Evergreen Fixed Income Trust N-CSR Certified annual shareholder report (management investment company)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES

Investment Company Act file number   811-08415

Evergreen Fixed Income Trust
_____________________________________________________________
(Exact name of registrant as specified in charter)

200 Berkeley Street
Boston, Massachusetts 02116
_____________________________________________________________
(Address of principal executive offices) (Zip code)

Michael H. Koonce, Esq.
200 Berkeley Street
Boston, Massachusetts 02116
____________________________________________________________
(Name and address of agent for service)

Registrant's telephone number, including area code:    (617) 210-3200

Date of fiscal year end: Registrant is making an annual filing for five of its series Evergreen High Income Fund, Evergreen U.S Government Fund, Evergreen Institutional Mortgage Portfolio, Evergreen Diversified Income Builder Fund, and Evergreen Core Plus Bond Fund, for the year ended April 30, 2008. These five series have an April 30, fiscal year end.

Date of reporting period: April 30, 2008

Item 1 - Reports to Stockholders.

Evergreen High Income Fund

	table of contents
1	LETTER TO SHAREHOLDERS
4	FUND AT GLANCE
5	PORTFOLIO MANAGER COMMENTARY
8	ABOUT YOUR FUND’S EXPENSES
9	FINANCIAL HIGHLIGHTS
13	SCHEDULE OF INVESTMENTS
27	STATEMENT OF ASSETS AND LIABILITIES
29	STATEMENT OF OPERATIONS
30	STATEMENTS OF CHANGES IN NET ASSETS
31	NOTES TO FINANCIAL STATEMENTS
41	REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
44	TRUSTEES AND OFFICERS

This annual report must be preceded or accompanied by a prospectus of the Evergreen fund contained herein. The prospectus contains more complete information, including fees and expenses, and should be read carefully before investing or sending money.

The fund will file its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q will be available on the SEC’s Web site at http://www.sec.gov. In addition, the fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 800.SEC.0330.

A description of the fund’s proxy voting policies and procedures, as well as information regarding how the fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available by visiting our Web site at EvergreenInvestments.com or by visiting the SEC’s Web site at http://www.sec.gov. The fund’s proxy voting policies and procedures are also available without charge, upon request, by calling 800.343.2898.

Mutual Funds:

NOT FDIC INSURED MAY LOSE VALUE NOT BANK GUARANTEED

Evergreen Investments^SM is a service mark of Evergreen Investment Management Company, LLC. Copyright 2008, Evergreen Investment Management Company, LLC.

Evergreen Investment Management Company, LLC is a subsidiary of Wachovia Corporation and is an affiliate of Wachovia Corporation’s other Broker Dealer subsidiaries.

Evergreen mutual funds are distributed by Evergreen Investment Services, Inc. 200 Berkeley Street, Boston, MA 02116

LETTER TO SHAREHOLDERS

June 2008

Dennis H. Ferro

President and Chief Executive Officer

Dear Shareholder:

We are pleased to provide the Annual Report for Evergreen High Income Fund for the twelve-month period ended April 30, 2008 (the “twelve-month period”).

The fiscal year witnessed a dramatic change in fixed income markets as problems that first surfaced in housing and the subprime mortgages raised questions about the strength of the domestic economy and the risks of credit-sensitive investments. Corporate bonds and asset-backed securities performed well early in the period, with gains in economic output, corporate profits and employment encouraging optimism. The backdrop for investing began to change, however, by the summer of 2007 amid widening worries about problems in the financials sector. Major financial institutions began to report substantial losses from their exposures to subprime mortgages and banks started to tighten their credit standards and to restrict their lending. With fears of a dramatic downturn hovering over the market, fixed income investors sought out the highest-quality securities and attempted to avoid credit risk. As a con sequence, the prices of corporate bonds and many asset-backed securities fell, while Treasuries rallied in a general flight to quality over much of the period.

These general trends later reversed themselves in the final month of the twelve-month period, with high yield corporate bonds and other credit-sensitive securities rallying in April 2008 following a series of actions by the U.S. Federal Reserve Board (the “Fed”) to stabilize the markets. Equities, meanwhile, tended to move in the same general direction as corporate bonds over the fiscal year. Stock prices rose very early in the period before falling in late 2007 and early 2008 and then rallying again in April. For the full twelve-month period, stock valuations fell across all market capitalizations, investment styles and regions. At the same time, the prices of gold, oil and other commodities surged while the U.S. dollar weakened further.

The U.S. economy grew briskly early in 2007, but then slowed

1

LETTER TO SHAREHOLDERS continued

significantly in late 2007 and early 2008. Economic growth decelerated as lending for ordinary consumer and commercial activity dried up, accentuating the weakening effects of declining home prices. Corporate profits, employment and other key economic indicators showed clear evidence of deterioration. Gross Domestic Product growth decelerated to a paltry 0.6% rate during the final quarter of 2007 and a marginally better 0.9% pace for the first quarter of 2008. Much of the strength early in 2008 came from exports and government spending, rather than from any noticeable improvements in consumer spending, business investment or housing. To reinvigorate the economy and stimulate lending activity, the Fed became increasingly aggressive, taking a series of steps to pour liquidity into the financial system. Starting in September 2007 and continuing through April 2008, the Fed cut the key fed funds rate seven different times, lowering the influential short-term rate from 5.25% to 2%. In March 2008, the central bank also opened its lending facilities to securities firms as well as commercial banks and intervened to help JPMorgan Chase & Co. purchase the collapsing investment bank Bear Stearns Cos. Meanwhile, Congress and the Bush administration rushed through a $168 billion fiscal stimulus bill, which included tax rebate checks, in an effort to boost growth in the second half of 2008.

During the twelve-month period, managers of Evergreen’s intermediate- and long-term bond funds paid careful attention to risk management in a changing market environment. The teams supervising the higher-credit quality funds—including Evergreen U.S. Government Fund, Evergreen Core Bond Fund, Evergreen Core Plus Bond Fund and Evergreen Institutional Mortgage Portfolio—monitored Fed policy and interest-rate movements as well as general macroeconomic trends in managing their portfolios. Meanwhile, the managers of Evergreen High Income Fund and Evergreen Select High Yield Bond Fund tended to position their credit-sensitive portfolios relatively conservatively during a period of growing risk aversion. After repositioning their portfolio early in the fiscal year, the managers of Evergreen Diversified Income Builder Fund maintained an emphasis on better-quality, high yield corporate bonds and also increased their exposure to dividend-paying stocks.

The experiences in the capital markets during the twelve-month period have underscored the value

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LETTER TO SHAREHOLDERS continued

of a well-diversified, long-term investment strategy to help soften the effects of volatility in any one market or asset class. As always, we encourage investors to maintain diversified investment portfolios in pursuit of their long-term investment goals.

Please visit us at EvergreenInvestments.com for more information about our funds and other investment products available to you. Thank you for your continued support of Evergreen Investments.

Sincerely,

Dennis H. Ferro

President and Chief Executive Officer

Evergreen Investment Company, Inc.

Notice of Investment Strategy Change:

Effective March 13, 2008, the Fund may invest in loans. The Fund may invest in a loan at origination as a co-lender or by acquiring in the secondary market participations in, or assignments or novations of, a loan. When a Fund acquires an interest in a loan in the secondary market, it may acquire some or all of the interest of a bank or other lending institution in a loan to a borrower. Loans are subject to risks similar to those associated with other below-investment grade bond investments, such as credit risk (e.g. risk of issuer default), below-investment grade bond risk (e.g. risk of greater volatility in value) and risk that the loan may become illiquid or difficult to price.

Special Notice to Shareholders:

Please visit our Web site at EvergreenInvestments.com for statements from President and Chief Executive Officer, Dennis Ferro, regarding the firm’s recent settlement with the Securities and Exchange Commission (SEC) and prior settlement with the Financial Industry Regulatory Authority (FINRA).

3

FUND AT A GLANCE

as of April 30, 2008

MANAGEMENT TEAM

Investment Advisor:

• Evergreen Investment Management Company, LLC

Sub-Advisor:

• Tattersall Advisory Group, Inc.

Portfolio Manager:

• Andrew Cestone

CURRENT INVESTMENT STYLE

Source: Morningstar, Inc.

Morningstar’s style box is based on a portfolio date as of 3/31/2008.

The Fixed Income style box placement is based on a fund's average effective maturity or duration and the average credit rating of the bond portfolio.

PERFORMANCE AND RETURNS

Portfolio inception date: 9/11/1935

	Class A	Class B	Class C	Class I
Class inception date	1/20/1998	9/11/1935	1/21/1998	4/14/1998
Nasdaq symbol	EKHAX	EKHBX	EKHCX	EKHYX
Average annual return*
1-year with sales charge	-5.64%	-6.25%	-2.57%	N/A
1-year w/o sales charge	-0.92%	-1.65%	-1.65%	-0.66%
5-year	5.46%	5.40%	5.71%	6.77%
10-year	4.02%	3.78%	3.78%	4.82%
Maximum sales charge	4.75% Front-end	5.00% CDSC	1.00% CDSC	N/A

* Adjusted for maximum applicable sales charge, unless noted.

Past performance is no guarantee of future results. The performance quoted represents past performance and current performance may be lower or higher. The investment return and principal value of an investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. To obtain performance information current to the most recent month-end for Classes A, B, C or I, please go to EvergreenInvestments.com/fundperformance. The performance of each class may vary based on differences in loads, fees and expenses paid by the shareholders investing in each class. Performance includes the reinvestment of income dividends and capital gain distributions. Performance shown does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The fund incurs a 12b-1 fee of 0.25% for Class A and 1.00% for Classes B and C. Class I does not pay a 12b-1 fee.

The advisor is reimbursing a portion of the 12b-1 fee for Class A. Had the fee not been reimbursed, returns for Class A would have been lower. Returns reflect expense limits previously in effect for all classes, without which returns would have been lower.

Comparison of a $10,000 investment in the Evergreen High Income Fund Class A shares versus a similar investment in the Merrill Lynch High Yield Master Index^† (MLHYMI) and the Consumer Price Index (CPI).

The MLHYMIis an unmanaged market index and does not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses or any taxes. The CPIis a commonly used measure of inflation and does not represent an investment return. It is not possible to invest directly in an index.

4

PORTFOLIO MANAGER COMMENTARY

The fund’s Class A shares returned -0.92% for the twelve-month period ended April 30, 2008, excluding any applicable sales charges. During the same period, the MLHYMI returned -0.76%.

The fund’s objective is to seek high income.

Investment Process

At the beginning of this past fiscal year, the high yield market had been providing excess returns and outperforming other fixed income sectors, but toward the end of June of 2007, problems with subprime collateral losses prompted investors to seek opportunities in the higher-quality markets. As a result, a typical “flight to quality” pattern occurred, with Treasury yields moving sharply lower and non-Treasury yield spreads increasing. We continued to implement a fundamental bottom-up security valuation style, reducing positions for which prices were above expected value and adding to positions for which prices were below expected value.

During the third quarter of 2007, many U.S. and foreign-based hedge fund and mutual fund managers announced that they were unable to meet investor redemptions because of their subprime investments. This situation raised concerns that subprime credit risks were spreading and would impair overall economic growth or, worse, the creditworthiness of banks and broker/dealers. Investors reasoned that unexpected losses incurred by banks and broker/dealers would increase the cost of lending to businesses. In response, investors typically raised their return requirements and demanded wider yield spreads across a broad range of fixed income investments, including high yield, which drove prices lower. During this period, we maintained a conservative portfolio, keeping duration, or sensitivity to interest rate changes, relatively short. The shorter duration was composed of purchases of callable and tendered bonds, which outperformed other high yield securities as yield spreads widened throughout most of the quarter.

As we moved into December of 2007, the high yield market continued its focus on how increased mortgage security write-downs in 2008 would affect business lending. Such concerns have prompted a number of measures from the U.S. Government to reduce defaults among subprime borrowers. Though the direct effect of reducing the number of foreclosures was considered positive, U.S. Treasury action signaled another level of government

Class I shares are only offered, subject to the minimum initial purchase requirements, in the following manner: (1) to investment advisory clients of EIMC (or its advisory affiliates), (2) to employer- or state-sponsored benefit plans, including but not limited to, retirement plans, defined benefit plans, deferred compensation plans, or savings plans, (3) to fee-based mutual fund wrap accounts, (4) through arrangements entered into on behalf of the Evergreen funds with certain financial services firms, (5) to certain institutional investors, and (6) to persons who owned Class Y shares in registered name in an Evergreen fund on or before December 31, 1994 or who owned shares of any SouthTrust fund in registered name as of March 18, 2005 or who owned shares of Vestaur Securities Fund as of May 20, 2005.

Class I shares are only available to institutional shareholders with a minimum of $1 million investment, which may be waived in certain situations.

The fund’s investment objective may be changed without a vote of the fund’s shareholders.

Foreign investments may contain more risk due to the inherent risks associated with changing political climates, foreign market instability and foreign currency fluctuations.

Derivatives involve additional risks including interest rate risk, credit risk, the risk of improper valuation and the risk of non-correlation to the relevant instruments they are designed to hedge or to closely track.

High yield, lower-rated bonds may contain more risk due to the increased possibility of default.

Loans are subject to risks similar to those associated with other below investment grade bond investments, such as credit risk (e.g. risk of issuer default), below investment grade bond risk (e.g. risk of greater volatility in value) and risk that the loan may become illiquid or difficult to price.

The return of principal is not guaranteed due to fluctuation in the fund’s NAV caused by changes in the price of individual bonds held by the fund and the buying and selling of bonds by the fund. Bond funds have the same inflation, interest rate and credit risks as individual bonds. Generally, the value of bond funds rises when prevailing interest rates fall, and falls when interest rates rise.

^†Copyright 2008. Merrill Lynch, Pierce, Fenner & Smith Incorporated. All rights reserved.

All data is as of April 30, 2008, and subject to change.

5

PORTFOLIO MANAGER COMMENTARY continued

intervention and left many investors more confused about how to value investments. This negative sentiment, along with the usual illiquidity associated with the last weeks of 2007, raised hopes that the Federal Reserve Board (the “Fed”) would reconfirm its commitment to market liquidity. Such measures were made by both the Fed and European Central Banks which provided additional liquidity to the market and lowered year-end cost of funds. While these actions were considered positive, the high yield market continued to reflect concern about the effect of further securitized investment write-downs and the ability of financial institutions to make loans and underwrite non-investment grade financings in 2008. To reduce credit risk in this environment, we broadened the fund’s diversification by adding 15 issuers, and reduced exposure to lower-quality, CCC-rated securities by more than 2%. The fund continued to have an overweight to B-rated securities and an underweight to both BB- and CCC-rated securities.

In the first quarter of 2008, the high yield market continued to post very negative performance. Most of the underperformance resulted from increased risk aversion on the part of investors rather than specific high yield market events. While the Fed attempted to shore up investor confidence by lowering short-term interest rates and providing additional funding to the commercial banking system, it was not until the Central Bank provided direct funding to investment banks and offered partial collateral guarantees to JPMorgan in its purchase of Bear Stearns that investors began to become more confident that the U.S. financial system was sound.

Throughout the first quarter of 2008, the management of Evergreen High Income Fund emphasized broad diversification, and the fund’s relative weight in all but two of 70 industries in the benchmark was within 2.5%. This diversification strategy was helpful in providing consistent performance. Because of market volatility, the fund was able to purchase selected high yield bonds at prices that were below their expected downside value, as investors sold issues at distressed prices. In some cases, prices for these newly purchased securities recovered. In other situations, the securities remained lower than their expected value. In still other instances, the securities were sold because of concerns that specific company risks could lead to defaults.

Contributors to Performance

Overall risk positioning relative to the market and security selection benefited the fund’s performance. As market performance deteriorated, the fund’s conservative positioning with its short duration was a significant contributor. Security selection also added to results and performance was enhanced by energy companies Chesapeake Energy Corporation and Encore Acquisition; health care companies HCA and Universal Healthcare; and Utility companies Aquila, Inc. and Allegheny Energy. Investments in natural gas and non-airline transportation also added to performance as commodity prices continued to benefit oil field services companies such as Gulfmark Offshore and Hornbeck Marine and other transportation companies such as H-Lines Finance and Ship Finance International benefited from increased international trade. Investment in L-3 Communications also contributed to performance as continued demand for defense services provided continued stable cash flow in this Aerospace/Defense company.

Detractors from Performance

As the liquidity crunch broadened, mortgage companies originating prime mortgages were also unable to obtain financing. Thornburg Mortgage was a notable detractor due to this financing freeze. Much of Thornburg’s financing had been obtained through short-term and mortgage-backed financing. When these financing sources were no longer available, the high yield market significantly discounted the price of Thornburg’s bonds to reflect the substantial increase in the potential for default. In this environment, a portion of the

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PORTFOLIO MANAGER COMMENTARY continued

Thornburg position was sold at a loss. Security selection in broadcasting companies was disappointing, as Young Broadcasting underperformed because of lower advertising revenues. Cable provider Charter Communications and other cable companies also performed poorly on prospects for slower subscriber growth in 2008. Among financial companies, Rescap and GMAC were volatile because of their exposure to subprime mortgages which were notable detractors from performance. In related auto investments, Metaldyne was also disappointing in its performance. A slight overweight in gaming and leisure held back results, as did positions in Isle of Capri Casinos and Trump Entertainment—though this was partially offset by not holding Harrah’s Operating Company. Among metals and mining companies, Griffin Coal Mining and Novelis also underperformed.

Outlook

At the end of the fiscal year, high yield spreads appeared to be indicating very slow economic growth in the coming quarters. Should these spreads widen, particularly if the economy goes into a recession, high yield securities are likely to underperform relative to U.S. Treasuries. On a more positive note, certain factors could keep high yield spreads at current levels. High yield spreads have widened more over the last six- and nine-month periods than in any six- and nine-month period in the past 10 years. In addition, because of the Fed’s lower interest rate policy, short-term interest rates have declined to a point where the difference between the short-term cost of borrowing and core inflation (inflation after removing the effects of food and energy price increases) is essentially zero. When this situation has occurred in the past, the high yield market has outperformed over the following 24-month period. Defaults are currently at a historically low level, and while they may increase over the next 12 to 24 months, this increase may already be discounted in current high yield market yield spreads. As a result, the high yield market could offer investors attractive returns, even if defaults increase over the next year.

This commentary reflects the views and opinions of the fund’s portfolio manager(s) on the date indicated and may include statements that constitute “forward-looking statements” under the U.S. Securities laws. Forward-looking statements include, among other things, projections, estimates, and information about possible or future results related to the fund, markets, or regulatory developments. The views expressed above are not guarantees of future performance or economic results and involve certain risks, uncertainties, and assumptions that could cause actual outcomes and results to differ materially from the views expressed herein. The views expressed above are subject to change at any time based upon economic, market, or other conditions and Evergreen undertakes no obligation to update the views expressed herein. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. The views expressed herein (including any forward-looking statements) may not be relied upon as investment advice or as an indication of the fund’s trading intent.

You should carefully consider the fund’s investment objectives, policies, risks, charges and expenses before investing. To obtain a prospectus, which contains this and other important information visit www.EvergreenInvestments.com or call 1.800.847.5397.

Please read the prospectus carefully before investing.

7

ABOUT YOUR FUND’S EXPENSES

The Example below is intended to describe the fees and expenses borne by shareholders and the impact of those costs on your investment.

Example

As a shareholder of the fund, you incur two types of costs: (1) transaction costs, including sales charges (loads), redemption fees and exchange fees; and (2) ongoing costs, including management fees, distribution (12b-1) fees and other fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from November 1, 2007 to April 30, 2008.

The example illustrates your fund’s costs in two ways:

• Actual expenses

The section in the table under the heading “Actual” provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class, in the column entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

• Hypothetical example for comparison purposes

The section in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees. Therefore, the section in the table under the heading “Hypothetical (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 11/1/2007		Ending Account Value 4/30/2008		Expenses Paid During Period*
Actual
Class A	$	1,000.00	$	985.32	$	5.38
Class B	$	1,000.00	$	981.70	$	9.07
Class C	$	1,000.00	$	981.70	$	9.07
Class I	$	1,000.00	$	986.59	$	4.10
Hypothetical
(5% return before expenses)
Class A	$	1,000.00	$	1,019.44	$	5.47
Class B	$	1,000.00	$	1,015.71	$	9.22
Class C	$	1,000.00	$	1,015.71	$	9.22
Class I	$	1,000.00	$	1,020.74	$	4.17

* For each class of the fund, expenses are equal to the annualized expense ratio of each class (1.09% for Class A, 1.84% for Class B, 1.84% for Class C and 0.83% for Class I), multiplied by the average account value over the period, multiplied by 182 / 366 days.

8

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	Year Ended April 30,
CLASS A	2008		2007		2006		2005		2004
Net asset value, beginning of period	$	3.40	$	3.31	$	3.32	$	3.43	$	3.30
Income from investment operations
Net investment income (loss)		0.25		0.241		0.23		0.24		0.25
Net realized and unrealized gains or losses on investments		(0.28)		0.09		0		(0.10)		0.14
Total from investment operations		(0.03)		0.33		0.23		0.14		0.39
Distributions to shareholders from
Net investment income		(0.24)		(0.24)		(0.24)		(0.25)		(0.26)
Net asset value, end of period	$	3.13	$	3.40	$	3.31	$	3.32	$	3.43
Total return2		(0.92)%		10.35%		7.01%		4.14%		12.25%
Ratios and supplemental data
Net assets, end of period (thousands)	$	270,758	$	335,411	$	388,523	$	467,714	$	530,526
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		1.07%		1.06%		1.04%		1.04%		1.01%
Expenses excluding waivers/reimbursements and expense reductions		1.12%		1.10%		1.05%		1.04%		1.02%
Net investment income (loss)		7.82%		7.19%		6.95%		7.16%		7.42%
Portfolio turnover rate		110%		48%		67%		65%		71%

1 Net investment income (loss) per share is based on average shares outstanding during the period.

2 Excluding applicable sales charges

See Notes to Financial Statements

9

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	Year Ended April 30,
CLASS B		2008		2007		2006		2005		2004
Net asset value, beginning of period	$	3.40	$	3.31	$	3.32	$	3.43	$	3.30
Income from investment operations
Net investment income (loss)		0.22		0.211		0.211		0.22		0.231
Net realized and unrealized gains or losses on investments		(0.28)		0.09		(0.01)2		(0.10)		0.14
Total from investment operations		(0.06)		0.30		0.20		0.12		0.37
Distributions to shareholders from
Net investment income		(0.21)		(0.21)		(0.21)		(0.23)		(0.24)
Net asset value, end of period	$	3.13	$	3.40	$	3.31	$	3.32	$	3.43
Total return3		(1.65)%		9.55%		6.27%		3.42%		11.46%
Ratios and supplemental data
Net assets, end of period (thousands)	$	108,327	$	150,609	$	176,663	$	211,950	$	247,741
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		1.82%		1.80%		1.75%		1.74%		1.72%
Expenses excluding waivers/reimbursements and expense reductions		1.82%		1.80%		1.75%		1.74%		1.72%
Net investment income (loss)		7.06%		6.46%		6.25%		6.46%		6.71%
Portfolio turnover rate		110%		48%		67%		65%		71%

1 Net investment income (loss) per share is based on average shares outstanding during the period.

2 The per share net realized and unrealized gains or losses is not in accord with the net realized and unrealized gains or losses for the period due to the timing of sales and redemptions of fund shares in relation to fluctuating market values of the portfolio.

3 Excluding applicable sales charges

See Notes to Financial Statements

10

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	YearEndedApril30,
CLASSC	2008		2007		2006		2005		2004
Net asset value, beginning of period	$	3.40	$	3.31	$	3.32	$	3.43	$	3.30
Income from investment operations
Net investment income (loss)		0.22		0.211		0.21		0.22		0.23
Net realized and unrealized gains or losses on investments		(0.28)		0.09		(0.01)2		(0.10)		0.14
Total from investment operations		(0.06)		0.30		0.20		0.12		0.37
Distributions to shareholders from
Net investment income		(0.21)		(0.21)		(0.21)		(0.23)		(0.24)
Net asset value, end of period	$	3.13	$	3.40		$3.31	$	3.32	$	3.43
Total return3		(1.65)%		9.55%		6.27%		3.42%		11.46%
Ratios and supplemental data
Net assets, end of period (thousands)	$	118,638	$	161,941	$	201,975	$	281,810	$	381,525
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		1.82%		1.80%		1.75%		1.74%		1.72%
Expenses excluding waivers/reimbursements and expense reductions		1.82%		1.80%		1.75%		1.74%		1.72%
Net investment income (loss)		7.06%		6.46%		6.25%		6.47%		6.72%
Portfolio turnover rate		110%		48%		67%		65%		71%

1 Net investment income (loss) per share is based on average shares outstanding during the period.

2 The per share net realized and unrealized gains or losses is not in accord with the net realized and unrealized gains or losses for the period due to the timing of sales and redemptions of Fund shares in relation to fluctuating market values for the portfolio.

3 Excluding applicable sales charges

See Notes to Financial Statements

11

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	YearEndedApril30,
CLASSI	2008		2007		2006		2005		2004
Net asset value, beginning of period	$	3.40	$	3.31	$	3.32	$	3.43	$	3.30
Income from investment operations
Net investment income (loss)		0.26		0.251		0.24		0.26		0.26
Net realized and unrealized gains or losses on investments		(0.29)		0.09		0		(0.11)		0.14
Total from investment operations		(0.03)		0.34		0.24		0.15		0.40
Distributions to shareholders from
Net investment income		(0.24)		(0.25)		(0.25)		(0.26)		(0.27)
Net asset value, end of period	$	3.13	$	3.40	$	3.31	$	3.32	$	3.43
Total return		(0.66)%		10.65%		7.33%		4.45%		12.58%
Ratios and supplemental data
Net assets, end of period (thousands)	$	25,729	$	27,147	$	50,365	$	60,412	$	37,894
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		0.82%		0.80%		0.75%		0.74%		0.72%
Expenses excluding waivers/reimbursements and expense reductions		0.82%		0.80%		0.75%		0.74%		0.72%
Net investment income (loss)		8.05%		7.42%		7.23%		7.46%		7.73%
Portfolio turnover rate		110%		48%		67%		65%		71%

1 Net investment income (loss) per share is based on average shares outstanding during the period.

See Notes to Financial Statements

12

SCHEDULE OF INVESTMENTS

April 30, 2008

		Principal Amount		Value
CORPORATE BONDS 79.3%
CONSUMER DISCRETIONARY 18.0%
Auto Components 1.6%
Cooper Standard Automotive, Inc.:
7.00%, 12/15/2012 ρ	$	210,000	$	193,620
8.375%, 12/15/2014		1,035,000		859,050
Cooper Tire & Rubber Co., 7.625%, 03/15/2027		2,715,000		2,307,750
Goodyear Tire & Rubber Co., 9.00%, 07/01/2015 ρ		1,139,000		1,244,357
Metaldyne Corp.:
10.00%, 11/01/2013		5,100,000		3,302,250
11.00%, 06/15/2012		1,772,000		655,640
				8,562,667
Automobiles 1.6%
Ford Motor Co., 7.70%, 05/15/2097		5,630,000		3,743,950
General Motors Corp.:
7.20%, 01/15/2011 ρ		4,030,000		3,576,625
8.25%, 07/15/2023 ρ		1,470,000		1,106,175
				8,426,750
Diversified Consumer Services 0.2%
Education Management, LLC, 8.75%, 06/01/2014		1,040,000		930,800
Service Corporation International, 6.75%, 04/01/2015		85,000		85,531
				1,016,331
Hotels, Restaurants & Leisure 4.9%
Caesars Entertainment, Inc.:
7.875%, 03/15/2010 ρ		1,625,000		1,535,625
8.125%, 05/15/2011 ρ		590,000		502,238
Fontainebleau Las Vegas Holdings, LLC, 10.25%, 06/15/2015 ρ 144A		5,272,000		3,809,020
Inn of the Mountain Gods Resort & Casino, 12.00%, 11/15/2010		2,095,000		1,822,650
Isle of Capri Casinos, Inc., 7.00%, 03/01/2014 ρ		6,725,000		5,211,875
Pinnacle Entertainment, Inc., 8.75%, 10/01/2013		175,000		178,500
Pokagon Gaming Authority, 10.375%, 06/15/2014 144A ρ		2,670,000		2,863,575
Seneca Gaming Corp., 7.25%, 05/01/2012		565,000		548,756
Shingle Springs Tribal Gaming Authority, 9.375%, 06/15/2015 144A ρ		2,615,000		2,327,350
Six Flags, Inc.:
8.875%, 02/01/2010 ρ		660,000		551,100
9.625%, 06/01/2014 ρ		1,000,000		665,000
Trump Entertainment Resorts, Inc., 8.50%, 06/01/2015 ρ		6,440,000		4,169,900
Universal City Development Partners, Ltd., 11.75%, 04/01/2010		1,320,000		1,369,500
				25,555,089
Household Durables 2.2%
Centex Corp.:
4.875%, 08/15/2008		1,220,000		1,207,887
5.80%, 09/15/2009		380,000		364,922

See Notes to Financial Statements

13

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

		Principal Amount		Value
CORPORATE BONDS continued
CONSUMER DISCRETIONARY continued
Household Durables continued
D.R. Horton, Inc.:
4.875%, 01/15/2010	$	580,000	$	553,900
5.00%, 01/15/2009		1,300,000		1,267,500
8.00%, 02/01/2009		620,000		620,000
Hovnanian Enterprises, Inc.:
6.00%, 01/15/2010 ρ		695,000		545,575
6.50%, 01/15/2014		804,000		574,860
KB Home:
7.75%, 02/01/2010 ρ		915,000		903,563
8.625%, 12/15/2008		555,000		563,325
Libbey, Inc., FRN, 11.91%, 06/01/2011 ρ		1,315,000		1,324,862
Meritage Homes Corp., 7.00%, 05/01/2014		565,000		485,194
Pulte Homes, Inc.:
4.875%, 07/15/2009		2,570,000		2,492,900
7.875%, 08/01/2011		160,000		156,800
Standard Pacific Corp., 5.125%, 04/01/2009		615,000		550,425
				11,611,713
Media 4.8%
Cablevision Systems Corp., Ser. B, 8.00%, 04/15/2012		1,830,000		1,830,000
Charter Communications, Inc., 10.875%, 09/15/2014 144A ρ		3,760,000		3,995,000
CSC Holdings, Inc., 7.625%, 04/01/2011		1,640,000		1,660,500
Idearc, Inc., 8.00%, 11/15/2016		5,060,000		3,314,300
Lamar Media Corp.:
6.625%, 08/15/2015 ρ		3,470,000		3,287,825
7.25%, 01/01/2013		165,000		164,175
Mediacom Broadband, LLC, 8.50%, 10/15/2015 ρ		580,000		536,500
Mediacom, LLC, 7.875%, 02/15/2011		515,000		489,250
Ion Media Networks, Inc., FRN, 8.96%, 01/15/2013 144A		2,950,000		1,777,375
R.H. Donnelley Corp., Ser. A-4, 8.875%, 10/15/2017 144A		2,980,000		1,937,000
Sinclair Broadcast Group, Inc., 8.00%, 03/15/2012 ρ		480,000		487,800
Sirius Satellite Radio, Inc., 9.625%, 08/01/2013 ρ		1,685,000		1,428,038
XM Satellite Radio Holdings, Inc., 9.75%, 05/01/2014 ρ		1,705,000		1,649,587
Young Broadcasting, Inc., 8.75%, 01/15/2014		4,700,000		2,773,000
				25,330,350
Multi-line Retail 0.3%
Neiman Marcus Group, Inc., 9.00%, 10/15/2015		1,310,000		1,368,950
Specialty Retail 1.3%
American Achievement Corp., 8.25%, 04/01/2012		2,760,000		2,442,600
Home Depot, Inc., 5.875%, 12/16/2036		650,000		545,104
Michaels Stores, Inc., 10.00%, 11/01/2014 ρ		1,080,000		1,053,000
Payless ShoeSource, Inc., 8.25%, 08/01/2013		2,935,000		2,663,513
				6,704,217

See Notes to Financial Statements

14

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

		Principal Amount		Value
CORPORATE BONDS continued
CONSUMER DISCRETIONARY continued
Textiles, Apparel & Luxury Goods 1.1%
AAC Group Holdings Corp., Sr. Disc. Note, Step Bond, 0.00%, 10/01/2012 †	$	435,000	$	341,475
Oxford Industries, Inc., 8.875%, 06/01/2011		4,762,000		4,559,615
Unifi, Inc., 11.50%, 05/15/2014 ρ		835,000		680,525
				5,581,615
CONSUMER STAPLES 1.9%
Beverages 0.1%
Constellation Brands, Inc., 8.375%, 12/15/2014		285,000		303,525
Food & Staples Retailing 0.3%
Ingles Markets, Inc., 8.875%, 12/01/2011		885,000		902,700
Rite Aid Corp., 8.125%, 05/01/2010 ρ		570,000		572,850
				1,475,550
Food Products 0.9%
Dean Foods Co., 6.625%, 05/15/2009		190,000		190,950
Del Monte Foods Co.:
6.75%, 02/15/2015 ρ		2,070,000		2,007,900
8.625%, 12/15/2012 ρ		1,240,000		1,289,600
Pilgrim’s Pride Corp.:
7.625%, 05/01/2015		140,000		133,700
8.375%, 05/01/2017		1,525,000		1,364,875
				4,987,025
Household Products 0.1%
Church & Dwight Co., 6.00%, 12/15/2012		480,000		475,200
Personal Products 0.5%
Central Garden & Pet Co., 9.125%, 02/01/2013		3,265,000		2,775,250
ENERGY 9.9%
Energy Equipment & Services 2.7%
Bristow Group, Inc., 7.50%, 09/15/2017		1,160,000		1,203,500
Dresser-Rand Group, Inc., 7.375%, 11/01/2014 ρ		1,689,000		1,697,445
GulfMark Offshore, Inc., 7.75%, 07/15/2014		1,465,000		1,523,600
Hornbeck Offshore Services, Inc., Ser. B, 6.125%, 12/01/2014		4,210,000		4,115,275
Parker Drilling Co., 9.625%, 10/01/2013		1,870,000		1,972,850
PHI, Inc., 7.125%, 04/15/2013		4,100,000		3,854,000
				14,366,670
Oil, Gas & Consumable Fuels 7.2%
Chesapeake Energy Corp., 6.875%, 01/15/2016 ρ		4,390,000		4,455,850
Clayton Williams Energy, Inc., 7.75%, 08/01/2013		1,565,000		1,471,100
Delta Petroleum Corp., 7.00%, 04/01/2015		1,705,000		1,517,450
El Paso Corp., 7.00%, 06/15/2017		1,025,000		1,074,796

See Notes to Financial Statements

15

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

		Principal Amount		Value
CORPORATE BONDS continued
ENERGY continued
Oil, Gas & Consumable Fuels continued
Encore Acquisition Co.:
6.00%, 07/15/2015	$	3,360,000	$	3,108,000
6.25%, 04/15/2014 ρ		720,000		680,400
Energy Partners, Ltd., 9.75%, 04/15/2014 ρ		920,000		855,600
Exco Resources, Inc., 7.25%, 01/15/2011		2,260,000		2,260,000
Forbes Energy Services, LLC, 11.00%, 02/15/2015 144A		2,790,000		2,803,950
Forest Oil Corp., 7.25%, 06/15/2019 ρ		875,000		907,812
Frontier Oil Corp., 6.625%, 10/01/2011		770,000		770,000
Mariner Energy, Inc., 8.00%, 05/15/2017		622,000		614,225
Peabody Energy Corp.:
5.875%, 04/15/2016		3,750,000		3,656,250
7.875%, 11/01/2026		375,000		389,063
Plains All American Pipeline, LP, 6.50%, 05/01/2018 144A		570,000		583,202
Plains Exploration & Production Co., 7.75%, 06/15/2015		1,000,000		1,030,000
Sabine Pass LNG, LP:
7.25%, 11/30/2013		3,915,000		3,640,950
7.50%, 11/30/2016		260,000		239,200
Southwestern Energy Co., 7.50%, 02/01/2018 144A		180,000		191,700
Tesoro Corp.:
6.50%, 06/01/2017		2,135,000		1,969,537
6.625%, 11/01/2015		820,000		774,900
Williams Cos., 8.125%, 03/15/2012		4,060,000		4,466,000
				37,459,985
FINANCIALS 13.8%
Capital Markets 0.4%
E*TRADE Financial Corp.:
7.375%, 09/15/2013		990,000		809,325
8.00%, 06/15/2011		180,000		161,100
12.50%, 11/30/2017 144A		935,000		971,231
				1,941,656
Consumer Finance 8.0%
CCH II Capital Corp., 10.25%, 09/15/2010		7,360,000		7,117,912
Ford Motor Credit Co., LLC:
5.70%, 01/15/2010		3,980,000		3,726,490
5.80%, 01/12/2009		1,400,000		1,369,155
7.375%, 10/28/2009		4,965,000		4,781,072
9.75%, 09/15/2010		3,255,000		3,163,860
General Motors Acceptance Corp., LLC:
5.625%, 05/15/2009 ρ		1,035,000		973,373
6.875%, 09/15/2011		405,000		337,736
6.875%, 08/28/2012		8,645,000		6,864,433
7.25%, 03/02/2011		400,000		339,527

See Notes to Financial Statements

16

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

		Principal Amount		Value
CORPORATE BONDS continued
FINANCIALS continued
Consumer Finance continued
General Motors Acceptance Corp., LLC:
7.75%, 01/19/2010	$	1,620,000	$	1,491,161
8.00%, 11/01/2031		3,715,000		2,816,917
FRN:
3.75%, 09/23/2008		1,645,000		1,614,183
4.32%, 05/15/2009		2,750,000		2,509,598
Qwest Capital Funding, Inc., 6.50%, 11/15/2018		620,000		520,800
Sprint Capital Corp., 6.875%, 11/15/2028		2,490,000		1,940,641
Toll Corp.:
8.25%, 02/01/2011		2,145,000		2,075,287
8.25%, 12/01/2011		410,000		393,600
				42,035,745
Diversified Financial Services 1.5%
Citigroup, Inc., FRN, 8.40%, 04/29/2049		1,495,000		1,514,928
JPMorgan Chase & Co., FRN, 7.90%, 12/31/2049		985,000		1,006,663
Leucadia National Corp.:
7.125%, 03/15/2017		205,000		196,800
8.125%, 09/15/2015		4,210,000		4,315,250
Biomet, Inc., 11.625%, 10/15/2017 144A		610,000		651,175
				7,684,816
Real Estate Investment Trusts 2.0%
Host Marriott Corp.:
7.125%, 11/01/2013 ρ		2,250,000		2,252,813
Ser. Q, 6.75%, 06/01/2016		2,755,000		2,706,787
Omega Healthcare Investors, Inc.:
7.00%, 04/01/2014		3,980,000		3,905,375
7.00%, 01/15/2016		435,000		422,494
Ventas, Inc., 7.125%, 06/01/2015		920,000		926,900
				10,214,369
Thrifts & Mortgage Finance 1.9%
Residential Capital, LLC:
FRN, 3.49%, 06/09/2008 ρ		790,000		739,638
Step Bond:
8.125%, 11/21/2008 Š		1,295,000		1,081,325
8.375%, 06/30/2010 Š		15,240,000		8,343,900
				10,164,863
HEALTH CARE 3.2%
Health Care Providers & Services 3.2%
HCA, Inc.:
6.375%, 01/15/2015		50,000		44,750
8.75%, 09/01/2010		1,365,000		1,409,363
9.25%, 11/15/2016		8,195,000		8,830,112

See Notes to Financial Statements

17

SCHEDULE OF INVESTMENTS continued

April 30, 2008

		Principal Amount		Value
CORPORATE BONDS continued
HEALTH CARE continued
Health Care Providers & Services continued
Omnicare, Inc.:
6.125%, 06/01/2013	$	3,360,000	$	3,074,400
6.875%, 12/15/2015		3,755,000		3,445,212
				16,803,837
INDUSTRIALS 7.7%
Aerospace & Defense 4.3%
Alliant Techsystems, Inc., 6.75%, 04/01/2016		410,000		407,950
DAE Aviation Holdings, 11.25%, 08/01/2015 144A		860,000		878,275
DRS Technologies, Inc., 6.625%, 02/01/2016		975,000		970,125
Hexcel Corp., 6.75%, 02/01/2015		1,585,000		1,583,019
L-3 Communications Holdings, Inc.:
5.875%, 01/15/2015		12,010,000		11,709,750
6.375%, 10/15/2015		4,265,000		4,238,343
Vought Aircraft Industries, Inc., 8.00%, 07/15/2011 ρ		2,950,000		2,817,250
				22,604,712
Commercial Services & Supplies 1.4%
Browning-Ferris Industries, Inc.:
7.40%, 09/15/2035		1,975,000		1,807,125
9.25%, 05/01/2021		2,360,000		2,454,400
Geo Group, Inc., 8.25%, 07/15/2013		650,000		674,375
Mobile Mini, Inc., 6.875%, 05/01/2015 ρ		1,295,000		1,097,512
Norcross Safety Products, LLC, Ser. B, 9.875%, 08/15/2011		1,500,000		1,579,695
				7,613,107
Machinery 0.9%
Commercial Vehicle Group, Inc., 8.00%, 07/01/2013		5,370,000		4,631,625
Road & Rail 0.8%
Avis Budget Car Rental, LLC, 7.75%, 05/15/2016		85,000		75,438
Hertz Global Holdings, Inc.:
8.875%, 01/01/2014		1,440,000		1,458,000
10.50%, 01/01/2016 ρ		40,000		40,450
Kansas City Southern:
7.50%, 06/15/2009		1,070,000		1,102,100
9.50%, 10/01/2008		1,355,000		1,375,325
				4,051,313
Trading Companies & Distributors 0.3%
Neff Corp., 10.00%, 06/01/2015 ρ		240,000		118,800
United Rentals, Inc., 6.50%, 02/15/2012		1,325,000		1,248,813
				1,367,613

See Notes to Financial Statements

18

SCHEDULE OF INVESTMENTS continued

April 30, 2008

		Principal Amount		Value
CORPORATE BONDS continued
INFORMATION TECHNOLOGY 3.5%
Electronic Equipment & Instruments 1.7%
Da-Lite Screen Co., Inc., 9.50%, 05/15/2011	$	2,765,000	$	2,640,575
Jabil Circuit, Inc.:
5.875%, 07/15/2010		535,000		525,589
8.25%, 03/15/2018 144A		4,075,000		4,095,375
Sanmina-SCI Corp.:
6.75%, 03/01/2013		440,000		400,400
8.125%, 03/01/2016		695,000		642,875
FRN, 5.55%, 06/15/2010 144A		563,000		558,778
				8,863,592
IT Services 1.3%
First Data Corp., 9.875%, 09/24/2015 144A		3,010,000		2,742,862
ipayment, Inc., 9.75%, 05/15/2014		1,660,000		1,435,900
SunGard Data Systems, Inc.:
4.875%, 01/15/2014		2,505,000		2,210,662
10.25%, 08/15/2015		50,000		53,375
Unisys Corp., 6.875%, 03/15/2010		715,000		690,869
				7,133,668
Office Electronics 0.1%
Xerox Corp., 6.35%, 05/15/2018		555,000		558,829
Semiconductors & Semiconductor Equipment 0.4%
Freescale Semiconductor, Inc.:
8.875%, 12/15/2014		85,000		75,225
9.125%, 12/15/2014 ρ		720,000		595,800
Spansion, Inc., FRN, 6.20%, 06/01/2013 144A		1,785,000		1,347,675
				2,018,700
MATERIALS 9.1%
Chemicals 4.0%
ARCO Chemical Co.:
9.80%, 02/01/2020 ρ		1,150,000		1,012,000
10.25%, 11/01/2010		190,000		194,750
Huntsman, LLC, 11.625%, 10/15/2010		1,970,000		2,078,350
Koppers Holdings, Inc.:
9.875%, 10/15/2013		225,000		239,625
Sr. Disc. Note, Step Bond, 0.00%, 11/15/2014 †		2,100,000		1,848,000
MacDermid, Inc., 9.50%, 04/15/2017 144A		3,071,000		2,948,160
Millenium America, Inc., 7.625%, 11/15/2026		2,265,000		1,466,587
Momentive Performance Materials, Inc.:
9.75%, 12/01/2014		2,425,000		2,364,375
10.125%, 12/01/2014		1,095,000		1,048,463

See Notes to Financial Statements

19

SCHEDULE OF INVESTMENTS continued

April 30, 2008

		Principal Amount		Value
CORPORATE BONDS continued
MATERIALS continued
Chemicals continued
Mosaic Co.:
7.30%, 01/15/2028	$	1,325,000	$	1,291,875
7.875%, 12/01/2016 144A		1,990,000		2,189,000
Tronox Worldwide, LLC, 9.50%, 12/01/2012		4,844,000		4,190,060
				20,871,245
Construction Materials 0.7%
CPG International, Inc.:
10.50%, 07/01/2013		3,395,000		2,919,700
FRN, 11.47%, 07/01/2012		625,000		510,938
				3,430,638
Containers & Packaging 2.7%
Berry Plastics Holdings Corp.:
6.68%, 09/15/2014		605,000		517,275
7.57%, 02/15/2015 144A		720,000		698,400
8.875%, 09/15/2014		580,000		545,200
Exopack Holding Corp., 11.25%, 02/01/2014		3,115,000		2,990,400
Graham Packaging Co.:
8.50%, 10/15/2012 ρ		2,105,000		2,073,425
9.875%, 10/15/2014		1,515,000		1,431,675
Graphic Packaging International, Inc.:
8.50%, 08/15/2011 ρ		2,375,000		2,410,625
9.50%, 08/15/2013		505,000		505,000
Smurfit-Stone Container Corp., 8.375%, 07/01/2012		3,390,000		3,118,800
				14,290,800
Metals & Mining 0.8%
Freeport-McMoRan Copper & Gold, Inc., 8.375%, 04/01/2017		2,705,000		2,995,787
Indalex Holdings Corp., 11.50%, 02/01/2014		1,870,000		1,467,950
				4,463,737
Paper & Forest Products 0.9%
Georgia Pacific Corp., 8.875%, 05/15/2031		2,240,000		2,195,200
Verso Paper Holdings, LLC, 11.375%, 08/01/2016		2,462,000		2,535,860
				4,731,060
TELECOMMUNICATION SERVICES 4.9%
Diversified Telecommunication Services 1.7%
Citizens Communications Co., 7.875%, 01/15/2027		1,085,000		968,363
FairPoint Communications, Inc., 13.125%, 04/01/2018 144A ρ		890,000		903,350
Qwest Corp.:
6.50%, 06/01/2017		550,000		518,375
7.50%, 06/15/2023		635,000		584,200

See Notes to Financial Statements

20

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

		Principal Amount		Value
CORPORATE BONDS continued
TELECOMMUNICATION SERVICES continued
Diversified Telecommunication Services continued
Qwest Corp.:
7.875%, 09/01/2011	$	2,680,000	$	2,760,400
8.875%, 03/15/2012		1,365,000		1,446,900
West Corp., 11.00%, 10/15/2016 ρ		1,870,000		1,671,312
				8,852,900
Wireless Telecommunication Services 3.2%
Centennial Communications Corp., 8.125%, 02/01/2014 ρ		3,535,000		3,535,000
Cricket Communications, Inc., 9.375%, 11/01/2014 ρ		1,725,000		1,701,281
MetroPCS Communications, Inc., 9.25%, 11/01/2014		3,430,000		3,387,125
Rural Cellular Corp., 8.25%, 03/15/2012		3,600,000		3,762,000
Sprint Nextel Corp.:
6.375%, 05/01/2009		1,235,000		1,216,763
6.90%, 05/01/2019		355,000		293,401
Ser. D, 7.375%, 08/01/2015		1,990,000		1,593,075
Ser. F, 5.95%, 03/15/2014		2,015,000		1,573,528
				17,062,173
UTILITIES 7.3%
Electric Utilities 7.2%
Allegheny Energy Supply Co., 8.25%, 04/15/2012 144A		3,965,000		4,242,550
Aquila, Inc., Step Bond, 14.875%, 07/01/2012 Š		5,510,000		6,722,200
CMS Energy Corp.:
6.55%, 07/17/2017		300,000		296,172
8.50%, 04/15/2011		325,000		349,684
Edison Mission Energy:
7.00%, 05/15/2017		335,000		340,025
7.20%, 05/15/2019		480,000		486,000
Energy Future Holdings Corp.:
10.875%, 11/01/2017 144A ρ		2,710,000		2,899,700
11.25%, 11/01/2017 144A		1,625,000		1,710,313
Mirant Americas Generation, LLC, 8.50%, 10/01/2021 ρ		500,000		492,500
Mirant Mid-Atlantic, LLC, Ser. C, 10.06%, 12/30/2028		433,561		498,595
Mirant North America, LLC, 7.375%, 12/31/2013 ρ		4,625,000		4,821,563
NRG Energy, Inc., 7.375%, 02/01/2016		3,870,000		3,995,775
Orion Power Holdings, Inc., 12.00%, 05/01/2010		4,665,000		5,166,487
Reliant Energy, Inc.:
6.75%, 12/15/2014		4,926,000		5,110,725
7.875%, 06/15/2017 ρ		90,000		94,275
Texas Competitive Electric Holdings Co., LLC:
10.25%, 11/01/2015 144A		300,000		314,250
10.50%, 11/01/2016 144A		50,000		51,438
				37,592,252

See Notes to Financial Statements

21

SCHEDULE OF INVESTMENTS continued

April 30, 2008

		Principal Amount		Value
CORPORATE BONDS continued
UTILITIES continued
Independent Power Producers & Energy Traders 0.1%
Dynegy Holdings, Inc., 7.50%, 06/01/2015 ρ	$	370,000	$	370,000
Total Corporate Bonds (cost $435,246,599)				415,354,137
WHOLE LOAN MORTGAGE-BACKED PASS THROUGH SECURITIES 0.5%
Lehman XS Trust, Ser. 2006-18N, Class A5A, 3.07%, 12/25/2036 (cost $2,548,975)		3,565,000		2,576,603
YANKEE OBLIGATIONS – CORPORATE 11.2%
CONSUMER DISCRETIONARY 0.0%
Media 0.0%
Videotron, Ltd., 9.125%, 04/15/2018 144A		155,000		165,850
ENERGY 2.6%
Oil, Gas & Consumable Fuels 2.6%
Connacher Oil & Gas, Ltd., 10.25%, 12/15/2015 144A		1,280,000		1,363,200
Griffin Coal Mining Co., Ltd.:
9.50%, 12/01/2016 144A		7,530,000		5,948,700
9.50%, 12/01/2016		1,180,000		932,200
OPTI Canada, Inc.:
7.875%, 12/15/2014		3,170,000		3,241,325
8.25%, 12/15/2014		1,965,000		2,038,687
				13,524,112
FINANCIALS 2.4%
Consumer Finance 0.8%
Avago Technologies Finance, Ltd.:
10.125%, 12/01/2013		220,000		235,400
FRN, 8.58%, 06/01/2013		870,000		872,175
Petroplus Finance, Ltd., 6.75%, 05/01/2014 144A ρ		710,000		670,950
Virgin Media Finance plc, 9.125%, 08/15/2016		2,380,000		2,308,600
				4,087,125
Diversified Financial Services 1.6%
FMG Finance Property, Ltd., 10.625%, 09/01/2016 144A		4,610,000		5,266,925
Preferred Term Securities XII, Ltd., FRN, 10.00%, 12/24/2033		720,000		512,150
Ship Finance International, Ltd., 8.50%, 12/15/2013 ρ		2,400,000		2,436,000
				8,215,075
INDUSTRIALS 1.1%
ROAD & RAIL 1.1%
Kansas City Southern de Mexico:
7.375%, 06/01/2014 144A		2,815,000		2,677,769
9.375%, 05/01/2012		3,133,000		3,281,817
				5,959,586

See Notes to Financial Statements

22

SCHEDULE OF INVESTMENTS continued

April 30, 2008

		Principal Amount		Value
YANKEE OBLIGATIONS – CORPORATE continued
INFORMATION TECHNOLOGY 1.2%
Communications Equipment 0.9%
Nortel Networks Corp., 10.125%, 07/15/2013 ρ	$	4,760,000	$	4,688,600
Semiconductors & Semiconductor Equipment 0.3%
Sensata Technologies, Inc., 8.00%, 05/01/2014		1,375,000		1,289,063
MATERIALS 2.6%
Metals & Mining 2.0%
Evraz Group SA:
8.875%, 04/24/2013 144A		630,000		641,025
9.50%, 04/24/2018 144A		2,005,000		2,055,015
Novelis, Inc., 7.25%, 02/15/2015		8,535,000		7,852,200
				10,548,240
Paper & Forest Products 0.6%
Abitibi Consolidated Company of Canada, 13.75%, 04/01/2011 144A		1,450,000		1,529,750
Corporacion Durango SAB de CV, 10.50%, 10/05/2017 144A ρ		2,295,000		1,732,725
				3,262,475
TELECOMMUNICATION SERVICES 1.3%
Wireless Telecommunication Services 1.3%
Inmarsat, plc, Sr. Disc. Note, Step Bond, 0.00%, 11/15/2012 †		1,270,000		1,258,888
Intelsat, Ltd.:
9.25%, 06/15/2016 ρ		1,290,000		1,307,738
11.25%, 06/15/2016		1,660,000		1,691,125
Vimpel Communications:
8.375%, 04/30/2013 144A		330,000		330,257
9.125%, 04/30/2018 144A		2,035,000		2,040,083
				6,628,091
Total Yankee Obligations – Corporate (cost $60,799,365)				58,368,217
		Shares		Value
COMMON STOCKS 0.2%
INDUSTRIALS 0.0%
Airlines 0.0%
Delta Air Lines, Inc. *		17,215		146,500
INFORMATION TECHNOLOGY 0.1%
Communications Equipment 0.0%
Cisco Systems, Inc. *		5,955		152,686
Electronic Equipment & Instruments 0.1%
Jabil Circuit, Inc.		14,321		155,813
Software 0.0%
Microsoft Corp.		4,400		125,488

See Notes to Financial Statements

23

SCHEDULE OF INVESTMENTS continued

April 30, 2008

		Shares		Value
COMMON STOCKS continued
MATERIALS 0.0%
Chemicals 0.0%
Tronox, Inc., Class A ρ		49,854	$	159,533
TELECOMMUNICATION SERVICES 0.1%
Wireless Telecommunication Services 0.1%
Sprint Nextel Corp.		21,636		172,871
Total Common Stocks (cost $1,192,645)				912,891
PREFERRED STOCKS 0.5%
FINANCIALS 0.5%
Thrifts & Mortgage Finance 0.5%
Fannie Mae, Ser. S, 8.25%		68,420		1,713,237
Freddie Mac, Ser. Z, 8.375% ρ		29,805		763,008
Total Preferred Stocks (cost $2,463,218)				2,476,245
WARRANTS 0.0%
CONSUMER DISCRETIONARY 0.0%
Media 0.0%
Metricom, Inc., Expiring 02/15/2010 * + o (cost $318,090)		1,500		0
		Principal Amount		Value
CONVERTIBLE DEBENTURES 0.2%
CONSUMER DISCRETIONARY 0.2%
Media 0.2%
Sinclair Broadcast Group, Inc., 3.00%, 05/15/2027 (cost $1,176,525)	$	1,260,000		1,176,525
LOANS 4.1%
CONSUMER DISCRETIONARY 1.1%
Dana Holding Corp., FRN, 6.55%, 01/31/2015 <		285,000		274,745
Fontainebleau Resorts, LLC, FRN, 5.55%, 06/06/2014		585,000		493,319
Idearc, Inc., FRN, 4.80%, 11/17/2014 <		909,307		753,406
Metaldyne Corp., FRN:
7.06%, 01/11/2012 <		864,205		648,154
7.06%, 01/11/2014 <		1,380,774		1,039,184
Ion Media Networks, Inc., FRN, 6.05%, 01/15/2012 <		3,175,000		2,612,803
				5,821,611
ENERGY 0.1%
Saint Acquisition Corp., FRN, 2.80%, 06/05/2014		725,000		540,640
INDUSTRIALS 1.0%
Clarke American Corp., FRN, 5.30%, 02/28/2014		3,225,372		2,732,406
Neff Corp., FRN, 6.30%, 11/30/2014 <		3,655,000		2,679,883
				5,412,289

See Notes to Financial Statements

24

SCHEDULE OF INVESTMENTS continued

April 30, 2008

		Principal Amount		Value
LOANS continued
INFORMATION TECHNOLOGY 0.0%
Freescale Semiconductor, Inc., FRN, 4.80%, 12/01/2013 <	$	272,942	$	235,958
MATERIALS 1.6%
Abitibi Consolidated Co. of Canada, FRN, 10.80%, 03/31/2009 <		2,324,731		2,299,485
Boise Paper Holdings, LLC, FRN, 5.55%, 02/15/2015		375,000		368,734
MacDermid, Inc., FRN, 5.05%, 04/15/2014		1,370,000		1,894,720
Wimar Co., FRN, 5.30%, 01/03/2012		3,800,000		3,599,474
				8,162,413
TELECOMMUNICATION SERVICES 0.3%
Telesat Canada, Inc., FRN, 5.80%, 09/01/2014		1,545,000		1,465,603
UTILITIES 0.0%
Energy Future Holdings Corp., FRN, 5.80%, 10/10/2014		1,739		1,661
Total Loans (cost $21,547,611)				21,640,175
SHORT-TERM INVESTMENTS 11.9%
CORPORATE BONDS 1.0%
Commercial Banks 0.5%
First Tennessee Bank, FRN, 2.75%, 08/15/2008 ρρ		2,500,000		2,498,583
Insurance 0.5%
Metropolitan Life Global Funding, 2.87%, 08/21/2008 ρρ		2,750,000		2,748,873
				5,247,456
		Shares		Value
MUTUAL FUND SHARES 10.9%
Evergreen Institutional Money Market Fund, Class I, 2.78% q ø ρρ		57,237,813		57,237,813
Total Short-Term Investments (cost $62,487,813)				62,485,269
Total Investments (cost $587,780,841) 107.9%				564,990,062
Other Assets and Liabilities (7.9%)				(41,538,031)
Net Assets 100.0%			$	523,452,031

ρ	All or a portion of this security is on loan.
144A	Security that may be sold to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines established by the Board of Trustees, unless otherwise noted.
Š	The rate shown is the stated rate at the current period end.
†	Security initially issued in zero coupon form which converts to coupon form at a specified rate and date. An effective interest rate is applied to recognize interest income daily for the bond. This rate is based on total expected interest to be earned over the life of the bond which consists of the aggregate coupon-interest payments and discount at acquisition. The rate shown is the stated rate at the current period end.
*	Non-income producing security
+	Security is deemed illiquid.
o	Security is valued at fair value as determined by the investment advisor in good faith, according to procedures approved by the Board of Trustees.

