EX-1 3 offtpros.htm EVERGREEN OFFIT INTERMEDIATE AND LONG TERM BOND FUNDS

Prospectus, September 16, 2002
as amended November 11, 2002

Evergreen
Intermediate and Long Term Bond Funds


Evergreen Offit High Yield Fund
Evergreen Offit Mortgage Securities Fund
Evergreen Offit U.S. Government Securities Fund
Class A
Class I
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 SUMMARIES:

Overview of Fund Risks
Evergreen Offit High Yield Fund
Evergreen Offit Mortgage Securities Fund
Evergreen Offit U.S. Government Securities Fund

GENERAL INFORMATION:

The Funds' Investment Advisor
The Funds' 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 Funds
Fees and Expenses of the Funds
Financial Highlights
Other Fund Practices

In general,

the Funds included in this prospectus provide investors with a selection of investment alternatives which seek a high level of current income or a combination of current income and capital growth (total return).

Fund Summaries Key

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

INVESTMENT GOAL

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

INVESTMENT STRATEGY

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

RISK FACTORS

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

PERFORMANCE

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

EXPENSES

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

Overview of Fund Risks

Intermediate and Long Term Bond Funds

typically rely on a combination of the following strategies:

  • investing a majority of their assets in bonds and other debt instruments;
  • investing in securities which produce current income; and
  • selling a portfolio investment: i) when the issuer's investment fundamentals begin to deteriorate; ii) to take advantage of more attractive yield opportunities; iii) when the investment no longer appears to meet the Fund's investment objective; iv) when the Fund must meet redemptions; or v) for other investment reasons which a portfolio manager deems necessary.

may be appropriate for investors who:

  • seek a long-term investment offering total return (except Offit U.S. Government Securities Fund which seeks only current income).
Following this overview, you will find information on each Fund's specific investment strategies and risks.

Each 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 each Fund's principal investment strategies and investment goals 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.

Below Investment Grade Bond Risk

Below investment grade bonds are commonly referred to as "high yield" or "junk" bonds because they are usually backed by issuers of less proven or questionable financial strength. Such issuers are more vulnerable to financial setbacks and less certain to pay interest and principal than issuers of bonds offering lower yields and risk. Markets may react to unfavorable news about issuers of below investment grade bonds, causing sudden and steep declines in value and resulting in a decreased liquidity of such bonds.

Foreign Investment Risk

If a Fund invests in non-U.S. securities it could be exposed to certain unique risks of foreign investing. For example, political turmoil and economic instability in the countries in which a 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 a 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 a 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.

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.

Non-Diversification Risk

An investment in a fund that is non-diversified entails greater risk than an investment in a diversified fund. When a fund is non-diversified, it may invest a greater percentage of assets in a single issuer than may be invested by a diversified fund. A higher percentage of investments among fewer issuers may result in greater fluctuation in the total market value of the Fund’s portfolio than in a fund which invests in numerous issuers.

Offit High Yield Fund

FUND FACTS:

Goals:

  • High Income
  • Capital Growth

    • Principal Investment:

  • High Yield, High Risk Bonds

    • Classes of Shares Offered in this Prospectus:

  • Class A
  • Class I

    • Investment Advisor:

  • OFFITBANK Fund Advisors

    • Portfolio Managers:

  • By Team

    • Dividend Payment Schedule:

  • Monthly

    • INVESTMENT GOAL

    The Fund seeks high current income. Capital growth is a secondary objective.

    INVESTMENT STRATEGY

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

    The Fund is a non-diversified fund that normally invests at least 80% of its assets in "seasoned" (i.e., the issuer has been in operation for more than one year) U.S. corporate fixed income securities that are rated below investment grade. The securities offering the high yield that the Fund seeks are generally found in mature cyclical or depressed industries and highly leveraged companies. The Fund also invests in senior securities and may invest in securities of issuers with an operating history of less than one year. The Fund may invest in debt securities of any maturity and the interest rates on such securities may be fixed or floating. In addition, the Fund may invest up to 20% of its assets in foreign securities. When selecting securities, the portfolio managers consider the following factors: yield, price and rating of the security; the balance sheet, capital structure and management of the issuer; and the variety of issuers and industries represented in the Fund’s portfolio. The Fund seeks to achieve its secondary objective of capital growth by normally investing in fixed income securities that are judged to be more creditworthy than generally perceived in the marketplace.

    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:

    • Interest Rate Risk
    • Credit Risk
    • Below Investment Grade Bond Risk
    • Foreign Investment Risk
    • Non-Diversification 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 the Class I shares of the Fund in each calendar year since the Class I shares’ inception on 3/2/1994. 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 I Shares (%) 1
    1995 1996 1997 1998 1999 2000 2001
    17.72 12.46 12.09 4.49 1.10 - 4.34 4.14

    Best Quarter: 1st Quarter 2001 + 6.24 %1
    Worst Quarter: 3rd Quarter 2001 - 4.84 %1
    Year-to-date total return through 9/30/2002 is -4.62%. 1

    The next table lists the Fund’s average annual total return by class over the past one and five years and since inception, including applicable sales charges. The after-tax returns shown are for Class I, the Fund's oldest class; 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 Merrill Lynch All High Yield Bond Index (MLHYBI), an unmanaged market index that provides a broad-based performance measure of the non-investment grade U.S. domestic bond index. 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 3/2/1994
    Class A 12/29/2000 - 1.01 % 2.36 % N/A 5.17 %
    Class I 3/2/1994 4.14 % 3.36 % N/A 5.82 %
    Class I 2 3/2/1994 0.23 %- 0.38 % N/A 2.01 %
    (after taxes on distributions)
    Class I 2 3/2/1994 2.54 % 0.90 % N/A 2.79 %
    (after taxes on distributions and sale of Fund shares)
    MLHYBI 6.20 % 3.95 % N/A 9.22 %

