EVERGREEN SELECT FIXED INCOME TRUST, 485BPOS, 2000-05-18

EVERGREEN SELECT FIXED INCOME TRUST
485BPOS, 2000-05-18

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1933 Act No. 333-34608

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-14AE

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933

[ ] Pre-Effective Amendment No. [X] Post-Effective Amendment No. 1

EVERGREEN SELECT FIXED INCOME TRUST
(Evergreen Select Adjustable Rate Fund)
(Exact Name of Registrant as Specified in Charter)

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

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

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

It is proposed that this filing will become effective:
[X] immediately upon filing pursuant to paragraph (b)
[ ] on February 1, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485

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

<PAGE>

EVERGREEN SELECT FIXED INCOME TRUST

PART A

PROSPECTUS/PROXY

<PAGE>

[THIS IS THE FRONT COVER]
LOGO

EVERGREEN CAPITAL PRESERVATION AND INCOME FUND
200 BERKELEY STREET
BOSTON, MA 02116
May 26, 2000

Dear Shareholder,

As a shareholder of Evergreen Capital Preservation and Income Fund ("Capital
Preservation and Income Fund"), you are invited to vote on a proposal to merge
Capital Preservation and Income Fund into Evergreen Select Adjustable Rate Fund
("Select Adjustable Rate Fund"), another mutual fund within the Evergreen Family
of Funds. THE BOARD OF TRUSTEES OF EVERGREEN FIXED INCOME TRUST HAS APPROVED THE
MERGER AND RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.

If approved by shareholders, this is how the merger will work:

o Your Fund will transfer its assets and liabilities to Select Adjustable
Rate Fund.
o Select Adjustable Rate Fund will issue new shares that will be distributed
to you in an amount equal to the value of your Capital Preservation and
Income Fund shares. You will receive Class A, Class B or Class C shares of
Select Adjustable Rate Fund, depending on the class of shares of Capital
Preservation and Income Fund you currently hold. Although the NUMBER of
shares you hold may change, the total VALUE of your investment will not
change as a result of the merger.
o You will not incur any sales loads or similar transaction charges as a
result of the merger.

The merger is intended to be tax free for federal income tax purposes. Details
about Select Adjustable Rate Fund's investment objective, portfolio management
team, performance, etc. along with additional information about the proposed
merger, are contained in the attached prospectus/proxy statement. Please take
the time to familiarize yourself with this information. Votes on the proposal
will be cast at a special meeting of Capital Preservation and Income Fund's
shareholders to be held on July 14, 2000. Although you are welcome to attend the
meeting in person, you do not need to do so in order to vote your shares. If you
do not expect to attend the meeting, please complete, date, sign and return the
enclosed proxy card in the enclosed postage paid envelope, or vote via one of
the other methods mentioned below. Instructions on how to vote are included at
the end of the prospectus/proxy statement.

If you have any questions about the proposal or the proxy card, please call
Shareholder Communications Corporation, our proxy solicitor, at 800-645-8640.
You may record your vote by telephone, FAX your completed and signed proxy card
(both front and back sides) or vote on the Internet by following the voting
instructions as outlined on your proxy card. If the Fund does not receive a
sufficient number of votes in favor of the merger, you may receive a telephone
call from Shareholder Communications Corporation requesting your vote. The
expenses of the merger, including the costs of soliciting proxies, will be paid
by First Union National Bank.

Thank you for taking this matter seriously and participating in this important
process.

Sincerely,
[Signature]
William M. Ennis
PRESIDENT
Evergreen Funds

<PAGE>

EVERGREEN CAPITAL PRESERVATION AND INCOME FUND

200 BERKELEY STREET

BOSTON, MASSACHUSETTS 02116

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON JULY 14, 2000

Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of Evergreen Capital Preservation and Income Fund ("Capital
Preservation and Income Fund"), a series of Evergreen Fixed Income Trust, will
be held at the offices of the Evergreen Funds, 26th Floor, 200 Berkeley Street,
Boston, Massachusetts 02116 on July 14, 2000 at 2:00 p.m. for the following
purposes:

1. To consider and act upon the Agreement and Plan of Reorganization (the
"Plan") dated as of April 30, 2000, providing for the acquisition of
all the assets of Capital Preservation and Income Fund by Evergreen
Select Adjustable Rate Fund ("Select Adjustable Rate Fund"), a series
of Evergreen Select Fixed Income Trust, in exchange for shares of
Select Adjustable Rate Fund and the assumption by Select Adjustable
Rate Fund of the identified liabilities of Capital Preservation and
Income Fund. The Plan also provides for distribution of these shares of
Select Adjustable Rate Fund to shareholders of Capital Preservation and
Income Fund in liquidation and subsequent termination of Capital
Preservation and Income Fund. A vote in favor of the Plan is a vote in
favor of the liquidation and dissolution of Capital Preservation and
Income Fund.

2. To transact any other business which may properly come before the
Meeting or any adjournment or adjournments thereof.

On behalf of Capital Preservation and Income Fund, the Trustees of
Evergreen Fixed Income Trust have fixed the close of business on April 28, 2000
as the record date for the determination of shareholders of the Fund entitled to
notice of and to vote at the Meeting or any adjournment thereof.

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO
NOT EXPECT TO ATTEND IN PERSON ARE URGED TO SIGN WITHOUT DELAY AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, SO THAT
THEIR SHARES MAY BE REPRESENTED AT THE MEETING. YOUR PROMPT ATTENTION TO THE
ENCLOSED PROXY WILL HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.

By order of the Board of Trustees

William M. Ennis
PRESIDENT

May 26, 2000

<PAGE>

INFORMATION RELATING TO THE PROPOSED MERGER
OF
EVERGREEN CAPITAL PRESERVATION AND INCOME FUND
INTO
EVERGREEN SELECT ADJUSTABLE RATE FUND

This prospectus/proxy statement contains the information you should know before
voting on the proposed merger ("Merger") of your Fund into Evergreen Select
Adjustable Rate Fund ("Select Adjustable Rate Fund"). If approved, the Merger
will result in your receiving shares of Select Adjustable Rate Fund in exchange
for your shares of Evergreen Capital Preservation and Income Fund ("Capital
Preservation and Income Fund"). The investment objectives of both Funds are the
same -- each Fund seeks a high level of current income consistent with low
volatility of principal.

Please read this prospectus/proxy statement carefully and retain it for future
reference. Additional information concerning each Fund and the Merger is
contained in the documents described in the box below, all of which have been
filed with the Securities and Exchange Commission ("SEC").

MORE INFORMATION ABOUT THE FUNDS IS AVAILABLE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------- ---------------------------------------------------------------
SEE: HOW TO GET THESE DOCUMENTS:
- ----------------------------------------------------------------- ---------------------------------------------------------------
- ----------------------------------------------------------------- ---------------------------------------------------------------

<S> <C>
Capital Preservation and Income Fund's prospectus, dated The Funds make all of these documents available to you free
November 1, 1999, with a supplement dated February 1, 2000. of charge if you:
Select Adjustable Rate Fund's prospectus, dated February 1, o Call 800-645-8640, or
2000, WHICH ACCOMPANIES THIS PROSPECTUS/PROXY STATEMENT. o Write the Funds at 200 Berkeley Street, Boston,

Massachusetts 02116.
Statement of additional information for Capital Preservation
and Income Fund dated November 1, 1999. You can also obtain any of these documents for a fee from the
Statement of additional information for Select Adjustable Rate SEC if you:
Fund dated February 1, 2000. o Call the SEC at 800-SEC-0330,

Capital Preservation and Income Fund's annual report, dated
June 30, 1999. Or for free if you:
Select Adjustable Rate Fund's annual report, dated September o Go to the SEC Website (http://www.sec.gov).
30, 1999.
To ask
questions about this prospectus/proxy statement:
Capital Preservation and Income Fund's semi-annual report, o Call 800-645-8640, or
dated December 31, 1999. o Write to the Funds at 200 Berkeley Street, Boston,
Massachusetts 02116.
Statement of additional information, dated May 26, 2000, which relates to this
prospectus/proxy statement and the Merger.
- ----------------------------------------------------------------- ---------------------------------------------------------------

</TABLE>

INFORMATION RELATING TO THE FUNDS CONTAINED IN CAPITAL PRESERVATION AND INCOME
FUND'S SEMI-ANNUAL REPORT, THE FUNDS' ANNUAL REPORTS, PROSPECTUSES AND
STATEMENTS OF ADDITIONAL INFORMATION, AS WELL AS THE STATEMENT OF ADDITIONAL
INFORMATION RELATING TO THIS PROSPECTUS/PROXY STATEMENT, IS INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS/PROXY STATEMENT. THIS MEANS THAT SUCH INFORMATION
IS LEGALLY CONSIDERED TO BE PART OF THIS DOCUMENT.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT DETERMINED THAT THE INFORMATION
IN THIS PROSPECTUS/PROXY STATEMENT IS ACCURATE OR COMPLETE, NOR HAS IT APPROVED
OR DISAPPROVED THESE SECURITIES. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIME.

THE SHARES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT ARE NOT DEPOSITS OF A
BANK, AND ARE NOT INSURED, ENDORSED OR GUARANTEED BY THE FDIC OR ANY GOVERNMENT
AGENCY AND INVOLVE INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF YOUR ORIGINAL
INVESTMENT.

THE ADDRESS OF BOTH FUNDS IS 200 BERKELEY STREET, BOSTON, MASSACHUSETTS 02116
(TELEPHONE: 800-343-2898).

PROSPECTUS/PROXY STATEMENT DATED MAY 26, 2000

TABLE OF CONTENTS

SUMMARY.........................................................................
What are the key features of the Merger?........................................
After the Merger, what class of shares of Select Adjustable Rate Fund will I
own?............
How do the Funds' investment objectives, principal investment strategies and
risks compare?..................................................................
How do the Funds' sales charges and expenses compare? Will I be able to buy,
sell and exchange shares the same way?..................................
How do the Funds' performance records compare?...............................
Who will be the Investment Advisor and Portfolio Manager of my Fund after
the Merger? What will the advisory fee be after the Merger?....................
What will be the primary federal tax consequences of the Merger?............

RISKS...........................................................................

What are the primary risks of investing in each Fund? ..........................
Are there any other risks of investing in each Fund? ...........................

MERGER INFORMATION..............................................................
Reasons for the Merger..........................................................
Agreement and Plan of Reorganization............................................
Federal Income Tax Consequences.................................................
Proforma Capitalization.........................................................
Distribution of Shares..........................................................
Purchase and Redemption Procedures..............................................
Exchange Privileges.............................................................
Dividend Policy.................................................................

INFORMATION ON SHAREHOLDERS'RIGHTS......................................
Form of Organization.........................................................
Capitalization..................................................................
Shareholder
Liability.......................................................................
Shareholder Meetings and Voting Rights........................................
Liquidation....................................................................
Liability and Indemnification of Trustees..................................

VOTING INFORMATION CONCERNING THE MEETING....................................
Shareholder Information.........................................................

FINANCIAL STATEMENTS AND EXPERTS................................................

LEGAL MATTERS...................................................................

ADDITIONAL INFORMATION..........................................................

OTHER BUSINESS..................................................................

INSTRUCTIONS FOR EXECUTING PROXY CARDS....................

OTHER WAYS TO VOTE YOUR PROXY...................................................

EXHIBIT A.......................................................................

EXHIBIT B.......................................................................

SUMMARY

This section summarizes the primary features and consequences of the
Merger. This summary is qualified in its entirety by reference to the additional
information contained elsewhere in this prospectus/proxy statement, each Fund's
prospectus and statement of additional information and in the Agreement and Plan
of Reorganization.

WHAT ARE THE KEY FEATURES OF THE MERGER?

The Agreement and Plan of Reorganization (the "Plan") sets forth the key
features of the Merger. For a complete description of the Merger, see the Plan,
attached as Exhibit A to this prospectus/proxy statement. The Plan generally
provides for the following:

o the transfer of all of the assets of Capital Preservation and Income Fund
in exchange for shares of Select Adjustable Rate Fund.
o the assumption by Select Adjustable Rate Fund of the identified liabilities
of Capital Preservation and Income Fund. (The identified liabilities
consist only of those liabilities reflected on Capital Preservation and
Income Fund's statement of assets and liabilities determined immediately
preceding the Merger.)
o the liquidation of Capital Preservation and Income Fund by distributing
shares of Select Adjustable Rate Fund to Capital Preservation and Income
Fund's shareholders.

The Merger is scheduled to take place on or about July 24, 2000.

AFTER THE MERGER, WHAT CLASS OF SHARES OF SELECT ADJUSTABLE RATE FUND WILL I
OWN?
<TABLE>
<CAPTION>

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

IF YOU OWN THIS CLASS OF SHARES OF YOU WILL GET THIS CLASS OF SHARES OF
CAPITAL PRESERVATION AND INCOME FUND: SELECT ADJUSTABLE RATE FUND:

<S> <C>
CLASS A CLASS A

CLASS B CLASS B

CLASS C CLASS C

- --------------------------------------------- ------------------------------------------
</TABLE>

The new shares you receive will have the same total value as your
Capital Preservation and Income Fund shares as of the close of business on the
day immediately prior to the Merger.

The Trustees of Evergreen Fixed Income Trust, including the Trustees
who are not "interested persons" (the "Independent Trustees"), as such term is
defined in the Investment Company Act of 1940 (the "1940 Act"), have concluded
that the Merger would be in the best interest of Capital Preservation and Income
Fund's shareholders, and that their interest will not be diluted as a result of
the Merger. Accordingly, the Trustees have submitted the Plan for the approval
of Capital Preservation and Income Fund's shareholders. The Trustees of
Evergreen Select Fixed Income Trust have also approved the Plan on behalf of
Select Adjustable Rate Fund.

HOW DO THE FUNDS' INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND
RISKS COMPARE?

The following table highlights the comparison between the Funds with
respect to their investment objectives and principal investment strategies as
set forth in each Fund's prospectus and statement of additional information:

<TABLE>
<CAPTION>
- ------------------------- ------------------------------------------------- -------------------------------------------------
CAPITAL PRESERVATION AND INCOME FUND SELECT ADJUSTABLE RATE FUND
- ------------------------- ------------------------------------------------- -------------------------------------------------
- ------------------------- ------------------------------------------------- -------------------------------------------------
<S> <C> <C>
INVESTMENT OBJECTIVE To seek a high level of current income To seek a high level of current income
consistent with low volatility of principal. consistent with low volatility of principal.
- ------------------------- ------------------------------------------------- -------------------------------------------------
- ------------------------- ------------------------------------------------- -------------------------------------------------
PRINCIPAL INVESTMENT o Invests at least 65% of its total o Invests at least 65% of its total
STRATEGIES assets in loan pool securities or in assets in mortgage-backed securities or

mortgage securities or other securities other securities collateralized by or
collateralized by or representing an representing an interest in a pool of
interest in a pool of mortgages, which mortgages, which securities have
securities have interest rates that interest rates that reset at periodic
reset at periodic intervals and are intervals and are issued or guaranteed
issued or guaranteed by the U.S. by the U.S. government, its agencies or
government, its agencies or instrumentalities.
instrumentalities. o Invests up to 35% of its assets under

o Invests up to 35% of its assets under ordinary circumstances in obligations
ordinary circumstances in obligations of the U.S. government, its agencies or
of the U.S. government, its agencies or instrumentalities.
instrumentalities. o Seeks to provide a relatively stable
o Invests up to 20% of its assets in net asset value per share by investing
securities rated AAA by Standard & primarily in adjustable rate securities
Poor's Ratings Services ("S&P") and whose interest rates are periodically
Fitch IBCA, Inc. ("Fitch"), and/or Aaa reset when interest rates change.
by Moody's Investors Service, Inc. o Maintains average dollar-weighted
("Moody's") and high grade commercial reset period of adjustable rate
paper of U.S. and foreign issuers. securities not to exceed one year.
o 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 interest
rates change.
o Maintains average dollar-weighted reset period
of adjustable rate securities not to exceed
one year.
- ------------------------- ------------------------------------------------- -------------------------------------------------
</TABLE>

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

The Funds have other investment policies, practices and restrictions
which, together with their related risks, are also set forth in each Fund's
prospectus and statement of additional information.

A portion of the securities held by Capital Preservation and Income
Fund may be disposed of in connection with the Merger, which could result in
additional portfolio transaction costs to the Funds and capital gains to
shareholders.

A principal risk of investing in both Funds is interest rate risk (when
interest rates rise, the value of debt securities and certain dividend paying
stocks held by the Funds tends to decline). Both Funds are also subject to
credit risk (the issuers of the securities in which the Funds invest will be
unable to repay principal and pay interest on the securities held by a Fund
either at all or on time). Both Funds are subject to mortgage-backed securities
risk (the Fund may be exposed to a lower rate of return if the mortgages are
repaid earlier than anticipated and may be more sensitive to interest rate
changes). For a detailed comparison of the Funds' risks, see the section
entitled "Risks" below.

HOW DO THE FUNDS' SALES CHARGES AND EXPENSES COMPARE? WILL I BE ABLE TO BUY,
SELL AND EXCHANGE SHARES THE SAME WAY?

The sales charges for comparable classes of both Funds are the same.
Both Funds offer Class A, Class B and Class C shares. In addition, Select
Adjustable Rate Fund offers Institutional and Institutional Service shares;
however, neither of these classes are involved in the Merger. You will not pay a
sales charge in connection with the Merger. The procedures for buying, selling
and exchanging shares of the Funds are identical. For more information, see
"Purchase and Redemption Procedures" and "Exchange Privileges" below.

The following tables allow you to compare the sales charges and
expenses of the two Funds. The table entitled "Select Adjustable Rate Fund Pro
Forma" shows you what the sales charges and expenses are estimated to be
assuming the Merger takes place.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
- ------------------------------------------------------------ ----------------------------------------------------------
CAPITAL PRESERVATION AND INCOME FUND SELECT ADJUSTABLE RATE FUND
- ------------------------------------------------------------ ---- ----------------------------------------------------------
- -------------------- ------------- ------------ ------------ ---- ------------------ ----------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER CLASS A CLASS B CLASS C SHAREHOLDER CLASS A CLASS B CLASS C
TRANSACTION TRANSACTION
EXPENSES EXPENSES
- -------------------- ------------- ------------ ------------ ---- ------------------ ----------- ------------ --------------
- -------------------- ------------- ------------ ------------ ---- ------------------ ----------- ------------ --------------
Maximum sales 3.25% None None Maximum sales 3.25% None None
charge imposed on charge imposed
purchases (as a % on purchases (as
of offering price) a % of offering
price)
- -------------------- ------------- ------------ ------------ ---- ------------------ ----------- ------------ --------------
- -------------------- ------------- ------------ ------------ ---- ------------------ ----------- ------------ --------------
Maximum deferred None* 5.00% 2.00%** Maximum deferred None* 5.00% 2.00%**
sales charge (as a sales charge (as
% of either the a % of either
redemption amount the redemption
or initial amount or
investment initial
whichever is lower) investment
whichever is
lower)
- -------------------- ------------- ------------ ------------ ------------------ ----------- ------------ --------------
</TABLE>

- --------------------------------------------------------------------------
SELECT ADJUSTABLE RATE FUND
PRO FORMA
- --------------------------------------------------------------------------
- --------------------------------- ----------- ----------- ----------------
SHAREHOLDER TRANSACTION EXPENSES CLASS A CLASS B CLASS C
- --------------------------------- ----------- ----------- ----------------
- --------------------------------- ----------- ----------- ----------------
Maximum sales charge imposed on 3.25% None None
purchases (as a % of offering
price)
- --------------------------------- ----------- ----------- ----------------
- --------------------------------- ----------- ----------- ----------------
Maximum deferred sales charge None* 5.00% 2.00%**
(as a % of either the
redemption amount or initial
investment whichever is lower)
- --------------------------------- ----------- ----------- ----------------

* Investments of $1 million or more are not subject to a front-end sales
charge, but may be subject to a contingent deferred sales charge ("CDSC")
of 1.00% upon redemption within one year after the month of purchase.
** Class C Shares purchased prior to February 1, 2000 are subject to the CDSC
schedule in place at that time, which included a maximum deferred sales
charge of 1.00%.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
- -------------------------------------------------------- ------------------------------------------------------
CAPITAL PRESERVATION AND INCOME FUND SELECT ADJUSTABLE RATE FUND

(based on expenses for the fiscal year ended June 30, (based on estimated expenses for the fiscal year
1999, which have been restated to reflect current ending September 30, 2000, which have been restated
contractual rates as of January 3, 2000) to reflect current contractual rates as of January
3, 2000)

- -------------------------------------------------------- --- ------------------------------------------------------
- --------- ----------- --------- --------- -------------- --- ------ ----------- ----------- --------- -------------
MANAGEMENT 12B-1 OTHER TOTAL FUND MANAGEMENT 12B-1 FEES OTHER TOTAL FUND
FEES FEES EXPENSES OPERATING FEES EXPENSES OPERATING
EXPENSES(1) EXPENSES
- --------- ----------- --------- --------- -------------- --- ------ ----------- ----------- --------- -------------
- --------- ----------- --------- --------- -------------- --- ------ ----------- ----------- --------- -------------

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A 0.54% 0.21%(2) 0. 46% 1.21% CLASS 0.21% 0.21%(2) 0.28% 0.70%

A
- --------- ----------- --------- --------- -------------- --- ------ ----------- ----------- --------- -------------
- --------- ----------- --------- --------- -------------- --- ------ ----------- ----------- --------- -------------
CLASS B 0.54% 1.00% 0.46% 2.00% CLASS 0.21% 1.00% 0.28% 1.49%
B
- --------- ----------- --------- --------- -------------- --- ------ ----------- ----------- --------- -------------
- --------- ----------- --------- --------- -------------- --- ------ ----------- ----------- --------- -------------
CLASS C 0.54% 1.00% 0.45% 1.99% CLASS 0.21% 1.00% 0.28% 1.49%
C
- --------- ----------- --------- --------- -------------- ------ ----------- ----------- --------- -------------
</TABLE>

- --------------------------------------------------------------------------
SELECT ADJUSTABLE RATE FUND PRO FORMA
(based on what the estimated combined expenses of Select Adjustable Rate Fund
would have been for the 12 months ended September 30, 1999)(3)
- --------------------------------------------------------------------------
- -------------- -------------- ---------- ------------- -------------------
MANAGEMENT 12B-1 OTHER TOTAL FUND
FEES FEES EXPENSES OPERATING
EXPENSES(4)
- -------------- -------------- ---------- ------------- -------------------
- -------------- -------------- ---------- ------------- -------------------

CLASS A 0.21% 0.21%(2) 0.28% 0.70%

- -------------- -------------- ---------- ------------- -------------------
- -------------- -------------- ---------- ------------- -------------------
CLASS B 0.21% 1.00% 0.28% 1.49%
- -------------- -------------- ---------- ------------- -------------------
- -------------- -------------- ---------- ------------- -------------------
CLASS C 0.21% 1.00% 0.28% 1.49%
- -------------- -------------- ---------- ------------- -------------------
(1) 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 waivers or reimbursements at any time. The Annual Fund Operating
Expenses do not reflect fee waivers and expense reimbursements. Including
current fee waivers and expense reimbursements, Total Fund Operating
Expenses were 0.83% for Class A, 1.65% for Class B and 1.65% for Class C
for the fiscal year ended June 30, 1999.

(2) Restated to reflect current 12b-1 fees. Class A shares purchased on or
after 1/1/1997 incur a 12b-1 fee of 0.10%. Class A shares purchased prior
to 1/1/1997 incur a 12b-1 fee of 0.25%. As a result, the Fund currently
accrues a blended 12b-1 fee of 0.21%.

(3) The expenses shown reflect contractual rate changes made on January 3,
2000. At that time, the Fund's advisory fee was reduced in order to offset
an increase in the Fund's administrative services fee.

(4) 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 Annual Fund Operating Expenses do
not reflect fee waivers and expense reimbursements. If the Merger takes
place, the Fund's investment advisor has agreed to waive the management fee
and/or reimburse expenses for a period of two years beginning in July 2000
in order to limit Total Fund Operating Expenses to 0.70% for Class A, 1.49%
for Class B and 1.49% for Class C.

The table below shows examples of 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 Capital Preservation and
Income Fund versus Select Adjustable Rate Fund and for Select Adjustable Rate
Fund pro forma, assuming the Merger takes place, and is for illustration only.
The example assumes a 5% average annual return, the imposition of the maximum
sales charge (if any) and that you reinvest all of your dividends. Your actual
costs may be higher or lower. For Class C shares of Select Adjustable Rate Fund
pro forma, the maximum 2% CDSC has been applied rather than the maximum 1% CDSC
which will be applicable with regard to Class C shares of Capital Preservation
and Income Fund purchased before February 1, 2000 and exchanged for Class C
shares of Select Adjustable Rate Fund.

EXAMPLE OF FUND EXPENSES
<TABLE>
<CAPTION>
- ------------------------------------------------------------- -- --------------------------------------------------------------
CAPITAL PRESERVATION AND INCOME FUND SELECT ADJUSTABLE RATE FUND
- ------------------------------------------------------------- -- --------------------------------------------------------------
- ----------------------------------------- ------------------- -- ---------------------------------------- ---------------------
ASSUMING ASSUMING NO ASSUMING REDEMPTION ASSUMING NO
REDEMPTION AT END OF PERIOD REDEMPTION AT END OF PERIOD REDEMPTION
- ----------------------------------------- ------------------- -- ---------------------------------------- ---------------------
- ---------- -------- ---------- ---------- --------- --------- -- -------- ---------- --------- ---------- ---------- ----------
CLASS A CLASS B CLASS C CLASS B CLASS C CLASS A CLASS B CLASS C CLASS B CLASS C
- ---------- -------- ---------- ---------- --------- --------- -- -------- ---------- --------- ---------- ---------- ----------
- ---------- -------- ---------- ---------- --------- --------- -- -------- ---------- --------- ---------- ---------- ----------

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AFTER 1 $444 $703 $402 $203 $202 AFTER $394 $652 $352 $152 $152

YEAR 1 YEAR
- ---------- -------- ---------- ---------- --------- --------- -- -------- ---------- --------- ---------- ---------- ----------
- ---------- -------- ---------- ---------- --------- --------- -- -------- ---------- --------- ---------- ---------- ----------

AFTER 3 $697 $927 $624 $627 $624 AFTER $542 $771 $471 $471 $471

YEARS 3 YEARS
- ---------- -------- ---------- ---------- --------- --------- -- -------- ---------- --------- ---------- ---------- ----------
- ---------- -------- ---------- ---------- --------- --------- -- -------- ---------- --------- ---------- ---------- ----------

AFTER 5 $968 $1,278 $1,073 $1,078 $1,073 AFTER $702 $1,013 $813 $813 $813

YEARS 5 YEARS
- ---------- -------- ---------- ---------- --------- --------- -- -------- ---------- --------- ---------- ---------- ----------
- ---------- -------- ---------- ---------- --------- --------- -- -------- ---------- --------- ---------- ---------- ----------

AFTER 10 $1,743 $2,028 $2,317 $2,028 $2,317 AFTER $1,167 $1,465 $1,779 $1,465 $1,779

YEARS 10
YEARS
- ---------- -------- ---------- ---------- --------- --------- -- -------- ---------- --------- ---------- ---------- ----------

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

SELECT ADJUSTABLE RATE FUND PRO FORMA

AFTER 1 YEAR $394 $652 $352 $152 $152

AFTER 3 YEARS $542 $771 $471 $471 $471

AFTER 5 YEARS $702 $1,013 $813 $813 $813

AFTER 10 YEARS $1,167 $1,465 $1,779 $1,465 $1,779

-------------------- ---------------- -------------- --------------- ------------- -----------------
</TABLE>

HOW DO THE FUNDS' PERFORMANCE RECORDS COMPARE?

The following charts show how each Fund has performed in the past. PAST
PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS.

YEAR-BY-YEAR TOTAL RETURN (%)

The chart below shows the percentage gain or loss for each Fund's
oldest class of shares in each calendar year since inception. For Capital
Preservation and Income Fund, the class shown is Class B since its inception on
July 1, 1991 and for Select Adjustable Rate Fund, the class shown is
Institutional shares since its inception on October 1, 1991. This chart includes
the effects of Fund expenses. The chart for Capital Preservation and Income Fund
does not include the applicable sales charges; returns would be lower if those
sales charges were included. There are no sales charges for Select Adjustable
Rate Fund's Institutional shares. The chart should give you a general idea of
the risks of investing in each Fund by showing how each Fund's return has varied
from year-to-year. The expenses of Capital Preservation and Income Fund's Class
B shares are higher than the expenses of Select Adjustable Rate Fund's
Institutional shares due to the fact that Class B pays a 1.00% Rule 12b-1 fee
and Institutional shares do not pay any Rule 12b-1 fee. If the performance of
Capital Preservation and Income Fund's Class B shares were shown on the chart
for the same periods without the imposition of a Rule 12b-1 fee, performance
would have been higher.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------- -----------------------------------------------------------
CAPITAL PRESERVATION AND INCOME FUND (CLASS B) SELECT ADJUSTABLE RATE FUND (INSTITUTIONAL)
- ------------------------------------------------------------------- -----------------------------------------------------------
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
`90 `91 `92 `93 `94 `95 `96 `97 `98 `99 `90 `91 `92 `93 `94 `95 `96 `97 `98 `99
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----
20% 20%
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----
15% 15%
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----
10% 7.58% 5.71% 5.65% 10% 5.37% 8.67% 6.92%7.23%
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----
5% 2.27% 4.18% 0.12% 3.57% 3.20%5% 4.13% 1.06% 4.81%4.99%
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----
0 0
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----
- -5% -5%
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----
- -10% -10%
- ------- --- ---- ----- ------ ------ ----- ------ ----- ------ ---- ----- --- ---- ---- ------ ---- ----- ---- ----- ---- -----

BEST QUARTER: 1ST QUARTER 1995 +2.91% BEST QUARTER: 1ST QUARTER 1995 +3.13%
WORST QUARTER: 2ND QUARTER 1994 -0.23% WORST QUARTER: 2ND QUARTER 1994 -0.26%
Year-to-date total return through March 31, 2000 is 1.62%. Year-to-date total return through March 31, 2000 is 1.77%.
</TABLE>

The next table lists each Fund's average annual total return over the
past one and five years and since inception (through 12/31/1999), including
applicable sales charges. This table is intended to provide you with some
indication of the risks of investing in each Fund by comparing each Fund's
performance with the 6-month Treasury Bill Index ("6-mo. T bill"), which is
derived from secondary market interest rates as published by the Federal
Reserve. It is an unmanaged index and does not include transaction costs
associated with buying and selling securities or any mutual fund expenses. It is
not possible to invest directly in an index.

AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIOD ENDED 12/31/1999)
<TABLE>
<CAPTION>
- -------------------------------------------------------------- ----------------------------------------------------------------
CAPITAL PRESERVATION AND INCOME FUND* SELECT ADJUSTABLE RATE FUND**
- -------------------------------------------------------------- -- ----------------------------------------------------------------
- ----------- ----------- -------- ------- ------- ------------- -- ------------- ----------- -------- -------- ------ -------------
Inception 1 year 5 year 10 Performance Inception 1 year 5 year 10 Performance
Date of year Since Date of year Since
Class 7/1/1991 Class 10/1/1991
- ----------- ----------- -------- ------- ------- ------------- -- ------------- ----------- -------- -------- ------ -------------
- ----------- ----------- -------- ------- ------- ------------- -- ------------- ----------- -------- -------- ------ -------------

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A 12/30/1994 0.82% 5.22% N/A 4.34% Class A 5/15/2000 0.00% 5.49% N/A -14.76%

Class B 7/1/1991 -1.73% 4.80% N/A 4.29% Class B 5/15/2000 0.05% 6.20% N/A 5.45%

Class C 2/1/1993 2.33% 5.16% N/A 4.29% Class C 5/15/2000 3.02% 6.51% N/A 5.45%

</TABLE>

* Historical performance shown for Class A and Class C prior to their inception
is based on the performance of Class B, the original class offered. These
historical returns for Class A have not been adjusted to eliminate the effect of
the higher 12b-1 fees applicable to Class B. The Fund currently incurs 12b-1
fees of 0.21% for Class A. This rate is based on 0.25% assessed on assets prior
to 1/1/1997 and 0.10% assessed on new assets beginning on 1/1/1997. Class B and
Class C each incur 12b-1 expenses of 1.00%.

If these fees had been reflected, returns for Class A would have been higher.

** Historical performance shown for Class A, Class B and Class C shares prior to
their inception is based on the performance of the Institutional shares and has
not been adjusted to reflect the effect of each Class' 12b-1 fees, but has been
adjusted for each Class' applicable sales charge. Capital Preservation and
Income Fund's shareholders receiving Class A shares will incur a 12b-1 fee of
0.21%. This rate is based on 0.25% assessed on assets prior to 1/1/1997 and
0.10% assessed on new assets beginning on 1/1/1997. Class A purchases made after
the Merger are subject to a 12b-1 fee of 0.10% for Class A. The 12b-1 fee for
Classes B and C is 1.00%. Institutional shares pay no 12b-1 fees. If these fees
had been reflected, returns would have been lower.

For a detailed discussion of the manner of calculation of total return,
please see each Fund's statement of additional information. Generally, the
calculations of total return assume the reinvestment of all dividends and
capital gain distributions on the reinvestment date.

Important information about Select Adjustable Rate Fund is also
contained in management's discussion of Select Adjustable Rate Fund's
performance, attached as Exhibit B to this prospectus/proxy statement. This
information also appears in Select Adjustable Rate Fund's most recent annual
report.

WHO WILL BE THE INVESTMENT ADVISOR AND PORTFOLIO MANAGER OF MY FUND AFTER THE
MERGER? WHAT WILL THE ADVISORY FEE BE AFTER THE MERGER?

MANAGEMENT OF THE FUNDS

The overall management of Select Adjustable Rate Fund is the
responsibility of, and is supervised by, the Board of Trustees of Evergreen
Select Fixed Income Trust. The overall management of Capital Preservation and
Income Fund is the responsibility of, and is supervised by, the Board of
Trustees of Evergreen Fixed Income Trust.

INVESTMENT ADVISOR

Evergreen Investment Management Company ("EIMC") is the investment
advisor to Select Adjustable Rate Fund.

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

Facts about EIMC:
o Is a subsidiary of First Union National Bank ("FUNB"), which is a
subsidiary of First Union Corporation ("First Union"), the 6th
largest bank holding company in the United States based on total
assets as of March 31, 2000.

o Has been managing mutual funds and private accounts since 1932.
o Manages over $12.7 billion in assets for 31 of the Evergreen Funds.

o Manages with its affiliates the Evergreen family of mutual funds
with assets of approximately $82.8 billion as of March 31, 2000.
o Is located at 200 Berkeley Street, Boston, Massachusetts 02116-5034.
------------------------------------------------------------------------

PORTFOLIO MANAGEMENT

The day-to-day management of Select Adjustable Rate Fund is handled by
Gary E. Pzegeo.

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

Gary E. Pzegeo, CFA, has been a Vice President and portfolio
manager since 1997 and has been a portfolio manager of the Fund
since April 1997. Mr. Pzegeo has been an investment professional
at EIMC since 1990, becoming a senior research associate in 1994,
an analyst in 1996, and a portfolio manager in 1997.

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

ADVISORY FEES
For its management and supervision of the daily business affairs of
Select Adjustable Rate Fund, EIMC is entitled to receive an annual fee equal to
0.21% of the Fund's average daily net assets.

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

o EIMC may, at its discretion, reduce or waive its fee or reimburse
the Fund for certain of its other expenses in order to reduce the
expense ratios. Unless otherwise agreed upon, EIMC may also
reduce or cease these voluntary waivers and reimbursements at any
time. If the Merger takes place, EIMC has agreed to waive the
management fee and/or reimburse expenses for a period of two
years beginning in July 2000 in order to limit Select Adjustable
Rate Fund's total fund operating expenses to 0.70% for Class A
shares, 1.49% for Class B shares, and 1.49% for Class C shares.

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

WHAT WILL BE THE PRIMARY FEDERAL TAX CONSEQUENCES OF THE MERGER?

Prior to or at the completion of the Merger, Capital Preservation and
Income Fund will have received an opinion from Sullivan & Worcester LLP that the
Merger has been structured so that no gain or loss will be realized by the Fund
or its shareholders for federal income tax purposes as a result of receiving
Select Adjustable Rate Fund shares in connection with the Merger. The holding
period and aggregate tax basis of shares of Select Adjustable Rate Fund that are
received by Capital Preservation and Income Fund's shareholders will be the same
as the holding period and aggregate tax basis of shares of the Fund previously
held by such shareholders, provided that shares of the Fund are held as capital
assets. In addition, the holding period and tax basis of the assets of Capital
Preservation and Income Fund in the hands of Select Adjustable Rate Fund as a
result of the Merger will be the same as in the hands of the Fund immediately
prior to the Merger, and no gain or loss will be recognized by Select Adjustable
Rate Fund upon the receipt of the assets of the Fund in exchange for shares of
Select Adjustable Rate Fund and the assumption by Select Adjustable Rate Fund of
Capital Preservation and Income Fund's identified liabilities.

RISKS

WHAT ARE THE PRIMARY RISKS OF INVESTING IN EACH FUND?

An investment in each Fund is subject to certain risks. There is no
assurance that investment performance of either Fund will be positive and that
the Funds will meet their investment objectives. The following tables and
discussions highlight the primary risks associated with investment in each of
the Funds.

- ----------------------------------------------- --------------------------------
CAPITAL PRESERVATION AND INCOME FUND SELECT ADJUSTABLE RATE FUND
- ----------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------

Both Funds are subject to INTEREST RATE RISK.
Both Funds invest substantially all of their assets in debt securities.

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

Interest rate risk is the tendency for the value of debt securities to
fall when interest rates go up. Since both Funds invest in debt securities, if
interest rates rise, then the value of the Funds' securities may decline. When
interest rates go down, interest earned by the Funds on their investments may
also decline, which could cause the Funds to reduce the dividends they pay. The
longer the term of a bond or fixed income instrument, the more sensitive it will
be to fluctuations in value from interest rate changes. The Funds attempt to
mitigate some of the interest rate risk by investing a substantial portion of
their assets in adjustable rate securities.

- ----------------------------------------------- -------------------------------
CAPITAL PRESERVATION AND INCOME FUND SELECT ADJUSTABLE RATE FUND
- ----------------------------------------------- --------------------------------
- --------------------------------------------------------------------------------

Both Funds are subject to CREDIT RISK.
Both Funds invest substantially all of their assets in debt securities.

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

The value of a debt security is directly affected by the issuer's
ability to repay principal and pay interest on time. Since the Funds invest in
debt securities, the value of and total return earned on a shareholder's
investment in a Fund may decline if an issuer fails to pay an obligation on a
timely basis.

- ------------------------------------------------ -------------------------------
CAPITAL PRESERVATION AND INCOME FUND SELECT ADJUSTABLE RATE FUND
- ------------------------------------------------ -------------------------------
- --------------------------------------------------------------------------------

Both Funds are subject to MORTGAGE-BACKED
SECURITIES RISK. Both Funds invest a substantial portion of
their assets in mortgage-backed securities.

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

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.

ARE THE ANY OTHER RISKS OF INVESTING IN EACH FUND?

Both Funds may invest in futures and options, which are forms of
derivatives. Such practices are used to hedge a Fund's portfolio to protect
against changes in interest rates, to adjust the portfolio's duration, to
maintain a Fund's exposure to its market, to manage cash or to attempt to
increase income. Although this is intended to increase returns, these practices
may actually reduce returns or increase volatility.

MERGER INFORMATION

REASONS FOR THE MERGER

At a regular meeting held on March 23-24, 2000, all of the Trustees of
Evergreen Fixed Income Trust and Evergreen Select Fixed Income Trust, including
the Independent Trustees, considered and approved the Merger; they determined
that it was in the best interests of shareholders of Capital Preservation and
Income Fund and Select Adjustable Rate Fund, respectively, and that the
interests of existing shareholders of Capital Preservation and Income Fund and
Select Adjustable Rate Fund, respectively, will not be diluted as a result of
the transactions contemplated by the Merger.

Before approving the Plan, the Trustees reviewed various factors about
the Funds and the proposed Merger. The Trustees considered among other things:

o the terms and conditions of the Merger;

o whether the Merger would result in the dilution of shareholders'
interests;

o expense ratios, fees and expenses of Select Adjustable Rate Fund and
Capital Preservation and Income Fund;

o the comparative performance records of each Fund;

o compatibility of the Funds' investment objectives and principal
investment strategies;

o the fact that FUNB will bear the expenses incurred by Capital
Preservation and Income Fund and Select Adjustable Rate Fund in
connection with the Merger;

o the fact that Select Adjustable Rate Fund will assume the
identified liabilities of Capital Preservation and Income Fund;

o the fact that the Merger is expected to be tax free for federal income
tax purposes; and

o alternatives available to shareholders of Capital Preservation and
Income Fund, including the ability to redeem their shares.

During their consideration of the Merger, the Trustees met with counsel
to the Independent Trustees regarding the legal issues involved.

In approving the Merger, the Trustees considered the relative size of
Capital Preservation and Income Fund as well as investment style. Both Funds'
investment objectives, policies and risks are substantially the same. The
Trustees evaluated the potential economies of scale associated with larger
mutual funds and concluded that operational efficiencies may be achieved by
combining Capital Preservation and Income Fund with Select Adjustable Rate Fund.
As of March 31, 2000, Select Adjustable Rate Fund's total assets were
approximately $50 million and Capital Preservation and Income Fund's total
assets were approximately $35.1 million. By merging into Select Adjustable Rate
Fund, shareholders of Capital Preservation and Income Fund would have the
benefit of a larger fund with lower total expenses than those of Capital
Preservation and Income Fund.

The Trustees considered the relative performance of each Fund. The
performance of Capital Preservation and Income Fund has been consistently lower
than the performance of Select Adjustable Rate Fund. The Trustees also
considered the relative expenses of the Funds. Currently, the expense ratio of
Select Adjustable Rate Fund is lower than that of Capital Preservation and
Income Fund. If the Merger takes place, EIMC has agreed to waive the management
fee and/or reimburse expenses for a period of two years beginning in July 2000
in order to limit total fund operating expenses of Select Adjustable Rate Fund
to 0.70% for Class A shares, 1.49% for Class B shares, and 1.49% for Class C
shares.

In addition, assuming that an alternative to the Merger would be to
propose that Capital Preservation and Income Fund continue its existence and be
separately managed by FUNB or one of its affiliates, Select Adjustable Rate Fund
would be offered through common distribution channels with the similar Capital
Preservation and Income Fund. Capital Preservation and Income Fund would also
have to bear the cost of maintaining its separate existence. FUNB believes that
the prospect of dividing the resources of the Evergreen Family of Funds between
two similar funds could result in each Fund being disadvantaged due to an
inability to achieve optimum size, performance levels and greater economies of
scale.

Accordingly, for the reasons noted above and recognizing that there can
be no assurance that any economies of scale or other benefits will be realized,
the Trustees believe that the proposed Merger would be in the best interests of
each Fund and its shareholders.

AGREEMENT AND PLAN OF REORGANIZATION

The following summary is qualified in its entirety by reference to the
Plan (Exhibit A hereto).

The Plan provides that Select Adjustable Rate Fund will acquire all of
the assets of Capital Preservation and Income Fund in exchange for shares of
Select Adjustable Rate Fund and the assumption by Select Adjustable Rate Fund of
the identified liabilities of Capital Preservation and Income Fund on or about
July 24, 2000 or such other date as may be agreed upon by the parties (the
"Closing Date"). Prior to the Closing Date, Capital Preservation and Income Fund
will endeavor to discharge all of its known liabilities and obligations. Select
Adjustable Rate Fund will not assume any liabilities or obligations of Capital
Preservation and Income Fund other than those reflected in an unaudited
statement of assets and liabilities of Capital Preservation and Income Fund
prepared as of the close of regular trading on the New York Stock Exchange
("NYSE"), normally 4:00 p.m. Eastern Time, on the business day immediately prior
to the Closing Date (the "Valuation Time"). The number of full and fractional
shares of each class of Select Adjustable Rate Fund to be received by the
shareholders of Capital Preservation and Income Fund will be determined by
multiplying the number of full and fractional shares of the corresponding class
of Capital Preservation and Income Fund by a factor which shall be computed by
dividing the net asset value per share of the respective class of shares of
Capital Preservation and Income Fund by the net asset value per share of the
respective class of shares of Select Adjustable Rate Fund. Such computations
will take place as of the Valuation Time. The net asset value per share of each
class will be determined by dividing assets, less liabilities, in each case
attributable to the respective class, by the total number of outstanding shares.

State Street Bank and Trust Company, the custodian for the Funds, will
compute the value of each Fund's respective portfolio securities. The method of
valuation employed will be consistent with the procedures set forth in the
prospectus and statement of additional information of Select Adjustable Rate
Fund, Rule 22c-1 under the 1940 Act, and with the interpretations of such Rule
by the SEC's Division of Investment Management.

At or prior to the Closing Date, Capital Preservation and Income Fund
will have declared a dividend and distribution which, together with all previous
dividends and distributions, shall have the effect of distributing to the Fund's
shareholders (in shares of the Fund, or in cash, as the shareholder has
previously elected) all of the Fund's net investment company taxable income for
the taxable period ending on the Closing Date (computed without regard to any
deduction for dividends paid), all of the Fund's net tax exempt income and all
of its net capital gains realized in all taxable periods ending on the Closing
Date (after the reductions for any capital loss carryforward).

As soon after the Closing Date as conveniently practicable, Capital
Preservation and Income Fund will liquidate and distribute pro rata to
shareholders of record as of the close of business on the Closing Date the full
and fractional shares of Select Adjustable Rate Fund received by Capital
Preservation and Income Fund. Such liquidation and distribution will be
accomplished by the establishment of accounts in the names of Capital
Preservation and Income Fund's shareholders on Select Adjustable Rate Fund's
share records of its transfer agent. Each account will represent the respective
pro rata number of full and fractional shares of Select Adjustable Rate Fund due
to the Fund's shareholders. All issued and outstanding shares of Capital
Preservation and Income Fund, including those represented by certificates, will
be canceled. The shares of Select Adjustable Rate Fund to be issued will have no
preemptive or conversion rights. After these distributions and the winding up of
its affairs, Capital Preservation and Income Fund will be terminated.

The consummation of the Merger is subject to the conditions set forth
in the Plan, including approval by Capital Preservation and Income Fund's
shareholders, accuracy of various representations and warranties and receipt of
opinions of counsel, including opinions with respect to those matters referred
to in "Federal Income Tax Consequences" below. Notwithstanding approval of
Capital Preservation and Income Fund's shareholders, the Plan may be terminated
(a) by the mutual agreement of Capital Preservation and Income Fund and Select
Adjustable Rate Fund; or (b) at or prior to the Closing Date by either party (i)
because of a breach by the other party of any representation, warranty, or
agreement contained therein to be performed at or prior to the Closing Date if
not cured within 30 days, or (ii) because a condition to the obligation of the
terminating party has not been met and it reasonably appears that it cannot be
met.

Whether or not the Merger is consummated, FUNB will pay the expenses
incurred by Capital Preservation and Income Fund and Select Adjustable Rate Fund
in connection with the Merger (including the cost of any proxy-soliciting
agent). No portion of the expenses will be borne directly or indirectly by
Capital Preservation and Income Fund, Select Adjustable Rate Fund or their
shareholders.

If Capital Preservation and Income Fund's shareholders do not approve
the Merger, the Trustees will consider other possible courses of action which
may be in the best interests of shareholders.

FEDERAL INCOME TAX CONSEQUENCES

The Merger is intended to qualify for federal income tax purposes as a
tax free reorganization under section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code"). As a condition to the closing of the Merger,
Capital Preservation and Income Fund will receive an opinion from Sullivan &
Worcester LLP to the effect that, on the basis of the existing provisions of the
Code, U.S. Treasury regulations issued thereunder, current administrative rules,
pronouncements and court decisions, for federal income tax purposes, upon
consummation of the Merger:

(1) The transfer of all of the assets of Capital Preservation and
Income Fund solely in exchange for shares of Select Adjustable Rate
Fund and the assumption by Select Adjustable Rate Fund of the
identified liabilities of Capital Preservation and Income Fund followed
by the distribution of Select Adjustable Rate Fund's shares to the
shareholders of Capital Preservation and Income Fund in dissolution and
liquidation of Capital Preservation and Income Fund, will constitute a
"reorganization" within the meaning of section 368(a)(1)(C) of the
Code, and Select Adjustable Rate Fund and Capital Preservation and
Income Fund will each be a "party to a reorganization" within the
meaning of section 368(b) of the Code;

(2) No gain or loss will be recognized by Select Adjustable Rate Fund
upon the receipt of the assets of Capital Preservation and Income Fund
solely in exchange for the shares of Select Adjustable Rate Fund and
the assumption by Select Adjustable Rate Fund of the identified
liabilities of Capital Preservation and Income Fund;

(3) No gain or loss will be recognized by Capital Preservation and
Income Fund on the transfer of its assets to Select Adjustable Rate
Fund in exchange for Select Adjustable Rate Fund's shares and the
assumption by Select Adjustable Rate Fund of the identified liabilities
of Capital Preservation and Income Fund or upon the distribution
(whether actual or constructive) of Select Adjustable Rate Fund's
shares to Capital Preservation and Income Fund's shareholders in
exchange for their shares of Capital Preservation and Income Fund;

(4) No gain or loss will be recognized by Capital Preservation and
Income Fund's shareholders upon the exchange of their shares of Capital
Preservation and Income Fund for shares of Select Adjustable Rate Fund
in liquidation of Capital Preservation and Income Fund;

(5) The aggregate tax basis of the shares of Select Adjustable Rate
Fund received by each shareholder of Capital Preservation and Income
Fund pursuant to the Merger will be the same as the aggregate tax basis
of the shares of Capital Preservation and Income Fund held by such
shareholder immediately prior to the Merger, and the holding period of
the shares of Select Adjustable Rate Fund received by each shareholder
of Capital Preservation and Income Fund will include the period during
which the shares of Capital Preservation and Income Fund exchanged
therefor were held by such shareholder (provided that the shares of
Capital Preservation and Income Fund were held as a capital asset on
the date of the Merger); and

(6) The tax basis of the assets of Capital Preservation and Income Fund
acquired by Select Adjustable Rate Fund will be the same as the tax
basis of such assets to Capital Preservation and Income Fund
immediately prior to the Merger, and the holding period of such assets
in the hands of Select Adjustable Rate Fund will include the period
during which the assets were held by Capital Preservation and Income
Fund.

Opinions of counsel are not binding upon the Internal Revenue Service
or the courts. If the Merger is consummated but does not qualify as a tax free
reorganization under the Code, a shareholder of Capital Preservation and Income
Fund would recognize a taxable gain or loss equal to the difference between his
or her tax basis in his or her Fund shares and the fair market value of Select
Adjustable Rate Fund shares he or she received. Shareholders of Capital
Preservation and Income Fund should consult their tax advisors regarding the
effect, if any, of the proposed Merger in light of their individual
circumstances. Since the foregoing discussion relates only to the federal income
tax consequences of the Merger, shareholders of Capital Preservation and Income
Fund should also consult their tax advisors as to the state and local tax
consequences, if any, of the Merger.

As of April 30, 2000, Capital Preservation and Income Fund had a
capital loss carryforward of approximately $7 million. The utilization of the
capital loss carryforward by Select Adjustable Rate Fund following the Merger
will be subject to various limitations prescribed by the Code, which cannot be
calculated precisely at this time. On a pro forma basis, the limitations would
be approximately as follows:

(1) For Select Adjustable Rate Fund's tax years ending after October
1, 2000, use of Capital Preservation and Income Fund's capital
loss carryforward would be limited to approximately $2.05 million
per year.

(2) For Select Adjustable Rate Fund's tax year ending September 30,
2000, the year that includes the date of the Merger, utilization
of the capital loss carryforward would be limited to the lesser of
the following:

a. Select Adjustable Rate Fund's net capital gain for the year
multiplied by 19.45% (the percentage represents the
post-Merger portion of Select Adjustable Rate Fund's tax year
ending September 30, 2000); or

b. The $2.05 million annual limitation referred to in (1) above
multiplied by 19.45% (i.e., $399,000).

PROFORMA CAPITALIZATION

The following table sets forth the capitalizations of Capital
Preservation and Income Fund and Select Adjustable Rate Fund as of September 30,
1999 and the capitalization of Select Adjustable Rate Fund on a pro forma basis
as of that date, giving effect to the proposed acquisition of assets at net
asset value. The pro forma data reflects an exchange ratio of approximately
1.00, 1.00 and 1.00 Class A, Class B and Class C share, respectively, of Select
Adjustable Rate Fund issued for each Class A, Class B and Class C share,
respectively, of Capital Preservation and Income Fund. The conversion ratio is
based on the net asset value of the Institutional Service shares of Select
Adjustable Rate Fund.
<TABLE>
<CAPTION>

CAPITALIZATION OF CAPITAL PRESERVATION AND INCOME FUND, SELECT ADJUSTABLE RATE FUND
AND SELECT ADJUSTABLE RATE FUND (PRO FORMA)
- --------------------------------- ------------------------------- ------------------------------- -------------------------------

CAPITAL PRESERVATION AND SELECT ADJUSTABLE RATE FUND SELECT ADJUSTABLE RATE FUND
INCOME FUND (PRO FORMA)

<S> <C> <C> <C>
Class A $18,565,506 N/A $18,565,506
Class B $15,331,722 N/A $15,331,722
Class C $3,737,505 N/A $3,737,505
Institutional N/A $36,032,963 $36,032,963
Institutional Service _______N/A $20,199,468 $20,199,468
--- ----------- -----------
Total Net Assets $37,634,733 $56,232,431 $93,867,164

- --------------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------------- ------------------------------- ------------------------------- -------------------------------
NET ASSET VALUE PER SHARE
- --------------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------------- ------------------------------- ------------------------------- -------------------------------
Class A $9.59 N/A $9.56
Class B $9.59 N/A $9.56
Class C $9.59 N/A $9.56
Institutional N/A $9.56 $9.56
Institutional Service N/A $9.56 $9.56
- --------------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------------- ------------------------------- ------------------------------- -------------------------------
SHARES OUTSTANDING
- --------------------------------- ------------------------------- ------------------------------- -------------------------------
- --------------------------------- ------------------------------- ------------------------------- -------------------------------
Class A 1,936,398 N/A 1,941,806
Class B 1,599,071 N/A 1,603,587
Class C 389,825 N/A 390,914
Institutional N/A 3,768,749 3,768,749
Institutional Service N/A 2,112,716 2,112,716
- --------------------------------- ------------------------------- ------------------------------- -------------------------------
</TABLE>

The table set forth above should not be relied upon to reflect the
number of shares to be received in the Merger; the actual number of shares to be
received will depend upon the net asset value and number of shares outstanding
of each Fund at the time of the Merger.

DISTRIBUTION OF SHARES

Evergreen Distributor, Inc. ("EDI"), an affiliate of BISYS Fund
Services, acts as underwriter of shares of Select Adjustable Rate Fund and
Capital Preservation and Income Fund. EDI distributes each Fund's shares
directly or through broker-dealers, banks (including FUNB), or other financial
intermediaries. Each Fund offers Class A, Class B and Class C shares. Select
Adjustable Rate Fund also offers Institutional and Institutional Service shares;
however, neither of these classes is involved in the Merger. Each class has a
separate distribution arrangement and bears its own distribution expenses. (See
"Distribution-Related and Shareholder Servicing-Related Expenses" below).

In the proposed Merger, Capital Preservation and Income Fund
shareholders will receive shares of Select Adjustable Rate Fund having the same
class designation. These shares have identical arrangements with respect to the
imposition of Rule 12b-1 distribution and service fees as the shares they
currently hold. Because the Merger will be effected at net asset value without
the imposition of a sales charge, Capital Preservation and Income Fund's
shareholders will receive Select Adjustable Rate Fund shares without paying any
initial sales charge or CDSC as a result of the Merger. Select Adjustable Rate
Fund Class B and Class C shares received by Capital Preservation and Income
Fund's shareholders as a result of the Merger will continue to be subject to a
CDSC upon subsequent redemption, but the CDSC will be based on the date of the
original purchase of Capital Preservation and Income Fund shares and will be
subject to the CDSC schedule applicable to the shares as of the date of the
original purchase of Capital Preservation and Income Fund shares.

The following is a summary description of charges and fees for the
Class A, Class B and Class C shares of Select Adjustable Rate Fund which will be
received by Capital Preservation and Income Fund's shareholders in the Merger.
More detailed descriptions of the distribution arrangements applicable to the
classes of shares are contained in the Select Adjustable Rate Fund and Capital
Preservation and Income Fund prospectuses and in the Funds' statements of
additional information.

CLASS A SHARES. Class A shares are sold at net asset value plus an
initial sales charge of up to 3.25% and, as indicated below, are subject to
distribution-related fees. For a description of the initial sales charge
applicable to purchase of Class A shares see "How to Choose the Share Class that
Best Suits You" in the prospectus of Select Adjustable Rate Fund. No initial
sales charge will be imposed on Class A shares of Select Adjustable Rate Fund
received by Capital Preservation and Income Fund's shareholders as a result of
the Merger.

CLASS B SHARES. Class B shares are sold without an initial sales charge
but are subject to a CDSC, which ranges from 5% to 1% if shares are redeemed
during the first six years after the month of purchase. In addition, Class B
shares are subject to distribution related fees and shareholder
servicing-related fees as described below. Class B shares convert to Class A
shares after seven years following the month in which they were purchased. For
purposes of determining when Class B shares issued in the Merger to shareholders
of Capital Preservation and Income Fund will convert to Class A shares, such
shares will be deemed to have been purchased as of the date the Class B shares
of Capital Preservation and Income Fund were originally purchased.

Class B shares are subject to higher distribution-related and
shareholder servicing-related fees than the corresponding Class A shares on
which a front-end sales charge is imposed (until they convert to Class A
shares). The higher fees mean a higher expense ratio, so Class B shares pay
correspondingly lower dividends and may have a lower net asset value than Class
A shares of the Fund.

CLASS C SHARES. Class C shares are sold without initial sales charges,
but, as indicated below, are subject to distribution-related and shareholder
servicing-related fees. Class C shares issued in connection with the Merger are
subject to the CDSC schedule in place at the time of their original purchase.
Class C shares purchased before February 1, 2000 are subject to a 1.00% CDSC if
such shares are redeemed within 13 months of purchase. No CDSC is imposed on
amounts redeemed thereafter. Class C shares purchased on or after February 1,
2000 are subject to a 2.00% CDSC if such shares are redeemed within 13 months of
purchase, and a 1.00% CDSC if redeemed within 12 months thereafter. No CDSC is
imposed on amounts redeemed after 25 months. Class C shares incur higher
distribution-related and shareholder servicing-related fees than Class A shares,
but unlike Class B shares, do not convert to any other class of shares.

Additional information regarding the classes of shares of each Fund is
included in its prospectus and statement of additional information.

DISTRIBUTION-RELATED AND SHAREHOLDER SERVICING-RELATED EXPENSES. Each
Fund has adopted a Rule 12b-1 plan with respect to its Class A shares under
which the class may pay for distribution-related expenses at an annual rate
which may not exceed 0.75% of average daily net assets attributable to the
class. Payments with respect to Class A shares are currently limited to 0.10% of
average daily net assets attributable to the class. Class A shares purchased on
or after January 1, 1997 incur a Rule 12b-1 fee of 0.10%. Class A shares
purchased prior to January 1, 1997 incur a Rule 12b-1 fee of 0.25%. As a result,
the Fund currently incurs a blended Rule 12b-1 fee of 0.21%. This amount may be
increased to the full plan rate for each Fund by the Trustees without
shareholder approval.