See Notes to Financial Statements

25

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

< All or a portion of the position represents an unfunded loan commitment.

q Rate shown is the 7-day annualized yield at period end.

ø Evergreen Investment Management Company, LLC is the investment advisor to both the Fund and the money market fund.

ρρ All or a portion of this security represents investment of cash collateral received from securities on loan.

Summary of Abbreviations

FRN Floating Rate Note

The following table shows the percent of total investments (excluding equity positions and collateral from securities on loan) by credit quality based on Moody’s and Standard & Poor’s ratings as of April 30, 2008 (unaudited):

AAA	2.0%
AA	0.5%
BBB	6.1%
BB	28.9%
B	48.8%
CCC	13.2%
NR	0.5%
	100.0%

The following table shows the percent of total investments (excluding equity positions and collateral from securities on loan) based on effective maturity as of April 30, 2008 (unaudited):

Less than 1 year	4.7%
1 to 3 year(s)	14.6%
3 to 5 years	17.3%
5 to 10 years	55.8%
10 to 20 years	4.5%
20 to 30 years	1.9%
Greater than 30 years	1.2%
	100.0%

See Notes to Financial Statements

26

STATEMENT OF ASSETS AND LIABILITIES

April 30, 2008

Assets
Investments in securities, at value (cost $530,543,028) including $54,009,717 of securities loaned	$	507,752,249
Investments in affiliated money market fund, at value (cost $57,237,813)		57,237,813
Total investments		564,990,062
Cash		2,232,781
Segregated cash		840,000
Foreign currency, at value (cost $ 10,170)		9,968
Receivable for securities sold		12,435,315
Receivable for Fund shares sold		473,500
Interest receivable		12,367,021
Receivable for securities lending income		32,715
Premiums paid on credit default swap transactions		197,575
Unrealized gains on forward foreign currency exchange contracts		5,774
Unrealized gains on credit default swap transactions		145,865
Prepaid expenses and other assets		134,551
Total assets		593,865,127
Liabilities
Dividends payable		1,333,820
Payable for securities purchased		11,746,429
Payable for Fund shares redeemed		988,085
Unrealized losses on credit default swap transactions		57,722
Unrealized losses on forward foreign currency exchange contracts		77,829
Premiums received on credit default swap transactions		361,875
Payable for securities on loan		55,723,220
Advisory fee payable		7,079
Distribution Plan expenses payable		8,007
Due to other related parties		1,806
Accrued expenses and other liabilities		107,224
Total liabilities		70,413,096
Net assets	$	523,452,031
Net assets represented by
Paid-in capital	$	675,685,644
Overdistributed net investment income		(137,343)
Accumulated net realized losses on investments		(129,321,381)
Net unrealized losses on investments		(22,774,889)
Total net assets	$	523,452,031
Net assets consists of
Class A	$	270,757,652
Class B		108,327,434
Class C		118,638,384
Class I		25,728,561
Total net assets	$	523,452,031
Shares outstanding (unlimited number of shares authorized)
Class A		86,551,729
Class B		34,628,983
Class C		37,924,656
Class I		8,224,745

See Notes to Financial Statements

27

STATEMENT OF ASSETS AND LIABILITIEScontinued

April 30, 2008

Net asset value per share
Class A	$	3.13
Class A — Offering price (based on sales charge of 4.75%)	$	3.29
Class B	$	3.13
Class C	$	3.13
Class I	$	3.13

See Notes to Financial Statements

28

STATEMENT OF OPERATIONS

Year Ended April 30, 2008

Investment income
Interest	$	51,070,852
Income from affiliate		806,978
Dividends		131,665
Securities lending		89,289
Total investment income		52,098,784
Expenses
Advisory fee		2,726,891
Distribution Plan expenses
Class A		863,727
Class B		1,269,446
Class C		1,357,713
Administrative services fee		584,506
Transfer agent fees		1,081,492
Trustees’ fees and expenses		13,781
Printing and postage expenses		83,645
Custodian and accounting fees		187,149
Registration and filing fees		67,293
Professional fees		53,000
Other		17,141
Total expenses		8,305,784
Less: Expense reductions		(56,703)
Expense reimbursements		(134,895)
Net expenses		8,114,186
Net investment income		43,984,598
Net realized and unrealized gains or losses on investments
Net realized losses on:
Securities		(5,360,974)
Foreign currency related transactions		(192)
Credit default swap transactions		(69,538)
Net realized losses on investments		(5,430,704)
Net change in unrealized gains or losses on investments		(48,995,205)
Net realized and unrealized gains or losses on investments		(54,425,909)
Net decrease in net assets resulting from operations	$	(10,441,311)

See Notes to Financial Statements

29

STATEMENTS OF CHANGES IN NET ASSETS

	Year Ended April 30,
	2008				2007
Operations
Net investment income			$	43,984,598			$	50,178,085
Net realized gains or losses on investments				(5,430,704)				2,935,671
Net change in unrealized gains or losses on investments				(48,995,205)				14,090,164
Net increase (decrease) in net assets resulting from operations				(10,441,311)				67,203,920
Distributions to shareholders from
Net investment income
Class A				(21,361,094)				(25,511,393)
Class B				(8,349,395)				(10,353,425)
Class C				(8,933,701)				(11,450,486)
Class I				(2,478,761)				(2,935,746)
Total distributions to shareholders				(41,122,951)				(50,251,050)
		Shares				Shares
Capital share transactions
Proceeds from shares sold
Class A		12,599,402		40,291,644		8,872,464		29,361,786
Class B		1,910,604		6,190,668		2,878,309		9,532,702
Class C		2,426,301		7,745,868		3,575,958		11,831,397
Class I		7,743,024		26,003,845		2,598,618		8,626,874
				80,232,025				59,352,759
Net asset value of shares issued in reinvestment of distributions
Class A		4,412,555		14,183,006		5,100,535		16,899,566
Class B		1,242,980		3,995,001		1,480,905		4,906,603
Class C		1,440,882		4,631,294		1,774,970		5,879,356
Class I		267,966		864,515		418,042		1,382,768
				23,673,816				29,068,293
Automatic conversion of Class B shares to Class A shares
Class A		1,175,830		3,743,609		1,001,277		3,327,267
Class B		(1,175,830)		(3,743,609)		(1,001,277)		(3,327,267)
				0				0
Payment for shares redeemed
Class A		(30,235,841)		(97,809,031)		(33,580,433)		(111,126,729)
Class B		(11,623,756)		(37,443,587)		(12,379,615)		(40,950,431)
Class C		(13,549,920)		(43,714,958)		(18,676,545)		(61,740,275)
Class I		(7,767,528)		(25,028,336)		(10,228,849)		(33,976,494)
				(203,995,912)				(247,793,929)
Net decrease in net assets resulting from capital share transactions				(100,090,071)				(159,372,877)
Total decrease in net assets				(151,654,333)				(142,420,007)
Net assets
Beginning of period				675,106,364				817,526,371
End of period			$	523,452,031			$	675,106,364
Overdistributed net investment income			$	(137,343)			$	(955,531)

See Notes to Financial Statements

30

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Evergreen High Income Fund (formerly Evergreen High Yield Bond Fund) (the “Fund”) is a diversified series of Evergreen Fixed Income Trust (the “Trust”), a Delaware statutory trust organized on September 18, 1997. The Trust is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”).

The Fund offers Class A, Class B, Class C and Class I shares. Class A shares are sold with a front-end sales charge. However, Class A share investments of $1 million or more are not subject to a front-end sales charge but are subject to a contingent deferred sales charge of 1.00% upon redemption within 18 months. Class B shares are sold without a front-end sales charge but are subject to a contingent deferred sales charge that is payable upon redemption and decreases depending on how long the shares have been held. Class C shares are sold without a front-end sales charge but are subject to a contingent deferred sales charge that is payable upon redemption within one year. Class I shares are sold without a front-end sales charge or contingent deferred sales charge. Each class of shares, except Class I shares, pays an ongoing distribution fee.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles in the United States of America, which require management to make estimates and assumptions that affect amounts reported herein. Actual results could differ from these estimates.

a. Valuation of investments

Portfolio debt securities acquired with more than 60 days to maturity are fair valued using matrix pricing methods determined by an independent pricing service which takes into consideration such factors as similar security prices, yields, maturities, liquidity and ratings. Securities for which valuations are not readily available from an independent pricing service may be valued by brokers which use prices provided by market makers or estimates of market value obtained from yield data relating to investments or securities with similar characteristics.

Listed equity securities are usually valued at the last sales price or official closing price on the national securities exchange where the securities are principally traded.

Foreign securities traded on an established exchange are valued at the last sales price on the exchange where the security is primarily traded. If there has been no sale, the securities are valued at the mean between bid and asked prices. Foreign securities may be valued at fair value according to procedures approved by the Board of Trustees if the closing price is not reflective of current market values due to trading or events occurring in the foreign markets between the close of the established exchange and the valuation time of the Fund. In addition, substantial changes in values in the U.S. markets subsequent to the close of a

31

NOTES TO FINANCIAL STATEMENTS continued

foreign market may also affect the values of securities traded in the foreign market. The value of foreign securities may be adjusted if such movements in the U.S. market exceed a specified threshold.

Short-term securities with remaining maturities of 60 days or less at the time of purchase are valued at amortized cost, which approximates market value.

Investments in open-end mutual funds are valued at net asset value. Securities for which market quotations are not readily available or not reflective of current market value are valued at fair value as determined by the investment advisor in good faith, according to procedures approved by the Board of Trustees.

b. Repurchase agreements

Securities pledged as collateral for repurchase agreements are held by the custodian bank or in a segregated account in the Fund’s name until the agreements mature. Collateral for certain tri-party repurchase agreements is held at the counterparty’s custodian in a segregated account for the benefit of the Fund and the counterparty. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. However, in the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. The Fund will only enter into repurchase agreements with banks and other financial institutions, which are deemed by the investment advisor to be creditworthy pursuant to guidelines established by the Board of Trustees. In certain instances, the Fund’s securities lending agent may provide collateral in the form of repurchase agreements.

c. Foreign currency translation

All assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for that portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses on investments.

d. Forward foreign currency contracts

A forward foreign currency contract is an agreement between two parties to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund enters into forward foreign currency contracts to facilitate transactions in foreign-denominated securities and to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. Forward foreign currency contracts are recorded at the forward rate and marked-to-market daily. When the contracts are closed, realized gains and losses arising from such transactions are recorded as realized gains or losses on foreign currency related transactions. The Fund could be exposed to risks if the counterparties to

32

NOTES TO FINANCIAL STATEMENTScontinued

the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.

e. When-issued and delayed delivery transactions

The Fund records when-issued or delayed delivery securities as of trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked-to-market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

f. Loans

The Fund may purchase loans through an agent, by assignment from another holder of the loan or as a participation interest in another holder’s portion of the loan. Loans are purchased on a when-issued or delayed delivery basis. Interest income is accrued based on the terms of the securities. Fees earned on loan purchasing activities are recorded as income when earned. Loans involve interest rate risk, liquidity risk and credit risk, including the potential default or insolvency of the borrower.

g. Securities lending

The Fund may lend its securities to certain qualified brokers in order to earn additional income. The Fund receives compensation in the form of fees or interest earned on the investment of any cash collateral received. The Fund also continues to receive interest and dividends on the securities loaned. The Fund receives collateral in the form of cash or securities with a market value at least equal to the market value of the securities on loan. In the event of default or bankruptcy by the borrower, the Fund could experience delays and costs in recovering the loaned securities or in gaining access to the collateral. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.

h. Credit default swaps

The Fund may enter into credit default swap contracts. Credit default swaps involve an exchange of a stream of payments for protection against the loss in value of an underlying security or index in the event of default or bankruptcy. Under the terms of the swap, one party acts as a guarantor and receives a periodic stream of payments that is a fixed percentage applied to a notional principal amount over the term of the swap. In return, the counterparty agrees to purchase the notional amount of the underlying instrument or index, at par, if a credit event occurs during the term of the swap. The Fund may enter into credit default swaps as either the guarantor or the counterparty.

Any premiums paid or received on the transactions are recorded as an asset or liability on the Statement of Assets and Liabilities and amortized. The value of the swap contract is marked-to-market daily based on quotations from an independent pricing service or market makers and any change in value is recorded as an unrealized gain or loss. Periodic

33

NOTES TO FINANCIAL STATEMENTScontinued

payments made or received are recorded as realized gains or losses. In addition, payments received or made as a result of a credit event or termination of the contract are recognized as realized gains or losses. The Fund could be exposed to risks if the counterparty defaults on its obligation to perform, or if there are unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index.

i. Security transactions and investment income

Security transactions are recorded on trade date. Realized gains and losses are computed using the specific cost of the security sold. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. Dividend income is recorded on the ex-dividend date.

j. Federal and other taxes

The Fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income, including any net capital gains (which have already been offset by available capital loss carryovers). Accordingly, no provision for federal taxes is required. The Fund has adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”) which prescribes a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The Fund’s financial statements have not been impacted by the adoption of FIN 48. The Fund’s income and excise tax returns and all financial records supporting those returns are subject to examination by the federal, Massachusetts and Delaware revenue authorities for all taxable years beginning after April 30, 2004.

k. Distributions

Distributions to shareholders from net investment income are accrued daily and paid monthly. Distributions from net realized gains, if any, are recorded on the ex-dividend date. Such distributions are determined in conformity with income tax regulations, which may differ from generally accepted accounting principles.

Reclassifications have been made to the Fund’s components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax regulations. The primary permanent differences causing such reclassifications are due to expiration of capital loss carryovers, premium amortization and consent fees. During the year ended April 30, 2008, the following amounts were reclassified:

Paid-in capital	$	(14,290,217)
Overdistributed net investment income		(2,043,459)
Accumulated net realized losses on investments		16,333,676

l. Class allocations

Income, common expenses and realized and unrealized gains and losses are allocated to the classes based on the relative net assets of each class. Distribution fees, if any, are calcu-

34

NOTES TO FINANCIAL STATEMENTScontinued

lated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

3. ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Evergreen Investment Management Company, LLC (“EIMC”), an indirect, wholly-owned subsidiary of Wachovia Corporation (“Wachovia”), is the investment advisor to the Fund and is paid a fee at an annual rate of 2% of the Fund’s gross investment income plus an amount determined by applying percentage rates to the average daily net assets of the Fund, starting at 0.31% and declining to 0.16% as average daily net assets increase. For the year ended April 30, 2008, the advisory fee was equivalent to 0.46% of the Fund’s average daily net assets.

Tattersall Advisory Group, Inc., an indirect, wholly-owned subsidiary of Wachovia, is an investment sub-advisor to the Fund and is paid by EIMC for its services to the Fund.

From time to time, EIMC may voluntarily or contractually waive its fee and/or reimburse expenses in order to limit operating expenses. During the year ended April 30, 2008, EIMC voluntarily reimbursed Distribution Plan expenses (see Note 4) relating to Class A shares in the amount of $134,895.

The Fund may invest in money market funds which are advised by EIMC. Income earned on these investments is included in income from affiliate on the Statement of Operations.

Effective January 1, 2008, EIMC replaced Evergreen Investment Services, Inc. (“EIS”), an indirect, wholly-owned subsidiary of Wachovia, as the administrator to the Fund upon the assignment of the Fund’s Administrative Services Agreement from EIS to EIMC. There were no changes to the services being provided or fees being paid by the Fund. The administrator provides the Fund with facilities, equipment and personnel and is paid an annual rate determined by applying percentage rates to the aggregate average daily net assets of the Evergreen funds (excluding money market funds) starting at 0.10% and declining to 0.05% as the aggregate average daily net assets of the Evergreen funds (excluding money market funds) increase.

Evergreen Service Company, LLC (“ESC”), an indirect, wholly-owned subsidiary of Wachovia, is the transfer and dividend disbursing agent for the Fund. ESC receives account fees that vary based on the type of account held by the shareholders in the Fund. For the year ended April 30, 2008, the transfer agent fees were equivalent to an annual rate of 0.18% of the Fund’s average daily net assets.

The Fund has placed a portion of its portfolio transactions with brokerage firms that are affiliates of Wachovia. During the year ended April 30, 2008, the Fund paid brokerage commissions of $1,785 to Wachovia Securities, LLC.

35

NOTES TO FINANCIAL STATEMENTS continued

4. DISTRIBUTION PLANS

EIS serves as distributor of the Fund’s shares. The Fund has adopted Distribution Plans, as allowed by Rule 12b-1 of the 1940 Act, for each class of shares, except Class I. Under the Distribution Plans, distribution fees are paid at an annual rate of 0.25% of the average daily net assets for Class A and 1.00% of the average daily net assets for each of Class B and Class C shares. Prior to April 1, 2008, distribution fees were paid at an annual rate of 0.30% of the average daily net assets for Class A shares.

For the year ended April 30, 2008, EIS received $13,497 from the sale of Class A shares and $23,958, $303,734 and $4,725 in contingent deferred sales charges from redemptions of Class A, Class B and Class C shares, respectively.

5. INVESTMENT TRANSACTIONS

Cost of purchases and proceeds from sales of investment securities (excluding short-term securities) were $625,022,947 and $658,314,263, respectively, for the year ended April 30, 2008.

As of year ended April 30, 2008, the Fund had unfunded loan commitments of $3,994,402.

At April 30, 2008, the Fund had forward foreign currency exchange contracts outstanding as follows:

Forward Foreign Currency Exchange Contracts to Sell:

Exchange Date	ContractstoDeliver	U.S.Valueat April30,2008		InExchange forU.S.$		Unrealized Gain(Loss)
5/14/2008	756,000 EUR	$	1,176,133	$	1,099,110	$	(77,023)
5/14/2008	8,379 EUR		13,034		12,228		(806)
7/8/2008	404,800 EUR		628,159		633,933		5,774

During the year ended April 30, 2008, the Fund loaned securities to certain brokers and earned $134,312 in affiliated income relating to securities lending activity which is included in income from affiliate on the Statement of Operations. At April 30, 2008, the value of securities on loan and the total value of collateral received for securities loaned amounted to $54,009,717 and $55,723,220, respectively.

36

NOTES TO FINANCIAL STATEMENTS continued

At April 30, 2008, the Fund had the following credit default swap contracts outstanding:

Expiration	Counterparty	Reference Debt Obligation/Index		Notional Amount	Fixed Payments Received by the Fund	Frequency of Payments Received		Unrealized Gain
12/20/2012	Goldman Sachs	Dow Jones CDX, North American Investment Grade Index	$	2,265,000	3.75%	Quarterly	$	5,894
12/20/2012	UBS	Dow Jones CDX, North American Investment Grade Index		1,525,000	3.75%	Quarterly		3,968
06/20/2013	Lehman Brothers	Centex Corp., 5.25%, 06/15/2015		740,000	5.12%	Quarterly		42,884
12/13/2049	Goldman Sachs	Markit CMBX North America AJ.3 Index		375,000	1.47%	Quarterly		39,114
12/13/2049	UBS	Markit CMBX North America AAA.3 Index		375,000	0.08%	Quarterly		41,948

Expiration	Counterparty	Reference Debt Obligation/Index		Notional Amount	Fixed Payments Made by the Fund	Frequency of Payments Made		Unrealized Gain (Loss)
12/20/2012	JPMorgan	Dow Jones CDX North American Investment Grade Index	$	3,790,000	3.75%	Quarterly	$	12,057
06/20/2013	Lehman Brothers	Pulte, Inc., 5.25%, 1/15/2014		740,000	4.17%	Quarterly		(48,583)
06/20/2013	Bank of America	Dow Jones CDX North American Investment Grade Index		580,000	5.00%	Quarterly		(2,739)
06/20/2013	UBS	Dow Jones CDX North American Investment Grade Index		1,355,000	5.00%	Quarterly		(6,400)

On April 30, 2008, the aggregate cost of securities for federal income tax purposes was $589,638,464. The gross unrealized appreciation and depreciation on securities based on tax cost was $7,160,272 and $31,808,674, respectively, with a net unrealized depreciation of $24,648,402.

37

NOTES TO FINANCIAL STATEMENTS continued

As of April 30, 2008, the Fund had $118,191,291 in capital loss carryovers for federal income tax purposes expiring as follows:

Expiration
2009	2010	2011	2014	2015
$38,451,200	$57,513,490	$15,936,101	$1,353,885	$4,936,615

These losses are subject to certain limitations prescribed by the Internal Revenue Code.

For income tax purposes, capital and currency losses incurred after October 31 within the Fund’s fiscal year are deemed to arise on the first business day of the following fiscal year. As of April 30, 2008, the Fund incurred and will elect to defer post-October capital and currency losses of $9,272,466 and $192, respectively.

6. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the SEC, the Fund may participate in an inter-fund lending program with certain funds in the Evergreen fund family. This program allows the Fund to borrow from, or lend money to, other participating funds. During the year ended April 30, 2008, the Fund did not participate in the interfund lending program.

7. DISTRIBUTIONS TO SHAREHOLDERS

As of April 30, 2008, the components of distributable earnings on a tax basis were as follows:

Undistributed Ordinary Income	Unrealized Depreciation	CapitalLoss Carryoversand Post-OctoberLosses	Temporary Book/Tax Differences
$1,264,240	$24,648,600	$127,463,949	$(1,385,304)

The differences between the components of distributable earnings on a tax basis and the amounts reflected in the Statement of Assets and Liabilities are primarily due to wash sales, passive foreign investment companies, forward contracts and swap contracts. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses.

The tax character of distributions paid were $41,122,951 and $50,251,050 of ordinary income for the years ended April 30, 2008 and April 30, 2007, respectively.

8. EXPENSE REDUCTIONS

Through expense offset arrangements with ESC and the Fund’s custodian, a portion of fund expenses has been reduced.

9. DEFERRED TRUSTEES‘ FEES

Each Trustee of the Fund may defer any or all compensation related to performance of his or her duties as a Trustee. The Trustees’ deferred balances are allocated to deferral accounts, which are included in the accrued expenses for the Fund. The investment

38

NOTES TO FINANCIAL STATEMENTS continued

performance of the deferral accounts is based on the investment performance of certain Evergreen funds. Any gains earned or losses incurred in the deferral accounts are reported in the Fund’s Trustees’ fees and expenses. At the election of the Trustees, the deferral account will be paid either in one lump sum or in quarterly installments for up to ten years.

10. FINANCING AGREEMENT

The Fund and certain other Evergreen funds share in an unsecured revolving credit commitment for temporary and emergency purposes, including the funding of redemptions, as permitted by each participating fund’s borrowing restrictions. Borrowings under this facility bear interest at 0.50% per annum above the Federal Funds rate. All of the participating funds are charged an annual commitment fee on the unused balance, which is allocated pro rata. The credit facility is for $100 million with an annual commitment fee of 0.08%. During the year ended April 30, 2008, the Fund had no borrowings.

11. REGULATORY MATTERS AND LEGAL PROCEEDINGS

Pursuant to an administrative order issued by the SEC on September 19, 2007, EIMC, EIS, ESC (collectively, the “Evergreen Entities”), Wachovia Securities, LLC and the SEC have entered into an agreement settling allegations of (i) improper short-term trading arrangements in effect prior to May 2003 involving former officers and employees of EIMC and certain broker-dealers, (ii) insufficient systems for monitoring exchanges and enforcing exchange limitations as stated in certain funds’ prospectuses, and (iii) inadequate e-mail retention practices. Under the settlement, the Evergreen Entities were censured and have paid approximately $32 million in disgorgement and penalties. This amount, along with a fine assessed by the SEC against Wachovia Securities, LLC will be distributed pursuant to a plan to be developed by an independent distribution consultant and approved by the SEC. The Evergreen Entities neither admitted nor denied the allegations and findings set forth in its settlement with the SEC.

In addition, the Evergreen funds and EIMC and certain of its affiliates are involved in various legal actions, including private litigation and class action lawsuits. EIMC does not expect that any of such legal actions currently pending or threatened will have a material adverse impact on the financial position or operations of any of the Evergreen funds or on EIMC’s ability to provide services to the Evergreen funds.

Although EIMC believes that none of the matters discussed above will have a material adverse impact on the Evergreen funds, there can be no assurance that these matters and any publicity surrounding or resulting from them will not result in reduced sales or increased redemptions of Evergreen fund shares, which could increase Evergreen fund transaction costs or operating expenses, or that they will not have other adverse consequences on the Evergreen funds.

39

NOTES TO FINANCIAL STATEMENTS continued

12. NEW ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157”). FAS 157 establishes a single authoritative definition of fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FAS 157 applies to fair value measurements already required or permitted by existing standards. The change to current generally accepted accounting principles from the application of FAS 157 relates to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. Management of the Fund does not believe the adoption of FAS 157 will materially impact the financial statement amounts, however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements on changes in net assets for the period. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years.

In March 2008, FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“FAS 161”), an amendment of FASB Statement No. 133. FAS 161 requires enhanced disclosures about (a) how and why a fund uses derivative instruments, (b) how derivative instruments and hedging activities are accounted for, and (c) how derivative instruments and related hedging activities affect a fund’s financial position, financial performance, and cash flows. Management of the Fund does not believe the adoption of FAS 161 will materially impact the financial statement amounts, but will require additional disclosures. This will include qualitative and quantitative disclosures on derivative positions existing at period end and the effect of using derivatives during the reporting period. FAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.

40

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Trustees and Shareholders

Evergreen Fixed Income Trust

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the Evergreen High Income Fund, formerly Evergreen High Yield Bond Fund, a series of the Evergreen Fixed Income Trust, as of April 30, 2008 and the related statement of operations for the year then ended, statements of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 2008 by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Evergreen High Income Fund as of April 30, 2008, the results of its operations, changes in its net assets and financial highlights for each of the years described above, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts

June 27, 2008

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43

TRUSTEES AND OFFICERS

TRUSTEES1
Charles A. Austin III Trustee DOB: 10/23/1934 Term of office since: 1991 Other directorships: None	Investment Counselor, Anchor Capital Advisors, LLC. (investment advice); Director, The Andover Companies (insurance); Trustee, Arthritis Foundation of New England; Former Director, The Francis Ouimet Society (scholarship program); Former Director, Executive Vice President and Treasurer, State Street Research & Management Company (investment advice)
K. Dun Gifford Trustee DOB: 10/23/1938 Term of office since: 1974 Other directorships: None	Chairman and President, Oldways Preservation and Exchange Trust (education); Trustee, Chairman of the Finance Committee, Member of the Executive Committee, and Former Treasurer, Cambridge College
Dr.Leroy Keith, Jr. Trustee DOB: 2/14/1939 Term of office since: 1983 Other directorships: Trustee, Phoenix Fund Complex (consisting of 53 portfolios as of 12/31/2007)	Managing Director, Almanac Capital Management (commodities firm); Trustee, Phoenix Fund Complex; Director, Diversapack Co. (packaging company); Former Partner, Stonington Partners, Inc. (private equity fund); Former Director, Obagi Medical Products Co.; Former Director, Lincoln Educational Services
Carol A. Kosel1 Trustee DOB: 12/25/1963 Term of office since: 2008 Other directorships: None	Former Consultant to the Evergreen Boards of Trustees; Former Vice President and Senior Vice President, Evergreen Investments, Inc.; Former Treasurer, Evergreen Funds; Former Treasurer, Vestaur Securities Fund
Gerald M. McDonnell Trustee DOB: 7/14/1939 Term of office since: 1988 Other directorships: None	Former Manager of Commercial Operations, CMC Steel (steel producer)
Patricia B. Norris Trustee DOB: 4/9/1948 Term of office since: 2006 Other directorships: None	President and Director of Buckleys of Kezar Lake, Inc. (real estate company); Former President and Director of Phillips Pond Homes Association (home community); Former Partner, PricewaterhouseCoopers, LLP (independent registered public accounting firm)
William Walt Pettit Trustee DOB: 8/26/1955 Term of office since: 1988 Other directorships: None	Partner and Vice President, Kellam & Pettit, P.A. (law firm); Director, Superior Packaging Corp. (packaging company); Member, Superior Land, LLC (real estate holding company), Member, K&P Development, LLC (real estate development); Former Director, National Kidney Foundation of North Carolina, Inc. (non-profit organization)
David M. Richardson Trustee DOB: 9/19/1941 Term of office since: 1982 Other directorships: None	President, Richardson, Runden LLC (executive recruitment advisory services); Director, J&M Cumming Paper Co. (paper merchandising); Trustee, NDI Technologies, LLP (communications); Former Consultant, AESC (The Association of Executive Search Consultants)
Dr.Russell A. Salton III Trustee DOB: 6/2/1947 Term of office since: 1984 Other directorships: None	President/CEO, AccessOne MedCard, Inc.

44

TRUSTEES AND OFFICERS continued

Michael S. Scofield Trustee DOB: 2/20/1943 Term of office since: 1984 Other directorships: None	Retired Attorney, Law Offices of Michael S. Scofield; Former Director and Chairman, Branded Media Corporation (multi-media branding company)
Richard J. Shima Trustee DOB: 8/11/1939 Term of office since: 1993 Other directorships: None	Independent Consultant; Director, Hartford Hospital; Trustee, Greater Hartford YMCA; Former Director, Trust Company of CT; Former Director, Old State House Association; Former Trustee, Saint Joseph College (CT)
Richard K. Wagoner, CFA2 Trustee DOB: 12/12/1937 Term of office since: 1999 Other directorships: None	Member and Former President, North Carolina Securities Traders Association; Member, Financial Analysts Society

OFFICERS

Dennis H. Ferro3 President DOB: 6/20/1945 Term of office since: 2003	Principal occupations: President and Chief Executive Officer, Evergreen Investment Company, Inc. and Executive Vice President, Wachovia Bank, N.A.; former Chief Investment Officer, Evergreen Investment Company, Inc.
Kasey Phillips4 Treasurer DOB: 12/12/1970 Term of office since: 2005	Principal occupations: Senior Vice President, Evergreen Investment Management Company, LLC; Former Vice President, Evergreen Investment Services, Inc.; Former Assistant Vice President, Evergreen Investment Services, Inc.
Michael H. Koonce4 Secretary DOB: 4/20/1960 Term of office since: 2000	Principal occupations: Senior Vice President and General Counsel, Evergreen Investment Services, Inc.; Secretary, Senior Vice President and General Counsel, Evergreen Investment Management Company, LLC and Evergreen Service Company, LLC; Senior Vice President and Assistant General Counsel, Wachovia Corporation
Robert Guerin4 Chief Compliance Officer DOB: 9/20/1965 Term of office since: 2007	Principal occupations: Chief Compliance Officer, Evergreen Funds and Senior Vice President of Evergreen Investments Co., Inc.; Former Managing Director and Senior Compliance Officer, Babson Capital Management LLC; Former Principal and Director, Compliance and Risk Management, State Street Global Advisors; Former Vice President and Manager, Sales Practice Compliance, Deutsche Asset Management

1 Each Trustee, except Mses. Kosel and Norris, serves until a successor is duly elected or qualified or until his or her death, resignation, retirement or removal from office. As new Trustees, Ms. Kosel’s and Ms. Norris’ initial terms end December 31, 2010 and June 30, 2009, respectively, at which times they may be re-elected by Trustees to serve until a successor is duly elected or qualified or until her death, resignation, retirement or removal from office by the Trustees. Each Trustee, except Ms. Kosel, oversaw 94 Evergreen funds as of December 31, 2007. Ms. Kosel became a Trustee on January 1, 2008. Correspondence for each Trustee may be sent to Evergreen Board of Trustees, P.O. Box 20083, Charlotte, NC 28202.

2 Mr. Wagoner is an “interested person”of the Fund because of his ownership of shares in Wachovia Corporation, the parent to the Fund’s investment advisor.

3 The address of the Officer is 401 S. Tryon Street, 20th Floor, Charlotte, NC 28288.

4 The address of the Officer is 200 Berkeley Street, Boston, MA 02116.

Additional information about the Fund’s Board of Trustees and Officers can be found in the Statement of Additional Information (SAI) and is available upon request without charge by calling 800.343.2898.

45

566660 rv5 06/2008

Evergreen U.S. Government Fund

	table of contents
1	LETTER TO SHAREHOLDERS
4	FUND AT A GLANCE
5	PORTFOLIO MANAGER COMMENTARY
7	ABOUT YOUR FUND’S EXPENSES
8	FINANCIAL HIGHLIGHTS
12	SCHEDULE OF INVESTMENTS
21	STATEMENT OF ASSETS AND LIABILITIES
22	STATEMENT OF OPERATIONS
23	STATEMENTS OF CHANGES IN NET ASSETS
24	STATEMENT OF CASH FLOWS
25	NOTES TO FINANCIAL STATEMENTS
34	REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
36	TRUSTEES AND OFFICERS

This annual report must be preceded or accompanied by a prospectus of the Evergreen fund contained herein. The prospectus contains more complete information, including fees and expenses, and should be read carefully before investing or sending money.

The fund will file its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q will be available on the SEC’s Web site at http://www.sec.gov. In addition, the fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 800.SEC.0330.

A description of the fund’s proxy voting policies and procedures, as well as information regarding how the fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available by visiting our Web site at EvergreenInvestments.com or by visiting the SEC’s Web site at http://www.sec.gov. The fund’s proxy voting policies and procedures are also available without charge, upon request, by calling 800.343.2898.

Mutual Funds:

 NOT FDIC INSURED  MAY LOSE VALUE  NOT BANK GUARANTEED 

Evergreen Investments^SM is a service mark of Evergreen Investment Management Company, LLC. Copyright 2008, Evergreen Investment Management Company, LLC.

Evergreen Investment Management Company, LLC is a subsidiary of Wachovia Corporation and is an affiliate of Wachovia Corporation’s other Broker Dealer subsidiaries.

Evergreen mutual funds are distributed by Evergreen Investment Services, Inc. 200 Berkeley Street, Boston, MA 02116

LETTER TO SHAREHOLDERS

June 2008

Dennis H. Ferro

President and Chief Executive Officer

Dear Shareholder:

We are pleased to provide the Annual Report for Evergreen U.S. Government Fund for the twelve-month period ended April 30, 2008 (the “twelve-month period”).

The fiscal year witnessed a dramatic change in fixed income markets as problems that first surfaced in housing and the subprime mortgages raised questions about the strength of the domestic economy and the risks of credit-sensitive investments. Corporate bonds and asset-backed securities performed well early in the period, with gains in economic output, corporate profits and employment encouraging optimism. The backdrop for investing began to change, however, by the summer of 2007 amid widening worries about problems in the financials sector. Major financial institutions began to report substantial losses from their exposures to subprime mortgages and banks started to tighten their credit standards and to restrict their lending. With fears of a dramatic downturn hovering over the market, fixed income investors sought out the highest-quality securities and attempted to avoid credit risk. As a consequence, the prices of corporate bonds and many asset-backed securities fell, while Treasuries rallied in a general flight to quality over much of the period. These general trends later reversed themselves in the final month of the twelve-month period, with high yield corporate bonds and other credit-sensitive securities rallying in April 2008 following a series of actions by the U.S. Federal Reserve Board (the “Fed”) to stabilize the markets. Equities, meanwhile, tended to move in the same general direction as corporate bonds over the fiscal year. Stock prices rose very early in the period before falling in late 2007 and early 2008

1

LETTER TO SHAREHOLDERScontinued

and then rallying again in April. For the full twelve-month period, stock valuations fell across all market capitalizations, investment styles and regions. At the same time, the prices of gold, oil and other commodities surged while the U.S. dollar weakened further.

The U.S. economy grew briskly early in 2007, but then slowed significantly in late 2007 and early 2008. Economic growth decelerated as lending for ordinary consumer and commercial activity dried up, accentuating the weakening effects of declining home prices. Corporate profits, employment and other key economic indicators showed clear evidence of deterioration. Gross Domestic Product growth decelerated to a paltry 0.6% rate during the final quarter of 2007 and a marginally better 0.9% pace for the first quarter of 2008. Much of the strength early in 2008 came from exports and government spending, rather than from any noticeable improvements in consumer spending, business investment or housing. To reinvigorate the economy and stimulate lending activity, the Fed became increasingly aggressive, taking a series of steps to pour liquidity into the financial system. Starting in September 2007 and continuing through April 2008, the Fed cut the key fed funds rate seven different times, lowering the influential short-term rate from 5.25% to 2%. In March 2008, the central bank also opened its lending facilities to securities firms as well as commercial banks and intervened to help JPMorgan Chase & Co. purchase the collapsing investment bank Bear Stearns Cos. Meanwhile, Congress and the Bush administration rushed through a $168 billion fiscal stimulus bill, which included tax rebate checks, in an effort to boost growth in the second half of 2008.

During the twelve-month period, managers of Evergreen’s intermediate- and long-term bond funds paid careful attention to risk management in a changing market environment. The teams supervising the higher-credit quality funds—including Evergreen U.S. Government Fund, Evergreen Core

2

LETTER TO SHAREHOLDERScontinued

Bond Fund, Evergreen Core Plus Bond Fund and Evergreen Institutional Mortgage Portfolio—monitored Fed policy and interest-rate movements as well as general macroeconomic trends in managing their portfolios. Meanwhile, the managers of Evergreen High Income Fund and Evergreen Select High Yield Bond Fund tended to position their credit-sensitive portfolios relatively conservatively during a period of growing risk aversion. After repositioning their portfolio early in the fiscal year, the managers of Evergreen Diversified Income Builder Fund maintained an emphasis on better-quality, high yield corporate bonds and also increased their exposure to dividend-paying stocks.

The experiences in the capital markets during the twelve-month period have underscored the value of a well-diversified, long-term investment strategy to help soften the effects of volatility in any one market or asset class. As always, we encourage investors to maintain diversified investment portfolios in pursuit of their long-term investment goals.

Please visit us at EvergreenInvestments.com for more information about our funds and other investment products available to you. Thank you for your continued support of Evergreen Investments.

Sincerely,

Dennis H. Ferro

President and Chief Executive Officer

Evergreen Investment Company, Inc.

Special Notice to Shareholders:

Please visit our Web site at EvergreenInvestments.com for statements from President and Chief Executive Officer, Dennis Ferro, regarding the firm’s recent settlement with the Securities and Exchange Commission (SEC) and prior settlement with the Financial Industry Regulatory Authority (FINRA).

3

FUND AT A GLANCE

as of April 30, 2008

MANAGEMENT TEAM

Investment Advisor:

• Evergreen Investment Management Company, LLC

Sub-Advisor:

• Tattersall Advisory Group, Inc.

Portfolio Managers:

• Lisa Brown-Premo

• Karen DiMeglio

CURRENT INVESTMENT STYLE

Source: Morningstar, Inc.

Morningstar’s style box is based on a portfolio date as of 3/31/2008.

The Fixed Income style box placement is based on a fund’s average effective maturity or duration and the average credit rating of the bond portfolio.

PERFORMANCE AND RETURNS
Portfolio inception date: 1/11/1993
	Class A	Class B	Class C	Class I
Class inception date	1/11/1993	1/11/1993	9/2/1994	9/2/1993
Nasdaq symbol	EUSAX	EUSBX	EUSCX	EUSYX
Average annual return*
1-year with sales charge	0.43%	-0.31%	3.69%	N/A
1-year w/o sales charge	5.47%	4.69%	4.69%	5.74%
5-year	2.43%	2.35%	2.70%	3.73%
10-year	4.41%	4.16%	4.16%	5.20%
Maximum sales charge	4.75%	5.00%	1.00%	N/A
	Front-end	CDSC	CDSC

* Adjusted for maximum applicable sales charge, unless noted.

Past performance is no guarantee of future results. The performance quoted represents past performance and current performance may be lower or higher. The investment return and principal value of an investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. To obtain performance information current to the most recent month-end for Classes A, B, C or I, please go to EvergreenInvestments.com/fundperformance. The performance of each class may vary based on differences in loads, fees and expenses paid by the shareholders investing in each class. Performance includes the reinvestment of income dividends and capital gain distributions. Performance shown does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The fund incurs a 12b-1 fee of 0.25% for Class A and 1.00% for Classes B and C. Class I does not pay a 12b-1 fee.

The advisor is reimbursing a portion of the 12b-1 fee for Class A. Had the fee not been reimbursed, returns for Class A would have been lower. Returns reflect expense limits previously in effect for all classes, without which returns would have been lower.

Comparison of a $10,000 investment in the Evergreen U.S. Government Fund Class A shares versus a similar investment in the Lehman Brothers Intermediate Government Bond Index (LBITGBI) and the Consumer Price Index (CPI).

The LBITGBIis an unmanaged market index and does not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses or any taxes. The CPIis a commonly used measure of inflation and does not represent an investment return. It is not possible to invest directly in an index.

4

PORTFOLIO MANAGER COMMENTARY

The fund’s Class A shares returned 5.47% for the twelve-month period ended April 30, 2008, excluding any applicable sales charges. During the same period, the LBITGBI returned 9.26%.

The fund’s objective is to seek to achieve a high level of current income consistent with stability of principal.

The fund’s underperformance relative to the benchmark was largely due to its exposure to mortgage-backed securities (MBS) during a period when all securitized assets significantly lagged U.S. Treasuries. The fiscal year began in May 2007 amid evidence that the domestic economy was continuing to expand after weathering a housing slump earlier in the year. Corporate bonds continued to perform well as investors sought out higher yields. The Federal Reserve Board (the “Fed”) indicated it was more concerned about inflationary pressures than about any potential drags on the economy, and it held the key fed funds rate unchanged at the 5.25% level where it had been for more than a year. That environment began to change in June 2007 amid mounting evidence that weakness in housing and problems in subprime mortgages were becoming more of a threat to the economy. Many major financial institutions, both domestic and international, began reporting significant losses from their subprime mortgage investments. Problems originating in the subprime market led to a massive deleveraging of the financial system and a seizing up of the fixed income markets. Investors typically sought out higher-quality bonds, most notably Treasuries, as evidence accumulated of a growing liquidity crunch affecting lending activities. In this general flight to quality, Treasuries outperformed all other sectors of the fixed income markets for the remainder of the fiscal year as the financial markets remained mired in a liquidity crunch. To relieve this credit crunch and inject liquidity into the financial markets, the Fed, in a series of actions starting in September 2007 and continuing through the end of the fiscal year in April 2008, provided funds to financial institutions. The Fed also lowered the fed funds rate from 5.25% to 2.00% and announced a series of other policy moves to ease lending activity.

For most of the period, we kept the fund’s duration—or exposure to changes in interest rates—consistent with that of the LBITGBI, and this neutral duration position had minimal impact on results. The fund typically invests in a diversified mix of government-backed bonds

Class I shares are only offered, subject to the minimum initial purchase requirements, in the following manner: (1) to investment advisory clients of EIMC (or its advisory affiliates), (2) to employer- or state-sponsored benefit plans, including but not limited to, retirement plans, defined benefit plans, deferred compensation plans, or savings plans, (3) to fee-based mutual fund wrap accounts, (4) through arrangements entered into on behalf of the Evergreen funds with certain financial services firms, (5) to certain institutional investors, and (6) to persons who owned Class Y shares in registered name in an Evergreen fund on or before December 31, 1994 or who owned shares of any SouthTrust fund in registered name as of March 18, 2005 or who owned shares of Vestaur Securities Fund as of May 20, 2005.

Class I shares are only available to institutional shareholders with a minimum of $1 million investment, which may be waived in certain situations.

The fund’s investment objective may be changed without a vote of the fund’s shareholders.

Asset-backed and mortgage-backed securities are generally subject to higher prepayment risks than other types of debt securities, which can limit the potential for gain in a declining interest rate environment and increase the potential for loss in a rising interest rate environment. Mortgage-backed securities may also be structured so that they are particularly sensitive to interest rates.

Derivatives involve additional risks including interest rate risk, credit risk, the risk of improper valuation and the risk of non-correlation to the relevant instruments they are designed to hedge or to closely track.

The return of principal is not guaranteed due to fluctuation in the fund’s NAV caused by changes in the price of individual bonds held by the fund and the buying and selling of bonds by the fund. Bond funds have the same inflation, interest rate and credit risks as individual bonds. Generally, the value of bond funds rises when prevailing interest rates fall, and falls when interest rates rise.

U.S. government guarantees apply only to certain securities held in the fund’s portfolio and not to the fund’s shares.

Leverage may disproportionately increase a fund’s portfolio losses and reduce opportunities for gain when interest rates, stock prices, or currency rates are changing.

All data is as of April 30, 2008, and subject to change.

5

PORTFOLIO MANAGER COMMENTARYcontinued

including pass-through mortgages and FNMA Delegated Underwriting and Servicing (DUS) bonds which have yield advantages—or spreads—over Treasuries. In most environments this strategy has provided additional yield to the fund and added to the overall performance relative to the market. In a liquidity crisis and flight to quality, however, these high-quality assets are often the ones that are most affected. The fund held a minimal allocation to U.S. Treasuries and Agency Debentures over the course of the year, particularly as yield spreads widened last fall. For most major sectors of the market, yield spreads reached record levels in November 2007. As we moved into 2008, problems in the subprime market continued to weigh on investors and confidence in the financial system remained low. Financial institutions typically continued to struggle as they attempted to value the subprime mortgages held on their balance sheets and shore up capital positions. Spread sectors, which were already historically cheap, underperformed even more in the first three months of 2008 and the fund’s performance was negatively impacted. While the fund did not own any subprime mortgages, performance, nevertheless, was hurt by the fallout from the subprime crisis. The use of MBS and DUS bonds in place of Agency debt tended to detract from results during a period in which the markets did not reward any credit risk.

The Fed’s efforts to provide liquidity and shore up the financial system began to take hold in mid-March 2008 and the market tone began to improve. In the last months of the fiscal year, spreads on securitized government bonds began to narrow significantly and the performance of the fund began to improve.

6

ABOUT YOUR FUND’S EXPENSES

The Example below is intended to describe the fees and expenses borne by shareholders and the impact of those costs on your investment.

Example

As a shareholder of the fund, you incur two types of costs: (1) transaction costs, including sales charges (loads), redemption fees and exchange fees; and (2) ongoing costs, including management fees, distribution (12b-1) fees and other fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from November 1, 2007 to April 30, 2008.

The example illustrates your fund’s costs in two ways:

• Actual expenses

The section in the table under the heading “Actual” provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class, in the column entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

• Hypothetical example for comparison purposes

The section in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees. Therefore, the section in the table under the heading “Hypothetical (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 11/1/2007			Ending Account Value 4/30/2008			Expenses Paid During Period*
Actual
Class A		$	1,000.00		$	1,029.93		$	4.59
Class B		$	1,000.00		$	1,026.16		$	8.36
Class C		$	1,000.00		$	1,026.16		$	8.36
Class I		$	1,000.00		$	1,031.26		$	3.33
Hypothetical
(5% return before expenses)
Class A		$	1,000.00		$	1,020.34		$	4.57
Class B		$	1,000.00		$	1,016.61		$	8.32
Class C		$	1,000.00		$	1,016.61		$	8.32
Class I		$	1,000.00		$	1,021.58		$	3.32

* For each class of the fund, expenses are equal to the annualized expense ratio of each class (0.91% for Class A, 1.66% for Class B, 1.66% for Class C and 0.66% for Class I), multiplied by the average account value over the period, multiplied by 182 / 366 days.

