice President, senior fixed income portfolio
manager and unit leader.
CALCULATING THE SHARE PRICE
The value of one share of a Fund, also known as the net asset value, or NAV, is
calculated on each day the New York Stock Exchange is open as of the time the
Exchange closes (normally 4:00 p.m. Eastern time). We calculate the share price
for each share by adding up the total assets of the Fund, subtracting all
liabilities, then dividing the result by the total number of shares outstanding.
Each security held by a Fund is valued using the most recent market quote for
that security. If no market quotation is available for a given security, we will
price that security at fair value according to policies established by the
Fund's Board of Trustees. Short-term securities with maturities of 60 days or
less will be valued on the basis of amortized cost.
The price relative for a Fund purchase or the amount you received for a Fund
redemption is based on the next price calculated after the order is received and
all required information is provided. The value of your account at any given
time is the latest share price multiplied by the number of shares you own. Your
account balance may change daily because the share price may change daily.
HOW TO CHOOSE AN EVERGREEN FUND When choosing an Evergreen Fund, you should: ?
Most importantly, read the prospectus to see if the Fund is suitable for you. ?
Consider talking to an investment professional. He or she is qualified to give
you investment advice based on your investment goals and financial situation and
will be able to answer questions you may have after reading the Fund's
prospectus. He or she can also assist you through all phases of opening your
account. HOW TO CHOOSE THE SHARE CLASS THAT BEST SUITS YOU After choosing a
Fund, you select a share class. Evergreen Select Core Bond Fund offers three
classes of shares, Charitable, Institutional and Institutional Service. Only the
Charitable shares are offered through this prospectus. Charitable investors must
qualify as a non-profit organization under the Internal Revenue Code of 1986, as
amended.
Charitable shares are sold without a front-end sales charge or contingent
deferred sales charge. The minimum initial investment is $1 million, which may
be waived in certain situations. There is no minimum amount required for
subsequent purchases.
HOW TO BUY SHARES
Charitable investors may buy shares through broker-dealers, banks and certain
other financial intermediaries, or directly through the Funds' distributor
Evergreen Distributor, Inc. ("EDI").
Method
Opening an Account
Adding to an Account
By Phone
? Call 1-800-343-2898 to set up an account number and get wiring instructions
(call before 12 noon if you want wired funds to be credited that day).
? Instruct your bank to wire or transfer your purchase (they may charge a
wiring fee).
? Complete the account application and mail to:
Evergreen Service Company Overnight Address:
P.O. Box 2121 Evergreen Service Company
Boston, MA 02106-2121 200 Berkeley St.
Boston, MA 02116
? Wires received after 4:00 p.m. Eastern time on market trading days will
receive the next market day's closing price.
? Call the Evergreen Funds at 1-800-343-2898 between 8 a.m. and 6 p.m. Eastern
time, on any business day.
? If your bank account is set up on file, you can request either:
? Federal Funds Wire (offers immediate access to funds) or
? Electronic transfer through the Automated Clearing House which avoids
wiring fees.
By Exchange
? You can make an additional investment by exchange from an existing Evergreen
Fund's account by contacting your investment representative.
? You can only exchange shares within the same class.
? There is no sales charge or redemption fee when exchanging funds within the
Evergreen Fund's family.
? Orders placed before 4 p.m. Eastern time on market trading days will receive
that day's closing share price (if not, you will receive the next market day's
closing price).
? Exchanges are limited to three per calendar quarter, and five per calendar
year.
? Exchanges between accounts that do not have identical ownership must be in
writing with a signature guarantee (see below).
HOW TO REDEEM SHARES
We offer you several convenient ways to redeem your shares in any of the
Evergreen Funds:
Methods
Requirements
Call Us
? Call the Evergreen Funds at 1-800-343-2898 between 8 a.m. and 6 p.m. Eastern
time, on any business day.
? This service must be authorized ahead of time, and is only available for
regular accounts.*
? All authorized requests made before 4 p.m. Eastern time on market trading
days will be processed at that day's closing price. Requests after 4 p.m.
will be processed the following business day.
? We can either:
? wire the proceeds into your bank account (service charges may apply)
? electronically transmit the proceeds to your bank account via the Automated
Clearing House service
? mail you a check.
? All telephone calls are recorded for your protection. We are not responsible
for acting on telephone orders we believe are genuine.
? See exceptions list below for requests that must be made in writing.
Write Us
? You can mail a redemption request to:
Evergreen Service Company Overnight Address:
P.O. Box 2121 Evergreen Service Company
Boston, MA 02106-2121 200 Berkeley St.
Boston, MA 02116
? Your letter of instructions must:
? list the Fund name and the account number
? indicate the number of shares or dollar value you wish to redeem
? be signed by the registered owner(s)
? See exceptions list below for requests that must be signature guaranteed.
Redeem Your Shares in Person
? You may also redeem your shares through participating broker-dealers by
delivering a letter as described above to your broker-dealer.
? A fee may be charged for this service.
* Once you have authorized either the telephone exchange or redemption service,
anyone with a Personal Identification Number (PIN) and the required account
information (including your broker) can request a telephone transaction in your
account. All calls are recorded or monitored for verification, recordkeeping and
quality-assurance purposes. The Evergreen Funds reserve the right to terminate
the exchange privilege of any shareholder who exceeds the listed maximum number
of exchanges, as well as to reject any large dollar exchange if placing it
would, in the judgment of the portfolio manager, adversely affect the price of
the Fund.
Timing of Proceeds
Normally, we will send your redemption proceeds on the next business day after
we receive your request; however, we reserve the right to wait up to seven
business days to redeem any investments made by check and five business days for
investments made by Automated Clearing House transfer. We also reserve the right
to redeem in kind, and to redeem the remaining amount in the account if your
redemption brings the account balance below the initial minimum of $1,000,000.
Exceptions: Redemption Requests That Require A Signature Guarantee
To protect you and Evergreen Funds against fraud, certain redemption requests
must be in writing with your signature guaranteed. A signature guarantee can be
obtained at most banks and securities dealers. A notary public is not authorized
to provide a signature guarantee.
The following circumstances require signature guarantees:
? You want the proceeds transmitted to a bank account not listed on the account
? You want the proceeds payable to anyone other than the registered owner(s) of
the account
? Either your address or the address of your bank account has been changed
within 30 days
Who Can Provide A Signature Guarantee:
Commercial Bank? Trust Company
? Savings Association
? Credit Union
? Member of a U.S. stock exchange
OTHER SERVICES
Automatic Reinvestment of Dividends
For the convenience of investors, all dividends and capital gains distributions
are automatically reinvested, unless you request otherwise. Distributions can be
made by check or electronic transfer through the Automated Clearing House to
your bank account. The details of your dividends and other distributions will be
included on your statement.
Telephone Investment Plan
You may make additional investments electronically in an existing Fund account.
Telephone requests received by 4:00 p.m. Eastern time will be invested the day
the request is received.
Dividend Exchange
You may elect on the application to reinvest capital gains and/or dividends
earned in one Evergreen Fund into an existing account in another Evergreen Fund
in the same share class - automatically. Please indicate on the application the
Evergreen Fund(s) into which you want to invest the distributions.
Reinvestment Privileges
Under certain circumstances, shareholders may, within one year of redemption,
reinstate their accounts at the current price (NAV).
THE TAX CONSEQUENCES OF INVESTING IN THE FUNDS You may be taxed in two ways:
On Fund distributions (capital gains and dividends)
On any profit you make when you sell any or all of your shares.
Fund Distributions
A mutual fund passes along to all of its shareholders the net income or profits
it receives from its investments. The shareholders of the Fund then pay any
taxes due, whether they receive these distributions in cash or elect to have
them reinvested. The Fund will distribute two types of taxable income to you:
Dividends. To the extent the regular dividends are derived from interest that
is not tax exempt, or from short term capital gains, you will have to include
them in your federal taxable income. The Fund pays either a monthly, quarterly
or yearly dividend from the dividends, interest and other income on the
securities in which it invests. The frequency of dividends for the Fund is
listed under the Fund's Investment Strategy section in the summary of each Fund
previously presented.
Capital Gains. When a mutual fund sells a security it owns for a profit, the
result is a capital gain. The Fund generally distributes capital gains at least
once a year, near the end of the calendar year. Short-term capital gains reflect
securities held by the Fund for a year or less and are considered ordinary
income just like dividends. Profits on securities held longer than 12 months are
considered long-term capital gains and are taxed at a special tax rate (20% for
most taxpayers, on sales made after January 1, 1998).
Distributions generally will cause a Fund's share price to drop by the amount of
the distribution.
Dividend and Capital Gain Reinvestment Unless you choose otherwise on the
account application, all dividend and capital gain payments will be reinvested
to buy additional shares. Distribution checks that are returned and distribution
checks that are uncashed when the shareholder has failed to respond to mailings
from the shareholder servicing agent will automatically be reinvested to buy
additional shares.
No interest will accrue on amounts represented by uncashed distribution or
redemption checks.
We will send you a statement each January with the federal tax status of
dividends and distributions paid by the Fund during the previous calendar year.
Profits You Realize When You Redeem Shares When you sell shares in a mutual
fund, whether by redeeming or exchanging, you have created a taxable event. You
must report any gain or loss on your tax return unless the transaction entered
into by a tax-deferred retirement plan or occurred in a money market fund. It is
your responsibility to keep accurate records of your mutual fund transactions.
You will need this information when you file your income tax return, since you
must report any capital gains or losses you incur when you sell shares.
Remember, an exchange is a purchase and a sale for tax purposes.
Tax Reporting
Evergreen Service Company provides you with a tax statement of your dividend and
capital gains distributions for each calendar year on Form 1099 DIV. Proceeds
from a sale are reported on Form 1099B. You must report these on your tax
return. Since the IRS receives a copy as well, you could pay a penalty if you
neglect to report them.
Evergreen Service Company will send you a tax information guide each year during
tax season, which may include a cost basis statement detailing the gain or loss
on taxable transactions you had during the year. Please consult your own tax
advisor for further information regarding the federal, state and local tax
consequences of an investment in the Funds.
FEES AND EXPENSES OF THE FUND
Every mutual fund has fees and expenses that are assessed either directly or
indirectly. This section describes each of those fees.
Management Fee
The management fee pays for the normal expenses of managing the Fund, including
portfolio manager salaries, research costs, investment advisory fees and related
expenses.
Other Expenses
Other expenses include miscellaneous fees from outside service providers. These
may include legal, audit, custodial and safekeeping fees, the printing and
mailing of reports and statements, automatic reinvestment of distributions and
other conveniences for which the shareholder pays no transaction fees.
Total Fund Operating Expenses
The total cost of running the Fund is called the expense ratio. As a
shareholder, you are not charged these fees directly; instead they are taken out
before the Fund's price is calculated, and are expressed as a percentage of the
Fund's net assets. The effect of these fees is reflected in the performance
results for that share class. Because these fees are "invisible," investors
should examine them closely in the prospectus, especially when comparing one
Fund with another fund in the same investment category. There are two things to
remember about expense ratios: 1) your total return in the Fund is reduced in
direct proportion to the fees; and 2) expense ratios can vary greatly between
funds and fund families, from under .25% to over 3%.
FINANCIAL HIGHLIGHTS
This section looks in detail at the results for one share in the Charitable
share class of the Fund - how much income it earned, how much of this income was
passed along as a distribution and how much the return was reduced by expenses.
[To be incorporated in 485(b) filing in January 1999.]0 OTHER FUND PRACTICES The
Funds may invest in a variety of derivative instruments. Derivatives are
financial contracts whose value is based on an underlying asset, such as a stock
or a bond, or an underlying economic factor, such as an index or an interest
rate. Small price movements in the underlying asset can result in immediate and
substantial gains or losses in the value of derivatives.
The Fund may invest in futures and options. Such practices are used to hedge the
Fund's portfolio. Although this is intended to increase returns, these practices
may actually reduce returns or increase volatility.
The Fund may also invest in other investment companies. This practice may expose
the Fund to duplicate expenses and lower its value.
In addition, the Fund may borrow money and lend its securities. Borrowing is a
form of leverage that may magnify the Fund's gain or loss. Lending securities
may cause the Fund to lose the opportunity to sell these securities at the most
desirable price and, therefore, lose money.
Please consult the Statement of Additional Information for more information
regarding these and other investment practices used by the Fund, including
risks.
Notes
Evergreen Select
Funds
Select Money Market
Select Money Market Fund
Select Treasury Money Market Fund
Select Municipal Money Market Fund
Select 100% Treasury Money Market Fund
Select U.S. Government Money Market Fund
Select Fixed Income
Select Limited Duration Fund
Select Fixed Income Fund
Select Income Plus Fund
Select Intermediate Bond Fund
Select Core Bond Fund
Select Total Return Fund
Select Adjustable Rate Fund
Select International Bond Fund
Select Equity Trust
Select Strategic Value Fund
Select Large Cap Blend Fund
Select Strategic Growth Fund
Select Social Principles Fund
Select Equity Income Fund
Select Small Company Value Fund
Select Common Stock Fund
Select Small Cap Growth
Select Balanced Fund
Select Diversified Value Fund
Select Special Equity Fund
Select Equity Index Fund
Investor Services
800.343.2898
www.evergreen-funds.com
Account holders
Call 1-800-343-2898
Each business day, 8 a.m. to 6 p.m. Eastern time to
buy, redeem or exchange shares
order applications
get assistance with your account
Information Line for Hearing and Speech Impaired
(TTY/TDD)
Call 1-800-343-2888
Each business day, 8 a.m. to 6 p.m. Eastern time
Write us a letter
Evergreen Service Company
P.O. Box 2121
Boston, MA 02106-2121
to buy, redeem or exchange shares
to change the registration on your account
for general correspondence
For express, registered, or certified mail:
Evergreen Service Company
200 Berkeley Street
Boston, MA 02116-5039
Contact us on-line:
www.evergreen-funds.com
Regular communications you'll receive: Account Statements - You'll receive
quarterly statements for each Fund you invest in. Confirmation Notices - We send
a confirmation of any transaction you make within five days of the
transaction.
Annual and Semiannual reports - You'll receive a detailed financial report on
each Fund you invest in twice a year. Tax Forms - Each January you'll receive
any Fund tax information you need to include in your tax return as well as the
Evergreen Tax Information Guide. Evergreen Events - You'll receive a periodic
newsletter published exclusively for Evergreen Funds' shareholders.
For More Information About the Evergreen Select Core Bond Fund, Ask for:
The Fund's most recent Annual or Semi-Annual Report, which contains a complete
financial accounting for the Fund and a complete list of portfolio holdings as
of a specific date, as well as commentary from the portfolio manager. This
commentary discusses the market conditions and investment strategies that
significantly affected the Fund's performance during the most recent fiscal year
or period.
The Statement of Additional Information (SAI), which contains more detailed
information about the policies and procedures of the Fund. The SAI has been
filed with the Securities and Exchange Commission ("SEC") and its contents are
legally considered to be part of this prospectus.
For questions, other information, or to request a copy of either document, call
1-800-343-2898 or ask your investment representative. We will mail material
within three business days.
Information about the Fund (including the SAI) is also available on the SEC's
Internet web site at http://www.sec.gov, or, for a duplication fee, by writing
the SEC Public Reference Section, Washington DC 20549-6009. This material can be
reviewed and copied at the SEC's Public Reference Room in Washington, DC. For
more information, call the SEC at 1-800-SEC-0330.
[LOGO OF EVERGREEN FUNDS APPEARS HERE]
Evergreen Distributor, Inc.
125 W. 55th Street
New York, New York 10019
14
EVERGREEN SELECT FIXED INCOME TRUST
200 Berkeley Street
Boston, Massachusetts 02116
(800) 633-2700
STATEMENT OF ADDITIONAL INFORMATION
February 1, 1999
Evergreen Select Limited Duration Fund Evergreen Select Fixed Income Fund
Evergreen Select Income Plus Fund Evergreen Select Intermediate Municipal Bond
Fund Evergreen Select Core Bond Fund Evergreen Select Total Return Fund
Evergreen Select Adjustable Rate Evergreen Select International Bond Fund
(Each a "Fund"; together, the "Funds")
Each Fund is a series of Evergreen Select Fixed Income Trust (the Trust).
This statement of additional information ("SAI") pertains to all classes of
shares of the Funds listed above. It is not a prospectus but should be read in
conjunction with the prospectuses dated February 1, 1999 for the Fund in which
you are interested. The Funds are offered through two separate prospectuses: one
offering Institutional and Institutional Service shares of each Fund, and one
offering Charitable shares of Evergreen Select Core Bond Fund. You may obtain
either of these prospectuses without charge by calling (800) 343-2898.
Certain information may be incorporated by reference to the Funds' Annual Report
dated September 30, 1998. You may obtain a copy of the Annual Report without
charge by calling (800) 343-2898.
24864
TABLE OF CONTENTS
PART 1
TRUST HISTORY
INVESTMENT POLICIES
OTHER SECURITIES AND PRACTICES
PRINCIPAL HOLDERS OF FUND SHARES
EXPENSES
PERFORMANCE
SERVICE PROVIDERS
FINANCIAL STATEMENTS
PART 2
ADDITIONAL INFORMATION ON SECURITIES AND INVESTMENT PRACTICES
PURCHASE, REDEMPTION AND PRICING OF SHARES
SALES CHARGE WAIVERS AND REDUCTIONS
PERFORMANCE CALCULATIONS
PRINCIPAL UNDERWRITER
DISTRIBUTION EXPENSES UNDER RULE 12b-1
TAX INFORMATION
BROKERAGE
ORGANIZATION
INVESTMENT ADVISORY AGREEMENT
MANAGEMENT OF THE TRUST
CORPORATE AND MUNICIPAL BOND RATINGS
ADDITIONAL INFORMATION
PART 1
TRUST HISTORY
The Evergreen Select Fixed Income Trust is an open-end management investment
company, which was organized as a Delaware business trust on September 18, 1997.
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.
INVESTMENT POLICIES
FUNDAMENTAL INVESTMENT RESTRICTIONS
Each Fund has adopted the fundamental investment restrictions set forth
below which may not be changed without the vote of a majority of the Fund's
outstanding shares, as defined in the Investment Company Act of 1940 (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
Each 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,
each 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 United States (U.S.) government or its agencies or
instrumentalities.
2. Concentration
Each Fund may not concentrate its investments in the securities of issuers
primarily engaged in any particular industry (other than securities that are
issued or guaranteed by the U.S.
government or its agencies or instrumentalities).
Further Explanation of Concentration Policy:
Each Fund not invest more than 25% of its total assets, taken at market value,
in the securities of issuers primarily engaged in any particular industry (other
than securities issued or guaranteed by the U.S. government or its agencies or
instrumentalities).
3. Issuing Senior Securities
Except as permitted under the 1940 Act, each Fund may not issue senior
securities.
4. Borrowing
Each Fund may not borrow money, except to the extent permitted by applicable
law.
Further Explanation of Borrowing Policy:
Each Fund may borrow from banks and enter into reverse repurchase agreements in
an amount up to 33 1/3% of its total assets, taken at market value. Each Fund
may also borrow up to an additional 5% of its total assets from banks or others.
A Fund may borrow only as a temporary measure for extraordinary or emergency
purposes such as the redemption of Fund shares. A Fund may purchase additional
securities so long as borrowings do not exceed 5% of its total assets. Each Fund
may obtain such short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities. Each Fund may purchase securities
on margin and engage in short sales to the extent permitted by applicable law.
5. Underwriting
Each Fund may not underwrite securities of other issuers, except insofar
as a Fund may be deemed to be an underwriter in connection with the disposition
of its portfolio securities.
6. Real Estate
Each Fund may not purchase or sell real estate, except that, to the extent
permitted by applicable law, a Fund may invest in (a) securities that are
directly or indirectly secured by real estate, or (b) securities issued by
issuers that invest in real estate.
7. Commodities
Each Fund may not purchase or sell commodities or contracts on commodities,
except to the extent that a Fund may engage in financial futures contracts and
related options and currency contracts and related options and may otherwise do
so in accordance with applicable law and without registering as a commodity pool
operator under the Commodity Exchange Act.
8. Lending
Each Fund may not make loans to other persons, except that a 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, a 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.