Each Fund has also adopted a Rule 12b-1 plan with respect to its Class
B and Class C shares under which the class may pay for distribution-related
expenses at an annual rate which may not exceed 1.00%. Of the total 1.00% Rule
12b-1 fees, up to 0.25% may be for payment with respect to "shareholder
services." Consistent with the requirements of Rule 12b-1 and the applicable
rules of the National Association of Securities Dealers, Inc., following the
Merger, Select Adjustable Rate Fund may make distribution-related and
shareholder servicing-related payments with respect to Capital Preservation and
Income Fund shares sold prior to the Merger.

Additional information regarding the Rule 12b-1 plans adopted by each
Fund is included in its prospectus and statement of additional information.

PURCHASE AND REDEMPTION PROCEDURES

Information concerning applicable sales charges and
distribution-related and shareholder servicing-related fees is provided above.
Investments in the Funds are not insured. The minimum initial purchase
requirement for Class A, Class B and Class C shares of each Fund is $1,000.
There is no minimum for subsequent purchases of shares of either Fund. For more
information, see "How to Buy Shares - Minimum Investments" in each Fund's
prospectus. Each Fund provides for telephone, mail or wire redemption of shares
at net asset value, less any CDSC, as next determined after receipt of a
redemption request on each day the NYSE is open for trading. Each Fund reserves
the right to redeem in kind, under certain circumstances, by paying you the
proceeds of a redemption in securities rather than in cash. Each Fund may
involuntarily redeem shareholders' accounts that have less than $1,000 of
invested funds. Additional information concerning purchases and redemptions of
shares, including how each Fund's net asset value is determined, is contained in
the Funds' prospectuses.All funds invested in each Fund are invested in full and
fractional shares. The Funds reserve the right to reject any purchase order.

EXCHANGE PRIVILEGES

Holders of shares of a class of each Fund may exchange their shares for
shares of the same class of any other Evergreen fund. Each Fund limits exchanges
to five per calendar year and three per calendar quarter. No sales charge is
imposed on an exchange. An exchange which represents an initial investment in
another Evergreen fund must amount to at least $1,000. The current exchange
privileges, and the requirements and limitations attendant thereto, are
described in the Funds' prospectuses and statements of additional information.

DIVIDEND POLICY

Each Fund distributes its investment company taxable income monthly and
its net realized gains at least annually to shareholders of record on the
dividend record date. Dividends and distributions are reinvested in additional
shares of the same class of the respective Fund, or paid in cash, as a
shareholder has elected. See each Fund's prospectus for further information
concerning dividends and distributions.

After the Merger, shareholders of Capital Preservation and Income Fund
who have elected to have their dividends and/or distributions reinvested will
have dividends and/or distributions received from Select Adjustable Rate Fund
reinvested in shares of Select Adjustable Rate Fund. Shareholders of Capital
Preservation and Income Fund who have elected to receive dividends and/or
distributions in cash will receive dividends and/or distributions from Select
Adjustable Rate Fund in cash after the Merger, although they may, after the
Merger, elect to have such dividends and/or distributions reinvested in
additional shares of Select Adjustable Rate Fund.

Both Select Adjustable Rate Fund and Capital Preservation and Income
Fund have qualified and intend to continue to qualify to be treated as regulated
investment companies under the Code. To remain qualified as a regulated
investment company, a Fund must distribute 90% of its taxable and tax-exempt
income. While so qualified, so long as each Fund distributes all of its net
investment company taxable and tax-exempt income and any net realized gains to
shareholders, it is expected that a Fund will not be required to pay any federal
income taxes on the amounts so distributed. A 4% nondeductible excise tax will
be imposed on amounts not distributed if a Fund does not meet certain
distribution requirements by the end of each calendar year. Each Fund
anticipates meeting such distribution requirements.

INFORMATION ON SHAREHOLDERS' RIGHTS

FORM OF ORGANIZATION

Evergreen Fixed Income Trust and Evergreen Select Fixed Income Trust
are open-end management investment companies registered with the SEC under the
1940 Act, which continuously offer shares to the public. Evergreen Fixed Income
Trust and Evergreen Select Fixed Income Trust are organized as Delaware business
trusts and are governed by their respective Declarations of Trust, By-Laws, a
Board of Trustees and by applicable Delaware and federal law. Capital
Preservation and Income Fund is a series of Evergreen Fixed Income Trust and
Select Adjustable Rate Fund is a series of Evergreen Select Fixed Income Trust.

CAPITALIZATION

The beneficial interests in Select Adjustable Rate Fund and Capital
Preservation and Income Fund are represented by an unlimited number of
transferable shares of beneficial interest, $.001 par value per share. The
Declarations of Trust of both Evergreen Fixed Income Trust and Evergreen Select
Fixed Income Trust permit the Trustees to allocate shares into an unlimited
number of series, and classes thereof, with rights determined by the Trustees,
all without shareholder approval. Fractional shares may be issued by either
Fund. Each Fund's shares represent equal proportionate interests in the assets
belonging to the Fund. Shareholders of each Fund are entitled to receive
dividends and other amounts as determined by the Trustees. Shareholders of each
Fund vote separately, by class, as to matters, such as approval of or amendments
to Rule 12b-1 distribution plans, that affect only their particular class and by
Fund as to matters, such as approval of or amendments to investment advisory
agreements or proposed mergers, that affect only their particular Fund.

SHAREHOLDER LIABILITY

Under Delaware law, shareholders of a Delaware business trust are
entitled to the same limitation of personal liability extended to stockholders
of Delaware corporations. Other than in a limited number of states, no similar
statutory or other authority limiting business trust shareholder liability
exists in any other state. As a result, to the extent that each Trust or a
shareholder is subject to the jurisdiction of courts in those states, it is
possible that a court may not apply Delaware law, and may thereby subject
shareholders of each Trust to liability. To guard against this risk, the
Declaration of Trust of each Trust (a) provides that any written obligation of
the Trust may contain a statement that such obligation may only be enforced
against the assets of the Trust or the particular series in question and the
obligation is not binding upon the shareholders of the Trust; however, the
omission of such a disclaimer will not operate to create personal liability for
any shareholder; and (b) provides for indemnification out of Trust property of
any shareholder held personally liable for the obligations of the Trust.
Accordingly, the risk of a shareholder of each Trust incurring financial loss
beyond that shareholder's investment because of shareholder liability is limited
to circumstances in which: (i) the court refuses to apply Delaware law; (ii) no
contractual limitation of liability was in effect; and (iii) the Trust itself is
unable to meet its obligations. In light of Delaware law, the nature of each
Trust's business, and the nature of its assets, the risk of personal liability
to a shareholder of either Trust is remote.

SHAREHOLDER MEETINGS AND VOTING RIGHTS

Evergreen Select Fixed Income Trust on behalf of Select Adjustable Rate
Fund and Evergreen Fixed Income Trust on behalf of Capital Preservation and
Income Fund are not required to hold annual meetings of shareholders. However, a
meeting of shareholders for the purpose of voting upon the question of removal
of a Trustee must be called when requested in writing by the holders of at least
10% of the outstanding shares of the Trust. In addition, each Trust is required
to call a meeting of shareholders for the purpose of electing Trustees if, at
any time, less than a majority of the Trustees then holding office were elected
by shareholders. Each Trust does not currently intend to hold regular
shareholder meetings. Cumulative voting is not permitted. Except when a larger
quorum is required by applicable law, with respect to both Funds, 25% of the
outstanding shares entitled to vote constitutes a quorum for consideration of a
matter. For each Fund, a majority (greater than 50%) of the votes cast and
entitled to vote is sufficient to act on a matter (unless otherwise specifically
required by the applicable governing documents or other law, including the 1940
Act).

Under the Declarations of Trust of both Trusts, each share of Select
Adjustable Rate Fund and Capital Preservation and Income Fund will be entitled
to one vote for each dollar of net asset value applicable to such share.

LIQUIDATION

In the event of the liquidation of Select Adjustable Rate Fund or
Capital Preservation and Income Fund, the shareholders are entitled to receive,
when and as declared by the Trustees, the excess of the assets belonging to such
Fund or attributable to the class over the liabilities belonging to the Fund or
attributable to the class. In either case, the assets so distributable to
shareholders of the Fund will be distributed among the shareholders in
proportion to the number of shares of a class of the Fund held by them and
recorded on the books of the Fund.

LIABILITY AND INDEMNIFICATION OF TRUSTEES

Under the Declaration of Trust of each Trust, a Trustee is liable to
the Trust and its shareholders only for such Trustee's own willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved in the
conduct of the office of Trustee or the discharge of such Trustee's functions.
As provided in the Declaration of Trust, each Trustee of the Trust is entitled
to be indemnified against all liabilities against him or her, including the
costs of litigation, unless it is determined that the Trustee (i) did not act in
good faith in the reasonable belief that such Trustee's action was in or not
opposed to the best interests of the Trust; (ii) had acted with willful
misfeasance, bad faith, gross negligence or reckless disregard of such Trustee's
duties; and (iii) in a criminal proceeding, had reasonable cause to believe that
such Trustee's conduct was unlawful (collectively, "disabling conduct"). A
determination that the Trustee did not engage in disabling conduct and is,
therefore, entitled to indemnification may be based upon the outcome of a court
action or administrative proceeding or by (a) a vote of a majority of those
Trustees who are neither "interested persons" within the meaning of the 1940 Act
nor parties to the proceeding or (b) an independent legal counsel in a written
opinion. The Trust may also advance money for such litigation expenses provided
that the Trustee undertakes to repay the Trust if his or her conduct is later
determined to preclude indemnification and certain other conditions are met.

The foregoing is only a summary of certain characteristics of the
operations of the Declaration of Trust of each Trust, their By-Laws and Delaware
law and is not a complete description of those documents or law. Shareholders
should refer to the provisions of such Declarations of Trust, By-Laws and
Delaware law directly for more complete information.

VOTING INFORMATION CONCERNING THE MEETING

This prospectus/proxy statement is being sent to shareholders of
Capital Preservation and Income Fund in connection with a solicitation of
proxies by the Trustees of Evergreen Fixed Income Trust, to be used at the
Special Meeting (the "Meeting") of Shareholders to be held at 2:00 p.m., July
14, 2000, at the offices of the Evergreen Funds, 200 Berkeley Street, 26th
Floor, Boston, Massachusetts 02116, and at any adjournments thereof. This
prospectus/proxy statement, along with a Notice of the Meeting and a proxy card,
is first being mailed to shareholders of Capital Preservation and Income Fund on
or about May 26, 2000. Only shareholders of record as of the close of business
on April 28, 2000 (the "Record Date") will be entitled to notice of, and to vote
at, the Meeting or any adjournment thereof.

If the enclosed form of proxy is properly executed and returned in time
to be voted at the Meeting, the proxies named therein will vote the shares
represented by the proxy in accordance with the instructions marked thereon.
Unmarked proxies will be voted FOR the proposed Merger and FOR any other matters
deemed appropriate. Proxies that reflect abstentions and "broker non-votes"
(i.e., shares held by brokers or nominees as to which (i) instructions have not
been received from the beneficial owners or the persons entitled to vote and
(ii) the broker or nominee does not have discretionary voting power on a
particular matter) will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum, but will not have the
effect of being counted as votes against the Plan, which must be approved by a
majority of the votes cast and entitled to vote. A proxy may be revoked at any
time on or before the Meeting by written notice to the Secretary of Evergreen
Fixed Income Trust at the address set forth on the cover of this
prospectus/proxy statement. Unless revoked, all valid proxies will be voted in
accordance with the specifications thereon or, in the absence of such
specifications, FOR approval of the Plan and the Merger contemplated thereby.

Approval of the Merger will require the affirmative vote of a majority
(greater than 50%) of Capital Preservation and Income Fund's shares voted and
entitled to vote at the Meeting, assuming a quorum (at least 25% of the Fund's
outstanding shares entitled to vote) is present.

In voting for the Merger, all classes of Capital Preservation and
Income Fund will vote together as if they were a single class, and each share
will be entitled to one vote for each dollar of net asset value applicable to
such share.

Proxy solicitations will be made primarily by mail, but proxy
solicitations may also be made by telephone, through the Internet or personal
solicitations conducted by officers and employees of FUNB, its affiliates or
other representatives of Capital Preservation and Income Fund (who will not be
paid for their soliciting activities). In addition, proxy solicitations may be
made by Shareholder Communications Corporation, the Fund's proxy solicitor. If
you wish to participate in the Meeting, you may submit the proxy card included
with this prospectus/proxy statement, vote by telephone, fax or by the Internet
or attend in person. (See the back of this prospectus/proxy statement for voting
instructions.) Any proxy given by you is revocable.

If Capital Preservation and Income Fund shareholders do not vote to
approve the Merger, the Trustees will consider other possible courses of action
in the best interests of shareholders. In the event that sufficient votes to
approve the Merger are not received before the Meeting, the persons named as
proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. In determining whether to adjourn the Meeting, the
following factors may be considered: the percentage of votes actually cast, the
percentage of negative votes actually cast, the nature of any further
solicitation and the information to be provided to shareholders with respect to
the reasons for the solicitation. Any such adjournment will require an
affirmative vote by the holders of a majority of the shares present in person or
by proxy at the Meeting. The persons named as proxies will vote upon such
adjournment after consideration of all circumstances which may bear upon a
decision to adjourn the Meeting.

A shareholder who objects to the proposed Merger will not be entitled
under either Delaware law or the Declaration of Trust of Evergreen Fixed Income
Trust to demand payment for, or an appraisal of, his or her shares. However,
shareholders should be aware that the Merger as proposed is not expected to
result in recognition of gain or loss to shareholders for federal income tax
purposes and that, if the Merger is consummated, shareholders will be free to
redeem the shares of Select Adjustable Rate Fund which they receive in the
transaction at their then-current net asset value. Shares of Capital
Preservation and Income Fund may be redeemed at any time prior to the
consummation of the Merger. Shareholders of Capital Preservation and Income Fund
may wish to consult their tax advisors as to any differing consequences of
redeeming Fund shares prior to the Merger or exchanging such shares in the
Merger.

Capital Preservation and Income Fund does not hold annual shareholder
meetings. If the Merger is not approved, shareholders wishing to submit
proposals to be considered for inclusion in a proxy statement for a subsequent
shareholder meeting should send their written proposals to the Secretary of
Evergreen Fixed Income Trust at the address set forth on the cover of this
prospectus/proxy statement so that they will be received by the Fund in a
reasonable period of time prior to the meeting.

The votes of the shareholders of Select Adjustable Rate Fund are not
being solicited by this prospectus/proxy statement and are not required to carry
out the Merger.

NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES.
Please advise Capital Preservation and Income Fund whether other persons are
beneficial owners of shares for which proxies are being solicited and, if so,
the number of copies of this prospectus/proxy statement needed to supply copies
to the beneficial owners of the respective shares.

SHAREHOLDER INFORMATION

As of the Record Date, the following number of each class of shares of
beneficial interest of Capital Preservation and Income Fund was outstanding:

------------------------------- ---------------------------
CLASS OF SHARES NUMBER OF SHARES
------------------------------- ---------------------------
------------------------------- ---------------------------

Class A 2,714,580.424
Class B 566,934.666
Class C 396,961.781
-------------
All Classes 3,678,476.871
=============
------------------------------- ---------------------------

As of March 31, 2000, the officers and Trustees of Evergreen Fixed
Income Trust and Evergreen Select Fixed Income Trust beneficially owned as a
group less than 1% of the outstanding shares of Capital Preservation and Income
Fund and Select Adjustable Rate Fund, respectively.

To Evergreen Fixed Income Trust's knowledge, the following persons
owned beneficially or of record more than 5% of Capital Preservation and Income
Fund's total outstanding shares as of March 31, 2000:

<TABLE>
<CAPTION>
- ------------------------------------ ------ ------------------- ------------------------------ -----------------------------
PERCENTAGE OF SHARES OF PERCENTAGE OF SHARES OF
CLASS BEFORE MERGER CLASS AFTER MERGER
NAME AND ADDRESS CLASS NO. OF SHARES
- ------------------------------------ ------ ------------------- ------------------------------ -----------------------------
- ------------------------------------ ------ ------------------- ------------------------------ -----------------------------

<S> <C> <C> <C> <C>
MLPF&S For The Sole Benefit A 440,659.268 16.32% 16.32%
Of Its Customers
Attn: Fund Admin #977J2
4800 Deer Lake Dr E 2nd FL
Jacksonville, FL 32246-6484

MLPF&S For The Sole Benefit B 82,696.931 14.19% 14.19%
Of Its Customers
Attn: Fund Admin #977N4
4800 Deer Lake Dr E 2nd FL
Jacksonville, FL 32246-6484

MLPF&S For The Sole Benefit C 55,669.646 14.10% 14.10%
Of Its Customers
Attn: Fund Admin #97A16
4800 Deer Lake Dr E 2nd FL
Jacksonville, FL 32246-6484

Aneca Federal Credit Union C 25,694.233 6.51% 6.51%
c/o Rick Holland
PO Box 21734
Shreveport, LA 71151-0001

Saloman Smith Barney Inc C 23,025.215 5.83% 5.83%
00135366750
333 West 34th St - 3rd Floor
New York, NY 10001

First Union Corp Y 107.077 100% 0%
c/o Evergreen Investment Services
Attn: Lori Gibson NC 1195
401 S Tryon St 5th FL
Charlotte, NC 28288-1195

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

To Evergreen Select Fixed Income Trust's knowledge, the following
persons owned beneficially or of record more than 5% of Select Adjustable Rate
Fund's total outstanding shares as of March 31, 2000:

- ------------------------------------ -------- ----------------- ------------------------------ -----------------------------
PERCENTAGE OF SHARES OF PERCENTAGE OF SHARES OF
CLASS BEFORE MERGER CLASS AFTER MERGER

NAME AND ADDRESS CLASS* NO. OF SHARES

AMPEX Retirement Master Trust I 2,169,426.595 75.32% 75.32%
PO Box 1992
Boston, MA 02105-1992

First Union National Bank/EB/INT I 634,038.932 22.01% 22.01%
Reinvest Account
Attn: Trust Operations Fund Group
401 S Tryon St 3rd FL CMG 1151
Charlotte, NC 28202-1911

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

First Union National Bank BK/EB/INT IS 1,290,134.678 52.11% 52.11%
Cash Acct
Attn: Trust Oper FD GRP
401 S Tryon St 3rd FL CMG 1151
Charlotte, NC 28202-1911

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

Union Pacific RR-UTU Crew IS 183,275.579 7.40% 7.40%
Consistent
G0-O569 - POOL 090 2000
Michael Errico, Manager-Payroll Acc
1416 Dodge St, MC7080
Omaha, NE 68179-0001

MLPF&S For The Sole Benefit
Of Its Customers IS 158,792.869 6.41% 6.41%
Attn: Fund Admin #97P31
4800 Deer Lake Dr E 2nd FL
Jacksonville, FL 32246-6484

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

* "I" denotes Institutional shares; "IS" denotes Institutional Service shares.

</TABLE>

FINANCIAL STATEMENTS AND EXPERTS

The Annual Report of Select Adjustable Rate Fund as of September 30,
1999, and the financial statements and financial highlights for the periods
indicated therein, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.

The Annual Report of Capital Preservation and Income Fund as of June
30, 1999, and the financial highlights and financial statements for the periods
indicated therein, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein and upon the
authority of said firm as experts in accounting and auditing.

LEGAL MATTERS

Certain legal matters concerning the issuance of shares of Select
Adjustable Rate Fund will be passed upon by Sullivan & Worcester LLP,
Washington, D.C.

ADDITIONAL INFORMATION

Capital Preservation and Income Fund and Select Adjustable Rate Fund
are each subject to the informational requirements of the Securities Exchange
Act of 1934 and the 1940 Act, and in accordance therewith file reports and other
information including proxy material, and charter documents with the SEC. These
items can be inspected and copies obtained at the Public Reference Facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington D.C. 20549, and at
the SEC's Regional Offices located at Northwest Atrium Center, 500 West Madison
Street, Chicago, Illinois 60661-2511 and Seven World Trade Center, Suite 1300,
New York, New York 10048.

OTHER BUSINESS

The Trustees of Evergreen Fixed Income Trust do not intend to present
any other business at the Meeting. If, however, any other matters are properly
brought before the Meeting, the persons named in the accompanying form of proxy
will vote thereon in accordance with their judgment.

THE TRUSTEES OF EVERGREEN FIXED INCOME TRUST RECOMMEND APPROVAL OF THE PLAN
AND ANY UNMARKED PROXIES WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE VOTED IN
FAVOR OF APPROVAL OF THE PLAN.May 26, 2000

<PAGE>

INSTRUCTIONS FOR EXECUTING PROXY CARDS

The following general rules for signing proxy cards may be of assistance to you
and may help to avoid the time and expense involved in validating your vote if
you fail to sign your proxy card properly.

1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears in the
Registration on the proxy card.

2. JOINT ACCOUNTS: Either party may sign, but the name of the party signing
should conform exactly to a name shown in the Registration on the proxy
card.

3. ALL OTHER ACCOUNTS: The capacity of the individual signing the proxy card
should be indicated unless it is reflected in the form of Registration. For
example:

REGISTRATION VALID SIGNATURE

CORPORATE ACCOUNTS

(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp. John Doe, Treasurer
c/o John Doe, Treasurer
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee

TRUST ACOUNTS

(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee Jane B. Doe
u/t/d 12/28/78

CUSTODIAL OR ESTATE ACCOUNTS

(1) John B. Smith, Cust. John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith John B. Smith, Jr., Executor

After completing your proxy card, return it in the enclosed postage paid
envelope.

OTHER WAYS TO VOTE YOUR PROXY

VOTE BY TELEPHONE:

1. Read the PROSPECTUS/PROXY STATEMENT and have your PROXY CARD at hand.
2. Call the toll-free number found on your PROXY CARD.
3. Enter the 12-digit CONTROL NUMBER found on your PROXY CARD.
4. Follow the simple recorded instructions.

VOTE BY FAX:

1. Read the PROSPECTUS/PROXY STATEMENT and have your completed PROXY CARD at
hand.
2. Fax BOTH FRONT AND BACK SIDES of your PROXY CARD by calling the
number indicated on your PROXY CARD and following the voting
instructions.

VOTE BY INTERNET:

1. Read the PROSPECTUS/PROXY STATEMENT and have your PROXY CARD at hand.
2. Go to the website indicated on your PROXY CARD and follow the voting
instructions.

The above methods of voting are generally available 24 hours a day. Do not mail
the proxy card if you are voting by telephone, fax or the Internet.

If you have any questions about the proxy card, please call Shareholder
Communications Corporation, our proxy solicitor, at 800-645-8640.

<PAGE>
EXHIBIT A

AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this 30th day of April, 2000, by and between Evergreen Select Fixed Income
Trust, a Delaware business trust, with its principal place of business at 200
Berkeley Street, Boston, Massachusetts 02116 (the "Trust"), with respect to its
Evergreen Select Adjustable Rate Fund series (the "Acquiring Fund"), and
Evergreen Fixed Income Trust, a Delaware business trust, with its principal
place of business at 200 Berkeley Street, Boston, Massachusetts 02116 with
respect to its Evergreen Capital Preservation and Income Fund series (the
"Selling Fund").

This Agreement is intended to be, and is adopted as, a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(C) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of (i) the transfer of all of
the assets of the Selling Fund in exchange solely for Class A, Class B and Class
C shares of beneficial interest, $.001 par value per share, of the Acquiring
Fund (the "Acquiring Fund Shares"); (ii) the assumption by the Acquiring Fund of
the identified liabilities of the Selling Fund; and (iii) the distribution,
after the Closing Date hereinafter referred to, of the Acquiring Fund Shares to
the shareholders of the Selling Fund in liquidation of the Selling Fund as
provided herein, all upon the terms and conditions hereinafter set forth in this
Agreement.

WHEREAS, the Selling Fund and the Acquiring Fund are each a separate
investment series of an open-end, registered investment company of the
management type and the Selling Fund owns securities that generally are assets
of the character in which the Acquiring Fund is permitted to invest;

WHEREAS, both Funds are authorized to issue their shares of beneficial
interest;

WHEREAS, the Trustees of Evergreen Fixed Income Trust have determined
that the exchange of all of the assets of the Selling Fund for Acquiring Fund
Shares and the assumption of the identified liabilities of the Selling Fund by
the Acquiring Fund on the terms and conditions hereinafter set forth are in the
best interests of the Acquiring Fund's shareholders;

WHEREAS, the Trustees of the Trust have determined that the Selling
Fund should exchange all of its assets and the identified liabilities for
Acquiring Fund Shares and that the interests of the existing shareholders of the
Selling Fund will not be diluted as a result of the transactions contemplated
herein;

NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:

<PAGE>

ARTICLE I

TRANSFER OF ASSETS OF THE SELLING FUND IN EXCHANGE FOR
THE ACQUIRING FUND SHARES AND ASSUMPTION OF SELLING FUND
LIABILITIES AND LIQUIDATION OF THE SELLING FUND

1.1 THE EXCHANGE. Subject to the terms and conditions herein set forth
and on the basis of the representations and warranties contained herein, the
Selling Fund agrees to transfer all of the Selling Fund's assets as set forth in
paragraph 1.2 to the Acquiring Fund. The Acquiring Fund agrees in exchange
therefor (i) to deliver to the Selling Fund the number of Acquiring Fund Shares,
including fractional Acquiring Fund Shares, computed in the manner and as of the
time and date set forth in paragraphs 2.2 and 2.3; and (ii) to assume the
identified liabilities of the Selling Fund, as set forth in paragraph 1.3. Such
transactions shall take place on the Closing Date provided for in paragraph 3.1.

1.2 ASSETS TO BE ACQUIRED. The assets of the Selling Fund to be
acquired by the Acquiring Fund shall consist of all property, including, without
limitation, all cash, securities, commodities, interests in futures and
dividends or interest receivables, that is owned by the Selling Fund and any
deferred or prepaid expenses shown as an asset on the books of the Selling Fund
on the Closing Date.

The Selling Fund has provided the Acquiring Fund with its most recent
audited financial statements, which contain a list of all of Selling Fund's
assets as of the date thereof. The Selling Fund hereby represents that as of the
date of the execution of this Agreement there have been no changes in its
financial position as reflected in said financial statements other than those
occurring in the ordinary course of its business in connection with the purchase
and sale of securities and the payment of its normal operating expenses. The
Selling Fund reserves the right to sell any of such securities, but will not,
without the prior written approval of the Acquiring Fund, acquire any additional
securities other than securities of the type in which the Acquiring Fund is
permitted to invest.

The Acquiring Fund will, within a reasonable time prior to the Closing
Date, furnish the Selling Fund with a list of the securities, if any, on the
Selling Fund's list referred to in the second sentence of this paragraph that do
not conform to the Acquiring Fund's investment objectives, policies, and
restrictions. The Selling Fund will, within a reasonable period of time prior to
the Closing Date, furnish the Acquiring Fund with a list of its portfolio
securities and other investments. In the event that the Selling Fund holds any
investments that the Acquiring Fund may not hold, the Selling Fund, if requested
by the Acquiring Fund, will dispose of such securities prior to the Closing
Date. In addition, if it is determined that the Selling Fund and the Acquiring
Fund portfolios, when aggregated, would contain investments exceeding certain
percentage limitations imposed upon the Acquiring Fund with respect to such
investments, the Selling Fund if requested by the Acquiring Fund will dispose of
a sufficient amount of such investments as may be necessary to avoid violating
such limitations as of the Closing Date. Notwithstanding the foregoing, nothing
herein will require the Selling Fund to dispose of any investments or securities
if, in the reasonable judgment of the Selling Fund, such disposition would
adversely affect the tax-free nature of the Reorganization or would violate the
Selling Fund's fiduciary duty to its shareholders.

1.3 LIABILITIES TO BE ASSUMED. The Selling Fund will endeavor to
discharge all of its known liabilities and obligations prior to the Closing
Date. The Acquiring Fund shall assume only those liabilities, expenses, costs,
charges and reserves reflected on a Statement of Assets and Liabilities of the
Selling Fund prepared on behalf of the Selling Fund, as of the Valuation Date
(as defined in paragraph 2.1), in accordance with generally accepted accounting
principles consistently applied from the prior audited period. The Acquiring
Fund shall assume only those liabilities of the Selling Fund reflected in such
Statement of Assets and Liabilities and shall not assume any other liabilities,
whether absolute or contingent, known or unknown, accrued or unaccrued, all of
which shall remain the obligation of the Selling Fund.

In addition, upon completion of the Reorganization, for purposes of
calculating the maximum amount of sales charges (including asset based sales
charges) permitted to be imposed by the Acquiring Fund under the National
Association of Securities Dealers, Inc. Conduct Rule 2830 ("Aggregate NASD
Cap"), the Acquiring Fund will add to its Aggregate NASD Cap immediately prior
to the Reorganization the Aggregate NASD Cap of the Selling Fund immediately
prior to the Reorganization, in each case calculated in accordance with such
Rule 2830.

1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date
as is conveniently practicable (the "Liquidation Date"), (a) the Selling Fund
will liquidate and distribute pro rata to the Selling Fund's shareholders of
record, determined as of the close of business on the Valuation Date (the
"Selling Fund Shareholders"), the Acquiring Fund Shares received by the Selling
Fund pursuant to paragraph 1.1; and (b) the Selling Fund will thereupon proceed
to dissolve as set forth in paragraph 1.8 below. Such liquidation and
distribution will be accomplished by the transfer of the Acquiring Fund Shares
then credited to the account of the Selling Fund on the books of the Acquiring
Fund to open accounts on the share records of the Acquiring Fund in the names of
the Selling Fund Shareholders and representing the respective pro rata number of
the Acquiring Fund Shares due such shareholders. All issued and outstanding
shares of the Selling Fund will simultaneously be canceled on the books of the
Selling Fund. The Acquiring Fund shall not issue certificates representing the
Acquiring Fund Shares in connection with such exchange.