7

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	Year Ended April 30,
CLASS A	2008		2007		2006		2005		2004
Net asset value, beginning of period	$	9.97	$	9.81	$	10.09	$	9.96	$	10.22
Income from investment operations
Net investment income (loss)		0.46		0.44		0.321		0.241		0.191
Net realized and unrealized gains or losses on investments		0.06		0.17		(0.24)		0.19		(0.16)
Total from investment operations		0.52		0.61		0.08		0.43		0.03
Distributions to shareholders from
Net investment income		(0.47)		(0.45)		(0.36)		(0.30)		(0.29)
Net asset value, end of period	$	10.02	$	9.97	$	9.81	$	10.09	$	9.96
Total return2		5.47%		6.37%		0.82%		4.37%		0.30%
Ratios and supplemental data
Net assets, end of period (thousands)	$	207,060	$	73,875	$	77,581	$	93,826	$	109,172
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		0.91%		0.95%		0.98%		1.00%		1.01%
Expenses excluding waivers/reimbursements and expense reductions		0.96%		0.99%		0.99%		1.00%		1.01%
Net investment income (loss)		4.59%		4.60%		3.18%		2.38%		1.86%
Portfolio turnover rate		377%3		97%		53%		110%		55%

1 Net investment income (loss) per share is based on average shares outstanding during the period.

2 Excluding applicable sales charges

3 Portfolio turnover rate includes mortgage dollar roll activity.

See Notes to Financial Statements

8

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	Year Ended April 30,
CLASS B	2008		2007		2006		2005		2004
Net asset value, beginning of period	$	9.97	$	9.81	$	10.09	$	9.96	$	10.22
Income from investment operations
Net investment income (loss)		0.38		0.381		0.241		0.171		0.121
Net realized and unrealized gains or losses on investments		0.07		0.16		(0.23)		0.19		(0.16)
Total from investment operations		0.45		0.54		0.01		0.36		(0.04)
Distributions to shareholders from
Net investment income		(0.40)		(0.38)		(0.29)		(0.23)		(0.22)
Net asset value, end of period	$	10.02	$	9.97	$	9.81	$	10.09	$	9.96
Total return2		4.69%		5.60%		0.12%		3.64%		(0.40)%
Ratios and supplemental data
Net assets, end of period (thousands)	$	12,201	$	12,653	$	16,747	$	25,452	$	37,270
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		1.66%		1.69%		1.69%		1.70%		1.71%
Expenses excluding waivers/reimbursements and expense reductions		1.66%		1.69%		1.69%		1.70%		1.71%
Net investment income (loss)		3.84%		3.83%		2.45%		1.67%		1.16%
Portfolio turnover rate		377%3		97%		53%		110%		55%

1 Net investment income (loss) per share is based on average shares outstanding during the period.

2 Excluding applicable sales charges

3 Portfolio turnover rate includes mortgage dollar roll activity.

See Notes to Financial Statements

9

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	Year Ended April 30,
CLASS C		2008		2007		2006		2005		2004
Net asset value, beginning of period	$	9.97	$	9.81	$	10.09	$	9.96	$	10.22
Income from investment operations
Net investment income (loss)		0.381		0.381		0.251		0.171		0.121
Net realized and unrealized gains or losses on investments		0.07		0.16		(0.24)		0.19		(0.16)
Total from investment operations		0.45		0.54		0.01		0.36		(0.04)
Distributions to shareholders from
Net investment income		(0.40)		(0.38)		(0.29)		(0.23)		(0.22)
Net asset value, end of period	$	10.02	$	9.97	$	9.81	$	10.09	$	9.96
Total return2		4.69%		5.60%		0.12%		3.64%		(0.40)%
Ratios and supplemental data
Net assets, end of period (thousands)	$	11,746	$	7,669	$	7,973	$	9,820	$	14,207
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		1.66%		1.69%		1.69%		1.70%		1.71%
Expenses excluding waivers/reimbursements and expense reductions		1.66%		1.69%		1.69%		1.70%		1.71%
Net investment income (loss)		3.81%		3.86%		2.47%		1.67%		1.17%
Portfolio turnover rate		377%3		97%		53%		110%		55%

1 Net investment income (loss) per share is based on average shares outstanding during the period.

2 Excluding applicable sales charges

3 Portfolio turnover rate includes mortgage dollar roll activity.

See Notes to Financial Statements

10

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	Year Ended April 30,
CLASS I		2008		2007		2006		2005		2004
Net asset value, beginning of period	$	9.97	$	9.81	$	10.09	$	9.96	$	10.22
Income from investment operations
Net investment income (loss)		0.49		0.47		0.351		0.271		0.221
Net realized and unrealized gains or losses on investments		0.06		0.17		(0.24)		0.19		(0.16)
Total from investment operations		0.55		0.64		0.11		0.46		0.06
Distributions to shareholders from
Net investment income		(0.50)		(0.48)		(0.39)		(0.33)		(0.32)
Net asset value, end of period	$	10.02	$	9.97	$	9.81	$	10.09	$	9.96
Total return		5.74%		6.66%		1.12%		4.68%		0.60%
Ratios and supplemental data
Net assets, end of period (thousands)	$	733,387	$	479,015	$	436,890	$	436,431	$	427,356
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		0.66%		0.69%		0.69%		0.70%		0.71%
Expenses excluding waivers/reimbursements and expense reductions		0.66%		0.69%		0.69%		0.70%		0.71%
Net investment income (loss)		4.82%		4.88%		3.48%		2.69%		2.15%
Portfolio turnover rate		377%2		97%		53%		110%		55%

1 Net investment income (loss) per share is based on average shares outstanding during the period.

2 Portfolio turnover rate includes mortgage dollar roll activity.

See Notes to Financial Statements

11

SCHEDULE OF INVESTMENTS

April 30, 2008

		Principal Amount		Value
AGENCY COMMERCIAL MORTGAGE-BACKED SECURITIES 12.8%
FIXED-RATE 11.9%
FNMA:
4.75%, 07/01/2012	$	963,315	$	974,615
5.08%, 02/01/2016-03/01/2016 ##		11,253,653		11,302,306
5.15%, 11/01/2017		4,148,023		4,188,561
5.31%, 04/01/2016		3,200,000		3,273,816
5.37%, 12/01/2024		912,017		906,470
5.50%, 04/01/2016		7,680,000		7,946,837
5.55%, 05/01/2016		3,300,000		3,424,644
5.63%, 02/01/2018		1,177,723		1,172,306
5.64%, 12/01/2013		3,000,000		3,139,783
5.65%, 08/01/2022		1,589,636		1,620,113
5.66%, 12/01/2016		1,732,000		1,786,600
5.67%, 03/01/2016-11/01/2021 ##		12,692,960		13,139,796
5.68%, 08/01/2016-04/01/2021 ##		12,670,839		13,151,339
5.70%, 03/01/2016		1,030,902		1,079,203
5.75%, 05/01/2021		3,887,734		4,006,393
5.79%, 10/01/2017-12/01/2017		3,295,345		3,398,689
5.82%, 12/01/2036		846,722		868,933
5.94%, 03/01/2017		7,043,878		7,514,796
5.95%, 06/01/2024		1,959,036		2,041,964
5.97%, 12/01/2017		1,395,428		1,441,812
6.07%, 09/01/2013		3,099,286		3,247,370
6.08%, 01/01/2019		6,204,504		6,464,597
6.18%, 06/01/2013		9,376,856		9,904,679
6.32%, 08/01/2012		2,935,170		3,122,112
6.35%, 08/01/2009-10/01/2009		1,054,325		1,068,475
6.65%, 05/01/2016		1,602,337		1,746,794
6.80%, 04/01/2017 o		392,577		392,577
7.48%, 01/01/2025		1,144,356		1,243,767
Ser. 2002-M1, Class C, 6.17%, 02/25/2016		878,180		910,185
				114,479,532
FLOATING-RATE 0.9%
FHLMC, 5.80%, 03/01/2037		8,669,792		8,870,454
Total Agency Commercial Mortgage-Backed Securities (cost $121,965,050)				123,349,986
AGENCY MORTGAGE-BACKED COLLATERALIZED MORTGAGE
OBLIGATIONS 28.3%
FIXED-RATE 2.5%
FHLMC:
Ser. 0243, Class 6, IO, 6.00%, 12/15/2032		332,412		73,759
Ser. 1807, Class C, 6.00%, 12/15/2008		34,397		34,630
Ser. 2043, Class ZP, 6.50%, 04/15/2028		529,701		549,441
Ser. 2046, Class G, 6.50%, 04/15/2028		305,608		318,214
Ser. 2058, Class TE, 6.50%, 05/15/2028		317,819		330,535
Ser. 2072, Class A, 6.50%, 07/15/2028		1,168,167		1,219,799

See Notes to Financial Statements

12

SCHEDULE OF INVESTMENTS continued

April 30, 2008

		Principal Amount		Value
AGENCY MORTGAGE-BACKED COLLATERALIZED MORTGAGE OBLIGATIONS continued
FIXED-RATE continued
FHLMC:
Ser. 2078, Class PE, 6.50%, 08/15/2028	$	587,330	$	610,194
Ser. 2173, Class Z, 6.50%, 07/15/2029		823,721		858,400
Ser. 2262, Class Z, 7.50%, 10/15/2030		260,291		276,601
Ser. 2326, Class ZP, 6.50%, 06/15/2031		26,063		27,118
Ser. 2367, Class BC, 6.00%, 04/15/2016		1,108		1,106
Ser. 2461 Class PZ, 6.50%, 06/15/2032		708,949		742,021
Ser. 3098, Class KI, IO, 5.50%, 11/15/2024		894,449		51,807
Ser. T-57, Class 1A1, 6.50%, 07/25/2043		2,616,176		2,709,008
FNMA:
Ser. 0342, Class 2, IO, 6.00%, 09/01/2033		122,811		30,664
Ser. 1993-215, Class ZQ, 6.50%, 11/25/2023		615,380		648,328
Ser. 1999, Class LH, 6.50%, 11/25/2029		387,785		403,351
Ser. 2001-82, Class ZA, 6.50%, 01/25/2032		266,890		278,229
Ser. 2002-09, Class PC, 6.00%, 03/25/2017		640,403		666,004
Ser. 2002-56, Class KW, 6.00%, 04/25/2023		1,190,000		1,218,219
Ser. 2002-W4, Class A4, 6.25%, 05/25/2042		2,437,208		2,569,099
Ser. 2002-W5, Class A7, 6.25%, 08/25/2030		830,478		830,895
Ser. 2003-033, Class IA, IO, 6.50%, 05/25/2033		320,570		75,582
Ser. 2003-046, Class IH, IO, 5.50%, 06/25/2033		2,914,591		700,036
Ser. 2003-084, Class PW, 3.00%, 06/25/2022		81,336		81,166
Ser. 2004-W1, Class 2A2, 7.00%, 12/25/2033		4,794,669		5,131,256
Ser. 2005-071, Class DB, 4.50%, 08/25/2025		4,000,000		3,914,388
GNMA, Ser. 2002-025, Class B, 6.21%, 03/16/2021		217,838		219,767
				24,569,617
FLOATING-RATE 25.8%
FHLMC:
Ser. 06, Class B, 3.54%, 03/25/2023		634,222		631,342
Ser. 1220, Class A, 3.10%, 02/15/2022		263,970		262,684
Ser. 1370, Class JA, 3.90%, 09/15/2022		239,645		241,658
Ser. 1498, Class I, 3.90%, 04/15/2023		154,588		155,934
Ser. 1533, Class FA, 3.85%, 06/15/2023		54,445		54,822
Ser. 1616, Class FB, 4.46%, 11/15/2008		164,363		164,508
Ser. 1671, Class TA, 3.25%, 02/15/2024		459,744		456,466
Ser. 1687, Class FA, 4.61%, 02/15/2009		915,118		917,166
Ser. 1699, Class FB, 3.75%, 03/15/2024		930,646		934,145
Ser. 1939, Class FB, 3.75%, 04/15/2027		377,908		379,329
Ser. 2005-S001, Class 1A2, 3.05%, 09/25/2035		3,177,143		3,134,294
Ser. 2030, Class F, 3.22%, 02/15/2028		776,835		764,902
Ser. 2156, Class FQ, 3.07%, 05/15/2029		4,283,481		4,260,114
Ser. 2181, Class PF, 3.12%, 05/15/2029		368,243		360,676
Ser. 2315, Class FD, 3.22%, 04/15/2027		269,655		265,486
Ser. 2325 Class FP, 3.62%, 06/15/2031		5,292,252		5,301,244

See Notes to Financial Statements

13

SCHEDULE OF INVESTMENTS continued

April 30, 2008

		Principal Amount		Value
AGENCY MORTGAGE-BACKED COLLATERALIZED MORTGAGE OBLIGATIONS continued
FLOATING-RATE continued
FHLMC:
Ser. 2334, Class FO, 3.69%, 07/15/2031 ##	$	10,168,137	$	10,194,167
Ser. 2380, Class FL, 3.32%, 11/15/2031 ##		12,412,878		12,348,151
Ser. 2388, Class FG, 3.22%, 12/31/2031		2,566,634		2,551,507
Ser. 2395, Class FD, 3.32%, 05/15/2029		3,186,603		3,175,635
Ser. 2399, Class XF, 3.67%, 01/15/2032		12,125,818		12,216,435
Ser. 2401, Class FA, 3.37%, 07/15/2029		1,111,200		1,098,033
Ser. 2436, Class FA, 3.72%, 03/15/2032		11,463,519		11,573,642
Ser. 2481, Class FE, 3.72%, 03/15/2032		10,636,054		10,684,981
Ser. 2504, Class FP, 3.22%, 03/15/2032		2,150,032		2,118,910
Ser. 2515, Class FP, 3.12%, 10/15/2032		2,035,267		2,002,929
Ser. 2691, Class FC, 3.42%, 10/15/2033		2,089,554		2,076,475
Ser. 3136, Class SA, IIFRN, 46.40%, 04/15/2036		2,015,329		3,942,968
Ser. 3425, Class JS, IIFRN, 17.90%, 10/15/2035		455,098		420,554
Ser. T-66, Class 2A1, 7.12%, 01/25/2036 ## o		27,430,686		29,200,513
Ser. T-67, Class 1A1C, 7.23%, 03/25/2036 ## o		28,934,137		31,102,750
Ser. T-67, Class 2A1C, 7.17%, 03/25/2036		8,567,058		9,268,022
Ser. T-75, Class A1, 2.94%, 11/25/2036 ##		13,804,059		13,594,928
FNMA:
Ser. 1991, Class F:
3.76%, 05/25/2021		592,732		599,235
4.21%, 11/25/2021		130,682		132,440
Ser. 1991, Class FA, 3.81%, 04/25/2021		21,942		21,951
Ser. 1993-221, Class FH, 4.01%, 12/25/2008		434,417		435,616
Ser. 1994-84, Class F, 3.51%, 02/25/2024		471,462		466,078
Ser. 1997-34, Class F, 3.56%, 10/25/2023		2,648,923		2,657,082
Ser. 1997-49, Class F, 3.22%, 06/17/2027		392,459		385,273
Ser. 1999-49, Class F, 3.30%, 05/25/2018		780,667		777,787
Ser. 2000-32, Class FM, 3.18%, 10/18/2030		420,048		412,399
Ser. 2001-53, Class CF, 3.30%, 10/25/2031		33,002		32,944
Ser. 2002-07, Class FB, 3.30%, 02/25/2028		254,915		249,776
Ser. 2002-13, Class FE, 3.80%, 02/27/2031		3,475,831		3,475,240
Ser. 2002-41, Class F, 3.45%, 07/25/2032		3,021,347		2,998,780
Ser. 2002-52, Class FG, 3.40%, 09/25/2032 ##		11,357,600		11,159,978
Ser. 2002-67, Class FA, 3.90%, 11/25/2032		8,352,194		8,512,449
Ser. 2002-68, Class FN, 3.18%, 10/18/2032		3,811,636		3,846,509
Ser. 2002-77, Class F, 3.50%, 12/25/2032 ##		13,362,145		13,216,472
Ser. 2002-77, Class FA, 3.73%, 10/18/2030		6,305,295		6,431,897
Ser. 2002-77, Class FG, 3.28%, 12/18/2032		1,332,102		1,343,272
Ser. 2002-W5, Class A27, 3.40%, 11/25/2030		1,908,743		1,900,898
Ser. 2003-011, Class DF, 3.35%, 02/25/2033		2,264,482		2,270,115
Ser. 2003-011, Class FE, 3.40%, 12/25/2033		545,456		531,585
Ser. 2003-024, Class FL, 3.35%, 04/25/2018		2,629,358		2,619,471
Ser. 2003-102, Class FT, 3.30%, 10/25/2033		2,276,688		2,273,489

See Notes to Financial Statements

14

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

		Principal Amount		Value
AGENCY MORTGAGE-BACKED COLLATERALIZED MORTGAGE OBLIGATIONS continued
FLOATING-RATE continued
FNMA:
Ser. 2006-72, Class GS, IIFRN, 26.24%, 08/25/2036	$	1,067,768	$	1,283,873
Ser. G93, Class FH, 4.06%, 04/25/2023		132,363		133,546
GNMA:
Ser. 1999-40, Class FL, 3.32%, 02/17/2029		188,339		186,113
Ser. 1999-43, Class FA, 3.16%, 11/16/2029		926,966		919,484
Ser. 2000-36, Class FG, 3.30%, 11/20/2030		343,437		337,517
Ser. 2001-21, Class FB, 3.11%, 01/16/2027		467,484		459,780
Ser. 2001-22, Class FG, 3.06%, 05/16/2031		768,539		758,920
Ser. 2002-15, Class F, 3.26%, 02/16/2032		602,849		594,240
Ser. 2002-26, Class C, 6.01%, 02/16/2024		981,021		1,057,310
Ser. 2006-47, Class SA, IO, 4.09%, 08/16/2036		1,420,304		138,172
				248,475,061
Total Agency Mortgage-Backed Collateralized Mortgage Obligations (cost $270,799,508)				273,044,678
AGENCY MORTGAGE-BACKED PASS THROUGH SECURITIES 71.1%
FIXED-RATE 58.7%
FHLMC:
6.00%, 05/01/2018-10/01/2032		2,823,638		2,922,940
6.50%, 04/01/2018-07/01/2031		2,442,275		2,557,708
7.00%, 12/01/2023-05/01/2029		201,701		214,494
7.50%, 04/01/2023-08/01/2028		1,270,640		1,375,441
8.00%, 08/01/2023-11/01/2028		442,951		478,444
8.50%, 07/01/2022-08/01/2026		75,166		83,184
9.00%, 01/01/2017-10/01/2024		183,100		201,509
9.50%, 09/01/2016-05/01/2021		57,572		63,772
10.00%, 08/01/2017-08/01/2020		2,254		2,588
10.50%, 02/01/2019-05/01/2020		116,701		136,371
FHLMC 15 year, 5.50%, TBA #		30,000,000		30,412,500
FHLMC 30 year:
5.50%, TBA #		120,000,000		120,468,720
6.00%, TBA #		90,340,000		92,189,170
6.50%, TBA #		44,800,000		46,242,000
FNMA:
4.12%, 09/01/2010		1,399,292		1,401,412
4.98%, 01/01/2020		934,001		922,578
5.00%, 06/01/2033-03/01/2034		6,535,756		6,452,838
5.07%, 04/01/2038 ##		20,927,599		21,038,581
5.12%, 01/01/2016		2,494,488		2,548,039
5.24%, 12/01/2012		732,084		745,789
5.39%, 01/01/2024		3,722,848		3,759,914
5.50%, 05/01/2024-05/01/2037 ##		42,546,709		42,735,107
5.55%, 09/01/2019		6,485,747		6,514,797
5.75%, 02/01/2009		1,742,549		1,770,429

See Notes to Financial Statements

15

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

		Principal Amount		Value
AGENCY MORTGAGE-BACKED PASS THROUGH SECURITIES continued
FIXED-RATE continued
FNMA:
6.00%, 03/01/2024 ##	$	571,618	$	593,268
6.00%, 11/01/2028-04/01/2033		20,875,140		21,498,101
6.50%, 06/01/2017-01/01/2048		20,550,104		21,211,299
7.00%, 11/01/2026-10/01/2047		17,112,477		17,872,969
7.50%, 12/01/2017-01/01/2033		2,139,806		2,312,338
8.00%, 08/01/2020-02/01/2030		2,179,517		2,360,665
8.50%, 08/01/2014-08/01/2029		377,274		414,189
9.00%, 06/01/2021-04/01/2025		265,627		287,588
9.50%, 10/01/2020-02/01/2023		32,139		35,482
11.00%, 01/01/2016		24,964		26,431
11.25%, 02/01/2016		85,378		96,725
FNMA 30 year:
5.00%, TBA #		88,125,000		86,417,578
6.00%, TBA #		20,000,000		20,351,563
GNMA:
6.00%, 02/15/2009-08/20/2034		3,965,857		4,078,858
6.50%, 12/15/2025-09/20/2033		553,237		575,336
7.00%, 12/15/2022-05/15/2032		453,684		486,319
7.34%, 10/20/2021-09/20/2022		552,821		590,236
7.50%, 02/15/2022-06/15/2032		805,579		870,420
8.00%, 04/15/2023-06/15/2025		87,979		96,285
8.50%, 07/15/2016		2,198		2,402
9.00%, 03/15/2009-04/15/2021		105,223		115,209
10.00%, 12/15/2018		63,990		72,560
14.00%, 02/15/2012-06/15/2012		204,853		238,272
				565,842,418
FLOATING-RATE 12.4%
FHLMC, 5.89%, 02/01/2037 ##		11,702,971		12,004,289
FNMA:
4.125%, 12/25/2025 ##		13,283,954		13,348,630
5.17%, 02/01/2035 ##		9,369,923		9,419,897
5.22%, 01/01/2038		5,286,753		5,322,166
5.23%, 07/01/2032		3,866,892		3,962,754
5.27%, 11/01/2030		564,330		577,562
5.28%, 04/01/2029-10/01/2041		5,105,516		5,196,213
5.33%, 09/01/2041 ##		7,436,174		7,482,010
5.48%, 06/01/2040-01/01/2041		6,416,379		6,500,246
6.52%, 01/01/2011		10,765		10,925
6.54%, 11/01/2033-04/01/2036 ##		29,570,387		31,549,223
6.58%, 11/01/2018		260,232		277,605
6.74%, 07/01/2025		280,499		289,492
7.35%, 05/01/2030		307,927		322,548

See Notes to Financial Statements

16

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

		Principal Amount		Value
AGENCY MORTGAGE-BACKED PASS THROUGH SECURITIES continued
FLOATING-RATE continued
SBA:
2.58%, 08/25/2031	$	905,315	$	903,458
2.60%, 09/25/2030-11/25/2030		1,497,163		1,495,836
2.625%, 03/25/2027-03/25/2035		3,199,143		3,241,975
2.66%, 10/25/2029-11/25/2029		10,284,204		10,311,832
2.68%, 10/25/2031		7,038,593		7,174,931
				119,391,592
Total Agency Mortgage-Backed Pass Through Securities (cost $679,320,403)				685,234,010
AGENCY REPERFORMING MORTGAGE-BACKED PASS THROUGH SECURITIES 2.1%
FHLMC:
Ser. 2406, Class FP, 3.70%, 01/15/2032		3,624,405		3,654,437
Ser. 2406, Class PF, 3.70%, 12/15/2031		3,491,926		3,502,297
Ser. T-60, Class 1A-1, 6.50%, 03/25/2044		1,033,181		1,093,674
FNMA:
Ser. 2001-T4, Class A1, 7.50%, 07/25/2041		244,236		261,927
Ser. 2002-T1, Class A3, 7.50%, 11/25/2031		2,233,587		2,394,364
Ser. 2002-T16, Class A1, 6.50%, 07/25/2042		3,665,858		3,980,132
Ser. 2002-W3, Class A5, 7.50%, 01/25/2028		361,194		387,805
Ser. 2002-W8, Class A4, 7.00%, 06/25/2017		1,108,204		1,192,517
Ser. 2003-W1, Class 1A-1, 6.50%, 12/25/2042		1,839,750		1,909,067
Ser. 2004-T1, Class 1A-2, 6.50%, 01/25/2044		1,641,300		1,733,918
Total Agency Reperforming Mortgage-Backed Pass Through Securities (cost $19,939,812)				20,110,138
ASSET-BACKED SECURITIES 0.6%
Argent Securities, Inc., Ser. 2004-W8, Class A2, FRN, 3.375%, 05/25/2034		778,579		766,724
Countrywide Asset-Backed Certificates:
Ser. 2005-16, Class 2AF2, 5.38%, 02/25/2030		370,000		367,489
Ser. 2005-17, Class 1AF2, 5.36%, 05/25/2036		250,000		250,800
HSBC Home Equity Loan Trust, Ser. 2005-3, Class A1, FRN, 3.06%,
01/20/2035		350,456		341,682
Lehman XS Trust:
Ser. 2005-02, Class 2A1B, 5.18%, 08/25/2035		242,476		244,062
Ser. 2005-04, Class 2A1B, 5.17%, 10/25/2035		215,919		210,473
Ser. 2005-10, Class 2A3B, 5.55%, 01/25/2036		369,495		363,695
NovaStar ABS CDO, Ltd., Ser. 2007-1A, Class A2, FRN, 3.59%, 02/08/2047
144A + » •		4,000,000		2,782,920
Popular Mtge. Trust, Ser. 2005-A, Class B3, 5.68%, 01/25/2036		380,000		381,733
Total Asset-Backed Securities (cost $6,963,808)				5,709,578

See Notes to Financial Statements

17

SCHEDULE OF INVESTMENTS continued

April 30, 2008

		Principal Amount		Value
COMMERCIAL MORTGAGE-BACKED SECURITIES 2.4%
FIXED-RATE 1.4%
Banc of America Comml. Mtge. Securities, Inc., Ser. 2006-05, Class A2, 5.32%, 10/10/2011	$	1,025,000	$	1,015,857
First Union-Lehman Brothers-Bank of America, Ser. 1998-C2, Class A2, 6.56%, 11/18/2035		37,601		37,528
GE Capital Comml. Mtge. Corp., Ser. 2005-C3, Class A2, 4.85%, 07/10/2045		660,000		660,091
JPMorgan Chase & Co. Comml. Mtge. Securities Corp., Ser. 2005-LDP4, Class A2, 4.79%, 10/15/2042		950,000		945,844
LB-UBS Comml. Mtge. Trust, Ser. 2005-C5, Class A2, 4.89%, 09/15/2030		790,000		790,000
Morgan Stanley Capital, Inc., Ser. 1998-HF2, Class F, 6.01%, 11/15/2030 144A		5,935,000		5,985,614
Prima Capital Securitization, Ltd., Ser. 2006, Class D, 5.88%, 12/28/2048		3,618,000		3,737,394
				13,172,328
FLOATING-RATE 1.0%
Credit Suisse First Boston Mtge. Securities:
Ser. 2004-TF2A, Class H, 3.42%, 11/15/2019 144A		1,900,000		1,907,553
Ser. 2004-TF2A, Class J, 3.67%, 11/15/2019 144A		1,828,000		1,835,266
Ser. 2005-TFLA, Class J, 3.67%, 02/15/2020 144A		961,000		973,238
Merrill Lynch Floating Trust, Ser. 2006-1, Class A1, 2.79%, 06/15/2022 144A		5,578,824		5,529,674
				10,245,731
Total Commercial Mortgage-Backed Securities (cost $23,225,026)				23,418,059
U.S. TREASURY OBLIGATIONS 4.9%
U.S. Treasury Bonds, 5.50%, 08/15/2028		6,500,000		7,344,493
U.S. Treasury Notes:
4.25%, 11/15/2017 ρ		18,000,000		18,703,134
4.75%, 12/31/2008-08/15/2017 ρ		20,600,000		21,712,310
Total U.S. Treasury Obligations (cost $47,829,139)				47,759,937
WHOLE LOAN MORTGAGE-BACKED COLLATERALIZED
MORTGAGE OBLIGATIONS 5.3%
FIXED-RATE 3.6%
Citigroup Mtge. Loan Trust, Inc., Ser. 2003-HE2, Class M6, 5.54%, 03/25/2036		168,189		168,927
Countrywide Alternative Loan Trust:
Ser. 2004-1T1, Class A6, 5.75%, 02/25/2034		5,000,000		5,325,250
Ser. 2005-46CB, Class A14, 5.50%, 10/25/2035		10,000,000		8,927,247
Countrywide Home Loans, Inc., Ser. 2006-18, Class 2A5, 6.00%, 12/25/2036		4,050,000		3,699,365
Credit Suisse Mtge. Capital Cert., Ser. 2006-9, Class 4A1, 6.00%, 11/25/2036		10,534,909		10,252,606
Residential Accredit Loans, Inc.:
Ser. 2006-QS4, Class A4, 6.00%, 04/25/2036		5,000,000		4,599,544
Ser. 2006-QS5, Class A2, 6.00%, 05/25/2036		423,850		423,886
Residential Asset Securitization Trust, Ser. 2006-A9CB, Class A5, 6.00%, 07/25/2036		881,513		874,484
				34,271,309

See Notes to Financial Statements

18

SCHEDULE OF INVESTMENTS continued

April 30, 2008

		Principal Amount		Value
WHOLE LOAN MORTGAGE-BACKED COLLATERALIZED MORTGAGE OBLIGATIONS continued
FLOATING-RATE 1.7%
Countrywide Home Loans, Inc., Ser. 2004-29, Class 3A1, 5.93%, 02/25/2035	$	8,265,006	$	8,279,838
Credit Suisse First Boston Mtge. Securities Corp., Ser. 2003 AR2, 5.35%, 02/25/2033		8,107,650		7,974,604
Deutsche Securities, Inc.:
Ser. 2006-AB2, Class A7, 5.96%, 06/25/2036		335,693		335,944
Ser. 2006-AB3, Class A7, 6.36%, 07/25/2036		109,626		109,748
				16,700,134
Total Whole Loan Mortgage-Backed Collateralized Mortgage Obligations (cost $52,583,417)				50,971,443
WHOLE LOAN SUBORDINATE COLLATERALIZED
MORTGAGE OBLIGATIONS 0.9%
FIXED-RATE 0.9%
Countrywide Alternative Loan Trust, Ser. 2004-2CB, Class M, 5.67%, 03/25/2034 (cost $10,911,537)		10,944,028		9,185,067
YANKEE OBLIGATIONS–CORPORATE 3.4%
FINANCIALS 3.4%
Diversified Financial Services 3.4%
MMCAPS Funding XIX, Ltd, FRN, 3.46%, 01/12/2038 144A		5,000,000		3,781,100
Preferred Term Securities IV, Ltd., FRN, 5.05%, 12/23/2031 144A		4,312,610		4,121,173
Preferred Term Securities V, Ltd., FRN, 4.71%, 04/03/2032 144A		4,877,100		4,642,999
Preferred Term Securities VI, Ltd., FRN, 4.41%, 07/03/2032 144A		835,709		826,642
Preferred Term Securities XII, Ltd., FRN, 4.42%, 12/24/2033 144A		5,000,000		4,762,400
Preferred Term Securities XIV, Ltd., FRN:
3.40%, 06/24/2034 144A		1,050,000		1,062,466
4.37%, 06/24/2034 144A		12,500,000		11,565,625
Trapeza CDO, LLC, Ser. 2004-7A, Class B1, FRN, 4.47%, 01/25/2035 144A		2,200,000		2,041,226
Total Yankee Obligations–Corporate (cost $35,433,631)				32,803,631
		Shares		Value
PREFERRED STOCKS 0.2%
FINANCIALS 0.2%
Thrifts & Mortgage Finance 0.2%
Freddie Mac, Ser. Z, 8.375% ρ (cost $2,000,000)		80,000		2,048,000
SHORT-TERM INVESTMENTS 10.8%
MUTUAL FUND SHARES 10.8%
Evergreen Institutional Money Market Fund, Class I, 2.78% ø q ρρ		15,578,053		15,578,053
Evergreen Institutional U.S. Government Money Market Fund, Class I, 2.22% ø q ##		88,220,005		88,220,005
Total Short-Term Investments (cost $103,798,058)				103,798,058

See Notes to Financial Statements

19

SCHEDULE OF INVESTMENTS continued

April 30, 2008

		Value
Total Investments (cost $1,374,769,389) 142.8%	$	1,377,432,585
Other Assets and Liabilities (42.8%)		(413,038,536)
Net Assets 100.0%	$	964,394,049

##	All or a portion of this security has been segregated for when-issued or delayed delivery securities.
o	Security is valued at fair value as determined by the investment advisor in good faith, according to procedures approved by the Board of Trustees.
#	When-issued or delayed delivery security
144A	Security that may be sold to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines established by the Board of Trustees, unless otherwise noted.
+	Security is deemed illiquid and is valued using market quotations when readily available, unless otherwise noted.
»	Security has defaulted on its payment of interest and/or principal subsequent to the date of this report and is currently valued at a fair value price of $0 as determined by the investment advisor, in good faith, according to procedures approved by the Board of Trustees.
•	The fund has stopped accruing interest on this security.
ρ	All or a portion of this security is on loan.
ø	Evergreen Investment Management Company, LLC is the investment advisor to both the Fund and the money market fund.
q	Rate shown is the 7-day annualized yield at period end.
ρρ	All or a portion of this security represents investment of cash collateral received from securities on loan.

Summary of Abbreviations
CDO	Collateralized Debt Obligation
FHLMC	Federal Home Loan Mortgage Corp.
FNMA	Federal National Mortgage Association
FRN	Floating Rate Note
GNMA	Government National Mortgage Association
IIFRN	Indexed Inverse Floating Rate Note
IO	Interest Only
SBA	Small Business Administration
TBA	To Be Announced

The following table shows the percent of total investments (excluding equity positions, collateral from securities on loan and segregated cash and cash equivalents) based on effective maturity as of April 30, 2008 (unaudited):

Less than 1 year	11.9%
1 to 3 year(s)	11.2%
3 to 5 years	25.2%
5 to 10 years	49.8%
10 to 20 years	1.4%
Greater than 30 years	0.5%
	100.0%

The following table shows the percent of total investments (excluding equity positions, collateral from securities on loan and segregated cash and cash equivalents) by credit quality based on on Moody’s and Standard & Poor’s ratings as of April 30, 2008 (unaudited):

AAA	92.0%
AA	1.0%
A	7.0%
	100.0%

See Notes to Financial Statements

20

STATEMENT OF ASSETS AND LIABILITIES

April 30, 2008

Assets
Investments in securities, at value (cost $1,270,971,331) including $37,281,299 of securities loaned	$	1,273,634,527
Investments in affiliated money market funds, at value (cost $103,798,058)		103,798,058
Total investments		1,377,432,585
Receivable for securities sold		397,139,212
Principal paydown receivable		720,154
Receivable for Fund shares sold		1,475,936
Interest receivable		5,048,969
Receivable for securities lending income		12,406
Prepaid expenses and other assets		52,131
Total assets		1,781,881,393
Liabilities
Dividends payable		1,111,452
Payable for securities purchased		794,082,018
Payable for Fund shares redeemed		3,481,665
Unrealized losses on credit default swap transactions		2,103,856
Premiums received on credit default swap transactions		581,694
Payable for securities on loan		15,578,053
Due to custodian bank		436,151
Advisory fee payable		10,257
Distribution Plan expenses payable		2,060
Due to other related parties		3,192
Accrued expenses and other liabilities		96,946
Total liabilities		817,487,344
Net assets	$	964,394,049
Net assets represented by
Paid-in capital	$	971,464,430
Undistributed net investment income		944,150
Accumulated net realized losses on investments		(8,573,871)
Net unrealized gains on investments		559,340
Total net assets	$	964,394,049
Net assets consists of
Class A	$	207,060,103
Class B		12,200,814
Class C		11,745,755
Class I		733,387,377
Total net assets	$	964,394,049
Shares outstanding (unlimited number of shares authorized)
Class A		20,654,792
Class B		1,217,040
Class C		1,171,679
Class I		73,157,748
Net asset value per share
Class A	$	10.02
Class A — Offering price (based on sales charge of 4.75%)	$	10.52
Class B	$	10.02
Class C	$	10.02
Class I	$	10.02

See Notes to Financial Statements

21

STATEMENT OF OPERATIONS

Year Ended April 30, 2008

Investment income
Interest	$	44,412,397
Income from affiliate		1,625,253
Securities lending		60,242
Dividends		53,972
Total investment income		46,151,864
Expenses
Advisory fee		3,312,137
Distribution Plan expenses
Class A		629,391
Class B		117,200
Class C		94,584
Administrative services fee		838,020
Transfer agent fees		869,423
Trustees’ fees and expenses		24,971
Printing and postage expenses		56,645
Custodian and accounting fees		344,268
Registration and filing fees		52,528
Professional fees		52,123
Interest expense		17,754
Other		11,005
Total expenses		6,420,049
Less: Expense reductions		(19,990)
Expense reimbursements		(97,788)
Net expenses		6,302,271
Net investment income		39,849,593
Net realized and unrealized gains or losses on investments
Net realized gains or losses:
Securities		9,483,645
Credit default swap transactions		22,714
Total return swap transactions		(2,460,060)
Net realized gains on investments		7,046,299
Net change in unrealized gains or losses on investments		472,997
Net realized and unrealized gains or losses on investments		7,519,296
Net increase in net assets resulting from operations	$	47,368,889

See Notes to Financial Statements

22

STATEMENTS OF CHANGES IN NET ASSETS

	Year Ended April 30,
	2008			2007
Operations
Net investment income		$	39,849,593		$	26,183,752
Net realized gains or losses on investments			7,046,299			(415,925)
Net change in unrealized gains or losses on investments			472,997			9,001,559
Net increase in net assets resulting from operations			47,368,889			34,769,386
Distributions to shareholders from
Net investment income
Class A			(10,087,979)			(3,445,960)
Class B			(468,754)			(564,283)
Class C			(374,996)			(294,916)
Class I			(30,246,347)			(21,740,316)
Total distributions to shareholders			(41,178,076)			(26,045,475)
	Shares			Shares
Capital share transactions
Proceeds from shares sold
Class A	1,615,301		16,164,426	859,580		8,489,247
Class B	458,141		4,614,620	228,197		2,246,261
Class C	692,521		6,954,001	170,228		1,688,996
Class I	38,278,593		382,122,548	12,147,068		120,215,524
			409,855,595			132,640,028
Net asset value of shares issued in reinvestment of distributions
Class A	767,662		7,668,531	263,381		2,608,321
Class B	30,791		307,403	39,575		391,753
Class C	24,717		247,292	19,966		197,719
Class I	2,067,300		20,671,365	1,642,616		16,271,000
			28,894,591			19,468,793
Automatic conversion of Class B shares to Class A shares
Class A	138,726		1,389,206	109,899		1,083,270
Class B	(138,726)		(1,389,206)	(109,899)		(1,083,270)
			0			0
Payment for shares redeemed
Class A	(9,513,821)		(94,322,134)	(1,728,671)		(17,088,408)
Class B	(402,896)		(4,016,244)	(595,371)		(5,881,001)
Class C	(315,032)		(3,142,442)	(233,476)		(2,306,414)
Class I	(15,253,417)		(152,479,467)	(10,262,151)		(101,536,649)
			(253,960,287)			(126,812,472)
Net asset value of shares issued in acquisition
Class A	20,234,248		200,202,084	0		0
Net increase in net assets resulting from capital share transactions			384,991,983			25,296,349
Total increase in net assets			391,182,796			34,020,260
Net assets
Beginning of period			573,211,253			539,190,993
End of period		$	964,394,049		$	573,211,253
Undistributed (overdistributed) net investment income		$	944,150		$	(345,257)

See Notes to Financial Statements

23

STATEMENT OF CASH FLOWS

April 30, 2008

Decrease in Cash
Cash Flows from Operating Activities:
Net increase in net assets from operations	$	47,368,889
Adjustments to reconcile net increase in net assets from operations to net cash used in operating activities:
Purchase of investment securities (including mortgage dollar rolls)		(4,841,420,064)
Proceeds from disposition of investment securities (including mortgage dollar rolls)		4,318,840,814
Proceeds from swap transactions		657,529
Payments made on swap transactions		(3,094,875)
Purchases of short-term investment securities, net		(46,506,898)
Premiums received on credit default swap transactions		581,694
Increase in interest receivable		(1,852,132)
Increase in receivable for securities sold		(234,353,507)
Increase in receivable for Fund shares sold		(553,608)
Increase in other assets		(29,663)
Increase in payable for securities purchased		408,615,229
Increase in payable for securities on loan		9,620,437
Increase in payable for Fund shares redeemed		2,506,231
Decrease in accrued expenses		(2,505)
Unrealized depreciation on investments		1,887,833
Net realized gain on investments		(7,046,299)
Net cash used in operating activities		(344,780,895)
Cash Flows from Financing Activities:
Increase in additional paid-in capital		356,097,392
Cash distributions paid		(11,752,648)
Net cash provided by financing activities		344,344,744
Net decrease in cash	$	(436,151)
Cash:
Beginning of period	$	0
End of period	$	(436,151)

See Notes to Financial Statements

24

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Evergreen U.S. Government Fund (the “Fund”) is a diversified series of Evergreen Fixed Income Trust (the “Trust”), a Delaware statutory trust organized on September 18, 1997. The Trust is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”).

The Fund offers Class A, Class B, Class C and Class I shares. Class A shares are sold with a front-end sales charge. However, Class A share investments of $1 million or more are not subject to a front-end sales charge but are subject to a contingent deferred sales charge of 1.00% upon redemption within 18 months. Class B shares are sold without a front-end sales charge but are subject to a contingent deferred sales charge that is payable upon redemption and decreases depending on how long the shares have been held. Class C shares are sold without a front-end sales charge but are subject to a contingent deferred sales charge that is payable upon redemption within one year. Class I shares are sold without a front-end sales charge or contingent deferred sales charge. Each class of shares, except Class I shares, pays an ongoing distribution fee.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles in the United States of America, which require management to make estimates and assumptions that affect amounts reported herein. Actual results could differ from these estimates.

a. Valuation of investments

Portfolio debt securities acquired with more than 60 days to maturity are fair valued using matrix pricing methods determined by an independent pricing service which takes into consideration such factors as similar security prices, yields, maturities, liquidity and ratings. Securities for which valuations are not readily available from an independent pricing service may be valued by brokers which use prices provided by market makers or estimates of market value obtained from yield data relating to investments or securities with similar characteristics.

Listed equity securities are usually valued at the last sales price or official closing price on the national securities exchange where the securities are principally traded.

Short-term securities with remaining maturities of 60 days or less at the time of purchase are valued at amortized cost, which approximates market value.

Investments in open-end mutual funds are valued at net asset value. Securities for which market quotations are not readily available or not reflective of current market value are valued at fair value as determined by the investment advisor in good faith, according to procedures approved by the Board of Trustees.

25

NOTES TO FINANCIAL STATEMENTS continued

b. Repurchase agreements

Securities pledged as collateral for repurchase agreements are held by the custodian bank or in a segregated account in the Fund’s name until the agreements mature. Collateral for certain tri-party repurchase agreements is held at the counterparty’s custodian in a segregated account for the benefit of the Fund and the counterparty. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. However, in the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. The Fund will only enter into repurchase agreements with banks and other financial institutions, which are deemed by the investment advisor to be creditworthy pursuant to guidelines established by the Board of Trustees. In certain instances, the Fund’s securities lending agent may provide collateral in the form of repurchase agreements.

c. Reverse repurchase agreements

To obtain short-term financing, the Fund may enter into reverse repurchase agreements with banks and other financial institutions, which are deemed by the investment advisor to be creditworthy. At the time the Fund enters into a reverse repurchase agreement, it will establish a segregated account with the custodian containing qualified assets having a value not less than the repurchase price, including accrued interest. If the counterparty to the transaction is rendered insolvent, the Fund may be delayed or limited in the repurchase of the collateral securities.

d. When-issued and delayed delivery transactions

The Fund records when-issued or delayed delivery securities as of trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked-to-market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

e. Securities lending

The Fund may lend its securities to certain qualified brokers in order to earn additional income. The Fund receives compensation in the form of fees or interest earned on the investment of any cash collateral received. The Fund also continues to receive interest and dividends on the securities loaned. The Fund receives collateral in the form of cash or securities with a market value at least equal to the market value of the securities on loan, including accrued interest. In the event of default or bankruptcy by the borrower, the Fund could experience delays and costs in recovering the loaned securities or in gaining access to the collateral. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.

f. Dollar roll transactions

The Fund may enter into dollar roll transactions with respect to mortgage-backed securities. In a dollar roll transaction, the Fund sells mortgage-backed securities to financial

26

NOTES TO FINANCIAL STATEMENTS continued

institutions and simultaneously agrees to accept substantially similar (same type, coupon and maturity) securities at a later date at an agreed upon price. The Fund will use the proceeds generated from the transactions to invest in short-term investments, which may enhance the Fund’s current yield and total return. The Fund accounts for dollar roll transactions as purchases and sales. The Fund could be exposed to risks if the counterparty defaults on its obligation to perform under the terms of the agreement, if the Fund receives inferior securities in comparison to what was sold to the counterparty at redelivery or if there are variances in paydown speed between the mortgage-related pools.

g. Credit default swaps

The Fund may enter into credit default swap contracts. Credit default swaps involve an exchange of a stream of payments for protection against the loss in value of an underlying security or index in the event of default or bankruptcy. Under the terms of the swap, one party acts as a guarantor and receives a periodic stream of payments that is a fixed percentage applied to a notional principal amount over the term of the swap. In return, the counterparty agrees to purchase the notional amount of the underlying instrument or index, at par, if a credit event occurs during the term of the swap. The Fund may enter into credit default swaps as either the guarantor or the counterparty.

Any premiums paid or received on the transactions are recorded as an asset or liability on the Statement of Assets and Liabilities and amortized. The value of the swap contract is marked-to-market daily based on quotations from an independent pricing service or market makers and any change in value is recorded as an unrealized gain or loss. Periodic payments made or received are recorded as realized gains or losses. In addition, payments received or made as a result of a credit event or termination of the contract are recognized as realized gains or losses. The Fund could be exposed to risks if the counterparty defaults on its obligation to perform, or if there are unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index.

h. Total return swaps

The Fund may enter into total return swap contracts. Total return swaps involve commitments to pay interest in exchange for a market-linked return, both based on notional amounts. To the extent the total return of the security or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from, or make a payment to, the counterparty.

The value of the swap contract is marked-to-market daily based upon quotations from an independent pricing service or market makers and any change in value is recorded as an unrealized gain or loss. Periodic payments made or received are recorded as realized gains or losses. The Fund could be exposed to risks if the counterparty defaults on its obligation to perform, or if there are unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index.

27

NOTES TO FINANCIAL STATEMENTS continued

i. Security transactions and investment income

Security transactions are recorded on trade date. Realized gains and losses are computed using the specific cost of the security sold. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.

j. Federal and other taxes

The Fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income, including any net capital gains (which have already been offset by available capital loss carryovers). Accordingly, no provision for federal taxes is required. The Fund has adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”) which prescribes a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The Fund’s financial statements have not been impacted by the adoption of FIN 48. The Fund’s income and excise tax returns and all financial records supporting those returns are subject to examination by the federal, Massachusetts and Delaware revenue authorities for all taxable years beginning after April 30, 2004.

k. Distributions

Distributions to shareholders from net investment income are accrued daily and paid monthly. Distributions from net realized gains, if any, are recorded on the ex-dividend date. Such distributions are determined in conformity with income tax regulations, which may differ from generally accepted accounting principles.

Reclassifications have been made to the Fund’s components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax regulations. The primary permanent differences causing such reclassifications are due to certain capital loss carryovers assumed as a result of acquisitions, expiration of capital loss carryovers, overdistributed net investment income and swap contracts.

During the year ended April 30, 2008, the following amounts were reclassified:

Paid-in capital	$	(2,528,718)
Undistributed net investment income		2,617,890
Accumulated net realized losses on investments		(89,172)

l. Class allocations

Income, common expenses and realized and unrealized gains and losses are allocated to the classes based on the relative net assets of each class. Distribution fees, if any, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

28

NOTES TO FINANCIAL STATEMENTS continued

3. ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Evergreen Investment Management Company, LLC (“EIMC”), an indirect, wholly-owned subsidiary of Wachovia Corporation (“Wachovia”), is the investment advisor to the Fund and is paid an annual fee starting at 0.42% and declining to 0.35% as average daily net assets increase. For the year ended April 30, 2008, the advisory fee was equivalent to 0.39% of the Fund’s average daily net assets.

Tattersall Advisory Group, Inc., an indirect, wholly-owned subsidiary of Wachovia, is an investment sub-advisor to the Fund and is paid by EIMC for its services to the Fund.

From time to time, EIMC may voluntarily or contractually waive its fee and/or reimburse expenses in order to limit operating expenses. During the year ended April 30, 2008, EIMC voluntarily reimbursed Distribution Plan expenses (see Note 4) relating to Class A shares in the amount of $97,788.

The Fund may invest in money market funds which are advised by EIMC. Income earned on these investments is included in income from affiliate on the Statement of Operations.

Effective January 1, 2008, EIMC replaced Evergreen Investment Services, Inc. (“EIS”), an indirect, wholly-owned subsidiary of Wachovia, as the administrator to the Fund upon the assignment of the Fund’s Administrative Services Agreement from EIS to EIMC. There were no changes to the services being provided or fees being paid by the Fund. The administrator provides the Fund with facilities, equipment and personnel and is paid an annual rate determined by applying percentage rates to the aggregate average daily net assets of the Evergreen funds (excluding money market funds) starting at 0.10% and declining to 0.05% as the aggregate average daily net assets of the Evergreen funds (excluding money market funds) increase.

Evergreen Service Company, LLC (“ESC”), an indirect, wholly-owned subsidiary of Wachovia, is the transfer and dividend disbursing agent for the Fund. ESC receives account fees that vary based on the type of account held by the shareholders in the Fund. For the year ended April 30, 2008, the transfer agent fees were equivalent to an annual rate of 0.10% of the Fund’s average daily net assets.

4. DISTRIBUTION PLANS

EIS serves as distributor of the Fund’s shares. The Fund has adopted Distribution Plans, as allowed by Rule 12b-1 of the 1940 Act, for each class of shares, except Class I. Under the Distribution Plans, distribution fees are paid at an annual rate of 0.25% of the average daily net assets for Class A and 1.00% of the average daily net assets for each of Class B and Class C shares. Prior to April 1, 2008, distribution fees were paid at an annual rate of 0.30% of the average daily net assets for Class A shares.

For the year ended April 30, 2008, EIS received $4,677 from the sale of Class A shares and $24,519 and $254 in contingent deferred sales charges from redemptions of Class B and Class C shares, respectively.

29

NOTES TO FINANCIAL STATEMENTS continued

5. ACQUISITION

Effective at the close of business on May 18, 2007, the Fund acquired the net assets of Atlas U.S. Government and Mortgage Securities Fund in a tax-free exchange for Class A shares of the Fund. Shares were issued to shareholders of Atlas U.S. Government and Mortgage Securities Fund at an exchange ratio of 1.00 for Class A shares of the Fund. The acquired net assets consisted primarily of portfolio securities with unrealized depreciation of $2,360,830. The aggregate net assets of the Fund and Atlas U.S. Government and Mortgage Securities Fund immediately prior to the acquisition were $570,150,705 and $200,202,084, respectively. The aggregate net assets of the Fund immediately after the acquisition were $770,352,789.

6. INVESTMENT TRANSACTIONS

Cost of purchases and proceeds from sales of investment securities (excluding short-term securities) were as follows for the year ended April 30, 2008:

Cost of Purchases		Proceeds from Sales
U.S. Government	Non-U.S. Government	U.S. Government	Non-U.S. Government
$4,468,725,750	$173,666,971	$4,093,305,723	$97,911,356

During the year ended April 30, 2008, the Fund loaned securities to certain brokers and earned $78,648 in affiliated income relating to securities lending activity which is included in income from affiliate on the Statement of Operations. At April 30, 2008, the value of securities on loan and the total value of collateral received for securities loaned amounted to $37,281,299 and $37,981,709, respectively. Of the total value of the collateral received for securities on loan, $22,403,656 represents the market value of U.S government agency securities received as non-cash collateral.

At April 30, 2008, the Fund had the following credit default swap contracts outstanding:

Expiration	Counterparty	Reference Index	Notional Amount	Fixed Payment	Frequency ofPayments Made	Unrealized Loss
12/13/2049	UBS	CMBX North America AA Index	$10,000,000	0.27%	Quarterly	$2,103,856

On April 30, 2008, the aggregate cost of securities for federal income tax purposes was $1,374,775,517. The gross unrealized appreciation and depreciation on securities based on tax cost was $14,131,972 and $11,474,904, respectively, with a net unrealized appreciation of $2,657,068.

As of April 30, 2008, the Fund had $8,567,743 in capital loss carryovers for federal income tax purposes with $1,572,729 expiring in 2014 and $6,995,014 expiring in 2015.

30

NOTES TO FINANCIAL STATEMENTS continued

7. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the SEC, the Fund may participate in an inter-fund lending program with certain funds in the Evergreen fund family. This program allows the Fund to borrow from, or lend money to, other participating funds. During the year ended April 30, 2008, the Fund did not participate in the interfund lending program.

8. DISTRIBUTIONS TO SHAREHOLDERS

As of April 30, 2008, the components of distributable earnings on a tax basis were as follows:

Unrealized Appreciation	Capital Loss Carryovers	Temporary Book/Tax Differences
$2,657,068	$8,567,743	$(1,159,706)

The differences between the components of distributable earnings on a tax basis and the amounts reflected in the Statement of Assets and Liabilities are primarily due to wash sales and swap contracts. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses.