OTHER SECURITIES AND PRACTICES
For information regarding certain securities the Funds may purchase and certain
investment practices the Funds may use, see the following sections under
Additional Information on Securities and Investment Practices in Part 2 of this
SAI:
Derivatives
U.S. Government Securities
Repurchase Agreements
Payment-In-Kind Securities (PIKs)
Reverse Repurchase Agreements
Zero Coupon Bonds
Futures Transactions
Mortgage-Backed and Asset-Backed Securities
Options
Foreign Securities
Obligations of Foreign Branches of U.S. Banks
Illiquid and Restricted Securities
Below Investment Grade Bonds
Obligations of U.S. Branches of Foreign Banks
Investment in Other Investment Companies
Master Demand Notes
PRINCIPAL HOLDERS OF FUND SHARES
As of November 1, 1998 the officers and Trustees of the Trust owned as a
group less than 1% of the outstanding shares of any class of each Fund.
Set forth below is information with respect to each person who, to each Fund's
knowledge, owned beneficially or of record more than 5% of the outstanding
shares of any class of each Fund as of November 1, 1998.
Evergreen Select Limited Duration Fund
Institutional Class
First Union National BK BK/EB/INT
Cash Acct
Attn Trust Oper FD GRP
401 S Tryon St 3rd Fl CMG 1151
Charlotte, NC 28202-1911 31.007%
First Union National BK BK/EB/INT
Reinvest Acct Attn Trust Oper FD GRP
401 S Tryon St 3rd Fl CMG 1151
Charlotte, NC 28202-1911 25.961%
Patterson & Co
PNB Personal Trust ACCTG
PO Box 7829
Philadelphia, PA 19101-7829 22.083%
Patterson & Co
PNB Personal Trust ACCTG
PO Box 7829
Philadelphia, PA 19101-7829 19.136%
Evergreen Select Limited Duration Fund
Institutional Service Class
State Street Bank & Trust Co
Cust For The Rollover IRA Of
Frank L. Caiola
321 Evergreen Drive
North Wales, PA 19454-2701 66.310%
State Street Bank & Trust Co
Cust For The Rollover IRA Of
John M. Ennis
206 Emerald Avenue
Reading, PA 19606-1450 17.744%
Fubs & Co FEBO
Milton G. Hyde IRA 44452273
201 South College Street
Charlotte, NC 28288-1167 8.343%
Evergreen Select Fixed Income Fund
Institutional Class
First Union National BK BK/EB/INT
Cash Acct Attn Trust Oper FD GRP
401 S Tryon St 3rd Fl CMG 1151
Charlotte, NC 28202-1911 71.210%
Patterson & Co PNB Personal Trust ACCTG
PO Box 7829
Philadelphia, PA 19101-7829 12.462%
First Union National
BK BK/EB/INT Reinvest Acct
Attn Trust Oper FD GRP
401 S Tryon St 3rd Fl CMG 1151
Charlotte, NC 28202-1911 8.580%
Evergreen Select Fixed Income Fund
Institutional Service Class
Wachovia Bank FBO James E. Roberts
A/C 15-8820000 1605 U.S. HGWY
15-501 SO Southern Pines, NC 28387 6.686%
Evergreen Select Income Plus Fund
Institutional Class
First Union National BK BK/EB/INT
Cash Acct Attn Trust Oper FD GRP
401 S Tryon St 3rd Fl CMG 1151
Charlotte, NC 28202-1911 87.643%
Patterson & Co PNB Personal Trust ACCTG
PO Box 7829
Philadelphia, PA 19101-7829 5.020%
Evergreen Select Income Plus Fund
Institutional Service Class None
Evergreen Select Intermediate Municipal Bond Fund
Institutional Class
First Union National BK BK/EB/INT
Cash Acct Attn Trust Oper FD GRP
401 S Tryon St 3rd Fl CMG 1151
Charlotte, NC 28202-1911 99.647%
Evergreen Select Intermediate Municipal Bond Fund
Institutional Service Class
Philadelphia Corp
PBO Bain S. Lee A/C#37102033
One Liberty Place 1650
Market St Ste#3050
Philadelphia, PA 19103 10.526%
National Financial Services
Corp. FBO Christopher Sturdy
A/C 051824364
One World Fin Center
New York, NY 10281 8.602%
Merrill Lynch, Pierce, Fenner & Smith
FBO Shaun Hicks A/C#762-11618
250 S. Orange Ave #600
Orlando, FL 32801 8.602%
Dean Witter FBO TIA Rosengarten
A/C #428-017227-008
PO Box 836 Rutland, VT 05702-0836 6.031%
Merrill Lynch FBO Francis B Lentz Trust
A/C #885-74C53
300 Davison Ave 2nd Fl West
Sommerset, NJ 08873 5.954%
The Midwest Trust Co FBO Mary Love May Trust
A/C 33-0146-08 7400
College Blvd Suite 150
Overland Parks, KS 66210 5.147%
Evergreen Select Core Bond Fund
Institutional Class
First Union National Bank
Trust Accounts
Attn Ginny Batten 11th FL CMG-1151
301 S. Tryon St
Charlotte, NC 28202-1910 77.486%
First Union National BK BK/EB/INT
Cash Acct
Attn Trust Oper FD GRP
401 S Tryon St 3rd Fl CMG 1151
Charlotte, NC 28202-1911 22.079%
Evergreen Select Core Bond Fund
Institutional Service Class
Thomas F. Hackett C/O
Warren S. Beebe Jr, CPA
PO Box
849 Oakhurst, NH 07755-0849 38.445%
Peoples Two Ten Company
FBO First Presbyterian Church Ewing Cemetery
A/C 11013100
C/O Summit Bank PO Box 821
Hackensack, NH 07602 34.988%
First Union Brokerage Services
Essex CNTY Comm American Legion
A/C 5142-1648 29 Newell Drive
Bloomfield, NH 07003 21.807%
Evergreen Select Core Bond Fund
Charitable Class
First Union National BK BK/EB/INT
Cash Acct Attn Trust Oper FD GRP
401 S Tryon St 3rd Fl CMG 1151
Charlotte, NC 28202-1911 99.386%
Evergreen Select Total Return Fund
Institutional Class
First Union National Bank BK/EB/INT
Reinvest Acct Attn Trust Oper FD Grp
401 S Tryon St 3rd FL CMG
1151 Charlotte, NC 28202-1911 79.643%
First Union National Bank BK/EB/INT
Cash Acct Attn Trust Oper FD Grp
401 S. Tryon St 3rd FL CMG 1151
Charlotte, NC 28202-1911 20.357%
Evergreen Select Total Return Fund
Institutional Service Class None
Evergreen Select Adjustable Rate Fund
Institutional Class
AMPEX Retirement Master Trust
PO Box 1992
Boston, Ma 02105-1992 82.617%
Patterson & Co
C/O Corestates Bank
PO Box 7829
Philadelphia, PA 19101-7829 12.242%
Evergreen Select Adjustable Rate Fund
Institutional Service Class
Skyline Telephone Membership Corp.
Attn: Hobart G. Davis
PO Box 759
West Jefferson, NC 28694 17.473%
Wexford Clearing Serv Corp
FBO Carl F. McLarand
695 Town Center Dr.
STE 300
Costa Mesa, CA 92626-1924 16.616%
William H. Morgan Jr
906 Weightman
Greenwood, MS 38930-2438 14.376%
Wexford Clearing Serv Corp
FBO McLarand Vasquez Partners
695 Town Center Dr. STE 300
Costa Mesa, CA 92626-1924 11.427%
Star Telephone Membership Corp
Milton R. TEW EXEC
PO Box 348 3900 N US 421 HWY
Clinton, NC 28329-0348 10.823% M & M Farms 906
Weightman Greenwood, MS 38930-2438 6.888%
Wexford Clearing Serv Corp
Karen Hosking Morrison
TTEE The Karen Hosking Morrison TR
UA DTD 08/19/93
16472 Grimaud LN
Huntington BH, CA 92649-1827 6.608%
Wexford Clearing Serv Corp
Karen H. Morrison
TTEE Morrison Family Trust
U/A DTD 10/20/88
16472 Grimaud LN
Huntington BH, CA 92649-1827 5.769%
Evergreen Select International Bond Fund
Institutional Class
Patterson & Co PNB
Personal Trust AcctG
PO Box 7829
Philadelphia, PA 19101-7829 66.270%
Patterson & Co
PNB Personal Trust AcctG
PO Box 7829
Philadelphia, PA 19101-7829 11.257%
Patterson & Co
PNB Personal Trust AcctG
PO Box 7829
Philadelphia, PA 19101-7829 11.009%
Post & Co
350302 The Bank Of New York
Mutual Fund/Reorg Dept.
PO Box
1066 Wall Street Station
New York, NY 10258 8.515%
Evergreen Select International Bond Fund
Institutional Service Class
State Street Bank & Trust Co
Allen Luke
17 Bennett Court
East Bruswick, NJ 08816-3686 52.872%
State Street Bank & Trust Co
Cust For The IRA Of Jane M. Grove
217 W. High St
Red Lion, PA 17356-1527 10.070%
Lowell J. Croshaw Debra H. Croshaw Jtten
2137 Riverbend RD
Allentown, PA 18103-9682 7.027%
First Union Brokerage Services
Marquerite D. McKenna IRA A/C 5728-2173
1460 Stockton RD
Meadowbrook, PA 19046-1131 5.694%
EXPENSES
Advisory Fees
Each Fund has its own investment advisor. (For more information, see Investment
Advisory Agreements in Part 2 of this SAI.) First Union National Bank ("FUNB")
is the investment advisor to Limited Duration, Core Bond, Fixed Income, Income
Plus, Total Return and Intermediate Municipal Bond. FUNB is entitled to receive
from each of these Funds an annual fee based on a percent of the Fund's average
net assets, as follows:
Limited Duration
0.30%
Core Bond
0.40%
Fixed Income
0.50%
Income Plus
0.50%
Total Return
0.40%
Intermediate Municipal Bond
0.60%
FUNB has a voluntarily agreed to reduce the investment advisory fee one each
Fund by 0.10% and to reimburse a portion of each Fund's annual operating
expenses (excluding interest, taxes, brokerage commissions and extraordinary
expenses).
Evergreen Investment Management Company ("EIMC"), formerly Keystone Investment
Management Company, is the investment advisor to Adjustable Rate. EIMC is
entitled to receive from Adjustable Rate an annual fee equal to 0.30% of the
average net assets of the Fund.
First International Advisers, Ltd. ("FIA"), formerly Analytic?TSA International,
Inc., is the investment advisor to International Bond. FIA is entitled to
receive from International Bond an annual fee equal to 0.60% of the Fund's
average net assets.
Advisory Fees Paid
Below are the advisory fees paid by each Fund for the fiscal period ended
September 30, 1998.
Fiscal Period/Fund
Advisory Fee Waiver
Limited Duration $154,868 $152,769
Fixed Income $2,219,526 $504,930
Income Plus $5,151,727 $1,033,751
Intermediate Municipal
Bond $3,831,537 $639,284
Core Bond $1,862,392 $526,182
Total Return $209,962 $135,770
Adjustable Rate $61,312 $0
International Bond $60,189 $48,948
12b-1 Fees
Below are the 12b-1 service fees paid by the Institutional Service shares of
each Fund for the fiscal year ended September 30, 1998. The Institutional and
Charitable shares do not pay 12b-1 fees. For more information, see "Distribution
Expenses Under Rule 12b-1" in Part 2 of this SAI.
Institutional Service
Fund Shares
Service Fees
Limited Duration $268
Fixed Income $8,535
Income Plus $6,9814
Intermediate
Municipal Bond $3,458
Core Bond $285
Total Return $13
Adjustable Rate $14,710
International Bond $92
Trustee Compensation
Listed below is the Trustee compensation paid by the Trust individually
and by the Trust and the eight other trusts in the Evergreen Fund complex for
the fiscal period ended September 30, 1998. The Trustees do not receive pension
or retirement benefits from the Funds. For more information, see Management of
the Trust in Part 2 of this SAI.
Trustee
Total Compensation
Aggregate from Trust and Fund
Compensation from Complex Paid to
Trust Trustees*
Laurence B. Ashkin $3,656 $68,450
Charles A. Austin, III $3,656 $60,450
K. Dun Gifford $3,524 $58,575
James S. Howell $4,764 $94,425
Leroy Keith Jr. $3,524 $58,575
Gerald M. McDonnell $3,656 $74,200
Thomas L. McVerry $4,237 $83,075
William Walt Pettit $3,157 $67,325
David M. Richardson $3,481 $57,950
Russell A. Salton, III $3,682 $76,425
Michael S. Scofield $3,707 $76,924
Richard J. Shima $3,524 $65,150
*Certain Trustees have elected to defer all or part of their total compensation
for the fiscal period ended September 30, 1998. The amounts listed below will be
payable in later years to the respective Trustees:
Austin $8,513
McVerry $88,275
Howell $76,119
Salton $81,625
Petit $72,325
McDonnell $79,200
Scofield $11,740
PERFORMANCE
Total Return
Below are the annual total returns for each class of shares of the Funds as of
September 30, 1998. For more information, see "Total Return" under Performance
Calculations in Part 2 of this SAI.
Fund/Class
Ten Years or
One Year Five Years Since Inception Inception Date
Limited Duration
Institutional 7.27% N/A 6.55% 04/30/94
Institutional
Service 7.15% N/A 6.32% 04/30/94
Fixed Income
Institutional 9.23% 5.86% 7.99% 03/31/77
Institutional
Service 9.04% 5.61% 7.73% 03/31/77
Income Plus
Institutional 11.14% 6.49% 8.58% 08/31/88
Institutional
Service 10.96% 6.24% 8.32% 08/31/88
Intermediate Municipal Bond
Institutional 8.62% 5.61% 6.84% 01/31/84
Institutional
Service 8.43% 5.37% 6.59% 01/31/84
Core Bond
Institutional 10.75% 6.05% 8.88% 02/28/86
Institutional
Service 10.55% 5.80% 8.61% 02/28/86
Charitable 10.75% 6.05% 8.88% 02/28/86
Total Return
Institutional N/A N/A 1.45% 04/20/98
Institutional
Service N/A N/A 1.41% 08/03/98
Adjustable Rate
Institutional 5.75% 5.63% 5.58% 10/01/91
Institutional
Service 5.17% 5.33% 5.37% 05/23/94
International Bond
Institutional 6.31% N/A 4.58% 12/15/93
Institutional
Service 6.05% N/A 4.33% 12/15/93
Current Yield
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 a 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. Such yield will include
income from sources other than municipal obligations, if any. For the 30-day
period ended September 30, 1998 the current yields of the Funds are shown below.
Any given yield or total return quotation should not be considered
representative of the Fund's yield or total return for any future period.
30-Day SEC Yield
Fund
Institutional Institutional Service Charitable
Limited Duration 5.25% 4.99% N/A
Fixed Income 5.37% 5.12% N/A
Income Plus 5.45% 5.23% N/A
Intermediate
Municipal Bond 4.37% 4.12% N/A
Core Bond 5.66% 5.67% 5.42%
Total Return 6.55% 6.32% N/A
Adjustable Rate 5.75% 5.46% N/A
International Bond 4.50% 4.76% N/A
A tax-equivalent yield is calculated, reflecting the rate an investor
would need to earn from a fully taxable investment to equal the yield the Fund
would provide after federal taxes. Below are the yields of the Intermediate Bond
Fund for the seven-day period ended September 30, 1998. The maximum federal tax
rate of 39.6% is assumed.
Tax Equivalent Yield
Institutional Institutional Service
Intermediate Municipal Bond 7.24% 6.82%
SERVICE PROVIDERS
Administrator
Evergreen Investment Services, Inc. ("EIS") serves as administrator to each of
the Funds other than Adjustable Rate, subject to the supervision and control of
the Trust's Board of Trustees. EIS provides the Funds with facilities, equipment
and personnel and is entitled to receive a fee from the Fund based on the total
assets of all mutual funds for which EIS serves as administrator and a First
Union Corporation subsidiary serves as advisor. The fee paid to EIS is
calculated in accordance with the following schedule:
Assets
Fee
first $7 billion 0.050%
next $3 billion 0.035%
next $5 billion 0.030%
next $10 billion 0.020%
next $5 billion 0.015%
over $30 billion 0.010%
Transfer Agent
Evergreen Service Company ("ESC"), a subsidiary of First Union
Corporation, is the Funds' transfer agent. ESC issues and redeems shares, pays
dividends and performs other duties in connection with the maintenance of
shareholder accounts. The transfer agent's address is P.O. Box 2121, Boston,
Massachusetts 02106-2121. The Fund pays ESC annual fees as follows:
Fund Type
Annual Fee Annual Fee
Per Open Per Closed
Account Account
Monthly Dividend Funds $25.50 $9.00
Quarterly Dividend Funds $24.50 $9.00
Semiannual Dividend Funds $23.50 $9.00
Annual Dividend Funds $23.50 $9.00
Money Market Funds $25.50 $9.00
Distributor
Evergreen Distributor, Inc. (the "Distributor") markets the Funds through
broker-dealers and other financial representatives. Its address is 125 W.
55th Street, New York, NY 10019.
Independent Accountants
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036 audits the financial statements of each Fund other than Adjustable Rate.
Independent Auditors
KPMG Peat Marwick LLP, 99 High Street, Boston, Massachusetts 02110, audits the
financial statements of Adjustable Rate.
Custodian
State Street Bank and Trust Company is the Funds' custodian. The bank
keeps custody of each Fund's securities and cash and performs other related
duties. The custodian's address is 225 Franklin Street, Boston, Massachusetts
02110.
Legal Counsel
Sullivan & Worcester LLP provides legal advice to the Funds. Its
address is 1025 Connecticut Avenue, N.W., Washington, D.C. 20036.
FINANCIAL STATEMENTS
The audited financial statements and the reports thereon are hereby incorporated
by reference to the Funds' Annual Reports, a copy of which may be obtained
without charge from ESC, P.O. Box 2121, Boston, Massachusetts 02106-2121.
EVERGREEN FUNDS
Statement of Additional Information ("SAI")
PART 2
ADDITIONAL INFORMATION ON SECURITIES
AND INVESTMENT PRACTICES
The prospectus describes the Fund's investment objective and the securities in
which it primarily invests. The following describes other securities the Fund
may purchase and investment strategies it may use. Some of the information below
will not apply to the Fund in which you are interested. See the list under Other
Securities and Practices in Part 1 of this SAI to determine which of the
sections below are applicable.
Defensive Investments
The Fund may invest up to 100% of its assets in high quality money market
instruments, such as notes, certificates of deposit, commercial paper, banker's
acceptances, bank deposits or U.S. government securities if, in the opinion of
the advisor, market conditions warrant a temporary defensive investment strategy
U.S. Government Securities
The Fund may invest in securities issued or guaranteed by U.S.
Government agencies or instrumentalities.
These securities are backed by (1) the discretionary authority of the
U.S. Government to purchase certain obligations of agencies or instrumentalities
or (2) the credit of the agency or instrumentality issuing the obligations.
Some government agencies and instrumentalities may not receive financial
support from the U.S. Government. Examples of such agencies are:
(I) Credit System, including the National Bank for Cooperatives, Farm
Credit Banks and Banks for Cooperatives;
(ii) Home Administration;
(iii) Federal Home Loan Banks;
(iv) Federal Home Loan Mortgage Corporation;
(v) Federal National Mortgage Association; and
(vi) Student Loan Marketing Association.
Securities Issued by the Government National Mortgage Association ("GNMA"). The
Fund may invest in securities issued by the GNMA, a corporation wholly-owned by
the U.S. Government. GNMA securities or "certificates" represent ownership in a
pool of underlying mortgages. The timely payment of principal and interest due
on these securities is guaranteed.
Unlike conventional bonds, the principal on GNMA certificates is not
paid at maturity but over the life of the security in scheduled monthly
payments. While mortgages pooled in a GNMA certificate may have maturities of up
to 30 years, the certificate itself will have a shorter average maturity and
less principal volatility than a comparable 30-year bond.
The market value and interest yield of GNMA certificates can vary due
not only to market fluctuations, but also to early prepayments of mortgages
within the pool. Since prepayment rates vary widely, it is impossible to
accurately predict the average maturity of a GNMA pool. In addition to the
guaranteed principal payments, GNMA certificates may also make unscheduled
principal payments resulting from prepayments on the underlying mortgages.
