EX-2 3 webis.htm EVERGREEN BALANCED FUNDS - IS PROSPECTUS

Prospectus, August 1, 2002

Evergreen
Balanced Funds


Evergreen Select Balanced Fund
Class IS
The Securities and Exchange Commission has not determined that the information in this prospectus is accurate or complete, nor has it approved or disapproved these securities. Anyone who tells you otherwise is committing a crime.

TABLE OF CONTENTS

FUND RISK/RETURN SUMMARY:

Overview of Fund Risks
Evergreen Select Balanced Fund

GENERAL INFORMATION:

The Fund's Investment Advisor
The Fund's Sub-Advisor
The Fund's Portfolio Managers
Calculating the Share Price
How to Choose an Evergreen Fund
How to Choose the Share Class That Best Suits You
How to Buy Shares
How to Redeem Shares
Other Services
The Tax Consequences of Investing in the Fund
Fees and Expenses of the Fund
Financial Highlights
Other Fund Practices

In general,

the Fund included in this prospectus seeks both capital growth and current income.

Fund Summary Key

The Fund's summary is organized around the following basic topics and questions:

INVESTMENT GOAL

What is the Fund's financial objective? You can find clarification on how the Fund seeks to achieve its objective by looking at the Fund's strategy and investment policies. The Fund's Board of Trustees can change the investment objective without a shareholder vote.

INVESTMENT STRATEGY

How does the Fund go about trying to meet its goals? What types of investments does it contain? What style of investing and investment philosophy does it follow? Does it have limits on the amount invested in any particular type of security?

RISK FACTORS

What are the specific risks for an investor in the Fund?

PERFORMANCE

How well has the Fund performed in the past year? The past five years? The past ten years?

EXPENSES

How much does it cost to invest in the Fund? What is the difference between sales charges and expenses?

Overview of Fund Risks

Select Balanced Fund

typically relies on a combination of the following strategies:

  • investing in common stocks, preferred stocks, and securities convertible into or exchangeable for common stocks;
  • investing a portion of their assets in investment grade debt securities, which are bonds rated within the four highest ratings categories; and
  • selling a portfolio investment: i) when the issuer's investment fundamentals begin to deteriorate; ii) when the investment reaches or exceeds the portfolio manager’s targeted value; iii) to take advantage of more attractive investment opportunities; iv) when the investment no longer appears to meet the Fund's investment objective; v) when the Fund must meet redemptions; or vi) for other investment reasons which the portfolio managers deem necessary.

may be appropriate for investors who:

  • are seeking a long-term investment offering both current income and the potential for capital growth.
Following this overview, you will find information on the Fund's specific investment strategies and risks.

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

Risk Factors For All Mutual Funds

Please remember that an investment in a mutual fund is:

  • not guaranteed to achieve its investment goal
  • not a deposit with a bank
  • not insured, endorsed or guaranteed by the FDIC or any government agency
  • subject to investment risks, including possible loss of your original investment
Like most investments, your investment in a Fund could fluctuate significantly in value over time and could result in a loss of money.

The following are some of the most important factors that may affect the value of your investment. Other factors may be described in the discussion following this overview:

Interest Rate Risk

When interest rates go up, the value of debt securities tends to fall. Since the Fund invests a significant portion of its portfolio in debt securities, if interest rates rise, then the value of your investment may decline. If interest rates go down, interest earned by the Fund on its debt investments may also decline, which could cause the Fund to reduce the dividends it pays. The longer the term of a debt security held by the Fund, the more the Fund is subject to interest rate risk.

Credit Risk

The value of a debt security is directly affected by the issuer's ability to repay principal and pay interest on time. Since the Fund invests in debt securities, the value of your investment may decline if an issuer fails to pay an obligation on a timely basis. The Fund may also be subject to credit risk to the extent it engages in transactions, such as repurchase agreements or dollar rolls, which involve a promise by a third party to honor an obligation to the Fund. Such third party may be unwilling or unable to honor its financial obligations.

Stock Market Risk

Your investment in a Fund will be affected by general economic conditions such as prevailing economic growth, inflation and interest rates. When economic growth slows, or interest or inflation rates increase, equity securities tend to decline in value. Such events could also cause companies to decrease the dividends they pay. If these events were to occur, the dividend yield, total return earned on and the value of your investment would likely decline. Even if general economic conditions do not change, the dividend yield, total return earned on and the value of your investment could decline if the particular industries, companies or sectors in which the Fund invests do not perform well.

Market Capitalization Risk

Stocks fall into three broad market capitalization categories--large, medium and small. Investing primarily in one category carries the risk that due to current market conditions that category may be out of favor with investors. If valuations of large capitalization companies appear to be greatly out of proportion to the valuations of small or medium capitalization companies, investors may migrate to the stocks of small- and mid-sized companies causing a Fund that invests in these companies to increase in value more rapidly than a Fund that invests in larger, fully-valued companies. Investing in medium and small capitalization companies may be subject to special risks associated with narrower product lines, more limited financial resources, smaller management groups, and a more limited trading market for their stocks as compared with larger companies. As a result, stocks of small and medium capitalization companies may decline significantly in market downturns.