The tax character of distributions paid were $41,178,076 and $26,045,475 of ordinary income for the years ended April 30, 2008 and April 30, 2007, respectively.

9. EXPENSE REDUCTIONS

Through expense offset arrangements with ESC and the Fund’s custodian, a portion of fund expenses has been reduced.

10. DEFERRED TRUSTEES' FEES

Each Trustee of the Fund may defer any or all compensation related to performance of his or her duties as a Trustee. The Trustees’ deferred balances are allocated to deferral accounts, which are included in the accrued expenses for the Fund. The investment performance of the deferral accounts is based on the investment performance of certain Evergreen funds. Any gains earned or losses incurred in the deferral accounts are reported in the Fund’s Trustees’ fees and expenses. At the election of the Trustees, the deferral account will be paid either in one lump sum or in quarterly installments for up to ten years.

11. FINANCING AGREEMENT AND OTHER BORROWINGS

The Fund and certain other Evergreen funds share in an unsecured revolving credit commitment for temporary and emergency purposes, including the funding of redemptions, as permitted by each participating fund’s borrowing restrictions. Borrowings under this facility bear interest at 0.50% per annum above the Federal Funds rate. All of the participating funds are charged an annual commitment fee on the unused balance, which

31

NOTES TO FINANCIAL STATEMENTS continued

is allocated pro rata. The credit facility is for $100 million with an annual commitment fee of 0.08%. During the year ended April 30, 2008, the Fund had no borrowings.

During the year ended April 30, 2008, the Fund entered into reverse repurchase agreements that had an average daily balance outstanding of $298,384 with a weighted average interest rate of 5.95% and paid interest of $17,754.

12. REGULATORY MATTERS AND LEGAL PROCEEDINGS

Pursuant to an administrative order issued by the SEC on September 19, 2007, EIMC, EIS, ESC (collectively, the “Evergreen Entities”), Wachovia Securities, LLC and the SEC have entered into an agreement settling allegations of (i) improper short-term trading arrangements in effect prior to May 2003 involving former officers and employees of EIMC and certain broker-dealers, (ii) insufficient systems for monitoring exchanges and enforcing exchange limitations as stated in certain funds’ prospectuses, and (iii) inadequate e-mail retention practices. Under the settlement, the Evergreen Entities were censured and have paid approximately $32 million in disgorgement and penalties. This amount, along with a fine assessed by the SEC against Wachovia Securities, LLC will be distributed pursuant to a plan to be developed by an independent distribution consultant and approved by the SEC. The Evergreen Entities neither admitted nor denied the allegations and findings set forth in its settlement with the SEC.

In addition, the Evergreen funds and EIMC and certain of its affiliates are involved in various legal actions, including private litigation and class action lawsuits. EIMC does not expect that any of such legal actions currently pending or threatened will have a material adverse impact on the financial position or operations of any of the Evergreen funds or on EIMC’s ability to provide services to the Evergreen funds.

Although EIMC believes that none of the matters discussed above will have a material adverse impact on the Evergreen funds, there can be no assurance that these matters and any publicity surrounding or resulting from them will not result in reduced sales or increased redemptions of Evergreen fund shares, which could increase Evergreen fund transaction costs or operating expenses, or that they will not have other adverse consequences on the Evergreen funds.

13. NEW ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157”). FAS 157 establishes a single authoritative definition of fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FAS 157 applies to fair value measurements already required or permitted by existing standards. The change to current generally accepted accounting principles from the application of FAS 157 relates to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. Management of the Fund does not believe the adoption of FAS 157

32

NOTES TO FINANCIAL STATEMENTS continued

will materially impact the financial statement amounts, however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements on changes in net assets for the period. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years.

In March 2008, FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“FAS 161”), an amendment of FASB Statement No. 133. FAS 161 requires enhanced disclosures about (a) how and why a fund uses derivative instruments, (b) how derivative instruments and hedging activities are accounted for, and (c) how derivative instruments and related hedging activities affect a fund’s financial position, financial performance, and cash flows. Management of the Fund does not believe the adoption of FAS 161 will materially impact the financial statement amounts, but will require additional disclosures. This will include qualitative and quantitative disclosures on derivative positions existing at period end and the effect of using derivatives during the reporting period. FAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.

33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Trustees and Shareholders

Evergreen Fixed Income Trust

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the Evergreen U.S. Government Fund, a series of the Evergreen Fixed Income Trust, as of April 30, 2008 and the related statement of operations for the year then ended, statements of changes in net assets for each of the years in the two-year period then ended, statement of cash flows for the year then ended and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 2008 by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Evergreen U.S. Government Fund as of April 30, 2008, the results of its operations, changes in its net assets, its cash flows and financial highlights for each of the years described above, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts

June 27, 2008

34

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35

TRUSTEES AND OFFICERS

TRUSTEES1
Charles A. Austin III Trustee DOB: 10/23/1934 Term of office since: 1991 Other directorships: None	Investment Counselor, Anchor Capital Advisors, LLC. (investment advice); Director, The Andover Companies (insurance); Trustee, Arthritis Foundation of New England; Former Director, The Francis Ouimet Society (scholarship program); Former Director, Executive Vice President and Treasurer, State Street Research & Management Company (investment advice)
K. Dun Gifford Trustee DOB: 10/23/1938 Term of office since: 1974 Other directorships: None	Chairman and President, Oldways Preservation and Exchange Trust (education); Trustee, Chairman of the Finance Committee, Member of the Executive Committee, and Former Treasurer, Cambridge College
Dr.Leroy Keith, Jr. Trustee DOB: 2/14/1939 Term of office since: 1983 Other directorships: Trustee, Phoenix Fund Complex (consisting of 53 portfolios as of 12/31/2007)	Managing Director, Almanac Capital Management (commodities firm); Trustee, Phoenix Fund Complex; Director, Diversapack Co. (packaging company); Former Partner, Stonington Partners, Inc. (private equity fund); Former Director, Obagi Medical Products Co.; Former Director, Lincoln Educational Services
Carol A. Kosel1 Trustee DOB: 12/25/1963 Term of office since: 2008 Other directorships: None	Former Consultant to the Evergreen Boards of Trustees; Former Vice President and Senior Vice President, Evergreen Investments, Inc.; Former Treasurer, Evergreen Funds; Former Treasurer, Vestaur Securities Fund
Gerald M. McDonnell Trustee DOB: 7/14/1939 Term of office since: 1988 Other directorships: None	Former Manager of Commercial Operations, CMC Steel (steel producer)
Patricia B. Norris Trustee DOB: 4/9/1948 Term of office since: 2006 Other directorships: None	President and Director of Buckleys of Kezar Lake, Inc. (real estate company); Former President and Director of Phillips Pond Homes Association (home community); Former Partner, PricewaterhouseCoopers, LLP (independent registered public accounting firm)
William Walt Pettit Trustee DOB: 8/26/1955 Term of office since: 1988 Other directorships: None	Partner and Vice President, Kellam & Pettit, P.A. (law firm); Director, Superior Packaging Corp. (packaging company); Member, Superior Land, LLC (real estate holding company), Member, K&P Development, LLC (real estate development); Former Director, National Kidney Foundation of North Carolina, Inc. (non-profit organization)
David M. Richardson Trustee DOB: 9/19/1941 Term of office since: 1982 Other directorships: None	President, Richardson, Runden LLC (executive recruitment advisory services); Director, J&M Cumming Paper Co. (paper merchandising); Trustee, NDI Technologies, LLP (communications); Former Consultant, AESC (The Association of Executive Search Consultants)
Dr.Russell A. Salton III Trustee DOB: 6/2/1947 Term of office since: 1984 Other directorships: None	President/CEO, AccessOne MedCard, Inc.

36

TRUSTEES AND OFFICERS continued

Michael S. Scofield Trustee DOB: 2/20/1943 Term of office since: 1984 Other directorships: None	Retired Attorney, Law Offices of Michael S. Scofield; Former Director and Chairman, Branded Media Corporation (multi-media branding company)
Richard J. Shima Trustee DOB: 8/11/1939 Term of office since: 1993 Other directorships: None	Independent Consultant; Director, Hartford Hospital; Trustee, Greater Hartford YMCA; Former Director, Trust Company of CT; Former Director, Old State House Association; Former Trustee, Saint Joseph College (CT)
Richard K. Wagoner, CFA2 Trustee DOB: 12/12/1937 Term of office since: 1999 Other directorships: None	Member and Former President, North Carolina Securities Traders Association; Member, Financial Analysts Society

OFFICERS

Dennis H. Ferro3 President DOB: 6/20/1945 Term of office since: 2003	Principal occupations: President and Chief Executive Officer, Evergreen Investment Company, Inc. and Executive Vice President, Wachovia Bank, N.A.; former Chief Investment Officer, Evergreen Investment Company, Inc.
Kasey Phillips4 Treasurer DOB: 12/12/1970 Term of office since: 2005	Principal occupations: Senior Vice President, Evergreen Investment Management Company, LLC; Former Vice President, Evergreen Investment Services, Inc.; Former Assistant Vice President, Evergreen Investment Services, Inc.
Michael H. Koonce4 Secretary DOB: 4/20/1960 Term of office since: 2000	Principal occupations: Senior Vice President and General Counsel, Evergreen Investment Services, Inc.; Secretary, Senior Vice President and General Counsel, Evergreen Investment Management Company, LLC and Evergreen Service Company, LLC; Senior Vice President and Assistant General Counsel, Wachovia Corporation
Robert Guerin4 Chief Compliance Officer DOB: 9/20/1965 Term of office since: 2007	Principal occupations: Chief Compliance Officer, Evergreen Funds and Senior Vice President of Evergreen Investments Co., Inc.; Former Managing Director and Senior Compliance Officer, Babson Capital Management LLC; Former Principal and Director, Compliance and Risk Management, State Street Global Advisors; Former Vice President and Manager, Sales Practice Compliance, Deutsche Asset Management

1 Each Trustee, except Mses. Kosel and Norris, serves until a successor is duly elected or qualified or until his or her death, resignation, retirement or removal from office. As new Trustees, Ms. Kosel’s and Ms. Norris’ initial terms end December 31, 2010 and June 30, 2009, respectively, at which times they may be re-elected by Trustees to serve until a successor is duly elected or qualified or until her death, resignation, retirement or removal from office by the Trustees. Each Trustee, except Ms. Kosel, oversaw 94 Evergreen funds as of December 31, 2007. Ms. Kosel became a Trustee on January 1, 2008. Correspondence for each Trustee may be sent to Evergreen Board of Trustees, P.O. Box 20083, Charlotte, NC 28202.

2 Mr. Wagoner is an “interested person” of the Fund because of his ownership of shares in Wachovia Corporation, the parent to the Fund’s investment advisor.

3 The address of the Officer is 401 S. Tryon Street, 20th Floor, Charlotte, NC 28288.

4 The address of the Officer is 200 Berkeley Street, Boston, MA 02116.

Additional information about the Fund’s Board of Trustees and Officers can be found in the Statement of Additional Information (SAI) and is available upon request without charge by calling 800.343.2898.

37

566663 rv5 06/2008

EvergreenInstitutional Motgage Portfolio

	table of contents
1	LETTER TO SHAREHOLDERS
4	FUND AT A GLANCE
5	PORTFOLIO MANAGER COMMENTARY
7	ABOUT YOUR FUND’S EXPENSES
8	FINANCIAL HIGHLIGHTS
9	SCHEDULE OF INVESTMENTS
14	STATEMENT OF ASSETS AND LIABILITIES
15	STATEMENT OF OPERATIONS
16	STATEMENTS OF CHANGES IN NET ASSETS
17	NOTES TO FINANCIAL STATEMENTS
26	REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
27	ADDITIONAL INFORMATION
28	TRUSTEES AND OFFICERS

This annual report must be preceded or accompanied by a prospectus of the Evergreen fund contained herein. The prospectus contains more complete information, including fees and expenses, and should be read carefully before investing or sending money.

The fund will file its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q will be available on the SEC’s Web site at http://www.sec.gov. In addition, the fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 800.SEC.0330.

A description of the fund’s proxy voting policies and procedures, as well as information regarding how the fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available by visiting our Web site at EvergreenInvestments.com or by visiting the SEC’s Web site at http://www.sec.gov. The fund’s proxy voting policies and procedures are also available without charge, upon request, by calling 800.343.2898.

Mutual Funds:

 NOT FDIC INSURED  MAY LOSE VALUE  NOT BANK GUARANTEED 

Evergreen Investments^SM is a service mark of Evergreen Investment Management Company, LLC. Copyright 2008, Evergreen Investment Management Company, LLC.

Evergreen Investment Management Company, LLC is a subsidiary of Wachovia Corporation and is an affiliate of Wachovia Corporation’s other Broker Dealer subsidiaries.

Evergreen mutual funds are distributed by Evergreen Investment Services, Inc. 200 Berkeley Street, Boston, MA 02116

LETTER TO SHAREHOLDERS

June 2008

Dennis H. Ferro

President and Chief Executive Officer

Dear Shareholder:

We are pleased to provide the Annual Report for Evergreen Institutional Mortgage Portfolio for the twelve-month period ended April 30, 2008 (the “twelve-month period”).

The fiscal year witnessed a dramatic change in fixed income markets as problems that first surfaced in housing and the subprime mortgages raised questions about the strength of the domestic economy and the risks of credit-sensitive investments. Corporate bonds and asset-backed securities performed well early in the period, with gains in economic output, corporate profits and employment encouraging optimism. The backdrop for investing began to change, however, by the summer of 2007 amid widening worries about problems in the financials sector. Major financial institutions began to report substantial losses from their exposures to subprime mortgages and banks started to tighten their credit standards and to restrict their lending. With fears of a dramatic downturn hovering over the market, fixed income investors sought out the highest-quality securities and attempted to avoid credit risk. As a consequence, the prices of corporate bonds and many asset-backed securities fell, while Treasuries rallied in a general flight to quality over much of the period. These general trends later reversed themselves in the final month of the twelve-month period, with high yield corporate bonds and other credit-sensitive securities rallying in April 2008 following a series of actions by the U.S. Federal Reserve Board (the “Fed”) to stabilize the markets. Equities, meanwhile, tended to move in the same general direction as corporate bonds over the fiscal year. Stock prices rose very early in the period before

1

LETTER TO SHAREHOLDERScontinued

falling in late 2007 and early 2008 and then rallying again in April. For the full twelve-month period, stock valuations fell across all market capitalizations, investment styles and regions. At the same time, the prices of gold, oil and other commodities surged while the U.S. dollar weakened further.

The U.S. economy grew briskly early in 2007, but then slowed significantly in late 2007 and early 2008. Economic growth decelerated as lending for ordinary consumer and commercial activity dried up, accentuating the weakening effects of declining home prices. Corporate profits, employment and other key economic indicators showed clear evidence of deterioration. Gross Domestic Product growth decelerated to a paltry 0.6% rate during the final quarter of 2007 and a marginally better 0.9% pace for the first quarter of 2008. Much of the strength early in 2008 came from exports and government spending, rather than from any noticeable improvements in consumer spending, business investment or housing. To reinvigorate the economy and stimulate lending activity, the Fed became increasingly aggressive, taking a series of steps to pour liquidity into the financial system. Starting in September 2007 and continuing through April 2008, the Fed cut the key fed funds rate seven different times, lowering the influential short-term rate from 5.25% to 2%. In March 2008, the central bank also opened its lending facilities to securities firms as well as commercial banks and intervened to help JPMorgan Chase & Co. purchase the collapsing investment bank Bear Stearns Cos. Meanwhile, Congress and the Bush administration rushed through a $168 billion fiscal stimulus bill, which included tax rebate checks, in an effort to boost growth in the second half of 2008.

During the twelve-month period, managers of Evergreen’s intermediate- and long-term bond funds paid careful attention to risk management in a changing market environment. The teams supervising the higher-credit quality funds—including Evergreen U.S.

2

LETTER TO SHAREHOLDERS continued

Government Fund, Evergreen Core Bond Fund, Evergreen Core Plus Bond Fund and Evergreen Institutional Mortgage Portfolio—monitored Fed policy and interest-rate movements as well as general macroeconomic trends in managing their portfolios. Meanwhile, the managers of Evergreen High Income Fund and Evergreen Select High Yield Bond Fund tended to position their credit-sensitive portfolios relatively conservatively during a period of growing risk aversion. After repositioning their portfolio early in the fiscal year, the managers of Evergreen Diversified Income Builder Fund maintained an emphasis on better-quality, high yield corporate bonds and also increased their exposure to dividend-paying stocks.

The experiences in the capital markets during the twelve-month period have underscored the value of a well-diversified, long-term investment strategy to help soften the effects of volatility in any one market or asset class. As always, we encourage investors to maintain diversified investment portfolios in pursuit of their long-term investment goals.

Please visit us at EvergreenInvestments.com for more information about our funds and other investment products available to you. Thank you for your continued support of Evergreen Investments.

Sincerely,

Dennis H. Ferro

President and Chief Executive Officer

Evergreen Investment Company, Inc.

Special Notice to Shareholders:

Please visit our Web site at EvergreenInvestments.com for statements from President and Chief Executive Officer, Dennis Ferro, regarding the firm’s recent settlement with the Securities and Exchange Commission (SEC) and prior settlement with the Financial Industry Regulatory Authority (FINRA).

3

FUND AT A GLANCE

as of April 30, 2008

MANAGEMENT TEAM

Investment Advisor:

• Evergreen Investment Management Company, LLC

Sub-Advisor:

• Tattersall Advisory Group, Inc.

Portfolio Managers:

• Robert A. Calhoun, CFA

• Todd C. Kuimjian, CFA

CURRENT INVESTMENT STYLE

Source: Morningstar, Inc.

Morningstar’s style box is based on a portfolio date as of 3/31/2008.

The Fixed Income style box placement is based on a fund’s average effective maturity or duration and the average credit rating of the bond portfolio.

PERFORMANCE AND RETURNS

Portfolio Inception date: 6/19/2002

	Class I
Class inception date	6/19/2002
Nasdaq symbol	EMSFX
Average annual return
1-year	0.14%
5-year	3.05%
Since portfolio inception	3.69%

Past performance is no guarantee of future results. The performance quoted represents past performance and current performance may be lower or higher. The investment return and principal value of an investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. To obtain performance information current to the most recent month-end, please go to EvergreenInvestments.com/fundperformance. Performance includes the reinvestment of income dividends and capital gain distributions. Performance shown does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The advisor is reimbursing the fund for a portion of other expenses. Had expenses not been reimbursed, returns would have been lower.

Comparison of a $1,000,000 investment in the Evergreen Institutional Mortgage Portfolio Class I shares versus a similar investment in the Merrill Lynch Mortgage Master Index^† (MLMMI) and the Consumer Price Index (CPI).

The MLMMIis an unmanaged market index and does not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses or any taxes. The CPIis a commonly used measure of inflation and does not represent an investment return. It is not possible to invest directly in an index.

4

PORTFOLIO MANAGER COMMENTARY

The fund’s Class I shares returned 0.14% for the twelve-month period ended April 30, 2008. During the same period, the MLMMI returned 7.50%.

The fund’s objective is to seek to maximize total return through a combination of current income and capital growth.

While the fund maintained a high credit quality, with an average credit rating of AAA, the exposure to commercial mortgage backed securities (CMBS) and pass-through securities tended to hold back results during a period when U.S. Treasuries and U.S. agency-backed securities outperformed. The fiscal year began in May 2007 amid evidence that the domestic economy was continuing to expand after weathering a housing slump earlier in the year. The Federal Reserve Board (the “Fed”) indicated it was more concerned about inflationary pressures than about any drags on the economy, and it held the key fed funds rate unchanged at the 5.25% level where it had been for more than a year. That environment began to change in June 2007 amid mounting evidence that weakness in housing and problems in subprime mortgages were becoming more of a threat to the economy. Many major financial institutions, both domestic and international, began reporting significant losses from their subprime mortgage investments. The problems in the subprime market led to a massive deleveraging of the financial system and a seizing up of the fixed income markets. Investors typically sought out higher-quality bonds, most notably Treasuries, as evidence accumulated of a growing liquidity crunch affecting lending activities. In this general flight to quality, Treasuries outperformed all other sectors of the fixed income markets for the remainder of the fiscal year as the financial markets remained mired in a liquidity crunch amid growing evidence of credit problems. To relieve this credit crunch and inject liquidity into the financial markets, the Fed, in a series of actions starting in September 2007 and continuing through the end of the fiscal year in April 2008, provided funds to financial institutions. The Fed also lowered the fed funds rate from 5.25% to 2.00% and announced a series of other policy moves to ease lending activity.

For most of the fiscal year, we kept the fund’s duration—or exposure to change in interest rates—consistent with that of the overall mortgage market and this neutral duration position had minimal impact on results. The fund typically invests in a diversified mix of mortgage bonds beyond the agency pass-

Class I shares are only offered to investment advisory clients of an investment advisor of an Evergreen fund (or its advisory affiliates) and through special arrangements entered into on behalf of Evergreen funds with certain financial services firms.

Class I shares are only available to institutional shareholders with a minimum of $1 million investment, which may be waived in certain situations.

The fund’s investment objective may be changed without a vote of the fund’s shareholders.

Asset-backed and mortgage-backed securities are generally subject to higher prepayment risks than other types of debt securities, which can limit the potential for gain in a declining interest rate environment and increase the potential for loss in a rising interest rate environment. Mortgage-backed securities may also be structured so that they are particularly sensitive to interest rates. A high rate of defaults on the mortgages held by a mortgage pool may limit the pool’s ability to make payments to the fund if the fund holds securities that are subordinate to other interest in the same mortgage pool; the risk of such defaults is generally higher in mortgage pools that include subprime mortgages.

Derivatives involve additional risks including interest rate risk, credit risk, the risk of improper valuation and the risk of non-correlation to the relevant instruments they are designed to hedge or to closely track.

The return of principal is not guaranteed due to fluctuation in the fund’s NAV caused by changes in the price of individual bonds held by the fund and the buying and selling of bonds by the fund. Bond funds have the same inflation, interest rate and credit risks as individual bonds. Generally, the value of bond funds rises when prevailing interest rates fall, and falls when interest rates rise.

U.S. government guarantees apply only to certain securities held in the fund’s portfolio and not to the fund’s shares.

†Copyright 2008. Merrill Lynch, Pierce, Fenner & Smith Incorporated. All rights reserved.

All data is as of April 30, 2008, and subject to change.

5

PORTFOLIO MANAGER COMMENTARY continued

through market. In most environments this strategy has provided additional yield to the fund and added to the overall performance relative to the market. In a liquidity crisis and flight to quality, however, these high-quality assets are often the ones that are most affected. For most major sectors of the market, yield spreads reached record levels in November. In the securitized sector (mortgage-backed securities, CMBS and asset-backed securities) the fund maintained its overweight and began to add more exposure to AAA non-agency mortgages as the spread between agency and non-agency bonds widened to record levels. As we moved into 2008, problems in the subprime market continued to weigh on investors and confidence in the financial system remained low. Financial institutions typically continued to struggle as they attempted to value the subprime mortgages held on their balance sheets and shore up capital positions. Spread sectors, which were already historically cheap, underperformed even more in the first three months of 2008 and the fund’s performance was negatively impacted. While the fund did not own any subprime mortgages, its performance nevertheless was hurt by the fallout from the subprime crisis. Investments in CMBS and non-agency pass-through mortgage securities tended to detract from results during a period in which the markets did not reward any credit risk. The Fed’s efforts to provide liquidity and shore up the financial system began to take hold in mid-March 2008 and the market tone began to improve. In the last months of the fiscal year, spreads in CMBS began to narrow significantly and the performance of the fund began to improve.

6

ABOUT YOUR FUND’S EXPENSES

The Example below is intended to describe the fees and expenses borne by shareholders and the impact of those costs on your investment.

Example

As a shareholder of the fund, you incur two types of costs: (1) transaction costs, including sales charges (loads), redemption fees and exchange fees; and (2) ongoing costs, including management fees, distribution (12b-1) fees and other fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from November 1, 2007 to April 30, 2008.

The example illustrates your fund’s costs in two ways:

• Actual expenses

The section in the table under the heading “Actual” provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class, in the column entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

• Hypothetical example for comparison purposes

The section in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees. Therefore, the section in the table under the heading “Hypothetical (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning			Ending
	Account			Account			Expenses
	Value			Value			Paid During
	11/1/2007			4/30/2008			Period*
Actual
Class I		$	1,000.00		$	980.64		$	0.98
Hypothetical (5% return before expenses)
Class I		$	1,000.00		$	1,023.87		$	1.01

* Expenses are equal to the Fund's annualized expense ratio (0.20% for Class I), multiplied by the average account value over the period, multiplied by 182 / 366 days.

7

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	Year Ended April 30,
CLASS I	2008		2007		2006		2005		2004
Net asset value, beginning of period	$	9.78	$	9.57	$	9.89	$	9.89	$	10.18
Income from investment operations
Net investment income (loss)		0.49		0.48		0.43		0.35		0.35
Net realized and unrealized gains or losses on investments		(0.47)		0.22		(0.29)		0.10		(0.18)
Total from investment operations		0.02		0.70		0.14		0.45		0.17
Distributions to shareholders from
Net investment income		(0.30)		(0.49)		(0.46)		(0.45)		(0.45)
Net realized gains		0		0		0		0		(0.01)
Tax basis return of capital		(0.20)		0		0		0		0
Total distributions to shareholders		(0.50)		(0.49)		(0.46)		(0.45)		(0.46)
Net asset value, end of period	$	9.30	$	9.78	$	9.57	$	9.89	$	9.89
Total return		0.14%		7.51%		1.45%		4.66%		1.63%
Ratios and supplemental data
Net assets, end of period (thousands)	$	51,981	$	62,263	$	58,552	$	45,997	$	48,032
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		0.20%		0.20%		0.20%		0.20%		0.20%
Expenses excluding waivers/reimbursements and expense reductions		0.23%		0.23%		0.21%		0.24%		0.28%
Net investment income (loss)		5.09%		4.97%		4.37%		3.44%		3.33%
Portfolio turnover rate		400%1		131%		121%		177%		327%

1 Portfolio turnover rate includes mortgage dollar roll activity.

See Notes to Financial Statements

8

SCHEDULE OF INVESTMENTS

April 30, 2008

	Principal Amount		Value
AGENCY COMMERCIAL MORTGAGE-BACKED SECURITIES 4.6%
FIXED-RATE 3.9%
FHLMC:
6.90%, 12/01/2010	$	545,000	$	580,147
6.98%, 10/01/2020		433,709		460,946
FNMA:
6.01%, 02/01/2012		316,016		331,147
6.79%, 07/01/2009		89,128		90,788
6.91%, 07/01/2009		272,148		277,457
7.09%, 07/01/2009		267,893		273,472
				2,013,957
FLOATING-RATE 0.7%
FNMA:
7.04%, 12/01/2010		183,908		192,901
7.63%, 04/01/2010		189,723		197,969
				390,870
Total Agency Commercial Mortgage-Backed Securities (cost $2,540,261)				2,404,827
AGENCY MORTGAGE-BACKED COLLATERALIZED MORTGAGE OBLIGATIONS 6.6%
FIXED-RATE 6.6%
FHLMC:
Ser. 2991, Class QD, 5.00%, 08/15/2034		465,000		464,387
Ser. 3036, Class NC, 5.00%, 03/15/2031		740,000		738,487
Ser. 3079, Class MD, 5.00%, 03/15/2034		550,000		532,522
Ser. 3104, Class QD, 5.00%, 05/15/2034		550,000		529,773
FNMA:
Ser. 2003-092, Class KH, 5.00%, 03/25/2032		570,000		565,329
Ser. 2004-90, Class LH, 5.00%, 04/25/2034		590,000		578,678
Total Agency Mortgage-Backed Collateralized Mortgage Obligations (cost $3,334,990)				3,409,176
AGENCY MORTGAGE-BACKED PASS THROUGH SECURITIES 26.4%
FIXED-RATE 25.1%
FHLMC, 4.50%, 04/01/2035		1,070,045		1,020,118
FHLMC 30 year:
5.00%, TBA #		1,140,000		1,120,228
6.00%, TBA #		1,405,000		1,437,271
FNMA:
4.06%, 06/01/2013		595,000		577,729
4.50%, 04/01/2019		310,607		308,624
4.83%, 03/01/2013		650,749		657,193
5.78%, 11/01/2011		770,035		800,481
5.85%, 09/01/2012		345,823		360,706
6.00%, 05/01/2011		353,394		366,272

See Notes to Financial Statements

9

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

	Principal Amount		Value
AGENCY MORTGAGE-BACKED PASS THROUGH SECURITIES continued
FIXED-RATE continued
FNMA:
6.09%, 05/01/2011	$	523,313	$	543,577
6.15%, 05/01/2011		217,449		225,854
7.27%, 02/01/2010		473,829		490,973
FNMA 15 year, 5.00%, TBA #		1,685,000		1,690,528
GNMA, 5.625%, 07/20/2030		117,430		118,361
GNMA 30 Year:
5.50%, TBA #		2,755,000		2,790,730
6.00%, TBA #		500,000		513,672
				13,022,317
FLOATING-RATE 1.3%
FNMA, 5.44%, 01/01/2036		676,845		679,589
Total Agency Mortgage-Backed Pass Through Securities (cost $13,730,564)				13,701,906
ASSET-BACKED SECURITIES 1.6%
Deutsche Alt-A Securities, Inc., Mtge. Loan Trust:
Ser. 2005-03, Class 4A5, 5.25%, 06/25/2035		190,000		171,648
Ser. 2006-AB2, Class A3, 6.27%, 06/25/2036		575,000		387,630
Morgan Stanley Mtge. Trust, Ser. 2006-2, Class 5A3, 5.50%, 02/25/2036		290,000		257,389
Vanderbilt Mtge. & Fin., Inc., Ser. 2002-B, Class A3, 4.70%, 10/17/2018		35,211		35,183
Total Asset-Backed Securities (cost $1,084,575)				851,850
COMMERCIAL MORTGAGE-BACKED SECURITIES 25.8%
FIXED-RATE 20.3%
Banc of America Comml. Mtge. Securities, Inc.:
Ser. 2004-04, Class A6, 4.88%, 07/10/2042		1,000,000		983,203
Ser. 2006-4, Class AM, 5.68%, 07/10/2046		460,000		429,564
Ser. 2007-01, Class A4, 5.45%, 01/15/2049		405,000		394,229
Ser. 2007-04, Class A4, 5.94%, 07/10/2017		560,000		558,179
Ser. 2007-2, Class A2, 5.63%, 04/10/2049		800,000		798,378
Citigroup Comml. Mtge. Trust, Ser. 2008-C7, Class AJ, 6.10%, 12/10/2049		150,000		126,257
Cobalt Comml. Mtge. Trust, Ser. 2006-C1, Class AM, 5.25%, 08/15/2048		270,000		243,734
Credit Suisse First Boston Mtge. Securities Corp.:
Ser. 2003-C3, Class A2, 2.84%, 05/15/2038		207,277		206,900
Ser. 2003-C3, Class A5, 3.94%, 05/15/2038		855,000		821,978
GMAC Comml. Mtge. Securities, Inc., Ser. 2004-C2, Class A4, 5.30%, 08/10/2038		760,000		765,104
Greenwich Capital Comml. Funding Corp., Ser. 2007-GG09, Class A4, 5.44%, 03/10/2039		395,000		384,900
JPMorgan Chase & Co. Comml. Mtge. Securities Corp.:
Ser. 2004-CB8, Class A4, 4.40%, 01/12/2039		840,000		804,199
Ser. 2006-LDP9, Class A3, 5.34%, 05/15/2047		400,000		388,552

See Notes to Financial Statements

10

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

	Principal Amount		Value
COMMERCIAL MORTGAGE-BACKED SECURITIES continued
FIXED-RATE continued
JPMorgan Chase & Co. Comml. Mtge. Securities Corp.:
Ser. 2007-LD12, Class A2, 5.83%, 02/15/2051	$	570,000	$	572,575
Ser. 2007-LD12, Class A4, 5.88%, 02/15/2051		560,000		559,758
LB-UBS Comml. Mtge. Trust, Ser. 2003-C3, Class A4, 4.17%, 05/15/2032		440,000		427,181
Merrill Lynch/Countrywide Comml. Mtge. Trust, Ser. 2006-4, Class A3, 5.17%, 12/12/2049		672,000		647,402
Morgan Stanley Capital I, Ser. 2002-LQ3, Class A4, 5.08%, 09/15/2037		1,205,000		1,221,879
Wachovia Bank Comml. Mtge. Trust, Ser. 2003-C8, Class A1, 3.44%, 11/15/2035		198,816		197,886
				10,531,858
FLOATING-RATE 5.5%
Citigroup Comml. Mtge. Trust, Ser. 2006-C4, Class AJ, 5.92%, 03/15/2049		90,000		79,136
GE Comml. Mtge. Trust, Ser. 2007-C9, Class A4, 6.01%, 12/10/2049		525,000		525,937
Goldman Sachs Mtge. Securities Corp., Ser. 2007-GG10, Class A4, 5.99%, 08/10/2045		390,000		390,183
JPMorgan Chase & Co. Comml. Mtge. Securities Corp.:
Ser. 2007-CB19, Class A4, 5.94%, 02/12/2049		830,000		825,820
Ser. 2007-LD11, Class A4, 6.01%, 06/15/2049		490,000		490,416
Morgan Stanley Capital I, Inc., Ser. 2007-IQ15, Class A4, 6.08%, 06/11/2049		570,000		574,001
				2,885,493
Total Commercial Mortgage-Backed Securities (cost $13,341,680)				13,417,351
U.S. TREASURY OBLIGATIONS 10.0%
U.S. Treasury Notes:
3.50%, 02/15/2018 ρ		550,000		538,485
4.625%, 11/15/2009 ρ		4,500,000		4,667,346
Total U.S. Treasury Obligations (cost $5,215,099)				5,205,831
WHOLE LOAN MORTGAGE-BACKED COLLATERALIZED MORTGAGE OBLIGATIONS 3.2%
FIXED-RATE 0.4%
Banc of America Mtge. Securities, Inc., Ser. 2005-D, Class 2A6, 4.78%, 05/25/2035		230,000		217,872
FLOATING-RATE 2.8%
Washington Mutual, Inc.:
Ser. 2005-AR5, Class A5, 4.68%, 05/25/2035		690,000		659,333
Ser. 2006-OA3, Class 4AB, 4.85%, 04/25/2047		409,921		275,471
Wells Fargo Mtge. Backed Securities Trust, Ser. 2006-AR07, Class 2A5, 5.61%, 05/25/2036		560,000		517,807
				1,452,611
Total Whole Loan Mortgage-Backed Collateralized Mortgage Obligations (cost $1,851,665)				1,670,483

See Notes to Financial Statements

11

SCHEDULE OF INVESTMENTS continued

April 30, 2008

	Principal Amount		Value
WHOLE LOAN MORTGAGE-BACKED PASS THROUGH SECURITIES 18.3%
FIXED-RATE 8.3%
Countrywide Alternative Loan Trust, Inc.:
Ser. 2005-50CB, Class 1A1, 5.50%, 11/25/2035	$	393,777	$	356,219
Ser. 2007-24, Class A1, 7.00%, 10/25/2037		187,493		115,897
Ser. 2007-26R, Class A1, 7.00%, 01/25/2037		384,890		352,351
First Horizon Mtge. Pass Through Trust:
Ser. 2005-FA5, Class 3A1, 5.50%, 08/25/2035		530,534		483,729
Ser. 2007-AR2, Class 2A1, 5.89%, 07/25/2037		587,275		540,686
GSAA Home Equity Trust, Ser. 2007-09, Class A1A, 6.00%, 10/01/2037		307,187		291,253
IndyMac INDX Mtge. Loan Trust, Ser. 2007-AR7, Class 2A1, 5.81%, 06/25/2037		570,975		443,460
Morgan Stanley Capital I, Inc., Ser. 2007-13, Class 5A1, 5.50%, 10/25/2037		672,011		613,319
PHH Alternative Mtge. Trust, Ser. 2007-01, Class 21A, 6.00%, 02/25/2037		191,125		166,857
Residential Accredited Loans, Inc.:
Ser. 2007-QS9, Class A33, 6.50%, 07/25/2037		102,883		89,080
Ser. 2007-QS10, Class A1, 6.50%, 09/25/2037		222,159		208,067
Ser. 2007-QS11, Class A1, 7.00%, 10/25/2037		395,694		337,187
Wells Fargo Mtge. Backed Securities Trust, Ser. 2006-AR10, Class 5A1, 5.60%, 07/25/2036		353,431		340,363
				4,338,468
FLOATING-RATE 10.0%
American Home Mtge. Assets, Ser. 2007-1, Class A1, 4.78%, 02/25/2047		86,711		67,102
Bear Stearns Adjustable Rate Mtge. Trust, Ser. 2007-5, Class 1A1, 5.83%, 08/25/2047		353,277		327,655
Countrywide Alternative Loan Trust, Inc., Ser. 2007-A2, Class 1A1, 4.92%, 03/25/2047		558,198		439,659
Deutsche Securities, Inc., Ser. 2007-OA2, Class A1, 5.10%, 04/25/2047		268,447		216,862
IndyMac INDX Mtge. Loan Trust, Ser. 2006-AR11, Class 3A1, 5.82%, 06/25/2036		459,566		347,294
MASTR Reperforming Loan Trust, Ser. 2006-2, Class 1A1, 5.90%, 05/25/2046 144A		420,477		415,868
Residential Funding Mtge. Securities, Ser. 2006-SA2, Class 2A1, 5.85%, 08/25/2036		461,461		438,966
Structured Adjustable Rate Mtge. Loan Trust, Ser. 2007-3, Class 3A1, 5.72%, 04/25/2037		463,689		421,371
Washington Mutual, Inc. Mtge. Pass-Through Cert.:
Ser. 2006-AR17, Class 1A1B, 4.89%, 12/25/2046		498,440		355,682
Ser. 2007-HY7, Class 3A2, 5.91%, 07/25/2037		521,244		503,175
Washington Mutual, Inc.:
Ser. 2006-AR09, Class 2A, 4.92%, 11/25/2046		199,554		159,705
Ser. 2006-AR12, Class 2A3, 5.75%, 10/25/2036		473,714		446,393
Ser. 2007-OA5, Class 1A1B, 4.83%, 06/25/2047		808,520		563,765
Ser. 2007-OA6, Class 1A, 4.89%, 07/25/2047		594,704		478,499
				5,181,996
Total Whole Loan Mortgage-Backed Pass Through Securities (cost $10,865,452)				9,520,464

See Notes to Financial Statements

12

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

	Shares		Value
SHORT-TERM INVESTMENTS 25.5%
MUTUAL FUND SHARES 25.5%
Evergreen Institutional Money Market Fund, Class I, 2.78% q ø ## ρρ
(cost $13,259,242)		13,259,242	$	13,259,242
Total Investments (cost $65,223,528) 122.0%				63,441,130
Other Assets and Liabilities (22.0%)				(11,459,837)
Net Assets 100.0%			$	51,981,293

#	When-issued or delayed delivery security
ρ	All or a portion of this security is on loan.
144A	Security that may be sold to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines established by the Board of Trustees, unless otherwise noted.
q	Rate shown is the 7-day annualized yield at period end.
ø	Evergreen Investment Management Company, LLC is the investment advisor to both the Fund and the money market fund.
##	All or a portion of this security has been segregated for when-issued or delayed delivery securities.
ρρ	All or a portion of this security represents investment of cash collateral received from securities on loan.

Summary of Abbreviations
FHLMC	Federal Home Loan Mortgage Corp.
FNMA	Federal National Mortgage Association
GNMA	Government National Mortgage Association
MASTR	Mortgage Asset Securitization Transactions, Inc.
TBA	To Be Announced

The following table shows the percent of total investments (excluding collateral from securities on loan and segregated cash and cash equivalents) by credit quality based on Moody’s and Standard & Poor’s ratings as of April 30, 2008 (unaudited):

AAA 100%

The following table shows the percent of total investments (excluding collateral from securities on loan and segregated cash and cash equivalents) based on effective maturity as of April 30, 2008 (unaudited):

Less than 1 year	4.2%
1 to 3 year(s)	16.3%
3 to 5 years	23.3%
5 to 10 years	50.5%
10 to 20 years	5.7%
	100.0%

See Notes to Financial Statements

13

STATEMENT OF ASSETS AND LIABILITIES

April 30, 2008

Assets
Investments in securities, at value (cost $51,964,286) including $4,724,947 of securities loaned	$	50,181,888
Investments in affiliated money market fund, at value (cost $13,259,242)		13,259,242
Total investments		63,441,130
Receivable for securities sold		881,579
Interest receivable		326,007
Receivable for securities lending income		918
Unrealized gains on total return swap transactions		266,664
Unrealized gains on credit default swap transactions		39,535
Receivable from investment advisor		51
Prepaid expenses and other assets		4,312
Total assets		64,960,196
Liabilities
Dividends payable		171,124
Payable for securities purchased		7,713,326
Payable for Fund shares redeemed		400,000
Unrealized losses on credit default swap transactions		140,214
Premiums received on credit default swap transactions		175,115
Payable for securities on loan		4,367,025
Due to custodian bank		2,486
Due to related parties		519
Accrued expenses and other liabilities		9,094
Total liabilities		12,978,903
Net assets	$	51,981,293
Net assets represented by
Paid-in capital	$	55,198,163
Overdistributed net investment income		(338,571)
Accumulated net realized losses on investments		(1,261,886)
Net unrealized losses on investments		(1,616,413)
Total net assets	$	51,981,293
Shares outstanding (unlimited number of shares authorized)
Class I		5,592,093
Net asset value per share
Class I	$	9.30

See Notes to Financial Statements

14

STATEMENT OF OPERATIONS

Year Ended April 30, 2008

Investment income
Interest		$	2,378,191
Income from affiliate			540,516
Securities lending			1,686
Total investment income			2,920,393
Expenses
Administrative services fee			54,969
Transfer agent fees			2,413
Trustees’ fees and expenses			1,906
Printing and postage expenses			18,401
Custodian and accounting fees			22,629
Registration and filing fees			7,328
Professional fees			22,119
Other			1,017
Total expenses			130,782
Less:	Expense reductions		(2,049)
	Expense reimbursements		(18,344)
Net expenses			110,389
Net investment income			2,810,004
Net realized and unrealized gains or losses on investments
Net realized gains or losses on:
Securities			11,379
Credit default swap transactions			(80,789)
Total return swap transactions			(1,255,981)
Net realized losses on investments			(1,325,391)
Net change in unrealized gains or losses on investments			(1,409,634)
Net realized and unrealized gains or losses on investments			(2,735,025)
Net increase in net assets resulting from operations		$	74,979

See Notes to Financial Statements

15

STATEMENTS OF CHANGES IN NET ASSETS

	Year Ended April 30,
	2008			2007
Operations
Net investment income		$	2,810,004		$	2,961,541
Net realized gains or losses on investments			(1,325,391)			294,672
Net change in unrealized gains or losses on investments			(1,409,634)			1,150,448
Net increase in net assets resulting from operations			74,979			4,406,661
Distributions to shareholders from
Net investment income			(1,755,285)			(3,032,386)
Tax basis return of capital			(1,113,554)			0
Total distributions to shareholders			(2,868,839)			(3,032,386)
	Shares			Shares
Capital share transactions
Proceeds from shares sold	1,393,615		13,363,533	3,261,841		31,539,512
Net asset value of shares issued in reinvestment of distributions	73,555		707,024	82,713		802,545
Payment for shares redeemed	(2,239,001)		(21,558,141)	(3,097,034)		(30,005,109)
Net increase (decrease) in net assets resulting from capital share transactions			(7,487,584)			2,336,948
Total increase (decrease) in net assets			(10,281,444)			3,711,223
Net assets
Beginning of period			62,262,737			58,551,514
End of period		$	51,981,293		$	62,262,737
Overdistributed net investment income		$	(338,571)		$	(130,238)

See Notes to Financial Statements

16

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Evergreen Institutional Mortgage Portfolio (the “Fund”) is a diversified series of Evergreen Fixed Income Trust (the “Trust”), a Delaware statutory trust organized on September 18, 1997. The Trust is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”).

The Fund offers Class I shares. Class I shares are sold without a front-end sales charge or contingent deferred sales charge.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles in the United States of America, which require management to make estimates and assumptions that affect amounts reported herein. Actual results could differ from these estimates.

a. Valuation of investments

Portfolio debt securities acquired with more than 60 days to maturity are fair valued using matrix pricing methods determined by an independent pricing service which takes into consideration such factors as similar security prices, yields, maturities, liquidity and ratings. Securities for which valuations are not readily available from an independent pricing service may be valued by brokers which use prices provided by market makers or estimates of market value obtained from yield data relating to investments or securities with similar characteristics.

Short-term securities with remaining maturities of 60 days or less at the time of purchase are valued at amortized cost, which approximates market value.

Investments in open-end mutual funds are valued at net asset value. Securities for which market quotations are not readily available or not reflective of current market value are valued at fair value as determined by the investment advisor in good faith, according to procedures approved by the Board of Trustees.

b. Repurchase agreements

Securities pledged as collateral for repurchase agreements are held by the custodian bank or in a segregated account in the Fund’s name until the agreements mature. Collateral for certain tri-party repurchase agreements is held at the counterparty’s custodian in a segregated account for the benefit of the Fund and the counterparty. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. However, in the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. The Fund will only enter into repurchase agreements with banks and other financial institutions, which are deemed by the investment advisor to be creditworthy pursuant to guidelines

17

NOTES TO FINANCIAL STATEMENTS continued

established by the Board of Trustees. In certain instances, the Fund's securities lending agent may provide collateral in the form of repurchase agreements.

c. When-issued and delayed delivery transactions

The Fund records when-issued or delayed delivery securities as of trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked-to-market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

d. Securities lending

The Fund may lend its securities to certain qualified brokers in order to earn additional income. The Fund receives compensation in the form of fees or interest earned on the investment of any cash collateral received. The Fund also continues to receive interest and dividends on the securities loaned. The Fund receives collateral in the form of cash or securities with a market value at least equal to the market value of the securities on loan, including accrued interest. In the event of default or bankruptcy by the borrower, the Fund could experience delays and costs in recovering the loaned securities or in gaining access to the collateral. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.

e. Dollar roll transactions

The Fund may enter into dollar roll transactions with respect to mortgage-backed securities. In a dollar roll transaction, the Fund sells mortgage-backed securities to financial institutions and simultaneously agrees to accept substantially similar (same type, coupon and maturity) securities at a later date at an agreed upon price. The Fund will use the proceeds generated from the transactions to invest in short-term investments, which may enhance the Fund’s current yield and total return. The Fund accounts for dollar roll transactions as purchases and sales. The Fund could be exposed to risks if the counterparty defaults on its obligation to perform under the terms of the agreement, if the Fund receives inferior securities in comparison to what was sold to the counterparty at redelivery or if there are variances in paydown speed between the mortgage-related pools.

f. Credit default swaps

The Fund may enter into credit default swap contracts. Credit default swaps involve an exchange of a stream of payments for protection against the loss in value of an underlying security or index in the event of default or bankruptcy. Under the terms of the swap, one party acts as a guarantor and receives a periodic stream of payments that is a fixed percentage applied to a notional principal amount over the term of the swap. In return, the counterparty agrees to purchase the notional amount of the underlying instrument or index, at par, if a credit event occurs during the term of the swap. The Fund may enter into credit default swaps as either the guarantor or the counterparty.

18

NOTES TO FINANCIAL STATEMENTScontinued

Any premiums paid or received on the transactions are recorded as an asset or liability on the Statement of Assets and Liabilities and amortized. The value of the swap contract is marked-to-market daily based on quotations from an independent pricing service or market makers and any change in value is recorded as an unrealized gain or loss. Periodic payments made or received are recorded as realized gains or losses. In addition, payments received or made as a result of a credit event or termination of the contract are recognized as realized gains or losses. The Fund could be exposed to risks if the counterparty defaults on its obligation to perform, or if there are unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index.

g. Total return swaps

The Fund may enter into total return swap contracts. Total return swaps involve commitments to pay interest in exchange for a market-linked return, both based on notional amounts. To the extent the total return of the security or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from, or make a payment to, the counterparty.

The value of the swap contract is marked-to-market daily based upon quotations from an independent pricing service or market makers and any change in value is recorded as an unrealized gain or loss. Periodic payments made or received are recorded as realized gains or losses. The Fund could be exposed to risks if the counterparty defaults on its obligation to perform, or if there are unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index.

h. Security transactions and investment income

Security transactions are recorded on trade date. Realized gains and losses are computed using the specific cost of the security sold. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.

i. Federal and other taxes

The Fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income, including any net capital gains (which have already been offset by available capital loss carryovers). Accordingly, no provision for federal taxes is required. The Fund has adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”) which prescribes a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The Fund’s financial statements have not been impacted by the adoption of FIN 48. The Fund’s income and excise tax returns and all financial records supporting those returns are subject to examination by the federal, Massachusetts and Delaware revenue authorities for all taxable years beginning after April 30, 2004.

19

NOTES TO FINANCIAL STATEMENTS continued

j. Distributions

Distributions to shareholders from net investment income are accrued daily and paid monthly. Distributions from net realized gains, if any, are recorded on the ex-dividend date. Such distributions are determined in conformity with income tax regulations, which may differ from generally accepted accounting principles.

Reclassifications have been made to the Fund’s components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax regulations. The primary permanent differences causing such reclassifications are due to mortgage paydown gains and losses and swap contracts. During the year ended April 30, 2008, the following amounts were reclassified:

Overdistributed net investment income	($1,263,052)
Accumulated net realized losses on investments	1,263,052

3. ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Evergreen Investment Management Company, LLC (“EIMC”), an indirect, wholly-owned subsidiary of Wachovia Corporation (“Wachovia”), is the investment advisor to the Fund. The Fund does not pay a fee for the investment advisory service.

Tattersall Advisory Group, Inc., an indirect, wholly-owned subsidiary of Wachovia, is an investment sub-advisor to the Fund and is paid by EIMC for its services to the Fund.

From time to time, EIMC may voluntarily or contractually waive its fee and/or reimburse expenses in order to limit operating expenses. During the year ended April 30, 2008, EIMC voluntarily reimbursed other expenses in the amount of $18,344.

The Fund may invest in money market funds which are advised by EIMC. Income earned on these investments is included in income from affiliate on the Statement of Operations.

Effective January 1, 2008, EIMC replaced Evergreen Investment Services, Inc. (“EIS”), an indirect, wholly-owned subsidiary of Wachovia, as the administrator to the Fund upon the assignment of the Fund’s Administrative Services Agreement from EIS to EIMC. There were no changes to the services being provided or fees being paid by the Fund. The administrator provides the Fund with facilities, equipment and personnel and is paid an annual rate determined by applying percentage rates to the aggregate average daily net assets of the Evergreen funds (excluding money market funds) starting at 0.10% and declining to 0.05% as the aggregate average daily net assets of the Evergreen funds (excluding money market funds) increase.

Evergreen Service Company, LLC (“ESC”), an indirect, wholly-owned subsidiary of Wachovia, is the transfer and dividend disbursing agent for the Fund. ESC receives account fees that vary based on the type of account held by the shareholders in the Fund.

20

NOTES TO FINANCIAL STATEMENTS continued

4. INVESTMENT TRANSACTIONS

Cost of purchases and proceeds from sales of investment securities (excluding short-term securities) were as follows for the year ended April 30, 2008:

Cost of Purchases		Proceeds from Sales
U.S. Government	Non-U.S. Government	U.S. Government	Non-U.S. Government
$155,714,709	$59,253,148	$175,582,247	$43,588,963

During the year ended April 30, 2008, the Fund loaned securities to certain brokers and earned $336 in affiliated income relating to securities lending activity which is included in income from affiliate on the Statement of Operations. At April 30, 2008, the value of securities on loan and the total value of collateral received for securities loaned amounted to $4,724,947 and $4,819,625, respectively. Of the total value of the collateral received for securities on loan, $452,600 represents the market value of U.S. government agency securities received as non-cash collateral.