Although GNMA certificates may offer yields higher than those available
from other types of U.S. Government securities, they may be less effective as a
means of locking in attractive long-term rates because of the prepayment
feature. For instance, when interest rates decline, prepayments are likely to
increase as the holders of the underlying mortgages seek refinancing. As a
result, the value of a GNMA certificate is not likely to rise as much as the
value of a comparable debt security would in response to same decline. In
addition, these prepayments can cause the price of a GNMA certificate originally
purchased at a premium to decline in price compared to its par value, which may
result in a loss.
When-Issued, Delayed-Delivery and Forward Commitment Transactions
The Fund may purchase securities on a when-issued or delayed delivery basis and
may purchase or sell securities on a forward commitment basis. Settlement of
such transactions normally occurs within a month or more after the purchase or
sale commitment is made.
The Fund may purchase securities under such conditions only with the
intention of actually acquiring them, but may enter into a separate agreement to
sell the securities before the settlement date. Since the value of securities
purchased may fluctuate prior to settlement, the Fund may be required to pay
more at settlement than the security is worth. In addition, the purchaser is not
entitled to any of the interest earned prior to settlement.
Upon making a commitment to purchase a security on a when-issued, delayed
delivery or forward commitment basis the Fund will hold liquid assets worth at
least the equivalent of the amount due. The liquid assets will be monitored on a
daily basis and adjusted as necessary to maintain the necessary value.
Purchases made under such conditions may involve the risk that yields
secured at the time of commitment may be lower than otherwise available by the
time settlement takes place, causing an unrealized loss to the Fund. In
addition, when the Fund engages in such purchases, it relies on the other party
to consummate the sale. If the other party fails to perform its obligations, the
Fund may miss the opportunity to obtain a security at a favorable price or
yield.
Repurchase Agreements
The Fund may enter into repurchase agreements with entities that are
registered as U.S. Government securities dealers, including member banks of the
Federal Reserve System having at least $1 billion in assets, primary dealers in
U.S. government securities or other financial institutions believed by the
investment advisor to be creditworthy. In a repurchase agreement the Fund
obtains a security and simultaneously commits to return the security to the
seller at a set price (including principal and interest) within period of time
usually not exceeding seven days. The resale price reflects the purchase price
plus an agreed upon market rate of interest which is unrelated to the coupon
rate or maturity of the underlying security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is in
effect secured by the value of the underlying security.
The Fund's custodian or a third party will take possession of the
securities subject to repurchase agreements, and these securities will be marked
to market daily. To the extent that the original seller does not repurchase the
securities from the Fund, the Fund could receive less than the repurchase price
on any sale of such securities. In the event that such a defaulting seller filed
for bankruptcy or became insolvent, disposition of such securities by the Fund
might be delayed pending court action. The Fund's investment advisor believes
that under the regular procedures normally in effect for custody of the Fund's
portfolio securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or disposition
of such securities. The Fund will only enter into repurchase agreements with
banks and other recognized financial institutions, such as broker-dealers, which
are deemed by the investment advisor to be creditworthy pursuant to guidelines
established by the Board of Trustees.
Reverse Repurchase Agreements
As described herein, the Fund may also enter into reverse repurchase
agreements. These transactions are similar to borrowing cash. In a reverse
repurchase agreement, the Fund transfers possession of a portfolio instrument to
another person, such as a financial institution, broker, or dealer, in return
for a percentage of the instrument's market value in cash, and agrees that on a
stipulated date in the future the Fund will repurchase the portfolio instrument
by remitting the original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable the Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous,
but the ability to enter into reverse repurchase agreements does not ensure that
the Fund will be able to avoid selling portfolio instruments at a
disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund,
in a dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These securities are marked to
market daily and maintained until the transaction is settled.
Options
An option is a right to buy or sell a security for a specified price within a
limited time period. The option buyer pays the option seller (known as the
"writer") for the right to buy, which is a "call" option, or the right to sell,
which is a "put" option. Unless the option is terminated, the option seller must
then buy or sell the security at the agreed-upon price when asked to do so by
the option buyer.
The Fund may buy or sell put and call options on securities it holds or intends
to acquire, and may purchase put and call options for the purpose of offsetting
previously written put and call options of the same series. The Fund may also
buy and sell options on financial futures contracts. The Fund will use options
as a hedge against decreases or increases in the value of securities it holds or
intends to acquire.
The Fund may write only covered options. With regard to a call option,
this means that the Fund will own, for the life of the option, the securities
subject to the call option. The Fund will cover put options by holding, in a
segregated account, liquid assets having a value equal to or greater than the
price of securities subject to the put option. If the Fund is unable to effect a
closing purchase transaction with respect to the covered options it has sold, it
will not be able to sell the underlying securities or dispose of assets held in
a segregated account until the options expire or are exercised.
Futures Transactions
The Fund may enter into financial futures contracts and write options on
such contracts. The Fund intends to enter into such contracts and related
options for hedging purposes. The Fund will enter into futures on securities or
index-based futures contracts in order to hedge against changes in interest or
exchange rates or securities prices. A futures contract on securities is an
agreement to buy or sell securities at a specified price during a designated
month. A futures contract on a securities index does not involve the actual
delivery of securities, but merely requires the payment of a cash settlement
based on changes in the securities index. The Fund does not make payment or
deliver securities upon entering into a futures contract. Instead, it puts down
a margin deposit, which is adjusted to reflect changes in the value of the
contract and which continues until the contract is terminated.
The Fund may sell or purchase futures contracts. When a futures contract
is sold by the Fund, the value of the contract will tend to rise when the value
of the underlying securities declines and to fall when the value of such
securities increases. Thus, the Fund sells futures contracts in order to offset
a possible decline in the value of its securities. If a futures contract is
purchased by the Fund, the value of the contract will tend to rise when the
value of the underlying securities increases and to fall when the value of such
securities declines. The Fund intends to purchase futures contracts in order to
establish what is believed by the investment advisor to be a favorable price or
rate of return for securities the Fund intends to purchase.
The Fund also intends to purchase put and call options on futures
contracts for hedging purposes. A put option purchased by the Fund would give it
the right to assume a position as the seller of a futures contract. A call
option purchased by the Fund would give it the right to assume a position as the
purchaser of a futures contract. The purchase of an option on a futures contract
requires the Fund to pay a premium. In exchange for the premium, the Fund
becomes entitled to exercise the benefits, if any, provided by the futures
contract, but is not required to take any action under the contract. If the
option cannot be exercised profitably before it expires, the Fund's loss will be
limited to the amount of the premium and any transaction costs.
The Fund may enter into closing purchase and sale transactions in order
to terminate a futures contract and may sell put and call options for the
purpose of closing out its options positions. The Fund's ability to enter into
closing transactions depends on the development and maintenance of a liquid
secondary market. There is no assurance that a liquid secondary market will
exist for any particular contract or at any particular time. As a result, there
can be no assurance
that the Fund will be able to enter into an offsetting transaction with respect
to a particular contract at a particular time. If the Fund is not able to enter
into an offsetting transaction, the Fund will continue to be required to
maintain the margin deposits on the contract and to complete the contract
according to its terms, in which case it would continue to bear market risk on
the transaction.
Although futures and options transactions are intended to enable the
Fund to manage market, interest rate or exchange rate risk, unanticipated
changes in interest rates or market prices could result in poorer performance
than if it had not entered into these transactions. Even if the investment
advisor correctly predicts interest rate movements, a hedge could be
unsuccessful if changes in the value of the Fund's futures position did not
correspond to changes in the value of its investments. This lack of correlation
between the Fund's futures and securities positions may be caused by differences
between the futures and securities markets or by differences between the
securities underlying the Fund's futures position and the securities held by or
to be purchased for the Fund. The Fund's investment advisor will attempt to
minimize these risks through careful selection and monitoring of the Fund's
futures and options positions.
The Fund does not intend to use futures transactions for speculation or
leverage. The Fund has the ability to write options on futures, but currently
intends to write such options only to close out options purchased by the Fund.
The Fund will not change these policies without supplementing the information in
the prospectus and SAI.
The Fund will not maintain open positions in futures contracts it has
sold or call options it has written on futures contracts if, in the aggregate,
the value of the open positions (marked to market) exceeds the current market
value of its securities portfolio plus or minus the unrealized gain or loss on
those open positions, adjusted for the correlation of volatility between the
hedged securities and the futures contracts. If this limitation is exceeded at
any time, the Fund will take prompt action to close out a sufficient number of
open contracts to bring its open futures and options positions within this
limitation.
"Margin in futures transactions unlike the purchase or sale of a security, the
Fund does not pay or receive money upon the purchase or sale of a futures
contract. Rather the Fund is required to deposit an amount of "initial margin"
in cash or U.S. Treasury bills with its custodian (or the broker, if legally
permitted). The nature of initial margin in futures transactions is different
from that of margin in securities transactions in that futures contract initial
margin does not involve the borrowing of funds by the Fund to finance the
transactions. Initial margin is in the nature of a performance bond or good
faith deposit on the contract which is returned to the Fund upon termination of
the futures contract, assuming all contractual obligations have been satisfied.
A futures contract held by the Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day the Fund pays
or receives cash, called "variation margin," equal to the daily change in value
of the futures contract. This process is known as "marking to market". Variation
margin does not represent a borrowing or loan by the Fund but is instead
settlement between the Fund and the broker of the amount one would owe the other
if the futures contract expired. In computing its daily net asset value the Fund
will mark-to-market its open futures positions. The Fund is also required to
deposit and maintain margin when it writes call options on futures contracts.
Foreign Securities
The Fund may invest in foreign securities or U.S. securities traded in
foreign markets. In addition to securities issued by foreign companies,
permissible investments may also consist of obligations of foreign branches of
U.S. banks and of foreign banks, including European certificates of deposit,
European time deposits, Canadian time deposits and Yankee certificates of
deposit. The Fund may also invest in Canadian commercial paper and Europaper.
These instruments may subject the Fund to investment risks that differ in some
respects from those related to investments in obligations of U.S. issuers. Such
risks include the possibility of adverse political and economic developments;
imposition of withholding taxes on interest or other income; seizure,
nationalization, or expropriation of foreign deposits; establishment of exchange
controls or taxation at the source; greater fluctuations in value due to changes
in exchange rates, or the adoption of other foreign governmental restrictions
which might adversely affect the payment of principal and interest on such
obligations. Such investments may also entail higher custodial fees and sales
commissions than domestic investments. Foreign issuers of securities or
obligations are often subject to accounting treatment and engage in business
practices different from those respecting domestic issuers of similar securities
or obligations. Foreign branches of U.S. banks and foreign banks may be subject
to less stringent reserve requirements than those applicable to domestic
branches of U.S. banks.
Foreign Currency Transactions
As one way of managing exchange rate risk, the Fund may enter into
forward currency exchange contracts (agreements to purchase or sell currencies
at a specified price and date). The exchange rate for the transaction (the
amount of currency the Fund will deliver and receive when the contract is
completed) is fixed when the Fund enters into the contract. The Fund usually
will enter into these contracts to stabilize the U.S. dollar value of a security
it has agreed to buy or sell. The Fund intends to use these contracts to hedge
the U.S. dollar value of a security it already owns, particularly if the Fund
expects a decrease in the value of the currency in which the foreign security is
denominated. Although the Fund will attempt to benefit from using forward
contracts, the success of its hedging strategy will depend on the investment
advisor's ability to predict accurately the future exchange rates between
foreign currencies and the U.S. dollar. The value of the Fund's investments
denominated in foreign currencies will depend on the relative strengths of those
currencies and the U.S. dollar, and the Fund may be affected favorably or
unfavorably by changes in the exchange rates or exchange control regulations
between foreign currencies and the U.S. dollar. Changes in foreign currency
exchange rates also may affect the value of dividends and interest earned, gains
and losses realized on the sale of securities and net investment income and
gains, if any, to be distributed to shareholders by the Fund. The Fund may also
purchase and sell options related to foreign currencies in connection with
hedging strategies.
High Yield, High Risk Bonds
The Fund may invest a portion of its assets in lower rated bonds. Bonds rated
below BBB by Standard & Poor's Ratings Services ("S&P") or Fitch IBCA, Inc.
("Fitch") or below Baa by Moody's Investors Service, Inc. ("Moody's"), commonly
known as "junk bonds," offer high yields, but also high risk. While investment
in junk bonds provides opportunities to maximize return over time, they are
considered predominantly speculative with respect to the ability of the issuer
to meet principal and interest payments. Investors should be aware of the
following risks:
(1) The lower ratings of junk bonds reflect a greater possibility that
adverse changes in the financial condition of the issuer or in general economic
conditions, or both, or an unanticipated rise in interest rates may impair the
ability of the issuer to make payments of interest and principal, especially if
the issuer is highly leveraged. Such issuer's ability to meet its debt
obligations may also be adversely affected by the issuer's inability to meet
specific forecasts or the unavailability of additional financing. Also, an
economic downturn or an increase in interest rates may increase the potential
for default by the issuers of these securities.
(2) The value of junk bonds may be more susceptible to real or perceived
adverse economic or political events than is the case for higher quality bonds.
(3) The value of junk bonds, like those of other fixed income
securities, fluctuates in response to changes in interest rates, generally
rising when interest rates decline and falling when interest rates rise. For
example, if interest rates increase after a fixed income security is purchased,
the security, if sold prior to maturity, may return less than its cost. The
prices of junk bonds, however, are generally less sensitive to interest rate
changes than the prices of higher-rated bonds, but are more sensitive to news
about an issuer or the economy which is, or investors perceive as, negative.
(4) The secondary market for junk bonds may be less liquid at certain
times than the secondary market for higher quality bonds, which may adversely
effect (a) the bond's market price, (b) the Fund's ability to sell the bond and
the Fund's ability to obtain accurate market quotations for purposes of valuing
its assets.
For bond ratings descriptions, see "Corporate and Municipal Bond Ratings" below.
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.
The Fund may invest in "restricted" securities, i.e., securities subject
to restrictions on resale under federal securities laws. Rule 144A under the
Securities Act of 1933 ("Rule 144A") allows certain restricted securities to
trade freely among qualified institutional investors. Since Rule 144A securities
may have limited markets, the Board of Trustees will determine whether such
securities should be considered illiquid for the purpose of determining the
Fund's compliance with the limit on illiquid securities indicated above. In
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.
Investment in Other Investment Companies
The Fund may purchase the shares of other investment companies to the
extent permitted under the 1940 Act. Currently, the Fund may not (1) own more
than 3% of the outstanding voting stocks of another investment company, (2)
invest more than 5% of its assets in any single investment company, and (3)
invest more than 10% of its assets in investment companies. 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, policies and limitations as the Fund.
Short Sales
A short sale is the sale of a security the Fund has borrowed. The Fund expects
to profit from a short sale by selling the borrowed security for more than the
cost of buying it to repay the lender. After a short sale is completed, the
value of the security sold short may rise. If that happens, the cost of buying
it to repay the lender may exceed the amount originally received for the sale by
the Fund.
The Fund may not make short sales of securities or maintain a short
position unless, at all times when a short position is open, it owns an equal
amount of such securities or of securities which, without payment of any further
consideration, are convertible into or exchangeable for securities of the same
issue as, and equal in amount to, the securities sold short. The Fund may effect
a short sale in connection with an underwriting in which the Fund is a
participant.
Municipal Bonds
The Fund may invest in municipal bonds of any state, territory or possession of
the United States ("U.S."), including the District of Columbia. The Fund may
also invest in municipal bonds of any political subdivision, agency or
instrumentality (e.g., counties, cities, towns, villages, districts,
authorities) of the U.S. or its possessions. Municipal bonds are debt
instruments issued by or for a state or local government to support its general
financial needs or to pay for special projects such as airports, bridges,
highways, public transit, schools, hospitals, housing and water and sewer works.
Municipal bonds may also may be issued to refinance public debt.
Municipal bonds are mainly divided between "general obligation" and
"revenue" bonds. General obligation bonds are backed by the full faith and
credit of governmental issuers with the power to tax. They are repaid from the
issuer's general revenues. Payment, however, may be dependent upon legislative
approval and may be subject to limitations on the issuer's taxing power.
Enforcement of payments due under general obligation bonds varies according to
the law applicable to the issuer. In contrast, revenue bonds are supported only
by the revenues generated by the project or facility.
The Fund may also invest in industrial development bonds. Such bonds are
usually revenue bonds issued to pay for facilities with a public purpose
operated by private corporations. The credit quality of industrial development
bonds is usually directly related to the credit standing of the owner or user of
the facilities. To qualify as a municipal bond, the interest paid on an
industrial development bond must qualify as fully exempt from federal income
tax. However, the interest paid on an industrial development bond may be subject
to the federal alternative minimum tax.
The yields on municipal bonds depend on such factors as market
conditions, the financial condition of the issuer and the issue's size, maturity
date and rating. Municipal bonds are rated by S&P, Moody's and Fitch. Such
ratings, however, are opinions, not absolute standards of quality. Municipal
bonds with the same maturity, interest rates and rating may have different
yields, while municipal bonds with the same maturity and interest rate, but
different ratings, may have the same yield. Once purchased by the Fund, a
municipal bond may cease to be rated or receive a new rating below the minimum
required for purchase by the Fund. Neither event would require the Fund to sell
the bond, but the Fund's investment advisor would consider such events in
determining whether the Fund should continue to hold it.
The ability of the Fund to achieve its investment objective depends upon
the continuing ability of issuers of municipal bonds to pay interest and
principal when due. Municipal bonds are subject to the provisions of bankruptcy,
insolvency and other laws affecting the rights and remedies of creditors. Such
laws extend the time for payment of principal and/or interest, and may otherwise
restrict the Fund's ability to enforce its rights in the event of default. Since
there is generally less information available on the financial condition of
municipal bond issuers compared to other domestic issuers of securities, the
Fund's investment advisor may lack sufficient knowledge of an issue's
weaknesses. Other influences, such as litigation, may also materially affect the
ability of an issuer to pay principal and interest when due. In addition, the
market for municipal bonds is often thin and can be temporarily affected by
large purchases and sales, including those by the Fund.
From time to time, Congress has considered restricting or eliminating
the federal income tax exemption for interest on municipal bonds. Such actions
could materially affect the availability of municipal bonds and the value of
those already owned by the Fund. If such legislation were passed, the Trust's
Board of Trustees may recommend changes in the Fund's investment objectives and
policies or dissolution of the Fund.
Loans of Securities
To generate income and offset expenses, the Fund may lend portfolio securities
to broker-dealers and other financial institutions. Loans of securities by a
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. 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 have 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.
Although voting rights attendant to securities lent pass to the borrower, the
Fund may call such loans at any time and may vote the securities if it believes
a material event affecting the investment is to occur. The Fund may experience a
delay in receiving additional collateral or in recovering the securities lent or
may even suffer a loss of rights in the collateral should the borrower of the
securities fail financially. The Fund may only make loans to borrowers deemed to
be of good standing, under standards approved by the Board of Trustees, when the
income to be earned from the loan justifies the attendant risks.
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. 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, a Fund investment advisor
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, a 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 statement of additional
information (which limits such investments to commercial paper rated A-1 by S&P,
Prime-1 by Moody's or F-1 by Fitch.
Obligations of Foreign Branches of United States Banks
The obligations of foreign branches of U.S. banks may be general obligations of
the parent bank in addition to the issuing branch, or may be limited by the
terms of a specific obligation and by government regulation. Payment of interest
and principal upon these obligations may also be affected by governmental action
in the country of domicile of the branch (generally referred to as sovereign
risk). In addition, evidences of ownership of such securities may be held
outside the U.S. and the Fund may be subject to the risks associated with the
holding of such property overseas. Examples of governmental actions would be the
imposition of currency controls, interest limitations, withholding taxes,
seizure of assets or the declaration of a moratorium. Various provisions of
federal law governing domestic branches do not apply to foreign branches of
domestic banks.
Obligations of United States Branches of Foreign Banks
Obligations of U.S. branches of foreign banks may be general obligations of the
parent bank in addition to the issuing branch, or may be limited by the terms of
a specific obligation and by federal and state regulation as well as by
governmental action in the country in which the foreign bank has its head
office. In addition, there may be less publicly available information about a
U.S.
branch of a foreign bank than about a domestic bank.
Payment-in-kind Securities
Payment-in-kind ("PIK") securities pay interest in either cash or additional
securities, at the issuer's option, for a specified period. The issuer's option
to pay in additional securities typically ranges from one to six years, compared
to an average maturity for all PIK securities of eleven years. Call protection
and sinking fund features are comparable to those offered on traditional debt
issues.