Investment Style Risk

Securities with different characteristics tend to shift in and out of favor depending upon market and economic conditions as well as investor sentiment. A Fund may outperform or underperform other funds that employ a different style. A Fund may also employ a combination of styles that impact its risk characteristics. Examples of different styles include growth and value investing. Growth stocks may be more volatile than other stocks because they are more sensitive to investor perceptions of the issuing company's growth of earnings potential. Growth-oriented funds will typically underperform when value investing is in favor. Value stocks are those which are undervalued in comparison to their peers due to adverse business developments or other factors. Value-oriented funds will typically underperform when growth investing is in favor.

Mortgage-Backed and Asset-Backed Securities Risk

Like other debt securities, changes in interest rates generally affect the value of mortgage-backed securities and other asset-backed securities. Additionally, some mortgage-backed securities may be structured so that they may be particularly sensitive to interest rates. Asset-backed and mortgage-backed securities are generally subject to higher prepayment risks than most other types of debt instruments. Prepayment of mortgages may expose the Fund to a lower rate of return when it reinvests the principal. Prepayment risks in mortgage-backed securities tend to increase during periods of declining interest rates because many borrowers refinance their mortgages to take advantage of the more favorable rates.

Select Balanced Fund

FUND FACTS:

Goal:

  • Long-Term Total Return

    • Principal Investments:

  • Common and Preferred Stocks of Large- and mid-sized U.S. Companies
  • Investment Grade Debt Securities
  • U.S. Treasury and Agency Obligations

    • Class of Shares Offered in this Prospectus:

  • Class IS

    • Investment Advisor:

  • Evergreen
    Investment
    Management
    Company, LLC

    • Sub-Advisor:

  • Tattersall Advisory Group, Inc.

    • Portfolio Managers:

  • By Teams

    • NASDAQ Symbol:

  • ESASX

    • Dividend Payment Schedule:

  • Monthly

    • INVESTMENT GOAL

    The Fund seeks long-term total return through capital growth and current income.

    INVESTMENT STRATEGY

    The following supplements the investment strategies discussed in the ''Overview of Fund Risks'' on page 2.

    The Fund invests in common stocks, preferred stocks and fixed income securities to provide a stable income flow. It is anticipated that the Fund's assets allocation will range between 40-75% in common and preferred stocks, 25-50% in fixed income securities and 0-25% in cash equivalents. The equity portion of the Fund invests primarily in the equity securities of large- and mid-sized U.S. companies (i.e., companies whose market capitalizations fall within the range tracked by the Russell 1000® Index, at the time of purchase). In addition, the Fund will seek to maintain a weighted average market capitalization that falls within the range of the Russell 1000® Index. The Fund’s stock selection is based on a style of equity management that allows it to invest in both growth- and value-oriented equity securities. The portfolio managers select equities that demonstrate superior and sustainable earnings growth, as well as those which they believe are undervalued and which exihibit positive trends in their underlying operations and earnings expectations. The investment process combines quantitative and qualitative fundamental analysis to identify companies which exhibit histories of superior earnings, strong current fundamentals, and rising earnings expectations, as well as industry leadership, quality of management, the companies' current positions and future earnings prospects.

    The Fund normally invests primarily all of the fixed income portion in dollar-denominated investment grade debt securities, including debt securities issued or guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S. Government, corporate bonds, mortgage-backed securities, asset-backed securities, and other income producing securities. The Fund is not required to sell or otherwise dispose of any security that loses its rating or has its rating reduced after the Fund has purchased it. The Fund maintains a bias toward corporate and mortgage-backed securities in order to capture higher levels of income. The Fund expects duration to provide a better measure of interest rate sensitivity than maturity. Accordingly, the Fund intends to limit duration to a two-year minimum and a six-year maximum while the weighted average maturity is expected to be longer than the weighted average duration.

    RISK FACTORS

    Your investment in the Fund is subject to the risks discussed in the ''Overview of Fund Risks'' on page 2 under the headings:

    • Stock Market Risk
    • Interest Rate Risk
    • Credit Risk
    • Market Capitalization Risk
    • Investment Style Risk
    • Mortgage-Backed and Asset-Backed Securities Risk
    For further information regarding the Fund's investment strategy and risk factors, see "Other Fund Practices."

    PERFORMANCE

    The following tables show how the Fund has performed in the past. Past performance (both before and after taxes) is not an indication of future results.

    The table below shows the percentage gain or loss for Class IS shares of the Fund in each of the last ten calendar years. It should give you a general idea of the risks of investing in the Fund by showing how the Fund's return has varied from year-to-year. This table includes the effects of Fund expenses.