At April 30, 2008, the Fund had the following credit default swap contracts outstanding:

Expiration	Counterparty	Reference Index	Notional Amount		Fixed Payments Made by the Fund	Frequency of Payments Made	Unrealized Gain (Loss)
12/13/2049	Lehman Brothers	Markit CMBX, North America AJ.3 Index	$	420,000	1.47%	Quarterly	$	37,500
12/13/2049	Goldman Sachs	Markit CMBX, North America AA.3 Index		100,000	0.27%	Quarterly		(12,406)
Expiration	Counterparty	Reference Index	Notional Amount		Fixed Payments Received by the Fund	Frequency of Payments Received	Unrealized Gain (Loss)
12/13/2049	Lehman Brothers	Markit CMBX, North America AJ.3 Index	$	50,000	1.47%	Quarterly	$	2,035
2/17/2051	Goldman Sachs	Markit CMBX, North America AA.4 Index		800,000	1.65%	Quarterly		(102,246)
2/17/2051	Lehman Brothers	Markit CMBX, North America AA.4 Index		200,000	1.65%	Quarterly		(25,562)

21

NOTES TO FINANCIAL STATEMENTS continued

At April 30, 2008, the Fund had the following total return swap contracts outstanding:

Expiration	Notional Amount		Counterparty	Swap Description	Unrealized Gain
5/1/2008	$	1,000,000	Goldman Sachs	Agreement dated 10/22/2007 to receive the spread return on the Lehman Brothers CMBS AAA 8.5+yr. Index multiplied by the notional amount and to pay the negative spread return.	$	31,360
6/1/2008		700,000	Lehman Brothers	Agreement dated 3/01/2008 to receive the spread return on the Lehman Brothers CMBS AAA 8.5+yr. Index plus 10 basis points multiplied by the notional amount and to pay the negative spread return.		22,009
8/1/2008		1,500,000	Lehman Brothers	Agreement dated 2/01/2008 to receive the spread return on the Lehman Brothers CMBS AAA 8.5+yr. Index multiplied by the notional amount and to pay the negative spread return.		47,041
9/1/2008		1,000,000	Lehman Brothers	Agreement dated 3/01/2008 to receive the spread return on the Lehman Brothers CMBS AAA 8.5+yr. Index plus 100 basis points multiplied by the notional amount and to pay the negative spread return.		32,166
9/1/2008		300,000	Lehman Brothers	Agreement dated 3/01/2008 to receive the spread return on the Lehman Brothers CMBS AAA 8.5+yr. Index plus 125 basis points multiplied by the notional amount and to pay the negative spread return.		9,710
10/1/2008		1,000,000	Lehman Brothers	Agreement dated 10/01/2007 to receive the spread return on the Lehman Brothers CMBS AAA 8.5+yr. Index minus 62 basis points multiplied by the notional amount and to pay the negative spread return.		30,861
11/1/2008		2,000,000	Lehman Brothers	Agreement dated 11/01/2007 to receive the spread return on the Lehman Brothers CMBS AAA 8.5+yr. Index minus 15 basis points multiplied by the notional amount and to pay the negative spread return.		62,479
2/1/2009		1,000,000	Lehman Brothers	Agreement dated 2/01/2008 to receive the spread return on the Lehman Brothers CMBS AAA 8.5+yr. Index minus 40 basis points multiplied by the notional amount and to pay the negative spread return.		31,038

On April 30, 2008, the aggregate cost of securities for federal income tax purposes was $65,267,761. The gross unrealized appreciation and depreciation on securities based on tax cost was $328,832 and $2,155,463, respectively, with a net unrealized depreciation of $1,826,631.

22

NOTES TO FINANCIAL STATEMENTScontinued

As of April 30, 2008, the Fund had $1,217,653 in capital loss carryovers for federal income tax purposes expiring as follows:

Expiration
2012	2013	2014	2015	2016
$512,937	$77,895	$392,403	$213,424	$20,994

5. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the SEC, the Fund may participate in an interfund lending program with certain funds in the Evergreen fund family. This program allows the Fund to borrow from, or lend money to, other participating funds. During the year ended April 30, 2008, the Fund did not participate in the interfund lending program.

6. DISTRIBUTIONS TO SHAREHOLDERS

As of April 30, 2008, the components of distributable earnings on a tax basis were as follows:

Unrealized Depreciation	Capital Loss Carryovers	Temporary Book/Tax Differences
$1,826,631	$1,217,653	($172,586)

The differences between the components of distributable earnings on a tax basis and the amounts reflected in the Statement of Assets and Liabilities are primarily due to wash sales and swap contracts. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses.

The tax character of distributions paid was as follows:

		Year Ended April 30,
		2008		2007
Ordinary Income	$	1,755,285	$	3,032,386
Return of Capital		1,113,554		0

7. EXPENSE REDUCTIONS

Through expense offset arrangements with ESC and the Fund’s custodian, a portion of fund expenses has been reduced.

8. DEFERRED TRUSTEES’ FEES

Each Trustee of the Fund may defer any or all compensation related to performance of his or her duties as a Trustee. The Trustees’ deferred balances are allocated to deferral accounts, which are included in the accrued expenses for the Fund. The investment performance of the deferral accounts is based on the investment performance of certain Evergreen funds. Any gains earned or losses incurred in the deferral accounts are reported in the Fund’s Trustees’

23

NOTES TO FINANCIAL STATEMENTS continued

fees and expenses. At the election of the Trustees, the deferral account will be paid either in one lump sum or in quarterly installments for up to ten years.

9. FINANCING AGREEMENT

The Fund and certain other Evergreen funds share in an unsecured revolving credit commitment for temporary and emergency purposes, including the funding of redemptions, as permitted by each participating fund’s borrowing restrictions. Borrowings under this facility bear interest at 0.50% per annum above the Federal Funds rate. All of the participating funds are charged an annual commitment fee on the unused balance, which is allocated pro rata. The credit facility is for $100 million with an annual commitment fee of 0.08%. During the year ended April 30, 2008, the Fund had no borrowings.

10. REGULATORY MATTERS AND LEGAL PROCEEDINGS

Pursuant to an administrative order issued by the SEC on September 19, 2007, EIMC, EIS, ESC (collectively, the “Evergreen Entities”), Wachovia Securities, LLC and the SEC have entered into an agreement settling allegations of (i) improper short-term trading arrangements in effect prior to May 2003 involving former officers and employees of EIMC and certain broker-dealers, (ii) insufficient systems for monitoring exchanges and enforcing exchange limitations as stated in certain funds’ prospectuses, and (iii) inadequate e-mail retention practices. Under the settlement, the Evergreen Entities were censured and have paid approximately $32 million in disgorgement and penalties. This amount, along with a fine assessed by the SEC against Wachovia Securities, LLC will be distributed pursuant to a plan to be developed by an independent distribution consultant and approved by the SEC. The Evergreen Entities neither admitted nor denied the allegations and findings set forth in its settlement with the SEC.

In addition, the Evergreen funds and EIMC and certain of its affiliates are involved in various legal actions, including private litigation and class action lawsuits. EIMC does not expect that any of such legal actions currently pending or threatened will have a material adverse impact on the financial position or operations of any of the Evergreen funds or on EIMC’s ability to provide services to the Evergreen funds.

Although EIMC believes that none of the matters discussed above will have a material adverse impact on the Evergreen funds, there can be no assurance that these matters and any publicity surrounding or resulting from them will not result in reduced sales or increased redemptions of Evergreen fund shares, which could increase Evergreen fund transaction costs or operating expenses, or that they will not have other adverse consequences on the Evergreen funds.

11. NEW ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157”). FAS 157 establishes a single authoritative

24

NOTES TO FINANCIAL STATEMENTS continued

definition of fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FAS 157 applies to fair value measurements already required or permitted by existing standards. The change to current generally accepted accounting principles from the application of FAS 157 relates to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. Management of the Fund does not believe the adoption of FAS 157 will materially impact the financial statement amounts, however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements on changes in net assets for the period. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years.

In March 2008, FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“FAS 161”), an amendment of FASB Statement No. 133. FAS 161 requires enhanced disclosures about (a) how and why a fund uses derivative instruments, (b) how derivative instruments and hedging activities are accounted for, and (c) how derivative instruments and related hedging activities affect a fund’s financial position, financial performance, and cash flows. Management of the Fund does not believe the adoption of FAS 161 will materially impact the financial statement amounts, but will require additional disclosures. This will include qualitative and quantitative disclosures on derivative positions existing at period end and the effect of using derivatives during the reporting period. FAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.

25

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Trustees and Shareholders

Evergreen Fixed Income Trust

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the Evergreen Institutional Mortgage Portfolio, a series of the Evergreen Fixed Income Trust, as of April 30, 2008 and the related statement of operations for the year then ended, statements of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 2008 by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Evergreen Institutional Mortgage Portfolio as of April 30, 2008, the results of its operations, changes in its net assets and financial highlights for each of the years described above, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts

June 27, 2008

26

ADDITIONAL INFORMATION (unaudited)

FEDERAL TAX DISTRIBUTIONS

The Fund paid total distributions of $2,868,839 during the year ended April 30, 2008 of which 61.18% was from ordinary taxable income and 38.82% was from a non-taxable return of capital. Shareholders of the Fund will receive in early 2009 a Form 1099-DIV that will inform them of the tax character of this distribution as well as all other distributions made by the Fund in calendar year 2008.

27

TRUSTEES AND OFFICERS

TRUSTEES1
Charles A. Austin III Trustee DOB: 10/23/1934 Term of office since: 1991 Other directorships: None	Investment Counselor, Anchor Capital Advisors, LLC. (investment advice); Director, The Andover Companies (insurance); Trustee, Arthritis Foundation of New England; Former Director, The Francis Ouimet Society (scholarship program); Former Director, Executive Vice President and Treasurer, State Street Research & Management Company (investment advice)
K. Dun Gifford Trustee DOB: 10/23/1938 Term of office since: 1974 Other directorships: None	Chairman and President, Oldways Preservation and Exchange Trust (education); Trustee, Chairman of the Finance Committee, Member of the Executive Committee, and Former Treasurer, Cambridge College
Dr. Leroy Keith, Jr. Trustee DOB: 2/14/1939 Term of office since: 1983 Other directorships: Trustee, Phoenix Fund Complex (consisting of 53 portfolios as of 12/31/2007)	Managing Director, Almanac Capital Management (commodities firm); Trustee, Phoenix Fund Complex; Director, Diversapack Co. (packaging company); Former Partner, Stonington Partners, Inc. (private equity fund); Former Director, Obagi Medical Products Co.; Former Director, Lincoln Educational Services
Carol A. Kosel1 Trustee DOB: 12/25/1963 Term of office since: 2008 Other directorships: None	Former Consultant to the Evergreen Boards of Trustees; Former Vice President and Senior Vice President, Evergreen Investments, Inc.; Former Treasurer, Evergreen Funds; Former Treasurer, Vestaur Securities Fund
Gerald M. McDonnell Trustee DOB: 7/14/1939 Term of office since: 1988 Other directorships: None	Former Manager of Commercial Operations, CMC Steel (steel producer)
Patricia B. Norris Trustee DOB: 4/9/1948 Term of office since: 2006 Other directorships: None	President and Director of Buckleys of Kezar Lake, Inc. (real estate company); Former President and Director of Phillips Pond Homes Association (home community); Former Partner, PricewaterhouseCoopers, LLP (independent registered public accounting firm)
William Walt Pettit Trustee DOB: 8/26/1955 Term of office since: 1988 Other directorships: None	Partner and Vice President, Kellam & Pettit, P.A. (law firm); Director, Superior Packaging Corp. (packaging company); Member, Superior Land, LLC (real estate holding company), Member, K&P Development, LLC (real estate development); Former Director, National Kidney Foundation of North Carolina, Inc. (non-profit organization)
David M. Richardson Trustee DOB: 9/19/1941 Term of office since: 1982 Other directorships: None	President, Richardson, Runden LLC (executive recruitment advisory services); Director, J&M Cumming Paper Co. (paper merchandising); Trustee, NDI Technologies, LLP (communications); Former Consultant, AESC (The Association of Executive Search Consultants)
Dr. Russell A. Salton III Trustee DOB: 6/2/1947 Term of office since: 1984 Other directorships: None	President/CEO, AccessOne MedCard, Inc.

28

TRUSTEES AND OFFICERS continued

Michael S. Scofield Trustee DOB: 2/20/1943 Term of office since: 1984 Other directorships: None	Retired Attorney, Law Offices of Michael S. Scofield; Former Director and Chairman, Branded Media Corporation (multi-media branding company)
Richard J. Shima Trustee DOB: 8/11/1939 Term of office since: 1993 Other directorships: None	Independent Consultant; Director, Hartford Hospital; Trustee, Greater Hartford YMCA; Former Director, Trust Company of CT; Former Director, Old State House Association; Former Trustee, Saint Joseph College (CT)
Richard K. Wagoner, CFA2 Trustee DOB: 12/12/1937 Term of office since: 1999 Other directorships: None	Member and Former President, North Carolina Securities Traders Association; Member, Financial Analysts Society

OFFICERS

Dennis H. Ferro3 President DOB: 6/20/1945 Term of office since: 2003	Principal occupations: President and Chief Executive Officer, Evergreen Investment Company, Inc. and Executive Vice President, Wachovia Bank, N.A.; former Chief Investment Officer, Evergreen Investment Company, Inc.
Kasey Phillips4 Treasurer DOB: 12/12/1970 Term of office since: 2005	Principal occupations: Senior Vice President, Evergreen Investment Management Company, LLC; Former Vice President, Evergreen Investment Services, Inc.; Former Assistant Vice President, Evergreen Investment Services, Inc.
Michael H. Koonce4 Secretary DOB: 4/20/1960 Term of office since: 2000	Principal occupations: Senior Vice President and General Counsel, Evergreen Investment Services, Inc.; Secretary, Senior Vice President and General Counsel, Evergreen Investment Management Company, LLC and Evergreen Service Company, LLC; Senior Vice President and Assistant General Counsel, Wachovia Corporation
Robert Guerin4 Chief Compliance Officer DOB: 9/20/1965 Term of office since: 2007	Principal occupations: Chief Compliance Officer, Evergreen Funds and Senior Vice President of Evergreen Investments Co., Inc.; Former Managing Director and Senior Compliance Officer, Babson Capital Management LLC; Former Principal and Director, Compliance and Risk Management, State Street Global Advisors; Former Vice President and Manager, Sales Practice Compliance, Deutsche Asset Management

1 Each Trustee, except Mses. Kosel and Norris, serves until a successor is duly elected or qualified or until his or her death, resignation, retirement or removal from office. As new Trustees, Ms. Kosel’s and Ms. Norris’ initial terms end December 31, 2010 and June 30, 2009, respectively, at which times they may be re-elected by Trustees to serve until a successor is duly elected or qualified or until her death, resignation, retirement or removal from office by the Trustees. Each Trustee, except Ms. Kosel, oversaw 94 Evergreen funds as of December 31, 2007. Ms. Kosel became a Trustee on January 1, 2008. Correspondence for each Trustee may be sent to Evergreen Board of Trustees, P.O. Box 20083, Charlotte, NC 28202.

2 Mr. Wagoner is an “interested person” of the Fund because of his ownership of shares in Wachovia Corporation, the parent to the Fund’s investment advisor.

3 The address of the Officer is 401 S. Tryon Street, 20th Floor, Charlotte, NC 28288.

4 The address of the Officer is 200 Berkeley Street, Boston, MA 02116.

Additional information about the Fund’s Board of Trustees and Officers can be found in the Statement of Additional Information (SAI) and is available upon request without charge by calling 800.343.2898.

29

573633rv3 06/2008

  Evergreen Diversified Income Builder Fund

	table of contents
1	LETTER TO SHAREHOLDERS
4	FUND AT A GLANCE
6	PORTFOLIO MANAGER COMMENTARY
9	ABOUT YOUR FUND’S EXPENSES
10	FINANCIAL HIGHLIGHTS
14	SCHEDULE OF INVESTMENTS
21	STATEMENT OF ASSETS AND LIABILITIES
22	STATEMENT OF OPERATIONS
23	STATEMENTS OF CHANGES IN NET ASSETS
24	NOTES TO FINANCIAL STATEMENTS
33	REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
34	ADDITIONAL INFORMATION
36	TRUSTEES AND OFFICERS

This annual report must be preceded or accompanied by a prospectus of the Evergreen fund contained herein. The prospectus contains more complete information, including fees and expenses, and should be read carefully before investing or sending money.

The fund will file its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q will be available on the SEC’s Web site at http://www.sec.gov. In addition, the fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 800.SEC.0330.

A description of the fund’s proxy voting policies and procedures, as well as information regarding how the fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available by visiting our Web site at EvergreenInvestments.com or by visiting the SEC’s Web site at http://www.sec.gov. The fund’s proxy voting policies and procedures are also available without charge, upon request, by calling 800.343.2898.

Mutual Funds:
NOT FDIC INSURED	MAY LOSE VALUE	NOT BANK GUARANTEED

Evergreen Investments^SM is a service mark of Evergreen Investment Management Company, LLC. Copyright 2008, Evergreen Investment Management Company, LLC.

Evergreen Investment Management Company, LLC is a subsidiary of Wachovia Corporation and is an affiliate of Wachovia Corporation’s other Broker Dealer subsidiaries.

Evergreen mutual funds are distributed by Evergreen Investment Services, Inc. 200 Berkeley Street, Boston, MA 02116

LETTER TO SHAREHOLDERS

June 2008

Dennis H. Ferro

President and Chief Executive Officer

Dear Shareholder:

We are pleased to provide the Annual Report for Evergreen Diversified Income Builder Fund for the twelve-month period ended April 30, 2008 (the “twelve-month period”).

The fiscal year witnessed a dramatic change in fixed income markets as problems that first surfaced in housing and the subprime mortgages raised questions about the strength of the domestic economy and the risks of credit-sensitive investments. Corporate bonds and asset-backed securities performed well early in the period, with gains in economic output, corporate profits and employment encouraging optimism. The backdrop for investing began to change, however, by the summer of 2007 amid widening worries about problems in the financials sector. Major financial institutions began to report substantial losses from their exposures to subprime mortgages and banks started to tighten their credit standards and to restrict their lending. With fears of a dramatic downturn hovering over the market, fixed income investors sought out the highest-quality securities and attempted to avoid credit risk. As a consequence, the prices of corporate bonds and many asset-backed securities fell, while Treasuries rallied in a general flight to quality over much of the period. These general trends later reversed themselves in the final month of the twelve-month period, with high yield corporate bonds and other credit-sensitive securities rallying in April 2008 following a series of actions by the U.S. Federal Reserve Board (the “Fed”) to stabilize the markets. Equities, meanwhile, tended to move in the same general direction as corporate bonds over the fiscal year. Stock prices rose very early in the period before

1

LETTER TO SHAREHOLDERScontinued

falling in late 2007 and early 2008 and then rallying again in April. For the full twelve-month period, stock valuations fell across all market capitalizations, investment styles and regions. At the same time, the prices of gold, oil and other commodities surged while the U.S. dollar weakened further.

The U.S. economy grew briskly early in 2007, but then slowed significantly in late 2007 and early 2008. Economic growth decelerated as lending for ordinary consumer and commercial activity dried up, accentuating the weakening effects of declining home prices. Corporate profits, employment and other key economic indicators showed clear evidence of deterioration. Gross Domestic Product growth decelerated to a paltry 0.6% rate during the final quarter of 2007 and a marginally better 0.9% pace for the first quarter of 2008. Much of the strength early in 2008 came from exports and government spending, rather than from any noticeable improvements in consumer spending, business investment or housing. To reinvigorate the economy and stimulate lending activity, the Fed became increasingly aggressive, taking a series of steps to pour liquidity into the financial system. Starting in September 2007 and continuing through April 2008, the Fed cut the key fed funds rate seven different times, lowering the influential short-term rate from 5.25% to 2%. In March 2008, the central bank also opened its lending facilities to securities firms as well as commercial banks and intervened to help JPMorgan Chase & Co. purchase the collapsing investment bank Bear Stearns Cos. Meanwhile, Congress and the Bush administration rushed through a $168 billion fiscal stimulus bill, which included tax rebate checks, in an effort to boost growth in the second half of 2008.

During the twelve-month period, managers of Evergreen’s intermediate- and long-term bond funds paid careful attention to risk management in a changing market environment. The teams supervising the higher-credit quality funds—including Evergreen U.S.

2

LETTER TO SHAREHOLDERScontinued

Government Fund, Evergreen Core Bond Fund, Evergreen Core Plus Bond Fund and Evergreen Institutional Mortgage Portfolio— monitored Fed policy and interest-rate movements as well as general macroeconomic trends in managing their portfolios. Meanwhile, the managers of Evergreen High Income Fund and Evergreen Select High Yield Bond Fund tended to position their credit-sensitive portfolios relatively conservatively during a period of growing risk aversion. After repositioning their portfolio early in the fiscal year, the managers of Evergreen Diversified Income Builder Fund maintained an emphasis on better-quality, high yield corporate bonds and also increased their exposure to dividend-paying stocks.

The experiences in the capital markets during the twelve-month period have underscored the value of a well-diversified, long-term investment strategy to help soften the effects of volatility in any one market or asset class. As always, we encourage investors to maintain diversified investment portfolios in pursuit of their long-term investment goals.

Please visit us at EvergreenInvestments.com for more information about our funds and other investment products available to you. Thank you for your continued support of Evergreen Investments.

Sincerely,

Dennis H. Ferro

President and Chief Executive Officer

Evergreen Investment Company, Inc.

Special Notice to Shareholders:

Please visit our Web site at EvergreenInvestments.com for statements from President and Chief Executive Officer, Dennis Ferro, regarding the firm’s recent settlement with the Securities and Exchange Commission (SEC) and prior settlement with the Financial Industry Regulatory Authority (FINRA).

3

FUND AT A GLANCE

as of April 30, 2008

MANAGEMENT TEAM

Investment Advisor:

• Evergreen Investment Management Company, LLC

Portfolio Manager:

• Margaret D. Patel

CURRENT INVESTMENT STYLE

Source: Morningstar, Inc.

Morningstar’s style box is based on a portfolio date as of 3/31/2008.

The Equity style box placement is based on 10 growth and valuation measures for each fund holding and the median size of the companies in which the fund invests.

The Fixed Income style box placement is based on a fund’s average effective maturity or duration and the average credit rating of the bond portfolio.

PERFORMANCE AND RETURNS

Portfolio inception date: Inception 4/14/1987

	Class A	Class B	Class C	Class I
Class inception date	4/14/1987	2/1/1993	2/1/1993	1/13/1997
Nasdaq symbol	EKSAX	EKSBX	EKSCX	EKSYX
Average annual return*
1-year with sales charge	-5.05%	-5.81%	-1.99%	N/A
1-year w/o sales charge	-0.30%	-1.02%	-1.03%	-0.12%
5-year	3.44%	3.37%	3.70%	4.72%
10-year	4.61%	4.33%	4.33%	5.48%
Maximum sales charge	4.75%	5.00%	1.00%	N/A
	Front-end	CDSC	CDSC

* Adjusted for maximum applicable sales charge, unless noted.

Past performance is no guarantee of future results. The performance quoted represents past performance and current performance may be lower or higher. The investment return and principal value of an investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. To obtain performance information current to the most recent month-end for Classes A, B, C or I, please go to EvergreenInvestments.com/fundperformance. The performance of each class may vary based on differences in loads, fees and expenses paid by the shareholders investing in each class. Performance includes the reinvestment of income dividends and capital gain distributions. Performance shown does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

The fund incurs a 12b-1 fee of 0.25% for Class A and 1.00% for Classes B and C. Class I does not pay a 12b-1 fee.

The advisor is reimbursing a portion of the 12b-1 fee for Class A. Had the fee not been reimbursed, returns for Class A would have been lower. Returns reflect expense limits previously in effect for all classes, without which returns would have been lower.

4

FUND AT A GLANCE continued

Comparison of a $10,000 investment in the Evergreen Diversified Income Builder Fund Class A shares versus a similar investment in the Evergreen Diversified Income Builder Blended Index New (EDIBBI NEW), the Evergreen Diversified Income Builder Blended Index Old (EDIBBI OLD), the Merrill Lynch High Yield Master Index^† (MLHYMI), the Russell 1000 Index (Russell 1000) and the Consumer Price Index (CPI).

The EDIBBI NEW, the EDIBBI OLD, the MLHYMI and the Russell 1000 are unmanaged market indexes and do not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses or any taxes. 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.

Class I shares are only offered, subject to the minimum initial purchase requirements, in the following manner: (1) to investment advisory clients of EIMC (or its advisory affiliates), (2) to employer- or state-sponsored benefit plans, including but not limited to, retirement plans, defined benefit plans, deferred compensation plans, or savings plans, (3) to fee-based mutual fund wrap accounts, (4) through arrangements entered into on behalf of the Evergreen funds with certain financial services firms, (5) to certain institutional investors, and (6) to persons who owned Class Y shares in registered name in an Evergreen fund on or before December 31, 1994 or who owned shares of any SouthTrust fund in registered name as of March 18, 2005 or who owned shares of Vestaur Securities Fund as of May 20, 2005.

Class I shares are only available to institutional shareholders with a minimum of $1 million investment, which may be waived in certain situations.

The fund’s investment objective may be changed without a vote of the fund’s shareholders.

5

PORTFOLIO MANAGER COMMENTARY

The fund’s Class A shares returned -0.30% for the twelve-month period ended April 30, 2008, excluding any applicable sales charges. During the same period, the EDIBBI NEW returned -1.70%, the EDIBBI OLD returned 5.37%, the MLHYMI returned -0.76% and the Russell 1000 returned -4.62%.

The fund seeks high current income from investments in income-producing securities. Secondarily, the fund considers potential for growth of capital in selecting securities.

Investment Process

On June 1, 2007, just one month into its fiscal year, Evergreen Strategic Income Fund changed its name to Evergreen Diversified Income Builder Fund to reflect a new set of strategies effective on that same day. Specifically, the strategies for the fund were broadened to provide the management team with increased flexibility to invest in a wider range of income-producing securities to create a potential for increased total return. To pursue the new objective, the fund typically seeks to invest at least 80 percent of assets in a diversified portfolio of U.S. and non-U.S. income-producing securities, including debt securities of any quality, dividend-paying common and preferred stocks, convertible bonds and derivatives (such as structured notes). We do not normally expect to invest more than 25 percent of assets in common stocks.

Volatility in both fixed income and equity markets characterized much of the investment year, as problems in the subprime mortgage market rippled through many sectors of the economy, beginning in the waning months of 2007 and continuing into 2008. During this time, the fund maintained an emphasis on better-quality, high yielding corporate bonds while also focusing on equities in areas where attractive fixed income opportunities were not available. We kept our asset allocation within a fairly consistent range, with high yield bonds representing the majority of assets and the remainder of assets invested primarily in dividend paying stocks. Our fixed income investments tended to have the greatest concentrations in the Industrials, Utilities, Materials and Energy sectors. The yield spreads offered by bonds in these economically sensitive areas widened substantially over Treasury yields by the end of the fiscal year because of concerns about the effects of decelerating economic growth. Throughout the fiscal year, our bond investments tended to be in relatively better-rated bonds within the below-investment grade universe. Bond holdings generally were rated BB/Ba to B. By fiscal year’s end, we found it necessary to emphasize securities of companies

Foreign investments may contain more risk due to the inherent risks associated with changing political climates, foreign market instability and foreign currency fluctuations. Risks of international investing are magnified in emerging or developing markets.

Asset-backed and mortgage-backed securities are generally subject to higher prepayment risks than other types of debt securities, which can limit the potential for gain in a declining interest rate environment and increase the potential for loss in a rising interest rate environment. Mortgage-backed securities may also be structured so that they are particularly sensitive to interest rates.

Derivatives involve additional risks including interest rate risk, credit risk, the risk of improper valuation and the risk of non-correlation to the relevant instruments they are designed to hedge or to closely track.

High yield, lower-rated bonds may contain more risk due to the increased possibility of default.

The return of principal is not guaranteed due to fluctuation in the fund’s NAV caused by changes in the price of individual bonds held by the fund and the buying and selling of bonds by the fund. Bond funds have the same inflation, interest rate and credit risks as individual bonds. Generally, the value of bond funds rises when prevailing interest rates fall, and falls when interest rates rise.

U.S. government guarantees apply only to certain securities held in the fund’s portfolio and not to the fund’s shares.

Leverage may disproportionately increase a fund’s portfolio losses and reduce opportunities for gain when interest rates, stock prices, or currency rates are changing.

The Evergreen Diversified Income Builder Blended Index New is composed of the following indexes: MLHYMI (75%) and Russell 1000 (25%). The Evergreen Diversified Income Builder Blended Index Old was formerly composed of the following indexes: MLHYMI (50%), JPMGXUS (25%) and LBABI (25%). Given recent changes to the fund’s principal investment strategies, the fund believes that the EDIBBI NEW is a more appropriate benchmark. In future periods, the fund will compare its performance to the EDIBBI NEW.

† Copyright 2008. Merrill Lynch, Pierce, Fenner & Smith Incorporated. All rights reserved.

All data is as of April 30, 2008, and subject to change.

6

PORTFOLIO MANAGER COMMENTARY continued

that we thought were financially strong enough to weather a slowing economy.

Among our equity investments, we often took advantage of opportunities in economically sensitive areas such as Industrials, where we held positions in corporations such as Emerson Electric, Cooper Industries and Rockwell Automation. We believed that the stocks of these companies offered excellent growth prospects in a sector where there were few attractive high yield bonds available. Similarly, we invested in stocks of companies such as Thermo Fisher Scientific, a medical equipment company with good potential in an industry that does not offer many high yield bond opportunities. In general, we had very low exposure to stocks from the Financials sector. When we did hold Financials stocks, we focused on real estate investment trusts (REITs) of office, shopping mall, lodging and timber properties, which tended to offer higher yields than generally available in the equity market. We sought to avoid companies vulnerable to losses from their investments in structured products and residential real estate mortgages.

Contributors to performance

Our strategy emphasizing the equities of REITs in our Financials positions tended to help. Two healthy performers were Simon Property Group, owner of shopping mall properties, and Mack-Cali Realty Corp., owner of office and mixed-use properties. In our Energy equity positions, our investments in oil field services companies such as Pride International and Halliburton added to results, as they posted modest gains during a period in which the stocks of the major oil companies tended to fall. Questar, a natural gas corporation with divisions involved in exploration, pipeline development and marketing, also rose in value, supporting performance. While the more economically sensitive Industrials stocks generally did not perform well, shares of defense contractors DRS Technologies and Raytheon rose. Shares of railroad operator Norfolk Southern also gained. In basic materials, we also saw gains for Freeport-McMoRan Cooper & Gold. Currently, all of these contributors remain in the portfolio because we still believe they hold long-term value.

Detractors from performance

Our emphasis on stocks in the Industrials and other economically sensitive sectors tended to hold back performance when those groups fell out of favor because of concerns about decelerating economic growth. In addition, our positions in the convertible bonds of companies General Cable and Inverness Medical Innovations fell in sympathy with the values of the companies’ underlying stocks. We eliminated our position in one disappointing high yield investment—the bonds of Freescale Semiconductor. It declined amid concerns about increasing competition in the market for semiconductors used in wireless communications devices. Another detractor, Wesco International, Inc.—a distributor of electrical and industrial products—declined because of delays in several construction and utility projects, as well as its exposure to the beleaguered home construction industry. All of these detractors remain in the portfolio at present because we still believe they hold long-term value.

Management outlook

Although the end of the fiscal year was particularly challenging for high yield investing, we have confidence in our strategy to invest opportunistically in the bonds of economically sensitive industries and companies. When the current economic downturn ends and economic growth begins to accelerate, our investments in these bonds may offer good potential. The yields of high yielding corporate bonds increased substantially in the last several months of the fiscal year, and yield advantages over Treasuries widened significantly. We currently think corporate bonds issued by companies that are financially strong enough to withstand the present economic downdraft may perform particularly well when the economy begins to re-accelerate.

7

PORTFOLIO MANAGER COMMENTARY continued

At present, we think the outlook for equities also should improve by the end of 2008, if the momentum of the economic cycle turns upward, as we now expect. We think stock valuations of many economically sensitive companies have fallen to attractive levels, while their prospects may be improving because of sustained growth in developing markets and the prospect of improving conditions in the domestic economy later this year. At present, growth in emerging markets is generating heavy investments in basic infrastructure and industrial plants, while the U.S. economy may benefit both from the efforts of the Federal Reserve to inject more liquidity into the financial system and from the Treasury Department’s tax rebates, expected in the coming months. We think investments in many equities now make sense, especially for those investors with time horizons of a few years or more who have the patience to wait for a recovery in the markets. In our equity investments—which represented 25% of the portfolio at the end of the fiscal year—we currently expect to remain focused on sectors with the potential to grow faster than the overall economy.

This commentary reflects the views and opinions of the fund’s portfolio manager(s) on the date indicated and may include statements that constitute “forward-looking statements” under the U.S. Securities laws. Forward-looking statements include, among other things, projections, estimates, and information about possible or future results related to the fund, markets, or regulatory developments. The views expressed above are not guarantees of future performance or economic results and involve certain risks, uncertainties, and assumptions that could cause actual outcomes and results to differ materially from the views expressed herein. The views expressed above are subject to change at any time based upon economic, market, or other conditions and Evergreen undertakes no obligation to update the views expressed herein. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. The views expressed herein (including any forward-looking statements) may not be relied upon as investment advice or as an indication of the fund’s trading intent.

You should carefully consider the fund’s investment objectives, policies, risks, charges and expenses before investing. To obtain a prospectus, which contains this and other important information visit www.EvergreenInvestments.com or call 1.800.847.5397. Please read the prospectus carefully before investing.

8

ABOUT YOUR FUND’S EXPENSES

The Example below is intended to describe the fees and expenses borne by shareholders and the impact of those costs on your investment.

Example

As a shareholder of the fund, you incur two types of costs: (1) transaction costs, including sales charges (loads), redemption fees and exchange fees; and (2) ongoing costs, including management fees, distribution (12b-1) fees and other fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from November 1, 2007 to April 30, 2008.

The example illustrates your fund’s costs in two ways:

• Actual expenses

The section in the table under the heading “Actual” provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class, in the column entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

• Hypothetical example for comparison purposes

The section in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees. Therefore, the section in the table under the heading “Hypothetical (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning Account Value 11/1/2007	Ending Account Value 4/30/2008	Expenses Paid During Period*
Actual
Class A	$ 1,000.00	$   979.46	$ 5.27
Class B	$ 1,000.00	$   975.98	$ 8.94
Class C	$ 1,000.00	$   975.92	$ 8.94
Class I	$ 1,000.00	$   980.09	$ 4.04
Hypothetical
(5% return before expenses)
Class A	$ 1,000.00	$ 1,019.54	$ 5.37
Class B	$ 1,000.00	$ 1,015.81	$ 9.12
Class C	$ 1,000.00	$ 1,015.81	$ 9.12
Class I	$ 1,000.00	$ 1,020.79	$ 4.12

* For each class of the fund, expenses are equal to the annualized expense ratio of each class (1.07% for Class A, 1.82% for Class B, 1.82% for Class C and 0.82% for Class I), multiplied by the average account value over the period, multiplied by 182 / 366 days.

9

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	Year Ended April 30,
CLASS A	2008		2007		2006		2005		2004
Net asset value, beginning of period	$	6.40	$	6.32	$	6.53	$	6.38	$	6.50
Income from investment operations
Net investment income (loss)		0.271		0.331		0.291		0.33		0.341
Net realized and unrealized gains or losses on investments		(0.29)		0.08		(0.19)		0.19		0.07
Total from investment operations		(0.02)		0.41		0.10		0.52		0.41
Distributions to shareholders from
Net investment income		(0.26)		(0.31)		(0.31)		(0.35)		(0.37)
Net realized gains		0		0		0		(0.02)		(0.16)
Tax basis return of capital		0		(0.02)		0		0		0
Total distributions to shareholders		(0.26)		(0.33)		(0.31)		(0.37)		(0.53)
Net asset value, end of period	$	6.12	$	6.40	$	6.32	$	6.53	$	6.38
Total return2		(0.30)%		6.71%		1.59%		8.22%		6.24%
Ratios and supplemental data
Net assets, end of period (thousands)	$	147,430	$	170,804	$	199,501	$	214,776	$	202,017
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		1.11%		1.16%		1.17%		1.12%		1.21%
Expenses excluding waivers/reimbursements and expense reductions		1.16%		1.20%		1.18%		1.12%		1.21%
Net investment income (loss)		4.41%		5.17%		4.57%		5.03%		5.10%
Portfolio turnover rate		125%		128%		100%		130%		129%

¹ Net investment income (loss) per share is based on average shares outstanding during the period.

² Excluding applicable sales charges

See Notes to Financial Statements

10

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	Year Ended April 30,
CLASS B	2008		2007		2006		2005		2004
Net asset value, beginning of period	$	6.42	$	6.34	$	6.55	$	6.40	$	6.52
Income from investment operations
Net investment income (loss)		0.231		0.281		0.251		0.29		0.291
Net realized and unrealized gains or losses on investments		(0.30)		0.09		(0.19)		0.19		0.07
Total from investment operations		(0.07)		0.37		0.06		0.48		0.36
Distributions to shareholders from
Net investment income		(0.21)		(0.27)		(0.27)		(0.31)		(0.32)
Net realized gains		0		0		0		(0.02)		(0.16)
Tax basis return of capital		0		(0.02)		0		0		0
Total distributions to shareholders		(0.21)		(0.29)		(0.27)		(0.33)		(0.48)
Net asset value, end of period	$	6.14	$	6.42	$	6.34	$	6.55	$	6.40
Total return2		(1.02)%		5.94%		0.89%		7.46%		5.49%
Ratios and supplemental data
Net assets, end of period (thousands)	$	37,846	$	54,955	$	71,860	$	98,852	$	113,115
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		1.86%		1.90%		1.87%		1.83%		1.91%
Expenses excluding waivers/reimbursements and expense reductions		1.86%		1.90%		1.87%		1.83%		1.91%
Net investment income (loss)		3.68%		4.43%		3.85%		4.34%		4.40%
Portfolio turnover rate		125%		128%		100%		130%		129%

¹ Net investment income (loss) per share is based on average shares outstanding during the period.

² Excluding applicable sales charges

See Notes to Financial Statements

11

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	Year Ended April 30,
CLASS C	2008		2007		2006		2005		2004
Net asset value, beginning of period	$	6.41	$	6.33	$	6.54	$	6.39	$	6.51
Income from investment operations
Net investment income (loss)		0.221		0.281		0.251		0.29		0.291
Net realized and unrealized gains or losses on investments		(0.29)		0.09		(0.19)		0.19		0.07
Total from investment operations		(0.07)		0.37		0.06		0.48		0.36
Distributions to shareholders from
Net investment income		(0.21)		(0.27)		(0.27)		(0.31)		(0.32)
Net realized gains		0		0		0		(0.02)		(0.16)
Tax basis return of capital		0		(0.02)		0		0		0
Total distributions to shareholders		(0.21)		(0.29)		(0.27)		(0.33)		(0.48)
Net asset value, end of period	$	6.13	$	6.41	$	6.33	$	6.54	$	6.39
Total return2		(1.03)%		5.94%		0.88%		7.46%		5.49%
Ratios and supplemental data
Net assets, end of period (thousands)	$	61,860	$	55,110	$	65,322	$	79,539	$	89,236
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		1.85%		1.90%		1.88%		1.83%		1.91%
Expenses excluding waivers/reimbursements and expense reductions		1.85%		1.90%		1.88%		1.83%		1.91%
Net investment income (loss)		3.63%		4.43%		3.86%		4.34%		4.40%
Portfolio turnover rate		125%		128%		100%		130%		129%

¹ Net investment income (loss) per share is based on average shares outstanding during the period.

² Excluding applicable sales charges

See Notes to Financial Statements

12

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	Year Ended April 30,
CLASS I	2008		2007		2006		2005		2004
Net asset value, beginning of period	$	6.30	$	6.22	$	6.43	$	6.28	$	6.40
Income from investment operations
Net investment income (loss)		0.281		0.341		0.311		0.34		0.351
Net realized and unrealized gains or losses on investments		(0.29)		0.08		(0.19)		0.19		0.07
Total from investment operations		(0.01)		0.42		0.12		0.53		0.42
Distributions to shareholders from
Net investment income		(0.27)		(0.32)		(0.33)		(0.36)		(0.38)
Net realized gains		0		0		0		(0.02)		(0.16)
Tax basis return of capital		0		(0.02)		0		0		0
Total distributions to shareholders		(0.27)		(0.34)		(0.33)		(0.38)		(0.54)
Net asset value, end of period	$	6.02	$	6.30	$	6.22	$	6.43	$	6.28
Total return		(0.12)%		7.02%		1.84%		8.58%		6.56%
Ratios and supplemental data
Net assets, end of period (thousands)	$	25,200	$	17,861	$	20,424	$	19,216	$	26,711
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		0.85%		0.90%		0.88%		0.82%		0.91%
Expenses excluding waivers/reimbursements and expense reductions		0.85%		0.90%		0.88%		0.82%		0.91%
Net investment income (loss)		4.66%		5.43%		4.88%		5.33%		5.42%
Portfolio turnover rate		125%		128%		100%		130%		129%

¹ Net investment income (loss) per share is based on average shares outstanding during the period.

See Notes to Financial Statements

13

SCHEDULE OF INVESTMENTS

April 30, 2008

	Principal Amount		Value
ASSET-BACKED SECURITIES 1.0%
NovaStar ABS CDO, Ltd., Ser. 2007-1A, Class A2, FRN, 3.59%, 02/08/2047 144A+» • (cost $3,988,000)	$	4,000,000	$	2,782,920
CORPORATE BONDS 61.2%
CONSUMER DISCRETIONARY 0.3%
Auto Components 0.2%
Goodyear Tire & Rubber Co., 9.00%, 07/01/2015 ρ		500,000		546,250
Textiles, Apparel & Luxury Goods 0.1%
Oxford Industries, Inc., 8.875%, 06/01/2011		400,000		383,000
CONSUMER STAPLES 0.3%
Household Products 0.3%
Church & Dwight Co., 6.00%, 12/15/2012 ρ		740,000		732,600
ENERGY 9.2%
Energy Equipment & Services 2.0%
Bristow Group, Inc., 7.50%, 09/15/2017		4,430,000		4,596,125
Dresser-Rand Group, Inc., 7.375%, 11/01/2014		692,000		695,460
				5,291,585
Oil, Gas & Consumable Fuels 7.2%
El Paso Corp., 6.875%, 06/15/2014		2,900,000		3,021,498
McMoRan Exploration Co., 11.875%, 11/15/2014		6,200,000		6,603,000
Overseas Shipholding Group, Inc., 8.25%, 03/15/2013		750,000		782,813
Peabody Energy Corp.:
5.875%, 04/15/2016		4,565,000		4,450,875
6.875%, 03/15/2013		440,000		451,000
Tesoro Corp., 6.50%, 06/01/2017		3,690,000		3,404,025
Williams Cos., 7.50%, 01/15/2031		925,000		985,125
				19,698,336
FINANCIALS 10.3%
Consumer Finance 0.4%
Qwest Capital Funding, Inc., 6.50%, 11/15/2018		1,100,000		924,000
Real Estate Investment Trusts 6.9%
Host Marriott Corp.:
7.125%, 11/01/2013		750,000		750,938
Ser. Q, 6.75%, 06/01/2016		7,638,000		7,504,335
Omega Healthcare Investors, Inc., 7.00%, 04/01/2014		1,000,000		981,250
Rouse Co., LP, 6.75%, 05/01/2013 144A ρ		7,621,000		6,845,502
Saul Centers, Inc., 7.50%, 03/01/2014		3,000,000		2,700,000
				18,782,025
Real Estate Management & Development 3.0%
Forest City Enterprises, Inc.:
3.625%, 10/15/2011		4,000,000		3,476,400
6.50%, 02/01/2017		5,310,000		4,752,450
				8,228,850

See Notes to Financial Statements

14

SCHEDULE OF INVESTMENTS continued

April 30, 2008

	Principal Amount		Value
CORPORATE BONDS continued
INDUSTRIALS 14.5%
Aerospace & Defense 3.5%
DRS Technologies, Inc.:
6.625%, 02/01/2016	$	1,000,000	$	995,000
7.625%, 02/01/2018 ρ		1,875,000		1,921,875
L-3 Communications Holdings, Inc.:
5.875%, 01/15/2015		3,470,000		3,383,250
6.375%, 10/15/2015		3,160,000		3,140,250
				9,440,375
Commercial Services & Supplies 2.9%
Allied Waste North America, Inc., 6.875%, 06/01/2017 ρ		8,000,000		8,040,000
Electrical Equipment 4.2%
Baldor Electric Co., 8.625%, 02/15/2017 ρ		8,700,000		8,917,500
Belden, Inc., 7.00%, 03/15/2017		1,200,000		1,195,500
General Cable Corp., 7.125%, 04/01/2017 ρ		1,500,000		1,470,000
				11,583,000
Machinery 3.9%
Actuant Corp., 6.875%, 06/15/2017 144A ρ		7,442,000		7,497,815
RBS Global, Inc., 11.75%, 08/01/2016 ρ		1,000,000		965,000
SPX Corp., 7.625%, 12/15/2014 144A		2,000,000		2,092,500
				10,555,315
INFORMATION TECHNOLOGY 3.0%
Electronic Equipment & Instruments 0.8%
Anixter International, Inc., 5.95%, 03/01/2015		1,500,000		1,329,375
Itron, Inc., 7.75%, 05/15/2012		1,000,000		975,410
				2,304,785
IT Services 2.2%
Iron Mountain, Inc., 6.625%, 01/01/2016 ρ		6,100,000		5,924,625
MATERIALS 9.2%
Chemicals 0.1%
MacDermid, Inc., 9.50%, 04/15/2017 144A		291,000		279,360
Millenium America, Inc., 7.625%, 11/15/2026		140,000		90,650
				370,010
Construction Materials 0.4%
Texas Industries, Inc., 7.25%, 07/15/2013 ρ		1,168,000		1,162,160
Containers & Packaging 4.5%
Ball Corp., 6.625%, 03/15/2018		8,000,000		8,000,000
Crown Holdings, Inc., 7.75%, 11/15/2015 ρ		1,750,000		1,855,000
Greif, Inc., 6.75%, 02/01/2017 ρ		1,540,000		1,536,150
Smurfit-Stone Container Corp., 8.375%, 07/01/2012		1,075,000		989,000
				12,380,150

See Notes to Financial Statements

15

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

	Principal Amount		Value
CORPORATE BONDS continued
MATERIALS continued
Metals & Mining 4.0%
Freeport-McMoRan Copper & Gold, Inc.:
8.25%, 04/01/2015	$	240,000	$	261,300
8.375%, 04/01/2017		235,000		260,262
Steel Dynamics, Inc., 7.75%, 04/15/2016 144A		10,000,000		10,275,000
				10,796,562
Paper & Forest Products 0.2%
Glatfelter, 7.125%, 05/01/2016		475,000		470,250
TELECOMMUNICATION SERVICES 0.7%
Diversified Telecommunication Services 0.5%
Qwest Corp., 7.875%, 09/01/2011		1,275,000		1,313,250
Wireless Telecommunication Services 0.2%
Rural Cellular Corp., 8.25%, 03/15/2012		450,000		470,250
UTILITIES 13.7%
Electric Utilities 9.7%
Edison Mission Energy, 7.00%, 05/15/2017		8,020,000		8,140,300
Mirant North America, LLC, 7.375%, 12/31/2013		850,000		886,125
NRG Energy, Inc.:
7.375%, 02/01/2016		1,500,000		1,548,750
7.375%, 01/15/2017		8,000,000		8,260,000
Reliant Energy, Inc.:
6.75%, 12/15/2014		1,125,000		1,167,187
7.625%, 06/15/2014		6,265,000		6,546,925
				26,549,287
Independent Power Producers & Energy Traders 4.0%
AES Corp., 7.75%, 03/01/2014 ρ		1,125,000		1,158,750
Dynegy, Inc.:
6.875%, 04/01/2011		4,400,000		4,455,000
7.125%, 05/15/2018		3,815,000		3,691,013
8.375%, 05/01/2016 ρ		1,450,000		1,518,875
				10,823,638
Total Corporate Bonds (cost $167,454,893)				166,770,303
WHOLE LOAN SUBORDINATE COLLATERALIZED MORTGAGE OBLIGATIONS 0.0%
FIXED-RATE 0.0%
MASTR Resecuritization Trust, Ser. 2005-2, 4.75%, 03/28/2034 (cost $12,846)		13,090		13,264
YANKEE OBLIGATIONS – CORPORATE 0.8%
FINANCIALS 0.0%
Diversified Financial Services 0.0%
Preferred Term Securities XII, Ltd., FRN, 10.00%, 12/24/2033		105,000		74,689

See Notes to Financial Statements

16

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

	Principal Amount		Value
YANKEE OBLIGATIONS – CORPORATE continued
MATERIALS 0.4%
Metals & Mining 0.4%
Novelis, Inc., 7.25%, 02/15/2015	$	1,065,000	$	979,800
TELECOMMUNICATION SERVICES 0.4%
Diversified Telecommunication Services 0.4%
Nordic Telecom Holdings Co., 8.875%, 05/01/2016 144A ρ		1,000,000		1,027,500
Total Yankee Obligations – Corporate (cost $2,172,305)				2,081,989
		Shares		Value
COMMON STOCKS 26.9%
ENERGY 4.4%
Energy Equipment & Services 2.0%
Halliburton Co.		35,000		1,606,850
National Oilwell Varco, Inc. *		20,241		1,385,497
Pride International, Inc. *		60,000		2,547,000
				5,539,347
Oil, Gas & Consumable Fuels 2.4%
Marathon Oil Corp.		35,000		1,594,950
Patriot Coal Corp. *		4,000		264,200
Peabody Energy Corp.		40,000		2,445,200
Tesoro Corp.		35,000		879,900
Valero Energy Corp.		25,000		1,221,250
				6,405,500
FINANCIALS 4.5%
Capital Markets 0.3%
Lazard, Ltd. ρ		17,800		696,692
Real Estate Investment Trusts 4.2%
General Growth Properties, Inc.		18,000		737,280
Host Hotels & Resorts, Inc.		147,300		2,533,560
Macerich Co. ρ		11,000		804,430
Mack-Cali Realty Corp. ρ		45,000		1,755,900
Plum Creek Timber Co., Inc.		100,000		4,084,000
Simon Property Group, Inc.		15,000		1,497,900
				11,413,070
HEALTH CARE 2.2%
Life Sciences Tools & Services 2.2%
Millipore Corp. * ρ		15,000		1,051,500
PerkinElmer, Inc.		90,000		2,390,400
Thermo Fisher Scientific, Inc. *		45,000		2,604,150
				6,046,050

See Notes to Financial Statements

17

SCHEDULE OF INVESTMENTS continued

April 30, 2008

	Shares		Value
COMMON STOCKS continued
INDUSTRIALS 9.9%
Aerospace & Defense 1.3%
Boeing Co.		7,000	$	594,020
DRS Technologies, Inc. ρ		27,000		1,685,880
Raytheon Co.		20,000		1,279,400
				3,559,300
Building Products 0.7%
Lennox International, Inc.		55,000		1,822,700
Electrical Equipment 4.6%
Ametek, Inc.		36,000		1,746,720
Cooper Industries, Inc.		62,000		2,628,180
Emerson Electric Co.		55,000		2,874,300
General Cable Corp. * ρ		50,000		3,350,000
Rockwell Automation, Inc.		15,000		813,450
Roper Industries, Inc. ρ		16,500		1,024,980
				12,437,630
Machinery 2.7%
Danaher Corp.		15,000		1,170,300
Donaldson Co., Inc. ρ		26,100		1,136,394
Dover Corp.		25,000		1,236,750
IDEX Corp. ρ		37,000		1,357,530
Pall Corp.		35,000		1,216,950
Parker Hannifin Corp.		16,800		1,341,480
		��
				7,459,404
Road & Rail 0.6%
Norfolk Southern Corp.		30,000		1,787,400
INFORMATION TECHNOLOGY 2.4%
Communications Equipment 0.4%
CommScope, Inc. * ρ		25,000		1,188,750
Electronic Equipment & Instruments 2.0%
Agilent Technologies, Inc. *		25,000		755,250
Amphenol Corp., Class A		100,000		4,618,000
				5,373,250
MATERIALS 2.1%
Chemicals 0.8%
FMC Corp. ρ		26,000		1,632,280
Huntsman Corp.		19,570		440,129
				2,072,409
Construction Materials 0.4%
Texas Industries, Inc. ρ		15,200		1,176,632

See Notes to Financial Statements

18

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

	Shares		Value
COMMON STOCKS continued
MATERIALS continued
Metals & Mining 0.4%
Freeport-McMoRan Copper & Gold, Inc.		10,000	$	1,137,500
Paper & Forest Products 0.5%
Weyerhaeuser Co.		20,000		1,277,600
UTILITIES 1.4%
Electric Utilities 0.6%
NRG Energy, Inc. *		40,000		1,758,000
Gas Utilities 0.8%
Questar Corp.		18,000		1,116,540
Southern Union Co.		40,000		1,024,800
				2,141,340
Total Common Stocks (cost $76,799,103)				73,292,574

	Principal Amount		Value
CONVERTIBLE DEBENTURES 8.4%
FINANCIALS 1.0%
Real Estate Investment Trusts 1.0%
Alexandria Real Estate Equities, Inc., 3.70%, 01/15/2027 144A	$	2,500,000		2,603,125
HEALTH CARE 4.4%
Health Care Equipment & Supplies 3.8%
Inverness Medical Innovations, Inc., 3.00%, 05/15/2016 144A		10,000,000		10,312,500
Life Sciences Tools & Services 0.6%
Millipore Corp., 3.75%, 06/01/2026		1,500,000		1,563,750
INDUSTRIALS 3.0%
Electrical Equipment 3.0%
General Cable Corp., 1.00%, 10/15/2012 144A		7,940,000		8,307,225
Total Convertible Debentures (cost $22,344,549)				22,786,600

	Shares		Value
SHORT-TERM INVESTMENTS 13.0%
MUTUAL FUND SHARES 13.0%
Evergreen Institutional Money Market Fund, Class I, 2.78% q ø ρρ (cost $35,489,731)		35,489,731		35,489,731
Total Investments (cost $308,261,427) 111.3%				303,217,381
Other Assets and Liabilities (11.3%)				(30,881,657)
Net Assets 100.0%			$	272,335,724

See Notes to Financial Statements

19

SCHEDULE OF INVESTMENTS continued

April 30, 2008

144A Security that may be sold to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines established by the Board of Trustees, unless otherwise noted.