PIKs, like zero coupon bonds, are designed to give an issuer flexibility in
managing cash flow. Several PIKs are senior debt. In other cases, where PIKs are
subordinated, most senior lenders view them as equity equivalents.
An advantage of PIKs for the issuer -- as with zero coupon securities -- is that
interest payments are automatically compounded (reinvested) at the stated coupon
rate, which is not the case with cash-paying securities. However, PIKs are
gaining popularity over zeros since interest payments in additional securities
can be monetized and are more tangible than accretion of a discount.
As a group, PIK bonds trade flat (i.e., without accrued interest). Their price
is expected to reflect an amount representing accredit interest since the last
payment. PIKs generally trade at higher yields than comparable cash-paying
securities of the same issuer. Their premium yield is the result of the lesser
desirability of non-cash interest, the more limited audience for non-cash paying
securities, and the fact that many PIKs have been issued to equity investors who
do not normally own or hold such securities.
Calculating the true yield on a PIK security requires a discounted cash flow
analysis if the security (ex interest) is trading at a premium or a discount
because the realizable value of additional payments is equal to the current
market value of the underlying security, not par.
Regardless of whether PIK securities are senior or deeply subordinated, issuers
are highly motivated to retire them because they are usually their most costly
form of capital.
Zero Coupon "Stripped" Bonds
A zero coupon "stripped" bond represents ownership in serially maturing interest
payments or principal payments on specific underlying notes and bonds, including
coupons relating to such notes and bonds. The interest and principal payments
are direct obligations of the issuer. Coupon zero coupon bonds of any series
mature periodically from the date of issue of such series through the maturity
date of the securities related to such series. Principal zero coupon bonds
mature on the date specified therein, which is the final maturity date of the
related securities. Each zero coupon bond entitles the holder to receive a
single payment at maturity. There are no periodic interest payments on a zero
coupon bond. Zero coupon bonds are offered at discounts from their face amounts.
In general, owners of zero coupon bonds have substantially all the rights and
privileges of owners of the underlying coupon obligations or principal
obligations. Owners of zero coupon bonds have the right upon default on the
underlying coupon obligations or principal obligations to proceed directly and
individually against the issuer and are not required to act in concert with
other holders of zero coupon bonds.
For federal income tax purposes, a purchaser of principal zero coupon bonds or
coupon zero coupon bonds (either initially or in the secondary market) is
treated as if the buyer had purchased a corporate obligation issued on the
purchase date with an original issue discount equal to the excess of the amount
payable at maturity over the purchase price. The purchaser is required to take
into income each year as ordinary income an allocable portion of such discounts
determined on a "constant yield" method. Any such income increases the holder's
tax basis for the zero coupon bond, and any gain or loss on a sale of the zero
coupon bonds relative to the holder's basis, as so adjusted, is a capital gain
or loss. If the holder owns both principal zero coupon bonds and coupon zero
coupon bonds representing interest in the same underlying issue of securities, a
special basis allocation rule (requiring the aggregate basis to be allocated
among the items sold and retained based on their relative fair market value at
the time of sale) may apply to determine the gain or loss on a sale of any such
zero coupon bonds.
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 services 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 investment advisor 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.
Variable or Floating Rate Instruments
The Fund may invest in variable or floating rate instruments which may involve a
demand feature and may include variable amount master demand notes which may or
may not be backed by bank letters of credit. Variable or floating rate
instruments bear interest at a rate which varies with changes in market rates.
The holder of an instrument with a demand feature may tender the instrument back
to the issuer at par prior to maturity. A variable amount master demand note is
issued pursuant to a written agreement between the issuer and the holder, its
amount may be increased by the holder or decreased by the holder or issuer, it
is payable on demand, and the rate of interest varies based upon an agreed
formula. The quality of the underlying credit must, in the opinion of the
investment advisor, be equivalent to the long-term bond or commercial paper
ratings applicable to permitted investments for each Fund. The investment
advisor will monitor, on an ongoing basis, the earning power, cash flow, and
liquidity ratios of the issuers of such instruments and will similarly monitor
the ability of an issuer of a demand instrument to pay principal and interest on
demand.
Virgin Islands, Guam and Puerto Rico
The Fund may invest in obligations of the governments of the Virgin Islands,
Guam and Puerto Rico to the extent such obligations are exempt from the income
or intangibles taxes, as applicable, of the state for which the Fund is named.
The Fund does not presently intend to invest more than (a) 5% of its net assets
in the obligations of each of the Virgin Islands and Guam or (b) 25% of its net
assets in the obligations of Puerto Rico. Accordingly, the Fund may be adversely
affected by local political and economic conditions and developments within the
Virgin Islands, Guam and Puerto Rico affecting the issuers of such obligations.
PURCHASE, REDEMPTION AND PRICING OF SHARES
You may buy shares of the Fund through the Distributor,
broker-dealers that have entered into special agreements with the Distributor or
certain other financial institutions. The Fund offers up to different classes of
shares that differ primarily with respect to sales charges and distribution
fees. Depending upon the class of shares, you will pay an initial sales charge
when you buy the Fund's shares, a contingent deferred sales charge (a "CDSC")
when you redeem the Fund's shares or no sales charges at all.
Class A Shares
With certain exceptions, when you purchase Class A shares you will pay a
maximum sales charge of 4.75%. The prospectus contains a complete table of
applicable sales charges and a discussion of sales charge reductions or waivers
that may apply to purchases. If you purchase Class A shares in the amount of $1
million or more, without an initial sales charge, the Fund will charge a CDSC of
1.00% if you redeem during the month of your purchase or the 12-month period
following the month of your purchase (see "Contingent Deferred Sales Charge"
below).
Class B Shares
The Fund offers Class B shares at net asset value without an initial
sales charge. With certain exceptions, however, the Fund will charge a CDSC on
shares you redeem within 72 months after the month of your purchase, in
accordance with the following schedule:
REDEMPTION TIME CDSC RATE
Month of purchase and the first 12-month
period following the month of purchase. .................................5.00%
Second 12-month period following the month of purchase...................4.00%
Third 12-month period following the month of purchase....................3.00%
Fourth 12-month period following the month of purchase...................3.00%
Fifth 12-month period following the month of purchase....................2.00%
Sixth 12-month period following the month of purchase....................1.00%
Thereafter...............................................................0.00%
Class B shares that have been outstanding for seven years after the month of
purchase will automatically convert to Class A shares without imposition of a
front-end sales charge or exchange fee. Conversion of Class B shares represented
by stock certificates will require the return of the stock certificate to ESC.
Class C Shares
Class C shares are available only through broker-dealers who have entered into
special distribution agreements with the Distributor. The Fund offers Class C
shares at net asset value without an initial sales charge. With certain
exceptions, however, the Fund will charge a CDSC of 1.00% on shares you redeem
within 12-months after the month of your purchase. See "Contingent Deferred
Sales Charge" below.
Class Y Shares
No CDSC is imposed on the redemption of Class Y shares. Class Y shares
are not offered to the general public and are available only to (1) persons who
at or prior to December 31, 1994 owned shares in a mutual fund advised by (2)
certain institutional investors and (3) investment advisory clients of CMG,
EAMC, EIMC, Meridian Investment Company, First International Advisors, Ltd., or
their affiliates. Class Y shares are offered at net asset value without a
front-end or back-end sales charge and do not bear any Rule 12b-1 distribution
expenses.
INSTITUTIONAL SHARES, INSTITUTIONAL SERVICE SHARES AND CHARITABLE SHARES
Each institutional class of shares is sold without a front-end sales
charge or contingent deferred sales charge. Institutional Service shares pay an
ongoing service fee. The minimum initial investment in any institutional class
of shares is $1 million, which may be waived in certain circumstances. There is
no minimum amount required for subsequent purchases.
Contingent Deferred Sales Charge
The Fund charges a CDSC as reimbursement for certain expenses, such as
commissions or shareholder servicing fees, that it has incurred in connection
with the sale of its shares (see "Distribution Expenses Under Rule 12b-1,"
below). Institutional, Institutional Service and Charitable shares do not charge
a CDSC. If imposed, the Fund deducts the CDSC from the redemption proceeds you
would otherwise receive. The CDSC is a percentage of the lesser of (1) the net
asset value of the shares at the time of redemption or (2) the shareholder's
original net cost for such shares. Upon request for redemption, to keep the CDSC
a shareholder must pay as low as possible, the Fund will first seek to redeem
shares not subject to the CDSC and/or shares held the longest, in that order.
The CDSC on any redemption is, to the extent permitted by the National
Association of Securities Dealers, Inc. ("NASD"), paid to the Distributor or its
predecessor.
SALES CHARGE WAIVERS AND REDUCTIONS
The following information is not applicable to the Institutional,
Institutional Service and Charitable shares. With a larger purchase, there are
several ways that you can combine multiple purchases of Class A shares in
Evergreen Funds and take advantage of lower sales charges.
Combined Purchases
You can reduce your sales charge by combining purchases of Class A
shares of multiple Evergreen Funds. For example, if you invested $75,000 in each
of two different Evergreen Funds, you would pay a sales charge based on a
$150,000 purchase (i.e., 3.75% of the offering price, rather than 4.75%).
Rights of Accumulation
You can reduce your sales charge by adding the value of Class A shares
of Evergreen Funds you already own to the amount of your next Class A
investment. For example, if you hold Class A shares valued at $99,999 and
purchase an additional $5,000, the sales charge for the $5,000 purchase would be
at the next lower sales charge of 3.75%, rather than 4.75%.
Your account, and therefore your rights of accumulation, can be linked to
immediate family members which includes father and mother, brothers and sisters,
and sons and daughters. The same rule applies with respect to individual
retirement plans. Please note, however, that retirement plans involving
employees stand alone and do not pass on rights of accumulation.
Letter of Intent
You can, by completing the "Letter of Intent" section of the
application, purchase Class A shares over a 13-month period and receive the same
sales charge as if you had invested all the money at once. All purchases of
Class A shares of an Evergreen Fund during the period will qualify as Letter of
Intent purchases.
Waiver of Initial Sales Charges
The Fund may sell its shares at net asset value without an initial sales
charge to:
1. purchasers of shares in the amount of $1 million or more;
2. a corporate or certain other qualified retirement plan or a
non-qualified deferred compensation plan or a Title 1 tax-sheltered annuity or
TSA plan sponsored by an organization having 100 or more eligible employees (a
"Qualifying Plan") or a TSA plan sponsored by a public educational entity having
5,000 or more eligible employees (an "Educational TSA Plan");
3. institutional investors, which may include bank trust departments and
registered investment advisors;
4. investment advisors, consultants or financial planners who place
trades for their own accounts or the accounts of their clients and who charge
such clients a management, consulting, advisory or other fee;
5. clients of investment advisors or financial planners who place trades
for their own accounts if the accounts are linked to a master account of such
investment advisors or financial planners on the books of the broker-dealer
through whom shares are purchased;
6. institutional clients of broker-dealers, including retirement and
deferred compensation plans and the trusts used to fund these plans, which place
trades through an omnibus account maintained with the Fund by the broker-dealer;
7. employees of First Union National Bank ("FUNB"), its affiliates, the
Distributor, any broker-dealer with whom the Distributor, has entered into an
agreement to sell shares of the Fund, and members of the immediate families of
such employees;
8. certain Directors, Trustees, officers and employees of the Evergreen
Funds, the Distributor or their affiliates and to the immediate families of such
persons; or
9. a bank or trust company in a single account in the name of such bank
or trust company as Trustee if the initial investment in or any Evergreen fund
made pursuant to this waiver is at least $500,000 and any commission paid at the
time of such purchase is not more than 1% of the amount invested.
With respect to items 8 and 9 above, the Fund will only sell shares to
these parties upon the purchasers written assurance that the purchase is for
their personal investment purposes only.
Such purchasers may not resell the securities except through redemption by the
Fund. The Fund will not charge any CDSC on redemptions by such purchasers.
Waiver of CDSCS
The Fund does not impose a CDSC when the shares you are redeeming
represent:
1. an increase in the share value above the net cost of such shares;
2. certain shares for which the Fund did not pay a commission on
issuance, including shares acquired through reinvestment of dividend income and
capital gains distributions;
3. shares that are in the accounts of a shareholder who has died
or become disabled;
4. a lump-sum distribution from a 401(k) plan or other benefit plan
qualified under the Employee Retirement Income Security Act of 1974 ("ERISA");
5. an automatic withdrawal from the ERISA plan of a shareholder
who is a least 59 years old;
6. shares in an account that we have closed because the account has an
aggregate net asset value of less than $1,000;
7. an automatic withdrawal under an Systematic Income Plan of up to 1.0%
per month of your initial account balance;
8. a withdrawal consisting of loan proceeds to a retirement plan
participant;
9. a financial hardship withdrawal made by a retirement plan
participant;
10. a withdrawal consisting of returns of excess contributions or excess
deferral amounts made to a retirement plan; or
11. a redemption by an individual participant in a Qualifying Plan that
purchased Class C shares (this waiver is not available in the event a Qualifying
Plan, as a whole, redeems substantially all of its assets).
Exchanges
Investors may exchange shares of the Fund for shares of the same class of any
other Evergreen fund other that the Evergreen Select Funds. Shares of any class
of the Evergreen Select Funds may be exchanged for the same class of shares of
any other Evergreen Select Fund. See "By Exchange" under "How to Buy Shares" in
the prospectus. Before you make an exchange, you should read the prospectus of
the Evergreen fund into which you want to exchange. The Trust's Board of
Trustees reserves the right to discontinue, alter or limit the exchange
privilege at any time.
Automatic Reinvestment
As described in the prospectus, a shareholder may elect to receive
dividends and capital gains distributions in cash instead of shares. However,
ESC will automatically reinvest all dividends and distributions in additional
shares when it learns that the postal or other delivery service is unable to
deliver checks or transaction confirmations to the shareholder's address of
record. When a check is returned, the Fund will hold the check amount in a
no-interest account in the shareholder's name until the shareholder updates his
or her address or automatic reinvestment begins. Uncashed or returned redemption
checks will also be handled in the manner described above.
Calculation of Net Asset Value
The Fund calculates its net asset value ("NAV") once daily on Monday
through Friday, as described in the prospectus. The Fund will not compute its
NAV on the day the following legal holidays are observed: New Year's Day, Martin
Luther King Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
The NAV of the Fund is calculated by dividing the value of the Fund's
net assets attributable to that class by all of the shares issued for that
class.
Valuation of Portfolio Securities
Current values for the Fund's portfolio securities are determined as
follows:
(1) Securities that are traded on an established securities exchange or the
over-the-counter National Market System ("NMS") are valued on the basis of the
last sales price on the exchange where primarily traded or on the NMS prior to
the time of the valuation, provided that a sale has occurred.
(2) Securities traded on an established securities exchange or in the
over-the-counter market for which there has been no sale and other securities
traded in the over-the-counter market are valued at the mean of the bid and
asked prices at the time of valuation.
(3) Short-term investments maturing in more than 60 days, for which market
quotations are readily available, are valued at current market value.
(4) Short-term investments maturing in sixty days or less are valued at
amortized cost, which approximates market.
(5) Securities, including restricted securities, for which market quotations are
not readily available; listed securities or those on NMS if, in the Fund's
opinion, the last sales price does not reflect a current market value; and other
assets are valued at prices deemed in good faith to be fair under procedures
established by the Board of Trustees.
PERFORMANCE CALCULATIONS
Total Return
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 effective, whichever is
relevant, on a hypothetical $1,000 investment that would equate the initial
amount invested in the class to the ending redeemable value. To the initial
investment all dividends and distributions are added, and all recurring fees
charged to all shareholder accounts are deducted. The ending redeemable value
assumes a complete redemption at the end of the relevant periods. The following
is the formula used to calculate average annual total return:
n
P(1+T)=ERV
P= initial payment of $1,000
T= average total return
n= number of years
ERV=ending redeemable value of the initial $1,000
CURRENT, EFFECTIVE AND TAX-EQUIVALENT YIELDS
The Fund may quote a "current yield" or "effective yield" from time to
time. The current yield is an annualized yield based on the actual total return
for a seven-day period. The effective yield is an annualized yield based on a
compounding of the current yield. These yields are each computed by first
determining the net change in account value for a hypothetical account having a
share balance of one share at the beginning of a seven-day period (shown as
"beginning account value" in the formula below), excluding capital changes. The
net change in account value will generally equal the total dividends declared
with respect to the account. The yields are then computed as follows:
Current Yield = Beginning Account Value x 365/7
Effective Yield = [(1 + Total Dividend for 7 days) 365/7]-1
Yield fluctuations may reflect changes in the Fund's net investment
income. Portfolio changes resulting from net purchases or net redemptions of the
Fund's shares may also affect the yield. Accordingly, the Fund's yield may vary
from day to day. The yield stated for a particular past period is not
necessarily representative of its future yield. Since the Fund uses the
amortized cost method of net asset value computation, it does not anticipate any
change in yield resulting from unrealized gains or losses or unrealized
appreciation or depreciation not reflected in the yield computation, or change
in net asset value during the period used for computing yield. If any of these
conditions should occur, yield quotations would be suspended. The Fund's yield
is not guaranteed, and the principal is not insured.
Yield information is useful in reviewing the Fund's performance, but
because yields fluctuate, such information cannot necessarily be used to compare
an investment in the Fund's shares with bank deposits, savings accounts and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that yield
is a function of (1) the kind and quality of the instruments the Fund holds, (2)
portfolio maturity, (3) operating expenses and (4) market conditions.
In periods of declining interest rates, yields will tend to be somewhat
higher than prevailing market rates. In periods of rising interest rates, yields
will tend to be somewhat lower. Also, when interest rates are falling, the
inflow of net new money to the Fund from the continuous sale of its shares will
likely be invested in instruments producing lower yields than the balance of the
Fund's investments, thereby reducing the current yield of the Fund. In periods
of rising interest rates, the opposite can be expected to occur.
A tax-equivalent yield is calculated, reflecting the rate an investor
would need to earn from a fully taxable investment to equal the yield the Fund
would provide after federal taxes. The following formula is used:
Tax-Equivalent Yield = Effective Yield
----------------------------
1 - Federal Tax Rate
PRINCIPAL UNDERWRITER
The Distributor is the principal underwriter for the Trust and with
respect to 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 is a subsidiary of The
BISYS Group, Inc.
The Distributor, as agent, has agreed to use its best efforts to find
purchasers for the shares. The Distributor may retain and employ representatives
to promote distribution of the shares and may obtain orders from broker-dealers,
and others, acting as principals, for sales of shares to them. The Underwriting
Agreement provides that the Distributor will bear the expense of preparing,
printing, and distributing advertising and sales literature and prospectuses
used by it.
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 Fund and the 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 Distributor has agreed that it will, in all respects, duly conform
with all state and federal laws applicable to the sale of the shares. The
Distributor has also agreed that it will indemnify and hold harmless the Trust
and each person who has been, is, or may be a Trustee or officer of the Trust
against expenses reasonably incurred by any of them in connection with any
claim, action, suit, or proceeding to which any of them may be a party that
arises out of or is alleged to arise out of any misrepresentation or omission to
state a material fact on the part of the Distributor or any other person for
whose acts the Distributor is responsible or is alleged to be responsible,
unless such misrepresentation or omission was made in reliance upon written
information furnished by the Trust.
The Underwriting Agreement provides that it will remain in effect as
long as its terms and continuance are approved annually (I) by a vote of a
majority of the Trust's Trustees who are not interested persons of the Fund, as
defined in the 1940 Act (the "Independent Trustees"), and (ii) by vote of a
majority of the Trust's Trustees, in each case, cast in person at a meeting
called for that purpose.
The Underwriting Agreement may be terminated, without penalty, on 60
days' written notice by the Board of Trustees or by a vote of a majority of
outstanding shares subject to such agreement. The Underwriting Agreement will
terminate automatically upon its "assignment," as that term is defined in the
1940 Act.
From time to time, if, in 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.
DISTRIBUTION EXPENSES UNDER RULE 12b-1
The Fund bears some of the costs of selling its Class A, Class B, and, when
applicable, Class C shares, or Institutional Service shares, including certain
advertising, marketing and shareholder service expenses, pursuant to Rule 12b-1
of the 1940 Act. These "12b-1 fees" or "distribution fees" are indirectly paid
by the shareholder, as shown by the Fund's expense table in the prospectus.