1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be
shown on the books of the Acquiring Fund's transfer agent. Shares of the
Acquiring Fund will be issued in the manner described in the Prospectus/Proxy
Statement on Form N-14 which has been distributed to shareholders of the Selling
Fund as described in paragraph 4.1(o).

1.6 TRANSFER TAXES. Any transfer taxes payable upon issuance of the
Acquiring Fund Shares in a name other than the registered holder of the Selling
Fund shares on the books of the Selling Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.

1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the
Selling Fund is and shall remain the responsibility of the Selling Fund up to
and including the Closing Date and such later date on which the Selling Fund is
terminated.

1.8 TERMINATION. The Selling Fund shall be terminated promptly
following the Closing Date and the making of all distributions pursuant to
paragraph 1.4.

ARTICLE II

VALUATION

2.1 VALUATION OF ASSETS. The value of the Selling Fund's assets to be
acquired by the Acquiring Fund hereunder shall be the value of such assets
computed as of the close of business on the New York Stock Exchange on the
business day next preceding the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures set
forth in the Trust's Declaration of Trust and the Acquiring Fund's then current
prospectus and statement of additional information or such other valuation
procedures as shall be mutually agreed upon by the parties.

2.2 VALUATION OF SHARES. The net asset value per share of the Acquiring
Fund Shares shall be the net asset value per share computed as of the close of
business on the New York Stock Exchange on the Valuation Date, using the
valuation procedures set forth in the Trust's Declaration of Trust and the
Acquiring Fund's then current prospectus and statement of additional
information.

2.3 SHARES TO BE ISSUED. The number of the Acquiring Fund Shares of
each class to be issued (including fractional shares, if any) in exchange for
the Selling Fund's assets shall be determined by multiplying the shares
outstanding of each class of the Selling Fund by the ratio computed by dividing
the net asset value per share of the Selling Fund attributable to each of its
classes by the net asset value per share of the respective classes of the
Acquiring Fund determined in accordance with paragraph 2.2. Holders of Class A,
Class B, Class C and Class Y shares of the Selling Fund will receive Class A,
Class B and Class C shares, respectively, of the Acquiring Fund.

2.4 DETERMINATION OF VALUE. All computations of value shall be made by
State Street Bank and Trust Company in accordance with its regular practice in
pricing the shares and assets of the Acquiring Fund.

ARTICLE III

CLOSING AND CLOSING DATE

3.1 CLOSING DATE. The closing of the Reorganization (the "Closing")
shall take place on or about July 24, 2000 or such other date as the parties may
agree to in writing (the "Closing Date"). All acts taking place at the Closing
shall be deemed to take place simultaneously immediately prior to the opening of
business on the Closing Date unless otherwise provided. The Closing shall be
held as of 9:00 a.m. at the offices of the Evergreen Funds, 200 Berkeley Street,
Boston, MA 02116, or at such other time and/or place as the parties may agree.

3.2 EFFECT OF SUSPENSION IN TRADING. In the event that on the Valuation
Date (a) the New York Stock Exchange or another primary trading market for
portfolio securities of the Acquiring Fund or the Selling Fund shall be closed
to trading or trading thereon shall be restricted; or (b) trading or the
reporting of trading on said Exchange or elsewhere shall be disrupted so that
accurate appraisal of the value of the net assets of the Acquiring Fund or the
Selling Fund is impracticable, the Valuation Date shall be postponed until the
first business day after the day when trading shall have been fully resumed and
reporting shall have been restored.

3.3 TRANSFER AGENT'S CERTIFICATE. Evergreen Service Company, as
transfer agent for the Selling Fund, shall deliver at the Closing a certificate
of an authorized officer stating that its records contain the names and
addresses of the Selling Fund Shareholders and the number and percentage
ownership of outstanding shares owned by each such shareholder immediately prior
to the Closing. The Acquiring Fund shall issue and deliver or cause Evergreen
Service Company, its transfer agent, to issue and deliver a confirmation
evidencing the Acquiring Fund Shares to be credited on the Closing Date to the
Secretary of Evergreen Fixed Income Trust or provide evidence satisfactory to
the Selling Fund that such Acquiring Fund Shares have been credited to the
Selling Fund's account on the books of the Acquiring Fund. At the Closing, each
party shall deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts and other documents as such other party or its
counsel may reasonably request.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

4.1 REPRESENTATIONS OF THE SELLING FUND. The Selling Fund
represents and warrants to the Acquiring Fund as follows:

(a) The Selling Fund is a separate investment series of a
Delaware business trust duly organized, validly existing, and in good standing
under the laws of the State of Delaware.

(b) The Selling Fund is a separate investment series of a
Delaware business trust that is registered as an investment company classified
as a management company of the open-end type, and its registration with the
Securities and Exchange Commission (the "Commission") as an investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), is in
full force and effect.

(c) The current prospectus and statement of additional
information of the Selling Fund conform in all material respects to the
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act and the rules and regulations of the Commission
thereunder and do not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

(d) The Selling Fund is not, and the execution, delivery, and
performance of this Agreement (subject to shareholder approval) will not result,
in violation of any provision of Evergreen Fixed Income Trust's Declaration of
Trust or By-Laws or of any material agreement, indenture, instrument, contract,
lease, or other undertaking to which the Selling Fund is a party or by which it
is bound.

(e) The Selling Fund has no material contracts or other
commitments (other than this Agreement) that will be terminated with liability
to it prior to the Closing Date, except for liabilities, if any, to be
discharged or reflected in the Statement of Assets and Liabilities as provided
in paragraph 1.3 hereof.

(f) Except as otherwise disclosed in writing to and accepted
by the Acquiring Fund, no litigation, administrative proceeding, or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Selling Fund or any of its properties
or assets, which, if adversely determined, would materially and adversely affect
its financial condition, the conduct of its business, or the ability of the
Selling Fund to carry out the transactions contemplated by this Agreement. The
Selling Fund knows of no facts that might form the basis for the institution of
such proceedings and is not a party to or subject to the provisions of any
order, decree, or judgment of any court or governmental body that materially and
adversely affects its business or its ability to consummate the transactions
herein contemplated.

(g) The unaudited semi-annual financial statements of the
Selling Fund at December 31, 1999 are in accordance with generally accepted
accounting principles consistently applied, and such statements (copies of which
have been furnished to the Acquiring Fund) fairly reflect the financial
condition of the Selling Fund as of such date, and there are no known contingent
liabilities of the Selling Fund as of such date not disclosed therein.

(h) Since December 31, 1999 there has not been any material
adverse change in the Selling Fund's financial condition, assets, liabilities,
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Selling Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquiring Fund. For the purposes of this subparagraph (h), a
decline in the net asset value of the Selling Fund shall not constitute a
material adverse change.

(i) At the Closing Date, all federal and other tax returns and
reports of the Selling Fund required by law to have been filed by such dates
shall have been filed, and all federal and other taxes shown due on said returns
and reports shall have been paid, or provision shall have been made for the
payment thereof. To the best of the Selling Fund's knowledge, no such return is
currently under audit, and no assessment has been asserted with respect to such
returns.

(j) For each fiscal year of its operation, the Selling Fund
has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and has distributed in each such
year all net investment income and realized capital gains.

(k) All issued and outstanding shares of the Selling Fund are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable by the Selling Fund. All of the issued and outstanding
shares of the Selling Fund will, at the time of the Closing Date, be held by the
persons and in the amounts set forth in the records of the transfer agent as
provided in paragraph 3.3. The Selling Fund does not have outstanding any
options, warrants, or other rights to subscribe for or purchase any of the
Selling Fund shares, nor is there outstanding any security convertible into any
of the Selling Fund shares.

(l) At the Closing Date, the Selling Fund will have good and
marketable title to the Selling Fund's assets to be transferred to the Acquiring
Fund pursuant to paragraph 1.2 and full right, power, and authority to sell,
assign, transfer, and deliver such assets hereunder, and, upon delivery and
payment for such assets, the Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act, other than as
disclosed to the Acquiring Fund and accepted by the Acquiring Fund.

(m) The execution, delivery, and performance of this Agreement
have been duly authorized by all necessary action on the part of the Selling
Fund and, subject to approval by the Selling Fund's shareholders, this Agreement
constitutes a valid and binding obligation of the Selling Fund, enforceable in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights and to general equity principles.

(n) The information furnished by the Selling Fund for use in
no-action letters, applications for orders, registration statements, proxy
materials, and other documents that may be necessary in connection with the
transactions contemplated hereby is accurate and complete in all material
respects and complies in all material respects with federal securities and other
laws and regulations thereunder applicable thereto.

(o) The Selling Fund has provided the Acquiring Fund with
information reasonably necessary for the preparation of a prospectus, which
included the proxy statement of the Selling Fund (the "Prospectus/Proxy
Statement"), all of which was included in a Registration Statement on Form N-14
of the Acquiring Fund (the "Registration Statement"), in compliance with the
1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act") and
the 1940 Act in connection with the meeting of the shareholders of the Selling
Fund to approve this Agreement and the transactions contemplated hereby. The
Prospectus/Proxy Statement included in the Registration Statement (other than
information therein that relates to the Acquiring Fund) does not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading.

4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Acquiring Fund
represents and warrants to the Selling Fund as follows:

(a) The Acquiring Fund is a separate investment series of a
Delaware business trust duly organized, validly existing and in good standing
under the laws of the State of Delaware.

(b) The Acquiring Fund is a separate investment series of a
Delaware business trust that is registered as an investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act is in full force and
effect.

(c) The current prospectus and statement of additional
information of the Acquiring Fund conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder and do not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

(d) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result, in violation of the Trust's
Declaration of Trust or By-Laws or of any material agreement, indenture,
instrument, contract, lease, or other undertaking to which the Acquiring Fund is
a party or by which it is bound.

(e) Except as otherwise disclosed in writing to the Selling
Fund and accepted by the Selling Fund, no litigation, administrative proceeding
or investigation of or before any court or governmental body is presently
pending or to its knowledge threatened against the Acquiring Fund or any of its
properties or assets, which, if adversely determined, would materially and
adversely affect its financial condition and the conduct of its business or the
ability of the Acquiring Fund to carry out the transactions contemplated by this
Agreement. The Acquiring Fund knows of no facts that might form the basis for
the institution of such proceedings and is not a party to or subject to the
provisions of any order, decree, or judgment of any court or governmental body
that materially and adversely affects its business or its ability to consummate
the transactions contemplated herein.

(f) The financial statements of the Acquiring Fund at
September 30, 1999 are in accordance with generally accepted accounting
principles consistently applied, and such statements (copies of which have been
furnished to the Selling Fund) fairly reflect the financial condition of the
Acquiring Fund as of such date, and there are no known contingent liabilities of
the Acquiring Fund as of such date not disclosed therein.

(g) Since September 30, 1999 there has not been any material
adverse change in the Acquiring Fund's financial condition, assets, liabilities,
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Selling Fund. For the purposes of this subparagraph (g), a
decline in the net asset value of the Acquiring Fund shall not constitute a
material adverse change.

(h) At the Closing Date, all federal and other tax returns and
reports of the Acquiring Fund required by law then to be filed by such dates
shall have been filed, and all federal and other taxes shown due on said returns
and reports shall have been paid or provision shall have been made for the
payment thereof. To the best of the Acquiring Fund's knowledge, no such return
is currently under audit, and no assessment has been asserted with respect to
such returns.

(i) For each fiscal year of its operation, the Acquiring Fund
has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and has distributed in each such
year all net investment income and realized capital gains.

(j) All issued and outstanding Acquiring Fund Shares are, and
at the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable. The Acquiring Fund does not have outstanding any options,
warrants, or other rights to subscribe for or purchase any Acquiring Fund
Shares, nor is there outstanding any security convertible into any Acquiring
Fund Shares.

(k) The execution, delivery, and performance of this Agreement
have been duly authorized by all necessary action on the part of the Acquiring
Fund, and this Agreement constitutes a valid and binding obligation of the
Acquiring Fund enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium, and other
laws relating to or affecting creditors' rights and to general equity
principles.

(l) The Acquiring Fund Shares to be issued and delivered to
the Selling Fund, for the account of the Selling Fund Shareholders, pursuant to
the terms of this Agreement will, at the Closing Date, have been duly authorized
and, when so issued and delivered, will be duly and validly issued Acquiring
Fund Shares, and will be fully paid and non-assessable.

(m) The information furnished by the Acquiring Fund for use in
no-action letters, applications for orders, registration statements, proxy
materials, and other documents that may be necessary in connection with the
transactions contemplated hereby is accurate and complete in all material
respects and complies in all material respects with federal securities and other
laws and regulations applicable thereto.

(n) The Prospectus/Proxy Statement included in the
Registration Statement (only insofar as it relates to the Acquiring Fund) does
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which such statements were made, not
misleading.

(o) The Acquiring Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1940 Act,
and such of the state Blue Sky or securities laws as it may deem appropriate in
order to continue its operations after the Closing Date.

ARTICLE V

COVENANTS OF THE ACQUIRING FUND AND THE SELLING FUND

5.1 OPERATION IN ORDINARY COURSE. The Acquiring Fund and the Selling
Fund each will operate its business in the ordinary course between the date
hereof and the Closing Date, it being understood that such ordinary course of
business will include customary dividends and distributions.

5.2 INVESTMENT REPRESENTATION. The Selling Fund covenants that the
Acquiring Fund Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof other than in accordance with the
terms of this Agreement.

5.3 APPROVAL BY SHAREHOLDERS. Evergreen Fixed Income Trust will call a
meeting of the shareholders of the Selling Fund to act upon this Agreement and
to take all other action necessary to obtain approval of the transactions
contemplated herein.

5.4 ADDITIONAL INFORMATION. The Selling Fund will assist the Acquiring
Fund in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Selling Fund shares.

5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the
Acquiring Fund and the Selling Fund will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including any actions required to be taken after the Closing Date.

5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but
in any case within sixty days after the Closing Date, the Selling Fund shall
furnish the Acquiring Fund, in such form as is reasonably satisfactory to the
Acquiring Fund, a statement of the earnings and profits of the Selling Fund for
federal income tax purposes that will be carried over by the Acquiring Fund as a
result of Section 381 of the Code, and which will be reviewed by KPMG LLP and
certified by Evergreen Fixed Income Trust's President and Treasurer.

ARTICLE VI

CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLING FUND

The obligations of the Selling Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:

6.1 All representations, covenants, and warranties of the Acquiring
Fund contained in this Agreement shall be true and correct as of the date hereof
and as of the Closing Date with the same force and effect as if made on and as
of the Closing Date, and the Acquiring Fund shall have delivered to the Selling
Fund a certificate executed in its name by a duly authorized officer of the
Trust, in form and substance reasonably satisfactory to the Selling Fund and
dated as of the Closing Date, to such effect and as to such other matters as the
Selling Fund shall reasonably request.

6.2 The Selling Fund shall have received on the Closing Date an opinion
from Sullivan & Worcester LLP, counsel to the Acquiring Fund, dated as of the
Closing Date, in a form reasonably satisfactory to the Selling Fund, covering
the following points:

(a) The Acquiring Fund is a separate investment series of a
Delaware business trust duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the power to own all of its
properties and assets and to carry on its business as presently conducted.

(b) The Acquiring Fund is a separate investment series of a
Delaware business trust registered as an investment company under the 1940 Act,
and, to such counsel's knowledge, such registration with the Commission as an
investment company under the 1940 Act is in full force and effect.

(c) This Agreement has been duly authorized, executed, and
delivered by the Acquiring Fund and, assuming due authorization, execution and
delivery of this Agreement by the Selling Fund, is a valid and binding
obligation of the Acquiring Fund enforceable against the Acquiring Fund in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights generally and to general equity principles.

(d) Assuming that a consideration therefor not less than the
net asset value thereof has been paid, the Acquiring Fund Shares to be issued
and delivered to the Selling Fund on behalf of the Selling Fund Shareholders as
provided by this Agreement are duly authorized and upon such delivery will be
legally issued and outstanding and fully paid and non-assessable, and no
shareholder of the Acquiring Fund has any preemptive rights in respect thereof.

(e) The Registration Statement, to such counsel's knowledge,
has been declared effective by the Commission and no stop order under the 1933
Act pertaining thereto has been issued, and to the knowledge of such counsel, no
consent, approval, authorization or order of any court or governmental authority
of the United States or the State of Delaware is required for consummation by
the Acquiring Fund of the transactions contemplated herein, except such as have
been obtained under the 1933 Act, the 1934 Act and the 1940 Act, and as may be
required under state securities laws.

(f) The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not, result in a
violation of the Trust's Declaration of Trust or By-Laws or any provision of any
material agreement, indenture, instrument, contract, lease or other undertaking
(in each case known to such counsel) to which the Acquiring Fund is a party or
by which it or any of its properties may be bound or to the knowledge of such
counsel, result in the acceleration of any obligation or the imposition of any
penalty, under any agreement, judgment, or decree to which the Acquiring Fund is
a party or by which it is bound.

(g) Only insofar as they relate to the Acquiring Fund, the
descriptions in the Prospectus/Proxy Statement of statutes, legal and
governmental proceedings and material contracts, if any, are accurate and fairly
present the information required to be shown.

(h) Such counsel does not know of any legal or governmental
proceedings, only insofar as they relate to the Acquiring Fund, existing on or
before the effective date of the Registration Statement or the Closing Date
required to be described in the Registration Statement or to be filed as
exhibits to the Registration Statement which are not described or filed as
required.

(i) To the knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to the Acquiring Fund or
any of its properties or assets and the Acquiring Fund is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body, which materially and adversely affects its business, other
than as previously disclosed in the Registration Statement.

Such opinion shall contain such assumptions and limitations as shall be in the
opinion of Sullivan & Worcester LLP appropriate to render the opinions expressed
therein.

In this paragraph 6.2, references to the Prospectus/Proxy Statement
include and relate to only the text of such Prospectus/Proxy Statement and not
to any exhibits or attachments thereto or to any documents incorporated by
reference therein.

ARTICLE VII

CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND

The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Selling Fund of all the obligations to be performed by it hereunder on or before
the Closing Date and, in addition thereto, the following conditions:

7.1 All representations, covenants, and warranties of the Selling Fund
contained in this Agreement shall be true and correct as of the date hereof and
as of the Closing Date with the same force and effect as if made on and as of
the Closing Date, and the Selling Fund shall have delivered to the Acquiring
Fund on the Closing Date a certificate executed in its name by a duly authorized
officer of Evergreen Fixed Income Trust, in form and substance satisfactory to
the Acquiring Fund and dated as of the Closing Date, to such effect and as to
such other matters as the Acquiring Fund shall reasonably request.

7.2 The Selling Fund shall have delivered to the Acquiring Fund a
statement of the Selling Fund's assets and liabilities, together with a list of
the Selling Fund's portfolio securities showing the tax costs of such securities
by lot and the holding periods of such securities, as of the Valuation Date,
certified by the Treasurer or Assistant Treasurer of Evergreen Fixed Income
Trust.

7.3 The Acquiring Fund shall have received on the Closing Date an
opinion of Sullivan & Worcester LLP, counsel to the Selling Fund, in a form
satisfactory to the Acquiring Fund covering the following points:

(a) The Selling Fund is a separate investment series of a
Delaware business trust duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the power to own all of its
properties and assets and to carry on its business as presently conducted.

(b) The Selling Fund is a separate investment series of a
Delaware business trust registered as an investment company under the 1940 Act,
and, to such counsel's knowledge, such registration with the Commission as an
investment company under the 1940 Act is in full force and effect.

(c) This Agreement has been duly authorized, executed and
delivered by the Selling Fund and, assuming due authorization, execution, and
delivery of this Agreement by the Acquiring Fund, is a valid and binding
obligation of the Selling Fund enforceable against the Selling Fund in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and to general equity principles.

(d) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority of the United
States or the State of Delaware is required for consummation by the Selling Fund
of the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act, and as may be required under state
securities laws.

(e) The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not, result in a
violation of Evergreen Fixed Income Trust's Declaration of Trust or By-laws, or
any provision of any material agreement, indenture, instrument, contract, lease
or other undertaking (in each case known to such counsel) to which the Selling
Fund is a party or by which it or any of its properties may be bound or, to the
knowledge of such counsel, result in the acceleration of any obligation or the
imposition of any penalty, under any agreement, judgment, or decree to which the
Selling Fund is a party or by which it is bound.

(f) Only insofar as they relate to the Selling Fund, the
descriptions in the Prospectus/Proxy Statement of statutes, legal and government
proceedings and material contracts, if any, are accurate and fairly present the
information required to be shown.

(g) Such counsel does not know of any legal or governmental
proceedings, only insofar as they relate to the Acquired Fund, existing on or
before the effective date of the Registration Statement or the Closing Date
required to be described in the Registration Statement or to be filed as
exhibits to the Registration Statement which are not described or filed as
required.

(h) To the knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to the Selling Fund or
any of its respective properties or assets and the Selling Fund is neither a
party to nor subject to the provisions of any order, decree or judgment of any
court or governmental body, which materially and adversely affects its business
other than as previously disclosed in the Prospectus/Proxy Statement.

(i) Assuming that a consideration therefor of not less than
the net asset value thereof has been paid, and assuming that such shares were
issued in accordance with the terms of the Selling Fund's registration
statement, or any amendment thereto, in effect at the time of such issuance, all
issued and outstanding shares of the Selling Fund are legally issued and fully
paid and non-assessable.

Such opinion shall contain such other assumptions and limitations as shall be in
the opinion of Sullivan & Worcester LLP appropriate to render the opinions
expressed therein.

In this paragraph 7.3, references to the Prospectus/Proxy Statement
include and relate to only the text of such Prospectus/Proxy Statement and not
to any exhibits or attachments thereto or to any documents incorporated by
reference therein.

ARTICLE VIII

FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND AND THE SELLING FUND

If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Selling Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:

8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Selling Fund in accordance with the provisions of Evergreen Fixed Income
Trust's Declaration of Trust and By-Laws and certified copies of the resolutions
evidencing such approval shall have been delivered to the Acquiring Fund.
Notwithstanding anything herein to the contrary, neither the Acquiring Fund or
the Selling Fund may waive the conditions set forth in this paragraph 8.1.

8.2 On the Closing Date, the Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, nor instituted any
proceeding seeking to enjoin the consummation of the transactions contemplated
by this Agreement under Section 25(c) of the 1940 Act and no action, suit or
other proceeding shall be threatened or pending before any court or governmental
agency in which it is sought to restrain or prohibit, or obtain damages or other
relief in connection with, this Agreement or the transactions contemplated
herein.

8.3 All required consents of other parties and all other consents,
orders, and permits of federal, state and local regulatory authorities
(including those of the Commission and of state Blue Sky securities authorities,
including any necessary "no-action" positions of and exemptive orders from such
federal and state authorities) to permit consummation of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order, or permit would not involve a risk of a material adverse
effect on the assets or properties of the Acquiring Fund or the Selling Fund,
provided that either party hereto may for itself waive any of such conditions.

8.4 No stop orders suspending the effectiveness of the Registration
Statement shall have been issued and, to the best knowledge of the parties
hereto, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the 1933 Act.

8.5 The Selling Fund shall have declared a dividend or dividends which,
together with all previous such dividends, shall have the effect of distributing
to the shareholders of the Selling Fund all of the Selling Fund's net investment
company taxable or tax-exempt income for all taxable periods ending on or prior
to the Closing Date (computed without regard to any deduction for dividends
paid) and all of its net capital gains realized in all taxable periods ending on
or prior to the Closing Date (after reduction for any capital loss
carryforward).

8.6 The parties shall have received a favorable opinion of Sullivan &
Worcester LLP addressed to the Acquiring Fund and the Selling Fund substantially
to the effect that for federal income tax purposes:

(a) The transfer of all of the Selling Fund assets in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
identified liabilities of the Selling Fund followed by the distribution of the
Acquiring Fund Shares to the Selling Fund Shareholders in dissolution and
liquidation of the Selling Fund will constitute a "reorganization" within the
meaning of Section 368(a)(1)(C) of the Code and the Acquiring Fund and the
Selling Fund will each be a "party to a reorganization" within the meaning of
Section 368(b) of the Code.

(b) No gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Selling Fund solely in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund of the identified
liabilities of the Selling Fund.

(c) No gain or loss will be recognized by the Selling Fund
upon the transfer of the Selling Fund assets to the Acquiring Fund in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
identified liabilities of the Selling Fund or upon the distribution (whether
actual or constructive) of the Acquiring Fund Shares to Selling Fund
Shareholders in exchange for their shares of the Selling Fund.

(d) No gain or loss will be recognized by the Selling Fund
Shareholders upon the exchange of their Selling Fund shares for the Acquiring
Fund Shares in liquidation of the Selling Fund.

(e) The aggregate tax basis for the Acquiring Fund Shares
received by each Selling Fund Shareholder pursuant to the Reorganization will be
the same as the aggregate tax basis of the Selling Fund shares held by such
shareholder immediately prior to the Reorganization, and the holding period of
the Acquiring Fund Shares to be received by each Selling Fund Shareholder will
include the period during which the Selling Fund shares exchanged therefor were
held by such shareholder (provided the Selling Fund shares were held as capital
assets on the date of the Reorganization).

(f) The tax basis of the Selling Fund assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the Selling
Fund immediately prior to the Reorganization, and the holding period of the
assets of the Selling Fund in the hands of the Acquiring Fund will include the
period during which those assets were held by the Selling Fund.

Notwithstanding anything herein to the contrary, neither the Acquiring
Fund nor the Selling Fund may waive the conditions set forth in this paragraph
8.6.

8.7 The Acquiring Fund shall have received from KPMG LLP a letter
addressed to the Acquiring Fund, in form and substance satisfactory to the
Acquiring Fund, to the effect that:

(a) they are independent certified public accountants with
respect to the Selling Fund within the meaning of the 1933 Act and the
applicable published rules and regulations thereunder;

(b) on the basis of limited procedures agreed upon by the
Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the Capitalization Table
appearing in the Registration Statement and Prospectus/Proxy Statement has been
obtained from and is consistent with the accounting records of the Selling Fund;

(c) on the basis of limited procedures agreed upon by the
Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the pro forma financial
statements that are included in the Registration Statement and Prospectus/Proxy
Statement agree to the underlying accounting records of the Acquiring Fund and
the Selling Fund or with written estimates provided by each Fund's management,
and were found to be mathematically correct; and

(d) on the basis of limited procedures agreed upon by the
Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the data utilized in the
calculations of the pro forma expense ratios appearing in the Registration
Statement and Prospectus/Proxy Statement agree with underlying accounting
records of the Selling Fund or with written estimates by the Selling Fund's
management and were found to be mathematically correct.

In addition, unless waived by the Acquiring Fund, the Acquiring Fund
shall have received from KPMG LLP a letter addressed to the Acquiring Fund dated
on the Closing Date, in form and substance satisfactory to the Acquiring Fund,
to the effect that on the basis of limited procedures agreed upon by the
Acquiring Fund (but not an examination in accordance with generally accepted
auditing standards), the net asset value per share of the Selling Fund as of the
Valuation Date was computed and the valuation of the portfolio was consistent
with the valuation practices of the Acquiring Fund.

8.8 The Selling Fund shall have received from KPMG LLP a letter
addressed to the Selling Fund, in form and substance satisfactory to the Selling
Fund, to the effect that:

(a) they are independent certified public accountants with
respect to the Acquiring Fund within the meaning of the 1933 Act and the
applicable published rules and regulations thereunder;

(b) they had performed limited procedures agreed upon by the
Selling Fund and described in such letter (but not an examination in accordance
with generally accepted auditing standards) which consisted of a reading of any
unaudited pro forma financial statements included in the Registration Statement
and Prospectus\Proxy Statement, and making inquiries of appropriate officials of
the Trust responsible for financial and accounting matters whether such
unaudited pro forma financial statements comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act and the
published rules and regulations thereunder;

(c) on the basis of limited procedures agreed upon by the
Selling Fund and described in such letter (but not an examination in accordance
with generally accepted auditing standards), the Capitalization Table appearing
in the Registration Statement and Prospectus/Proxy Statement has been obtained
from and is consistent with the accounting records of the Acquiring Fund; and

(d) on the basis of limited procedures agreed upon by the
Selling Fund (but not an examination in accordance with generally accepted
auditing standards), the data utilized in the calculations of the pro forma
expense ratios appearing in the Registration Statement and Prospectus/Proxy
Statement agree with written estimates by each Fund's management and were found
to be mathematically correct.

ARTICLE IX

EXPENSES

9.1 Except as otherwise provided for herein, all expenses of the
transactions contemplated by this Agreement incurred by the Selling Fund and the
Acquiring Fund, whether incurred before or after the date of this Agreement,
will be borne by First Union National Bank. Such expenses include, without
limitation, (a) expenses incurred in connection with the entering into and the
carrying out of the provisions of this Agreement; (b) expenses associated with
the preparation and filing of the Registration Statement under the 1933 Act
covering the Acquiring Fund Shares to be issued pursuant to the provisions of
this Agreement; (c) registration or qualification fees and expenses of preparing
and filing such forms as are necessary under applicable state securities laws to
qualify the Acquiring Fund Shares to be issued in connection herewith in each
state in which the Selling Fund Shareholders are resident as of the date of the
mailing of the Prospectus/Proxy Statement to such shareholders; (d) postage; (e)
printing; (f) accounting fees; (g) legal fees; and (h) solicitation costs of the
transaction. Notwithstanding the foregoing, the Acquiring Fund shall pay its own
federal and state registration fees.

ARTICLE X

ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES

10.1 The Acquiring Fund and the Selling Fund agree that neither party
has made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.