+ Security is deemed illiquid and is valued using market quotations when readily available, unless otherwise noted.

» Security has defaulted on its payment of interest and/or principal subsequent to the date of this report and is currently valued at a fair value price of $0 as determined by the investment advisor, in good faith, according to procedures approved by the Board of Trustees.

• The fund has stopped accruing interest on this security.

ρ All or a portion of this security is on loan.

*	Non-income producing security
q	Rate shown is the 7-day annualized yield at period end.
ø	Evergreen Investment Management Company, LLC is the investment advisor to both the Fund and the money market fund.

ρρ All or a portion of this security represents investment of cash collateral received from securities on loan.

Summary of Abbreviations

CDO Collateralized Debt Obligation

FRN Floating Rate Note

MASTR Mortgage Asset Securitization Transactions, Inc.

The following table shows the percent of total investments (excluding equity positions and collateral from securities on loan) by credit quality based on Moody’s and Standard & Poor’s ratings as of April 30, 2008 (unaudited):

AAA	6.2%
BBB	0.6%
BB	50.2%
B	37.3%
CCC	4.4%
NR	1.3%
	100.0%

The following table shows the percent of total investments (excluding equity positions and collateral from securities on loan) based on effective maturity as of April 30, 2008 (unaudited):

Less than 1 year	6.2%
1 to 3 year(s)	2.7%
3 to 5 years	10.1%
5 to 10 years	76.8%
10 to 20 years	2.3%
20 to 30 years	1.9%
	100.0%

See Notes to Financial Statements

20

STATEMENT OF ASSETS AND LIABILITIES

April 30, 2008

Assets
Investments in securities, at value (cost $272,771,696) including $31,906,839 of securities loaned	$	267,727,650
Investments in affiliated money market fund, at value (cost $35,489,731)		35,489,731
Total investments		303,217,381
Foreign currency, at value (cost $202,611)		226,467
Receivable for securities sold		564,527
Receivable for Fund shares sold		626,866
Dividends and interest receivable		3,915,754
Receivable for securities lending income		16,249
Prepaid expenses and other assets		59,703
Total assets		308,626,947
Liabilities
Dividends payable		241,051
Payable for securities purchased		2,520,181
Payable for Fund shares redeemed		383,361
Payable for securities on loan		33,013,773
Advisory fee payable		3,037
Distribution Plan expenses payable		3,725
Due to other related parties		10,324
Accrued expenses and other liabilities		115,771
Total liabilities		36,291,223
Net assets	$	272,335,724
Net assets represented by
Paid-in capital	$	323,732,217
Undistributed net investment income		2,920,462
Accumulated net realized losses on investments		(49,296,765)
Net unrealized losses on investments		(5,020,190)
Total net assets	$	272,335,724
Net assets consists of
Class A	$	147,429,761
Class B		37,845,606
Class C		61,860,078
Class I		25,200,279
Total net assets	$	272,335,724
Shares outstanding (unlimited number of shares authorized)
Class A		24,082,280
Class B		6,162,029
Class C		10,087,590
Class I		4,184,497
Net asset value per share
Class A	$	6.12
Class A — Offering price (based on sales charge of 4.75%)	$	6.43
Class B	$	6.14
Class C	$	6.13
Class I	$	6.02

See Notes to Financial Statements

21

STATEMENT OF OPERATIONS

Year Ended April 30, 2008

Investment income
Interest	$	13,382,099
Dividends		1,023,652
Income from affiliate		828,681
Securities lending		25,035
Total investment income		15,259,467
Expenses
Advisory fee		1,165,860
Distribution Plan expenses
Class A		461,740
Class B		456,313
Class C		582,194
Administrative services fee		275,986
Transfer agent fees		636,787
Trustees’ fees and expenses		14,884
Printing and postage expenses		50,460
Custodian and accounting fees		117,053
Registration and filing fees		52,016
Professional fees		40,004
Interest expense		1,171
Other		15,216
Total expenses		3,869,684
Less: Expense reductions		(6,736)
Expense reimbursements		(71,989)
Net expenses		3,790,959
Net investment income		11,468,508
Net realized and unrealized gains or losses on investments
Net realized losses on:
Securities		(188,046)
Foreign currency related transactions		(757,728)
Net realized losses on investments		(945,774)
Net change in unrealized gains or losses on investments		(12,993,879)
Net realized and unrealized gains or losses on investments		(13,939,653)
Net decrease in net assets resulting from operations	$	(2,471,145)

See Notes to Financial Statements

22

STATEMENTS OF CHANGES IN NET ASSETS

	Year Ended April 30,
	2008			2007
Operations
Net investment income		$	11,468,508		$	15,923,558
Net realized losses on investments			(945,774)			(3,220,142)
Net change in unrealized gains or losses on investments			(12,993,879)			7,133,625
Net increase (decrease) in net assets resulting from operations			(2,471,145)			19,837,041
Distributions to shareholders from
Net investment income
Class A			(6,544,853)			(9,094,484)
Class B			(1,588,318)			(2,627,449)
Class C			(1,988,850)			(2,528,220)
Class I			(771,946)			(1,045,572)
Tax basis return of capital
Class A			0			(519,958)
Class B			0			(175,306)
Class C			0			(168,861)
Class I			0			(57,606)
Total distributions to shareholders			(10,893,967)			(16,217,456)
	Shares			Shares
Capital share transactions
Proceeds from shares sold
Class A	3,907,591		24,178,154	2,802,341		17,655,099
Class B	567,760		3,531,104	662,966		4,199,618
Class C	3,656,310		22,584,738	935,756		5,896,227
Class I	2,570,994		15,309,422	724,245		4,513,577
			65,603,418			32,264,521
Net asset value of shares issued in reinvestment of distributions
Class A	768,971		4,732,934	1,101,527		6,947,693
Class B	144,405		892,625	242,976		1,537,222
Class C	180,525		1,111,654	233,170		1,473,134
Class I	96,419		579,805	86,125		534,959
			7,317,018			10,493,008
Automatic conversion of Class B shares to Class A shares
Class A	663,058		4,036,733	878,428		5,528,422
Class B	(660,954)		(4,036,733)	(875,646)		(5,528,422)
			0			0
Payment for shares redeemed
Class A	(7,927,137)		(48,598,987)	(9,675,630)		(60,907,111)
Class B	(2,443,593)		(15,038,878)	(2,810,537)		(17,750,836)
Class C	(2,342,069)		(14,451,139)	(2,894,878)		(18,242,199)
Class I	(1,316,454)		(7,860,824)	(1,260,417)		(7,853,118)
			(85,949,828)			(104,753,264)
Net decrease in net assets resulting from capital share transactions			(13,029,392)			(61,995,735)
Total decrease in net assets			(26,394,504)			(58,376,150)
Net assets
Beginning of period			298,730,228			357,106,378
End of period		$	272,335,724		$	298,730,228
Undistributed net investment income		$	2,920,462		$	267,621

See Notes to Financial Statements

23

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Evergreen Diversified Income Builder Fund (the “Fund”) is a diversified series of Evergreen Fixed Income Trust (the “Trust”), a Delaware statutory trust organized on September 18, 1997. The Trust is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”).

The Fund offers Class A, Class B, Class C and Class I shares. Class A shares are sold with a front-end sales charge. However, Class A share investments of $1 million or more are not subject to a front-end sales charge but are subject to a contingent deferred sales charge of 1.00% upon redemption within 18 months. Class B shares are sold without a front-end sales charge but are subject to a contingent deferred sales charge that is payable upon redemption and decreases depending on how long the shares have been held. Class C shares are sold without a front-end sales charge but are subject to a contingent deferred sales charge that is payable upon redemption within one year. Class I shares are sold without a front-end sales charge or contingent deferred sales charge. Each class of shares, except Class I shares, pays an ongoing distribution fee.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles in the United States of America, which require management to make estimates and assumptions that affect amounts reported herein. Actual results could differ from these estimates.

a. Valuation of investments

Portfolio debt securities acquired with more than 60 days to maturity are fair valued using matrix pricing methods determined by an independent pricing service which takes into consideration such factors as similar security prices, yields, maturities, liquidity and ratings. Securities for which valuations are not readily available from an independent pricing service may be valued by brokers which use prices provided by market makers or estimates of market value obtained from yield data relating to investments or securities with similar characteristics.

Listed equity securities are usually valued at the last sales price or official closing price on the national securities exchange where the securities are principally traded.

Short-term securities with remaining maturities of 60 days or less at the time of purchase are valued at amortized cost, which approximates market value.

Investments in open-end mutual funds are valued at net asset value. Securities for which market quotations are not readily available or not reflective of current market value are valued at fair value as determined by the investment advisor in good faith, according to procedures approved by the Board of Trustees.

24

NOTES TO FINANCIAL STATEMENTS continued

b. Repurchase agreements

Securities pledged as collateral for repurchase agreements are held by the custodian bank or in a segregated account in the Fund’s name until the agreements mature. Collateral for certain tri-party repurchase agreements is held at the counterparty’s custodian in a segregated account for the benefit of the Fund and the counterparty. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. However, in the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. The Fund will only enter into repurchase agreements with banks and other financial institutions, which are deemed by the investment advisor to be creditworthy pursuant to guidelines established by the Board of Trustees. In certain instances, the Fund’s securities lending agent may provide collateral in the form of repurchase agreements.

c. Foreign currency translation

All assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for that portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses on investments.

d. Forward foreign currency contracts

A forward foreign currency contract is an agreement between two parties to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund enters into forward foreign currency contracts to facilitate transactions in foreign-denominated securities and to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. Forward foreign currency contracts are recorded at the forward rate and marked-to-market daily. When the contracts are closed, realized gains and losses arising from such transactions are recorded as realized gains or losses on foreign currency related transactions. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.

e. When-issued and delayed delivery transactions

The Fund records when-issued or delayed delivery securities as of trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked-to-market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

25

NOTES TO FINANCIAL STATEMENTS continued

f. Securities lending

The Fund may lend its securities to certain qualified brokers in order to earn additional income. The Fund receives compensation in the form of fees or interest earned on the investment of any cash collateral received. The Fund also continues to receive interest and dividends on the securities loaned. The Fund receives collateral in the form of cash or securities with a market value at least equal to the market value of the securities on loan, including accrued interest. In the event of default or bankruptcy by the borrower, the Fund could experience delays and costs in recovering the loaned securities or in gaining access to the collateral. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.

g. Dollar roll transactions

The Fund may enter into dollar roll transactions with respect to mortgage-backed securities. In a dollar roll transaction, the Fund sells mortgage-backed securities to financial institutions and simultaneously agrees to accept substantially similar (same type, coupon and maturity) securities at a later date at an agreed upon price. The Fund will use the proceeds generated from the transactions to invest in short-term investments, which may enhance the Fund’s current yield and total return. The Fund accounts for dollar roll transactions as purchases and sales. The Fund could be exposed to risks if the counterparty defaults on its obligation to perform under the terms of the agreement, if the Fund receives inferior securities in comparison to what was sold to the counterparty at redelivery or if there are variances in paydown speed between the mortgage-related pools.

h. Security transactions and investment income

Security transactions are recorded on trade date. Realized gains and losses are computed using the specific cost of the security sold. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. Dividend income is recorded on the ex-dividend date.

i. Federal and other taxes

The Fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income, including any net capital gains (which have already been offset by available capital loss carryovers). Accordingly, no provision for federal taxes is required. The Fund has adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”) which prescribes a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The Fund’s financial statements have not been impacted by the adoption of FIN 48. The Fund’s income and excise tax returns and all financial records supporting those returns are subject to examination by the federal, Massachusetts and Delaware revenue authorities for all taxable years beginning after April 30, 2004.

26

NOTES TO FINANCIAL STATEMENTS continued

j. Distributions

Distributions to shareholders from net investment income are accrued daily and paid monthly. Distributions from net realized gains, if any, are recorded on the ex-dividend date. Such distributions are determined in conformity with income tax regulations, which may differ from generally accepted accounting principles.

Reclassifications have been made to the Fund’s components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax regulations. The primary permanent differences causing such reclassifications are due to net realized foreign currency gains or losses, expiration of capital loss carryovers and premium amortization. During the year ended April 30, 2008, the following amounts were reclassified:

Paid-in capital	$	(6,306,504)
Undistributed net investment income		2,078,300
Accumulated net realized losses on investments		4,228,204

k. Class allocations

Income, common expenses and realized and unrealized gains and losses are allocated to the classes based on the relative net assets of each class. Distribution fees, if any, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

3. ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Evergreen Investment Management Company, LLC (“EIMC”), an indirect, wholly-owned subsidiary of Wachovia Corporation (“Wachovia”), is the investment advisor to the Fund and is paid a fee at an annual rate of 2% of the Fund’s gross investment income plus an amount determined by applying percentage rates to the aggregate average daily net assets of the Fund and its variable annuity counterpart, Evergreen VA Diversified Income Builder Fund Fund, starting at 0.31% and declining to 0.16% as the aggregate average daily net assets increase. For the year ended April 30, 2008, the advisory fee was equivalent to 0.42% of the Fund’s average daily net assets.

Prior to June 1, 2007, Tattersall Advisory Group, Inc., an indirect, wholly-owned subsidiary of Wachovia, served as the investment sub-advisor to the Fund and was paid by EIMC for its services to the Fund.

Also, prior to June 1, 2007, First International Advisors, Inc. d/b/a Evergreen International Advisors, an indirect, wholly-owned subsidiary of Wachovia, served as the investment sub-advisor to the Fund and was paid by EIMC for its services to the Fund.

From time to time, EIMC may voluntarily or contractually waive its fee and/or reimburse expenses in order to limit operating expenses. During the year ended April 30, 2008, EIMC

27

NOTES TO FINANCIAL STATEMENTS continued

voluntarily reimbursed Distribution Plan expenses (see Note 4) relating to Class A shares in the amount of $71,989.

The Fund may invest in money market funds which are advised by EIMC. Income earned on these investments is included in income from affiliate on the Statement of Operations.

Effective January 1, 2008, EIMC replaced Evergreen Investment Services, Inc. (“EIS”), an indirect, wholly-owned subsidiary of Wachovia, as the administrator to the Fund upon the assignment of the Fund’s Administrative Services Agreement from EIS to EIMC. There were no changes to the services being provided or fees being paid by the Fund. The administrator provides the Fund with facilities, equipment and personnel and is paid an annual rate determined by applying percentage rates to the aggregate average daily net assets of the Evergreen funds (excluding money market funds) starting at 0.10% and declining to 0.05% as the aggregate average daily net assets of the Evergreen funds (excluding money market funds) increase.

Evergreen Service Company, LLC (“ESC”), an indirect, wholly-owned subsidiary of Wachovia, is the transfer and dividend disbursing agent for the Fund. ESC receives account fees that vary based on the type of account held by the shareholders in the Fund. For the year ended April 30, 2008, the transfer agent fees were equivalent to an annual rate of 0.23% of the Fund’s average daily net assets.

The Fund has placed a portion of its portfolio transactions with brokerage firms that are affiliates of Wachovia. During the year ended April 30, 2008, the Fund paid brokerage commissions of $12,351 to Wachovia Securities, LLC.

4. DISTRIBUTION PLANS

EIS serves as distributor of the Fund’s shares. The Fund has adopted Distribution Plans, as allowed by Rule 12b-1 of the 1940 Act, for each class of shares, except Class I. Under the Distribution Plans, distribution fees are paid at an annual rate of 0.25% of the average daily net assets for Class A and 1.00% of the average daily net assets for each of Class B and Class C shares. Prior to April 1, 2008, distribution fees were paid at an annual rate of 0.30% of the average daily net assets for Class A shares.

For the year ended April 30, 2008, EIS received $24,531 from the sale of Class A shares and $105,827 and $4,841 in contingent deferred sales charges from redemptions of Class B and Class C shares, respectively.

28

NOTES TO FINANCIAL STATEMENTS continued

5. INVESTMENT TRANSACTIONS

Cost of purchases and proceeds from sales of investment securities (excluding short-term securities) were as follows for the year ended April 30, 2008:

Cost of Purchases		Proceeds from Sales
U.S. Government	Non-U.S. Government	U.S. Government	Non-U.S. Government
$53,553,389	$280,613,953	$140,886,061	$235,204,659

During the year ended April 30, 2008, the Fund loaned securities to certain brokers and earned $68,904 in affiliated income relating to securities lending activity which is included in income from affiliate on the Statement of Operations. At April 30, 2008, the value of securities on loan and the total value of collateral received for securities loaned amounted to $31,906,839 and $33,013,773, respectively.

On April 30, 2008, the aggregate cost of securities for federal income tax purposes was $308,374,438. The gross unrealized appreciation and depreciation on securities based on tax cost was $7,742,795 and $12,899,852, respectively, with a net unrealized depreciation of $5,157,057.

As of April 30, 2008, the Fund had $46,173,062 in capital loss carryovers for federal income tax purposes expiring as follows:

Expiration
2009	2010	2015	2016
$14,759,243	$27,292,961	$3,090,558	$1,030,300

Certain portions of the capital loss carryovers of the Fund were assumed as a result of acquisitions. These losses are subject to certain limitations prescribed by the Internal Revenue Code.

For income tax purposes, capital losses incurred after October 31 within the Fund’s fiscal year are deemed to arise on the first business day of the following fiscal year. As of April 30, 2008, the Fund incurred and will elect to defer post-October losses of $3,010,692.

6. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the SEC, the Fund may participate in an interfund lending program with certain funds in the Evergreen fund family. This program allows the Fund to borrow from, or lend money to, other participating funds. During the year ended April 30, 2008, the Fund did not participate in the interfund lending program.

29

NOTES TO FINANCIAL STATEMENTScontinued

7. DISTRIBUTIONS TO SHAREHOLDERS

As of April 30, 2008, the components of distributable earnings on a tax basis were as follows:

Undistributed Ordinary Income	Unrealized Depreciation	Capital Loss Carryovers and Post-October Losses	Temporary Book/Tax Differences
$3,184,084	$5,133,201	$49,183,754	$(263,622)

The differences between the components of distributable earnings on a tax basis and the amounts reflected in the Statement of Assets and Liabilities are primarily due to wash sales and premium amortization. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses.

The tax character of distributions paid was as follows:

	Year Ended April 30,
	2008		2007
Ordinary Income	$	10,893,967	$	15,295,725
Return of Capital		0		921,731

8. EXPENSE REDUCTIONS

Through expense offset arrangements with ESC and the Fund’s custodian, a portion of fund expenses has been reduced.

9. DEFERRED TRUSTEES’ FEES

Each Trustee of the Fund may defer any or all compensation related to performance of his or her duties as a Trustee. The Trustees’ deferred balances are allocated to deferral accounts, which are included in the accrued expenses for the Fund. The investment performance of the deferral accounts is based on the investment performance of certain Evergreen funds. Any gains earned or losses incurred in the deferral accounts are reported in the Fund’s Trustees’ fees and expenses. At the election of the Trustees, the deferral account will be paid either in one lump sum or in quarterly installments for up to ten years.

10. FINANCING AGREEMENT

The Fund and certain other Evergreen funds share in an unsecured revolving credit commitment for temporary and emergency purposes, including the funding of redemptions, as permitted by each participating fund’s borrowing restrictions. Borrowings under this facility bear interest at 0.50% per annum above the Federal Funds rate. All of the participating funds are charged an annual commitment fee on the unused balance, which is allocated pro rata. The credit facility is for $100 million with an annual commitment fee of 0.08%.

During the year ended April 30, 2008, the Fund had average borrowings outstanding of $20,051 at an average rate of 5.84% and paid interest of $1,171.

30

NOTES TO FINANCIAL STATEMENTScontinued

11. REGULATORY MATTERS AND LEGAL PROCEEDINGS

Pursuant to an administrative order issued by the SEC on September 19, 2007, EIMC, EIS, ESC (collectively, the “Evergreen Entities”), Wachovia Securities, LLC and the SEC have entered into an agreement settling allegations of (i) improper short-term trading arrangements in effect prior to May 2003 involving former officers and employees of EIMC and certain broker-dealers, (ii) insufficient systems for monitoring exchanges and enforcing exchange limitations as stated in certain funds’ prospectuses, and (iii) inadequate e-mail retention practices. Under the settlement, the Evergreen Entities were censured and have paid approximately $32 million in disgorgement and penalties. This amount, along with a fine assessed by the SEC against Wachovia Securities, LLC will be distributed pursuant to a plan to be developed by an independent distribution consultant and approved by the SEC. The Evergreen Entities neither admitted nor denied the allegations and findings set forth in its settlement with the SEC.

In addition, the Evergreen funds and EIMC and certain of its affiliates are involved in various legal actions, including private litigation and class action lawsuits. EIMC does not expect that any of such legal actions currently pending or threatened will have a material adverse impact on the financial position or operations of any of the Evergreen funds or on EIMC’s ability to provide services to the Evergreen funds.

Although EIMC believes that none of the matters discussed above will have a material adverse impact on the Evergreen funds, there can be no assurance that these matters and any publicity surrounding or resulting from them will not result in reduced sales or increased redemptions of Evergreen fund shares, which could increase Evergreen fund transaction costs or operating expenses, or that they will not have other adverse consequences on the Evergreen funds.

12. NEW ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157”). FAS 157 establishes a single authoritative definition of fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FAS 157 applies to fair value measurements already required or permitted by existing standards. The change to current generally accepted accounting principles from the application of FAS 157 relates to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. Management of the Fund does not believe the adoption of FAS 157 will materially impact the financial statement amounts, however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements on changes in net assets for the period. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years.

In March 2008, FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“FAS 161”),

31

NOTES TO FINANCIAL STATEMENTScontinued

an amendment of FASB Statement No. 133. FAS 161 requires enhanced disclosures about (a) how and why a fund uses derivative instruments, (b) how derivative instruments and hedging activities are accounted for, and (c) how derivative instruments and related hedging activities affect a fund’s financial position, financial performance, and cash flows. Management of the Fund does not believe the adoption of FAS 161 will materially impact the financial statement amounts, but will require additional disclosures. This will include qualitative and quantitative disclosures on derivative positions existing at period end and the effect of using derivatives during the reporting period. FAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.

32

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Trustees and Shareholders

Evergreen Fixed Income Trust

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the Evergreen Diversified Income Builder Fund, a series of the Evergreen Fixed Income Trust, as of April 30, 2008 and the related statement of operations for the year then ended, statements of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 2008 by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Evergreen Diversified Income Builder Fund as of April 30, 2008, the results of its operations, changes in its net assets and financial highlights for each of the years described above, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts

June 27, 2008

33

ADDITIONAL INFORMATION (unaudited)

FEDERAL TAX DISTRIBUTIONS

For corporate shareholders, 3.67% of ordinary income dividends paid during the fiscal year ended April 30, 2008 qualified for the dividends received deduction.

With respect to dividends paid from investment company taxable income during the fiscal year ended April 30, 2008, the Fund designates 4.80% of ordinary income and any short-term capital gain distributions as Qualified Dividend Income in accordance with the Internal Revenue Code. Complete 2008 year-end tax information will be reported on your 2008 Form 1099-DIV, which shall be provided to you in early 2009.

34

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35

TRUSTEES AND OFFICERS

TRUSTEES1
Charles A. Austin III Trustee DOB: 10/23/1934 Term of office since: 1991 Other directorships: None	Investment Counselor, Anchor Capital Advisors, LLC. (investment advice); Director, The Andover Companies (insurance); Trustee, Arthritis Foundation of New England; Former Director, The Francis Ouimet Society (scholarship program); Former Director, Executive Vice President and Treasurer, State Street Research & Management Company (investment advice)
K. Dun Gifford Trustee DOB: 10/23/1938 Term of office since: 1974 Other directorships: None	Chairman and President, Oldways Preservation and Exchange Trust (education); Trustee, Chairman of the Finance Committee, Member of the Executive Committee, and Former Treasurer, Cambridge College
Dr. Leroy Keith, Jr. Trustee DOB: 2/14/1939 Term of office since: 1983 Othern directorships: Trustee, Phoenix Fund Complex (consisting of 53 portfolios as of 12/31/2007)	Managing Director, Almanac Capital Management (commodities firm); Trustee, Phoenix Fund Complex; Director, Diversapack Co. (packaging company); Former Partner, Stonington Partners, Inc. (private equity fund); Former Director, Obagi Medical Products Co.; Former Director, Lincoln Educational Services
Carol A. Kosel1 Trustee DOB: 12/25/1963 Term of office since: 2008 Other directorships: None	Former Consultant to the Evergreen Boards of Trustees; Former Vice President and Senior Vice President, Evergreen Investments, Inc.; Former Treasurer, Evergreen Funds; Former Treasurer, Vestaur Securities Fund
Gerald M. McDonnell Trustee DOB: 7/14/1939 Term of office since: 1988 Other directorships: None	Former Manager of Commercial Operations, CMC Steel (steel producer)
Patricia B. Norris Trustee DOB: 4/9/1948 Term of office since: 2006 Other directorships: None	President and Director of Buckleys of Kezar Lake, Inc. (real estate company); Former President and Director of Phillips Pond Homes Association (home community); Former Partner, PricewaterhouseCoopers, LLP (independent registered public accounting firm)
William Walt Pettit Trustee DOB: 8/26/1955 Term of office since: 1988 Other directorships: None	Partner and Vice President, Kellam & Pettit, P.A. (law firm); Director, Superior Packaging Corp. (packaging company); Member, Superior Land, LLC (real estate holding company), Member, K&P Development, LLC (real estate development); Former Director, National Kidney Foundation of North Carolina, Inc. (non-profit organization)
David M. Richardson Trustee DOB: 9/19/1941 Term of office since: 1982 Other directorships: None	President, Richardson, Runden LLC (executive recruitment advisory services); Director, J&M Cumming Paper Co. (paper merchandising); Trustee, NDI Technologies, LLP (communications); Former Consultant, AESC (The Association of Executive Search Consultants)
Dr. Russell A. Salton III Trustee DOB: 6/2/1947 Term of office since: 1984 Other directorships: None	President/CEO, AccessOne MedCard, Inc.

36

TRUSTEES AND OFFICERScontinued

Michael S. Scofield Trustee DOB: 2/20/1943 Term of office since: 1984 Other directorships: None	Retired Attorney, Law Offices of Michael S. Scofield; Former Director and Chairman, Branded Media Corporation (multi-media branding company)
Richard J. Shima Trustee DOB: 8/11/1939 Term of office since: 1993 Other directorships: None	Independent Consultant; Director, Hartford Hospital; Trustee, Greater Hartford YMCA; Former Director, Trust Company of CT; Former Director, Old State House Association; Former Trustee, Saint Joseph College (CT)
Richard K. Wagoner, CFA2 Trustee DOB: 12/12/1937 Term of office since: 1999 Other directorships: None	Member and Former President, North Carolina Securities Traders Association; Member, Financial Analysts Society
OFFICERS
Dennis H.Ferro3 President DOB: 6/20/1945 Term of office since: 2003	Principal occupations: President and Chief Executive Officer, Evergreen Investment Company, Inc. and Executive Vice President, Wachovia Bank, N.A.; former Chief Investment Officer, Evergreen Investment Company, Inc.
Kasey Phillips4 Treasurer DOB: 12/12/1970 Term of office since: 2005	Principal occupations: Senior Vice President, Evergreen Investment Management Company, LLC; Former Vice President, Evergreen Investment Services, Inc.; Former Assistant Vice President, Evergreen Investment Services, Inc.
Michael H. Koonce4 Secretary DOB: 4/20/1960 Term of office since: 2000	Principal occupations: Senior Vice President and General Counsel, Evergreen Investment Services, Inc.; Secretary, Senior Vice President and General Counsel, Evergreen Investment Management Company, LLC and Evergreen Service Company, LLC; Senior Vice President and Assistant General Counsel, Wachovia Corporation
Robert Guerin4 Chief Compliance Officer DOB: 9/20/1965 Term of office since: 2007	Principal occupations: Chief Compliance Officer, Evergreen Funds and Senior Vice President of Evergreen Investments Co., Inc.; Former Managing Director and Senior Compliance Officer, Babson Capital Management LLC; Former Principal and Director, Compliance and Risk Management, State Street Global Advisors; Former Vice President and Manager, Sales Practice Compliance, Deutsche Asset Management

¹ Each Trustee, except Mses. Kosel and Norris, serves until a successor is duly elected or qualified or until his or her death, resignation, retirement or removal from office. As new Trustees, Ms. Kosel’s and Ms. Norris’ initial terms end December 31, 2010 and June 30, 2009, respectively, at which times they may be re-elected by Trustees to serve until a successor is duly elected or qualified or until her death, resignation, retirement or removal from office by the Trustees. Each Trustee, except Ms. Kosel, oversaw 94 Evergreen funds as of December 31, 2007. Ms. Kosel became a Trustee on January 1, 2008. Correspondence for each Trustee may be sent to Evergreen Board of Trustees, P.O. Box 20083, Charlotte, NC 28202.

² Mr. Wagoner is an “interested person” of the Fund because of his ownership of shares in Wachovia Corporation, the parent to the Fund’s investment advisor.

³ The address of the Officer is 401 S. Tryon Street, 20th Floor, Charlotte, NC 28288.

⁴ The address of the Officer is 200 Berkeley Street, Boston, MA 02116.

Additional information about the Fund’s Board of Trustees and Officers can be found in the Statement of Additional Information (SAI) and is available upon request without charge by calling 800.343.2898.

37

566662 rv5 06/2008

Evergreen Core Plus Bond Fund

	table of contents
1	LETTER TO SHAREHOLDERS
4	FUND AT A GLANCE
5	PORTFOLIO MANAGER COMMENTARY
7	ABOUT YOUR FUND’S EXPENSES
8	FINANCIAL HIGHLIGHTS
12	SCHEDULE OF INVESTMENTS
32	STATEMENT OF ASSETS AND LIABILITIES
34	STATEMENT OF OPERATIONS
35	STATEMENTS OF CHANGES IN NET ASSETS
36	NOTES TO FINANCIAL STATEMENTS
49	REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
50	ADDITIONAL INFORMATION
52	TRUSTEES AND OFFICERS

This annual report must be preceded or accompanied by a prospectus of the Evergreen fund contained herein. The prospectus contains more complete information, including fees and expenses, and should be read carefully before investing or sending money.

The fund will file its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q will be available on the SEC’s Web site at http://www.sec.gov. In addition, the fund’s Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 800.SEC.0330.

A description of the fund’s proxy voting policies and procedures, as well as information regarding how the fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, is available by visiting our Web site at EvergreenInvestments.com or by visiting the SEC’s Web site at http://www.sec.gov. The fund’s proxy voting policies and procedures are also available without charge, upon request, by calling 800.343.2898.

Mutual Funds:
NOT FDIC INSURED	MAY LOSE VALUE	NOT BANK GUARANTEED

Evergreen Investments^SM is a service mark of Evergreen Investment Management Company, LLC. Copyright 2008, Evergreen Investment Management Company, LLC.

Evergreen Investment Management Company, LLC is a subsidiary of Wachovia Corporation and is an affiliate of Wachovia Corporation’s other Broker Dealer subsidiaries.

Evergreen mutual funds are distributed by Evergreen Investment Services, Inc. 200 Berkeley Street, Boston, MA 02116

LETTER TO SHAREHOLDERS

June 2008

Dennis H. Ferro

President and Chief Executive Officer

Dear Shareholder:

We are pleased to provide the Annual Report for Evergreen Core Plus Bond Fund for the twelve-month period ended April 30, 2008 (the “twelve-month period”).

The fiscal year witnessed a dramatic change in fixed income markets as problems that first surfaced in housing and the subprime mortgages raised questions about the strength of the domestic economy and the risks of credit-sensitive investments. Corporate bonds and asset-backed securities performed well early in the period, with gains in economic output, corporate profits and employment encouraging optimism. The backdrop for investing began to change, however, by the summer of 2007 amid widening worries about problems in the financials sector. Major financial institutions began to report substantial losses from their exposures to subprime mortgages and banks started to tighten their credit standards and to restrict their lending. With fears of a dramatic downturn hovering over the market, fixed income investors sought out the highest-quality securities and attempted to avoid credit risk. As a consequence, the prices of corporate bonds and many asset-backed securities fell, while Treasuries rallied in a general flight to quality over much of the period. These general trends later reversed themselves in the final month of the twelve-month period, with high yield corporate bonds and other credit-sensitive securities rallying in April 2008 following a series of actions by the U.S. Federal Reserve Board (the “Fed”) to stabilize the markets. Equities, meanwhile, tended to move in the same general direction as corporate bonds over the fiscal year. Stock prices rose very early in the period before falling in late 2007 and early 2008

1

LETTER TO SHAREHOLDERS continued

and then rallying again in April. For the full twelve-month period, stock valuations fell across all market capitalizations, investment styles and regions. At the same time, the prices of gold, oil and other commodities surged while the U.S. dollar weakened further.

The U.S. economy grew briskly early in 2007, but then slowed significantly in late 2007 and early 2008. Economic growth decelerated as lending for ordinary consumer and commercial activity dried up, accentuating the weakening effects of declining home prices. Corporate profits, employment and other key economic indicators showed clear evidence of deterioration. Gross Domestic Product growth decelerated to a paltry 0.6% rate during the final quarter of 2007 and a marginally better 0.9% pace for the first quarter of 2008. Much of the strength early in 2008 came from exports and government spending, rather than from any noticeable improvements in consumer spending, business investment or housing. To reinvigorate the economy and stimulate lending activity, the Fed became increasingly aggressive, taking a series of steps to pour liquidity into the financial system. Starting in September 2007 and continuing through April 2008, the Fed cut the key fed funds rate seven different times, lowering the influential short-term rate from 5.25% to 2%. In March 2008, the central bank also opened its lending facilities to securities firms as well as commercial banks and intervened to help JPMorgan Chase & Co. purchase the collapsing investment bank Bear Stearns Cos. Meanwhile, Congress and the Bush administration rushed through a $168 billion fiscal stimulus bill, which included tax rebate checks, in an effort to boost growth in the second half of 2008.

During the twelve-month period, managers of Evergreen’s intermediate- and long-term bond funds paid careful attention to risk management in a changing market environment. The teams supervising the higher-credit quality funds—including Evergreen U.S. Government Fund, Evergreen Core

2

LETTER TO SHAREHOLDERS continued

Bond Fund, Evergreen Core Plus Bond Fund and Evergreen Institutional Mortgage Portfolio—monitored Fed policy and interest-rate movements as well as general macroeconomic trends in managing their portfolios. Meanwhile, the managers of Evergreen High Income Fund and Evergreen Select High Yield Bond Fund tended to position their credit-sensitive portfolios relatively conservatively during a period of growing risk aversion. After repositioning their portfolio early in the fiscal year, the managers of Evergreen Diversified Income Builder Fund maintained an emphasis on better-quality, high yield corporate bonds and also increased their exposure to dividend-paying stocks.

The experiences in the capital markets during the twelve-month period have underscored the value of a well-diversified, long-term investment strategy to help soften the effects of volatility in any one market or asset class. As always, we encourage investors to maintain diversified investment portfolios in pursuit of their long-term investment goals.

Please visit us at EvergreenInvestments.com for more information about our funds and other investment products available to you. Thank you for your continued support of Evergreen Investments.

Sincerely,

Dennis H. Ferro

President and Chief Executive Officer

Evergreen Investment Company, Inc.

Special Notice to Shareholders:

Please visit our Web site at EvergreenInvestments.com for statements from President and Chief Executive Officer, Dennis Ferro, regarding the firm’s recent settlement with the Securities and Exchange Commission (SEC) and prior settlement with the Financial Industry Regulatory Authority (FINRA).

3

FUND AT A GLANCE

as of April 30, 2008

MANAGEMENT TEAM

Investment Advisor:

• Evergreen Investment Management Company, LLC

Sub-Advisors:

• Evergreen International Advisors

• Tattersall Advisory Group, Inc.

Portfolio Managers:

• Robert A. Calhoun, CFA

• Michael Lee

• Anthony Norris

• Alex Perrin

• Peter Wilson

• Parham M. Behrooz, CFA

• Lisa Brown-Premo

• Andrew Cestone

• Todd C. Kuimjian, CFA

• Robert D. Rowe

CURRENT INVESTMENT STYLE

Source: Morningstar, Inc.

Morningstar’s style box is based on a portfolio date as of 3/31/2008.

The Fixed Income style box placement is based on a fund’s average effective maturity or duration and the average credit rating of the bond portfolio.

PERFORMANCE AND RETURNS

Portfolio inception date: 11/30/1972

	Class A	Class B	Class C	Class I
Class inception date	5/20/2005	5/20/2005	5/20/2005	11/30/1972
Nasdaq symbol	EKDLX	EKDMX	EKDCX	EKDYX
Average annual return*
1-year with sales charge	-5.17%	-5.91%	-2.13%	N/A
1-year w/o sales charge	-0.44%	-1.18%	-1.18%	-0.19%
5-year	3.18%	3.42%	3.74%	4.35%
10-year	4.74%	5.02%	5.02%	5.33%
Maximum sales charge	4.75%	5.00%	1.00%	N/A
	Front-end	CDSC	CDSC

* Adjusted for maximum applicable sales charge, unless noted.

Past performance is no guarantee of future results. The performance quoted represents past performance and current performance may be lower or higher. The investment return and principal value of an investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. To obtain performance information current to the most recent month-end for Classes A, B, C or I, please go to EvergreenInvestments.com/fundperformance. The performance of each class may vary based on differences in loads, fees and expenses paid by the shareholders investing in each class. Performance includes the reinvestment of income dividends and capital gain distributions. Performance shown does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.

Historical performance shown for Class I prior to 5/23/2005 is based on the performance of the fund’s predecessor closed-end fund, Vestaur Securities Fund. Historical performance shown for Classes A, B and C prior to their inception is based on the performance of Class I. The historical returns for Classes A, B and C have not been adjusted to reflect the effect of each class’ 12b-1 fee. These fees are 0.25% for Class A and 1.00% for Classes B and C. Class I does not, and Vestaur Securities Fund did not, pay a 12b-1 fee. If these fees had been reflected, returns for Classes A, B and C would have been lower.

The advisor is waiving a portion of its advisory fee and reimbursing a portion of the 12b-1 fee for Class A. Had the fees not been waived or reimbursed, returns would have been lower.

Comparison of a $10,000 investment in the Evergreen Core Plus Bond Fund Class A shares versus a similar investment in the Evergreen Diversified Bond Blended Index (EDBBI), the Lehman Brothers Aggregate Bond Index (LBABI), the Lehman Brothers Corporate Bond Index (LBCBI), the Merrill Lynch High Yield, Cash Pay, BB-B Index^† (MLHYCPBB-B) and the Consumer Price Index (CPI).

The EDBBI, the LBABI, the LBCBIand the MLHYCPBB-Bare unmanaged market indexes and do not include transaction costs associated with buying and selling securities, any mutual fund fees or expenses or any taxes. The CPIis a commonly used measure of inflation and do not represent an investment return. It is not possible to invest directly in an index.

^ The fund has previously compared its performance to the EDBBI, LBCBI and the MLHYCPBB-B. Given recent changes to the fund’s principal investment strategies, the fund believes that the LBABI is a more appropriate benchmark than the EDBBI, LBCBI and the MLHYCPBB-B. In future periods, the fund will compare its performance to the LBABI.

4

PORTFOLIO MANAGER COMMENTARY

The fund’s Class A shares returned -0.44% for the twelve-month period ended April 30, 2008, excluding any applicable sales charges. During the same period, the EDBBI returned 2.59%, the LBABI returned 6.87%, the LBCBI returned 3.06% and the MLHYCPBB-B returned 0.58%.

The fund’s objective is to seek to maximize total return through a combination of current income and capital growth.

The fund’s underperformance relative to its benchmarks was principally due to its exposure to commercial mortgage-backed securities (CMBS) and Residential Mortgage-Backed Securities (RMBS) during a period when all securitized assets significantly lagged other sectors in the fixed income markets. The fiscal year began in May 2007 amid evidence that the domestic economy was continuing to expand after weathering a housing slump earlier in the year. Corporate bonds continued to perform well as investors sought out higher yields. The Federal Reserve Board (the “Fed”) indicated it was more concerned about inflationary pressures than about any potential drags on the economy, and it held the key fed funds rate unchanged at the 5.25% level where it had been for more than a year. That environment began to change in June 2007 amid mounting evidence that weakness in housing and problems in subprime mortgages were becoming more of a threat to the economy. Many major financial institutions, both domestic and international, began reporting significant losses from their subprime mortgage investments. Problems originating in the subprime market led to a massive deleveraging of the financial system and a seizing up of the fixed income markets. Investors typically sought out higher-quality bonds, most notably Treasuries, as evidence accumulated of a growing liquidity crunch affecting lending activities. In this general flight to quality, Treasuries outperformed all other sectors of the fixed income markets for the remainder of the fiscal year as the financial markets remained mired in a liquidity crunch. To relieve this credit crunch and inject liquidity into the financial markets, the Fed, in a series of actions

Class I shares are only offered, subject to the minimum initial purchase requirements, in the following manner: (1) to investment advisory clients of EIMC (or its advisory affiliates), (2) to employer- or state-sponsored benefit plans, including but not limited to, retirement plans, defined benefit plans, deferred compensation plans, or savings plans, (3) to fee-based mutual fund wrap accounts, (4) through arrangements entered into on behalf of the Evergreen funds with certain financial services firms, (5) to certain institutional investors, and (6) to persons who owned Class Y shares in registered name in an Evergreen fund on or before December 31, 1994 or who owned shares of any SouthTrust fund in registered name as of March 18, 2005 or who owned shares of Vestaur Securities Fund as of May 20, 2005.

Class I shares are only available to institutional shareholders with a minimum of $1 million investment, which may be waived in certain situations.

The fund’s investment objective may be changed without a vote of the fund’s shareholders.

Foreign investments may contain more risk due to the inherent risks associated with changing political climates, foreign market instability and foreign currency fluctuations.

Asset-backed and mortgage-backed securities are generally subject to higher prepayment risks than other types of debt securities, which can limit the potential for gain in a declining interest rate environment and increase the potential for loss in a rising interest rate environment. Mortgage-backed securities may also be structured so that they are particularly sensitive to interest rates. A high rate of defaults on the mortgages held by a mortgage pool may limit the pool’s ability to make payments to the fund if the fund holds securities that are subordinate to other interest in the same mortgage pool; the risk of such defaults is generally higher in mortgage pools that include subprime mortgages.

Derivatives involve additional risks including interest rate risk, credit risk, the risk of improper valuation and the risk of non-correlation to the relevant instruments they are designed to hedge or to closely track.

High yield, lower-rated bonds may contain more risk due to the increased possibility of default.

The return of principal is not guaranteed due to fluctuation in the fund’s NAV caused by changes in the price of individual bonds held by the fund and the buying and selling of bonds by the fund. Bond funds have the same inflation, interest rate and credit risks as individual bonds. Generally, the value of bond funds rises when prevailing interest rates fall, and falls when interest rates rise.

U.S. government guarantees apply only to certain securities held in the fund’s portfolio and not to the fund’s shares.

The Evergreen Diversified Bond Blended Index is composed of the following indexes: LBCBI (80%) AND MLHYCPBB-B (20%).

†Copyright 2008. Merrill Lynch, Pierce, Fenner & Smith Incorporated. All rights reserved.

All data is as of April 30, 2008, and subject to change.

5

PORTFOLIO MANAGER COMMENTARYcontinued

starting in September 2007 and continuing through the end of the fiscal year in April 2008 provided funds to financial institutions. The Fed also lowered the fed funds rate from 5.25% to 2.00% and announced a series of other policy moves to ease lending activity.

For most of the fiscal year, we kept the fund’s duration—or exposure to change in interest rates—consistent with that of the LBABI, and this neutral duration position had minimal impact on results. The fund’s investments in Treasuries, government agency securities and international bonds all contributed positively to performance. The fund had only minimal exposure to high yield corporate bonds early in the fiscal year, but we increased the positions late in 2007 as yield spreads widened and high yield bonds appeared more attractive. This increased exposure, however, hurt relative performance during the first three months of 2008 as yield spreads widened further and Treasuries continued to outperform.

The fund typically invests in a diversified mix of bonds from all sectors of the market including corporate bonds and high-quality mortgage-backed securities (MBS), CMBS, and asset-backed securities (ABS). In most environments, this strategy has provided additional yield to the fund and added to the overall performance relative to the market. In a liquidity crisis and flight to quality, however, these high-quality assets are often the ones that are most affected. The fund held a minimal allocation to U.S Treasuries over the course of the fiscal year particularly as yield spreads widened last fall. For most major sectors of the market, yield spreads reached record levels in November 2007. As spreads widened, the fund added to its exposure in the corporate sector, where it had been underweight for most of the fiscal year. In the securitized sector (MBS, CMBS and ABS) the fund maintained its overweight position and began to add more exposure to AAA non-agency mortgages as the spread between agency and non-agency bonds widened to record levels. As we moved into 2008, problems in the subprime market continued to weigh on investors and confidence in the financial system remained low. Financial institutions typically continued to struggle as they attempted to value the subprime mortgages held on their balance sheets and shore up capital positions. Spread sectors, which were already historically cheap, underperformed even more in the first three months of 2008 and the fund’s performance was negatively impacted. While the fund did not own any subprime mortgages, its performance nevertheless was hurt by the fallout from the subprime crisis. Investments in CMBS, investment-grade corporate bonds, and ABS tended to detract from results during a period in which the markets did not reward any credit risk. The Fed’s efforts to provide liquidity and shore up the financial system began to take hold in mid-March 2008 and the market tone began to improve. In the last months of the fiscal year, spreads in CMBS and corporates in particular began to narrow significantly and the performance of the fund began to improve.

6

ABOUT YOUR FUND’S EXPENSES

The Example below is intended to describe the fees and expenses borne by shareholders and the impact of those costs on your investment.

Example

As a shareholder of the fund, you incur two types of costs: (1) transaction costs, including sales charges (loads), redemption fees and exchange fees; and (2) ongoing costs, including management fees, distribution (12b-1) fees and other fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from November 1, 2007 to April 30, 2008.

The example illustrates your fund’s costs in two ways:

•Actual expenses

The section in the table under the heading “Actual” provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class, in the column entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

•Hypothetical example for comparison purposes

The section in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees. Therefore, the section in the table under the heading “Hypothetical (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

	Beginning	Ending
	Account	Account		Expenses
	Value	Value		Paid During
	11/1/2007	4/30/2008		Period*
Actual
Class A	$ 1,000.00	$	974.18	$ 4.52
Class B	$ 1,000.00	$	970.55	$ 8.18
Class C	$ 1,000.00	$	970.55	$ 8.18
Class I	$ 1,000.00	$	975.39	$ 3.29
Hypothetical (5% return before expenses)
Class A	$ 1,000.00	$	1,020.29	$ 4.62
Class B	$ 1,000.00	$	1,016.56	$ 8.37
Class C	$ 1,000.00	$	1,016.56	$ 8.37
Class I	$ 1,000.00	$	1,021.53	$ 3.37

* For each class of the fund, expenses are equal to the annualized expense ratio of each class (0.92% for Class A, 1.67% for Class B, 1.67% for Class C and 0.67% for Class I), multiplied by the average account value over the period, multiplied by 182 / 366 days.

7

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	Year Ended April 30,						Year Ended November 30, 20052, 3
CLASS A	2008		2007		20061
Net asset value, beginning of period	$	14.45	$	14.25	$	14.53	$	14.83
Income from investment operations
Net investment income (loss)		0.74		0.81		0.33		0.414
Net realized and unrealized gains or losses on investments		(0.79)		0.23		(0.27)		(0.28)
Total from investment operations		(0.05)		1.04		0.06		0.13
Distributions to shareholders from
Net investment income		(0.51)		(0.83)		(0.34)		(0.43)
Tax basis return of capital		(0.21)		(0.01)		0		0
Total distributions to shareholders		(0.72)		(0.84)		(0.34)		(0.43)
Net asset value, end of period	$	13.68	$	14.45	$	14.25	$	14.53
Total return5		(0.44)%		7.49%		0.43%		0.89%
Ratios and supplemental data
Net assets, end of period (thousands)	$	171,130	$	199,442	$	213,268	$	226,450
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		0.92%		0.94%		0.96%6		0.97%6
Expenses excluding waivers/reimbursements and expense reductions		1.14%		1.16%		1.19%6		1.15%6
Net investment income (loss)		5.23%		5.65%		5.43%6		5.28%6
Portfolio turnover rate		374%7		70%		30%		55%

¹ For the five months ended April 30, 2006. The Fund changed its fiscal year end from November 30 to April 30, effective April 30, 2006.

² For the period from May 20, 2005 (commencement of class operations), to November 30, 2005.

³ Effective at the close of business on May 20, 2005, the Fund acquired the net assets of Vestaur Securities Fund. Vestaur Securities Fund became the accounting and performance survivor in this transaction. Class A shares of Vestaur Securities Fund did not exist prior to the transaction. As a result, accounting and performance information for Class A shares commenced on May 20, 2005.

⁴ Net investment income (loss) per share is based on average shares outstanding during the period.

⁵ Excluding applicable sales charges

⁶ Annualized

⁷ Portfolio turnover rate includes mortgage dollar roll activity.

See Notes to Financial Statements

8

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	Year Ended April 30,						Year Ended November 30, 20052, 3
CLASS B	2008		2007		20061
Net asset value, beginning of period	$	14.45	$	14.25	$	14.53	$	14.83
Income from investment operations
Net investment income (loss)		0.64		0.70		0.28		0.364
Net realized and unrealized gains or losses on investments		(0.80)		0.23		(0.26)		(0.28)
Total from investment operations		(0.16)		0.93		0.02		0.08
Distributions to shareholders from
Net investment income		(0.41)		(0.72)		(0.30)		(0.38)
Tax basis return of capital		(0.21)		(0.01)		0		0
Total distributions to shareholders		(0.62)		(0.73)		(0.30)		(0.38)
Net asset value, end of period	$	13.67	$	14.45	$	14.25	$	14.53
Total return5		(1.18)%		6.71%		0.14%		0.52%
Ratios and supplemental data
Net assets, end of period (thousands)	$	13,894	$	16,102	$	18,277	$	20,439
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		1.67%		1.67%		1.67%6		1.67%6
Expenses excluding waivers/reimbursements and expense reductions		1.84%		1.85%		1.89%6		1.85%6
Net investment income (loss)		4.49%		4.91%		4.72%6		4.58%6
Portfolio turnover rate		374%7		70%		30%		55%

¹ For the five months ended April 30, 2006. The Fund changed its fiscal year end from November 30 to April 30, effective April 30, 2006.

² For the period from May 20, 2005 (commencement of class operations), to November 30, 2005.

³ Effective at the close of business on May 20, 2005, the Fund acquired the net assets of Vestaur Securities Fund. Vestaur Securities Fund became the accounting and performance survivor in this transaction. Class B shares of Vestaur Securities Fund did not exist prior to the transaction. As a result, accounting and performance information for Class B shares commenced on May 20, 2005.

⁴ Net investment income (loss) per share is based on average shares outstanding during the period.

⁵ Excluding applicable sales charges

⁶ Annualized

⁷ Portfolio turnover rate includes mortgage dollar roll activity.

See Notes to Financial Statements

9

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	Year Ended April 30,
CLASS C		2008		2007		20061		Year Ended November 30, 20052, 3
Net asset value, beginning of period	$	14.45	$	14.25	$	14.53	$	14.83
Income from investment operations
Net investment income (loss)		0.63		0.70		0.28		0.364
Net realized and unrealized gains or losses on investments		(0.78)		0.23		(0.26)		(0.28)
Total from investment operations		(0.15)		0.93		0.02		0.08
Distributions to shareholders from
Net investment income		(0.41)		(0.72)		(0.30)		(0.38)
Tax basis return of capital		(0.21)		(0.01)		0		0
Total distributions to shareholders		(0.62)		(0.73)		(0.30)		(0.38)
Net asset value, end of period	$	13.68	$	14.45	$	14.25	$	14.53
Total return5		(1.18)%		6.71%		0.14%		0.52%
Ratios and supplemental data
Net assets, end of period (thousands)	$	22,140	$	24,157	$	25,972	$	27,764
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		1.67%		1.67%		1.67%6		1.67%6
Expenses excluding waivers/reimbursements and expense reductions		1.84%		1.85%		1.89%6		1.85%6
Net investment income (loss)		4.48%		4.91%		4.72%6		4.58%6
Portfolio turnover rate		374%7		70%		30%		55%

1 For the five months ended April 30, 2006. The Fund changed its fiscal year end from November 30 to April 30, effective April 30, 2006.