Under the Distribution Plans (each a "Plan," together, the "Plans") that the
Fund has adopted for its, Class A, Class B, and, when applicable, Class C
shares, or Institutional Service shares, the Fund may incur expenses for
distribution costs up to a maximum annual percentage of the average daily net
assets attributable to a class, as follows:
Class A
0.75%*
Class B
1.00%
Class C
1.00%
Institutional Service
0.35%*
*Currently limited to 0.25% or less. See the expense table in the prospectus
of the Fund in which you are interested.
Of the amounts above, each class may pay under its Plan a maximum service fee of
0.25% to compensate organizations, which may include the Fund's investment
advisor or its affiliates, for personal services provided to shareholders and
the maintenance of shareholder accounts. The Fund may not, during any fiscal
period, pay distribution or service fees greater than the amounts above.
Amounts paid under the Plans are used to compensate the Distributor pursuant to
Distribution Agreements (each an "Agreement," together, the "Agreements") that
the Fund has entered into with respect to its Class A, Class B and, if
applicable, Class C shares. The compensation is based on a maximum annual
percentage of the average daily net assets attributable to a class, as follows:
Class A
0.25%*
Class B
1.00%
Class C
1.00%
*May be lower. See the expense table in the prospectus of the Fund in which
you are interested.
The Agreements provide that the Distributor will use the distribution fees
received from the Fund for the following purposes:
(1) to compensate broker-dealers or other persons for distributing
Fund shares;
(2) to compensate broker-dealers, depository institutions and other financial
intermediaries for providing administrative, accounting and other services with
respect to the Fund's shareholders; and
(3) to otherwise promote the sale of Fund shares.
The Agreements also provide that the Distributor may use distribution fees to
make interest and principal payments in respect of amounts that have been
financed to pay broker-dealers or other persons for distributing Fund shares.
The Distributor may assign its rights to receive compensation under the Plans to
secure such financings. FUNB or its affiliates may finance payments made by the
Distributor to compensate broker-dealers or other persons for distributing
shares of the Fund.
In the event the Fund acquires the assets of another mutual fund, compensation
paid to the Distributor under the Agreements may be paid by the Fund's
Distributor to the acquired fund's distributor or its predecessor.
Since the Distributor's compensation under the Agreements is not directly tied
to the expenses incurred by the Distributor, the compensation received by it
under the Agreements during any fiscal year may be more or less than its actual
expenses and may result in a profit to the Distributor. Distribution expenses
incurred by the Distributor in one fiscal year that exceed the compensation paid
to the Distributor for that year may be paid from distribution fees received
from the Fund in subsequent fiscal years.
Distribution fees are accrued daily and paid at least monthly on Class
A, Class B and Class C shares and are charged as class expenses, as accrued. The
distribution fees attributable to the Class B and Class C shares are designed to
permit an investor to purchase such shares through broker-dealers without the
assessment of a front-end sales charge, while at the same time permitting the
Distributor to compensate broker-dealers in connection with the sale of such
shares. In this regard, the purpose and function of the combined contingent
deferred sales charge and distribution services fee on the Class B shares are
the same as those of the front-end sales charge and distribution fee with
respect to the Class A shares in that in each case the sales charge and/or
distribution fee provide for the financing of the distribution of the Fund's
shares.
Under the Plans, the Treasurer of the Trust reports the amounts expended
under the Plans and the purposes for which such expenditures were made to the
Trustees of the Trust for their review on a quarterly basis. Also, each Plan
provides that the selection and nomination of the Independent Trustees are
committed to the discretion of such Independent Trustees then in office.
The investment advisor may from time to time from its own funds or such
other resources as may be permitted by rules of the Securities and Exchange
Commission ("SEC") make payments for distribution services to the Distributor;
the latter may in turn pay part or all of such compensation to brokers or other
persons for their distribution assistance.
Each Plan and the Agreement will continue in effect for successive
12-month periods provided, however, that such continuance is specifically
approved at least annually by the Trustees of the Trust or by vote of the
holders of a majority of the outstanding voting securities of that class and, in
either case, by a majority of the Independent Trustees of the Trust.
The Plans permit the payment of fees to brokers and others for
distribution and shareholder-related administrative services and to
broker-dealers, depository institutions, financial intermediaries and
administrators for administrative services as to Class A, Class B, Class C and
Institutional Service shares. The Plans are designed to (i) stimulate brokers to
provide distribution and administrative support services to the Fund and holders
of Class A, Class B, Class C and Institutional Service shares and (ii) stimulate
administrators to render administrative support services to the Fund and holders
of Class A, Class B, Class C and Institutional shares. The administrative
services are provided by a representative who has knowledge of the shareholder's
particular circumstances and goals, and include, but are not limited to
providing office space, equipment, telephone facilities, and various personnel
including clerical, supervisory, and computer, as necessary or beneficial to
establish and maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client account cash
balances; answering routine client inquiries regarding Class A, Class B, Class C
and Institutional Service shares; assisting clients in changing dividend
options, account designations, and addresses; and providing such other services
as the Fund reasonably requests for its Class A, Class B, Class C and
Institutional Service shares.
In the event that the Plan or Distribution Agreement is terminated or
not continued with respect to one or more classes of the Fund, (i) no
distribution fees (other than current amounts accrued but not yet paid) would be
owed by the Fund to the Distributor with respect to that class or classes, and
(ii) the Fund would not be obligated to pay the Distributor for any amounts
expended under the Distribution Agreement not previously recovered by the
Distributor from distribution services fees in respect of shares of such class
or classes through deferred sales charges.
All material amendments to any Plan or Agreement must be approved by a
vote of the Trustees of the Trust or the holders of the Fund's outstanding
voting securities, voting separately by class, and in either case, by a majority
of the Independent Trustees, cast in person at a meeting called for the purpose
of voting on such approval; and any Plan or Distribution Agreement may not be
amended in order to increase materially the costs that a particular class of
shares of the Fund may bear pursuant to the Plan or Distribution Agreement
without the approval of a majority of the holders of the outstanding voting
shares of the class affected. Any Plan or Distribution Agreement may be
terminated (I) by the Fund without penalty at any time by a majority vote of the
holders of the outstanding voting securities of the Fund, voting separately by
class or by a majority vote of the Independent Trustees, or (ii) by the
Distributor. To terminate any Distribution Agreement, any party must give the
other parties 60 days' written notice; to terminate a Plan only, the Fund need
give no notice to the Distributor. Any Distribution Agreement will terminate
automatically in the event of its assignment. For more information about 12b-1
fees, see "Expenses" in the prospectus and "12b-1 Fees" under "Expenses" in Part
1 of this SAI.
TAX INFORMATION
Requirements for Qualifications as a Regulated Investment Company
The Fund intends to qualify for and elect the tax treatment applicable
to regulated investment companies ("RIC") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). If the (Such qualification does
not involve supervision of management or investment practices or policies by the
Internal Revenue Service.) In order to qualify as a RIC, the Fund must, among
other things, (I) derive at least 90% of its gross income from dividends,
interest, payments with respect to proceeds from securities loans, gains from
the sale or other disposition of securities or foreign currencies and other
income (including gains from options, futures or forward contracts) derived with
respect to its business of investing in such securities; and (ii) diversify its
holdings so that, at the end of each quarter of its taxable year, (a) at least
50% of the market value of the Fund's total assets is represented by cash, U.S.
government securities and other securities limited in respect of any one issuer,
to an amount not greater than 5% of the Fund's total assets and 10% of the
outstanding voting securities of such issuer, and (b) not more than 25% of the
value of its total assets is invested in the securities of any one issuer (other
than U.S. government securities and securities of other regulated investment
companies). By so qualifying, 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 Distributions
Unless the Fund is a municipal bond fund, distributions will be taxable to
shareholders whether made in shares or in cash. Shareholders electing to receive
distributions in the form of additional shares will have a cost basis for
federal income tax purposes in each share so received equal to the net asset
value of a share of the Fund on the reinvestment date.
To calculate ordinary income for federal income tax purposes,
shareholders must generally include dividends paid by the Fund from its
investment company taxable income (net taxable investment income plus net
realized short-term capital gains, if any). The Fund will include dividends it
receives from domestic corporations when the Fund calculates its gross
investment income. Unless the Fund is a municipal bond fund or U.S. Treasury
money market fund, it anticipates that all or a portion of the ordinary
dividends which it pays will qualify for the 70% dividends-received deduction
for corporations. The Fund will inform shareholders of the amounts that so
qualify. If the Fund is a municipal bond fund or U.S. Treasury money market
fund, none of its income will consist of corporate dividends; therefore, none of
its distributions will qualify for the 70% dividends-received deduction for
corporations.
From time to time, the Fund will distribute the excess of its net
long-term capital gains over its short-term capital loss to shareholders (i.e.,
capital gain dividends). For federal tax purposes, shareholders must include
such capital gain dividends when calculating their net long-term capital gains.
Capital gain dividends are taxable as net long-term capital gains to a
shareholder, no matter how long the shareholder has held the shares.
Distributions by the Fund reduce its NAV. A distribution that reduces the Fund's
NAV below a shareholder's cost basis is taxable as described above, although
from an investment standpoint, it is a return of capital. In particular, if a
shareholder buys Fund shares just before the Fund makes a distribution, when the
Fund makes the distribution the shareholder will receive what is in effect a
return of capital. Nevertheless, the shareholder may incur taxes on the
distribution. Therefore, shareholders should carefully consider the tax
consequences of buying Fund shares just before a distribution.
All distributions, whether received in shares or cash, must be reported by each
shareholder on his or her federal income tax return. Each shareholder should
consult a tax advisor to determine the state and local tax implications of Fund
distributions.
If more than 50% of the value of the Fund's total assets at the end of a fiscal
year is represented by securities of foreign corporations and the Fund elects to
make foreign tax credits available to its shareholders, a shareholder will be
required to include in his gross income both cash dividends and the amount the
Fund advises him is his pro rata portion of income taxes withheld by foreign
governments from interest and dividends paid on the Fund's investments. The
shareholder may be entitled, however, to take the amount of such foreign taxes
withheld as a credit against his U.S. income tax, or to treat the foreign tax
withheld as an itemized deduction from his gross income, if that should be to
his advantage. In substance, this policy enables the shareholder to benefit from
the same foreign tax credit or deduction that he would have received if he had
been the individual owner of foreign securities and had paid foreign income tax
on the income therefrom. As in the case of individuals receiving income directly
from foreign sources, the credit or deduction is subject to a number of
limitations.
Special Tax Information for Municipal Bond Fund Shareholders
The Fund expects that substantially all of its dividends will be "exempt
interest dividends," which should be treated as excludable from federal gross
income. In order to pay exempt interest dividends, at least 50% of the value of
the Fund's assets must consist of federally tax-exempt obligations at the close
of each quarter. An exempt interest dividend is any dividend or part thereof
(other than a capital gain dividend) paid by the Fund with respect to its net
federally excludable municipal obligation interest and designated as an exempt
interest dividend in a written notice mailed to each shareholder not later than
60 days after the close of its taxable year. The percentage of the total
dividends paid by the Fund with respect to any taxable year that qualifies as
exempt interest dividends will be the same for all shareholders of the Fund
receiving dividends with respect to such year. If a shareholder receives an
exempt interest dividend with respect to any share and such share has been held
for six months or less, any loss on the sale or exchange of such share will be
disallowed to the extent of the exempt interest dividend amount.
Any shareholder of the Fund who may be a "substantial user" (as defined by the
Code) of a facility financed with an issue of tax-exempt obligations or a
"related person" to such a user should consult his tax advisor concerning his
qualification to receive exempt interest dividends should the Fund hold
obligations financing such facility.
Under regulations to be promulgated, to the extent attributable to
interest paid on certain private activity bonds, the Fund's exempt interest
dividends, while otherwise tax-exempt, will be treated as a tax preference item
for alternative minimum tax purposes. Corporate shareholders should also be
aware that the receipt of exempt interest dividends could subject them to
alternative minimum tax under the provisions of Section 56(g) of the Code
(relating to "adjusted current earnings").
Interest on indebtedness incurred or continued by shareholders to purchase or
carry shares of the Fund will not be deductible for federal income tax purposes
to the extent of the portion of the interest expense relating to exempt interest
dividends. Such portion is determined by multiplying the total amount of
interest paid or accrued on the indebtedness by a fraction, the numerator of
which is the exempt interest dividends received by a shareholder in his taxable
year and the denominator of which is the sum of the exempt interest dividends
and the taxable distributions out of the Fund's investment income and long-term
capital gains received by the shareholder.
Taxes on The Sale or Exchange of Fund Shares
Upon a sale or exchange of Fund shares, a shareholder will realize a
taxable gain or loss depending on his or her basis in the shares. A shareholder
must treat such gains or losses as a capital gain or loss if the shareholder
held the shares as capital assets. Capital gain on assets held for more than 12
months is generally subject to a maximum federal income tax rate of 20% for an
individual. Generally, the Code will not allow a shareholder to realize a loss
on shares he or she has sold or exchanged and replaced within a 61-day period
beginning 30 days before and ending 30 days after he or she sold or exchanged
the shares. The Code will not allow a shareholder to realize a loss on the sale
of Fund shares held by the shareholder for six months or less to the extent the
shareholder received exempt interest dividends on such shares. Moreover, the
Code will treat a shareholder's loss on shares held for six months or less as a
long-term capital loss to the extent the shareholder received distributions of
net capital gains on such shares.
Shareholders who fail to furnish their taxpayer identification numbers
to 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
advisors about the applicability of the backup withholding provisions.
Other Tax Considerations
The foregoing discussion relates solely to U.S. federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens and residents and U.S. domestic
corporations, partnerships, trusts and estates). It does not reflect the special
tax consequences to certain taxpayers (e.g., banks, insurance companies, tax
exempt organizations and foreign persons). Shareholders are encouraged to
consult their own tax advisors regarding specific questions relating to federal,
state and local tax consequences of investing in shares of the Fund. Each
shareholder who is not a U.S. person should consult his or her tax advisor
regarding the U.S. and foreign tax consequences of ownership of shares of the
Fund, including the possibility that such a shareholder may be subject to a U.S.
withholding tax at a rate of 30% (or at a lower rate under a tax treaty) on
amounts treated as income from U.S. sources under the Code.
BROKERAGE
Brokerage Commissions
If the Fund invests in equity securities, it expects to buy and sell them
through brokerage transactions for which commissions are payable. Purchases from
underwriters will include the underwriting commission or concession, and
purchases from dealers serving as market makers will include a dealer's mark-up
or reflect a dealer's mark-down. Where transactions are made in the
over-the-counter market, the Fund will deal with primary market makers unless
more favorable prices are otherwise obtainable.
If the Fund invests in fixed income securities, it expects to buy and sell them
directly from the issuer or an underwriter or market maker for the securities.
Generally, the Fund will not pay brokerage commissions for such purchases. When
the Fund buys a security from an underwriter, the purchase price will usually
include an underwriting commission or concession. The purchase price for
securities bought from dealers serving as market makers will similarly include
the dealer's mark up or reflect a dealer's mark down. When the Fund executes
transactions in the over-the-counter market, it will deal with primary market
makers unless more favorable prices are otherwise obtainable.
Selection of Brokers
When buying and selling portfolio securities, the advisor seeks brokers who can
provide the most benefit to the Fund. When selecting a broker, the investment
advisor will primarily look for the best price at the lowest commission, but in
the context of the broker's:
1. ability to provide the best net financial result to the Fund;
2. efficiency in handling trades;
3. ability to trade large blocks of securities;
4. readiness to handle difficult trades;
5. financial strength and stability; and
6. provision of "research services," defined as (a) reports and analyses
concerning issuers, industries, securities and economic factors and (b) other
information useful in making investment decisions.
The Fund may pay higher brokerage commissions to a broker providing it with
research services, as defined in item 6, above. Pursuant to Section 28(e) of the
Securities Exchange Act of 1934, this practice is permitted if the commission is
reasonable in relation to the brokerage and research services provided. Research
services provided by a broker to the advisor do not replace, but supplement, the
services an advisor is required to deliver to the Fund. It is impracticable for
the investment advisor to allocate the cost, value and specific application of
such research services among its clients because research services intended for
one client may indirectly benefit another.
When selecting a broker for portfolio trades, the investment advisor may also
consider the amount of Fund shares a broker has sold, subject to the other
requirements described above.
If the Fund is advised by EIMC, Lieber & Company, an affiliate of EIMC and a
member of the New York and American Stock Exchanges, will to the extent
practicable effect substantially all of the portfolio transactions effected on
those exchanges for the Fund.
Simultaneous Transactions
The investment advisor makes investment decisions for the Fund independently of
decisions made for its other clients. When a security is suitable for the
investment objective of more than one client, it may be prudent for the
investment advisor to engage in a simultaneous transaction, that is, buy or sell
the same security for more than one client. The investment advisor strives for
an equitable result in such transactions by using an allocation formula. The
high volume involved in some simultaneous transactions can result in greater
value to the Fund, but the ideal price or trading volume may not always be
achieved for an individual Fund.
ORGANIZATION
Description of Shares
The Declaration of Trust authorizes the issuance of an unlimited number
of shares of beneficial interest of series and classes of shares. Each share of
the 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 "NAV"applicable to such share. Shares generally vote together as one class on
all matters. Classes of shares of the Fund have equal voting rights. No
amendment may be made to the Declaration of Trust that adversely affects any
class of shares without the approval of a majority of the votes applicable to
the shares of that class. Shares have non-cumulative voting rights, which means
that the holders of more than 50% of the votes applicable to shares voting for
the election of Trustees can elect 100% of the Trustees to be elected at a
meeting and, in such event, the holders of the remaining shares voting will not
be able to elect any Trustees.
After the initial meeting as described above, no further meetings of
shareholders for the purpose of electing Trustees will be held, unless required
by law (for such reasons as electing or removing Trustees, changing fundamental
policies, and approving advisory agreements or 12b-1 plans), unless and until
such time as less than a majority of the Trustees holding office have been
elected by shareholders, at which time, the Trustees then in office will call a
shareholders' meeting for the election of Trustees.
Limitation of Trustees' Liability
The Declaration of Trust provides that a Trustee will not be liable for
errors of judgment or mistakes of fact or law, but nothing in the Declaration of
Trust protects a Trustee against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his duties involved in the conduct of his office.
Banking Laws
The Glass-Steagall Act and other banking laws and regulations presently prohibit
member banks of the Federal Reserve System ("Member Banks") or their non-bank
affiliates from sponsoring, organizing, controlling, or distributing the shares
of registered, open-end investment companies such as the Trust. Such laws and
regulations also prohibit banks from issuing, underwriting or distributing
securities in general. However, under the Glass-Steagall Act and such other laws
and regulations, a Member Bank or an affiliate thereof may act as investment
advisor, transfer agent or custodian to a registered open-end investment company
and may also act as agent in connection with the purchase of shares of such an
investment company upon the order of its customer, FUNB and its affiliates are
subject to, and in compliance with, the aforementioned laws and regulations.
Changes to applicable laws and regulations or future judicial or administrative
decisions could result in FUNB and its affiliates being prevented from
continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of
the Fund by its customers. If FUNB and its affiliates were prevented from
continuing to provide for services called for under the investment advisory
agreement, it is expected that the Trustees would identify, and call upon the
Fund's shareholders to approve a new investment advisor. If this were to occur,
it is not anticipated that the shareholders of the Fund would suffer any adverse
financial consequences.
INVESTMENT ADVISORY AGREEMENT
On behalf of the Fund, the Trust has entered into an investment advisory
agreement with the Fund's investment advisor (the "Advisory Agreement"). Under
the Advisory Agreement, and subject to the supervision of the Trust's Board of
Trustees, the investment advisor furnishes to the Fund investment advisory,
management and administrative services, office facilities, and equipment in
connection with its services for managing the investment and reinvestment of the
Fund's assets.