    Year-by-Year Total Return for Class IS Shares (%) 1
    1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
    8.21 10.68 - 2.15 26.81 11.72 21.21 10.60 13.69 1.51 - 11.20

    Best Quarter: 4th Quarter 1999 + 16.32 %
    Worst Quarter: 1st Quarter 2001 - 13.32 %
    Year-to-date total return through 6/30/2002 is -6.76%.

    The next table lists the Fund’s average annual total return for Class IS over the past one, five and ten years and since inception. The after-tax returns shown are for Class IS; after-tax returns for other classes will vary. This table is intended to provide you with some indication of the risks of investing in the Fund by comparing its performance with the Lehman Brothers Aggregate Bond Index (LBABI) and the Russell 1000® Index (Russell 1000). The LBABI is an unmanaged, fixed income index covering the U.S. investment grade fixed-rate bond market, including U.S. government and U.S. government agency securities, corporate securities and asset-backed securities. The Russell 1000 is an index which measures the performance of the 1,000 largest companies in the Russell 3000® Index, which represents approximately 92% of the total market capitalization of the Russell 3000® Index. The Russell 3000® Index measures the performance of the 3,000 largest U.S. companies based on total market capitalization, which represents approximately 98% of the investable U.S. equity market. An index does not include transaction costs associated with buying and selling securities, any mutual fund expenses or any taxes. It is not possible to invest directly in an index.

    Average Annual Total Return
    (for the period ended 12/31/2001) 1
    Inception Date of Class 1 year 5 year 10 year Performance Since 4/1/1991
    Class IS 4/9/1998 - 11.20 % 6.56 % 8.60 % 9.33 %
    Class IS 2 4/9/1998 - 12.01 % 3.37 % 5.66 % N/A
    (after taxes on distributions)
    Class IS 2 4/9/1998 - 6.82 % 4.29 % 5.90 % N/A
    (after taxes on distributions and sale of Fund shares)
    Russell 1000 - 12.45 % 10.50 % 12.84 % 13.38 %
    LBABI 8.44 % 7.43 % 7.23 % 7.92 %

    1. Historical performance shown for Class IS prior to its inception reflects that of Class Y of the Evergreen Balanced Fund II from 4/1/1991 through 1/22/1998, the inception of Class I. Performance from 1/23/1998 through the inception of Class IS reflects that of Class I. Class I shares are not offered in this prospectus. Performance prior to inception of Class IS does not include 12b-1 fees. These fees are 0.25% for Class IS. Classes I and Y do not pay 12b-1 fees. If fees were reflected, returns for Class IS would have been lower.

    2. The after-tax returns shown are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. After-tax returns on distributions and the sale of Fund shares assumes a complete sale of Fund shares at the end measurement period, resulting in capital gains taxes or a tax benefit from any resulting capital losses. Actual after-tax returns will depend on your individual tax situation and may differ from those shown. The after-tax returns shown are not relevant to you if you hold your Fund shares through tax-deferred arrangements, such as 401(k) plans or IRAs.

    EXPENSES

    This section describes the fees and expenses you would pay if you bought and held shares of the Fund. Annual Fund Operating Expenses are based on the Fund's fiscal year ended 3/31/2002.

    You pay no shareholder transaction fees.

    Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
    Management Fees 12b-1 Fees Other Expenses Total Fund Operating Expenses 3
    Class IS 0.52 % 0.25 % 0.21 % 0.98 %

    3. From time to time, the Fund’s investment advisor may, at its discretion, reduce or waive its fees or reimburse the Fund for certain of its expenses in order to decrease expense ratios. The Fund’s investment advisor may cease these waivers or reimbursements at any time. The Annual Fund Operating Expenses do not reflect fee waivers. Including current fee waivers, Total Fund Operating Expenses were 0.90% for Class IS.

    The table below shows the total expenses you would pay on a $10,000 investment over one-, three-, five- and ten-year periods. The example is intended to help you compare the cost of investing in this Fund versus other mutual funds and is for illustration purposes only. The example assumes a 5% average annual return, reinvestment of all dividends and distributions, and that the Fund's operating expenses remain the same. Your actual costs may be higher or lower.

    Example of Fund Expenses
    After: Class IS
    1 year $ 100
    3 years $ 312
    5 years $ 542
    10 years $ 1,201

    THE FUND'S INVESTMENT ADVISOR

    An investment advisor manages a Fund's investments and supervises its daily business affairs. The investment advisor for the Evergreen funds is a subsidiary of Wachovia Corporation (Wachovia), formerly First Union Corporation, the fourth largest bank holding company in the United States, with over $324.7 billion in consolidated assets as of 6/30/2002. Wachovia is located at 301 South College Street, Charlotte, North Carolina 28288-0013.

    Evergreen Investment Management Company, LLC (EIMC) is the investment advisor to the Fund. EIMC has been managing mutual funds and private accounts since 1932 and manages over $108 billion in assets for 101 of the Evergreen funds as of 6/30/2002. EIMC is located at 200 Berkeley Street, Boston, Massachusetts 02116-5034.