2 For the period from May 20, 2005 (commencement of class operations), to November 30, 2005.

3 Effective at the close of business on May 20, 2005, the Fund acquired the net assets of Vestaur Securities Fund. Vestaur Securities Fund became the accounting and performance survivor in this transaction. Class C shares of Vestaur Securities Fund did not exist prior to the transaction. As a result, accounting and performance information for Class C shares commenced on May 20, 2005.

4 Net investment income (loss) per share is based on average shares outstanding during the period.

5 Excluding applicable sales charges

6 Annualized

7 Portfolio turnover rate includes mortgage dollar roll activity.

See Notes to Financial Statements

10

FINANCIAL HIGHLIGHTS

(For a share outstanding throughout each period)

	Year Ended April 30,						Year Ended November 30,
CLASS I	2008		2007		20061		20052		20042		20032
Net asset value, beginning of period	$	14.45	$	14.25	$	14.53	$	15.14	$	15.14	$	14.27
Income from investment operations
Net investment income (loss)		0.76		0.83		0.34		0.793		0.93		0.95
Net realized and unrealized gains or losses on investments		(0.77)		0.25		(0.26)		(0.41)		0.02		0.91
Total from investment operations		(0.01)		1.08		0.08		0.38		0.95		1.86
Distributions to shareholders from
Net investment income		(0.55)		(0.87)		(0.36)		(0.86)		(0.95)		(0.99)
Tax basis return of capital		(0.21)		(0.01)		0		(0.13)4		0		0
Total distributions to shareholders		(0.76)		(0.88)		(0.36)		(0.99)		(0.95)		(0.99)
Net asset value, end of period	$	13.68	$	14.45	$	14.25	$	14.53	$	15.14	$	15.14
Total return		(0.19)%		7.78%		0.55%		2.82%		6.47%		13.43%
Ratios and supplemental data
Net assets, end of period (thousands)	$	48,634	$	56,478	$	61,711	$	65,893	$	97,235	$	97,277
Ratios to average net assets
Expenses including waivers/reimbursements but excluding expense reductions		0.67%		0.67%		0.67%5		0.79%		0.94%		0.91%
Expenses excluding waivers/reimbursements and expense reductions		0.84%		0.85%		0.89%5		0.88%		0.97%		0.94%
Net investment income (loss)		5.48%		5.91%		5.72%5		5.50%		6.10%		6.43%
Portfolio turnover rate		374%6		70%		30%		55%		23%		45%

1 For the five months ended April 30, 2006. The Fund changed its fiscal year end from November 30 to April 30, effective April 30, 2006.

2 Effective at the close of business on May 20, 2005, the Fund acquired the net assets of Vestaur Securities Fund. Vestaur Securities Fund became the accounting and performance survivor in this transaction. The financial highlights for the periods prior to May 23, 2005 are those of Vestaur Securities Fund. The per share information has been restated to give effect to this transaction. Total return performance reflects the total return of Vestaur Securities Fund based on its net asset value.

3 Net investment income (loss) per share is based on average shares outstanding during the period.

4 Return of capital relates to former Vestaur Securities Fund shareholders and is based on average shares outstanding from December 1, 2004 through May 20, 2005.

5 Annualized

6 Portfolio turnover rate includes mortgage dollar roll activity.

See Notes to Financial Statements

11

SCHEDULE OF INVESTMENTS

April 30, 2008
		Principal Amount		Value
AGENCY COMMERCIAL MORTGAGE-BACKED SECURITIES 1.4%
FIXED-RATE 1.4%
FHLMC, Ser. M009, Class A, 5.40%, 10/15/2021 (cost $ 3,514,181)	$	3,510,671	$	3,711,937
AGENCY MORTGAGE-BACKED COLLATERALIZED MORTGAGE OBLIGATIONS 6.3%
FIXED-RATE 6.3%
FHLMC:
Ser. 2594, Class QE, 5.00%, 08/15/2031		2,395,000		2,378,775
Ser. 2647, Class PC, 5.00%, 11/15/2031		2,500,000		2,487,192
Ser. 2695, Class BG, 4.50%, 04/15/2032		950,000		923,672
Ser. 2991, Class QD, 5.00%, 08/15/2034		2,550,000		2,546,641
Ser. 3036, Class NC, 5.00%, 03/15/2031		1,740,000		1,736,443
Ser. 3068, Class AK, 4.50%, 03/15/2027		335,000		328,368
FNMA:
Ser. 2002-T12, Class A3, 7.50%, 05/25/2042		17,531		18,759
Ser. 2002-T19, Class A3, 7.50%, 07/25/2042		287,397		310,973
Ser. 2003-129, Class PW, 4.50%, 07/25/2033		2,800,000		2,799,748
Ser. 2003-W4, Class 4A, 7.50%, 10/25/2042		182,923		195,008
Ser. 2007-65, Class GV, 5.00%, 07/25/2018		2,518,407		2,520,176
Total Agency Mortgage-Backed Collateralized Mortgage Obligations (cost $15,645,539)				16,245,755
AGENCY MORTGAGE-BACKED PASS THROUGH SECURITIES 16.7%
FIXED-RATE 16.7%
FHLMC:
5.00%, 09/15/2028		210,000		212,474
6.50%, 09/25/2043		107,025		110,241
7.50%, 09/01/2013-08/25/2042		163,838		172,420
9.00%, 12/01/2016		129,813		140,441
9.50%, 12/01/2022		18,129		20,042
FHLMC 30 year, 5.00%, TBA #		14,450,000		14,199,379
FNMA:
5.70%, 11/01/2011 ##		6,444,506		6,677,862
6.10%, 03/01/2012		2,214,558		2,332,349
6.27%, 02/01/2011		3,333,271		3,467,365
6.45%, 09/01/2016		1,745,740		1,853,069
6.80%, 08/01/2009		2,978,099		3,040,039
7.87%, 07/01/2026 ##		3,006,052		3,506,322
9.00%, 02/01/2025-09/01/2030		167,357		184,179
10.00%, 09/01/2010-04/01/2021		85,759		95,850
FNMA 15 year, 5.00%, TBA #		2,990,000		2,999,810
GNMA:
8.00%, 03/15/2022-08/15/2024		58,636		64,137
8.25%, 05/15/2020		57,026		62,351
8.50%, 09/15/2024-01/15/2027		59,542		65,764
9.00%, 12/15/2019		58,314		63,907
9.50%, 09/15/2019		13,937		15,490
10.00%, 01/15/2019-03/15/2020		29,307		33,366

See Notes to Financial Statements

12

SCHEDULE OF INVESTMENTS continued

April 30, 2008
		Principal Amount		Value
AGENCY MORTGAGE-BACKED PASS THROUGH SECURITIES continued
FIXED-RATE continued
GNMA 30 Year:
5.50%, TBA #	$	2,105,000	$	2,132,300
6.00%, TBA #		1,250,000		1,284,180
Total Agency Mortgage-Backed Pass Through Securities (cost $42,123,318)				42,733,337
AGENCY REPERFORMING MORTGAGE-BACKED COLLATERALIZED
MORTGAGE OBLIGATIONS 0.2%
FNMA:
Ser. 2003-W02, Class 2A9, 5.90%, 07/25/2042		161,592		165,296
Ser. 2003-W12, Class 1A8, 4.55%, 06/25/2043		350,000		346,838
Total Agency Reperforming Mortgage-Backed Collateralized Mortgage Obligations (cost $491,386)				512,134
ASSET-BACKED SECURITIES 3.7%
Acacia CDO, Ltd., Ser. 10A, Class C, FRN, 4.30%, 09/07/2046 144A		1,000,000		868,810
American Home Mtge. Backed Investment Trust, Ser. 2005-2, Class 5A4C, 5.41%, 09/25/2035		2,000,000		1,469,860
Deutsche Alt-A Securities, Inc., Mtge. Loan Trust, Ser. 2006-AB2, Class A3, 6.27%, 06/25/2036		2,000,000		1,348,279
MASTR Asset Backed Securities Trust, Ser. 2005-AB1, Class A4, 5.65%, 10/25/2032		2,500,000		1,842,970
Nautilus RMBS CDO, Ltd., Ser. 2005-1A, Class A3, FRN, 4.23%, 07/07/2040 144A		2,705,709		2,645,777
Nomura Asset Acceptance Corp., Ser. 2006-AP1, Class A2, 5.52%, 01/25/2036		2,078,000		1,406,702
Total Asset-Backed Securities (cost $11,896,465)				9,582,398
COMMERCIAL MORTGAGE-BACKED SECURITIES 15.0%
FIXED-RATE 11.7%
Banc of America Comml. Mtge. Securities, Inc., Ser. 2007-1, Class A4, 5.45%, 01/15/2049		245,000		238,484
Banc of America Comml. Mtge., Inc., Ser. 2000-2, Class F, 7.92%, 09/15/2032		3,000,000		3,100,650
Banc of America Mtge. Securities, Inc., Ser. 2003-7, Class B6, 4.75%, 09/25/2018		228,797		142,609
Citigroup Comml. Mtge. Trust, Ser. 2007-C6, Class C, 5.89%, 07/10/2017		855,000		615,811
Commercial Mtge. Pass-Through Cert., Ser. 2007-C9, Class B, 6.01%, 12/10/2049		910,000		682,786
Crown Castle Towers, LLC, Ser. 2006-1A, Class C, 5.47%, 11/15/2036 144A		1,920,000		1,598,899
GE Capital Comml. Mtge. Corp., Ser. 2007-C1, Class C, 5.89%, 12/10/2049		2,500,000		1,812,979
Greenwich Capital Comml. Funding Corp., Ser. 2004-GG1, Class A7, 5.32%, 06/10/2036		4,000,000		4,068,308
GS Mtge. Securities Corp.:
Ser. 2007-GG10, Class AM, 5.99%, 08/10/2045		2,700,000		2,517,956
Ser. 2007-GG10, Class A2, 5.78%, 08/10/2045		3,665,000		3,679,332
JPMorgan Chase & Co. Comml. Mtge. Securities Corp.:
Ser. 2004-CB9, Class A1, 3.48%, 06/12/2041		3,327,194		3,298,620
Ser. 2006-LDP8, Class B, 5.52%, 05/15/2045		1,000,000		750,369
Ser. 2006-LDP9, Class A3, 5.34%, 05/15/2047		2,360,000		2,292,458
Ser. 2007-LD12, Class A2, 5.83%, 02/15/2051		3,045,000		3,058,757

See Notes to Financial Statements

13

SCHEDULE OF INVESTMENTScontinued

April 30, 2008
		Principal Amount		Value
COMMERCIAL MORTGAGE-BACKED SECURITIES continued
FIXED-RATE continued
Morgan Stanley Capital I, Inc., Ser. 2001-TOP5, Class G, 6.00%, 10/15/2035 144A	$	1,042,000	$	880,013
Prima Capital Securitization, Ltd., Ser. 2006, Class D, 5.88%, 12/28/2048		1,085,000		1,120,805
				29,858,836
FLOATING-RATE 3.3%
Capmark, Ltd., Ser. 2006-7A, Class B, 3.09%, 08/20/2036 144A		500,000		368,000
Citigroup Comml. Mtge. Trust, Ser. 2006-C4, Class AJ, 5.92%, 03/15/2049		450,000		395,682
Credit Suisse Mtge. Capital Cert., Ser. 2006-C1, Class AM, 5.74%, 02/15/2039		2,835,000		2,653,832
JPMorgan Chase & Co. Comml. Mtge. Securities Corp., Ser. 2007-CB19, Class A4, 5.94%, 02/12/2049		2,105,000		2,094,400
MASTR Reperforming Loan Trust, Ser. 2006-2, Class B3, 5.90%, 05/25/2036 144A		426,472		153,905
Morgan Stanley Capital I, Inc., Ser. 2007-IQ15, Class A4, 6.08%, 06/11/2049		2,750,000		2,769,301
				8,435,120
Total Commercial Mortgage-Backed Securities (cost $40,547,894)				38,293,956
CORPORATE BONDS 25.0%
CONSUMER DISCRETIONARY 2.8%
Auto Components 0.1%
Cooper Tire & Rubber Co., 7.625%, 03/15/2027		110,000		93,500
Goodyear Tire & Rubber Co., 9.00%, 07/01/2015		60,000		65,550
				159,050
Diversified Consumer Services 0.0%
Service Corporation International, 6.75%, 04/01/2015		5,000		5,031
Hotels, Restaurants & Leisure 0.2%
Caesars Entertainment, Inc.:
7.875%, 03/15/2010 ρ		70,000		66,150
8.125%, 05/15/2011 ρ		20,000		17,025
Inn of the Mountain Gods Resort & Casino, 12.00%, 11/15/2010		90,000		78,300
Isle of Capri Casinos, Inc., 7.00%, 03/01/2014 ρ		285,000		220,875
Pinnacle Entertainment, Inc., 8.75%, 10/01/2013		5,000		5,100
Pokagon Gaming Authority, 10.375%, 06/15/2014 144A ρ		119,000		127,627
Seneca Gaming Corp., 7.25%, 05/01/2012		20,000		19,425
Shingle Springs Tribal Gaming Authority, 9.375%, 06/15/2015 144A		120,000		106,800
Universal City Development Partners, Ltd., 11.75%, 04/01/2010		50,000		51,875
				693,177
Household Durables 0.2%
Centex Corp.:
4.875%, 08/15/2008		50,000		49,504
5.80%, 09/15/2009		15,000		14,405
D.R. Horton, Inc.:
4.875%, 01/15/2010		25,000		23,875
5.00%, 01/15/2009		75,000		73,125
8.00%, 02/01/2009		30,000		30,000

See Notes to Financial Statements

14

SCHEDULE OF INVESTMENTS continued

April 30, 2008

		Principal Amount		Value
CORPORATE BONDS continued
CONSUMER DISCRETIONARY continued
Household Durables continued
Hovnanian Enterprises, Inc.:
6.00%, 01/15/2010 ρ	$	20,000	$	15,700
6.50%, 01/15/2014		15,000		10,725
KB Home:
7.75%, 02/01/2010 ρ		40,000		39,500
8.625%, 12/15/2008		15,000		15,225
Libbey, Inc., FRN, 11.91%, 06/01/2011		55,000		55,412
Pulte Homes, Inc.:
4.875%, 07/15/2009		115,000		111,550
7.875%, 08/01/2011		5,000		4,900
Standard Pacific Corp., 5.125%, 04/01/2009		30,000		26,850
				470,771
Media 0.8%
Cablevision Systems Corp., Ser. B, 8.00%, 04/15/2012		80,000		80,000
Charter Communications, Inc., 10.875%, 09/15/2014 144A ρ		185,000		196,563
CSC Holdings, Inc., 7.625%, 04/01/2011		150,000		151,875
Idearc, Inc., 8.00%, 11/15/2016		250,000		163,750
Lamar Media Corp.:
6.625%, 08/15/2015 ρ		180,000		170,550
7.25%, 01/01/2013		10,000		9,950
Mediacom Broadband, LLC, 8.50%, 10/15/2015		25,000		23,125
Mediacom, LLC, 7.875%, 02/15/2011		20,000		19,000
R.H. Donnelley Corp., Ser. A-4, 8.875%, 10/15/2017 144A		130,000		84,500
Sinclair Broadcast Group, Inc., 8.00%, 03/15/2012		20,000		20,325
Time Warner, Inc., 7.625%, 04/15/2031		1,100,000		1,183,689
				2,103,327
Multi-line Retail 0.8%
Kohl’s Corp., 6.875%, 12/15/2037		575,000		528,240
Macy’s, Inc.:
6.375%, 03/15/2037		700,000		545,933
7.45%, 09/15/2011		500,000		500,733
Neiman Marcus Group, Inc., 9.00%, 10/15/2015		60,000		62,700
Target Corp., 6.50%, 10/15/2037		450,000		455,010
				2,092,616
Specialty Retail 0.6%
American Achievement Corp., 8.25%, 04/01/2012		140,000		123,900
Home Depot, Inc., 5.875%, 12/16/2036		1,530,000		1,283,092
Payless ShoeSource, Inc., 8.25%, 08/01/2013		150,000		136,125
				1,543,117
Textiles, Apparel & Luxury Goods 0.1%
Oxford Industries, Inc., 8.875%, 06/01/2011		245,000		234,588

See Notes to Financial Statements

15

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

		Principal Amount		Value
CORPORATE BONDS continued
CONSUMER STAPLES 0.5%
Beverages 0.0%
Constellation Brands, Inc., 8.375%, 12/15/2014	$	15,000	$	15,975
Food & Staples Retailing 0.4%
Ingles Markets, Inc., 8.875%, 12/01/2011		60,000		61,200
Rite Aid Corp., 8.125%, 05/01/2010		85,000		85,425
Wal-Mart Stores, Inc., 6.50%, 08/15/2037		675,000		718,776
				865,401
Food Products 0.1%
Del Monte Foods Co.:
6.75%, 02/15/2015 ρ		100,000		97,000
8.625%, 12/15/2012		55,000		57,200
Pilgrim’s Pride Corp.:
7.625%, 05/01/2015		5,000		4,775
8.375%, 05/01/2017		70,000		62,650
				221,625
Household Products 0.0%
Church & Dwight Co., 6.00%, 12/15/2012		25,000		24,750
Personal Products 0.0%
Central Garden & Pet Co., 9.125%, 02/01/2013		115,000		97,750
ENERGY 2.0%
Energy Equipment & Services 0.2%
Dresser-Rand Group, Inc., 7.375%, 11/01/2014		80,000		80,400
GulfMark Offshore, Inc., 7.75%, 07/15/2014 ρ		70,000		72,800
Hornbeck Offshore Services, Inc., Ser. B, 6.125%, 12/01/2014 ρ		225,000		219,937
Parker Drilling Co., 9.625%, 10/01/2013		85,000		89,675
PHI, Inc., 7.125%, 04/15/2013		175,000		164,500
				627,312
Oil, Gas & Consumable Fuels 1.8%
Chesapeake Energy Corp., 6.875%, 01/15/2016		205,000		208,075
Clayton Williams Energy, Inc., 7.75%, 08/01/2013		55,000		51,700
El Paso Corp., 7.00%, 06/15/2017		20,000		20,972
EnCana Corp., 6.625%, 08/15/2037		1,225,000		1,255,184
Encore Acquisition Co.:
6.00%, 07/15/2015		100,000		92,500
6.25%, 04/15/2014 ρ		70,000		66,150
Exco Resources, Inc., 7.25%, 01/15/2011		105,000		105,000
Forbes Energy Services, LLC, 11.00%, 02/15/2015 144A		140,000		140,700
Forest Oil Corp., 7.25%, 06/15/2019 ρ		40,000		41,500
Frontier Oil Corp., 6.625%, 10/01/2011		30,000		30,000
Kinder Morgan Energy Partners, LP, 7.40%, 03/15/2031		1,125,000		1,171,210
Mariner Energy, Inc., 8.00%, 05/15/2017		25,000		24,688

See Notes to Financial Statements

16

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

		Principal Amount		Value
CORPORATE BONDS continued
ENERGY continued
Oil, Gas & Consumable Fuels continued
Peabody Energy Corp.:
5.875%, 04/15/2016	$	165,000	$	160,875
7.875%, 11/01/2026		15,000		15,563
Plains All American Pipeline, LP, 6.50%, 05/01/2018 144A		25,000		25,579
Plains Exploration & Production Co., 7.75%, 06/15/2015		35,000		36,050
Sabine Pass LNG, LP:
7.25%, 11/30/2013		210,000		195,300
7.50%, 11/30/2016		5,000		4,600
Southwestern Energy Co., 7.50%, 02/01/2018 144A		10,000		10,650
Sunoco, Inc., 9.00%, 11/01/2024		500,000		604,396
Tesoro Corp.:
6.50%, 06/01/2017		20,000		18,450
6.625%, 11/01/2015		130,000		122,850
Williams Cos., 7.125%, 09/01/2011		150,000		160,125
				4,562,117
FINANCIALS 14.5%
Capital Markets 4.3%
American Capital Strategies, Ltd., Ser. A, 5.92%, 09/01/2009 + o		3,500,000		3,461,885
E*TRADE Financial Corp.:
7.375%, 09/15/2013		50,000		40,875
8.00%, 06/15/2011		10,000		8,950
12.50%, 11/30/2017 144A		40,000		41,550
Goldman Sachs Group, Inc.:
5.30%, 02/14/2012		1,200,000		1,213,304
6.75%, 10/01/2037		1,330,000		1,307,369
Lehman Brothers Holdings, Inc.:
6.00%, 07/19/2012 ρ		900,000		909,594
7.00%, 09/27/2027		250,000		245,618
Merrill Lynch & Co., Inc., 6.05%, 08/15/2012		1,325,000		1,322,362
Morgan Stanley:
5.625%, 01/09/2012		1,425,000		1,440,428
5.95%, 12/28/2017		1,125,000		1,116,395
				11,108,330
Commercial Banks 3.1%
BankAmerica Capital II, 8.00%, 12/15/2026		1,000,000		1,019,434
FBOP Corp., 10.00%, 01/15/2009 144A		4,000,000		4,024,800
National City Corp., 5.80%, 06/07/2017		1,700,000		1,409,266
PNC Financial Services Group, Inc., 8.70%, 12/31/2049 144A		300,000		297,542
SunTrust Banks, Inc., 6.00%, 09/11/2017		1,300,000		1,269,408
				8,020,450

See Notes to Financial Statements

17

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

	Principal
	Amount		Value
CORPORATE BONDS continued
FINANCIALS continued
Consumer Finance 2.3%
American Water Capital Corp., 6.09%, 10/15/2017 144A	$	850,000	$	846,949
Daimler Financial Services AG, 4.875%, 06/15/2010		100,000		101,054
Ford Motor Credit Co., LLC:
5.70%, 01/15/2010		65,000		60,860
5.80%, 01/12/2009		5,000		4,890
7.375%, 10/28/2009		585,000		563,329
9.75%, 09/15/2010		40,000		38,880
General Motors Acceptance Corp., LLC:
5.625%, 05/15/2009 ρ		40,000		37,618
6.875%, 09/15/2011		425,000		354,414
6.875%, 08/28/2012		10,000		7,940
7.25%, 03/02/2011		20,000		16,976
7.75%, 01/19/2010		65,000		59,831
8.00%, 11/01/2031		200,000		151,651
FRN:
3.75%, 09/23/2008		85,000		83,408
4.32%, 05/15/2009		165,000		150,576
MBNA Corp., Ser. A, 8.28%, 12/01/2026		1,750,000		1,778,465
Qwest Capital Funding, Inc., 6.50%, 11/15/2018		30,000		25,200
Sprint Capital Corp., 6.875%, 11/15/2028		1,835,000		1,430,151
Toll Corp.:
8.25%, 02/01/2011		105,000		101,587
8.25%, 12/01/2011		20,000		19,200
				5,832,979
Diversified Financial Services 1.0%
Citigroup, Inc.:
5.50%, 08/27/2012 ρ		650,000		651,760
FRN, 8.40%, 04/29/2049		920,000		932,264
JPMorgan Chase & Co., FRN, 7.90%, 12/31/2049		790,000		807,374
Leucadia National Corp.:
7.125%, 03/15/2017		10,000		9,600
8.125%, 09/15/2015		180,000		184,500
				2,585,498
Insurance 0.5%
Prudential Financial, Inc., 6.10%, 06/15/2017		1,200,000		1,219,805
Real Estate Investment Trusts 3.1%
BRE Properties, Inc., 5.50%, 03/15/2017		2,400,000		2,095,745
Camden Property Trust, 5.00%, 06/15/2015		3,500,000		3,071,957
Colonial Realty, Ltd., 6.25%, 06/15/2014		1,370,000		1,249,410
ERP Operating, LP, 5.75%, 06/15/2017		1,000,000		939,966

See Notes to Financial Statements

18

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

	Principal
	Amount		Value
CORPORATE BONDS continued
FINANCIALS continued
Real Estate Investment Trusts continued
Host Marriott Corp.:
7.125%, 11/01/2013 ρ	$	95,000	$	95,119
Ser. O, 6.375%, 03/15/2015		5,000		4,825
Ser. Q, 6.75%, 06/01/2016		155,000		152,287
Omega Healthcare Investors, Inc.:
7.00%, 04/01/2014		65,000		63,781
7.00%, 01/15/2016		100,000		97,125
Ventas, Inc., 7.125%, 06/01/2015		75,000		75,563
				7,845,778
Thrifts & Mortgage Finance 0.2%
Residential Capital, LLC:
FRN, 3.49%, 06/09/2008 ρ		35,000		32,769
Step Bond:
8.125%, 11/21/2008 Š		55,000		45,925
8.375%, 06/30/2010 Š		530,000		290,175
				368,869
HEALTH CARE 1.7%
Biotechnology 0.6%
Amgen, Inc., 6.375%, 06/01/2037		1,500,000		1,488,138
Health Care Providers & Services 1.1%
HCA, Inc., 9.25%, 11/15/2016		385,000		414,837
Omnicare, Inc.:
6.125%, 06/01/2013		180,000		164,700
6.875%, 12/15/2015		215,000		197,263
UnitedHealth Group, Inc., 5.375%, 03/15/2016		1,000,000		959,338
WellPoint, Inc., 6.375%, 06/15/2037		1,300,000		1,192,715
				2,928,853
INDUSTRIALS 0.7%
Aerospace & Defense 0.4%
Alliant Techsystems, Inc., 6.75%, 04/01/2016 ρ		25,000		24,875
DRS Technologies, Inc., 6.625%, 02/01/2016		50,000		49,750
Hexcel Corp., 6.75%, 02/01/2015		70,000		69,913
L-3 Communications Holdings, Inc.:
5.875%, 01/15/2015		635,000		619,125
6.375%, 10/15/2015		235,000		233,531
				997,194
Commercial Services & Supplies 0.1%
Browning-Ferris Industries, Inc.:
7.40%, 09/15/2035		90,000		82,350
9.25%, 05/01/2021		95,000		98,800

See Notes to Financial Statements

19

SCHEDULE OF INVESTMENTS continued

April 30, 2008

	Principal Amount		Value
CORPORATE BONDS continued
INDUSTRIALS continued
Commercial Services & Supplies continued
Geo Group, Inc., 8.25%, 07/15/2013	$	50,000	$	51,875
Mobile Mini, Inc., 6.875%, 05/01/2015		55,000		46,613
Norcross Safety Products, LLC, Ser. B, 9.875%, 08/15/2011		65,000		68,453
				348,091
Machinery 0.1%
Commercial Vehicle Group, Inc., 8.00%, 07/01/2013		285,000		245,812
Road & Rail 0.1%
Avis Budget Car Rental, LLC, 7.75%, 05/15/2016		5,000		4,438
Hertz Global Holdings, Inc., 8.875%, 01/01/2014		80,000		81,000
Kansas City Southern:
7.50%, 06/15/2009		35,000		36,050
9.50%, 10/01/2008		55,000		55,825
				177,313
Trading Companies & Distributors 0.0%
United Rentals, Inc., 6.50%, 02/15/2012		40,000		37,700
INFORMATION TECHNOLOGY 0.4%
Electronic Equipment & Instruments 0.2%
Da-Lite Screen Co., Inc., 9.50%, 05/15/2011		145,000		138,475
Jabil Circuit, Inc.:
5.875%, 07/15/2010		140,000		137,537
8.25%, 03/15/2018 144A		225,000		226,125
Sanmina-SCI Corp.:
6.75%, 03/01/2013		15,000		13,650
8.125%, 03/01/2016		30,000		27,750
FRN, 5.55%, 06/15/2010 144A		29,000		28,783
				572,320
IT Services 0.1%
First Data Corp., 9.875%, 09/24/2015 144A		140,000		127,575
SunGard Data Systems, Inc., 4.875%, 01/15/2014		115,000		101,488
Unisys Corp., 6.875%, 03/15/2010		25,000		24,156
				253,219
Office Electronics 0.0%
Xerox Corp., 6.35%, 05/15/2018		30,000		30,207
Semiconductors & Semiconductor Equipment 0.1%
Freescale Semiconductor, Inc.:
8.875%, 12/15/2014		5,000		4,425
9.125%, 12/15/2014 ρ		30,000		24,825
Spansion, Inc., FRN, 6.20%, 06/01/2013 144A		75,000		56,625
				85,875

See Notes to Financial Statements

20

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

	Principal Amount		Value
CORPORATE BONDS continued
MATERIALS 0.7%
Chemicals 0.3%
ARCO Chemical Co.:
9.80%, 02/01/2020 ρ	$	50,000	$	44,000
10.25%, 11/01/2010		10,000		10,250
Huntsman, LLC, 11.625%, 10/15/2010		90,000		94,950
Koppers Holdings, Inc.:
9.875%, 10/15/2013		10,000		10,650
Sr. Disc. Note, Step Bond, 0.00%, 11/15/2014 †		95,000		83,600
Millenium America, Inc., 7.625%, 11/15/2026		120,000		77,700
Momentive Performance Materials, Inc.:
9.75%, 12/01/2014		130,000		126,750
10.125%, 12/01/2014		50,000		47,875
Mosaic Co.:
7.30%, 01/15/2028		55,000		53,625
7.875%, 12/01/2016 144A		80,000		88,000
Tronox Worldwide, LLC,9.50%, 12/01/2012 ρ		230,000		198,950
				836,350
Construction Materials 0.1%
CPG International, Inc.:
10.50%, 07/01/2013		145,000		124,700
FRN, 11.47%, 07/01/2012		35,000		28,613
				153,313
Containers & Packaging 0.1%
Berry Plastics Holdings Corp.:
7.57%, 02/15/2015 144A		30,000		29,100
8.875%, 09/15/2014 ρ		28,000		26,320
Exopack Holding Corp., 11.25%, 02/01/2014		135,000		129,600
Graphic Packaging International, Inc.:
8.50%, 08/15/2011 ρ		95,000		96,425
9.50%, 08/15/2013		35,000		35,000
Smurfit-Stone Container Corp., 8.375%, 07/01/2012		145,000		133,400
				449,845
Metals & Mining 0.1%
Freeport-McMoRan Copper & Gold, Inc., 8.375%, 04/01/2017		140,000		155,050
Paper & Forest Products 0.1%
Georgia Pacific Corp., 8.875%, 05/15/2031		100,000		98,000
Verso Paper Holdings, LLC, 9.125%, 08/01/2014 ρ		95,000		98,562
				196,562
TELECOMMUNICATION SERVICES 1.0%
Diversified Telecommunication Services 0.1%
Citizens Communications Co., 7.875%, 01/15/2027		60,000		53,550
FairPoint Communications, Inc., 13.125%, 04/01/2018 144A ρ		40,000		40,600

See Notes to Financial Statements

21

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

	Principal Amount		Value
CORPORATE BONDS continued
TELECOMMUNICATION SERVICES continued
Diversified Telecommunication Services continued
Qwest Corp.:
6.50%, 06/01/2017	$	50,000	$	47,125
7.50%, 06/15/2023		35,000		32,200
7.875%, 09/01/2011		125,000		128,750
8.875%, 03/15/2012		60,000		63,600
				365,825
Wireless Telecommunication Services 0.9%
AT&T Wireless, 8.125%, 05/01/2012		1,600,000		1,777,870
Rural Cellular Corp., 8.25%, 03/15/2012		145,000		151,525
Sprint Nextel Corp.:
6.375%, 05/01/2009		65,000		64,040
6.90%, 05/01/2019		20,000		16,530
Ser. D, 7.375%, 08/01/2015		110,000		88,059
Ser. F, 5.95%, 03/15/2014		110,000		85,900
				2,183,924
UTILITIES 0.7%
Electric Utilities 0.7%
Allegheny Energy Supply Co., 8.25%, 04/15/2012 144A		155,000		165,850
Aquila,Inc., Step Bond, 14.875%, 07/01/2012 Š		238,000		290,360
CMS Energy Corp.:
6.55%, 07/17/2017		10,000		9,872
8.50%, 04/15/2011		15,000		16,139
Edison Mission Energy:
7.00%, 05/15/2017		5,000		5,075
7.20%, 05/15/2019		30,000		30,375
Energy Future Holdings Corp.:
10.875%, 11/01/2017 144A		115,000		123,050
11.25%, 11/01/2017 144A		70,000		73,675
Mirant Americas Generation, LLC, 8.50%, 10/01/2021		25,000		24,625
Mirant Mid-Atlantic, LLC, Ser. C, 10.06%, 12/30/2028		19,486		22,409
Mirant North America, LLC, 7.375%, 12/31/2013 ρ		210,000		218,925
NRG Energy, Inc., 7.375%, 02/01/2016		175,000		180,688
Orion Power Holdings, Inc., 12.00%, 05/01/2010		240,000		265,800
Reliant Energy, Inc.:
6.75%, 12/15/2014		265,000		274,937
7.875%, 06/15/2017 ρ		5,000		5,238
				1,707,018
Independent Power Producers & Energy Traders 0.0%
AES Corp., 8.00%, 10/15/2017		5,000		5,237
Dynegy Holdings, Inc., 7.50%, 06/01/2015 ρ		15,000		15,000
				20,237
Total Corporate Bonds (cost $65,734,074)				63,931,162

See Notes to Financial Statements

22

SCHEDULE OF INVESTMENTS continued

April 30, 2008

	Principal Amount		Value
FOREIGN BONDS – CORPORATE (PRINCIPAL AMOUNT
DENOMINATED IN CURRENCY INDICATED) 3.2%
CONSUMER DISCRETIONARY 0.1%
Media 0.1%
Central European Media Enterprise, Ltd., 8.25%, 05/15/2012 EUR		170,000	$	271,237
CONSUMER STAPLES 0.2%
Beverages 0.0%
Canandaigua Brands, Inc., 8.50%, 11/15/2009 GBP		50,000		98,920
Food & Staples Retailing 0.2%
Carrefour SA,3.625%, 05/06/2013 EUR		250,000		366,205
ENERGY 0.1%
Oil, Gas & Consumable Fuels 0.1%
GAZPROM OAO, 6.58%, 10/31/2013 GBP		65,000		118,014
Total SA, 4.125%, 01/25/2012 CAD		100,000		100,945
				218,959
FINANCIALS 2.4%
Capital Markets 0.1%
Ahold Finance USA, Inc., 6.50%, 03/14/2017 GBP		65,000		122,794
Morgan Stanley, 5.375%, 11/14/2013 GBP		100,000		184,405
				307,199
Commercial Banks 1.0%
Bayerische Landesbank, 10.00%, 03/31/2010 PLN		270,000		128,649
HBOS plc, 4.125%, 01/25/2010 CAD		600,000		595,473
Kreditanstalt für Wiederaufbau:
4.95%, 10/14/2014 CAD		470,000		488,754
6.00%, 07/15/2009 NZD		530,000		404,073
Landwirtschaftliche Rentenbank:
4.375%, 11/27/2017 EUR		150,000		231,585
5.75%, 01/21/2015 AUD		700,000		606,710
				2,455,244
Consumer Finance 0.5%
ABB International Finance, Ltd., 6.50%, 11/30/2011 EUR		250,000		404,938
BMW Finance Corp., 4.25%, 01/22/2014 EUR		300,000		453,141
Toyota Motor Credit Corp., 5.125%, 01/17/2012 GBP		205,000		405,149
Virgin Media Finance plc, 9.75%, 04/15/2014 GBP		50,000		93,465
				1,356,693
Diversified Financial Services 0.4%
Dubai Holding Commercial Operations Group, LLC, 6.00%, 02/01/2017 GBP		100,000		180,421
European Investment Bank, 6.00%, 07/15/2009 NZD		450,000		343,081
General Electric Capital Corp., 3.375%, 02/08/2012 EUR		250,000		371,501
Lighthouse Group plc, 8.00%, 04/30/2014 EUR		70,000		92,618
				987,621

See Notes to Financial Statements

23

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

	Principal Amount		Value
FOREIGN BONDS – CORPORATE (PRINCIPAL AMOUNT DENOMINATED IN CURRENCY INDICATED) continued
FINANCIALS continued
Thrifts & Mortgage Finance 0.4%
Nykredit, 5.00%, 10/01/2038 DKK		2,347,353	$	463,923
Totalkredit, FRN, 5.36%, 01/01/2015 DKK		2,432,479		515,833
				979,756
INDUSTRIALS 0.1%
Aerospace & Defense 0.1%
Bombardier, Inc., 7.25%, 11/15/2016 EUR		70,000		110,051
Machinery 0.0%
Savcio Holdings, Ltd., 8.00%, 02/15/2013 EUR		50,000		69,950
MATERIALS 0.0%
Containers & Packaging 0.0%
Owens-Illinois European Group BV, 6.875%, 03/31/2017 EUR		70,000		107,328
TELECOMMUNICATION SERVICES 0.2%
Diversified Telecommunication Services 0.2%
France Telecom, 7.50%, 03/14/2011 GBP		270,000		557,498
UTILITIES 0.1%
Multi-Utilities 0.1%
Veolia Environnement SA, 4.00%, 02/12/2016 EUR		200,000		280,483
Total Foreign Bonds – Corporate (Principal Amount Denominated in Currency Indicated) (cost $ 7,673,795)				8,167,144
FOREIGN BONDS – GOVERNMENT (PRINCIPAL AMOUNT DENOMINATED IN CURRENCY INDICATED) 3.7%
Australia:
6.00%, 05/01/2012 AUD		400,000		363,618
6.00%, 10/14/2015 AUD		670,000		600,475
Brazil, 10.25%, 01/10/2028 BRL		350,000		184,232
Brazil, 7.375%, 02/03/2015 EUR		60,000		100,289
Denmark, 4.00%, 11/15/2017 DKK		2,440,000		494,196
France, 4.25%, 04/25/2019 EUR		755,000		1,161,447
Germany, 3.75%, 01/04/2017 EUR		600,000		907,596
Hong Kong, 4.23%, 03/21/2011 HKD		3,050,000		415,420
International Bank for Reconstruction and Development, 5.75%, 06/25/2010 RUB		5,100,000		213,194
Malaysia, 3.87%, 04/13/2010 MYR		650,000		207,660
Mexico:
5.50%, 02/17/2020 EUR		320,000		488,897
8.00%, 12/07/2023 MXN		4,500,000		429,420
10.00%, 12/05/2024 MXN		1,875,000		211,718
Morocco, 5.375%, 06/27/2017 EUR		65,000		95,024
Netherlands, 4.00%, 07/15/2016 EUR		890,000		1,366,170
Norway, 5.00%, 05/15/2015 NOK		3,900,000		786,280

See Notes to Financial Statements

24

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

	Principal Amount		Value
FOREIGN BONDS – GOVERNMENT (PRINCIPAL AMOUNT DENOMINATED IN CURRENCY INDICATED) continued
Philippines, 6.25%, 03/15/2016 EUR		200,000	$	302,385
South Africa, 5.25%, 05/16/2013 EUR		100,000		151,768
Turkey, 4.75%, 07/06/2012 EUR		340,000		508,898
Ukraine, 4.95%, 10/13/2015 EUR		50,000		68,522
United Kingdom, 5.00%, 03/07/2012 GBP		220,000		446,311
Total Foreign Bonds – Government (Principal Amount Denominated in Currency Indicated) (cost $8,841,351)				9,503,520
WHOLE LOAN MORTGAGE-BACKED COLLATERALIZED MORTGAGE OBLIGATIONS 1.7%
FIXED-RATE 1.7%
Banc of America Mtge. Securities, Inc., Ser. 2005-D, Class 2A6, 4.78%, 05/25/2035	$	3,255,000		3,083,367
Deutsche Alt-A Securities, NIM, Ser. 2007-0A1, Class N1, 6.50%, 02/25/2047 144A o		439,345		428,801
Harborview NIM Corp.:
Ser. 2006-12, Class N1, 6.41%, 12/19/2036 144A o		14,109		14,087
Ser. 2006-14, Class N2, 8.35%, 03/19/2038 144A o		907,070		908,889
Total Whole Loan Mortgage-Backed Collateralized Mortgage Obligations (cost $4,522,691)				4,435,144
WHOLE LOAN MORTGAGE-BACKED PASS THROUGH SECURITIES 15.8%
FIXED-RATE 7.0%
Alternative Loan Trust, Ser. 2007-14T2, Class 2, 6.00%, 07/25/2037		1,651,784		1,112,601
Countrywide Alternative Loan Trust, Inc.:
Ser. 2005-50CB, Class 1A1, 5.50%, 11/25/2035		1,660,040		1,501,706
Ser. 2007-24, Class A1, 7.00%, 10/25/2037		905,452		559,696
CSMC Mtge. Backed Trust, Ser. 2007-4R, Class 1A1, 5.69%, 10/26/2036 144A		405,000		360,268
First Horizon Mtge. Pass Through Trust, Ser. 2007-AR2, Class 2A1, 5.89%, 07/25/2037		2,861,206		2,634,221
GSAA Home Equity Trust, Ser. 2007-10, Class A1A, 6.00%, 11/25/2037		1,363,125		1,174,850
GSR Mtge. Loan Trust, Ser. 2006-8F, Class 4A3, 6.50%, 09/25/2036		580,000		490,820
Morgan Stanley Capital I, Inc., Ser. 2007-13, Class 5A1, 5.50%, 10/25/2037		3,434,173		3,134,239
PHH Alternative Mtge. Trust, Ser. 2007-01, Class 21A, 6.00%, 02/25/2037		773,389		675,188
Residential Accredited Loans, Inc., Ser. 2007-QS10, Class A1, 6.50%, 09/25/2037		898,090		841,123
Washington Mutual, Inc., Ser. 2005-AR3, Class A1, 4.64%, 03/25/2035		3,056,839		2,956,715
Wells Fargo Mtge. Backed Securities Trust, Ser. 2006-AR10, Class 5A1, 5.60%, 07/25/2036		2,477,860		2,386,243
				17,827,670
FLOATING-RATE 8.8%
Citigroup Mtge. Loan Trust, Inc., Ser. 2005-7, Class 2A3A, 5.18%, 09/25/2035		3,076,910		2,883,319
Lehman XS Trust, Ser. 2006-18N, Class A5A, 3.07%, 12/25/2036		145,000		104,799
MASTR Reperforming Loan Trust, Ser. 2006-2, Class 1A1, 5.90%, 05/25/2046 144A		2,501,759		2,474,340
Merrill Lynch Countrywide Comml. Mtge. Trust, Ser. 2007-8, Class A3, 6.16%, 07/12/2017		3,530,000		3,569,267

See Notes to Financial Statements

25

SCHEDULE OF INVESTMENTScontinued

April 30, 2008

	Principal Amount		Value
WHOLE LOAN MORTGAGE-BACKED PASS THROUGH SECURITIES continued
FLOATING-RATE continued
Residential Funding Mtge. Securities, Ser. 2007-SA3, Class 2A1, 5.78%, 07/27/2037	$	3,518,431	$	3,294,116
Structured Adjustable Rate Mtge. Loan Trust, Ser. 2007-3, Class 3A1, 5.72%, 04/25/2037		2,347,432		2,133,198
Washington Mutual, Inc. Mtge. Pass-Through Cert.:
Ser. 2006-AR17, Class 1A1B, 4.89%, 12/25/2046		2,433,558		1,736,563
Ser. 2007-HY7, Class 3A2, 5.91%, 07/25/2037		2,885,458		2,785,430
Ser. 2007-OA5:
Class 1A, 4.83%, 06/25/2047		2,439,392		1,956,758
Class 1A1B, 4.83%, 06/25/2047		2,201,230		1,534,874
				22,472,664
Total Whole Loan Mortgage-Backed Pass Through Securities (cost $44,280,585)				40,300,334
WHOLE LOAN SUBORDINATE COLLATERALIZED MORTGAGE OBLIGATIONS 1.3%
FIXED-RATE 0.1%
Financial Asset Securitization, Inc., Ser. 1997-NAM2, Class B-2, 7.88%, 07/25/2027		345,588		344,793
FLOATING-RATE 1.2%
Harborview Mtge. Loan Trust:
Ser. 2004-7, Class B4, 5.99%, 11/19/2034		2,605,009		1,917,670
Ser. 2005-8, Class 2B3, 6.43%, 02/19/2035		1,087,571		1,118,653
				3,036,323
Total Whole Loan Subordinate Collateralized Mortgage Obligations (cost $3,461,179)				3,381,116
YANKEE OBLIGATIONS – CORPORATE 3.5%
CONSUMER DISCRETIONARY 0.0%
Media 0.0%
Videotron, Ltd., 9.125%, 04/15/2018 144A		5,000		5,350
CONSUMER STAPLES 0.1%
Beverages 0.1%
Companhia Brasileira de Bebidas, 8.75%, 09/15/2013		115,000		133,975
Food Products 0.0%
Sadia Overseas, Ltd., 6.875%, 05/24/2017 144A ρ		100,000		102,000
ENERGY 0.3%
Oil, Gas & Consumable Fuels 0.3%
Connacher Oil & Gas, Ltd., 10.25%, 12/15/2015 144A		45,000		47,925
GAZPROM OAO, 9.625%, 03/01/2013		190,000		216,505
Griffin Coal Mining Co., Ltd.:
9.50%, 12/01/2016 144A		390,000		308,100
9.50%, 12/01/2016		20,000		15,800
OPTI Canada, Inc., 7.875%, 12/15/2014		240,000		245,400
				833,730

See Notes to Financial Statements

26

SCHEDULE OF INVESTMENTS continued

April 30, 2008

	Principal Amount		Value
YANKEE OBLIGATIONS – CORPORATE continued
FINANCIALS 1.0%
Commercial Banks 0.1%
VTB Capital SA, 7.50%, 10/12/2011	$	120,000	$	124,152
Consumer Finance 0.1%
Avago Technologies Finance, Ltd.:
10.125%, 12/01/2013		10,000		10,700
FRN, 8.58%, 06/01/2013		30,000		30,075
Gaz Capital SA, 6.21%, 11/22/2016		100,000		95,773
NXP Funding, LLC, 7.875%, 10/15/2014		5,000		4,963
Petroplus Finance, Ltd., 6.75%, 05/01/2014 144A ρ		30,000		28,350
Virgin Media Finance plc, 9.125%, 08/15/2016		112,000		108,640
				278,501
Diversified Financial Services 0.8%
Corporacion Andina De Fomento, 5.75%, 01/12/2017		55,000		53,222
FMG Finance Property, Ltd., 10.625%, 09/01/2016 144A		240,000		274,200
Preferred Term Securities XII, Ltd., FRN, 10.00%, 12/24/2033		1,000,000		711,320
Ship Finance International, Ltd., 8.50%, 12/15/2013		130,000		131,950
Trapeza CDO, LLC, Ser. 2004-7A, Class B1, FRN, 4.47%, 01/25/2035 144A		1,000,000		927,830
				2,098,522
INDUSTRIALS 0.1%
Road & Rail 0.1%
Kansas City Southern de Mexico:
7.375%, 06/01/2014 144A		120,000		114,150
9.375%, 05/01/2012		135,000		141,413
				255,563
INFORMATION TECHNOLOGY 0.1%
Communications Equipment 0.1%
Nortel Networks Corp., 10.125%, 07/15/2013 ρ		220,000		216,700
Semiconductors & Semiconductor Equipment 0.0%
Sensata Technologies, Inc., 8.00%, 05/01/2014 ρ		75,000		70,313
MATERIALS 0.2%
Metals & Mining 0.2%
Evraz Group SA:
8.875%, 04/24/2013 144A		30,000		30,525
9.50%, 04/24/2018 144A		100,000		102,494
Novelis, Inc., 7.25%, 02/15/2015		405,000		372,600
				505,619
Paper & Forest Products 0.0%
Corporacion Durango SAB de CV, 10.50%, 10/05/2017 144A		105,000		79,275

See Notes to Financial Statements

27

SCHEDULE OF INVESTMENTS continued

April 30, 2008

	Principal Amount		Value
YANKEE OBLIGATIONS – CORPORATE continued
TELECOMMUNICATION SERVICES 1.5%
Diversified Telecommunication Services 0.6%
Telecom Italia SpA, 6.20%, 07/18/2011	$	200,000	$	201,619
Telefonica Emisiones, 7.05%, 06/20/2036 ρ		1,000,000		1,096,645
Telefonos De Mexico SAB de CV, 4.75%, 01/27/2010		100,000		101,322
				1,399,586
Wireless Telecommunication Services 0.9%
Inmarsat, plc, Sr. Disc. Note, Step Bond, 0.00%, 11/15/2012 †		30,000		29,737
Intelsat, Ltd., 9.25%, 06/15/2016		50,000		50,687
Vimpel Communications:
8.25%, 05/23/2016		200,000		196,490
8.375%, 04/30/2013 144A		15,000		15,012
9.125%, 04/30/2018 144A		100,000		100,250
Vodafone Group plc:
5.625%, 02/27/2017		1,200,000		1,207,260
7.75%, 02/15/2010		700,000		739,007
				2,338,443
UTILITIES 0.2%
Electric Utilities 0.1%
Enersis SA, 7.375%, 01/15/2014		115,000		123,917
Multi-Utilities 0.1%
National Power Corp.:
6.875%, 11/02/2016		200,000		203,958
FRN, 7.34%, 08/23/2011		130,000		137,618
				341,576
Total Yankee Obligations – Corporate (cost $9,044,487)				8,907,222
YANKEE OBLIGATIONS – GOVERNMENT 1.1%
Argentina, 12.25%, 06/19/2018 •		159,188		46,165
Brazil:
7.125%, 01/20/2037		370,000		423,650
8.25%, 01/20/2034		350,000		445,375
Chile, 7.125%, 01/11/2012		125,000		137,512
Colombia:
7.375%, 01/27/2017		100,000		112,850
8.125%, 05/21/2024		175,000		207,812
Emirates of Abu Dhabi, 5.50%, 08/02/2012		200,000		210,051
Indonesia, 6.75%, 03/10/2014		90,000		93,150
Mexico, 8.375%, 01/14/2011		60,000		66,954
Peru:
8.375%, 05/03/2016		200,000		243,400
8.75%, 11/21/2033		35,000		46,550

See Notes to Financial Statements

28

SCHEDULE OF INVESTMENTS continued

April 30, 2008

	Principal Amount		Value
YANKEE OBLIGATIONS – GOVERNMENT continued
Russia:
11.00%, 07/24/2018	$	55,000	$	79,613
Sr. Disc. Note, Step Bond, 7.50%, 03/31/2030 †		147,750		170,144
Turkey, 7.00%, 09/26/2016		200,000		205,750
Ukraine, 6.58%, 11/21/2016		100,000		98,375
Venezuela, 10.75%, 09/19/2013		180,000		186,300
Total Yankee Obligations – Government (cost $2,755,653)				2,773,651

	Shares		Value
PREFERRED STOCKS 0.8%
FINANCIALS 0.8%
Diversified Financial Services 0.0%
First Republic Capital Corp., 10.50% 144A		50		54,425
Thrifts & Mortgage Finance 0.8%
Fannie Mae, Ser. S, 8.25% ρ		33,750		845,100
Freddie Mac, Ser. Z, 8.38% ρ		41,260		1,056,256
				1,901,356
Total Preferred Stocks (cost $1,931,527)				1,955,781

	Principal Amount		Value
CONVERTIBLE DEBENTURES 0.0%
CONSUMER DISCRETIONARY 0.0%
Media 0.0%
Sinclair Broadcast Group, Inc., 3.00%, 05/15/2027 (cost $27,262)	$	30,000		27,263

	Shares		Value
MUTUAL FUND SHARES 2.1%
Blackrock Core Bond Trust ρ		63,250		777,975
Blackrock Income Opportunity Trust		82,350		830,088
Blackrock Income Trust		80,175		485,059
MFS Charter Income Trust		108,400		919,232
MFS Intermediate Income Trust		143,700		909,621
MFS Multimarket Income Trust		100,954		586,543
Putnam Premier Income Trust		105,043		653,367
Van Kampen Bond Fund		5,325		91,111
Total Mutual Fund Shares (cost $5,072,385)				5,252,996

See Notes to Financial Statements

29

SCHEDULE OF INVESTMENTS continued

April 30, 2008
		Principal Amount		Value
LOANS 0.2%
CONSUMER DISCRETIONARY 0.0%
Idearc, Inc., FRN, 4.80%, 11/17/2014 <	$	49,962	$	41,396
Ion Media Networks, Inc., FRN, 6.05%, 01/15/2012 <		110,000		90,522
				131,918
INDUSTRIALS 0.1%
Clarke American Corp., FRN, 5.30%, 02/28/2014		129,673		109,854
Neff Corp., FRN, 6.30%, 11/30/2014 <		185,000		135,644
				245,498
MATERIALS 0.1%
Wimar Co., FRN, 5.30%, 01/03/2012		160,000		151,557
UTILITIES 0.0%
Energy Future Holdings Corp., FRN, 5.80%, 10/10/2014		1,063		1,015
Total Loans (cost $531,853)				529,988

	Shares		Value
SHORT-TERM INVESTMENTS 6.6%
MUTUAL FUND SHARES 6.6%
Evergreen Institutional Money Market Fund, Class I, 2.78% q ø ## ρρ (cost $16,826,147)	16,826,147		16,826,147
Total Investments (cost $284,921,772) 108.3%			277,070,985
Other Assets and Liabilities (8.3%)			(21,272,401)
Net Assets 100.0%		$	255,798,584

# When-issued or delayed delivery security

##	All or a portion of this security has been segregated for when-issued or delayed delivery securities.
144A	Security that may be sold to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended. This security has been determined to be liquid under guidelines established by the Board of Trustees, unless otherwise noted.
ρ	All or a portion of this security is on loan.