The investment advisor pays for all of the expenses incurred in connection
with the provision of its services. The Fund pays for all charges and expenses,
other than those specifically referred to as being borne by the investment
advisor, including, but not limited to, (1) custodian charges and expenses; (2)
bookkeeping and auditors' charges and expenses; (3) transfer agent charges and
expenses; (4) fees and expenses of Independent Trustees; (5) brokerage
commissions, brokers' fees and expenses; (6) issue and transfer taxes; (7)
applicable costs and expenses under the Distribution Plan (as described above)
(8) taxes and trust fees payable to governmental agencies; (9) the cost of share
certificates; (10) fees and expenses of the registration and qualification of
the Fund and its shares with the SEC or under state or other securities laws;
(11) expenses of preparing, printing and mailing prospectuses, SAIs, notices,
reports and proxy materials to shareholders of the Fund; (12) expenses of
shareholders' and Trustees' meetings; (13) charges and expenses of legal counsel
for the Fund and for the Independent Trustees on matters relating to the Fund;
(14) charges and expenses of filing annual and other reports with the SEC and
other authorities; and (15) all extraordinary charges and expenses of the Fund.
For information on advisory fees paid by the Fund, see "Expenses" in Part 1 of
this SAI.
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. In either case, the terms of the Advisory Agreement
and continuance thereof must be approved by the vote of a majority of the
Independent Trustees cast in person at a meeting called for the purpose of
voting on such approval. 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.
Transactions Among Advisory Affiliates
The Trust has adopted procedures pursuant to Rule 17a-7 of the 1940 Act
("Rule 17a-7 Procedures"). The Rule 17a-7 Procedures permit the Fund to buy or
sell securities from another investment company for which a subsidiary of First
Union Corporation is an investment advisor. The Rule 17a-7 Procedures also allow
the Fund to buy or sell securities from other advisory clients for whom a
subsidiary of First Union Corporation is an investment advisor. The Fund may
engage in such transaction if it is equitable to each participant and consistent
with each participant's investment objective.
MANAGEMENT OF THE TRUST
The Trust is supervised by a Board of Trustees that is responsible for
representing the interest of the shareholders. The Trustees meet periodically
throughout the year to oversee the Fund's activities, reviewing, among other
things, the Fund's performance and its contractual arrangements with various
service providers. Each Trustee is paid a fee for his or her services. See
"Expenses-Trustee Compensation" in Part 1 of this SAI.
The Trust has an Executive Committee which consists of the Chairman of the
Board, James Howell, and Messrs. Scofield and Salton, each of whom is an
Independent Trustee. The Executive Committee recommends Trustees to fill
vacancies, prepares the agenda for Board meetings and acts on routine matters
between scheduled Board meetings.
Set forth below are the Trustees and officers of the Trust and their
principal occupations and affiliations over the last five years. Unless
otherwise indicated, the address for each Trustee and officer is 200 Berkeley
Street, Boston, Massachusetts 02116. Each Trustee is also a Trustee of each of
the other Trusts in the Evergreen Fund complex, other than Evergreen Variable
Trust of which Messrs. Howell, Salton and Scofield are the only Trustees.
<TABLE>
<CAPTION>
NAME POSITION WITH TRUST PRINCIPAL OCCUPATIONS FOR LAST FIVE YEARS
<S> <C> <C>
Laurence B. Ashkin Trustee Real estate developer and construction consultant; and
(DOB: 2/2/28) President of Centrum Equities and Centrum Properties, Inc.
Charles A. Austin III Trustee Investment Counselor to Appleton Partners, Inc.; former
(DOB: 10/23/34) 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; and former
Chairman, Gifford, Drescher & Associates (environmental
consulting).
James S. Howell Chairman of the Board Former Chairman of the Distribution Foundation for the
(DOB: 8/13/24) of Trustees 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. (steel
(DOB: 7/14/39) producer).
Thomas L. McVerry Trustee Former Vice President and Director of Rexham Corporation;
(DOB: 8/2/39) and former Director of Carolina Cooperative Federal Credit
Union.
William Walt Pettit Trustee Partner in the law firm of William Walt Pettit, P.A.
(DOB: 8/26/55)
David M. Richardson Trustee Vice Chair and former Executive Vice President, DHR
(DOB: 9/14/41) 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 Services;
(DOB: 6/2/47) 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 out placement); 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 Treasurer Senior Vice President and Operations Executive, BISYS Fund
(DOB:8/30/58) Services.
Vice President and
Nimish S. Bhatt* Assistant Treasurer Vice President, Tax, BISYS Fund Services; former Assistant
(DOB: 6/6/63) Vice President, Evergreen Asset Management Corp./First
Union Bank; former Senior Tax Consulting/Acting
Manager, Investment Companies Group, Price Waterhouse
LLP, New York.
Bryan Haft* Vice President Team Leader, Fund Administration, BISYS Fund Services
(DOB: 1/23/65)
Senior Vice President and Assistant General Counsel, First
Michael H. Koonce Secretary Union Corporation; former Senior Vice President and General
(DOB: 4/20/60) Counsel, Colonial Management Associates, Inc.
</TABLE>
*Address: BISYS Fund Services, 3435 Stelzer Road, Columbus, Ohio 43219-8001
CORPORATE AND MUNICIPAL BOND RATINGS
The Fund relies on ratings provided by independent rating services to help
determine the credit quality of bonds and other obligations the Fund intends to
purchase or already owns. A rating is an opinion of an issuer's ability to pay
interest and/or principal when due. Ratings reflect an issuer's overall
financial strength and whether it can meet its financial commitments under
various economic conditions.
If a security held by the Fund loses its rating or has its rating reduced after
the Fund has purchased it, the Fund is not required to sell or otherwise dispose
of the security, but may consider doing so.
The principal rating services, commonly used by the Fund and investors
generally, are S&P and Moody's. The Fund may also rely on ratings provided by
Fitch. Rating systems are similar among the different services. As an example,
the chart below compares basic ratings for long-term bonds. The "Credit Quality"
terms in the chart are for quick reference only. Following the chart are the
specific definitions each service provides for its ratings.
CORPORATE AND MUNICIPAL BOND RATINGS
The Fund relies on ratings provided by independent rating services to help
determine the credit quality of bonds and other obligations the Fund intends to
purchase or already owns. A rating is an opinion of an issuer?s ability to pay
interest and/or principal when due. Ratings reflect an issuer's overall
financial strength and whether it can meet its financial commitments under
various economic conditions.
If a security held by the Fund loses its rating or has its rating reduced after
the Fund has purchased it, the Fund is not required to sell or otherwise dispose
of the security, but may consider doing so.
Thee principal rating services, commonly used by the Fund and investors
generally, are S&P and Moody's. The Fund may also rely on ratings provided by
Fitch. Rating systems are similar among the different services. As an example,
the chart below compares basic ratings for long-term bonds. The "Credit Quality"
terms in the chart are for quick reference only. Following the chart are the
specific definitions each service provides for its ratings.
COMPARISON OF LONG-TERM BOND RATINGS
MOODY?S S&P FITCH Credit Quality
Aaa AAA AAA Excellent Quality (lowest
risk)
Aa AA AA Almost Excellent Quality
(very low risk)
A A A Good Quality (low risk)
Baa BBB BBB Satisfactory Quality (some
risk)
Ba BB BB Questionable Quality
(definite risk)
B B B Low Quality (high risk)
Caa/Ca/ CCC/CC/ CCC/CC/ In or Near Default
C C C
D DDD/DD/ In Default
D
CORPORATE BONDS
LONG-TERM RATINGS
Moody's Corporate Long-Term Bond Ratings
Aaa Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat larger than the Aaa
securities.
A Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa Bonds which are rated Baa are considered as mediumgrade obligations,
(i.e. they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with respect to
principal or interest.
Ca Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Note: Moody?s applies numerical modifiers, 1, 2 and 3 in each
generic rating classification from Aa to Caa. The modifier 1 indicates that
the company ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range raking and the modifier 3 indicates that the
company ranks in the lower end of its generic rating category.
S&P Corporate Long-Term Bond Ratings
AAA An obligation rated AAA has the highest rating assigned by S&P.
The obligor?s capacity to meet its financial commitment on the obligation is
extremely strong.
AA An obligation rated AA differs from the highestrated obligations
only in small degree. The obligor?s capacity to meet its financial commitment
on the obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher-rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
BBB An obligation rated BBB exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
BB, B, CCC, CC and C: As described below, obligations rated BB, B,
CCC, CC, and C are regarded as having significant speculative characteristics.
BB indicates the least degree of speculation and C the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB An obligation rated BB is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions, which could
lead to the obligor's inadequate capacity to meet its financial commitment on
the obligation.
B An obligation rated B is more vulnerable to nonpayment than
obligations rated BB, but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity or willingness
to meet it financial commitment on the obligation. An obligation rated CCC is
currently vulnerable to nonpayment and is dependent upon favorable business,
financial, and economic conditions for the obligor to meet its financial
commitment on the obligation. In the event of adverse business, financial, or
economic conditions, the obligor is not likely to have the capacity to meet
its financial commitment on the obligation.
CC An obligation rated CC is currently highly vulnerable to
nonpayment.
C The C rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on this
obligation are being continued.
D The D rating, unlike other ratings, is not prospective; rather, it
is used only where a default has actually occurred--and not where a default is
only expected. S&P changes ratings to D either:
On the day an interest and/or principal payment is due and is not
paid. An exception is made if there is a grace period and S&P believes that a
payment will be made, in which case the rating can be maintained; or
Upon voluntary bankruptcy filing or similar action. An exception is
made if S&P expects that debt service payments will continue to be made on a
specific issue. In the absence of a payment default or bankruptcy filing, a
technical default (i.e., covenant violation) is not sufficient for assigning a
D rating.
Plus (+) or minus (-) The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within the
major rating categories.
Fitch Corporate Long-Term Bond Ratings
Investment Grade
AAA Highest credit quality. AAA ratings denote the lowest
expectation of credit risk. They are assigned only in case of exceptionally
strong capacity for timely payment of financial commitments. This capacity is
highly unlikely to be adversely affected by foreseeable events.
AA Very high credit quality. AA ratings denote a very low
expectation of credit risk. They indicate very strong capacity for timely
payment of financial commitments. This capacity is not significantly
vulnerable to foreseeable events.
A High credit quality. A ratings denote a lower expectation of
credit risk. The capacity for timely payment of financial commitments is
considered strong. This capacity may, nevertheless, be more vulnerable to
changes in circumstances or in economic conditions than is the case for higher
ratings.
BBB Good credits quality. BBB ratings indicate that there is
currently a low expectation of credit risk. The capacity for timely payment of
financial commitments is considered adequate, but adverse changes in
circumstances and in economic conditions are more likely to impair this
capacity. This is the lowest investment-grade category.
Speculative Grade
BB Speculative. BB ratings indicate that there is a possibility of
credit risk developing, particularly as the result of adverse economic change
over time; however, business or financial alternatives may be available to
allow financial commitments to be met. Securities rated in this category are
not investment grade.
B Highly speculative. B ratings indicate that significant credit
risk is present, but a limited margin of safety remains. Financial commitments
are currently being met; however, capacity for continued payment is contingent
upon a sustained, favorable business and economic environment.
CCC, CC, C High default risk. Default is a real possibility.
Capacity for meeting financial commitment is solely reliant upon sustained,
favorable business or economic developments. A CC rating indicates that
default of some kind appears probable. C ratings signal imminent default.
DDD, DD, D Default. Securities are not
meeting current obligations and are extremely speculative. DDD
designates the highest potential for recovery of amounts
outstanding on any securities involved. For U.S. corporates, for
example, DD indicates expected recovery of 50%-90% of such
outstandings, and D the lowest recovery potential, i.e. below
50%.
+ or - may be appended to a rating to denote relative status within
major rating categories. Such suffixes are not added to the AAA rating
category or to categories below CCC.
CORPORATE SHORT-TERM RATINGS
Moody's Corporate Short-Term Issuer Ratings
Prime-1 Issuers rated Prime-1 (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics.
Leading market positions in well-established industries.
High rates of return on funds employed.
Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
Broad margins in earnings coverage of fixed financial changes and
high internal cash generation.
Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions.
Ample alternate liquidity is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level
of debt protection measurements and may require relatively high financial
leverage. Adequate alternate liquidity is maintained.
Not Prime Issuers rated Not Prime do not fall within any of the
Prime rating categories.
S&P Corporate Short-Term Obligation Ratings
A-1 A short-term obligation rated A-1 is rated in the highest
category by S&P. The obligor?s capacity to meet its financial commitment on
the obligation is strong. Within this category certain obligations are
designated with a plus sign (+). This indicates that the obligor's capacity to
meet its financial commitment on these obligations is extremely strong.
A-2 A short-term obligation rated A-2 is somewhat more susceptible
to the adverse effects of changes in circumstances and economic conditions
than obligations in higher rating categories. However, the obligor?s capacity
to meet its financial commitment on the obligation is satisfactory.
A-3 A short-term obligation rated A-3 exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
B A short-term obligation rated B is regarded as having significant
speculative characteristics. The obligor currently has the capacity to meet
its financial commitment on the obligation; however, it faces major ongoing
uncertainties, which could lead to the obligor's inadequate capacity to meet
its financial commitment on the obligation.
C A short-term obligation rated C is currently vulnerable to
nonpayment and is dependent upon favorable business, financial, and economic
conditions for the obligor to meet its financial commitment on the obligation.
D The D rating, unlike other ratings, is not prospective; rather, it
is used only where a default has actually occurred--and not where a default is
only expected. S&P changes ratings to D either:
On the day an interest and/or principal payment is due and is not
paid. An exception is made if there is a grace period and S&P believes that a
payment will be made, in which case the rating can be maintained; or
Upon voluntary bankruptcy filing or similar action, An exception is
made if S&P expects that debt service payments will continue to be made on a
specific issue. In the absence of a payment default or bankruptcy filing, a
technical default (i.e., covenant violation) is not sufficient for assigning a
D rating.
Fitch Corporate Short-Term Obligation Ratings
F1 Highest credit quality. Indicates the strongest capacity for
timely payment of financial commitments; may have an added "+" to denote any
exceptionally strong credit feature.
F2 Good credit quality. A satisfactory capacity for timely payment
of financial commitments, but the margin of safety is not as great as in the
case of the higher ratings.
F3 Fair credit quality. The capacity for timely payment of financial
commitments is adequate; however, near-term adverse changes could result in a
reduction to non-investment grade.
B Speculative. Minimal capacity for timely payment of financial
commitments, plus vulnerability to near-term adverse changes in financial and
economic conditions.
C High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon a sustained, favorable
business and economic environment.
D Default. Denotes actual or imminent payment default.
MUNICIPAL BONDS
LONG-TERM RATINGS
Moody's Municipal Long-Term Bond Ratings
Aaa Bonds rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present, which make the long-term risk, appear somewhat larger than the Aaa
securities.
A Bonds rated A possess many favorable investment attributes and are
to be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
Baa Bonds rated Baa are considered as medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba Bonds rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
Ca Bonds rated Ca represent obligations, which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C Bonds rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Note: Moody?s applies numerical modifiers 1, 2 and 3 in each generic
rating classification from Aa to B. The modifier 1 indicates that the company
ranks in the higher end of its generic rating category; the modifier 2
indicates a mid-range raking and the modifier 3 indicates that the company
ranks in the lower end of its generic rating category.
S&P Municipal Long-Term Bond Ratings
AAA An obligation rated AAA has the highest rating assigned by S&P.
The obligor?s capacity to meet its financial commitment on the obligation is
extremely strong.
AA An obligation rated AA differs from the highestrated obligations
only in small degree. The obligor?s capacity to meet its financial commitment
on the obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations
in higher-rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
BBB An obligation rated BBB exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
BB, B, CCC, CC and C: As described below, obligations rated BB, B,
CCC, CC, and C are regarded as having significant speculative characteristics.
BB indicates the least degree of speculation and C the highest. While such
obligations will likely have some quality and protective characteristics,
these may be outweighed by large uncertainties or major exposures to adverse
conditions.
BB An obligation rated BB is less vulnerable to nonpayment than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions, which could
lead to the obligor?s inadequate capacity to meet its financial commitment on
the obligation.
B An obligation rated B is more vulnerable to nonpayment than
obligations rated BB, but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial, or
economic conditions will likely impair the obligor?s capacity or willingness
to meet it financial commitment on the obligation.
CCC An obligation rated CCC is currently vulnerable to nonpayment
and is dependent upon favorable business, financial, and economic conditions
for the obligor to meet its financial commitment on the obligation. In the
event of adverse business, financial, or economic conditions, the obligor is
not likely to have the capacity to meet its financial commitment on the
obligation.
CC An obligation rated CC is currently highly vulnerable to
nonpayment.
C The C rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on this
obligation are being continued.
D An obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period. The D rating also will be used
upon the filing of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.
Plus (+) or minus (-) The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within the
major rating categories.
Fitch Municipal Long-Term Bond Ratings
Investment Grade
AAA Highest credit quality. AAA ratings denote the lowest
expectation of credit risk. They are assigned only in case of exceptionally
strong capacity for timely payment of financial commitments. This capacity is
highly unlikely to be adversely affected by foreseeable events.
AA Very high credit quality. AA ratings denote a very low
expectation of credit risk. They indicate very strong capacity for timely
payment of financial commitments. This capacity is not significantly
vulnerable to foreseeable events.
A High credit quality. A ratings denote a lower expectation of
credit risk. The capacity for timely payment of financial commitments is
considered strong. This capacity may, nevertheless, be more vulnerable to
changes in circumstances or in economic conditions than is the case for higher
ratings.
BBB Good credit quality. BBB ratings indicate that there is
currently a low expectation of credit risk. The capacity for timely payment of
financial commitments is considered adequate, but adverse changes in
circumstances and in economic conditions are more likely to impair this
capacity. This is the lowest investment-grade category.
Speculative Grade
BB Speculative. BB ratings indicate that there is a possibility of
credit risk developing, particularly as the result of adverse economic change
over time; however, business or financial alternatives may be available to
allow financial commitments to be met. Securities rated in this category are
not investment grade.
B Highly speculative. B ratings indicate that significant credit
risk is present, but a limited margin of safety remains. Financial commitments
are currently being met; however, capacity for continued payment is contingent
upon a sustained, favorable business and economic environment.
CCC, CC, C High default risk. Default is a real possibility.
Capacity for meeting financial commitments is solely reliant upon sustained,
favorable business or economic developments. A CC rating indicates that
default of some kind appears probable. C ratings signal imminent default.
DDD, DD, D Default. Securities are not meeting current obligations
and are extremely speculative. DDD designates the highest potential for
recovery of amounts outstanding on any securities involved. DD designates
lower recovery potential and D the lowest.
+ or - may be appended to a rating to denote relative status within
major rating categories. Such suffixes are not added to the AAA rating
category or to categories below CCC.
SHORT-TERM MUNICIPAL RATINGS
Moody's Municipal Short-Term Issuer Ratings Prime-1 Issuers rated
Prime-1 (or supporting institutions) have a superior ability for repayment of
senior short-term debt obligations. Prime-1 repayment ability will often be
evidenced by many of the following characteristics.
Leading market positions in well-established industries.
High rates of return on funds employed.
Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
Broad margins in earnings coverage of fixed financial changes and
high internal cash generation.
Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Prime-2 Issuers rated Prime-2 (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions.
Ample alternate liquidity is maintained.
Prime-3 Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect
of industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level
of debt protection measurements and may require relatively high financial
leverage. Adequate alternate liquidity is maintained.
Not Prime Issuers rated Not Prime do not fall within any of the
Prime rating categories.
Moody's Municipal Short-Term Loan Ratings
MIG 1 This designation denotes best quality. There is strong
protection by established cash flows, superior liquidity support, or
demonstrated broad-based access to the market for refinancing.
MIG 2 This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
MIG 3 This designation denotes favorable quality. Liquidity and cash
flow protection may be narrow and market access for refinancing is likely to
be less well established.
SG This designation denotes speculative quality. Debt instruments in
this category may lack margins of protection.
S&P Commercial Paper Ratings
A-1 This designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
A-3 Issues carrying this designation have an adequate capacity for
timely payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
B Issues rated B are regarded as having only speculative capacity
for timely payment.
C This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.
D Debt rated D is in payment default. The D rating category is used
when interest payments of principal payments are not made on the date due,
even if the applicable grace period has not expired, unless S&P believes such
payments will be made during such grace period.
S&P Municipal Short-Term Obligation Ratings
SP-1 Strong capacity to pay principal and interest. An issue
determined to possess a very strong capacity to pay debt service is given a
plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.
SP-3 Speculative capacity to pay principal and interest.