    For the fiscal year ended 3/31/2002, the Fund paid 0.44% of its average daily net assets in aggregate advisory fees to its investment advisor. Effective May, 11, 2001, the investment advisory contract for the Fund was transferred to EIMC. There were no changes in advisory fee rates. The Fund also changed its fiscal year end from September 30 to March 31, effective March 31, 2002.

    THE FUND'S SUB-ADVISOR

    Tattersall Advisory Group, Inc. (TAG) is the sub-advisor to the Fund. TAG manages the fixed income portion of the Fund. There is no additional charge to the Fund for the services provided by TAG. TAG has been managing fixed income accounts since 1976 and manages over $8.6 billion in assets for 7 of the Evergreen Funds as of 6/30/2002. TAG is located at 6802 Paragon Place, Suite 200, Richmond, Virginia 23230.

    EIMC pays a portion of its advisory fee to TAG for its services.

    THE FUND'S PORTFOLIO MANAGERS

    Select Balanced Fund

    The equity portion of the Fund is co-managed by two of EIMC's teams of portfolio management professionals - Value Equity team and the Large Cap Growth team, with team members responsible for various sectors.

    The fixed income portion of the Fund is managed by a team of fixed income portfolio management professionals of TAG, with team members responsible for various fixed income sectors.

    CALCULATING THE SHARE PRICE

    The value of one share of a Fund, also known as the net asset value, or NAV, is calculated at 4 p.m. Eastern time on each day the New York Stock Exchange is open or as of the time the Exchange closes, if earlier. The Fund calculates its share price for each share by adding up its total assets, subtracting all liabilities, then dividing the result by the total number of shares outstanding. The NAV of each class of shares is calculated separately. Each security held by a Fund is valued using the most recent market data for that security. If no market data is available for a given security, the Fund will price that security at fair value according to policies established by the Fund's Board of Trustees. Short-term securities with maturities of 60 days or less will be valued on the basis of amortized cost.

    The price per share you pay for a Fund purchase or the amount you receive for a Fund redemption is based on the next price calculated after the order is received and all required information is provided. The value of your account at any given time is the latest share price multiplied by the number of shares you own. Your account balance may change daily because the share price may change daily.

    The Fund may invest in foreign securities that are primarily listed on foreign exchanges that trade on weekends or other days when the Fund does not price its shares. As a result, the value of the Fund may change on days when investors will not be able to purchase or redeem the Fund’s shares.

    HOW TO CHOOSE AN EVERGREEN FUND

    When choosing an Evergreen fund, you should:

    • Most importantly, read the prospectus to see if the Fund is suitable for you.
    • Consider talking to an investment professional. He or she is qualified to give you investment advice based on your investment goals and financial situation and will be able to answer questions you may have after reading the Fund's prospectus. He or she can also assist you through all phases of opening your account.
    • Request any additional information you want about the Fund, such as the Statement of Additional Information (SAI), Annual Report or Semi-annual Report by calling 1.800.343.2898. In addition, any of these documents, with the exception of the SAI, may be downloaded off our website at EvergreenInvestments.com.

    HOW TO CHOOSE THE SHARE CLASS THAT BEST SUITS YOU

    After choosing a Fund, you select a share class. The Fund offered in this prospectus offers two different institutional classes: Class I and Class IS. Only Class IS shares are offered in this prospectus.

    Class IS shares are sold without a front-end sales charge or contingent deferred sales charge. The minimum initial investment in Class IS shares is $1 million, which may be waived in certain situations. There is no minimum amount required for subsequent purchases.

    The Fund's Class IS shares incur an annual service fee of 0.25% of the average daily net assets of the class for personal service rendered to shareholders and/or the maintenance of accounts.

    HOW TO BUY SHARES

    Institutional investors may buy shares through broker-dealers, banks and certain other financial intermediaries, or directly through the Fund's distributor, Evergreen Distributor, Inc. (EDI).

    Method Opening an Account Adding to an Account
    By Phone
    • Call 1.800.343.2898 to set up an account number and get wiring instructions.
    • Instruct your bank to wire or transfer your purchase (they may charge a wiring fee).
    • Complete the account application and mail to:

      Postal Service Address:

      Evergreen Funds
      P.O. Box 8400
      Boston, MA 02266-8400

      Overnight Address:

      Evergreen Funds
      66 Brooks Drive, Suite 8400
      Braintree, MA 02184-3800

    • Trades accepted after 4 p.m. Eastern time on market trading days will receive the next market day's closing price.
    • Call the Evergreen Express Line at 1.800.346.3858 24 hours a day or to speak with an Evergreen funds service representative call 1.800.343.2898 between 8 a.m. and 6 p.m. Eastern time, on any business day.
    • If your bank account is set up on file, you can request either:
      • Federal Funds Wire (offers immediate access to funds) or
      • Electronic transfer through the Automated Clearing House which avoids wiring fees.
    By Exchange
    • You can make an additional investment by exchange from an existing Evergreen funds account by contacting your investment professional or an Evergreen funds service representative, calling the Evergreen Express Line at 1.800.346.3858 or by visiting our website at EvergreenInvestments.com. 1
    • You can only exchange shares from your account within the same class and under the same registration.
    • There is no sales charge or redemption fee when exchanging funds within the Evergreen fund family. 2
    • Orders placed before 4 p.m. Eastern time on market trading days will be processed at that day's closing share price. Orders placed after 4 p.m. Eastern time will be processed at the next market trading day's closing price. 3
    • Exchanges are limited to three per calendar quarter, but in no event more than five per calendar year.
    • Exchanges between accounts which do not have identical ownership must be made in writing with a signature guarantee. (See "Exceptions: Redemption Requests That Require A Signature Guarantee" on the next page.)

    1. Once you have authorized either the telephone exchange or redemption service, anyone with a Personal Identification Number (PIN) and the required account information (including your investment professional) can request a telephone transaction in your account. All calls are recorded and may be monitored for verification, recordkeeping and quality-assurance purposes. The Evergreen funds reserve the right to terminate the exchange privilege of any shareholder who exceeds the listed maximum number of exchanges, as well as to reject any large dollar exchange or purchase if placing it would, in the judgment of the portfolio manager, adversely affect the price of the Fund.

    2. This does not apply to exchanges from Class A shares of an Evergreen money market fund, unless the account has been subject to a previous sales charge.

    3. The Fund's shares may be made available through financial service firms which are also investment dealers and which have a service agreement with EDI. The Fund has approved the acceptance of purchase and repurchase request orders effective as of the time of their receipt by certain authorized financial intermediaries or their designees. The Evergreen funds reserve the right to adjust the closing time to coincide with an earlier closing of the New York Stock Exchange or due to other unusual circumstances.

    HOW TO REDEEM SHARES

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

    Methods Requirements
    Call Us
    • Call the Evergreen Express Line at 1.800.346.3858 24 hours a day or to speak with an Evergreen service representative call 1.800.343.2898 between 8 a.m. and 6 p.m. Eastern time, on any business day.
    • This service must be authorized ahead of time, and is only available for regular accounts. 1
    • All authorized requests made before 4 p.m. Eastern time on market trading days will be processed at that day's closing price. Requests made after 4 p.m. Eastern time will be processed the following business day. 2
    • We can either:
      • wire the proceeds into your bank account (service charges may apply)
      • electronically transmit the proceeds into your bank account via the Automated Clearing House service
      • mail you a check.
    • All telephone calls are recorded and may be monitored for your protection. We are not responsible for acting on telephone orders we believe are genuine.
    • See "Exceptions: Redemption Requests That Require a Signature Guarantee" below for requests that must be made in writing with your signature guaranteed.
    Write Us
    • You can mail a redemption request to:

      Postal Service Address:

      Evergreen Service Company, LLC
      P.O. Box 8400
      Boston, MA 02266-8400

      Overnight Address:

      Evergreen Service Company, LLC
      66 Brooks Drive, Suite 8400
      Braintree, MA 02184-3800

    • Your letter of instructions must:
      • list the Fund name and the account number
      • indicate the number of shares or dollar value you wish to redeem
      • be signed by the registered owner(s).
    • See "Exceptions: Redemption Requests That Require a Signature Guarantee" below for requests that must be signature guaranteed.
    Redeem Your Shares in Person
    • You may also redeem your shares by contacting your investment professional or an Evergreen service representative.
    • A fee may be charged for this service.

    1. Once you have authorized either the telephone exchange or redemption service, anyone with a Personal Identification Number (PIN) and the required account information (including your investment professional) can request a telephone transaction in your account. All calls are recorded and may be monitored for verification, recordkeeping and quality-assurance purposes. The Evergreen funds reserve the right to terminate the exchange privilege of any shareholder who exceeds the listed maximum number of exchanges, as well as to reject any large dollar exchange or purchase if placing it would, in the judgment of the portfolio manager, adversely affect the price of the Fund.

    2. The Fund's shares may be made available through financial service firms which are also investment dealers and which have a service agreement with EDI. The Fund has approved the acceptance of purchase and repurchase request orders effective as of the time of their receipt by certain authorized financial intermediaries or their designees. The Evergreen funds reserve the right to adjust the closing time to coincide with an earlier closing of the New York Stock Exchange or due to other unusual circumstances.

    Timing of Proceeds

    Normally, we will send your redemption proceeds on the next business day after we receive your request; however, we reserve the right to wait up to seven business days to redeem any investments made by check and ten business days for investments made by Automated Clearing House transfer. We also reserve the right to redeem in kind, under certain circumstances, by paying you the proceeds of a redemption in securities rather than in cash, and to redeem the remaining amount in the account if your redemption brings the account balance below the initial minimum amount.