+ Security is deemed illiquid.

o Security is valued at fair value as determined by the investment advisor in good faith, according to procedures approved by the Board of Trustees.

† Security initially issued in zero coupon form which converts to coupon form at a specified rate and date. An effective interest rate is applied to recognize interest income daily for the bond. This rate is based on total expected interest to be earned over the life of the bond which consists of the aggregate coupon-interest payments and discount at acquisition. The rate shown is the stated rate at the current period end.

Š The rate shown is the stated rate at the current period end.

• Security that has defaulted on payment of interest and/or principal.

< All or a portion of the position represents an unfunded loan commitment.

q Rate shown is the 7-day annualized yield at period end.

ø Evergreen Investment Management Company, LLC is the investment advisor to both the Fund and the money market fund.

ρρ All or a portion of this security represents investment of cash collateral received from securities on loan.

See Notes to Financial Statements

30

SCHEDULE OF INVESTMENTS continued

April 30, 2008

Summary of Abbreviations

AUD	Australian Dollar
BRL	Brazil Real
CAD	Canadian Dollar
CDO	Collateralized Debt Obligation
DKK	Danish Krone
EUR	Euro
FHLMC	Federal Home Loan Mortgage Corp.
FNMA	Federal National Mortgage Association
FRN	Floating Rate Note
GBP	Great British Pound
GNMA	Government National Mortgage Association
HKD	Hong Kong Dollar
MASTR	Mortgage Asset Securitization Transactions, Inc.
MXN	Mexican Peso
MYR	Malaysian Ringgit
NIM	Net Interest Margin
NOK	Norwegian Krone
NZD	New Zealand Dollar
PLN	Polish Zloty
RUB	Russian Ruble
TBA	To Be Announced

The following table shows the percent of total investments (excluding equity positions, collateral from securities on loan and segregated cash and cash equivalents) by credit quality based on Moody’s and Standard & Poor’s ratings as of April 30, 2008 (unaudited):

AAA	53.1%
AA	11.3%
A	10.1%
BBB	9.4%
BB	11.7%
B	4.1%
CCC	0.2%
NR	0.1%
	100.0%

The following table shows the percent of total investments (excluding equity positions, collateral from securities on loan and segregated cash and cash equivalents) based on effective maturity as of April 30, 2008 (unaudited):

Less than 1 year	9.1%
1 to 3 year(s)	10.2%
3 to 5 years	16.5%
5 to 10 years	51.0%
10 to 20 years	7.8%
20 to 30 years	5.3%
Greater than 30 years	0.1%
	100.0%

See Notes to Financial Statements

31

STATEMENT OF ASSETS AND LIABILITIES

April 30, 2008

Assets
Investments in securities, at value (cost $268,095,625) including $5,439,665 of securities loaned	$	260,244,838
Investments in affiliated money market fund, at value (cost $16,826,147)		16,826,147
Total investments		277,070,985
Foreign currency, at value (cost $719,774)		722,569
Receivable for securities sold		3,620,449
Principal paydown receivable		108,062
Receivable for Fund shares sold		34,203
Dividends and interest receivable		2,718,810
Receivable for securities lending income		2,506
Premiums paid on credit default swap transactions		357,463
Unrealized gains on forward foreign currency exchange contracts		93,102
Unrealized gains on total return swap transactions		1,067,061
Unrealized gains on credit default swap transactions		1,796,079
Prepaid expenses and other assets		184,839
Total assets		287,776,128
Liabilities
Dividends payable		389,001
Payable for securities purchased		21,322,535
Payable for Fund shares redeemed		277,317
Unrealized losses on credit default swap transactions		2,900,803
Unrealized losses on forward foreign currency exchange contracts		159,834
Premiums received on credit default swap transactions		1,283,066
Payable for securities on loan		5,556,625
Due to custodian bank		5,137
Advisory fee payable		1,501
Distribution Plan expenses payable		2,141
Due to other related parties		5,557
Accrued expenses and other liabilities		74,027
Total liabilities		31,977,544
Net assets	$	255,798,584
Net assets represented by
Paid-in capital	$	296,012,513
Overdistributed net investment income		(323,900)
Accumulated net realized losses on investments		(31,940,283)
Net unrealized losses on investments		(7,949,746)
Total net assets	$	255,798,584
Net assets consists of
Class A	$	171,130,258
Class B		13,894,369
Class C		22,139,631
Class I		48,634,326
Total net assets	$	255,798,584
Shares outstanding (unlimited number of shares authorized)
Class A		12,513,548
Class B		1,016,622
Class C		1,618,948
Class I		3,556,340

See Notes to Financial Statements

32

STATEMENT OF ASSETS AND LIABILITIEScontinued

April 30, 2008

Net asset value per share
Class A	$	13.68
Class A — Offering price (based on sales charge of 4.75%)	$	14.36
Class B	$	13.67
Class C	$	13.68
Class I	$	13.68

See Notes to Financial Statements

33

STATEMENT OF OPERATIONS

Year Ended April 30, 2008

Investment income
Interest		$	16,019,881
Income from affiliate			639,969
Dividends			370,554
Securities lending			12,797
Total investment income			17,043,201
Expenses
Advisory fee			1,200,936
Distribution Plan expenses
Class A			550,231
Class B			149,343
Class C			236,016
Administrative services fee			275,934
Transfer agent fees			536,187
Trustees’ fees and expenses			6,089
Printing and postage expenses			70,251
Custodian and accounting fees			157,305
Registration and filing fees			54,720
Professional fees			38,394
Other			6,499
Total expenses			3,281,905
Less:	Expense reductions		(10,604)
	Fee waivers and expense reimbursements		(565,271)
Net expenses			2,706,030
Net investment income			14,337,171
Net realized and unrealized gains or losses on investments
Net realized gains or losses on:
Securities			(1,946,888)
Futures contracts			(80,021)
Foreign currency related transactions			463,541
Credit default swap transactions			(217,878)
Total return swap transactions			(5,613,672)
Net realized losses on investments			(7,394,918)
Net change in unrealized gains or losses on investments			(8,064,904)
Net realized and unrealized gains or losses on investments			(15,459,822)
Net decrease in net assets resulting from operations		$	(1,122,651)

See Notes to Financial Statements

34

STATEMENTS OF CHANGES IN NET ASSETS

	Year Ended April 30,
	2008			2007
Operations
Net investment income		$	14,337,171		$	17,061,576
Net realized losses on investments			(7,394,918)			(1,553,243)
Net change in unrealized gains or losses on investments			(8,064,904)			6,403,394
Net increase (decrease) in net assets resulting from operations			(1,122,651)			21,911,727
Distributions to shareholders from
Net investment income
Class A			(6,841,784)			(11,787,049)
Class B			(438,612)			(852,703)
Class C			(691,872)			(1,242,068)
Class I			(2,077,072)			(3,565,742)
Tax return of capital
Class A			(2,666,944)			(165,900)
Class B			(214,425)			(13,740)
Class C			(338,870)			(19,998)
Class I			(757,769)			(47,948)
Total distributions to shareholders			(14,027,348)			(17,695,148)
	Shares			Shares
Capital share transactions
Proceeds from shares sold
Class A	645,781		9,130,480	579,848		8,326,359
Class B	207,305		2,925,612	169,920		2,430,882
Class C	225,175		3,194,094	190,704		2,730,653
Class I	62,125		874,257	44,267		639,034
			16,124,443			14,126,928
Net asset value of shares issued in reinvestment of distributions
Class A	449,451		6,347,504	552,035		7,905,712
Class B	29,046		410,033	35,341		506,013
Class C	44,486		628,139	56,461		808,431
Class I	108,074		1,526,367	130,689		1,871,835
			8,912,043			11,091,991
Automatic conversion of Class B shares to Class A shares
Class A	51,162		717,162	69,131		988,636
Class B	(51,162)		(717,162)	(69,131)		(988,636)
			0			0
Payment for shares redeemed
Class A	(2,435,890)		(34,383,483)	(2,368,618)		(33,880,260)
Class B	(283,010)		(3,986,296)	(304,671)		(4,352,055)
Class C	(322,517)		(4,543,748)	(398,516)		(5,692,232)
Class I	(522,589)		(7,353,155)	(598,099)		(8,560,870)
			(50,266,682)			(52,485,417)
Net decrease in net assets resulting from capital share transactions			(25,230,196)			(27,266,498)
Total decrease in net assets			(40,380,195)			(23,049,919)
Net assets
Beginning of period			296,178,779			319,228,698
End of period		$	255,798,584		$	296,178,779
Overdistributed net investment income		$	(323,900)		$	(416,859)

See Notes to Financial Statements

35

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Evergreen Core Plus Bond Fund (the “Fund”) (formerly Diversified Bond Fund) is a diversified series of Evergreen Fixed Income Trust (the “Trust”), a Delaware statutory trust organized on September 18, 1997. The Trust is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”).

The Fund offers Class A, Class B, Class C and Class I shares. Class A shares are sold with a front-end sales charge. However, Class A share investments of $1 million or more are not subject to a front-end sales charge but are subject to a contingent deferred sales charge of 1.00% upon redemption within 18 months. Class B shares are sold without a front-end sales charge but are subject to a contingent deferred sales charge that is payable upon redemption and decreases depending on how long the shares have been held. Class C shares are sold without a front-end sales charge but are subject to a contingent deferred sales charge that is payable upon redemption within one year. Class I shares are sold without a front-end sales charge or contingent deferred sales charge. Each class of shares, except Class I shares, pays an ongoing distribution fee.

2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles in the United States of America, which require management to make estimates and assumptions that affect amounts reported herein. Actual results could differ from these estimates.

a. Valuation of investments

Portfolio debt securities acquired with more than 60 days to maturity are fair valued using matrix pricing methods determined by an independent pricing service which takes into consideration such factors as similar security prices, yields, maturities, liquidity and ratings. Securities for which valuations are not readily available from an independent pricing service may be valued by brokers which use prices provided by market makers or estimates of market value obtained from yield data relating to investments or securities with similar characteristics.

Listed equity securities are usually valued at the last sales price or official closing price on the national securities exchange where the securities are principally traded.

Short-term securities with remaining maturities of 60 days or less at the time of purchase are valued at amortized cost, which approximates market value.

Investments in open-end mutual funds are valued at net asset value. Securities for which market quotations are not readily available or not reflective of current market value are valued at fair value as determined by the investment advisor in good faith, according to procedures approved by the Board of Trustees.

36

NOTES TO FINANCIAL STATEMENTS continued

b. Repurchase agreements

Securities pledged as collateral for repurchase agreements are held by the custodian bank or in a segregated account in the Fund’s name until the agreements mature. Collateral for certain tri-party repurchase agreements is held at the counterparty’s custodian in a segregated account for the benefit of the Fund and the counterparty. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. However, in the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. The Fund will only enter into repurchase agreements with banks and other financial institutions, which are deemed by the investment advisor to be creditworthy pursuant to guidelines established by the Board of Trustees. In certain instances, the Fund’s securities lending agent may provide collateral in the form of repurchase agreements.

c. Foreign currency translation

All assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the date of valuation. Purchases and sales of portfolio securities and income items denominated in foreign currencies are translated into U.S. dollar amounts on the respective dates of such transactions. The Fund does not separately account for that portion of the results of operations resulting from changes in foreign exchange rates on investments and the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gains or losses on investments.

d. Futures contracts

In order to gain exposure to, or protect against changes in, security values, the Fund may buy and sell futures contracts. The primary risks associated with the use of futures contracts are the imperfect correlation between changes in market values of securities held by the Fund and the prices of futures contracts, and the possibility of an illiquid market.

Futures contracts are valued based upon their quoted daily settlement prices. The aggregate principal amounts of the contracts are not recorded in the financial statements. Fluctuations in the value of the contracts are recorded in the Statement of Assets and Liabilities as an asset or liability and in the Statement of Operations as unrealized gains or losses until the contracts are closed, at which point they are recorded as net realized gains or losses on futures contracts.

e. Forward foreign currency contracts

A forward foreign currency contract is an agreement between two parties to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund enters into forward foreign currency contracts to facilitate transactions in foreign-denominated securities and to attempt to minimize the risk to the Fund from adverse changes in the relationship between currencies. Forward foreign currency contracts are recorded at the forward rate and marked-to-market daily. When the contracts are closed, realized gains and losses

37

NOTES TO FINANCIAL STATEMENTS continued

arising from such transactions are recorded as realized gains or losses on foreign currency related transactions. The Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts or if the value of the foreign currency changes unfavorably.

f. When-issued and delayed delivery transactions

The Fund records when-issued or delayed delivery securities as of trade date and maintains security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked-to-market daily and begin earning interest on the settlement date. Losses may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the contract.

g. Loans

The Fund may purchase loans through an agent, by assignment from another holder of the loan or as a participation interest in another holder’s portion of the loan. Loans are purchased on a when-issued or delayed delivery basis. Interest income is accrued based on the terms of the securities. Fees earned on loan purchasing activities are recorded as income when earned. Loans involve interest rate risk, liquidity risk and credit risk, including the potential default or insolvency of the borrower.

h. Securities lending

The Fund may lend its securities to certain qualified brokers in order to earn additional income. The Fund receives compensation in the form of fees or interest earned on the investment of any cash collateral received. The Fund also continues to receive interest and dividends on the securities loaned. The Fund receives collateral in the form of cash or securities with a market value at least equal to the market value of the securities on loan, including accrued interest. In the event of default or bankruptcy by the borrower, the Fund could experience delays and costs in recovering the loaned securities or in gaining access to the collateral. The Fund has the right under the lending agreement to recover the securities from the borrower on demand.

i. Dollar roll transactions

The Fund may enter into dollar roll transactions with respect to mortgage-backed securities. In a dollar roll transaction, the Fund sells mortgage-backed securities to financial institutions and simultaneously agrees to accept substantially similar (same type, coupon and maturity) securities at a later date at an agreed upon price. The Fund will use the proceeds generated from the transactions to invest in short-term investments, which may enhance the Fund’s current yield and total return. The Fund accounts for dollar roll transactions as purchases and sales. The Fund could be exposed to risks if the counterparty defaults on its obligation to perform under the terms of the agreement, if the Fund receives inferior securities in comparison to what was sold to the counterparty at redelivery or if there are variances in paydown speed between the mortgage-related pools.

38

NOTES TO FINANCIAL STATEMENTScontinued

j. Credit default swaps

The Fund may enter into credit default swap contracts. Credit default swaps involve an exchange of a stream of payments for protection against the loss in value of an underlying security or index in the event of default or bankruptcy. Under the terms of the swap, one party acts as a guarantor and receives a periodic stream of payments that is a fixed percentage applied to a notional principal amount over the term of the swap. In return, the counterparty agrees to purchase the notional amount of the underlying instrument or index, at par, if a credit event occurs during the term of the swap. The Fund may enter into credit default swaps as either the guarantor or the counterparty.

Any premiums paid or received on the transactions are recorded as an asset or liability on the Statement of Assets and Liabilities and amortized. The value of the swap contract is marked-to-market daily based on quotations from an independent pricing service or market makers and any change in value is recorded as an unrealized gain or loss. Periodic payments made or received are recorded as realized gains or losses. In addition, payments received or made as a result of a credit event or termination of the contract are recognized as realized gains or losses. The Fund could be exposed to risks if the counterparty defaults on its obligation to perform, or if there are unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index.

k. Total return swaps

The Fund may enter into total return swap contracts. Total return swaps involve commitments to pay interest in exchange for a market-linked return, both based on notional amounts. To the extent the total return of the security or index underlying the transaction exceeds or falls short of the offsetting interest rate obligation, the Fund will receive a payment from, or make a payment to, the counterparty.

The value of the swap contract is marked-to-market daily based upon quotations from an independent pricing service or market makers and any change in value is recorded as an unrealized gain or loss. Periodic payments made or received are recorded as realized gains or losses. The Fund could be exposed to risks if the counterparty defaults on its obligation to perform, or if there are unfavorable changes in the fluctuation of interest rates or in the price of the underlying security or index.

l. Security transactions and investment income

Security transactions are recorded on trade date. Realized gains and losses are computed using the specific cost of the security sold. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. Dividend income is recorded on the ex-dividend date.

m. Federal and other taxes

The Fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income, including any net capital gains (which have already been offset by available capital loss carryovers). Accordingly, no provision for federal taxes is

39

NOTES TO FINANCIAL STATEMENTS continued

required. The Fund has adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”) which prescribes a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The Fund’s financial statements have not been impacted by the adoption of FIN 48. The Fund’s income and excise tax returns and all financial records supporting those returns are subject to examination by the federal, Massachusetts and Delaware revenue authorities for all taxable years beginning after April 30, 2004.

n. Distributions

Distributions to shareholders from net investment income are accrued daily and paid monthly. Distributions from net realized gains, if any, are recorded on the ex-dividend date. Such distributions are determined in conformity with income tax regulations, which may differ from generally accepted accounting principles.

Reclassifications have been made to the Fund’s components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax regulations. The primary permanent differences causing such reclassifications are due to net realized foreign currency gains or losses, expiration of capital loss carryovers, mortgage paydown gains and losses, premium amortization and swap contracts. During the year ended April 30, 2008, the following amounts were reclassified:

Paid-in-Capital	$	(22,702,302)
Overdistributed net investment income		(4,194,872)
Accumulated net realized losses on investments		26,897,174

o. Class allocations

Income, common expenses and realized and unrealized gains and losses are allocated to the classes based on the relative net assets of each class. Distribution fees, if any, are calculated daily at the class level based on the appropriate net assets of each class and the specific expense rates applicable to each class.

3. ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Evergreen Investment Management Company, LLC (“EIMC”), an indirect, wholly-owned subsidiary of Wachovia Corporation (“Wachovia”), is the investment advisor to the Fund and is paid a fee at an annual rate of 2% of the Fund’s gross investment income plus an amount determined by applying percentage rates to the average daily net assets of the Fund, starting at 0.31% and declining to 0.16% as average daily net assets increase. For the year ended April 30, 2008, the advisory fee was equivalent to 0.43% of the Fund’s average daily net assets.

Tattersall Advisory Group, Inc., an indirect, wholly-owned subsidiary of Wachovia, is an investment sub-advisor to the Fund and is paid by EIMC for its services to the Fund.

40

NOTES TO FINANCIAL STATEMENTS continued

Effective October 1, 2007, First International Advisors, Inc. d/b/a Evergreen International Advisors, an indirect, wholly-owned subsidiary of Wachovia, also became an investment sub-advisor to the Fund and is paid by EIMC for its services to the Fund.

From time to time, EIMC may voluntarily or contractually waive its fee and/or reimburse expenses in order to limit operating expenses. During the year ended April 30, 2008, EIMC voluntarily waived its advisory fee in the amount of $479,408 and reimbursed Distribution Plan expenses (see Note 4) relating to Class A shares in the amount of $85,863.

The Fund may invest in money market funds which are advised by EIMC. Income earned on these investments is included in income from affiliate on the Statement of Operations.

Effective January 1, 2008, EIMC replaced Evergreen Investment Services, Inc. (“EIS”), an indirect, wholly-owned subsidiary of Wachovia, as the administrator to the Fund upon the assignment of the Fund’s Administrative Services Agreement from EIS to EIMC. There were no changes to the services being provided or fees being paid by the Fund. The administrator provides the Fund with facilities, equipment and personnel and is paid an annual rate determined by applying percentage rates to the aggregate average daily net assets of the Evergreen funds (excluding money market funds) starting at 0.10% and declining to 0.05% as the aggregate average daily net assets of the Evergreen funds (excluding money market funds) increase.

Evergreen Service Company, LLC (“ESC”), an indirect, wholly-owned subsidiary of Wachovia, is the transfer and dividend disbursing agent for the Fund. ESC receives account fees that vary based on the type of account held by the shareholders in the Fund. For the year ended April 30, 2008, the transfer agent fees were equivalent to an annual rate of 0.19% of the Fund’s average daily net assets.

4. DISTRIBUTION PLANS

EIS serves as distributor of the Fund’s shares. The Fund has adopted Distribution Plans, as allowed by Rule 12b-1 of the 1940 Act, for each class of shares, except Class I. Under the Distribution Plans, distribution fees are paid at an annual rate of 0.25% of the average daily net assets for Class A and 1.00% of the average daily net assets for each of Class B and Class C shares. Prior to April 1, 2008, distribution fees were paid at an annual rate of 0.30% of the average daily net assets for Class A shares.

For the year ended April 30, 2008, EIS received $3,877 from the sale of Class A shares and $35,736 and $549 in contingent deferred sales charges from redemptions of Class B and Class C shares, respectively.

41

NOTES TO FINANCIAL STATEMENTS continued

5. INVESTMENT TRANSACTIONS

Cost of purchases and proceeds from sales of investment securities (excluding short-term securities) were as follows for the year ended April 30, 2008:

Cost of Purchases		Proceeds from Sales
U.S. Government	Non-U.S. Government	U.S. Government	Non-U.S. Government
$614,110,567	$444,151,602	$555,564,396	$507,808,916

At April 30, 2008, the Fund had forward foreign currency exchange contracts outstanding as follows:

Forward Foreign Currency Exchange Contracts to Buy:

Exchange Date	Contracts to Receive	U.S. Value at April 30, 2008	In Exchange for U.S. $	Unrealized Gain
06/10/2008	446,199 EUR	$693,349	$681,345	$12,004

Exchange Date	Contracts to Receive		U.S. Value at April 30, 2008	In Exchange for		U.S. Value at April 30, 2008	Unrealized Gain (Loss)
05/19/2008	186,500,000	JPY	$1,788,914	2,236,479	NZD	$1,742,688	$   46,226
05/19/2008	851,321	NZD	663,359	70,938,000	JPY	680,440	(17,081)
05/19/2008	400,000	NZD	311,684	32,401,200	JPY	310,793	891
06/10/2008	434,879	EUR	675,758	335,000	GBP	662,591	13,167
06/10/2008	174,000,000	JPY	1,671,242	1,106,870	EUR	1,719,967	(48,725)
07/14/2008	137,119,000	JPY	1,319,554	1,488,806	AUD	1,388,804	(69,250)
07/16/2008	46,090,000	JPY	443,594	3,564,275	HKD	458,241	(14,647)
07/16/2008	6,720,000	JPY	64,677	34,100	GBP	67,268	(2,591)
07/22/2008	72,770,000	JPY	700,617	713,704	CAD	708,157	(7,540)

Forward Foreign Currency Exchange Contracts to Sell:

Exchange Date	Contracts to Deliver	U.S. Value at April 30, 2008	In Exchange for U.S. $	Unrealized Gain
07/01/2008	870,000 EUR	$1,350,480	$1,371,294	$20,814

During the year ended April 30, 2008, the Fund loaned securities to certain brokers and earned $11,705 in affiliated income relating to securities lending activity which is included in income from affiliate on the Statement of Operations. At April 30, 2008, the value of securities on loan and the total value of collateral received for securities loaned amounted to $5,439,665 and $5,556,625, respectively.

42

NOTES TO FINANCIAL STATEMENTScontinued

At April 30, 2008, the Fund had the following credit default swap contracts outstanding:

Expiration	Counterparty	Reference Debt Obligation/Index	Notional Amount		Fixed Payments Made by the Fund	Frequency of Payments Made	Unrealized Gain (Loss)
09/20/2012	Goldman Sachs	PPG Industries, 7.05%, 09/20/2012	$	500,000	0.22%	Quarterly		$	4,960
12/20/2012	UBS	Dow Jones CDX, North American Investment Grade Index		105,000	3.75%	Quarterly			3,583
12/20/2012	Goldman Sachs	Dow Jones CDX, North American Investment Grade Index		40,000	3.75%	Quarterly			1,365
12/20/2012	JPMorgan	Dow Jones CDX, North American Investment Grade Index		145,000	3.75%	Quarterly			1,836
06/20/2013	Lehman Brothers	Pulte Homes, Inc., 5.25%, 01/15/2014		40,000	4.17%	Quarterly			(2,627)
06/20/2013	UBS	Dow Jones CDX, North American Investment Grade Index		55,000	5.00%	Quarterly			(260)
06/20/2013	Bank of America	Dow Jones CDX, North American Investment Grade Index		25,000	5.00%	Quarterly			(118)
03/15/2049	Morgan Stanley	CMBX North America BBB 2 Index		5,000,000	0.60%	Quarterly			1,535,654

43

NOTES TO FINANCIAL STATEMENTScontinued

Expiration	Counterparty	Reference Debt Obligation/Index	Notional Amount		Fixed Payments Received by the Fund	Frequency of Payments Received	Unrealized Gain (Loss)
09/20/2008	CitiBank	Goldman Sachs, 6.60%, 01/01/2012	$	500,000	0.70%	Quarterly		$	24
09/20/2008	CitiBank	Lehman Brothers, 6.625%, 01/18/2012		500,000	1.00%	Quarterly			(1,719)
09/20/2008	JPMorgan	Merril Lynch, 5.00%, 01/15/2015		500,000	0.80%	Quarterly			(1,908)
09/20/2008	JPMorgan	Lehman Brothers, 6.625%, 01/18/2012		500,000	1.25%	Quarterly			(1,075)
12/20/2008	Goldman Sachs	Lehman Brothers, 6.625%, 01/18/2012		500,000	0.85%	Quarterly			(2,104)
12/20/2008	Lehman Brothers	Morgan Stanley, 6.60%, 0/01/2012		500,000	1.15%	Quarterly			(532)
03/20/2009	Goldman Sachs	Morgan Stanley, 6.60%, 0/01/2012		500,000	1.75%	Quarterly			2,003
03/20/2009	Citigroup	AIG, 6.25%, 05/01/2036		1,000,000	1.55%	Quarterly			5,358
03/20/2009	Lehman Brothers	AIG, 6.25%, 05/01/2036		750,000	2.25%	Quarterly			9,247
09/20/2010	Goldman Sachs	Duke Realty, Ltd., 5.40%, 08/15/2014		500,000	0.75%	Quarterly			(17,066)
09/20/2012	Morgan Stanley	Duke Realty, Ltd., 5.40%, 08/15/2014		500,000	0.90%	Quarterly			(29,565)
06/20/2012	Morgan Stanley	Dow Jones CDX, North American Investment Grade Index		1,000,000	0.35%	Quarterly			(23,132)
06/20/2013	Lehman Brothers	Centex Corp., 5.25%, 06/15/2015		40,000	5.12%	Quarterly			2,318
12/13/2049	Morgan Stanley	CMBX North America BBB 3 Index		5,000,000	2.00%	Quarterly			(2,083,907)

44

NOTES TO FINANCIAL STATEMENTScontinued

Expiration	Counterparty	Reference Debt Obligation/Index	Notional Amount		Fixed Payments Received by the Fund	Frequency of Payments Received	Unrealized Gain (Loss)
12/13/2049	Morgan Stanley	CMBX North America AA Index	$	200,000	0.27%	Quarterly		$	(31,363)
12/13/2049	Lehman Brothers	CMBX North America AJ 3 Index		2,000,000	1.47%	Quarterly			185,158
12/13/2049	Goldman Sachs	CMBX North America AA 3 Index		600,000	0.27%	Quarterly			(67,997)
12/13/2049	Lehman Brothers	CMBX North America AJ 3 Index		800,000	1.47%	Quarterly			33,165
02/17/2051	Lehman Brothers	CMBX North America AA 4 Index		300,000	1.65%	Quarterly			11,408
02/17/2051	Goldman Sachs	CMBX North America AA 4 Index		4,000,000	1.65%	Quarterly			(509,944)
02/17/2051	Lehman Brothers	CMBX North America AA 4 Index		1,000,000	1.65%	Quarterly			(127,486)

At April 30, 2008, the Fund had the following total return swap contracts outstanding:

Expiration	Notional Amount		Counterparty	Swap Description	Unrealized Gain
06/01/2008	$	2,000,000	Lehman Brothers	Agreement dated 03/01/2008 to receive the spread return on the Lehman Brothers CMBS AAA 8.5+yr Index plus 10 basis points multiplied by the notional amount and to pay the negative spread return.	$	62,882
08/01/2008		11,000,000	Lehman Brothers	Agreement dated 02/01/2008 to receive the spread return on the Lehman Brothers CMBS AAA 8.5+yr Index multiplied by the notional amount and to pay the negative spread return.		344,965
09/01/2008		5,000,000	Lehman Brothers	Agreement dated 03/01/2008 to receive the spread return on the Lehman Brothers CMBS AAA 8.5+yr Index plus 100 basis points multiplied by the notional amount and to pay the negative spread return.		160,830
09/01/2008		2,000,000	Lehman Brothers	Agreement dated 03/01/2008 to receive the spread return on the Lehman Brothers CMBS AAA 8.5+yr Index plus 125 basis points multiplied by the notional amount and to pay the negative spread return.		64,735

45

NOTES TO FINANCIAL STATEMENTS continued

	Notional		Swap	Unrealized
Expiration	Amount	Counterparty	Description	Gain
10/01/2008	$5,000,000	Lehman Brothers	Agreement dated 10/01/2007 to receive the spread return on the Lehman Brothers CMBS AAA 8.5+yr Index minus 62 basis points multiplied by the notional amount and to pay the negative spread return.		$154,305
02/01/2009	9,000,000	Lehman Brothers	Agreement dated 02/01/2008 to receive the spread return on the Lehman Brothers CMBS AAA 8.5+yr Index minus 40 basis points multiplied by the notional amount and to pay the negative spread return.		279,344

On April 30, 2008, the aggregate cost of securities for federal income tax purposes was $285,225,448. The gross unrealized appreciation and depreciation on securities based on tax cost was $7,206,403 and $15,360,866, respectively, with a net unrealized depreciation of $8,154,463.

As of April 30, 2008, the Fund had $31,625,704 in capital loss carryovers for federal income tax purposes expiring as follows:

		Expiration
2009	2010	2013	2015	2016
$14,769,764	$4,586,980	$4,295,612	$3,669,132	$4,304,216

These losses are subject to certain limitations prescribed by the Internal Revenue Code.

For income tax purposes, capital losses incurred after October 31 within the Fund’s fiscal year are deemed to arise on the first business day of the following fiscal year. As of April 30, 2008, the Fund incurred and will elect to defer post-October losses of $10,904.

6. INTERFUND LENDING

Pursuant to an Exemptive Order issued by the SEC, the Fund may participate in an inter-fund lending program with certain funds in the Evergreen fund family. This program allows the Fund to borrow from, or lend money to, other participating funds. During the year ended April 30, 2008, the Fund did not participate in the interfund lending program.

7. DISTRIBUTIONS TO SHAREHOLDERS

As of April 30, 2008, the components of distributable earnings on a tax basis were as follows:

	Capital Loss
Unrealized	Carryovers and	Temporary Book/
Depreciation	Post-October Losses	Tax Differences
$8,150,705	$31,636,608	$(426,616)

The differences between the components of distributable earnings on a tax basis and the amounts reflected in the Statement of Assets and Liabilities are primarily due to wash

46

NOTES TO FINANCIAL STATEMENTS continued

sales, premium amortization, forward contracts and swap contracts. The temporary book/tax differences are a result of timing differences between book and tax recognition of income and/or expenses.

The tax character of distributions paid was as follows:

	Year Ended April 30,
	2008		2007
Ordinary Income	$	10,049,340	$	17,447,562
Return of Capital		3,978,008		247,586

8. EXPENSE REDUCTIONS

Through expense offset arrangements with ESC and the Fund’s custodian, a portion of fund expenses has been reduced.

9. DEFERRED TRUSTEES’ FEES

Each Trustee of the Fund may defer any or all compensation related to performance of his or her duties as a Trustee. The Trustees’ deferred balances are allocated to deferral accounts, which are included in the accrued expenses for the Fund. The investment performance of the deferral accounts is based on the investment performance of certain Evergreen funds. Any gains earned or losses incurred in the deferral accounts are reported in the Fund’s Trustees’ fees and expenses. At the election of the Trustees, the deferral account will be paid either in one lump sum or in quarterly installments for up to ten years.

10. FINANCING AGREEMENT

The Fund and certain other Evergreen funds share in an unsecured revolving credit commitment for temporary and emergency purposes, including the funding of redemptions, as permitted by each participating fund’s borrowing restrictions. Borrowings under this facility bear interest at 0.50% per annum above the Federal Funds rate. All of the participating funds are charged an annual commitment fee on the unused balance, which is allocated pro rata. The credit facility is for $100 million with an annual commitment fee of 0.08%. During the year ended April 30, 2008, the Fund had no borrowings.

11. REGULATORY MATTERS AND LEGAL PROCEEDINGS

Pursuant to an administrative order issued by the SEC on September 19, 2007, EIMC, EIS, ESC (collectively, the “Evergreen Entities”), Wachovia Securities, LLC and the SEC have entered into an agreement settling allegations of (i) improper short-term trading arrangements in effect prior to May 2003 involving former officers and employees of EIMC and certain broker-dealers, (ii) insufficient systems for monitoring exchanges and enforcing exchange limitations as stated in certain funds’ prospectuses, and (iii) inadequate e-mail retention practices. Under the settlement, the Evergreen Entities were censured and have paid approximately $32 million in disgorgement and penalties. This amount, along with a fine assessed by the SEC against Wachovia Securities, LLC will be

47

NOTES TO FINANCIAL STATEMENTS continued

distributed pursuant to a plan to be developed by an independent distribution consultant and approved by the SEC. The Evergreen Entities neither admitted nor denied the allegations and findings set forth in its settlement with the SEC.

In addition, the Evergreen funds and EIMC and certain of its affiliates are involved in various legal actions, including private litigation and class action lawsuits. EIMC does not expect that any of such legal actions currently pending or threatened will have a material adverse impact on the financial position or operations of any of the Evergreen funds or on EIMC’s ability to provide services to the Evergreen funds.

Although EIMC believes that none of the matters discussed above will have a material adverse impact on the Evergreen funds, there can be no assurance that these matters and any publicity surrounding or resulting from them will not result in reduced sales or increased redemptions of Evergreen fund shares, which could increase Evergreen fund transaction costs or operating expenses, or that they will not have other adverse consequences on the Evergreen funds.

12. NEW ACCOUNTING PRONOUNCEMENTS

In September 2006, FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157”). FAS 157 establishes a single authoritative definition of fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FAS 157 applies to fair value measurements already required or permitted by existing standards. The change to current generally accepted accounting principles from the application of FAS 157 relates to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. Management of the Fund does not believe the adoption of FAS 157 will materially impact the financial statement amounts, however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements on changes in net assets for the period. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years.

In March 2008, FASB issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“FAS 161”), an amendment of FASB Statement No. 133. FAS 161 requires enhanced disclosures about (a) how and why a fund uses derivative instruments, (b) how derivative instruments and hedging activities are accounted for, and (c) how derivative instruments and related hedging activities affect a fund’s financial position, financial performance, and cash flows. Management of the Fund does not believe the adoption of FAS 161 will materially impact the financial statement amounts, but will require additional disclosures. This will include qualitative and quantitative disclosures on derivative positions existing at period end and the effect of using derivatives during the reporting period. FAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.

48

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Trustees and Shareholders

Evergreen Fixed Income Trust

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the Evergreen Core Plus Bond Fund, formerly Evergreen Diversified Bond Fund, a series of the Evergreen Fixed Income Trust, as of April 30, 2008 and the related statement of operations for the year then ended, statements of changes in net assets for each of the years in the two-year period then ended and the financial highlights for each of the years or periods in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of April 30, 2008 by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Evergreen Core Plus Bond Fund as of April 30, 2008, the results of its operations, changes in its net assets and financial highlights for each of the periods described above, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts

June 27, 2008

49

ADDITIONAL INFORMATION(unaudited)

FEDERAL TAX DISTRIBUTIONS

The Fund paid total distributions of $14,027,348 during the year ended April 30, 2008 of which 71.64% was from ordinary taxable and 28.36% was from a non-taxable return of capital. Shareholders of the Fund will receive in early 2009 a Form 1099-DIV that will inform them of the tax character of this distribution as well as all other distributions made by the Fund in calendar year 2008.

50

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51

TRUSTEES AND OFFICERS

TRUSTEES1
Charles A. Austin III Trustee DOB: 10/23/1934 Term of office since: 1991 Other directorships: None	Investment Counselor, Anchor Capital Advisors, LLC. (investment advice); Director, The Andover Companies (insurance); Trustee, Arthritis Foundation of New England; Former Director, The Francis Ouimet Society (scholarship program); Former Director, Executive Vice President and Treasurer, State Street Research & Management Company (investment advice)
K. Dun Gifford Trustee DOB: 10/23/1938 Term of office since: 1974 Other directorships: None	Chairman and President, Oldways Preservation and Exchange Trust (education); Trustee, Chairman of the Finance Committee, Member of the Executive Committee, and Former Treasurer, Cambridge College
Dr. Leroy Keith, Jr. Trustee DOB: 2/14/1939 Term of office since: 1983 Other directorships: Trustee, Phoenix Fund Complex (consisting of 53 portfolios as of 12/31/2007)	Managing Director, Almanac Capital Management (commodities firm); Trustee, Phoenix Fund Complex; Director, Diversapack Co. (packaging company); Former Partner, Stonington Partners, Inc. (private equity fund); Former Director, Obagi Medical Products Co.; Former Director, Lincoln Educational Services
Carol A. Kosel1 Trustee DOB: 12/25/1963 Term of office since: 2008 Other directorships: None	Former Consultant to the Evergreen Boards of Trustees; Former Vice President and Senior Vice President, Evergreen Investments, Inc.; Former Treasurer, Evergreen Funds; Former Treasurer, Vestaur Securities Fund
Gerald M. McDonnell Trustee DOB: 7/14/1939 Term of office since: 1988 Other directorships: None	Former Manager of Commercial Operations, CMC Steel (steel producer)
Patricia B. Norris Trustee DOB: 4/9/1948 Term of office since: 2006 Other directorships: None	President and Director of Buckleys of Kezar Lake, Inc. (real estate company); Former President and Director of Phillips Pond Homes Association (home community); Former Partner, PricewaterhouseCoopers, LLP (independent registered public accounting firm)
William Walt Pettit Trustee DOB: 8/26/1955 Term of office since: 1988 Other directorships: None	Partner and Vice President, Kellam & Pettit, P.A. (law firm); Director, Superior Packaging Corp. (packaging company); Member, Superior Land, LLC (real estate holding company), Member, K&P Development, LLC (real estate development); Former Director, National Kidney Foundation of North Carolina, Inc. (non-profit organization)
David M. Richardson Trustee DOB: 9/19/1941 Term of office since: 1982 Other directorships: None	President, Richardson, Runden LLC (executive recruitment advisory services); Director, J&M Cumming Paper Co. (paper merchandising); Trustee, NDI Technologies, LLP (communications); Former Consultant, AESC (The Association of Executive Search Consultants)
Dr. Russell A. Salton III Trustee DOB: 6/2/1947 Term of office since: 1984 Other directorships: None	President/CEO, AccessOne MedCard, Inc.

52

TRUSTEES AND OFFICERS continued

Michael S. Scofield Trustee DOB: 2/20/1943 Term of office since: 1984 Other directorships: None	Retired Attorney, Law Offices of Michael S. Scofield; Former Director and Chairman, Branded Media Corporation (multi-media branding company)
Richard J. Shima Trustee DOB: 8/11/1939 Term of office since: 1993 Other directorships: None	Independent Consultant; Director, Hartford Hospital; Trustee, Greater Hartford YMCA; Former Director, Trust Company of CT; Former Director, Old State House Association; Former Trustee, Saint Joseph College (CT)
Richard K. Wagoner, CFA2 Trustee DOB: 12/12/1937 Term of office since: 1999 Other directorships: None	Member and Former President, North Carolina Securities Traders Association; Member, Financial Analysts Society
OFFICERS
Dennis H. Ferro3 President DOB: 6/20/1945 Term of office since: 2003	Principal occupations: President and Chief Executive Officer, Evergreen Investment Company, Inc. and Executive Vice President, Wachovia Bank, N.A.; former Chief Investment Officer, Evergreen Investment Company, Inc.
Kasey Phillips4 Treasurer DOB: 12/12/1970 Term of office since: 2005	Principal occupations: Senior Vice President, Evergreen Investment Management Company, LLC; Former Vice President, Evergreen Investment Services, Inc.; Former Assistant Vice President, Evergreen Investment Services, Inc.
Michael H. Koonce4 Secretary DOB: 4/20/1960 Term of office since: 2000	Principal occupations: Senior Vice President and General Counsel, Evergreen Investment Services, Inc.; Secretary, Senior Vice President and General Counsel, Evergreen Investment Management Company, LLC and Evergreen Service Company, LLC; Senior Vice President and Assistant General Counsel, Wachovia Corporation
Robert Guerin4 Chief Compliance Officer DOB: 9/20/1965 Term of office since: 2007	Principal occupations: Chief Compliance Officer, Evergreen Funds and Senior Vice President of Evergreen Investments Co., Inc.; Former Managing Director and Senior Compliance Officer, Babson Capital Management LLC; Former Principal and Director, Compliance and Risk Management, State Street Global Advisors; Former Vice President and Manager, Sales Practice Compliance, Deutsche Asset Management

¹ Each Trustee, except Mses. Kosel and Norris, serves until a successor is duly elected or qualified or until his or her death, resignation, retirement or removal from office. As new Trustees, Ms. Kosel’s and Ms. Norris’ initial terms end December 31, 2010 and June 30, 2009, respectively, at which times they may be re-elected by Trustees to serve until a successor is duly elected or qualified or until her death, resignation, retirement or removal from office by the Trustees. Each Trustee, except Ms. Kosel, oversaw 94 Evergreen funds as of December 31, 2007. Ms. Kosel became a Trustee on January 1, 2008. Correspondence for each Trustee may be sent to Evergreen Board of Trustees, P.O. Box 20083, Charlotte, NC 28202.

² Mr. Wagoner is an “interested person” of the Fund because of his ownership of shares in Wachovia Corporation, the parent to the Fund’s investment advisor.

³ The address of the Officer is 401 S. Tryon Street, 20th Floor, Charlotte, NC 28288.

⁴ The address of the Officer is 200 Berkeley Street, Boston, MA 02116.

Additional information about the Fund’s Board of Trustees and Officers can be found in the Statement of Additional Information (SAI) and is available upon request without charge by calling 800.343.2898.

53

566659 rv5 06/2008

Item 2 - Code of Ethics

(a) The Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer and principal financial officer.

(b) During the period covered by this report, there were no amendments to the provisions of the code of ethics adopted in 2.(a) above.

(c) During the period covered by this report, there were no implicit or explicit waivers to the provisions of the code of ethics adopted in 2.(a) above.

Item 3 - Audit Committee Financial Expert

Charles A. Austin III and Patricia B. Norris have been determined by the Registrant’s Board of Trustees to be audit committee financial experts within the meaning of Section 407 of the Sarbanes-Oxley Act. These financial experts are independent of management.

Items 4 – Principal Accountant Fees and Services

The following table represents fees for professional audit services rendered by KPMG LLP, for the audits of each of the five series of the Registrant’s annual financial statements for the fiscal years ended April 30, 2008 and April 30, 2007, and fees billed for other services rendered by KPMG LLP.

	2008	2007
Audit fees	$149,300	$136,900
Audit-related fees (1)	6,200	0
Tax fees (2)	8,182	360
Non-audit fees (3)	1,162,374	808,367
All other fees	0	0
Total fees	$1,326,056	$945,627

(1) Audit-related fees consists primarily of fees for merger activity.

(2) Tax fees consists of fees for tax consultation, tax compliance and tax review.

(3) Non-audit fees consists of the aggregate fees for non-audit services rendered to the Fund, EIMC (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor) and EIS.

Evergreen Funds

Evergreen Income Advantage Fund

Evergreen Multi-Sector Fund

Evergreen Utilities and High Income Fund

Evergreen International Balanced Income Fund

Evergreen Global Dividend Opportunity Fund

Audit and Non-Audit Services Pre-Approval Policy

I. Statement of Principles

Under the Sarbanes-Oxley Act of 2002 (the “Act”), the Audit Committee of the Board of Trustees/Directors is responsible for the appointment, compensation and oversight of the work of the independent auditor. As part of this responsibility, the Audit Committee is required to pre-approve the audit and non-audit services performed by the independent auditor in order to assure that they do not impair the auditor’s independence from the Funds. To implement these provisions of the Act, the Securities and Exchange Commission (the “SEC”) has issued rules specifying the types of services that an independent auditor may not provide to its audit client, as well as the audit committee’s administration of the

engagement of the independent auditor. Accordingly, the Audit Committee has adopted, and the Board of Trustees/Directors has ratified, the Audit and Non-Audit Services Pre Approval Policy (the “Policy”), which sets forth the procedures and the conditions pursuant to which services proposed to be performed by the independent auditor may be pre-approved.

The SEC’s rules establish two different approaches to pre-approving services, which the SEC considers to be equally valid. Proposed services either: may be pre-approved without consideration of specific case-by-case services by the Audit Committee (“general pre-approval”); or require the specific pre-approval of the Audit Committee (“specified pre-approval”). The Audit Committee believes that the combination of these two approaches in this Policy will result in an effective and efficient procedure to pre-approve services performed by the independent auditor. As set forth in this Policy, unless a type of service has received general pre-approval, it will require specific pre-approval by the Audit Committee if it is to be provided by the independent auditor. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by the Audit Committee.

For both types of pre-approval, the Audit Committee will consider whether such services are consistent with the SEC’s rules on auditor independence. The Audit Committee will also consider whether the independent auditor is best positioned to provide the most effective and efficient service, for reasons such as its familiarity with the Funds’ business people, culture, accounting systems, risk profile and other factors, and whether the service might enhance the Funds’ ability to manage or control risk or improve audit quality. All such factors will be considered as a whole, and no one factor should necessarily be determinative.

The Audit Committee is also mindful of the relationship between fees for audit and non-audit services in deciding whether to pre-approve any such services and may determine, for each fiscal year, the ratio between the total amount of fees for Audit, Audit-related and Tax services and the total amount of fees for certain permissible non-audit services classified as All Other services.

The term of any general pre-approval is 12 months from the date of pre-approval, unless the Audit Committee considers a different period and states otherwise. The Audit Committee will annually review and pre-approve the services that may be provided by the independent auditor without obtaining specific pre-approval from the Audit Committee. The Audit Committee will add or subtract to the list of general pre-approved services from time to time, based on subsequent determinations.

The purpose of this Policy is to set forth the procedures by which the Audit Committee intends to fulfill its responsibilities. It does not delegate the Audit Committee’s responsibilities to pre-approve services performed by the independent auditor to management.

The independent auditor has reviewed this Policy and believes that implementation of the policy will not adversely affect the auditor’s independence.

II. Delegation

As provided in the Act and the SEC’s rules, the Audit Committee may delegate either type of pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions of the Audit Committee at its next scheduled meeting.

III. Audit Services

The annual Audit services engagement terms and fees will be subject to the specific pre-approval of the Audit Committee. Audit services include the annual financial statement audit and other procedures required to be performed by the independent auditor to be able to form an opinion on the Funds’ financial statements. These other procedures include information systems and procedural reviews and testing performed in order to understand and place reliance on the systems of internal control, and consultations relating to the audit. Audit services also include the attestation engagement for the independent auditor’s report on management’s report on internal controls for financial reporting. The Audit Committee will monitor the Audit services engagement as necessary, but no less than on a quarterly basis, and will also

approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Fund service providers or other items.

In addition to the annual Audit services engagement approved by the Audit Committee, the Audit Committee may grant general pre-approval to other Audit services, which are those services that only the independent auditor reasonably can provide. Other Audit services may include services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with mergers or acquisitions.

IV. Audit-related Services

Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Funds’ financial statements or that are traditionally performed by the independent auditor. Because the Audit Committee believes that the provision of Audit-related services does not impair the independence of the auditor and is consistent with SEC’s rules on auditor independence, the Audit Committee may grant general pre-approval to Audit-related services. Audit-related services include, among others, due diligence services pertaining to potential business acquisitions/dispositions; accounting consultations related to accounting, financial reporting or disclosure matters not classified as “Audit services”; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; agreed-upon or expanded audit procedures related to accounting records required to respond to or comply with financial, accounting or regulatory reporting matters; and assistance with internal control reporting requirements.

V. Tax Services

The Audit Committee believes that the independent auditor can provide Tax services to the Funds such as tax compliance, tax planning and tax advice without impairing the auditor’s independence, and the SEC has stated that the independent auditor may provide such services. Hence, the Audit Committee believes it may grant general pre-approval to those Tax services that have historically been provided by the auditor, that the Audit Committee has reviewed and believes would not impair the independence of the auditor, and that are consistent with the SEC’s rules on auditor independence. The Audit Committee will not permit the retention of the independent auditor in connection with a transaction initially recommended by the independent auditor, the sole business purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee will consult with the Director of Fund Administration, the Vice President of Tax Services or outside counsel to determine that the tax planning and reporting positions are consistent with this policy.

All Tax services involving large and complex transactions must be specifically pre-approved by the Audit Committee, including: tax services proposed to be provide by the independent auditor to any executive officer or director of the Funds, in his or her individual capacity, where such services are paid for by the Funds or the investment advisor.

VI. All Other Services

The Audit Committee believes, based on the SEC’s rules prohibiting the independent auditor from providing specific non-audit services, that other types of non-audit services are permitted. Accordingly, the Audit Committee believes it may grant general pre-approval to those permissible non-audit services classified as All Other services that it believes are routine and recurring services, would not impair the independence of the auditor and are consistent with the SEC’s rules on auditor independence.

The SEC’s rules and relevant guidance should be consulted to determine the precise definitions of the SEC’s prohibited non-audit services and the applicability of exceptions to certain of the prohibitions.

VII. Pre-Approval Fee Levels or Budgeted Amounts

Pre-approval fee levels or budgeted amounts for all services to be provided by the independent auditor will be established annually by the Audit Committee. Any proposed services exceeding these levels or amounts will require specific pre-approval by the Audit Committee. The Audit Committee is mindful of the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services. For each fiscal year, the Audit Committee may determine to ratio between the total amount of fees

for Audit, Audit-related and Tax services, and the total amount of fees for services classified as All Other services.

VIII. Procedures

All requests or applications for services to be provided by the independent auditor that do not require specific approval by the Audit Committee will be submitted to the Director of Fund Administration or Assistant Director of Fund Administration and must include a detailed description of the services to be rendered. The Director/Assistant Director of Fund Administration will determine whether such services are included within the list of services that have received the general pre-approval of the Audit Committee. The Audit Committee will be informed on a quarterly basis (or more frequent if requested by the audit committee) of any such services rendered by the independent auditor.

Request or applications to provide services that require specific approval by the Audit Committee will be submitted to the Audit Committee by both the independent auditor and the Director/Assistant Director of Fund Administration, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC’s rules on auditor independence.

The Audit Committee has designated the Chief Compliance Officer to monitor the performance of all services provided by the independent auditor and to determine whether such services are in compliance with this policy. The Chief Compliance Officer will report to the Audit Committee on a periodic basis on the results of its monitoring. Both the Chief Compliance Officer and management will immediately report to the chairman of the Audit Committee any breach of this policy that comes to the attention of the Chief Compliance Officer or any member of management.

The Audit Committee will also review the internal auditor’s annual internal audit plan to determine that the plan provides for the monitoring of the independent auditor’s services.

IX. Additional Requirements

The Audit Committee has determined to take additional measures on an annual basis to meet its responsibility to oversee the work of the independent auditor and to assure the auditor’s independence from the Funds, such as reviewing a formal written statement from the independent auditor delineating all relationships between the independent auditor and the Funds, the Funds’ investment advisor and related parties of the investment advisor, consistent with Independence Standards Board Standard No. 1, and discussing with the independent auditor its methods and procedures for ensuring independence.

Items 5 – Audit Committee of Listed Registrants

Not applicable.

Item 6 – Schedule of Investments

Please see schedule of investments contained in the Report to Stockholders included under Item 1 of this Form N-CSR.

Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable.

Item 8 – Portfolio Managers of Closed-End Management Investment Companies.

Not applicable.

Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

Not applicable.

Item 10 – Submission of Matters to a Vote of Security Holders

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees that have been implemented since the Registrant last provided disclosure in response to the requirements of this Item.

Item 11 - Controls and Procedures

(a) The Registrant’s principal executive officer and principal financial officer have evaluated the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) within 90 days of this filing and have concluded that the Registrant’s disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the Registrant in this Form N-CSR was recorded, processed, summarized, and reported timely.

(b) There has been no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonable likely to affect, the Registrant’s internal control over financial reporting .

Item 12 - Exhibits

File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.

(a) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the Registrant intends to satisfy the Item 2 requirements through filing of an exhibit.

(b)(1)       Separate certifications for the Registrant’s principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached as EX99.CERT.

(b)(2)       Separate certifications for the Registrant’s principal executive officer and principal financial officer, as required by Section 1350 of Title 18 of United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule 30a-2(b) under the Investment Company Act of 1940, are attached as EX99.906CERT. The certifications furnished pursuant to this paragraph are not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certifications are not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Evergreen Fixed Income Trust
By:		:
	Dennis H. Ferro Principal Executive Officer

Date: June 30, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By:		:
	Dennis H. Ferro Principal Executive Officer

Date: June 30, 2008

By:		:
	Kasey Phillips Principal Financial Officer

Date: June 30, 2008