Fitch Municipal Short-Term Obligation Ratings
F1 Highest credit quality. Indicates the strongest capacity for
timely payment of financial commitments; may have an added "+" to denote any
exceptionally strong credit feature.
F2 Good credit quality. A satisfactory capacity for timely payment
of financial commitments, but the margin of safety is not as great as in the
case of the higher ratings.
F3 Fair credit quality. The capacity for timely payment of financial
commitments is adequate; however, near-term adverse changes could result in a
reduction to non-investment grade.
B Speculative. Minimal capacity for timely payment of financial
commitments, plus vulnerability to near-term adverse changes in financial and
economic conditions.
C High default risk. Default is a real possibility. Capacity for
meeting financial commitments is solely reliant upon a sustained, favorable
business and economic environment.
D Default. Denotes actual or imminent payment default.
ADDITIONAL INFORMATION
tc \l2 " 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.
EVERGREEN SELECT FIXED INCOME TRUST
PART C
OTHER INFORMATION
<TABLE>
<CAPTION>
Item 23 Exhibits
Number Description Location
- ------- ----------- -----------
<S> <C> <C>
(a) Declaration of Trust Incorporated by reference to
Registrant's Pre-Effective Amendment No. 1
Filed on November 17, 1997
(b) By-laws Incorporated by reference to
Registrant's Pre-Effective Amendment
No. 1 filed on November 17, 1997
(c) 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
(d)(1) Investment Advisory Agreement between
the Registrant and First Union National Bank
(d)(2) Investment Advisory Agreement between the
Registrant and Evergreen Investment Management
Company
(d)(3) Form of Investment Advisory Agreement between First Incorporated by reference to
Union National Bank and First International Registrant's Post-Effective Amendment
Advisers, Ltd. No. 2 filed on June 8, 1998
(d)(4) Sub-Advisory Agreement between First Union National Contained herein
Bank and First International Advisers, Ltd.
(e) Principal Underwriting Agreement between the
Registrant and Evergreen Distributor, Inc.
(f) Form of Deferred Compensation Plan Incorporated by reference to
Registrant's Pre-Effective Amendment
No. 1 filed on November 17, 1997
(g) Custodian Agreement between the Registrant
and State Street Bank and Trust Company
(h)(1) Administration Agreement between Evergreen
Investment Services, Inc. and the Registrant
(h)(2) Transfer Agent Agreement between the
Registrant and Evergreen Service Company
(i) Opinion and Consent of Sullivan & Worcester LLP Incorporated by reference to
Registrant's Post-Effective
Amendment No. 1 filed on
December 12, 1997
(j) Not applicable
(k) Not applicable
(l) Not applicable
(m) 12b-1 Distribution Plan for the
Institutional Service Shares
(n) Financial Data Schedules
(o) Multiple Class Plan Incorporated by reference to
Registrant's Pre-Effective Amendment No. 1
Filed on November 17, 1997
</TABLE>
Item 24. Persons Controlled by or Under Common Control with Registrant.
None
Item 25. 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 26. Business or Other Connections of Investment Advisor.
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
Anthony Terracciano President, First Union Corporation;
President, 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 Evergreen Investment
Management Company is incorporated by reference to the Form ADV (File No.
801-5436) of Evergreen Investment Management Company
The information required by this item with respect to First International
Advisers, Ltd. is incorporated by reference to the Form ADV (File No. 801-42427)
of First International Advisers, Ltd.
Item 27. 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
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 28. Location of Accounts and Records.
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and the Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Evergreen Investment Services, Inc., Evergreen Service Company and 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
First International Advisers, Ltd., 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 29. Management Services.
Not Applicable
Item 30. Undertakings.
The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Columbus, and State of Ohio, on the 30th day of
November, 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 November, 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/ Catherine E. Foley
- -------------------------------
Catherine E. Foley
Attorney-in-Fact
*Catherine E. Foley, by signing her name hereto, does hereby sign this
document on behalf of each of the above-named individuals pursuant to powers of
attorney duly executed by such persons 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
- ------- -------
(d)(4) Sub-Advisory Agreement between First Union National
Bank and First International Advisers, Ltd.
SUB-ADVISORY AGREEMENT
AGREEMENT made as of this 25th day of September, 1998, by and between
First Union National Bank, a national banking association, (the "Advisor"), and
First International Advisors Ltd. (the "Sub-Advisor").
WHEREAS, the Advisor serves as investment manager of the Evergreen
Select Total Return Bond Fund ("Fund"), a series of Evergreen Select Fixed
Income Trust (the "Trust"), a Delaware business trust which has filed a
registration statement under the Investment Company Act of 1940, as amended (the
"1940 Act") and the Securities Act of 1933 (the "Registration Statement"); and
WHEREAS, the Advisor desires to avail itself of the services, advice
and assistance of the Sub-Advisor to assist the Advisor in providing investment
advisory services to the Fund; and
WHEREAS, the Sub-Advisor is registered under the Investment Advisers
Act of 1940, as amended (the "Advisers Act"), is engaged in the business of
rendering investment advisory services to investment companies and other
institutional clients and desires to provide such services to the Advisor;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follow:
1. Employment of the Adviser. The Advisor hereby employs the
Sub-Advisor to manage the investment and reinvestment of that portion of the
Fund which the Advisor allocates to the Sub-Advisor from time to time (the
"Account"), subject to the control and direction of the Trust's Board of
Trustees, for the period and on the terms hereinafter set forth. The Sub-Advisor
hereby accepts such employment and agrees during such period to render the
services and to assume the obligations herein set forth for the compensation
herein provided. The Sub-Advisor shall for all purposes herein be deemed to be
an independent contractor and shall, except as expressly provided or authorized
(whether herein or otherwise), have no authority to act for or represent the
Advisor, the Fund or the Trust in any way. The Sub-Advisor may execute account
documentation, agreements, contracts and other documents requested by brokers,
dealers, counterparties and other persons in connection with its management of
the Account.
2. Responsibilities of the Sub-Advisor. The Sub-Advisor undertakes to
provide the following services and to assume the following obligations:
a. The Sub-Advisor shall manage the investment and reinvestment of the
portfolio assets of the Account, all without prior consultation with the
Advisor, subject to and in accordance with (i) the investment objective and
policies of the Fund set forth in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect (the "Governing
Documents") (ii) the requirements applicable to registered investment companies
under applicable laws, including without limitation the Investment Company Act
of 1940 ("1940 Act") and Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") and (iii) any written instructions which the Advisor or
the Trust's Board of Trustees may issue from time-to-time; provided, however,
that for purposes of determining compliance with the Governing Documents and
with applicable law, the Sub-Advisor may treat the Account as if it constituted
the entire Fund. The Sub-Advisor also agrees to conduct its activities hereunder
in accordance with any applicable procedures or policies adopted by the Trust's
Board of Trustees as from time to time in effect (the "Procedures"). The
Advisor has provided to the Sub-Advisor copies of all Governing Documents and
Procedures and shall promptly provide to the Sub-Advisor any amendments or
supplements thereto. Subject to and in pursuance of the foregoing, the
SubAdvisor shall make all determinations with respect to the purchase and sale
of portfolio securities and shall take such action necessary to implement the
same. The Sub-Advisor shall render such reports to the Trust's Board of Trustees
and the Advisor as they may reasonably request concerning the investment
activities of the Account. Unless the Advisor gives the Sub-Advisor written
instructions to the contrary, the Sub-Advisor shall, in good faith and in a
manner which it reasonably believes best serves the interests of the Account's
shareholders, direct the Account's custodian as to how to vote such proxies as
may be necessary or advisable in connection with any matters submitted to a
vote of shareholders of securities held in the Account.
b. Absent instructions of the Advisor to the contrary, the Sub-Advisor
shall, in the name of the Fund, place orders for the execution of portfolio
transactions with or through such brokers, dealers or other financial
institutions as it may select. The Sub-Advisor shall use its best efforts to
obtain "best execution" on all portfolio transactions executed on behalf of the
Fund, provided that, so long as the Sub-Advisor has complied with Section 28(e)
of the Securities Exchange Act of 1934, the Sub-Advisor may cause the Fund to
pay a commission on a transaction in excess of the amount of commission another
broker-dealer would have charged.
c. In connection with the placement of orders for the execution of the
portfolio transactions of the Account, the Sub-Advisor shall create and maintain
all necessary records pertaining to the purchase and sale of securities by the
Sub-Advisor on behalf of the Account in accordance with all applicable laws,
rules and regulations, including but not limited to records required by Section
31(a) of the 1940 Act. All records shall be the property of the Trust and shall
be available for inspection and use by the Securities and Exchange Commission
("SEC"), the Trust, the Advisor or any person retained by the Trust at all
reasonable times. Where applicable, such records shall be maintained by the
Sub-Advisor for the periods and in the places required by Rule 31a-2 under the
1940 Act.
d. The Sub-Advisor shall bear its expenses of providing services
pursuant to this Agreement.
3. Compensation of the Sub-Advisor. In full consideration of services
rendered pursuant to this Agreement, the Advisor will pay the Sub-Advisor a fee
at the annual rate set forth in Schedule A hereto of the value of the Account's
average daily net assets. Such fee shall be accrued daily and paid monthly as
soon as practicable after the end of each month. If the SubAdvisor shall serve
for less than the whole of any month, the foregoing compensation shall be
prorated. For the purpose of determining fees payable to the Sub-Advisor, the
value of the Account's net assets shall be computed at the times and in the
manner that the Fund's net assets are computed, as specified in the Governing
Documents.
4. Other Activities of the Sub-Advisor. The services of the Sub-Advisor
hereunder are not to be deemed exclusive, and the Sub-Advisor shall be free to
render similar services to others and to engage in other activities, so long as
the services rendered hereunder are not impaired.
5. Use of Names. The Advisor shall not use the name of the Sub-Advisor
or any of its affiliates in any prospectus, sales literature or other material
relating to the Trust or the Fund in any manner not approved prior thereto by
the Sub-Advisor; provided, however, that the Advisor may use the name of the
Sub-Advisor and its affiliates in any such material that merely refers in
accurate terms to the Sub-Advisor's appointment hereunder. The Sub-Advisor shall
not use the name of the Trust or the Advisor in any material relating to the
Sub-Advisor in any manner not approved prior thereto by the Advisor; provided,
however, that the Sub-Advisor may use the name of the Advisor or the Trust in
any material that merely refers in accurate terms to the appointment of the
Sub-Advisor hereunder.
6. Liability of the Sub-Advisor. Absent willful misfeasance, bad faith,
gross negligence, or reckless disregard of obligations or duties hereunder on
the part of the Sub-Advisor, the SubAdvisor shall not be liable for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the purchase, holding or sale of any
security. Subject to the foregoing, nothing herein shall constitute a waiver of
any rights or remedies which the Trust may have under any federal or state
securities laws.
7. Limitation of Trust's Liability. The Sub-Advisor acknowledges that
it has received notice of and accepts the limitations upon the Trust's liability
set forth in its Agreement and Declaration of Trust. The Sub-Advisor agrees that
any of the Trust's obligations shall be limited to the assets of the Fund and
that the Sub-Advisor shall not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trust officer, employee or agent of the
Trust.
8. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance is specifically approved at least annually by vote of the holders of
a majority of the outstanding voting securities of the Fund or by vote of a
majority of the Trustees who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated at any time without
payment of any penalty, by the Trust's Board of Trustees, by the Advisor, or by
a vote of a majority of the outstanding voting securities of the Fund upon 60
days prior written notice to the Sub-Advisor or by the Sub-Advisor upon 90 days'
prior written notice to the Advisor, or upon such shorter notice as may be
mutually agreed upon. This Agreement shall terminate automatically and
immediately upon termination of the Investment Advisory and Management
Agreement between the Advisor and the Trust. This Agreement shall terminate
automatically and immediately in the event of its assignment. The terms
"assignment" and "vote of a majority of the outstanding voting securities"
shall have the meaning set forth for such terms in the 1940 Act. This Agreement
may be amended at any time by the Sub-Advisor and the Advisor, subject to
approval by the Trust's Board of Trustees and, if required by applicable SEC
rules and regulations, a vote of a majority of the Fund's outstanding voting
securities.
9. Confidential Relationship. Any information and advice furnished by
either party to this Agreement to the other shall be treated as condidential and
shall not be disclosed to third parties without the consent of the other party
hereto except as requiredby law, rule or regulation. The Advisor hereby consents
to the disclosure to third parties of investment results and other data of the
Account in connection with providing composite investment results and related
information of the Sub-Advisor.
10. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statue, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
11. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the
Commonwealth of Massachusetts. The captions in this Agreement are included for
convience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed in
several counterparts, all of which together shall for all purposes constitute
one Agreement, binding on the parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
FIRST UNION NATIONAL BANK
By: _______________________________
Authorized Officer
FIRST INTERNATIONAL ADVISORS LTD.
By: _______________________________
Authorized Officer
SCHEDULE A
Evergreen Select Total Return 0.60% of average daily net
Bond Fund assets of the Account
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<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 CORE BOND FUND CLASS I
<CAPTION>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEPT-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEPT-30-1998
<INVESTMENTS-AT-COST> 566,629,781
<INVESTMENTS-AT-VALUE> 589,747,592
<RECEIVABLES> 10,099,970
<ASSETS-OTHER> 20,900
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 599,868,462
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,092,032
<TOTAL-LIABILITIES> 3,092,032
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 122,253,103
<SHARES-COMMON-STOCK> 11,345,900
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (41,839)
<ACCUMULATED-NET-GAINS> 2,508,251
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,845,493
<NET-ASSETS> 129,565,009
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,252,455
<OTHER-INCOME> 0
<EXPENSES-NET> 410,277
<NET-INVESTMENT-INCOME> 5,842,178
<REALIZED-GAINS-CURRENT> 2,465,177
<APPREC-INCREASE-CURRENT> 1,165,642
<NET-CHANGE-FROM-OPS> 9,472,998
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,842,178
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25,320,737
<NUMBER-OF-SHARES-REDEEMED> 14,355,469
<SHARES-REINVESTED> 380,632
<NET-CHANGE-IN-ASSETS> 125,893,401
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (390,357)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (523,789)
<AVERAGE-NET-ASSETS> 116,734,525
<PER-SHARE-NAV-BEGIN> 10.68
<PER-SHARE-NII> 0.51
<PER-SHARE-GAIN-APPREC> 0.34
<PER-SHARE-DIVIDEND> (0.51)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.02
<EXPENSE-RATIO> 0.42
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
[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] 103
[NAME] EVERGREEN SELECT CORE BOND FUND CLASS IS
<CAPTION>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] SEPT-30-1998
[PERIOD-START] OCT-01-1997
[PERIOD-END] SEPT-30-1998
[INVESTMENTS-AT-COST] 566,629,781
[INVESTMENTS-AT-VALUE] 589,747,592
[RECEIVABLES] 10,099,970
[ASSETS-OTHER] 20,900
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 599,868,462
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 3,092,032
[TOTAL-LIABILITIES] 3,092,032
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 278,707
[SHARES-COMMON-STOCK] 25,943
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (100)
[ACCUMULATED-NET-GAINS] 5,983
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 11,559
[NET-ASSETS] 296,149
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 14,915
[OTHER-INCOME] 0
[EXPENSES-NET] 979
[NET-INVESTMENT-INCOME] 13,936
[REALIZED-GAINS-CURRENT] 5,881
[APPREC-INCREASE-CURRENT] 2,781
[NET-CHANGE-FROM-OPS] 22,598
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 13,936
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 28,459
[NUMBER-OF-SHARES-REDEEMED] 2,982
[SHARES-REINVESTED] 466
[NET-CHANGE-IN-ASSETS] 287,488
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (931)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (1,249)
[AVERAGE-NET-ASSETS] 278,470
[PER-SHARE-NAV-BEGIN] 10.68
[PER-SHARE-NII] 0.35
[PER-SHARE-GAIN-APPREC] 0.34
[PER-SHARE-DIVIDEND] (0.35)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 11.02
[EXPENSE-RATIO] 0.68
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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 CORE BOND FUND CLASS IC
<CAPTION>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] SEPT-30-1998
[PERIOD-START] OCT-01-1997
[PERIOD-END] SEPT-30-1998
[INVESTMENTS-AT-COST] 566,629,781
[INVESTMENTS-AT-VALUE] 589,747,592
[RECEIVABLES] 10,099,970
[ASSETS-OTHER] 20,900
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 599,868,462
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 3,092,032
[TOTAL-LIABILITIES] 3,092,032
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 439,359,574
[SHARES-COMMON-STOCK] 42,765,453
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (157,674)
[ACCUMULATED-NET-GAINS] 9,452,613
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 18,260,759
[NET-ASSETS] 466,915,272
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 23,563,044
[OTHER-INCOME] 0
[EXPENSES-NET] 1,546,172
[NET-INVESTMENT-INCOME] 22,016,872
[REALIZED-GAINS-CURRENT] 9,290,284
[APPREC-INCREASE-CURRENT] 4,392,847
[NET-CHANGE-FROM-OPS] 35,700,004
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 22,016,873
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 45,858,535
[NUMBER-OF-SHARES-REDEEMED] 3,099,900
[SHARES-REINVESTED] 6,818
[NET-CHANGE-IN-ASSETS] 470,595,540
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (1,471,103)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (1,973,954)
[AVERAGE-NET-ASSETS] 439,926,532
[PER-SHARE-NAV-BEGIN] 10.68
[PER-SHARE-NII] 0.55
[PER-SHARE-GAIN-APPREC] 0.34
[PER-SHARE-DIVIDEND] (0.55)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 11.02
[EXPENSE-RATIO] 0.42
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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 TOTAL RETURN BOND FUND CLASS I
<CAPTION>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] SEPT-30-1998
[PERIOD-START] OCT-01-1997
[PERIOD-END] SEPT-30-1998
[INVESTMENTS-AT-COST] 135,331,060
[INVESTMENTS-AT-VALUE] 136,757,932
[RECEIVABLES] 2,583,606
[ASSETS-OTHER] 45,833
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 139,387,371
[PAYABLE-FOR-SECURITIES] 3,067,850
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 297,465
[TOTAL-LIABILITIES] 3,365,315
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 136,311,487
[SHARES-COMMON-STOCK] 1,363,876
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 4,750
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (1,718,968)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1,397,582
[NET-ASSETS] 135,994,852
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 3,829,021