10.2 The representations, warranties, and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall not survive the consummation of the transactions contemplated hereunder.

ARTICLE XI

TERMINATION

11.1 This Agreement may be terminated by the mutual agreement of the
Acquiring Fund and the Selling Fund. In addition, either the Acquiring Fund or
the Selling Fund may at its option terminate this Agreement at or prior to the
Closing Date because:

(a) of a breach by the other of any representation, warranty,
or agreement contained herein to be performed at or prior to the Closing Date,
if not cured within 30 days; or

(b) a condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.

11.2 In the event of any such termination, in the absence of willful
default, there shall be no liability for damages on the part of either the
Acquiring Fund, the Selling Fund, the Trust, Evergreen Fixed Income Trust, the
respective Trustees or officers, to the other party, but each shall bear the
expenses incurred by it incidental to the preparation and carrying out of this
Agreement as provided in paragraph 9.1.

ARTICLE XII

AMENDMENTS

12.1 This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
the Selling Fund and the Acquiring Fund; provided, however, that no such
amendment may have the effect of changing the provisions for determining the
number of the Acquiring Fund Shares to be issued to the Selling Fund
Shareholders under this Agreement to the detriment of such Shareholders without
their further approval.

ARTICLE XIII

HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY

13.1 The Article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

13.2 This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original.

13.3 This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to the conflicts
of laws provisions thereof.

13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but, except as provided in
this paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.

13.5 It is expressly agreed that the obligations of the Acquiring Fund
and the Selling Fund hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents, or employees of the Trust and
Evergreen Fixed Income Trust personally, but shall bind only the trust property
of the Acquiring Fund and of the Selling Fund, as provided in the Declarations
of Trust of the Trust and Evergreen Fixed Income Trust. The execution and
delivery of this Agreement have been authorized by the Trustees of the Trust and
Evergreen Fixed Income Trust on behalf of the Acquiring Fund and the Selling
Fund and signed by authorized officers of the Trust and Evergreen Fixed Income
Trust, acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officers shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Acquiring Fund and of the Selling Fund
as provided in the Declarations of Trust of the Trust and Evergreen Fixed Income
Trust.

IN WITNESS WHEREOF, the parties have duly executed this Agreement, all
as of the date first written above.

EVERGREEN SELECT FIXED INCOME TRUST ON BEHALF
OF EVERGREEN SELECT ADJUSTABLE RATE FUND

By: /s/ William M. Ennis
---------------------------------
Name: William M. Ennis
Title: President

EVERGREEN FIXED INCOME TRUST ON BEHALF OF
EVERGREEN CAPITAL PRESERVATION AND INCOME FUND

By: /s/ Carol Kosel
-----------------------------------
Name: Carol Kosel
Title: Treasurer

<PAGE>

EXHIBIT B

EVERGREEN
Select Adjustable Rate Fund
Fund at a Glance as of September 30, 1999

PORTFOLIO PROFILE

Philosophy

Evergreen Select Adjustable Rate Fund seeks a high level of current income
consistent with low volatility of principal.

Process

Portfolio management emphasizes non-convertible, one-year CMT-indexed ARMS to
achieve coupon sensitivity to changing interest rates. A series of laddered
maturities help to ensure a gradual response to changing interest rates.

Benchmark

6-month Treasury Bill

PERFORMANCE AND RETURNS/1/

Portfolio Inception Date: 10/1/1991 Class I Class IS
Class Inception Date 10/1/1991 5/23/1994
Average Annual Returns
1 year 4.98% 4.73%
3 years 6.02% 5.76%
5 years 6.36% 6.31%
Since Portfolio Inception 5.50% 5.42%
30-day SEC Yield 5.72% 5.44%
12-month income dividends per share $0.59 $0.56

LONG TERM GROWTH

[CHART]

Consumer Price Evergreen Select
Index - US 6 Month T-Bill Adj Rate I

31-Oct-91 1,000,000 1,000,000 1,000,000
30-Sep-92 1,028,384 1,036,120 1,045,304
30-Sep-93 1,056,048 1,068,073 1,103,112
30-Sep-94 1,087,337 1,107,585 1,118,836
30-Sep-95 1,115,001 1,170,600 1,195,658
30-Sep-96 1,148,480 1,232,957 1,277,701
30-Sep-97 1,173,225 1,297,626 1,374,335
30-Sep-98 1,190,693 1,365,342 1,450,406
30-Sep-99 1,219,077 1,428,629 1,522,677

Comparison of a $1,000,000 investment in Evergreen Select Adjustable Rate Fund,
Class I shares/1/, versus a similar investment in the 6-month Treasury Bill (6
mo. T-Bill), and the Consumer Price Index (CPI).

The 6-month Treasury Bill does not include transaction costs associated with
buying and selling securities nor any management fees. The CPI is a commonly
used measure of inflation and does not represent an investment return. It is not
possible to invest directly in an index.

/1/ Past performance is no guarantee of future results. The performance of each
class may vary based on differences in loads and fees paid by the shareholders
investing in each class. The investment return and principal value will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than original cost. Historical performance shown for Class IS prior to its
inception is based on the performance of Class I and has not been adjusted to
reflect the effect of the 0.25% 12b-1 fee applicable to Class IS. Class I pays
no 12b-1 fee. If these fees had been reflected, returns would have been lower.

EVERGREEN
Select Adjustable Rate Fund
Portfolio Manager Commentary

Portfolio Management

[PHOTO]
Gary Pzegeo

Performance

For the twelve-month period ended September 30, 1999, the Evergreen Select
Adjustable Rate Fund produced strong performance. The Fund's Class I Shares
returned 4.98% outperforming the 3.49% average return generated by the Fund's
benchmark, the 6-month T-Bill for the period ended September 30, 1999. The
return on the Fund's Class I shares was higher than the returns on 92% of the
funds in the Lipper Adjustable Rate Mortgage category, and the return on the
Fund's Class IS Shares was higher than the returns on 83% of the funds listed in
the Lipper Adjustable Rate Mortgage category. Select Adjustable Rate Fund also
ranked Number 3 out of 25 funds for Class I Shares in the Morningstar Short-Term
Government Fund category for the twelve-month period ended September 30, 1999.
Lipper, Inc. and Morningstar, Inc. are independent monitors of mutual fund
performance.

We attribute the Fund's strong performance to maintaining a high quality
portfolio composed of Treasury and agency securities and to our strategy of
preserving income by emphasizing seasoned, conventional, one-year constant
maturity Treasury ARMs. As interest rates rose during the twelve months, the
one-year ARMs in the portfolio provided a steady stream of income to the Fund.

Portfolio
Characteristics
---------------

Total Net Assets $56,232,431
Average Credit Quality AAA
Effective Maturity 4.8 years
Average Duration 1.1 years

Environment

The investment environment changed significantly during the twelve months. At
the beginning of the period, interest rates were relatively low, as U.S.
fixed-income markets continued to be affected by the economic and financial
crises that had occurred in Asia, Latin America and Russia. Concerns that
turmoil overseas would significantly slow the U.S. economy prompted the Federal
Reserve Board to make three 0.25% interest-rate cuts between September and
November 1998. The Federal Reserve's action of lowering interest rates made it
attractive for property owners to refinance or prepay their mortgages, and this
resulted in lower than anticipated returns for mortgage-backed securities, such
as adjustable-rate mortgages.

As the year progressed, however, concerns about a slowdown in the U.S. economy
dissipated. Economic growth remained strong throughout the period, giving way to
concerns about accelerating inflation. While inflation remained at a relatively
low level, the Federal Reserve Board took a pre-emptive stance against inflation
and raised interest rates 0.25% in June and August 1999. Higher interest rates
were positive for the Fund, because as rates rose, mortgage refinancing and
prepayment activity declined. In addition, as interest rates reset on the ARMs
in the portfolio, they did so at higher rates, producing added income for the
Fund.

EVERGREEN
Select Adjustable Rate Fund
Portfolio Manager Commentary

PORTFOLIO COMPOSITION
(based on 9/30/1999 net assets)

[PIE CHART]

. ARMS -- 73.3%
. U.S. Treasuries/Government Agency Notes/Bonds -- 13.2%
. Fixed-rate Mortgage-Backed Securities -- 7.0%
. Repurchase Agreements -- 6.3%
. Other Assets and Liabilities, net -- 0.2%

Strategy

During the twelve-month period, we kept the asset allocation in the Fund
relatively steady. In September 1998, ARMs accounted for about 76% of assets,
and in September 1999 they composed about 73% of the Fund. Most of that decline
came from one-year, conventional, constant maturity Treasury ARMs. Rising
interest rates affected the ARMs market in a couple of ways. First, they slowed
the market. As a result, home buying decelerated and fewer mortgages were
securitized by banks. This caused a decline in the supply of ARMs. At the same
time, there was constant prepayment activity. Prepayment activity slows when
interest rates rise, but it still goes on at a fairly steady pace. Even though
prepayments have dropped quite a bit from late 1998, they are still running at a
rate that is gradually reducing the Fund's existing holdings.

The fixed-rate position in the portfolio increased slightly as we invested new
money and the cash we received from ARMs prepayments. As yields rose, fixed-rate
securities became more attractively priced. At the end of the period, fixed-rate
securities, which included Treasury, government agency and mortgage-backed
securities, accounted for 20.2% of Fund assets.

We also increased the Fund's allocation to hybrid mortgages by about 2.5%. A
relatively large portion of new mortgages are hybrids. As a result, there was
ample supply and prices were attractive. With a hybrid mortgage, the interest
rate is fixed for a number of years before converting to an adjustable-rate
mortgage. For example with a 3/1 hybrid mortgage, the interest rate would be
fixed for three years, and at the end of that period the mortgage would convert
to a one year adjustable-rate mortgage. Hybrid mortgages benefit the Fund,
because they provide a predictable and attractive amount of income for a certain
period of time.

Outlook

Weakness in the housing and consumer sectors of the economy may indicate a
deceleration in economic growth. If this is the case, we believe the Fed may not
have to raise rates much further to keep the economy on a sustainable low
inflation pace of growth. Going forward, we believe the fixed-income markets
will most likely trade in a range of about 6.00% to 6.50% for the 30-year
Treasury bond and that range should continue to slow the economy. When rates are
at the lower end of the range, we intend to seek constant maturity Treasury ARMs
for the portfolio. As rates move to the higher end of the range, we anticipate
increasing the Fund's fixed-rate and hybrid positions.

<PAGE>

EVERGREEN SELECT FIXED INCOME TRUST

PART B

STATEMENT OF ADDITIONAL INFORMATION

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

Acquisition of Assets of

EVERGREEN CAPITAL PRESERVATION AND INCOME FUND

a Series of

EVERGREEN FIXED INCOME TRUST
200 Berkeley Street
Boston, Massachusetts 02116
(800) 343-2898

By and In Exchange For Shares of

EVERGREEN SELECT ADJUSTABLE RATE FUND

a Series of

EVERGREEN SELECT FIXED INCOME TRUST
200 Berkeley Street
Boston, Massachusetts 02116
(800) 343-2898

This Statement of Additional Information, relating specifically to the
proposed transfer of the assets and liabilities of Evergreen Capital
Preservation and Income Fund ("Capital Preservation and Income Fund"), a series
of Evergreen Fixed Income Trust, to Evergreen Select Adjustable Rate Fund
("Select Adjustable Rate Fund"), a series of Evergreen Select Fixed Income
Trust, in exchange for Class A, Class B and Class C shares (to be issued to
holders of Class A, Class B and Class C shares, respectively, of Capital
Preservation and Income Fund,) of beneficial interest, $.001 par value per
share, of Select Adjustable Rate Fund, consists of this cover page and the
following described documents, each of which is attached hereto and incorporated
by reference herein:

(1) The Statement of Additional Information of Select Adjustable Rate Fund
dated February 1, 2000;

(2) The Statement of Additional Information of Capital Preservation and
Income Fund dated November 1, 1999;

(3) Annual Report of Select Adjustable Rate Fund for the year ended
September 30, 1999;

(4) Annual Report of Capital Preservation and Income Fund for the year
ended June 30, 1999;

(5) Semi-Annual Report of Capital Preservation and Income Fund for the
six-month period ended December 31, 1999; and

(6) Pro Forma Financial Statements for September 30, 1999.

This Statement of Additional Information, which is not a prospectus,
supplements, and should be read in conjunction with, the Prospectus/Proxy
Statement of Capital Preservation and Income Fund and Select Adjustable Rate
Fund dated May 26, 2000. A copy of the Prospectus/Proxy Statement may be
obtained without charge by calling or writing to Evergreen Fixed Income Trust at
the telephone numbers or addresses set forth above.

The date of this Statement of Additional Information is May 26, 2000.

<PAGE>

EVERGREEN SELECT FIXED INCOME TRUST

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

STATEMENT OF ADDITIONAL INFORMATION

February 1, 2000

Evergreen Select Adjustable Rate Fund ("Adjustable Rate Fund")
Evergreen Select Core Bond Fund ("Core Bond Fund")
Evergreen Select Fixed Income Fund ("Fixed Income Fund")
Evergreen Select High Yield Bond Fund ("High Yield Fund")
Evergreen Select Income Plus Fund ("Income Plus Fund")
Evergreen Select Intermediate Term Municipal
Bond Fund ("Intermediate Bond Fund")
Evergreen Select International Bond Fund ("International Bond Fund")
Evergreen Select Limited Duration Fund ("Limited Duration Fund")
Evergreen Select Total Return Bond Fund ("Total Return 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 prospectus dated February 1, 2000 for the Fund
in which you are interested. The Funds are offered through a prospectus offering
Institutional and Institutional Service shares of each Fund. The information in
Part 1 of this SAI is specific information about the Funds described in the
prospectus. The information in Part 2 of this SAI contains more general
information that may or may not apply to the Fund or Class of shares in which
you are interested. You may obtain the prospectus without charge by calling
(800) 343-2898.

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

o:/esfit/n-1a/sai-2'1'2000.doc

<PAGE>

TABLE OF CONTENTS

PART 1

TRUST HISTORY...............................................................1-1
INVESTMENT POLICIES.........................................................1-1
OTHER SECURITIES AND PRACTICES..............................................1-3
PRINCIPAL HOLDERS OF FUND SHARES............................................1-3
EXPENSES....................................................................1-6
PERFORMANCE................................................................1-10
SERVICE PROVIDERS..........................................................1-11
FINANCIAL STATEMENTS.......................................................1-12

PART 2

ADDITIONAL INFORMATION ON SECURITIES AND INVESTMENT PRACTICES...............2-1
PURCHASE AND REDEMPTION OF SHARES..........................................2-17
SALES CHARGE WAIVERS AND REDUCTIONS........................................2-19
PRICING OF SHARES..........................................................2-22
PERFORMANCE CALCULATIONS...................................................2-23
PRINCIPAL UNDERWRITER......................................................2-25
DISTRIBUTION EXPENSES UNDER RULE 12b-1.....................................2-26
TAX INFORMATION............................................................2-28
BROKERAGE..................................................................2-31
ORGANIZATION...............................................................2-32
INVESTMENT ADVISORY AGREEMENT..............................................2-34
MANAGEMENT OF THE TRUST....................................................2-35
CORPORATE AND MUNICIPAL BOND RATINGS.......................................2-38
ADDITIONAL INFORMATION.....................................................2-49

<PAGE>

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. Each Fund is a diversified series of Evergreen Select Fixed
Income Trust. A copy of the Declaration of Trust is on file as an exhibit to the
Trust's Registration Statement, of which this SAI is a part.

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.

9. Investment in Federally Tax Exempt Securities

Intermediate Bond Fund will, during periods of normal market
conditions, invest its assets in accordance with applicable guidelines issued by
the Securities and Exchange Commission or its staff concerning investment in
tax-exempt securities for funds with the words "tax-exempt," "tax free" or
"municipal" in their names.

OTHER SECURITIES AND PRACTICES

Listed below are securities and investment practices the Funds may use
in addition to those discussed in the prospectus. See Additional Information on
Securities and Investment Practices in Part 2 of this SAI for further
information on these particular investment practices. The information below
applies to all Funds unless otherwise noted.
<TABLE>
<CAPTION>
<S> <C>
Money Market Instruments Illiquid and Restricted Securities
U.S. Government Securities Investment in Other Investment Companies
When-Issued, Delayed-Delivery and Forward Municipal Bonds (Fixed Income Fund, Income Plus Fund,
Commitment Transactions Intermediate Bond Fund and Limited Duration Fund only)
Repurchase Agreements Virgin Islands, Guam and Puerto Rico
Reverse Repurchase Agreements (Intermediate Bond Fund only)
Dollar Roll Transactions Master Demand Notes
Convertible Securities
Swaps, Caps, Floors and Collars Brady Bonds
Options (excluding Core Bond Fund) Obligations of Foreign Branches of U.S. Banks
Futures Transactions (excluding Core Bond Fund) Obligations of U.S. Branches of Foreign Banks
Foreign Securities (excluding Adjustable Rate Fund, Payment-In-Kind Securities (PIKs)
Core Bond Fund, High Yield Fund, and Zero Coupon "Stripped" Bonds
Intermediate Bond Fund) Mortgage-Backed and Asset-Backed Securities
Foreign Currency (excluding Adjustable Rate Fund, Variable or Floating Rate Instruments
Core Bond Fund, High Yield Fund, and Intermediate
Bond Fund)
High Yield, High Risk Bonds (excluding
Adjustable Rate Fund, Core Bond Fund,
and Limited Duration Fund)
</TABLE>

PRINCIPAL HOLDERS OF FUND SHARES

As of December 31, 1999, 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 December 31, 1999.

--------------------------------------------------------------------------
Adjustable Rate Fund
Institutional Class
--------------------------------------------------------------------------
----------------------------------------------------- --------------------
Ampex Retirement Master Trust
P.O. box 1992 75.519%
Boston, MA 02105-1992
----------------------------------------------------- --------------------
----------------------------------------------------- --------------------
First Union national Bank/EB/INT
Reinvest Account 23.502%
Attn: Trust Operations Funds Group
401 S. Tryon Street, 3rd Floor - CMG 1151
Charlotte, NC 20105-1992
----------------------------------------------------- --------------------
--------------------------------------------------------------------------
Adjustable Rate Fund
Institutional Service Class
--------------------------------------------------------------------------
----------------------------------------------------- --------------------
MLPF&S for the sole benefit of its Customers
Attn: Fund Administration #97P31 24.551%
4800 Deer Lake Drive E, 2nd Floor
Jacksonville, FL 32246-6484
----------------------------------------------------- --------------------
----------------------------------------------------- --------------------
Star Telephone Membership Corp
Milton R. Tew, Exec 16.548%
P.O. Box 348
3900 N. US 421 Hwy
Clinton, NC 28239-0348
----------------------------------------------------- --------------------
----------------------------------------------------- --------------------
Union Pacific RR-UTU Crew Consist
GO569 - Pool 090 2000 14.360%
Michael Errico, Manager - Payroll Account
1416 Dodge Street, MC7080
Omaha, NE 68179-0001
----------------------------------------------------- --------------------
----------------------------------------------------- --------------------
Union Pacific RR-UTU Crew Consist
GO577 - Pool 088 2000 7.871%
Michael Errico, Manager - Payroll Account
1416 Dodge Street, MC7080
Omaha, NE 68179-0001
----------------------------------------------------- --------------------
--------------------------------------------------------------------------
Core Bond Fund
Institutional Class
----------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Cash Account 81.543%
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor - CMG 1151
Charlotte, NC 28202-1911
----------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Trust Accounts 10.00%
Attn: Ginny Batten
11th Floor - CMG 1151
301 S. Tryon Street
Charlotte, NC 28202-1915
--------------------------------------------------------------------------
Core Bond Fund
Institutional Service Class
----------------------------------------------------- --------------------
First Union National Bank
Trust Accounts 24.431%
Attn: Ginny Batten CMG 1151-2
401 S. Tryon Street, 3rd Floor
Charlotte, NC 28202-1911
----------------------------------------------------- --------------------
----------------------------------------------------- --------------------
The Virginia United Methodist
Conference Church 21.821%
Fixed Income Account
P.O. Box 11367
Richmond, VA 23230-1367
----------------------------------------------------- --------------------
----------------------------------------------------- --------------------
SP Foundation
250 Pennsylvania Avenue 20.369%
Glen Ellyn, IL 60137
----------------------------------------------------- --------------------
----------------------------------------------------- --------------------
First Union National Bank
Trust Accounts 19.023%
Attn: Ginny Batten
11th Floor - CMG 1151
301 S. Tryon Street
Charlotte, NC 28202-1915
----------------------------------------------------- --------------------
----------------------------------------------------- --------------------
The Virginia United Methodist
Conference Agencies & 5.648%
Affiliated Organizations
P.O. Box 11367
Richmond, VA 23230-1367
----------------------------------------------------- --------------------
----------------------------------------------------- --------------------
SP Ministries
250 Pennsylvania Avenue 5.431%
Glen Ellyn, IL 60137
----------------------------------------------------- --------------------
--------------------------------------------------------------------------
Fixed Income Fund
Institutional Class
----------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Cash Account 81.906%
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor - CMG 1151
Charlotte, NC 28202-1911
----------------------------------------------------- --------------------
----------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Reinvest Account 17.703%
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor - CMG 1151
Charlotte, NC 28202-1911
--------------------------------------------------------------------------
Fixed Income Fund
Institutional Service Class
--------------------------------------------------------------------------
----------------------------------------------------- --------------------
Reliance Trust Co. for Trust Co. of S
FBO Wade H. Stephens Jr. Trust Under Will 7.177%
A/C 1715002411
PO Box 48449
Atlanta, GA 30362-1449
----------------------------------------------------- --------------------
--------------------------------------------------------------------------
High Yield Fund
Institutional Class
--------------------------------------------------------------------------
----------------------------------------------------- --------------------
First Tennessee Bank
FBO City of Memphis 32.325%
A/C# 010017000754
6802 Paragon Place #200
Richmond, VA 23230-1655
----------------------------------------------------- --------------------
----------------------------------------------------- --------------------
State Street Bank as Trustee
FBO Ascension Health 20.201%
A/C# DR2D
c/o Tattersall Advisory Group
6802 Paragon Place #200
Richmond, VA 23230-1655
----------------------------------------------------- --------------------

----------------------------------------------------- --------------------
Mac & Co.
FBO Bayer Corp. Master Trust 16.163%
A/C# BAYF8525572
c/o Tattersall Advisory Corp.
6802 Paragon Place #200
Richmond, VA 23230-1655
----------------------------------------------------- --------------------
----------------------------------------------------- --------------------
First Union National Bank
FBO Rockwood Casualty Insurance 5.392%
A/C# 5028491574
c/o Tattersall Advisory Corp.
6802 Paragon Place #200
Richmond, VA 23230-1655
----------------------------------------------------- --------------------
--------------------------------------------------------------------------
High Yield Fund
Institutional Service Class
--------------------------------------------------------------------------
----------------------------------------------------- --------------------
None

----------------------------------------------------- --------------------
--------------------------------------------------------------------------
Income Plus Fund
Institutional Class
--------------------------------------------------------------------------
First Union National Bank BK/EB/INT
Cash Account 94.538%
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor - CMG 1151
Charlotte, NC 28202-1911
----------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Reinvest Account 5.263%
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor - CMG 1151
Charlotte, NC 28202-1911
--------------------------------------------------------------------------
Income Plus Fund
Institutional Service Class
----------------------------------------------------- --------------------
None
----------------------------------------------------- --------------------

--------------------------------------------------------------------------
Intermediate Bond Fund
Institutional Class
----------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Cash Account 99.618%
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor - CMG 1151
Charlotte, NC 28202-1911
--------------------------------------------------------------------------
Intermediate Bond Fund
Institutional Service Class
--------------------------------------------------------------------------
----------------------------------------------------- --------------------
First Union National Bank
Trust Accounts 14.241%
Attn: Ginny Batten CMG-1151-2
401 S. Tryon Street, 3rd Floor
Charlotte, NC 28202-1915
----------------------------------------------------- --------------------
----------------------------------------------------- --------------------
First Clearing Corp.
FBO Stella Boczar 7.424%
A/C 16089470
201 S. College Street
Charlotte, NC 28202-1167
----------------------------------------------------- --------------------
--------------------------------------------------------------------------
International Bond Fund
Institutional Class
----------------------------------------------------- --------------------
First Union National Bank
Reinvest Account 71.471%
Attn: Trust Operations Fund Group
3rd Floor - CMG 1151
401 S. Tryon Street
Charlotte, NC 28202-1915
----------------------------------------------------- --------------------
Post & Co.
350302 15.745%
The Bank of New York
Mutual Fund/Reorg Dept
P.O. Box 1066 Wall Street Station
New York, NY 10258
----------------------------------------------------- --------------------
----------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Cash Account 12.784%
Attn: Trust Operations Fund Group
401 S Tryon Street, 3rd Floor - CMG 1151
Charlotte, NC 28202-1911
----------------------------------------------------- --------------------
International Bond Fund
Institutional Service Class
-------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Reinvest Accounts 28.855%
Attn: Trust Operations Fund Group
3rd Floor - CMG 1151
401 S. Tryon Street
Charlotte, NC 28202-1915
-------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Cash Account 26.838%
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor - CMG 1151
Charlotte, NC 28202-1911
-------------------------------------------------- --------------------
Fleet National Bank
FBO Alexander H. Macisaac 17.936%
IRA Rollover
A/C# 00033195620
PO Box 92800
Rochester, NY 14692-8900
-------------------------------------------------- --------------------
-------------------------------------------------- --------------------
Dean Witter Reynolds Inc.
Attn: IRA Receive Dept. 6.035%
FBO Lois R. Bransfield
PO Box 290
Church Street Station
New York, NY 10008-0290
-------------------------------------------------- --------------------

-----------------------------------------------------------------------
Limited Duration Fund
Institutional Class
-------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Cash Account 87.517%
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor - CMG 1151
Charlotte, NC 28202-1911
-------------------------------------------------- --------------------
-------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Reinvest Account 12.483%
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor - CMG 1151
Charlotte, NC 28202-1911
-------------------------------------------------- --------------------
-----------------------------------------------------------------------
Limited Duration Fund
Institutional Service Class
-------------------------------------------------- --------------------
First Clearing Coporation
A/C 6020-9716 33.450%
Northern Virginia Electric Co-Op
Attn: Wilbur Rollins
PO Box 2710, VA 20108-0875
-------------------------------------------------- --------------------
-------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Reinvest Account 32.978%
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor - CMG 1151
Charlotte, NC 28202-1911
-------------------------------------------------- --------------------
-------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Reinvest Account 14.126%
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor - CMG 1151
Charlotte, NC 28202-1911
-------------------------------------------------- --------------------
-------------------------------------------------- --------------------
State Street Bank & Trust Co.
Cust for the Rollover IRA of 5.553%
Frank L. Caiola
321 Evergreen Drive
North Wales, PA 19454-2701
-------------------------------------------------- --------------------
-----------------------------------------------------------------------
Total Return Bond Fund
Institutional Class
-------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Reinvest Account 78.942%
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor - CMG 1151
Charlotte, NC 28202-1911
-------------------------------------------------- --------------------
-------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Cash Account 21.058%
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor - CMG 1151
Charlotte, NC 28202-1911
-------------------------------------------------- --------------------
-----------------------------------------------------------------------
Total Return Bond Fund
Institutional Class
-------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Reinvest Accounts 78.942%
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor, CMG - 1151
Charlotte, NC 28202-1915
-------------------------------------------------- --------------------
-------------------------------------------------- --------------------
First Union National Bank BK/EB/INT
Cash Account 21.058%
Attn: Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor, CMG-1151
Charlotte, NC 28202-1911
-------------------------------------------------- --------------------
-----------------------------------------------------------------------
Total Return Bond Fund
Institutional Service Class
-------------------------------------------------- --------------------
First Union National Bank
Trust Accounts 97.641%
Attn: Ginny Batten
CMG - 1151, 11th Floor
301 S. Tryon Street
Charlotte, NC 28202-1915
-------------------------------------------------- --------------------

EXPENSES

Advisory Fees

Each Fund has its own investment advisor. (For more information, see
Investment Advisory Agreements in Part 2 of this SAI.)

Tattersal Advisory Group, Inc. (TAG) is the investment advisor to Core
Bond Fund. TAG is entitled to receive from Core Bond Fund an annual fee equal to
0.32% of the Fund's average net assets.

First Capital Group (FCG), a division of First Union National Bank
(FUNB), is the investment advisor to Fixed Income Fund, Income Plus Fund,
Limited Duration Fund and Total Return Bond Fund. FCG is entitled to receive
from each of these Funds an annual fee based on a percentage of the Fund's
average net assets, as follows:

--------------------------------- ------------------
Fixed Income Fund 0.42%
--------------------------------- ------------------
--------------------------------- ------------------
Income Plus Fund 0.42%
--------------------------------- ------------------
--------------------------------- ------------------
Limited Duration Fund 0.22%
--------------------------------- ------------------
--------------------------------- ------------------
Total Return Bond Fund 0.32%
--------------------------------- ------------------

First Investment Advisors (First Investment), a division of FUNB, is
the investment advisor to Intermediate Bond Fund. First Investment is entitled
to receive from the Fund an annual fee equal to 0.52% of the average net assets
of the Fund.

Evergreen Investment Management Company (EIMC) is the investment
advisor to Adjustable Rate Fund. EIMC is entitled to receive from Adjustable
Rate Fund an annual fee equal to 0.21% of the average net assets of the Fund.

EIMC is also the investment advisor to High Yield Fund. EIMC is
entitled to receive from High Yield Fund an annual fee equal to 0.50% of the
average net assets of the Fund.

First International Advisers, Ltd. (First International), formerly
AnalyticoTSA International, Inc., is the investment advisor to International
Bond Fund. FIA is entitled to receive from International Bond Fund an annual fee
equal to 0.52% of the Fund's average net assets.