    Exceptions: Redemption Requests That Require A Signature Guarantee

    To protect you and the Evergreen funds against fraud, certain redemption requests must be made in writing with your signature guaranteed. A signature guarantee can be obtained at most banks and securities dealers. A notary public is not authorized to provide a signature guarantee. The following circumstances require signature guarantees:

    • You are redeeming more than $50,000.
    • You want the proceeds transmitted into a bank account not listed on the account.
    • You want the proceeds payable to anyone other than the registered owner(s) of the account.
    • Either your address or the address of your bank account has been changed within 30 days.
    • The account is registered in the name of a fiduciary corporation or any other organization.
      In these cases, additional documentation is required:
      corporate accounts: certified copy of corporate resolution
      fiduciary accounts: copy of the power of attorney or other governing document

    Who Can Provide A Signature Guarantee:

    • Commercial Bank
    • Trust Company
    • Savings Association
    • Credit Union
    • Member of a U.S. stock exchange

    OTHER SERVICES

    Evergreen Express Line
    1.800.346.3858

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

    Automatic Reinvestment of Distributions

    For the convenience of investors, all dividends and capital gains distributions are automatically reinvested, unless you request otherwise. Distributions can be made by check or electronic transfer through the Automated Clearing House to your bank account. The details of your dividends and other distributions will be included on your statement.

    Telephone Investment Plan

    You may make additional investments electronically in an existing Fund account at amounts of not less than $100 or more than $10,000 per investment. Telephone requests received by 4 p.m. Eastern time will be invested the day the request is received.

    Dividend Exchange

    You may elect on the application to reinvest capital gains and/or dividends earned in one Evergreen fund into an existing account in another Evergreen fund in the same share class and same registration — automatically. Please indicate on the application the Evergreen fund(s) into which you want to invest the distributions.

    THE TAX CONSEQUENCES OF INVESTING
    IN THE FUND

    You may be taxed in two ways:

    • On Fund distributions (dividends and capital gains).
    • On any profit you make when you sell any or all of your shares.

    Fund Distributions

    A mutual fund passes along to all of its shareholders the net income or profits it receives from its investments. The shareholders of the fund then pay any taxes due, whether they receive these distributions in cash or elect to have them reinvested. The Fund expects that substantially all of its regular dividends will be exempt from federal income tax, other than the alternative minimum tax. Otherwise, the Fund will distribute two types of taxable income to you:

    • Dividends. To the extent that regular dividends are derived from investment income that is not tax-exempt, or from short-term capital gains, you will have to include them in your federal taxable income. The Fund pays a monthly dividend from the dividends, interest and other income on the securities in which it invests.
    • Capital Gains. When a mutual fund sells a security it owns for a profit, the result is a capital gain. The Fund generally distributes capital gains, if any, at least once a year, near the end of the calendar year. Short-term capital gains reflect securities held by the Fund for a year or less and are considered ordinary income just like dividends. Profits on securities held longer than 12 months are considered long-term capital gains and are taxed at a special tax rate (20% for most taxpayers).

    Dividend and Capital Gain Reinvestment

    Unless you choose otherwise on the account application, all dividend and capital gain payments will be reinvested to buy additional shares. Distribution checks that are returned and distribution checks that are uncashed when the shareholder has failed to respond to mailings from the shareholder servicing agent will automatically be reinvested to buy additional shares. No interest will accrue on amounts represented by uncashed distribution or redemption checks. We will send you a statement each January with the federal tax status of dividends and distributions paid by the Fund during the previous calendar year.

    Profits You Realize When You Redeem Shares

    When you sell shares in a mutual fund, whether by redeeming or exchanging, you have created a taxable event. You must report any gain or loss on your tax return unless the transaction was entered into by a tax-deferred retirement plan. Investments in money market funds typically do not generate capital gains. It is your responsibility to keep accurate records of your mutual fund transactions. You will need this information when you file your income tax return, since you must report any capital gain or loss you incur when you sell shares. Remember, an exchange is a purchase and a sale for tax purposes.

    Tax Reporting

    Evergreen Service Company, LLC will send you a tax information guide each year during tax season, which may include a cost basis statement detailing the gain or loss on taxable transactions you had during the year. Please consult your own tax advisor for further information regarding the federal, state and local tax consequences of an investment in the Fund.

    Evergreen Service Company, LLC provides you and the IRS with a tax statement of your dividend and capital gains distributions for each calendar year on Form 1099 DIV. Proceeds from a sale are reported on Form 1099B. You must report these on your tax return. You could pay a penalty if you neglect to report them.

    FEES AND EXPENSES OF THE FUND

    Every mutual fund has fees and expenses that are assessed either directly or indirectly. This section describes each of those fees.

    Management Fee

    The management fee pays for the normal expenses of managing the Fund, including portfolio manager salaries, research costs, corporate overhead expenses and related expenses.