[OTHER-INCOME] 0
[EXPENSES-NET] 215,389
[NET-INVESTMENT-INCOME] 3,610,633
[REALIZED-GAINS-CURRENT] (1,717,592)
[APPREC-INCREASE-CURRENT] 1,397,582
[NET-CHANGE-FROM-OPS] 3,290,623
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 3,610,633
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1,352,317
[NUMBER-OF-SHARES-REDEEMED] 13,905
[SHARES-REINVESTED] 25,464
[NET-CHANGE-IN-ASSETS] 135,998,380
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (209,920)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (351,314)
[AVERAGE-NET-ASSETS] 116,818,511
[PER-SHARE-NAV-BEGIN] 100.00
[PER-SHARE-NII] 3.10
[PER-SHARE-GAIN-APPREC] (0.29)
[PER-SHARE-DIVIDEND] (3.10)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 99.71
[EXPENSE-RATIO] 0.41
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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 TOTAL RETURN BOND FUND CLASS IS
<CAPTION>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] SEPT-30-1998
[PERIOD-START] OCT-01-1997
[PERIOD-END] SEPT-30-1998
[INVESTMENTS-AT-COST] 135,331,060
[INVESTMENTS-AT-VALUE] 136,757,932
[RECEIVABLES] 2,583,606
[ASSETS-OTHER] 45,833
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 139,387,371
[PAYABLE-FOR-SECURITIES] 3,067,850
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 297,465
[TOTAL-LIABILITIES] 3,365,315
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 27,268
[SHARES-COMMON-STOCK] 237
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 1
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (344)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 280
[NET-ASSETS] 27,204
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 766
[OTHER-INCOME] 0
[EXPENSES-NET] 43
[NET-INVESTMENT-INCOME] 722
[REALIZED-GAINS-CURRENT] (344)
[APPREC-INCREASE-CURRENT] 280
[NET-CHANGE-FROM-OPS] 658
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 722
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 689
[NUMBER-OF-SHARES-REDEEMED] 452
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 23,676
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (42)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (70)
[AVERAGE-NET-ASSETS] 23,368
[PER-SHARE-NAV-BEGIN] 99.87
[PER-SHARE-NII] 1.03
[PER-SHARE-GAIN-APPREC] (0.16)
[PER-SHARE-DIVIDEND] (1.03)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 99.71
[EXPENSE-RATIO] 0.66
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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 ADJUSTABLE RATE FUND CLASS IS
<CAPTION>
<S> <C>
[PERIOD-TYPE] 7-MOS
[FISCAL-YEAR-END] SEPT-30-1998
[PERIOD-START] MAR-01-1998
[PERIOD-END] SEPT-30-1998
[INVESTMENTS-AT-COST] 32,721,065
[INVESTMENTS-AT-VALUE] 32,618,579
[RECEIVABLES] 532,426
[ASSETS-OTHER] 2,699
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 33,153,704
[PAYABLE-FOR-SECURITIES] 299,190
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 35,962
[TOTAL-LIABILITIES] 335,152
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 23,916,900
[SHARES-COMMON-STOCK] 2,395,201
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (7,579)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (675,355)
[ACCUM-APPREC-OR-DEPREC] (60,004)
[NET-ASSETS] 23,173,962
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 935,644
[OTHER-INCOME] 0
[EXPENSES-NET] (47,645)
[NET-INVESTMENT-INCOME] (887,998)
[REALIZED-GAINS-CURRENT] (54,809)
[APPREC-INCREASE-CURRENT] (60,004)
[NET-CHANGE-FROM-OPS] (1,002,811)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 694,346
[NUMBER-OF-SHARES-REDEEMED] (1,040,259)
[SHARES-REINVESTED] 76,201
[NET-CHANGE-IN-ASSETS] (269,712)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (43,646)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (47,645)
[AVERAGE-NET-ASSETS] 24,750,912
[PER-SHARE-NAV-BEGIN] 9.75
[PER-SHARE-NII] 0.35
[PER-SHARE-GAIN-APPREC] (0.07)
[PER-SHARE-DIVIDEND] (0.35)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 9.68
[EXPENSE-RATIO] 0.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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 ADJUSTABLE RATE FUND CLASS I
<CAPTION>
<S> <C>
[PERIOD-TYPE] 7-MOS
[FISCAL-YEAR-END] SEPT-30-1998
[PERIOD-START] MAR-01-1998
[PERIOD-END] SEPT-30-1998
[INVESTMENTS-AT-COST] 32,721,065
[INVESTMENTS-AT-VALUE] 32,618,579
[RECEIVABLES] 532,426
[ASSETS-OTHER] 2,699
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 33,153,704
[PAYABLE-FOR-SECURITIES] 299,190
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 35,962
[TOTAL-LIABILITIES] 335,152
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 9,621,070
[SHARES-COMMON-STOCK] 996,046
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 10,455
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 55,547
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (42,482)
[NET-ASSETS] 9,644,590
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 378,376
[OTHER-INCOME] 0
[EXPENSES-NET] (33,993)
[NET-INVESTMENT-INCOME] (344,384)
[REALIZED-GAINS-CURRENT] (23,420)
[APPREC-INCREASE-CURRENT] (42,482)
[NET-CHANGE-FROM-OPS] (410,286)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 603,561
[NUMBER-OF-SHARES-REDEEMED] (683,194)
[SHARES-REINVESTED] 18,011
[NET-CHANGE-IN-ASSETS] (61,622)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (17,666)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (33,993)
[AVERAGE-NET-ASSETS] 10,092,686
[PER-SHARE-NAV-BEGIN] 9.76
[PER-SHARE-NII] 0.35
[PER-SHARE-GAIN-APPREC] (0.08)
[PER-SHARE-DIVIDEND] (0.35)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 9.68
[EXPENSE-RATIO] 0.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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 INTERNATIONAL BOND FUND CLASS IS
<CAPTION>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] SEP-30-1998
[PERIOD-START] OCT-01-1998
[PERIOD-END] SEP-30-1998
[INVESTMENTS-AT-COST] 43,564,928
[INVESTMENTS-AT-VALUE] 46,108,930
[RECEIVABLES] 1,474,187
[ASSETS-OTHER] 326,882
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 47,909,999
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1,173,938
[TOTAL-LIABILITIES] 1,173,938
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 139,396
[SHARES-COMMON-STOCK] 13,607
[SHARES-COMMON-PRIOR] 21,308
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (1,872)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (17,074)
[ACCUM-APPREC-OR-DEPREC] 9,015
[NET-ASSETS] 129,465
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 2,068
[OTHER-INCOME] 0
[EXPENSES-NET] (398)
[NET-INVESTMENT-INCOME] 1,670
[REALIZED-GAINS-CURRENT] (215,416)
[APPREC-INCREASE-CURRENT] 577,503
[NET-CHANGE-FROM-OPS] 363,757
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (1,692)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 22
[NUMBER-OF-SHARES-REDEEMED] (7,900)
[SHARES-REINVESTED] 177
[NET-CHANGE-IN-ASSETS] 289,981
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (218)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (398)
[AVERAGE-NET-ASSETS] 145,628
[PER-SHARE-NAV-BEGIN] 9.30
[PER-SHARE-NII] 0.11
[PER-SHARE-GAIN-APPREC] 0.23
[PER-SHARE-DIVIDEND] (0.13)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 9.51
[EXPENSE-RATIO] 1.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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 INTERNATIONAL BOND FUND CLASS I
<CAPTION>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] SEP-30-1998
[PERIOD-START] OCT-01-1998
[PERIOD-END] SEP-30-1998
[INVESTMENTS-AT-COST] 43,564,928
[INVESTMENTS-AT-VALUE] 46,108,930
[RECEIVABLES] 1,474,187
[ASSETS-OTHER] 326,882
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 47,909,999
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1,173,938
[TOTAL-LIABILITIES] 1,173,938
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 48,007,044
[SHARES-COMMON-STOCK] 4,893,330
[SHARES-COMMON-PRIOR] 3,940,654
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (101,998)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (2,880,607)
[ACCUM-APPREC-OR-DEPREC] 1,582,157
[NET-ASSETS] 46,606,596
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 572,510
[OTHER-INCOME] 0
[EXPENSES-NET] (83,958)
[NET-INVESTMENT-INCOME] 488,552
[REALIZED-GAINS-CURRENT] (373,314)
[APPREC-INCREASE-CURRENT] 1,000,805
[NET-CHANGE-FROM-OPS] 1,116,043
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (638,833)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 906,343
[NUMBER-OF-SHARES-REDEEMED] (7,356)
[SHARES-REINVESTED] 53,689
[NET-CHANGE-IN-ASSETS] 9,525,475
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (105,919)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (129,906)
[AVERAGE-NET-ASSETS] 39,652,887
[PER-SHARE-NAV-BEGIN] 9.32
[PER-SHARE-NII] 0.11
[PER-SHARE-GAIN-APPREC] 0.22
[PER-SHARE-DIVIDEND] (0.13)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 9.52
[EXPENSE-RATIO] 0.76
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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 LIMITED DURATION FUND CLASS A
<CAPTION>
<S> <C>
[PERIOD-TYPE] 10-MOS
[FISCAL-YEAR-END] SEP-30-1998
[PERIOD-START] NOV-24-1997
[PERIOD-END] SEP-30-1998
[INVESTMENTS-AT-COST] 69,717,020
[INVESTMENTS-AT-VALUE] 70,767,337
[RECEIVABLES] 917,153
[ASSETS-OTHER] 30,005
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 71,714,495
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 290,063
[TOTAL-LIABILITIES] 290,063
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 681,695
[SHARES-COMMON-STOCK] 58,402
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 49
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 1,144
[ACCUM-APPREC-OR-DEPREC] 7,055
[NET-ASSETS] 689,943
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 6,840
[OTHER-INCOME] 0
[EXPENSES-NET] (591)
[NET-INVESTMENT-INCOME] 6,249
[REALIZED-GAINS-CURRENT] 914
[APPREC-INCREASE-CURRENT] 5,452
[NET-CHANGE-FROM-OPS] 12,615
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (6,249)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 57,810
[NUMBER-OF-SHARES-REDEEMED] (4)
[SHARES-REINVESTED] 596
[NET-CHANGE-IN-ASSETS] 614,337
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (324)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (591)
[AVERAGE-NET-ASSETS] 591,969
[PER-SHARE-NAV-BEGIN] 10.42
[PER-SHARE-NII] 0.53
[PER-SHARE-GAIN-APPREC] 0.10
[PER-SHARE-DIVIDEND] (0.53)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 10.52
[EXPENSE-RATIO] 0.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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] 103
[NAME] EVERGREEN SELECT LIMITED DURATION FUND CLASS C
<CAPTION>
<S> <C>
[PERIOD-TYPE] 10-MOS
[FISCAL-YEAR-END] SEP-30-1998
[PERIOD-START] NOV-24-1997
[PERIOD-END] SEP-30-1998
[INVESTMENTS-AT-COST] 69,717,020
[INVESTMENTS-AT-VALUE] 70,767,337
[RECEIVABLES] 917,153
[ASSETS-OTHER] 30,005
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 71,714,495
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 290,063
[TOTAL-LIABILITIES] 290,063
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 69,569,547
[SHARES-COMMON-STOCK] 6,731,896
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 4,974
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 116,706
[ACCUM-APPREC-OR-DEPREC] 1,043,262
[NET-ASSETS] 70,734,489
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 3,228,427
[OTHER-INCOME] 0
[EXPENSES-NET] (154,428)
[NET-INVESTMENT-INCOME] 3,073,999
[REALIZED-GAINS-CURRENT] 183,423
[APPREC-INCREASE-CURRENT] 610,959
[NET-CHANGE-FROM-OPS] 3,868,381
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (3,073,999)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 10,407,268
[NUMBER-OF-SHARES-REDEEMED] (3,832,975)
[SHARES-REINVESTED] 157,603
[NET-CHANGE-IN-ASSETS] 70,810,095
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (154,544)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (154,428)
[AVERAGE-NET-ASSETS] 60,412,668
[PER-SHARE-NAV-BEGIN] 10.41
[PER-SHARE-NII] 0.11
[PER-SHARE-GAIN-APPREC] 0.11
[PER-SHARE-DIVIDEND] (0.11)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 10.52
[EXPENSE-RATIO] 0.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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 INCOME PLUS FUND CLASS A
<CAPTION>
<S> <C>
[PERIOD-TYPE] 10-MOS
[FISCAL-YEAR-END] SEP-30-1998
[PERIOD-START] NOV-24-1997
[PERIOD-END] SEP-30-1998
[INVESTMENTS-AT-COST] 1,269,414,951
[INVESTMENTS-AT-VALUE] 1,360,488,135
[RECEIVABLES] 23,961,040
[ASSETS-OTHER] 250,122
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,384,699,297
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 9,930,741
[TOTAL-LIABILITIES] 9,930,741
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1,265,300,315
[SHARES-COMMON-STOCK] 231,012,949
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (241,858)
[ACCUMULATED-NET-GAINS] 11,154,261
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 91,027,365
[NET-ASSETS] 1,367,240,083
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 67,833,397
[OTHER-INCOME] 0
[EXPENSES-NET] (5,234,519)
[NET-INVESTMENT-INCOME] 62,598,878
[REALIZED-GAINS-CURRENT] 10,905,562
[APPREC-INCREASE-CURRENT] 34,819,071
[NET-CHANGE-FROM-OPS] 108,323,511
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (62,598,276)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 259,182,193
[NUMBER-OF-SHARES-REDEEMED] (28,469,435)
[SHARES-REINVESTED] 300,191
[NET-CHANGE-IN-ASSETS] 1,367,240,083
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (5,137,783)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (6,279,158)
[AVERAGE-NET-ASSETS] 1,205,970,832
[PER-SHARE-NAV-BEGIN] 5.72
[PER-SHARE-NII] 0.30
[PER-SHARE-GAIN-APPREC] 0.20
[PER-SHARE-DIVIDEND] (0.30)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 5.92
[EXPENSE-RATIO] 0.51
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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 INCOME PLUS FUND CLASS B
<CAPTION>
<S> <C>
[PERIOD-TYPE] 10-MOS
[FISCAL-YEAR-END] SEP-30-1998
[PERIOD-START] NOV-24-1997
[PERIOD-END] SEP-30-1998
[INVESTMENTS-AT-COST] 1,269,414,951
[INVESTMENTS-AT-VALUE] 1,360,488,135
[RECEIVABLES] 23,961,040
[ASSETS-OTHER] 250,122
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,384,699,297
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 9,930,741
[TOTAL-LIABILITIES] 9,930,741
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 7,451,388
[SHARES-COMMON-STOCK] 1,272,214
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (961)
[ACCUMULATED-NET-GAINS] 32,227
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 45,819
[NET-ASSETS] 7,528,473
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 190,776
[OTHER-INCOME] 0
[EXPENSES-NET] (21,769)
[NET-INVESTMENT-INCOME] 169,007
[REALIZED-GAINS-CURRENT] 31,235
[APPREC-INCREASE-CURRENT] 1,024
[NET-CHANGE-FROM-OPS] 201,266
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (169,001)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 2,503,139
[NUMBER-OF-SHARES-REDEEMED] (1,248,097)
[SHARES-REINVESTED] 17,172
[NET-CHANGE-IN-ASSETS] 7,528,473
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (13,944)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (24,603)
[AVERAGE-NET-ASSETS] 4,807,400
[PER-SHARE-NAV-BEGIN] 5.72
[PER-SHARE-NII] 0.17
[PER-SHARE-GAIN-APPREC] 0.20
[PER-SHARE-DIVIDEND] (0.17)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 5.92
[EXPENSE-RATIO] 0.78
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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 INTERMEDIATE TAX EXEMPT BOND FUND CLASS A
<CAPTION>
<S> <C>
[PERIOD-TYPE] 10-MOS
[FISCAL-YEAR-END] SEP-30-1998
[PERIOD-START] NOV-24-1997
[PERIOD-END] SEP-30-1998
[INVESTMENTS-AT-COST] 699,113,382
[INVESTMENTS-AT-VALUE] 743,943,962
[RECEIVABLES] 11,149,786
[ASSETS-OTHER] 25,709
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 755,119,457
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 3,509,605
[TOTAL-LIABILITIES] 3,509,605
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 692,433,062
[SHARES-COMMON-STOCK] 11,129,384
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 10,491
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 9,666,867
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 44,763,277
[NET-ASSETS] 746,873,697
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 33,186,853
[OTHER-INCOME] 0
[EXPENSES-NET] (3,963,958)
[NET-INVESTMENT-INCOME] 29,222,895
[REALIZED-GAINS-CURRENT] 9,666,867
[APPREC-INCREASE-CURRENT] 16,014,135
[NET-CHANGE-FROM-OPS] 54,903,897
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (29,222,895)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 949,868
[NUMBER-OF-SHARES-REDEEMED] (1,328,980)
[SHARES-REINVESTED] 1,174
[NET-CHANGE-IN-ASSETS] 746,890,425
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (3,823,237)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (4,603,699)
[AVERAGE-NET-ASSETS] 747,869,547
[PER-SHARE-NAV-BEGIN] 64.84
[PER-SHARE-NII] 2.57
[PER-SHARE-GAIN-APPREC] 2.27
[PER-SHARE-DIVIDEND] (2.57)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 67.11
[EXPENSE-RATIO] 0.62
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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 INTERMEDIATE TAX EXEMPT BOND FUND CLASS B
<CAPTION>
<S> <C>
[PERIOD-TYPE] 10-MOS
[FISCAL-YEAR-END] SEP-30-1998
[PERIOD-START] NOV-24-1997
[PERIOD-END] SEP-30-1998
[INVESTMENTS-AT-COST] 699,113,382
[INVESTMENTS-AT-VALUE] 743,943,962
[RECEIVABLES] 11,149,786
[ASSETS-OTHER] 25,709
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 755,119,457
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 3,509,605
[TOTAL-LIABILITIES] 3,509,605
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 4,651,447
[SHARES-COMMON-STOCK] 70,574
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 33
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 17,372
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 67,303
[NET-ASSETS] 4,736,155
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 72,423
[OTHER-INCOME] 0
[EXPENSES-NET] (12,294)
[NET-INVESTMENT-INCOME] 60,129
[REALIZED-GAINS-CURRENT] 17,372
[APPREC-INCREASE-CURRENT] 50,575
[NET-CHANGE-FROM-OPS] 128,076
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (60,129)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 104,141
[NUMBER-OF-SHARES-REDEEMED] (34,214)
[SHARES-REINVESTED] 647
[NET-CHANGE-IN-ASSETS] 4,719,427
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (8,300)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (13,683)
[AVERAGE-NET-ASSETS] 2,359,495
[PER-SHARE-NAV-BEGIN] 65.90
[PER-SHARE-NII] 1.66
[PER-SHARE-GAIN-APPREC] 1.21
[PER-SHARE-DIVIDEND] (1.66)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 67.11
[EXPENSE-RATIO] 0.89
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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 A
<CAPTION>
<S> <C>
[PERIOD-TYPE] 11-MOS
[FISCAL-YEAR-END] SEP-30-1998
[PERIOD-START] APR-01-1997
[PERIOD-END] SEP-30-1998
[INVESTMENTS-AT-COST] 649,690,557
[INVESTMENTS-AT-VALUE] 676,348,837
[RECEIVABLES] 8,677,040
[ASSETS-OTHER] 44,130
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 685,070,007
[PAYABLE-FOR-SECURITIES] 43,171
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 6,311,508
[TOTAL-LIABILITIES] 6,354,679
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 9,793,900
[SHARES-COMMON-STOCK] 1,602,027
[SHARES-COMMON-PRIOR] 258,653
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (3,213)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (7,288)
[ACCUM-APPREC-OR-DEPREC] 25,062
[NET-ASSETS] 9,808,461
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 219,409
[OTHER-INCOME] 0
[EXPENSES-NET] (26,452)
[NET-INVESTMENT-INCOME] 192,957
[REALIZED-GAINS-CURRENT] (10,528)
[APPREC-INCREASE-CURRENT] 254,115
[NET-CHANGE-FROM-OPS] 436,544
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (192,964)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 2,184,215
[NUMBER-OF-SHARES-REDEEMED] (604,664)
[SHARES-REINVESTED] 22,476
[NET-CHANGE-IN-ASSETS] 9,808,460
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (17,070)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (30,341)
[AVERAGE-NET-ASSETS] 5,822,974
[PER-SHARE-NAV-BEGIN] 5.97
[PER-SHARE-NII] 0.20
[PER-SHARE-GAIN-APPREC] 0.15
[PER-SHARE-DIVIDEND] (0.20)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 6.12
[EXPENSE-RATIO] 0.77
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
[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 B
<CAPTION>
<S> <C>
[PERIOD-TYPE] 11-MOS
[FISCAL-YEAR-END] SEP-30-1998
[PERIOD-START] APR-01-1997
[PERIOD-END] SEP-30-1998
[INVESTMENTS-AT-COST] 649,690,557
[INVESTMENTS-AT-VALUE] 676,348,837
[RECEIVABLES] 8,677,040
[ASSETS-OTHER] 44,130
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 685,070,007
[PAYABLE-FOR-SECURITIES] 43,171
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 6,311,508
[TOTAL-LIABILITIES] 6,354,679
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 642,757,123
[SHARES-COMMON-STOCK] 109,255,445
[SHARES-COMMON-PRIOR] 80,776,312
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (285,378)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (198,096)
[ACCUM-APPREC-OR-DEPREC] 26,633,218
[NET-ASSETS] 668,906,867
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 28,662,867
[OTHER-INCOME] 0
[EXPENSES-NET] (2,290,390)
[NET-INVESTMENT-INCOME] 26,372,477
[REALIZED-GAINS-CURRENT] (485,743)
[APPREC-INCREASE-CURRENT] 18,003,302
[NET-CHANGE-FROM-OPS] 43,890,036
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (26,373,150)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 124,668,046
[NUMBER-OF-SHARES-REDEEMED] (15,780,546)
[SHARES-REINVESTED] 367,945
[NET-CHANGE-IN-ASSETS] 668,906,868
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] (2,202,456)
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] (2,792,199)
[AVERAGE-NET-ASSETS] 516,975,178
[PER-SHARE-NAV-BEGIN] 5.72
[PER-SHARE-NII] 0.17
[PER-SHARE-GAIN-APPREC] 0.20
[PER-SHARE-DIVIDEND] (0.17)
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 5.92
[EXPENSE-RATIO] 0.78
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