First International is also the sub-advisor to Total Return Bond Fund
and is paid by FCG, the investment advisor to the Fund, at a rate equal to 0.60%
of the average daily net assets of the portion of the Fund which First
International manages.

Advisory Fees Paid

Below are the advisory fees paid by each Fund for the fiscal periods
ended September 30, 1999 and 1998 and when applicable for fiscal period ended in
1997.
<TABLE>
<CAPTION>
----------------------------------------------- -------------------- ----------------------------------
Fiscal Period/Fund Advisory Fee Waiver
----------------------------------------------- -------------------- ----------------------------------
-------------------------------------------------------------------------------------------------------
Period Ended 1999
-------------------------------------------------------------------------------------------------------
----------------------------------------------- -------------------- ----------------------------------
<S> <C> <C>
Adjustable Rate Fund $109,172 $64,702
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
Core Bond Fund(1) $1,341,265 $318,098
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
Core Bond Fund(2) $418,525 $23,693
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
Fixed Income Fund $3,103,125 $620,625
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
High Yield Fund N/A N/A
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
Income Plus Fund $7,268,470 $1,453,694
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
Intermediate Bond Fund $4,398,704 $733,117
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
International Bond Fund $287,115 $122,058
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
Limited Duration Fund $416,391 $274,975
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
Total Return Bond Fund $580,306 53,477
----------------------------------------------- -------------------- ----------------------------------
-------------------------------------------------------------------------------------------------------
Period Ended 1998
-------------------------------------------------------------------------------------------------------
----------------------------------------------- -------------------- ----------------------------------
Adjustable Rate Fund(3) $61,312 $0
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
Adjustable Rate Fund(4) $137,489 $0
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
Core Bond Fund(5) $326,338 $16,111
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
Fixed Income Fund(5) $2,219,526 $504,930
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
Income Plus Fund(5) $5,151,727 $1,033,751
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
Intermediate Bond Fund(5) $3,831,537 $639,284
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
International Bond Fund(6) $60,189 $45,948
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
International Bond Fund(7) $221,000 $36,000
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
Limited Duration Fund(5) $154,868 $152,769
----------------------------------------------- -------------------- ----------------------------------
----------------------------------------------- -------------------- ----------------------------------
Total Return Bond Fund(8) $209,962 $135,770
----------------------------------------------- -------------------- ----------------------------------
</TABLE>
1. Six months ended September 30, 1999. The Fund changed its fiscal year
end from March 31 to September 30, effective September 30, 1999.
2. Fiscal year ended March 31, 1999.
3. Seven months ended September 30, 1998. The Fund changed its fiscal year
end from the last day of February to September 30, effective September
30, 1998.
4. Fiscal year ended February 28, 1998.
5. Fiscal year ended March 31, 1998.
6. Three months ended September 30, 1998. The Fund changed its fiscal year
end from June 30 to September 30, effective September 30, 1998.
7. Fiscal year ended June 30, 1998.
8. The Fund commenced investment operations on April 20, 1998.

--------------------------------------- --------------------- ------------
Fiscal Period/Fund Advisory Fee Waiver
--------------------------------------- --------------------- ------------
--------------------------------------------------------------------------
Period Ended 1997
--------------------------------------------------------------------------
--------------------------------------- --------------------- ------------
Adjustable Rate Fund(1) $101,412 $0
--------------------------------------- --------------------- ------------
--------------------------------------- --------------------- ------------
International Bond Fund(2) $207,000 $32,160
--------------------------------------- --------------------- ------------
1. Five months ended February 28, 1997. The Fund changed its fiscal year
end from September 30 to the last day of February, effective
February 28, 1997.
2. Predecessor fund information for the period ended June 30, 1997.

Portfolio Turnover

The Funds generally do not take portfolio turnover into account in
making investment decisions. This means the Funds could experience a high rate
of portfolio turnover (100% or more) in any given fiscal year, resulting in
greater brokerage and other transaction costs which are borne by the Funds and
their shareholders. It may also result in the Funds realizing greater net
short-term capital gains, distributions from which are taxable to shareholders
as ordinary income.

12b-1 Fees

Below are the 12b-1 service fees paid by the Institutional Service
shares of each Fund for the fiscal period ended September 30, 1999. The
Institutional 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 Shares
Fund/Period
- ---------------------------------------------- -------------------------------
- ---------------------------------------------- -------------------------------
Service Fees
- ---------------------------------------------- -------------------------------
- ------------------------------------------------------------------------------
Period Ended 1999
- ------------------------------------------------------------------------------
- ---------------------------------------------- -------------------------------
Adjustable Rate Fund $33,833
- ---------------------------------------------- -------------------------------
- ---------------------------------------------- -------------------------------
Core Bond Fund(1) $4,191
- ---------------------------------------------- -------------------------------
- ---------------------------------------------- -------------------------------
Core Bond Fund(2) $4,201
- ---------------------------------------------- -------------------------------
- ---------------------------------------------- -------------------------------
Fixed Income Fund $29,172
- ---------------------------------------------- -------------------------------
- ---------------------------------------------- -------------------------------
Income Plus Fund $22,267
- ---------------------------------------------- -------------------------------
- ---------------------------------------------- -------------------------------
Intermediate Bond Fund $13,511
- ---------------------------------------------- -------------------------------
- ---------------------------------------------- -------------------------------
International Bond Fund $402
- ---------------------------------------------- -------------------------------
- ---------------------------------------------- -------------------------------
Limited Duration Fund $1,943
- ---------------------------------------------- -------------------------------
- ---------------------------------------------- -------------------------------
Total Return Bond Fund $15,342
- ---------------------------------------------- -------------------------------
1. Six months ended September 30, 1999. The Fund changed its fiscal year
end from March 31 to September 30, effective September 30, 1999.
2. Fiscal year ended March 31, 1999.

Trustee Compensation

Listed below is the Trustee compensation paid by the Trust individually
for the fiscal year ended September 30, 1999 and by the Trust and the eleven
other trusts in the Evergreen Fund complex for the calendar year ended December
31, 1999. 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.
<TABLE>
<CAPTION>
------------------------------- ------------------------------ -----------------------------
Total Compensation from
Trust and Fund Complex Paid
Aggregate Compensation from to Trustees for the
Trustee Trust for the fiscal period calendar year ended
ended 9/30/1999 12/31/1999*
------------------------------- ------------------------------ -----------------------------
------------------------------- ------------------------------ -----------------------------
<S> <C> <C>
Laurence B. Ashkin $4,919 $75,000
------------------------------- ------------------------------ -----------------------------
------------------------------- ------------------------------ -----------------------------

Charles A. Austin, III $4,900 $75,000
------------------------------- ------------------------------ -----------------------------
------------------------------- ------------------------------ -----------------------------

K. Dun Gifford $4,908 $75,000
------------------------------- ------------------------------ -----------------------------
------------------------------- ------------------------------ -----------------------------

James S. Howell** $6,335 $97,000
------------------------------- ------------------------------ -----------------------------
------------------------------- ------------------------------ -----------------------------

Leroy Keith Jr. $4,880 $75,000
------------------------------- ------------------------------ -----------------------------
------------------------------- ------------------------------ -----------------------------

Gerald M. McDonnell $4,948 $75,000
------------------------------- ------------------------------ -----------------------------
------------------------------- ------------------------------ -----------------------------

Thomas L. McVerry $5,662 $85,000
------------------------------- ------------------------------ -----------------------------
------------------------------- ------------------------------ -----------------------------

William Walt Pettit $4,880 $75,000
------------------------------- ------------------------------ -----------------------------
------------------------------- ------------------------------ -----------------------------

David M. Richardson $4,908 $75,000
------------------------------- ------------------------------ -----------------------------
------------------------------- ------------------------------ -----------------------------

Russell A. Salton, III $5,009 $77,000
------------------------------- ------------------------------ -----------------------------
------------------------------- ------------------------------ -----------------------------

Michael S. Scofield $6,270 $102,000
------------------------------- ------------------------------ -----------------------------
------------------------------- ------------------------------ -----------------------------

Richard J. Shima $4,908 $75,000
------------------------------- ------------------------------ -----------------------------
</TABLE>

*Certain Trustees have elected to defer all or part of their
total compensation for the fiscal period ended September 30,
1999. The amounts listed below will be payable in later years
to the respective Trustees:

Austin $11,250
Howell $77,600
McDonnell $75,000
McVerry $85,000
Pettit $75,000
Salton $77,000
Scofield $61,200
**Trustee Emeritus, retired 12/31/1999.

PERFORMANCE

Total Return
Below are the annual total returns for each class of shares of the
Funds as of September 30, 1999. For more information, see "Total Return" under
Performance Calculations in Part 2 of this SAI.
<TABLE>
<CAPTION>
- --------------------------- ----------------- ------------------ -------------------- --------------------
Ten Years or Since Class
Fund/Class One Year Five Years Inception Inception Date
- --------------------------- ----------------- ------------------ -------------------- --------------------
- ----------------------------------------------------------------------------------------------------------
Adjustable Rate Fund(1)
- ----------------------------------------------------------------------------------------------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
<S> <C> <C> <C> <C>
Institutional 4.98% 6.36% 5.50% 10/1/1991
- --------------------------- ----------------- ------------------ -------------------- --------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
Institutional Service 4.73% 6.31% 5.42% 5/23/1994
- --------------------------- ----------------- ------------------ -------------------- --------------------
- ----------------------------------------------------------------------------------------------------------
Core Bond Fund(2)
- ----------------------------------------------------------------------------------------------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
Institutional 0.07% 8.06% 7.41% 12/13/1990
- --------------------------- ----------------- ------------------ -------------------- --------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
Institutional Service -0.18% 7.97% 7.36% 10/2/1997
- --------------------------- ----------------- ------------------ -------------------- --------------------
- ----------------------------------------------------------------------------------------------------------
Fixed Income Fund(3)
- ----------------------------------------------------------------------------------------------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
Institutional 0.84% 6.51% 7.05% 11/24/1997
- --------------------------- ----------------- ------------------ -------------------- --------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
Institutional Service 0.59% 6.23% 6.78% 3/9/1998
- --------------------------- ----------------- ------------------ -------------------- --------------------
- ----------------------------------------------------------------------------------------------------------
Income Plus Fund(4)
- ----------------------------------------------------------------------------------------------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
Institutional -2.13% 7.02% 7.23% 11/24/1997
- --------------------------- ----------------- ------------------ -------------------- --------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
Institutional Service -2.36% 6.84% 7.06% 3/2/1998
- --------------------------- ----------------- ------------------ -------------------- --------------------
- ----------------------------------------------------------------------------------------------------------
Intermediate Bond Fund(5)
- ----------------------------------------------------------------------------------------------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
Institutional -3.00% 5.07% 5.78% 11/24/1997
- --------------------------- ----------------- ------------------ -------------------- --------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
Institutional Service -3.24% 4.82% 5.52% 3/2/1998
- --------------------------- ----------------- ------------------ -------------------- --------------------
- ----------------------------------------------------------------------------------------------------------
International Bond Fund(6)
- ----------------------------------------------------------------------------------------------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
Institutional 3.96% 7.34% 4.47% 12/15/1993
- --------------------------- ----------------- ------------------ -------------------- --------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
Institutional Service 3.74% 7.10% 4.23% 12/15/1993
- --------------------------- ----------------- ------------------ -------------------- --------------------
- ----------------------------------------------------------------------------------------------------------
Limited Duration Fund(7)
- ----------------------------------------------------------------------------------------------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
Institutional 3.07% 5.92% 5.71% 11/24/1997
- --------------------------- ----------------- ------------------ -------------------- --------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
Institutional Service 2.81% 5.68% 5.47% 7/28/1998
- --------------------------- ----------------- ------------------ -------------------- --------------------
- ----------------------------------------------------------------------------------------------------------
Total Return Bond Fund(1)
- ----------------------------------------------------------------------------------------------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
Institutional -0.87% N/A 1.35% 4/20/1998
- --------------------------- ----------------- ------------------ -------------------- --------------------
- --------------------------- ----------------- ------------------ -------------------- --------------------
Institutional Service -1.12% N/A 1.14% 8/3/1998
- --------------------------- ----------------- ------------------ -------------------- --------------------
</TABLE>

1. Historical performance shown for the Institutional Service shares
prior to their inception is based on the performance of the
Institutional shares and has not been adjusted to reflect the effect of
the 0.25% 12b-1 fee applicable to the Institutional Service shares.
Institutional shares pay no 12b-1 fee. If these fees had been
reflected, returns would have been lower.

2. Historical performance shown for Institutional shares is based on the
performance of the Institutional shares of the Fund's predecessor fund,
Tattersall Bond Fund. Historical performance shown for the
Institutional Service shares is based on (1) the performance of the
Institutional Service shares of the Fund's predecessor fund, Tattersall
Bond Fund, since 10/2/1997 and (2) the Institutional shares of
Tattersall Bond Fund from 12/13/1990 to 10/2/1997 which have not been
adjusted to reflect the 0.25% 12b-1 fee paid by the Institutional
Service shares. The Institutional shares do not pay a 12b-1 fee. If
these fees had been reflected, returns would have been lower.

3. Historical performance shown for the Institutional Service shares from
11/24/1997 to their inception is based on the performance of the
Institutional shares and has not been adjusted to reflect the effect of
the 0.25% 12b-1 fee applicable to the Institutional Service shares.
Institutional shares pay no 12b-1 fee. If these fees had been
reflected, returns would have been lower. Prior to 11/24/1997, the
returns for the Institutional shares and the Institutional Service
shares are based on the Fund's predecessor common trust fund's (CTF's)
performance, adjusted for estimated mutual fund expenses. The CTF was
not registered under the Investment Company Act of 1940 and was not
subject to certain investment restrictions. If the CTF had been
registered, its performance may have been adversely affected.
Performance for the CTF has been adjusted to include the effect of
estimated mutual fund class gross expense ratios at the time the CTF
was converted to a mutual fund. If fee waivers and expense
reimbursements had been calculated into the mutual fund class expense
ratio, the total return would be as follows: Institutional shares - 5
year = 6.62%, 10 year = 6.87% and since 3/31/1977 = 8.14%;
Institutional Service shares - 5 year = 6.35%, 10 year = 6.59% and
since 3/31/1977 = 7.87%.

4. Historical performance shown for the Institutional Service shares from
11/24/1997 to their inception is based on the performance of the
Institutional shares and has not been adjusted to reflect the effect of
the 0.25% 12b-1 fee applicable to the Institutional Service shares.
Institutional shares pay no 12b-1 fee. If these fees had been
reflected, returns would have been lower. Prior to 11/24/1997, the
returns for the Institutional shares and the Institutional Service
shares are based on the Fund's predecessor common trust fund's (CTF's)
performance, adjusted for estimated mutual fund expenses. The CTF was
not registered under the Investment Company Act of 1940 and was not
subject to certain investment restrictions. If the CTF had been
registered, its performance may have been adversely affected.
Performance for the CTF has been adjusted to include the effect of
estimated mutual fund class gross expense ratios at the time the CTF
was converted to a mutual fund. If fee waivers and expense
reimbursements had been calculated into the mutual fund class expense
ratio, the total return would be as follows: Institutional shares - 5
year = 6.92%, 10 year = 6.99% and since 8/31/1988 = 7.37%;
Institutional Service shares - 5 year = 6.68%, 10 year = 6.73% and
since 8/31/1988 = 7.11%.

5. Historical performance shown for the Institutional Service shares from
11/24/1997 to their inception is based on the performance of the
Institutional shares and has not been adjusted to reflect the effect of
the 0.25% 12b-1 fee applicable to the Institutional Service shares.
Institutional shares pay no 12b-1 fee. If these fees had been
reflected, returns would have been lower. Prior to 11/24/1997, the
returns for the Institutional shares and the Institutional Service
shares are based on the Fund's predecessor common trust fund's (CTF's)
performance, adjusted for estimated mutual fund expenses. The CTF was
not registered under the Investment Company Act of 1940 and was not
subject to certain investment restrictions. If the CTF had been
registered, its performance may have been adversely affected.
Performance for the CTF has been adjusted to include the effect of
estimated mutual fund class gross expense ratios at the time the CTF
was converted to a mutual fund. If fee waivers and expense
reimbursements had been calculated into the mutual fund class expense
ratio, the total return would be as follows: Institutional shares - 5
year = 5.10%, 10 year = 5.44% and since 1/31/1984 = 6.63%;
Institutional Service shares - 5 year = 4.85%, 10 year = 5.19% and
since 1/31/1984 = 6.37%.

6. Historical performance shown for the Institutional shares is based on
the performance of the Class Y shares of the Fund's predecessor fund,
CoreFund Global Bond Fund. Historical performance shown for the
Institutional Service shares is based on the performance of the Class A
shares of the Fund's predecessor fund, CoreFund Global Bond Fund, and
reflects the same 0.25% 12b-1 fee applicable to the Institutional
Service shares.

7. Historical performance shown for the Institutional Service shares from
11/24/1997 to their inception is based on the performance of the
Institutional shares and has not been adjusted to reflect the effect of
the 0.25% 12b-1 fee applicable to the Institutional Service shares.
Institutional shares pay no 12b-1 fee. If these fees had been
reflected, returns would have been lower. Prior to 11/24/1997, the
returns for the Institutional shares and the Institutional Service
shares are based on the Fund's predecessor common trust fund's (CTF's)
performance, adjusted for estimated mutual fund expenses. The CTF was
not registered under the Investment Company Act of 1940 and was not
subject to certain investment restrictions. If the CTF had been
registered, its performance may have been adversely affected.
Performance for the CTF has been adjusted to include the effect of
estimated mutual fund class gross expense ratios at the time the CTF
was converted to a mutual fund. If fee waivers and expense
reimbursements had been calculated into the mutual fund class expense
ratio, the total return would be as follows: Institutional shares -
since 4/30/1994 = 5.80%; Institutional Service shares - since 4/30/1994
= 5.57%.

Current Yield

Below are the current yields for each class of shares of the Funds as
of September 30, 1999. For more information, see "30-day Yield" under
Performance Calculation in Part 2 of this SAI.
================================================================================

30-Day SEC Yield
================================================================================
- ---------------------------------- ---------------------- ======================
Fund Institutional Institutional Service
- ---------------------------------- ---------------------- ======================
- ---------------------------------- ---------------------- ======================
Adjustable Rate Fund 5.72% 5.44%
- ---------------------------------- ---------------------- ======================
- ---------------------------------- ---------------------- ======================
Core Bond Fund 6.33% 6.07%
- ---------------------------------- ---------------------- ======================
- ---------------------------------- ---------------------- ======================
Fixed Income Fund 7.61% 7.34%
- ---------------------------------- ---------------------- ======================
- ---------------------------------- ---------------------- ======================
Income Plus Fund 6.42% 6.19%
- ---------------------------------- ---------------------- ======================
- ---------------------------------- ---------------------- ======================
Intermediate Bond Fund 5.08% 4.83%
- ---------------------------------- ---------------------- ======================
- ---------------------------------- ---------------------- ======================
International Bond Fund 3.83% 3.58%
- ---------------------------------- ---------------------- ======================
Limited Duration Fund 6.19% 5.94%
- ---------------------------------- ---------------------- ======================
Total Return Bond Fund 6.40% 6.14%
- ---------------------------------- ---------------------- ======================

Below are the tax equivalent yields for each class of shares of the
Intermediate Bond Fund for the thirty-day period ended September 30, 1999. The
maximum federal tax rate of 39.6% is assumed. For more information, see "Tax
Equivalent Yield" under Performance Calculations in Part 2 of this SAI.

============================================================================
30-day SEC Tax Equivalent Yield
============================================================================
- ------------------------------ ---------------------- ----------------------
Institutional Institutional Service
- ------------------------------ ---------------------- ----------------------
- ------------------------------ ---------------------- ----------------------
Intermediate Bond Fund 8.41% 8.00%
- ------------------------------ ---------------------- ----------------------

SERVICE PROVIDERS
Administrator

Evergreen Investment Services, Inc. ("EIS") serves as administrator to
each of the Funds subject to the supervision and control of the Trust's Board of
Trustees. EIS provides the Funds with facilities, equipment and personnel and is
entitled to receive a fee from the Funds an annual fee at a rate of 0.10% of the
Funds' average daily net assets.

Below are the administrative service fees paid for the last three
fiscal years for the Funds referenced:

- -------------------------------- ------------- --------------- ============
Fund 1999 1998 1997
- -------------------------------- ------------- --------------- ============
- -------------------------------- ------------- --------------- ============
Adjustable Rate Fund $4,875 N/A(1) N/A(1)
- -------------------------------- ------------- --------------- ============
- -------------------------------- ------------- --------------- ============
Core Bond Fund $82,328(2) $133,870(4) N/A
- -------------------------------- ------------- --------------- ============
- -------------------------------- ------------- --------------- ============
Core Bond Fund $98,726(3) N/A N/A
- -------------------------------- ------------- --------------- ============
- -------------------------------- ------------- --------------- ============
Fixed Income Fund $154,082 $125,951(4) N/A
- -------------------------------- ------------- --------------- ============
- -------------------------------- ------------- --------------- ============
Income Plus Fund $359,786 $293,363(4) N/A
- -------------------------------- ------------- --------------- ============
- -------------------------------- ------------- --------------- ============
Intermediate Bond Fund $182,850 $183,098 N/A
- -------------------------------- ------------- --------------- ============
- -------------------------------- ------------- --------------- ============
International Bond Fund $11,917 $1,735(5) $86,000(8)
- -------------------------------- ------------- --------------- ============
- -------------------------------- ------------- --------------- ============
International Bond Fund N/A $90,347(6) N/A
- -------------------------------- ------------- --------------- ============
- -------------------------------- ------------- --------------- ============
Limited Duration Fund $33,285 $14,591(4) N/A
- -------------------------------- ------------- --------------- ============
- -------------------------------- ------------- --------------- ============
Total Return Bond Fund $35,924 $14,250(7) N/A
- -------------------------------- ------------- --------------- ============
(1) For the years ended 1998 and 1997, the administration fee was paid
by the Adviser and was not a Fund expense.
(2) Six months ended September 30, 1999.
(3) Tattersall Bond Fund.
(4) Fund commenced operations on November 27, 1997.
(5) Three months ended September 30, 1998. The Fund changed its fiscal
year end from June 30 to September 30, effective September 30, 1998.
(6) Twelve months ended June 30, 1998. Paid to SEI Investments, the
Fund's previous administrator.
(7) Fund commenced operations on April 20, 1998.
(8) Twelve months ended June 30, 1997. Paid to SEI Investments, the Fund's
previous administrator.

Transfer Agent

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

----------------------------- -------------------- ----------------------
Annual Fee Per Annual Fee Per
Fund Type Open Account* Closed Account**
----------------------------- -------------------- ----------------------
----------------------------- -------------------- ----------------------
Monthly Dividend Funds $22.75 $9.00
----------------------------- -------------------- ----------------------
----------------------------- -------------------- ----------------------
Quarterly Dividend Funds $21.75 $9.00
----------------------------- -------------------- ----------------------
----------------------------- -------------------- ----------------------
Semiannual Dividend Funds $20.75 $9.00
----------------------------- -------------------- ----------------------
----------------------------- -------------------- ----------------------
Annual Dividend Funds $220.75 $9.00
----------------------------- -------------------- ----------------------
----------------------------- -------------------- ----------------------
Money Market Funds $25.50 $9.00
----------------------------- -------------------- ----------------------
* For shareholder accounts only. The Fund pays ESC cost plus 15% for broker
accounts.
** Closed account are maintained on the system in order to facilitate
historical and tax information.

Distributor

Evergreen Distributor, Inc. (EDI) markets the Funds through broker-
dealers and other financial representatives. Its address is 90 Park Avenue,
New York, NY 10016.

Independent Auditors

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

Custodian

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

Legal Counsel

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

FINANCIAL STATEMENTS

The audited financial statements and the independent auditors' report
thereon are hereby incorporated by reference to the Funds' Annual Reports, a
copy of which may be obtained without charge by writing to ESC, P.O. Box 2121,
Boston, Massachusetts 02106-2121, or by calling ESC toll-free at 1-800-343-2898.

<PAGE>

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 or the Class 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.

Money Market Instruments

The Fund may invest up to 100% of its assets in high quality money
market instruments, such as notes, certificates of deposit, commercial paper,
banker's acceptances, bank deposits or U.S. government securities if, in the
opinion of the investment advisor, market conditions warrant a temporary
defensive investment strategy. Evergreen Equity Income Fund may also invest in
debt securities and high grade preferred stocks for defensive purposes when its
investment advisor determines a temporary defensive strategy is warranted.

U.S. Government Securities

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

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

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

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

(ii) Farmers Home Administration;

(iii) Federal Home Loan Banks;

(iv) Federal Home Loan Mortgage Corporation;

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

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

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

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

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

When-Issued, Delayed-Delivery and Forward Commitment Transactions

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

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

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

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

Repurchase Agreements

The Fund may enter into repurchase agreements with entities that are
registered as U.S. Government securities dealers, including member banks of the
Federal Reserve System having at least $1 billion in assets, primary dealers in
U.S. government securities or other financial institutions believed by the
investment advisor to be creditworthy. In a repurchase agreement the Fund
obtains a security and simultaneously commits to return the security to the
seller at a set price (including principal and interest) within a period of time
usually not exceeding seven days. The resale price reflects the purchase price
plus an agreed upon market rate of interest which is unrelated to the coupon
rate or maturity of the underlying security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is in
effect secured by the value of the underlying security.

The Fund's custodian or a third party will take possession of the
securities subject to repurchase agreements, and these securities will be marked
to market daily. To the extent that the original seller does not repurchase the
securities from the Fund, the Fund could receive less than the repurchase price
on any sale of such securities. In the event that such a defaulting seller filed
for bankruptcy or became insolvent, disposition of such securities by the Fund
might be delayed pending court action. The Fund's investment advisor believes
that under the regular procedures normally in effect for custody of the Fund's
portfolio securities subject to repurchase agreements, a court of competent
jurisdiction would rule in favor of the Fund and allow retention or disposition
of such securities. The Fund will only enter into repurchase agreements with
banks and other recognized financial institutions, such as broker-dealers, which
are deemed by the investment advisor to be creditworthy pursuant to guidelines
established by the Board of Trustees.

Reverse Repurchase Agreements

As described herein, the Fund may also enter into reverse repurchase
agreements. These transactions are similar to borrowing cash. In a reverse
repurchase agreement, the Fund transfers possession of a portfolio instrument to
another person, such as a financial institution, broker, or dealer, in return
for a percentage of the instrument's market value in cash, and agrees that on a
stipulated date in the future the Fund will repurchase the portfolio instrument
by remitting the original consideration plus interest at an agreed upon rate.

The use of reverse repurchase agreements may enable the Fund to avoid
selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase agreements
does not ensure that the Fund will be able to avoid selling portfolio
instruments at a disadvantageous time.

When effecting reverse repurchase agreements, liquid assets of the
Fund, in a dollar amount sufficient to make payment for the obligations to be
purchased, are segregated at the trade date. These securities are marked to
market daily and maintained until the transaction is settled.

Dollar Roll Transactions

The Fund may enter into dollar rolls in which the Fund sells securities
and simultaneously contracts to repurchase substantially similar securities on a
specified future date. In the case of dollar rolls involving mortgage-related
securities, the mortgage-related securities that are purchased typically will be
of the same type and will have the same or similar interest rate and maturity as
those sold, but will be supported by different pools of mortgages. The Fund
forgoes principal and interest paid during the roll period on the securities
sold in a dollar roll, but it is compensated by the difference between the
current sales price and the price for the future purchase as well as by any
interest earned on the proceeds of the securities sold. The Fund could also be
compensated through receipt of fee income.

Dollar rolls may be viewed as a borrowing by the Fund, secured by the security
which is the subject of the agreement. In addition to the general risks involved
in leveraging, dollar rolls are subject to the same risks as repurchase and
reverse repurchase agreements.

Securities Lending

The Fund may lend portfolio securities to brokers, dealers and other
financial institutions to earn additional income for the Fund. These
transactions must be fully collateralized at all times with cash or short-term
debt obligations, but involve some risk to the Fund if the other party should
default on its obligation and the Fund is delayed or prevented from exercising
its rights in respect of the collateral. Any investment of collateral by the
Fund would be made in accordance with the Fund's investment objective and
policies described in the prospectus.

Convertible Securities

The Fund may invest in convertible securities. Convertible securities
include fixed-income securities that may be exchanged or converted into a
predetermined number of shares of the issuer's underlying common stock at the
option of the holder during a specified period. Convertible securities may take
the form of convertible preferred stock, convertible bonds or debentures, bonds
with warrants attached or bonds with a combination of the features of several of
these securities. The investment characteristics of each convertible security
vary widely, which allow convertible securities to be employed for a variety of
investment strategies.

The Fund will exchange or convert convertible securities into shares of
underlying common stock when, in the opinion of its investment advisor, the
investment characteristics of the underlying common shares will assist the Fund
in achieving its investment objective. The Fund may also elect to hold or trade
convertible securities. In selecting convertible securities, the investment
advisor evaluates the investment characteristics of the convertible security as
a fixed-income instrument, and the investment potential of the underlying equity
security for capital appreciation. In evaluating these matters with respect to a
particular convertible security, the investment advisor considers numerous
factors, including the economic and political outlook, the value of the security
relative to other investment alternatives, trends in the determinants of the
issuer's profits, and the issuer's management capability and practices.

Warrants

The Fund may invest in warrants. Warrants are options to purchase
common stock at a specific price (usually at a premium above the market value of
the optioned common stock at issuance) valid for a specific period of time.
Warrants may have a life ranging from less than one year to twenty years, or
they may be perpetual. However, most warrants have expiration dates after which
they are worthless. In addition, a warrant is worthless if the market price of
the common stock does not exceed the warrant's exercise price during the life of
the warrant. Warrants have no voting rights, pay no dividends, and have no
rights with respect to the assets of the corporation issuing them. The
percentage increase or decrease in the market price of the warrant may tend to
be greater than the percentage increase or decrease in the market price of the
optioned common stock.