    12b-1 Fees

    The Trustees of the Evergreen Funds have approved a policy to assess annual 12b-1 fees of up to 0.75% of the Class IS shares' average daily net assets. However, currently the 12b-1 fees are limited to 0.25% of the Class IS shares' average daily net assets. These fees will increase the cost of your investment. The purpose of the 12b-1 fees is to promote the sale of more shares of the Fund to the public. The Fund may use the 12b-1 fees for advertising and marketing and as a "service fee" to broker-dealers, banks and other financial institutions for additional shareholder services and/or the maintenance of accounts.

    Other Expenses

    Other expenses include miscellaneous fees from affiliated and outside service providers. These may include legal, audit, custodial and safekeeping fees, the printing and mailing of reports and statements, automatic reinvestment of distributions and other conveniences for which the shareholder pays no transaction fees.

    Total Fund Operating Expenses

    The total cost of running the Fund is called the expense ratio. As a shareholder, you are not charged these fees directly; instead they are taken out before the Fund’s NAV is calculated, and are expressed as a percentage of the Fund’s average daily net assets. The effect of these fees is reflected in the performance results for that share class. Because these fees are “invisible,” investors should examine them closely in the prospectus, especially when comparing one fund with another fund in the same investment category. There are three things to remember about expense ratios: (i) your total return in the Fund is reduced in direct proportion to the fees; (ii) expense ratios can vary greatly between funds and fund families, from under 0.25% to over 3.00%; and (iii) the Fund’s investment advisor may waive a portion of the Fund’s expenses for a period of time, reducing its expense ratio.

    FINANCIAL HIGHLIGHTS

    This section looks in detail at the results for one Class IS share of the Fund--how much income it earned, how much of this income was passed along as a distribution and how much the return was reduced by expenses. The following table has been derived from financial information audited by KPMG LLP, the Fund's independent auditors. For a more complete picture of the Fund's financial statements, please see the Fund's Annual Report as well as the SAI.

    Select Balanced Fund

    Year Ended Year Ended June 30,
    March 31, 2002 (a) 2001 2000 1999 1998 (b)
    CLASS IS
    Net asset value, beginning of period $ 11.10 $ 15.14 $ 13.59 $ 13.42 $ 13.34
    Income from investment operations
    Net investment income 0.16 0.37 0.43 0.35 0.07
    Net realized and unrealized gains or losses on securities
    and foreign currency related transactions - 0.50 - 2.07 2.08 0.35 0.09
    Total from investment operations - 0.34 - 1.70 2.51 0.70 0.16
     
    Distributions to shareholders from
    Net investment income - 0.16 - 0.35 - 0.43 - 0.39 - 0.08
    Net realized gains 0 - 1.99 - 0.53 - 0.14 0
    Total distributions to shareholders - 0.16 - 2.34 - 0.96 - 0.53 - 0.08
     
    Net asset value, end of period $ 10.60 $ 11.10 $ 15.14 $ 13.59 $ 13.42
    Total return - 3.07 %- 13.25 % 19.23 % 5.43 % 1.23 %
    Ratios and supplemental data
    Net assets, end of period (thousands) $ 1,338 $ 2,280 $ 1,039 $ 405 $ 215
    Ratios to average net assets
    Expenses‡ 0.91 %† 0.89 % 0.89 % 0.93 % 0.95 %†
    Net investment income 2.19 %† 2.55 % 2.74 % 3.35 % 2.58 %†
    Portfolio turnover rate 174 % 227 % 163 % 60 % 37 %
    (a) For the nine months ended March 31, 2002. The Fund changed its fiscal year end from June 30 to March 31, effective March 31, 2002.
    (b) For the period from April 9, 1998 (commencement of class operations to) to June 30, 1998.
    ‡ The ratio of expenses to average net assets excludes expense reductions but includes fee waivers.
    † Annualized

    OTHER FUND PRACTICES

    The Fund may invest in futures and options, which are forms of derivatives. Derivatives are financial contracts whose value is based on an underlying asset, such as a stock or a bond, or an underlying economic factor, such as an index or an interest rate. Small price movements in the underlying asset can result in immediate and substantial gains or losses in the value of derivatives. Such practices are used to hedge the Fund's portfolio, to maintain the Fund's exposure to its market, to manage cash or to attempt to increase income. Although this is intended to increase returns, these practices may actually reduce returns or increase volatility.

    Although not a principal investment strategy, the Fund may invest up to 10% of its assets in foreign securities, including securities issued by foreign branches of U.S. banks and foreign banks, Canadian commercial paper and Europaper (U.S. dollar-denominated commercial paper of foreign issuers), American Depositary Receipts, European Depositary Receipts and Global Depositary Receipts.

    The Fund's investment in non-U.S. securities could expose it to certain unique risks of foreign investing. For example, political turmoil and economic instability in the countries in which the Fund invests could adversely affect the dividend yield, total return earned on and the value of your investment. In addition, if the value of any foreign currency in which the Fund’s investments are denominated declines relative to the U.S. dollar, the dividend yield, total return earned on and the value of your investment in the Fund may decline as well. Certain foreign countries have less developed and less regulated securities markets and accounting systems than the U.S. This may make it harder to get accurate information about a security or company, and increase the likelihood that an investment will not perform as well as expected.

    Please consult the SAI for more information regarding these and other investment practices used by the Fund, including risks.

    Evergreen Funds



    Institutional Money Market Funds
  • Institutional Money Market Fund
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  • Institutional Treasury Money Market Fund
  • Institutional U.S. Government Money Market Fund
  • Institutional 100% Treasury Money Market Fund
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  • Prime Cash Management Money Market Fund


    • Money Market Funds
  • California Municipal Money Market Fund
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  • Money Market Fund
  • Municipal Money Market Fund
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  • New York Municipal Money Market Fund
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  • U.S. Government Money Market Fund


    • State Municipal Bond Funds
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  • Florida Municipal Bond Fund
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  • Intermediate Municipal Bond Fund
  • Municipal Bond Fund
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    • Short and Intermediate Term Bond Funds
  • Adjustable Rate Fund
  • Limited Duration Fund
  • Short Intermediate Bond Fund


    • Intermediate and Long Term Bond Funds
  • Core Bond Fund
  • Diversified Bond Fund
  • Fixed Income Fund II
  • High Yield Bond Fund
  • Select High Yield Bond Fund
  • Strategic Income Fund
  • U.S. Government Fund


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  • Balanced Fund
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  • Select Balanced Fund
  • Tax Strategic Foundation Fund


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    • Sector Funds
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  • Utility and Telecommunications Fund


    • Global and International Funds
  • Emerging Markets Growth Fund
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    • Evergreen Express Line

    Call 1.800.346.3858

    24 hours a day to

    • check your account
    • order a statement
    • get a Fund’s current price, yield and total return
    • buy, redeem or exchange Fund shares


    Shareholder Services

    Call 1.800.343.2898

    Monday-Friday, 8 a.m. to 6 p.m. Eastern time to

    • buy, redeem or exchange Fund shares
    • order applications
    • get assistance with your account


    Information Line for Hearing and Speech Impaired (TTY/TDD)

    Call 1.800.343.2888

    Monday-Friday, 8 a.m. to 6 p.m. Eastern time



    Write us a letter
  • Evergreen Funds
  • P.O. Box 8400
  • Boston, MA 02266-8400
    • to buy, redeem or exchange Fund shares
    • to change the registration on your account
    • for general correspondence


    For express, registered or certified mail
  • Evergreen Funds
  • 66 Brooks Drive, Suite 8400
  • Braintree, MA 02184-3800


    • Visit us on-line
    EvergreenInvestments.com



    Regular communications you will receive
    Account Statements — You will receive quarterly statements for each Fund you invest in. Please review and promptly notify Evergreen funds of any inaccuracies.

    Confirmation Notices — A confirmation of your transaction is sent within five days. Please review and promptly notify Evergreen funds of any inaccuracies.

    Annual and Semi-annual Reports — You will receive a detailed financial report on each Fund you invest in twice a year.

    Tax Forms — Each January you will receive any Fund tax information you need to complete your tax returns as well as the Evergreen Tax Information Guide.

    For More Information About the Evergreen Select Balanced Fund, Ask for:

    The Fund's most recent Annual or Semi-annual Report, which contains a complete financial accounting for the Fund and a complete list of the Fund's portfolio holdings as of a specific date, as well as commentary from the Fund’s portfolio managers. This report discusses the market conditions and investment strategies that significantly affected the Fund's performance during the most recent fiscal year or period.

    The Statement of Additional Information (SAI), which contains more detailed information about the policies and procedures of the Fund. The SAI has been filed with the Securities and Exchange Commission (SEC) and its contents are legally considered to be part of this prospectus.

    For questions, other information, or to request a copy, without charge, of any of the documents, call 1.800.343.2898 or ask your investment professional. We will mail material within three business days. In addition, any of these documents, with the exception of the SAI, may be downloaded off our website at EvergreenInvestments.com.

    Information about the Fund (including the SAI) is also available on the SEC’s Internet website at http://www.sec.gov. Copies of this material may be obtained, for a duplication fee, by writing the SEC Public Reference Section, Washington D.C. 20549-0102, or by electronic request at the following e-mail address: publicinfo@sec.gov. This material can also be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. For more information about the operation of the Public Reference Room, call the SEC at 1.202.942.8090.

  • Evergreen mutual funds are distributed by Evergreen Distributor, Inc.,
  • 90 Park Avenue, 10th Floor, New York, NY 10016

    • SEC File No.: 811-08363
    559936 RV2 (8/02)
  • Evergreen Investments
  • 200 Berkeley Street
  • Boston, MA 02116-5034