Swaps, Caps, Floors and Collars

The Fund may enter into interest rate, currency and index swaps and the
purchase or sale of related caps, floors and collars. The Fund expects to enter
into these transactions primarily to preserve a return or spread on a particular
investment or portion of its portfolio, to protect against currency
fluctuations, as a duration management technique or to protect against any
increase in the price of securities the Fund anticipates purchasing at a later
date. The Fund would use these transactions as hedges and not as speculative
investments and would not sell interest rate caps or floors where it does not
own securities or other instruments providing the income stream the Fund may be
obligated to pay. Interest rate swaps involve the exchange by the Fund with
another party of their respective commitments to pay or receive interest, e.g.,
an exchange of floating rate payments for fixed rate payments with respect to a
notional amount of principal. A currency swap is an agreement to exchange cash
flows on a notional amount of two or more currencies based on the relative value
differential among them and an index swap is an agreement to swap cash flows on
a notional amount based on changes in the values of the reference indices. The
purchase of a cap entitles the purchaser to receive payments on a notional
principal amount from the party selling such cap to the extent that a specified
index exceeds a predetermined interest rate or amount. The purchase of a floor
entitles the purchaser to receive payments on a notional principal amount from
the party selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return within a predetermined range of interest
rates or values.

The Fund will usually enter into swaps on a net basis, i.e., the two
payment streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with the Fund receiving or paying, as the case may
be, only the net amount of the two payments. The Fund will not enter into any
swap, cap, floor or collar transaction unless, at the time of entering into such
transaction, the unsecured long-term debt of the counterparty, combined with any
credit enhancements, is rated at least A by Standard & Poor's Ratings Services
("S&P") or Moody's Investors Service, Inc. ("Moody's") or has an equivalent
rating from another nationally recognized securities rating organization or is
determined to be of equivalent credit quality by the Fund's investment advisor.
If there is a default by the counterparty, the Fund may have contractual
remedies pursuant to the agreements related to the transaction. As a result, the
swap market has become relatively liquid. Caps, floors and collars are more
recent innovations for which standardized documentation has not yet been fully
developed and, accordingly, they are less liquid than swaps.

Indexed Securities

The Fund may invest in indexed securities, the values of which are
linked to currencies, interest rates, commodities, indices or other financial
indicators ("reference instruments"). Most indexed securities have maturities of
three years or less.

Indexed securities differ from other types of debt securities in which
the Fund may invest in several respects. First, the interest rate or, unlike
other debt securities, the principal amount payable at maturity of an indexed
security may vary based on changes in one or more specified reference
instruments, such as an interest rate compared with a fixed interest rate or the
currency exchange rates between two currencies (neither of which need be the
currency in which the instrument is denominated). The reference instrument need
not be related to the terms of the indexed security. For example, the principal
amount of a U.S. dollar denominated indexed security may vary based on the
exchange rate of two foreign currencies. An indexed security may be positively
or negatively indexed; that is, its value may increase or decrease if the value
of the reference instrument increases. Further, the change in the principal
amount payable or the interest rate of an indexed security may be a multiple of
the percentage change (positive or negative) in the value of the underlying
reference instrument(s).

Investment in indexed securities involves certain risks. In addition to
the credit risk of the security's issuer and the normal risks of price changes
in response to changes in interest rates, the principal amount of indexed
securities may decrease as a result of changes in the value of reference
instruments. Further, in the case of certain indexed securities in which the
interest rate is linked to a reference instrument, the interest rate may be
reduced to zero, and any further declines in the value of the security may then
reduce the principal amount payable on maturity. Finally, indexed securities may
be more volatile than the reference instruments underlying indexed securities.

To reduce the effect of currency fluctuations on the value of existing
or anticipated holdings of portfolio securities, the Fund may also engage in
proxy hedging. Proxy hedging is often used when the currency to which the Fund
is exposed is difficult to hedge or to hedge against the dollar. Proxy hedging
entails entering into a forward contract to sell a currency whose changes in
value are generally considered to be linked to a currency or currencies in which
some or all of the Fund's securities are or are expected to be denominated, and
to buy U.S. dollars. The amount of the contract would not exceed the value of
the Fund's securities denominated in linked currencies. For example, if the
Fund's investment advisor considers that the Austrian schilling is linked to the
German deutschmark (the "D-mark"), the Fund holds securities denominated in
schillings and the investment advisor believes that the value of schillings will
decline against the U.S. dollar, the investment advisor may enter into a
contract to sell D-marks and buy dollars.

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, resulting in a
potential loss of value to the Fund.

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.

The Fund may also invest in the stocks of companies located in emerging
markets. These countries generally have economic structures that are less
diverse and mature, and political systems that are less stable than those of
developed countries. Emerging markets may be more volatile than the markets of
more mature economies, and the securities of companies located in emerging
markets are often subject to rapid and large price fluctuations; however, these
markets may also provide higher long-term rates of return.

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.

Premium Securities

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

High Yield, High Risk Bonds

The Fund may invest a portion of its assets in lower rated bonds. Bonds
rated below BBB by S&P or Fitch IBCA, Inc. ("Fitch") or below Baa by 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
(c) 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% (10% for money market funds) of
its net assets in securities that are illiquid. A security is illiquid when the
Fund cannot dispose of it in the ordinary course of business within seven days
at approximately the value at which the Fund has the investment on its books.

The Fund may invest in "restricted" securities, i.e., securities
subject to restrictions on resale under federal securities laws. Rule 144A under
the Securities Act of 1933 ("Rule 144A") allows certain restricted securities to
trade freely among qualified institutional investors. Since Rule 144A securities
may have limited markets, the Board of Trustees will determine whether such
securities should be considered illiquid for the purpose of determining the
Fund's compliance with the limit on illiquid securities indicated above. In
determining the liquidity of Rule 144A securities, the Trustees will consider:
(1) the frequency of trades and quotes for the security; (2) the number of
dealers willing to purchase or sell the security and the number of other
potential buyers; (3) dealer undertakings to make a market in the security; and
(4) the nature of the security and the nature of the marketplace trades.

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. Investing in other investment
companies may expose a Fund to duplicate expenses and lower its value.

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 engage in short sales, but it 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.

U.S. Virgin Islands, Guam and Puerto Rico

The Fund may invest in obligations of the governments of the U.S.
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) 10% of
its net assets in the obligations of each of the U.S. 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 U.S. Virgin Islands, Guam and Puerto Rico affecting the
issuers of such obligations.

Master Demand Notes

The Fund may invest in master demand notes. These 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. Master
demand notes permit the Fund to demand payment of principal and accrued interest
at any time (on not more than seven days' notice). Notes acquired by the Fund
may have maturities of more than one year, provided that (1) the Fund is
entitled to payment of principal and accrued interest upon not more than seven
days' notice, and (2) the rate of interest on such notes is adjusted
automatically at periodic intervals, which normally will not exceed 31 days, but
may extend up to one year. The notes are deemed to have a maturity equal to the
longer of the period remaining to the next interest rate adjustment or the
demand notice period. Because these types of notes are direct lending
arrangements between the lender and borrower, such instruments are not normally
traded and there is no secondary market for these notes, although they are
redeemable and thus repayable by the borrower at face value plus accrued
interest at any time. Accordingly, the Fund's right to redeem is dependent on
the ability of the borrower to pay principal and interest on demand. In
connection with master demand note arrangements, the Fund`s 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, the Fund may invest
in them only if at the time of an investment the issuer meets the criteria
established for high quality commercial paper, i.e., rated A-1 by S&P, Prime-1
by Moody's or F-1 by Fitch.

Brady Bonds

The Fund may also invest in Brady Bonds. Brady Bonds are created
through the exchange of existing commercial bank loans to foreign entities for
new obligations in connection with debt restructurings under a plan introduced
by former U.S. Secretary of the Treasury, Nicholas F. Brady (the "Brady Plan").
Brady Bonds have been issued only recently, and, accordingly, do not have a long
payment history. They may be collateralized or uncollateralized and issued in
various currencies (although most are U.S. dollar-denominated) and they are
actively traded in the over-the-counter secondary market.

U.S. dollar-denominated, collateralized Brady Bonds, which may be
fixed-rate par bonds or floating rate discount bonds, are generally
collateralized in full as to principal due at maturity by U.S. Treasury zero
coupon obligations that have the same maturity as the Brady Bonds. Interest
payments on these Brady Bonds generally are collateralized by cash or securities
in an amount that, in the case of fixed rate bonds, is equal to at least one
year of rolling interest payments based on the applicable interest rate at that
time and is adjusted at regular intervals thereafter. Certain Brady Bonds are
entitled to "value recovery payments" in certain circumstances, which in effect
constitute supplemental interest payments, but generally are not collateralized.
Brady Bonds are often viewed as having up to four valuation components: (1)
collateralized repayment of principal at final maturity, (2) collateralized
interest payments, (3) uncollateralized interest payments, and (4) any
uncollateralized repayment of principal at maturity (these uncollateralized
amounts constitute the "residual risk"). In the event of a default with respect
to collateralized Brady Bonds as a result of which the payment obligations of
the issuer are accelerated, the U.S. Treasury zero coupon obligations held as
collateral for the payment of principal will not be distributed to investors,
nor will such obligations be sold and the proceeds distributed. The collateral
will be held by the collateral agent to the scheduled maturity of the defaulted
Brady Bonds, which will continue to be outstanding, at which time the face
amount of the collateral will equal the principal payments that would have then
been due on the Brady Bonds in the normal course. In addition, in light of the
residual risk of Brady Bonds and, among other factors, the history of defaults
with respect to commercial bank loans by public and private entities of
countries issuing Brady Bonds, investments in Brady Bonds are to be viewed as
speculative.

Obligations of Foreign Branches of United States Banks

The Fund may invest in obligations of foreign branches of U.S. banks.
These 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

The Fund may invest in obligations of U.S. branches of foreign banks.
These 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

The Fund may invest in payment-in-kind ("PIK") securities. PIKs 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

The Fund may invest in zero coupon "stripped" bonds. These represent
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. Interest 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 interest 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
interest zero coupon bonds representing an 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
servicers 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
related 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 related 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 the 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.

Real Estate Investment Trusts

The Fund may invest in investments related to real estate including
real estate investment trusts ("REITs"). Risks associated with investments in
securities of companies in the real estate industry include: decline in the
value of real estate; risks related to general and local economic conditions,
overbuilding and increased competition; increases in property taxes and
operating expenses; changes in zoning laws; casualty or condemnation losses;
variations in rental income; changes in neighborhood values; the appeal of
properties to tenants; and increases in interest rates. In addition, equity
REITs may be affected by changes in the values of the underlying property owned
by the trusts, while mortgage real estate investment trusts may be affected by
the quality of credit extended. REITs are dependent upon management skills, may
not be diversified and are subject to the risks of financing projects. Such
REITs are also subject to heavy cash flow dependency, defaults by borrowers,
self liquidation and the possibility of failing to qualify for tax-free
pass-through of income under the Code and to maintain exemption from the 1940
Act. In the event an issuer of debt securities collateralized by real estate
defaults, it is conceivable that the REITs could end up holding the underlying
real estate.

Limited Partnerships

The Fund may invest in limited and master limited partnerships. A
limited partnership is a partnership consisting of one or more general partners,
jointly and severally responsible as ordinary partners, and by whom the business
is conducted, and one or more limited partners who contribute cash as capital to
the partnership and who generally are not liable for the debts of the
partnership beyond the amounts contributed. Limited partners are not involved in
the day-to-day management of the partnership. They receive income, capital gains
and other tax benefits associated with the partnership project in accordance
with terms established in the partnership agreement. Typical limited
partnerships are in real estate, oil and gas and equipment leasing, but they
also finance movies, research and development, and other projects.

For an organization classified as a partnership under the Internal
Revenue Code of 1986, as amended (the "Code"), each item of income, gain, loss,
deduction, and credit is not taxed at the partnership level but flows through to
the holder of the partnership unit. This allows the partnership to avoid double
taxation and to pass through income to the holder of the partnership unit at
lower individual rates.

A master limited partnership is a publicly traded limited partnership.
The partnership units are registered with the Securities and Exchange Commission
("SEC") and are freely exchanged on a securities exchange or in the
over-the-counter market.

PURCHASE AND REDEMPTION OF SHARES

You may buy shares of the Fund through Evergreen Distributor, Inc.
("EDI"), broker-dealers that have entered into special agreements with EDI or
certain other financial institutions. With certain exceptions, the Fund may
offer up to four 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. Each Fund offers different classes of shares. Refer to the
prospectus to determine which classes of shares are offered by each Fund.

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).

No front-end sales charges are imposed on Class A shares purchased by
(a) institutional investors, which may include bank trust departments and
registered investment advisors; (b) 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; (c) clients of investment advisors or financial planners who place
trades for their own accounts if the accounts are linked to the master account
of such investment advisors or financial planners on the books of the
broker-dealer through whom shares are purchased; (d) 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; (e) shareholders of record on
October 12, 1990 in any series of Evergreen Investment Trust in existence on
that date, and the members of their immediate families; (f) current and retired
employees of First Union National Bank ("FUNB") and its affiliates, EDI and any
broker-dealer with whom EDI has entered into an agreement to sell shares of the
Fund, and members of the immediate families of such employees; and (g) upon the
initial purchase of an Evergreen Fund by investors reinvesting the proceeds from
a redemption within the preceding 30 days of shares of other mutual funds,
provided such shares were initially purchased with a front-end sales charge or
subject to a CDSC. These provisions are generally intended to provide additional
job-related incentives to persons who serve the funds or work for companies
associated with the Funds and selected dealers and agents of the Funds. Since
these persons are in a position to have a basic understanding of the nature of
an investment company as well as a general familiarity with the Fund, sales to
these persons, as compared to sales in the normal channels of distribution,
require substantially less sales effort. Similarily, these provisions extend the
privilege of purchasing shares at net asset value to certain classes of
institutional investors who, because of their investment sophistication, can be
expected to require significantly less than normal sales effort on the part of
the Funds and the Distributor. In addition, the provisions allow the Funds to be
competitive in the mutual fund industry, where similar allowances are common.

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 EDI. 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 2.00% on shares you redeem
within 24 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..................... 2.00%
Second 12-month period following the month of purchase..... 1.00%
Thereafter................................................. 0.00%

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 an
investment advisor of an Evergreen Fund or the advisor's 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

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 and Institutional Service 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., paid to EDI or its predecessor.

SALES CHARGE WAIVERS AND REDUCTIONS

The following information is not applicable to Institutional and
Institutional Service shares.

If you making a large purchase, there are several ways you can combine
multiple purchases of Class A shares in Evergreen Funds and take advantage of
lower sales charges. These are described below.

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 FUNB, its affiliates, EDI, any broker-dealer
with whom EDI 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, EDI or their affiliates and to the immediate
families of such persons; or

9. a bank or trust company acting as trustee for a single
account in the name of such bank or trust company if the
initial investment in any of the Evergreen Funds 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 at 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 a 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 which offers the same class of shares. 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.

PRICING OF SHARES

Calculation of Net Asset Value

The Fund calculates its net asset value ("NAV") once daily (or twice
daily, for Money Market Funds) on Monday through Friday, as described in the
prospectus. The Fund will not compute its NAV on the days the New York Stock
Exchange is closed: New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.

The NAV of 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 investment advisor's opinion, the
last sales price does not reflect an accurate current market
value; and other assets are valued at prices deemed in good
faith to be fair under procedures established by the Board of
Trustees.

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

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

PERFORMANCE CALCULATIONS

Total Return

Total return quotations for a class of shares of the 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:

[OBJECT OMITTED]

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

Yield

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

30-Day Yield

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

[OBJECT OMITTED] [OBJECT OMITTED]

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

7-Day Current and Effective Yield

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

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

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

[OBJECT OMITTED]

Tax Equivalent Yield

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

[OBJECT OMITTED]

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

PRINCIPAL UNDERWRITER

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

EDI, as agent, has agreed to use its best efforts to find purchasers
for the shares. EDI may retain and employ representatives to promote
distribution of the shares and may obtain orders from broker-dealers, and
others, acting as principals, for sales of shares to them. The Underwriting
Agreement provides that EDI will bear the expense of preparing, printing, and
distributing advertising and sales literature and prospectuses used by it.

All subscriptions and sales of shares by EDI are at the public offering
price of the shares, which is determined in accordance with the provisions of
the Trust's Declaration of Trust, By-Laws, current prospectuses and SAI. All
orders are subject to acceptance by the 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.

EDI has agreed that it will, in all respects, duly conform with all
state and federal laws applicable to the sale of the shares. EDI has also agreed
that it will indemnify and hold harmless the Trust and each person who has been,
is, or may be a Trustee or officer of the Trust against expenses reasonably
incurred by any of them in connection with any claim, action, suit, or
proceeding to which any of them may be a party that arises out of or is alleged
to arise out of any misrepresentation or omission to state a material fact on
the part of EDI or any other person for whose acts EDI is responsible or is
alleged to be responsible, unless such misrepresentation or omission was made in
reliance upon written information furnished by the Trust.

The Underwriting Agreement provides that it will remain in effect as
long as its terms and continuance are approved annually (i) by a vote of a
majority of the Trust's Trustees who are not interested persons of the 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 EDI's judgment, it could benefit the sales of
shares, EDI may provide to selected broker-dealers promotional materials and
selling aids, including, but not limited to, personal computers, related
software, and data files.

DISTRIBUTION EXPENSES UNDER RULE 12b-1

The Fund bears some of the costs of selling its Class A, Class B, Class
C and Institutional Service shares, as applicable, including certain
advertising, marketing and shareholder service expenses, pursuant to Rule 12b-1
of the 1940 Act. These 12b-1 fees are indirectly paid by the shareholder, as
shown by 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, Class C and Institutional
Service shares, as applicable, the Fund may incur expenses for 12b-1 fees 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 0.75%*
------------------------------- ---------------

* Currently limited to 0.25% or less to be used exclusively as
a shareholder service fee. See the expense table in the
prospectus of the Fund in which you are interested.

Amounts paid under the Plans are used to compensate EDI pursuant to
Distribution Agreements (each an "Agreement," together, the "Agreements") that
the Fund has entered into with respect to its Class A, Class B, Class C and
Institutional Service shares, as applicable. 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%
----------------------------- -------------
----------------------------- -------------
Institutional Service 0.25%*
----------------------------- -------------

*May be lower. See the expense table in the prospectus of the
Fund in which you are interested.

The Agreements provide that EDI 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 EDI 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. EDI may assign
its rights to receive compensation under the Plans to secure such financings.
FUNB or its affiliates may finance payments made by EDI 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 EDI under the Agreements may be paid by the Fund's
Distributor to the acquired fund's distributor or its predecessor.

Since EDI's compensation under the Agreements is not directly tied to
the expenses incurred by EDI, 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 EDI. Distribution expenses incurred by EDI in one
fiscal year that exceed the compensation paid to EDI 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 annually on 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 EDI to
compensate broker-dealers in connection with the sale of such shares.

Service fees are accrued daily and paid at least annually on Class A,
Class B, Class C, and Institutional Service shares and are charged as class
expenses, as accrued.

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 SEC make payments for
distribution services to EDI; the latter may in turn pay part or all of such
compensation to brokers or other persons for their distribution assistance.

Each Plan and the Agreement will continue in effect for successive
12-month periods provided, however, that such continuance is specifically
approved at least annually by the Trustees of the Trust or by vote of the
holders of a majority of the outstanding voting securities of that class and, in
either case, by a majority of the Independent Trustees of the Trust.

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 Service 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 EDI with respect to that class or classes, and (ii) the Fund
would not be obligated to pay EDI for any amounts expended under the
Distribution Agreement not previously recovered by the EDI 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 EDI. 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
EDI. 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 Code, as
amended. (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 or
U.S. Government money market fund, it anticipates that all or a portion of the
ordinary dividends which it pays will qualify for the 70% dividends-received
deduction for corporations. The Fund will inform shareholders of the amounts
that so qualify. If the Fund is a municipal bond fund or U.S. Treasury or U.S.
Government 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 Shareholders of Municipal Bond Funds

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, as amended.) 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 investment advisor do
not replace, but supplement, the services the investment advisor is required to
deliver to the Fund. It is impracticable for the investment advisor to allocate
the cost, value and specific application of such research services among its
clients because research services intended for one client may indirectly benefit
another.

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

If the Fund is advised by Evergreen Asset Management Company ("EAMC"),
Lieber & Company, an affiliate of EAMC 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 the Fund.

ORGANIZATION

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

Description of Shares

The Declaration of Trust authorizes the issuance of an unlimited number
of shares of beneficial interest of series and classes of shares. Each share of
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 (unless
the Fund is Evergreen Masters 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.

If the Fund is Evergreen Masters Fund, the Advisory Agreement is
similar to the above except that the investment advisor selects sub-advisors
(hereinafter referred to as "Managers") for the Fund and monitors each Manager's
investment program and results. The investment advisor has primary
responsibility under the multi-manager strategy to oversee the Managers,
including making recommendations to the Trust regarding the hiring, termination
and replacement of Managers.

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.

Managers (Evergreen Masters Fund only)

Evergreen Masters Fund's investment program is based upon the
investment advisor's multi-manager concept. The investment advisor allocates the
Fund's portfolio assets on an equal basis among a number of investment
management organizations - currently four in number - each of which employs a
different investment style, and periodically rebalances the Fund's portfolio
among the Managers so as to maintain an approximate equal allocation of the
portfolio among them throughout all market cycles. Each Manager provides these
services under a Portfolio Management Agreement. Each Manager has discretion,
subject to oversight by the Trustees and the investment advisor, to purchase and
sell portfolio assets consistent with the Fund's investment objectives, policies
and restrictions and specific investment strategies developed by the investment
advisor. The Fund's current Managers are EAMC, MFS Institutional Advisors, Inc.,
OppenheimerFunds, Inc. and Putnam Investment Management, Inc.

The Trust and FUNB have received an order from the SEC that permits the
investment advisor to employ a "manager of managers" strategy in connection with
its management of the Fund. The exemptive order permits the investment advisor,
subject to certain conditions, and without shareholder approval, to: (a) select
new Managers who are unaffiliated with the investment advisor with the approval
of the Trust's Board of Trustees; (b) change the material terms of the Portfolio
Management Agreements with the Managers; and (c) continue the employment of a
Manager after an event which would otherwise cause the automatic termination of
a Portfolio Management Agreement. Shareholders would be notified of any Manager
changes. Shareholders have the right to terminate arrangements with a Manager by
vote of a majority of the outstanding shares of the Fund. The order also permits
the Fund to disclose the Managers' fees only in the aggregate.

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

Set forth below are the Trustees and officers of the Trust and their
principal occupations and affiliations over the last five years. Unless
otherwise indicated, the address for each Trustee and officer is 200 Berkeley
Street, Boston, Massachusetts 02116. Each Trustee is also a Trustee of each of
the other Trusts in the Evergreen Fund complex.
<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 (real estate development) and
Centrum Properties, Inc.(real estate development).

Charles A. Austin III Trustee Investment Counselor to Appleton Partners, Inc.(investment
(DOB: 10/23/34) advice); former Director, Executive Vice President and
Treasurer, State Street Research & Management Company
(investment advice); Director, The Andover Companies
(insurance); and Trustee, Arthritis Foundation of New
England.

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

K. Dun Gifford Trustee Trustee, Treasurer and Chairman of the Finance Committee,
(DOB: 10/12/38) Cambridge College; Chairman Emeritus and Director, American
Institute of Food and Wine; Chairman and President,
Oldways Preservation and Exchange Trust (education);
former Chairman of the Board, Director, and Executive
Vice President, The London Harness Company (leather
goods purveyor); former Managing Partner, Roscommon
Capital Corp.; former Chief Executive Officer, Gifford
Gifts of Fine Foods; former Chairman, Gifford, Drescher
& Associates (environmental consulting).

Leroy Keith, Jr. Trustee Chairman of the Board and Chief Executive Officer, Carson
(DOB: 2/14/39) Products Company (manufacturing); Director of Phoenix Total
Return Fund and Equifax, Inc. (worldwide information
management); Trustee of Phoenix Series Fund, Phoenix
Multi-Portfolio Fund, and The Phoenix Big Edge Series Fund;
and former President, Morehouse College.

Gerald M. McDonnell Trustee Sales and Marketing Management with Nucor-Yamoto, Inc.
(DOB: 7/14/39) (steel producer).

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

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

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

David M. Richardson Trustee President, Richardson & Runden & Company (executive search
(DOB: 9/14/41) and advisory services); former Vice Chairman, DHR
International, Inc. (executive recruitment); former Senior
Vice President, Boyden International Inc. (executive
recruitment); and Director, Commerce and Industry
Association of New Jersey, 411 International, Inc.
(communications), and J&M Cumming Paper Co.

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

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

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

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

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

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

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

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

</TABLE>

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.

<TABLE>
<CAPTION>
COMPARISON OF LONG-TERM BOND RATINGS

----------------- ---------------- --------------- =================================================
<S> <C> <C> <C>
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/C CCC/CC/C CCC/CC/C In or Near Default
----------------- ---------------- --------------- =================================================
----------------- ---------------- --------------- =================================================

D DDD/DD/D In Default
----------------- ---------------- --------------- =================================================
</TABLE>

CORPORATE BONDS

LONG-TERM RATINGS

Moody's Corporate Long-Term Bond Ratings

Aaa Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than the Aaa securities.

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

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

Ba Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.

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

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

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

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

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

S&P Corporate Long-Term Bond Ratings

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

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

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

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

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

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

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

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

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

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

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

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

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

Plus (+) or minus (-) The ratings from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major rating
categories.

Fitch Corporate Long-Term Bond Ratings

Investment Grade

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

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

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

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

Speculative Grade

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

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

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

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

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

CORPORATE SHORT-TERM RATINGS

Moody's Corporate Short-Term Issuer Ratings

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

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

- -- High rates of return on funds employed.

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

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

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

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

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

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

S&P Corporate Short-Term Obligation Ratings

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

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

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

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

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

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

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

Fitch Corporate Short-Term Obligation Ratings

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

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

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

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

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

D Default. Denotes actual or imminent payment default.

MUNICIPAL BONDS

LONG-TERM RATINGS

Moody's Municipal Long-Term Bond Ratings

Aaa Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Aa Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than the Aaa securities.

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

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

Ba Bonds rated Ba are judged to have speculative elements; their future cannot
be considered as well-assured. Often the protection of interest and principal
payments may be very moderate, and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.

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

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

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

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

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

S&P Municipal Long-Term Bond Ratings

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

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

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

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

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

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

Plus (+) or minus (-) The ratings from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major rating
categories.

Fitch Municipal Long-Term Bond Ratings

Investment Grade

Speculative Grade

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

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

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

SHORT-TERM MUNICIPAL RATINGS

Moody's Municipal Short-Term Issuer Ratings

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

- -- High rates of return on funds employed.

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

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

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

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

Moody's Municipal Short-Term Loan Ratings

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

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

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

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

S&P Commercial Paper Ratings

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

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

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

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

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

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

S&P Municipal Short-Term Obligation Ratings

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

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

SP-3 Speculative capacity to pay principal and interest.

Fitch Municipal Short-Term Obligation Ratings

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

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

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

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

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

D Default. Denotes actual or imminent payment default.

ADDITIONAL INFORMATION

Except as otherwise stated in its prospectus or required by law, 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 EDI,
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.

<PAGE>

EVERGREEN FIXED INCOME TRUST

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

EVERGREEN SHORT AND INTERMEDIATE
TERM BOND FUNDS

STATEMENT OF ADDITIONAL INFORMATION

November 1, 1999

Evergreen Capital Preservation and Income Fund ("Capital Preservation Fund")
Evergreen Intermediate Term Bond Fund ("Intermediate Bond Fund")
Evergreen Short-Intermediate Bond Fund ("Short-Intermediate Fund")
(Each a "Fund," together, the "Funds")

Each Fund is a series of an open-end
management investment company
known as Evergreen 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 prospectus dated November 1, 1999 for the Fund
in which you are interested. The Funds are offered through the prospectus
offering Class A, Class B, Class C and Class Y shares. The information in Part 1
of this SAI is specific information about the Funds in the prospectus. The
information in Part 2 of this SAI contains more general information that may or
may not apply to the Fund or Class of shares in which you are interested.

Certain information may be incorporated by reference to the Funds'
Annual Report dated June 30, 1999. You may obtain a copy of the Annual Report
without charge by calling (800) 343-2898.

o:/efit-de/n-1a/sais&i.doc

<PAGE>

TABLE OF CONTENTS

PART 1

TRUST HISTORY.............................................................1-1
INVESTMENT POLICIES.......................................................1-1
OTHER SECURITIES AND PRACTICES............................................1-3
PRINCIPAL HOLDERS OF FUND SHARES..........................................1-3
EXPENSES..................................................................1-6
PERFORMANCE...............................................................1-9
COMPUTATION OF CLASS A OFFERING PRICE ...................................1-11
SERVICE PROVIDERS........................................................1-11
FINANCIAL STATEMENTS.....................................................1-13

PART 2

ADDITIONAL INFORMATION ON SECURITIES AND INVESTMENT PRACTICES.............2-1
PURCHASE AND REDEMPTION OF SHARES........................................2-14
SALES CHARGE WAIVERS AND REDUCTIONS......................................2-16
PRICING OF SHARES........................................................2-17
PERFORMANCE CALCULATIONS.................................................2-19
PRINCIPAL UNDERWRITER....................................................2-21
DISTRIBUTION EXPENSES UNDER RULE 12b-1...................................2-22
TAX INFORMATION..........................................................2-25
BROKERAGE................................................................2-28
ORGANIZATION.............................................................2-29
INVESTMENT ADVISORY AGREEMENT............................................2-30
MANAGEMENT OF THE TRUST..................................................2-32
CORPORATE AND MUNICIPAL BOND RATINGS.....................................2-34
ADDITIONAL INFORMATION...................................................2-46

<PAGE>
PART 1

TRUST HISTORY

The Evergreen Fixed Income Trust is an open-end management investment
company, which was organized as a Delaware business trust on September 18, 1997.
Each Fund is a diversified series of Evergreen Fixed Income Trust. A copy of the
Declaration of Trust is on file as an exhibit to the Trust's Registration
Statement, of which this SAI is a part.

INVESTMENT POLICIES

Each Fund has adopted the fundamental investment restrictions set forth
below which may not be changed without the vote of a majority of the Fund's
outstanding shares, as defined in the Investment Company Act of 1940 (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 Diversified Funds:

To remain classified as a diversified investment company under the 1940
Act, each Fund must conform with the following: With respect 75% of its total
assets, a diversified investment company may not invest more that 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 that 10% of the
outstanding voting securities 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

Further Explanation of Concentration Policy:

Each Fund may not invest more than 25% of its total assets, taken at
market value, in the securities of issuers primarily engaged in any particular
industry (other than securities issued or guaranteed by the U.S. government or
its agencies or instrumentalities).

3. Issuing Senior Securities

Except as permitted under the 1940 Act, each Fund may not issue senior
securities.

4. Borrowing

Each Fund may not borrow money, except to the extent permitted by
applicable law.

Further Explanation of Borrowing Policy:

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

7. Commodities

8. Lending

Further Explanation of Lending Policy:

OTHER SECURITIES AND PRACTICES

For information regarding securities the Funds may purchase and
investment practices the Funds may use, see the following sections in Part 2 of
this SAI under "Additional Information on Securities and Investment Practices."
Information provided in the sections listed below expands upon and supplements
information provided in the Funds' prospectus. The list below applies to all
Funds unless otherwise noted.

Defensive Investments
U.S. Government Securities
When-Issued, Delayed-Delivery and Forward Commitment Transactions
Repurchase Agreements
Reverse Repurchase Agreements
Options
Futures Transactions
Foreign Securities (Short-Intermediate Fund and Intermediate Bond Fund only)
Foreign Currency Transactions (Short-Intermediate Fund and Intermediate Bond
Fund only)
High Yield, High Risk Bonds (Short-Intermediate Fund and Intermediate Bond Fund
only)
Illiquid and Restricted Securities
Investment in Other Investment Companies
Short Sales
Zero Coupon "Stripped" Bonds (Short-Intermediate Fund and Intermediate Bond
only)
Payment-in-kind Securities (Short-Intermediate Fund and Intermediate Bond only)
Mortgage-Backed or Asset-Backed Securities

PRINCIPAL HOLDERS OF FUND SHARES

As of September 30, 1999, the officers and Trustees of the Trust owned
as a group less than 1% of the outstanding shares of any class of each Fund.

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

Capital Preservation Fund Class A
------------------------------------------------------
----------------------------------------- ------------
MLPF&S For the sole benefit of its 20.35%
customers
Attn: Fund Administration #977J2
4800 Deer Lake Dr. E 2nd Fl.
Jacksonville, FL 32246-6484
----------------------------------------- ------------
----------------------------------------- ------------
Dean Witter for the benefit of 5.35%
Vital Spark Foundation
P.O. Box 250
Church Street Station
New York, PA 19050-2705
----------------------------------------- ------------

------------------------------------------------------
Capital Preservation Fund Class B
------------------------------------------------------
----------------------------------------- ------------
MLPF&S For the sole benefit of its 8.12%
customers
Attn: Fund Administration #977N4
4800 Deer Lake Dr. E 2nd Fl.
Jacksonville, FL 32246-6484
----------------------------------------- ------------
------------------------------------------------------
Capital Preservation Fund Class C
------------------------------------------------------
----------------------------------------- ------------
MLPF&S For the sole benefit of its 14.70%
customers
Attn: Fund Administration #97A16
4800 Deer Lake Dr. E 2nd Fl.
Jacksonville, FL 32246-6484
----------------------------------------- ------------
----------------------------------------- ------------
Aneca Federal Credit Union 6.60%
c/o Rick Holland
P.O. Box 21734
Shreveport, LA 71151-0001
----------------------------------------- ------------
------------------------------------------------------
Intermediate Bond Fund Class A
------------------------------------------------------
----------------------------------------- ------------
None
----------------------------------------- ------------
------------------------------------------------------

Intermediate Bond Fund Class B
------------------------------------------------------
----------------------------------------- ------------
MLPF&S for the sole benefit of its 7.24%
customers
Attn: Fund Administration #97A17
4800 Deer Lake Dr. E 2nd Fl.
Jacksonville, FL 32246-6484
----------------------------------------- ------------
------------------------------------------------------
Intermediate Bond Fund Class C
------------------------------------------------------
----------------------------------------- ------------
MLPF&S for the sole benefit of its 27.85%
customers
Attn: Fund Administration #97A18
4800 Deer Lake Dr. E 2nd Fl.
Jacksonville, FL 32246-6484
----------------------------------------- ------------
----------------------------------------- ------------
NFSC FEBO #H3E-522228 6.00%
Ctr for the Advancement of Hlth
Rena Convissor
2000 Florida Ave NW
Suite 210
Washington, DC 20009
----------------------------------------- ------------
------------------------------------------------------
Intermediate Bond Fund Class Y
------------------------------------------------------
----------------------------------------- ------------
First Union National Bank 72.01%
Trust Accounts
Attn: Ginny Batten
11th Fl. CMG-1511
301 S. Tryon Street
Charlotte, NC 28202-1915
----------------------------------------- ------------
----------------------------------------- ------------
First Union National Bank 27.00%
Trust Accounts
Attn: Ginny Batten
11th Fl. CMG-1511
301 S. Tryon Street
Charlotte, NC 28202-1915
----------------------------------------- ------------
------------------------------------------------------
Short-Intermediate Fund Class A
------------------------------------------------------
----------------------------------------- ------------
None
----------------------------------------- ------------
------------------------------------------------------
Short-Intermediate Fund Class B
------------------------------------------------------
----------------------------------------- ------------
None
----------------------------------------- ------------
------------------------------------------------------
Short-Intermediate Fund Class C
------------------------------------------------------
----------------------------------------- ------------
MLPF&S for the sole benefit of its 25.31%
customers
Attn: Fund Administration #97H39
4800 Deer Lake Dr. E 2nd FL
Jacksonville, Fl 32246-6484
----------------------------------------- ------------
----------------------------------------- ------------
First Clearing Corporation 8.59%
FBO Rivero Gordimer & Co Pa
a/c 7101-8713
Ceasar Rivero & Richard Gordimer
2203 N. Lois Ave.
Tampa, FL 33607
----------------------------------------- ------------
----------------------------------------- ------------
First Clearing Corporation 6.53%
a/c 4189-0339
Eleanor O. Hogueland
526 Purchase Street
Rye, NY 10580-1811
----------------------------------------- ------------
----------------------------------------- ------------
First Clearing Corporation 6.08%
FBO Rachel W. Fort and
Edward C. Fort
2737 Stockton St.
Winston Salem, NC 27127
----------------------------------------- ------------
------------------------------------------------------
Short Intermediate Fund Class Y
------------------------------------------------------
----------------------------------------- ------------
First Union National Bank 54.83%
Trust Accounts
Attn: Ginny Batten
11th Fl. CMG-1511
301 S. Tryon Street
Charlotte, NC 28202-1915
----------------------------------------- ------------
----------------------------------------- ------------
First Union National Bank 44.03%
Trust Accounts
Attn: Ginny Batten
11th Fl CMG-1511
301 S. Tryon Street
Charlotte, NC 28202-1915
----------------------------------------- ------------

EXPENSES

Advisory Fees

Each Fund has its own investment advisor. For more information, see
"Investment Advisory Agreements" in Part 2 of this SAI.

Evergreen Investment Management Company ("EIMC") is the investment
advisor to Capital Preservation Fund and Intermediate Bond Fund. EIMC is
entitled to receive a fee from each Fund an annual fee of 2.0% of gross dividend
and interest income, plus the following:

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

Average Daily Net Fee
Assets
---------------------- ---------------------
---------------------- ---------------------
First $100 million 0.50%
---------------------- ---------------------
---------------------- ---------------------
Next $100 million 0.45%
---------------------- ---------------------
---------------------- ---------------------
Next $100 million 0.40%
---------------------- ---------------------
---------------------- ---------------------
Next $100 million 0.35%
---------------------- ---------------------
---------------------- ---------------------
Next $100 million 0.30%
---------------------- ---------------------
---------------------- ---------------------
Over $500 million 0.25%
---------------------- ---------------------

Evergreen Investment Management ("EIM") (formerly known as Capital
Management Group or CMG), a division of First Union National Bank, is the
investment advisor to Short-Intermediate Fund. EIM is entitled to receive a fee
from Short-Intermediate Fund at the annual rate of 0.50% of the Fund's average
daily net assets.

Advisory Fees Paid

Below are the advisory fees paid by each Fund for the last three fiscal
periods.
<TABLE>
<CAPTION>
---------------------------------------------------------------- ----------------------- ======================

Fund/Fiscal Year or Period Advisory Fee Paid Advisory Fees Waived
---------------------------------------------------------------- ----------------------- ======================
===============================================================================================================
<S> <C> <C>
Year or Period Ended 1999
===============================================================================================================
---------------------------------------------------------------- ----------------------- ======================
Capital Preservation Fund $270,118 $147,381
---------------------------------------------------------------- ----------------------- ======================
---------------------------------------------------------------- ----------------------- ======================
Intermediate Bond Fund $1,196,312 $293,547
---------------------------------------------------------------- ----------------------- ======================
---------------------------------------------------------------- ----------------------- ======================
Short-Intermediate Fund $1,986,762 $0
---------------------------------------------------------------- ----------------------- ======================
===============================================================================================================

Year or Period Ended 1998
===============================================================================================================
---------------------------------------------------------------- ----------------------- ======================
Capital Preservation Fund $307,654 $212,054
---------------------------------------------------------------- ----------------------- ======================
---------------------------------------------------------------- ----------------------- ======================
Intermediate Bond Fund $574,715 $285,486
---------------------------------------------------------------- ----------------------- ======================
---------------------------------------------------------------- ----------------------- ======================
Short-Intermediate Fund $1,976,366 $0
---------------------------------------------------------------- ----------------------- ======================
===============================================================================================================
Year or Period Ended 1997
===============================================================================================================
---------------------------------------------------------------- ----------------------- ======================
Capital Preservation Fund $284,977 $245,255
---------------------------------------------------------------- ----------------------- ======================
---------------------------------------------------------------- ----------------------- ======================
Intermediate Bond Fund $987,044 $5,480
---------------------------------------------------------------- ----------------------- ======================
---------------------------------------------------------------- ----------------------- ======================
Short-Intermediate Fund $1,998,063 $0
---------------------------------------------------------------- ----------------------- ======================
</TABLE>

Brokerage Commissions

The Funds paid no brokerage commissions during fiscal years 1999, 1998
and 1997.

Underwriting Commissions

Below are the underwriting commissions paid by each Fund and the
amounts retained by the principal underwriter for the last three fiscal periods.
For more information, see "Principal Underwriter" in Part 2 of this SAI.

- -------------------------------- -------------------- ==================

Total Underwriting Underwriting
Fund/Fiscal Year or Period Commissions Commissions
Retained
- -------------------------------- -------------------- ==================
========================================================================

Year or Period Ended 1999
========================================================================
- -------------------------------- -------------------- ==================
Capital Preservation Fund $120,393 $0
- -------------------------------- -------------------- ==================
- -------------------------------- -------------------- ==================
Intermediate Bond Fund $603,041 $47,941
- -------------------------------- -------------------- ==================
- -------------------------------- -------------------- ==================
Short-Intermediate Fund $228,524 $0
- -------------------------------- -------------------- ==================
========================================================================

Year or Period Ended 1998
========================================================================
- -------------------------------- -------------------- ==================
Capital Preservation Fund $74,609 $0
- -------------------------------- -------------------- ==================
- -------------------------------- -------------------- ==================
Intermediate Bond Fund $13,855 $0
- -------------------------------- -------------------- ==================
- -------------------------------- -------------------- ==================
Short-Intermediate Fund $22,935 $2,549
- -------------------------------- -------------------- ==================
========================================================================

Year or Period Ended 1997
========================================================================
- -------------------------------- -------------------- ==================
Capital Preservation Fund $305,542 $244,211
- -------------------------------- -------------------- ==================
- -------------------------------- -------------------- ==================
Intermediate Bond Fund $3,201 $504
- -------------------------------- -------------------- ==================
- -------------------------------- -------------------- ==================
Short-Intermediate Fund $52,484 $6,833
- -------------------------------- -------------------- ==================

12b-1 Fees

Below are the 12b-1 fees paid by each Fund for the fiscal year or
period ended June 30, 1999. For more information, see "Distribution Expenses
Under Rule 12b-1" in Part 2 of this SAI.
<TABLE>
<CAPTION>
- ------------------------------- ================================= ================================== ===============================

Class A Class B Class C

================================= ================================== ===============================
---------------- ---------------- ---------------- ----------------- ---------------- ==============

Fund Distribution Service Fees Distribution Service Fees Distribution Service Fees
Fees Fees Fees
- ------------------------------- ---------------- ---------------- ---------------- ----------------- ---------------- ==============
- ------------------------------- ---------------- ---------------- ---------------- ----------------- ---------------- ==============
<S> <C> <C> <C> <C> <C> <C>
Capital Preservation Fund $0 $36,258 $156,882 $52,294 $31,166 $10,387
- ------------------------------- ---------------- ---------------- ---------------- ----------------- ---------------- ==============
- ------------------------------- ---------------- ---------------- ---------------- ----------------- ---------------- ==============
Intermediate Bond Fund $0 $296,312 $84,664 $28,221 $39,283 $13,094
- ------------------------------- ---------------- ---------------- ---------------- ----------------- ---------------- ==============
- ------------------------------- ---------------- ---------------- ---------------- ----------------- ---------------- ==============
Short-Intermediate Fund $0 $19,253 $178,960 $59,653 $10,634 $3,545
- ------------------------------- ---------------- ---------------- ---------------- ----------------- ---------------- ==============
</TABLE>

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 twelve months ended June 30, 1999. 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 Aggregate Compensation Total Compensation from
from Trust Trust and Fund Complex Paid
to Trustees*
- ------------------------- ------------------------- ============================
- ------------------------- ------------------------- ============================
$1,004 $75,000
Laurence B. Ashkin
- ------------------------- ------------------------- ============================
- ------------------------- ------------------------- ============================
$1,004 $75,000
Charles A. Austin, III
- ------------------------- ------------------------- ============================
- ------------------------- ------------------------- ============================
$976 $74,250
K. Dun Gifford
- ------------------------- ------------------------- ============================
- ------------------------- ------------------------- ============================
$1,312 $98,000
James S. Howell
- ------------------------- ------------------------- ============================
- ------------------------- ------------------------- ============================
$976 $74,250
Leroy Keith Jr.
- ------------------------- ------------------------- ============================
- ------------------------- ------------------------- ============================
$1,004 $75,000
Gerald M. McDonnell
- ------------------------- ------------------------- ============================
- ------------------------- ------------------------- ============================
$1,173 $86,500
Thomas L. McVerry
- ------------------------- ------------------------- ============================
- ------------------------- ------------------------- ============================
$976 $74,250
William Walt Pettit
- ------------------------- ------------------------- ============================
- ------------------------- ------------------------- ============================
$976 $74,250
David M. Richardson
- ------------------------- ------------------------- ============================
- ------------------------- ------------------------- ============================
$1,004 $78,000
Russell A. Salton, III
- ------------------------- ------------------------- ============================
- ------------------------- ------------------------- ============================
$1,109 $90,502
Michael S. Scofield
- ------------------------- ------------------------- ============================
- ------------------------- ------------------------- ============================
$976 $74,250
Richard J. Shima
- ------------------------- ------------------------- ============================
*As of January 1, 2000, Michael S. Scofield will become
Chairman of the Board and James S. Howell will become Trustee
of Emeritis.
**Certain Trustees have elected to defer all or
part of their total compensation for the twelve months ended
June 30, 1999. The amounts listed below will be payable in
later years to the respective Trustees:

Austin $11,325
Howell $78,400
McDonnell $75,000
McVerry $86,500
Pettit $74,250
Salton $78,000
Scofield $30,900

PERFORMANCE

Total Return

Below are the annual total returns for each class of shares of the
Funds (including applicable sales charges) as of June 30, 1999. For more
information, see "Total Return" under "Performance Calculations" in Part 2 of
this SAI.
<TABLE>
<CAPTION>
- ----------------------- -------------------- --------------------- -------------------- =====================

Fund/Class One Year Five Years Ten Years or Since Inception Date of
Inception Class
- ----------------------- -------------------- --------------------- -------------------- =====================
=============================================================================================================

Capital Preservation Fund(a)
=============================================================================================================
- ----------------------- -------------------- --------------------- -------------------- =====================
<S> <C> <C> <C> <C> <C>
Class A 1.36% 4.95% 4.42% 12/30/1994

- ----------------------- -------------------- --------------------- -------------------- =====================
=============================================================================================================

Intermediate Bond Fund(b)

=============================================================================================================
- ----------------------- -------------------- --------------------- -------------------- =====================
Class A -2.17% 5.78% 6.75% 2/13/1987

- ----------------------- -------------------- --------------------- -------------------- =====================
- ----------------------- -------------------- --------------------- -------------------- =====================
Class C -0.64% 5.63% 6.58% 2/1/1993
- ----------------------- -------------------- --------------------- -------------------- =====================
- ----------------------- -------------------- --------------------- -------------------- =====================
Class Y 1.43% 6.73% 7.45% 1/26/1998
- ----------------------- -------------------- --------------------- -------------------- =====================
=============================================================================================================

Short-Intermediate Fund(c)

- ----------------------- -------------------- --------------------- -------------------- =====================
- ----------------------- -------------------- --------------------- -------------------- =====================
Class C 1.69% 5.33% 6.36% 9/6/1994
- ----------------------- -------------------- --------------------- -------------------- =====================
- ----------------------- -------------------- --------------------- -------------------- =====================
Class Y 3.69% 6.32% 6.92% 1/4/1991
- ----------------------- -------------------- --------------------- -------------------- =====================
</TABLE>

(a) Historical performance shown for Classes A, C and Y prior to their inception
is based on the performance of Class B, the original class offered. These
historical returns for Classes A and Y have not been adjusted to eliminate the
effect of the higher 12b-1 fees applicable to Class B. The Fund currently incurs
12b-1 expenses of 0.18% for Class A. This rate is based on 0.25% assessed on
assets prior to 1/1/97 and 0.10% assessed on new assets from 1/1/97. Classes B
and C each incur 12b-1 expenses of 1.00%. Class Y does not pay 12b-1 fees. If
these fees had been reflected, returns for Classes A and Y would have been
higher.

(b) Historical performance shown for Classes B, C and Y prior to their inception
is based on the performance of Class A, the original class offered. These
historical returns for Classes B and C have not been adjusted to reflect the
effect of each Class' 12b-1 fees. These fees for Class A are 0.25%, for Class B
are 1.00% and for Class C are 1.00%. If these fees had been reflected, returns
would have been lower. The historical returns for Class Y have been adjusted to
reflect the elimination of the 0.25% 12b-1 fee applicable to Class A. Class Y
does not pay a 12b-1 fee. If these fees had not been eliminated, returns for
Class Y would have been lower.

(c) Historical performance shown for Classes B, C and Y prior to their inception
is based on the performance of Class A, the original class offered. These
historical returns for Classes B, C and Y have not been adjusted to reflect the
effect of each Class' 12b-1 fees. These fees for Class A are 0.25%, for Class B
are 1.00% and for Class C are 1.00%. Class Y does not pay a 12b-1 fee. If these
fees had been reflected, returns for Classes B and C would have been lower while
returns for Class Y would have been higher.

Yields

Below are the current yields of the Funds for the 30-day period ended
June 30, 1999. For more information, see "30-Day Yield" under "Performance
Calculations" in Part 2 of this SAI.
<TABLE>
<CAPTION>
======================================================================================================

30-Day Yield
======================================================================================================
- ------------------------------------- --------------- -------------- ----------------- ===============

Fund Class A Class B Class C Class Y
- ------------------------------------- --------------- -------------- ----------------- ===============
- ------------------------------------- --------------- -------------- ----------------- ===============
<S> <C> <C> <C>
Capital Preservation Fund 4.58% 3.90% 3.93% N/A
- ------------------------------------- --------------- -------------- ----------------- ===============
- ------------------------------------- --------------- -------------- ----------------- ===============
Intermediate Bond Fund 5.94% 5.36% 5.39% 6.40%
- ------------------------------------- --------------- -------------- ----------------- ===============
- ------------------------------------- --------------- -------------- ----------------- ===============
Short-Intermediate Fund 5.73% 5.02% 5.02% 6.03%
- ------------------------------------- --------------- -------------- ----------------- ===============
</TABLE>

COMPUTATION OF CLASS A OFFERING PRICE

Class A shares are sold at the NAV plus a sales charge. Below is an
example of the method of computing the offering price of Class A shares of each
Fund. The example assumes a purchase of Class A shares of each Fund aggregating
less than $100,000 based upon the NAV of each Fund's Class A shares at June 30,
1999. For more information, see "Purchase and Redemption of Shares" and "Pricing
of Shares."
<TABLE>
<CAPTION>
- -------------------------------------- ------------------------ -------------------- =================

Net Asset Value Per Offering Price
Fund Share Sales Charge Per Share
- -------------------------------------- ------------------------ -------------------- =================
- -------------------------------------- ------------------------ -------------------- =================
<S> <C> <C> <C>
Capital Preservation Fund $9.65 3.25% $9.97
- -------------------------------------- ------------------------ -------------------- =================
- -------------------------------------- ------------------------ -------------------- =================
Intermediate Bond Fund $8.66 3.25% $8.95
- -------------------------------------- ------------------------ -------------------- =================
- -------------------------------------- ------------------------ -------------------- =================
Short-Intermediate Fund $9.68 3.25% $10.01
- -------------------------------------- ------------------------ -------------------- =================
</TABLE>

SERVICE PROVIDERS

Administrator

Evergreen Investment Services, Inc. ("EIS") serves as administrator to
Short-Intermediate Fund, subject to the supervision and control of the Trust's
Board of Trustees. EIS provides the Fund 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 investment 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%
---------------------- =================

EIS also provides facilities, equipment and personnel to Capital
Preservation Fund and Intermediate Bond Fund on behalf of the investment
advisor. Capital Preservation Fund and Intermediate Bond Fund reimburse EIS for
the cost of providing such services.

Transfer Agent

Evergreen Service Company ("ESC"), a subsidiary of First Union
Corporation, is the Fund's 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
----------------------------- --------------- ==============

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

Distributor

Evergreen Distributor, Inc. ("EDI") markets the Funds through
broker-dealers and other financial representatives. Its address is 90 Park
Avenue, New York, New York 10016.

Independent Auditors

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

Custodian

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

Legal Counsel

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

FINANCIAL STATEMENTS

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

<PAGE>

EVERGREEN FUNDS
Statement of Additional Information ("SAI")

PART 2

ADDITIONAL INFORMATION ON SECURITIES
AND INVESTMENT PRACTICES

Defensive Investments

U.S. Government Securities

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

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

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

(ii) Farmers Home Administration;

(iii) Federal Home Loan Banks;

(iv) Federal Home Loan Mortgage Corporation;

(v) Federal National Mortgage Association; and

(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.

When-Issued, Delayed-Delivery and Forward Commitment Transactions

Repurchase Agreements

Reverse Repurchase Agreements

Options

Futures Transactions

Foreign Securities

Foreign Currency Transactions

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:

(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.

(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.

Investment in Other Investment Companies

Short Sales

Municipal Bonds

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) 10% 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.

Master Demand Notes

Brady Bonds

The Fund may also invest in Brady Bonds. Brady Bonds are created through
the exchange of existing commercial bank loans to foreign entities for new
obligations in connection with debt restructurings under a plan introduced by
former U.S. Secretary of the Treasury, Nicholas F. Brady (the "Brady Plan").
Brady Bonds have been issued only recently, and, accordingly, do not have a long
payment history. They may be collateralized or uncollateralized and issued in
various currencies (although most are U.S. dollar-denominated) and they are
actively traded in the over-the-counter secondary market.

Obligations of Foreign Branches of United States Banks

Obligations of United States Branches of Foreign Banks

Payment-in-kind Securities

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

For federal income tax purposes, a purchaser of principal zero coupon
bonds or interest 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
interest 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

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
servicers 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.

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 the 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.

Limited Partnerships

PURCHASE AND REDEMPTION OF SHARES

Class A Shares

Class B Shares

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 C Shares

Class C shares are available only through broker-dealers who have
entered into special distribution agreements with EDI. 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

INSTITUTIONAL SHARES, INSTITUTIONAL SERVICE SHARES

Contingent Deferred Sales Charge

SALES CHARGE WAIVERS AND REDUCTIONS

The following information is not applicable to Institutional and
Institutional Service shares.

If you making a large purchase, there are several ways you can combine
multiple purchases of Class A shares in Evergreen Funds and take advantage of
lower sales charges. These are described below.

Combined Purchases

Rights of Accumulation

Letter of Intent

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;

3. institutional investors, which may include bank trust
departments and registered investment advisors;

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 FUNB, its affiliates, EDI, any broker-dealer with
whom EDI, 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, EDI 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 in or any of the Evergreen Funds trust company as
Trustee if the initial investment 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.

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 which offers the same class of shares. 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

PRICING OF SHARES

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 days the New York Stock Exchange is closed: New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day.

The NAV of 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 investment advisor's opinion, the last sales price does not
reflect an accurate current market value; and other assets are valued
at prices deemed in good faith to be fair under procedures established
by the Board of Trustees.

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

PERFORMANCE CALCULATIONS

Total Return

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

[OBJECT OMITTED]

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

Yield

30-Day Yield

[OBJECT OMITTED] [OBJECT OMITTED]

7-Day Current and Effective Yield

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

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

[OBJECT OMITTED]

Tax Equivalent Yield

[OBJECT OMITTED]

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

PRINCIPAL UNDERWRITER

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.

DISTRIBUTION EXPENSES UNDER RULE 12b-1

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

Class A 0.75%*
------------------------------- ---------------
------------------------------- ---------------

Class B 1.00%
------------------------------- ---------------
------------------------------- ---------------

Class C 1.00%
------------------------------- ---------------
------------------------------- ---------------

Institutional Service 0.75%*
------------------------------- ---------------

* Currently limited to 0.25% or less to be used exclusively as
a shareholder service fee. 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 EDI pursuant to
Distribution Agreements (each an "Agreement," together, the "Agreements") that
the Fund has entered into with respect to its Class A, Class B, Class C and
Institutional Service shares, as applicable. The compensation is based on a
maximum annual percentage of the average daily net assets attributable to a
class, as follows:

*May be lower. See the expense table in the prospectus of the
Fund in which you are interested.

The Agreements provide that EDI 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.

TAX INFORMATION

Requirements for Qualifications as a Regulated Investment Company

Taxes on Distributions

Special Tax Information for Shareholders of Municipal Bond Funds

Taxes on The Sale or Exchange of Fund Shares

Other Tax Considerations

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.

<PAGE>

BROKERAGE

Brokerage Commissions

Selection of Brokers

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 EAMC, Lieber & Company, an affiliate of EAMC
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

ORGANIZATION

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

Description of Shares

Voting Rights

Limitation of Trustees' Liability

Banking Laws

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 (unless
the Fund is Evergreen Masters 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.

Managers (Evergreen Masters Fund only)

Transactions Among Advisory Affiliates

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

<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 (real estate development) and
Centrum Properties, Inc.(real estate development).

K. Dun Gifford Trustee Trustee, Treasurer and Chairman of the Finance Committee,
(DOB: 10/12/38) Cambridge College; Chairman Emeritus and Director, American
Institute of Food and Wine; Chairman and President, Oldways
Preservation and Exchange Trust (education); former Chairman
of the Board, Director, and Executive Vice President, The
London Harness Company (leather goods purveyor); former
Managing Partner, Roscommon Capital Corp.; former Chief
Executive Officer, Gifford Gifts of Fine Foods; former
Chairman, Gifford, Drescher & Associates (environmental
consulting).

James S. Howell* Chairman of the Board Former Chairman of the Distribution Committee, Foundation
(DOB: 8/13/24) of Trustees for the Carolinas; and former Vice President of Lance Inc.
(food manufacturing).

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) (manufacturing); and Director of Carolina Cooperative
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.
(communications), and J&M Cumming Paper Co.

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

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

Richard J. Shima Trustee Former Chairman, Environmental Warranty, Inc. (insurance
(DOB: 8/11/39) agency); Executive Consultant, Drake Beam Morin, Inc.
(executive outplacement); Director of Connecticut Natural
Gas Corporation, Hartford Hospital, Old State House
Association, Middlesex Mutual Assurance Company (property/
casualty insurance), and Enhance Financial Services, Inc.
(financial guaranty insurance); 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.(investment banking, specializing in the
insurance industry)

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

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

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

*As of January 1, 2000, Michael S. Scofield will become Chairman of the Board and James S. Howell will become Trustee of
Emeritis.
**Address: BISYS Fund Services, 90 Park Avenue, New York, New York 10016
***Address: BISYS, 3435 Stelzer Road, Columbus, Ohio 43219-8001
</TABLE>

CORPORATE AND MUNICIPAL BOND 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/C CCC/CC/C CCC/CC/C In or Near Default
- ----------------- ----------- --------- =======================================
- ----------------- ----------- --------- =======================================

D DDD/DD/D In Default
- ----------------- ----------- ---------- =======================================

CORPORATE BONDS

LONG-TERM RATINGS

Moody's Corporate Long-Term Bond Ratings

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

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

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

S&P Corporate Long-Term Bond Ratings

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

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

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:

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

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.