    1. Historical performance shown for Class A is based on the performance of (1) the Advisor shares of the Fund's predecessor fund, OFFIT High Yield Fund and (2) prior to 12/29/2000, on the Select shares, the original class offered by the fund's predecessor fund. There were no Advisor shares outstanding for the predecessor fund from 12/31/1999 until 12/29/2000. Historical performance for Class I is based on the performance of the Select shares of the fund's predecessor fund. The historical returns for Class A have not been adjusted to reflect the effect of each class' 12b-1 fees. These fees are 0.25% for Class A and the Advisor shares. Class I and Select shares do not pay a 12b-1 fee. If these fees had been reflected, returns for Class A 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 assume a complete sale of Fund shares at the end of the 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 estimated for the Fund’s fiscal year ending 12/31/2002.

    Shareholder Fees (fees paid directly from your investment)
    Shareholder Transaction Expenses Class A Class I
    Maximum sales charge imposed on purchases (as a % of offering price) 4.75 %3 None
    Maximum deferred sales charge (as a % of either the redemption amount or initial investment, whichever is lower) None 3 None

    3. Investments of $1 million or more are not subject to a front-end sales charge, but will be subject to a contingent deferred sales charge of 1.00% upon redemption within one year after the month of purchase.

    Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
    Management Fees 12b-1 Fees Other Expenses Total Fund Operating Expenses
    Class A 0.76 % 0.25 % 0.24 % 1.25 %
    Class I 0.76 % 0.00 % 0.24 % 1.00 %

    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 are the same as described in the table above. Your actual costs may be higher or lower.

    Example of Fund Expenses
    Assuming Redemption At End of Period
    After: Class A Class I
    1 year $ 596 $ 102
    3 years $ 853 $ 318
    5 years $ 1,129 $ 552
    10 years $ 1,915 $ 1,225

    Offit Mortgage Securities Fund

    FUND FACTS:

    Goal:

  • Maximize Total Return

    • Principal Investment:

  • Mortgage-Backed Securities

    • Classes of Shares Offered in this Prospectus:

  • Class A
  • Class I

    • Investment Advisor:

  • OFFITBANK Fund Advisors

    • Portfolio Managers:

  • By Team

    • Dividend Payment Schedule:

  • Monthly

    • INVESTMENT GOAL

    The Fund seeks to maximize total return through a combination of current income and capital growth.

    INVESTMENT STRATEGY

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

    The Fund is a non-diversified fund that normally invests at least 80% of its assets in investment grade or comparable mortgage-related securities issued by U.S. entities, including those issued or guaranteed by an agency or instrumentality of the U.S. government and those issued by non-governmental issuers. The Fund will invest primarily in mortgage-related securities representing interests in residential property, adjustable rate and derivative multiclass mortgage securities and collateralized mortgage obligations issued by U.S. entities. In addition, the remaining 20% of the Fund’s assets may be invested in investment grade or comparable fixed income securities of U.S. and non-U.S. issuers. The Fund is not limited with regard to the maturities of the securities in which it may invest.

    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:

    • Interest Rate Risk
    • Credit Risk
    • Foreign Investment Risk
    • Mortgage-Backed and Asset-Backed Securities Risk
    • Non-Diversification Risk
    In addition, the Fund is also subject to extension risk. An unexpected rise in interest rates could reduce the rate of prepayments on mortgage securities and extend their life. This could cause the price of mortgage securities and the Fund’s share price to fall and would make the mortgage securities more sensitive to interest rate changes.

    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 the Class I shares of the Fund in each calendar year since the Class I shares’ inception on 7/1/1997. 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 I Shares (%) 1
    1998 1999 2000 2001
    7.26 0.23 10.86 7.54

    Best Quarter: 3rd Quarter 2001 + 4.05 %1
    Worst Quarter: 2nd Quarter 1999 - 1.21 %1
    Year-to-date total return through 9/30/2002 is +6.67%. 1

    The next table lists the Fund’s average annual total return by class over the past one year and since inception, including applicable sales charges. The after-tax returns shown are for Class I, the Fund's oldest class; 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 Merrill Lynch Mortgage Master Index (MLMMI), an unmanaged market index that provides a broad-based performance measure of the mortgage-backed securities market in the U.S. 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 7/1/1997
    Class A 2/28/2002 2.45 % N/A N/A 5.69 %
    Class I 7/1/1997 7.54 % N/A N/A 6.84 %
    Class I 2 7/1/1997 5.12 % N/A N/A 4.31 %
    (after taxes on distributions)
    Class I 2 7/1/1997 4.57 % N/A N/A 4.21 %
    (after taxes on distributions and sale of Fund shares)
    MLMMI 8.14 % N/A N/A 7.36 %

    1. Historical performance for Class A prior to its inception and Class I is based on the performance of the Select shares of the fund's predecessor fund, OFFIT Mortgage Securities Fund. The historical returns for Class A have not been adjusted to reflect the effect of each class' 12b-1 fees. These fees are 0.25% for Class A. Class I and Select shares do not pay a 12b-1 fee. If these fees had been reflected, returns for Class A 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 assume a complete sale of Fund shares at the end of the 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 estimated for the Fund’s fiscal year ending 12/31/2002.

    Shareholder Fees (fees paid directly from your investment)
    Shareholder Transaction Expenses Class A Class I
    Maximum sales charge imposed on purchases (as a % of offering price) 4.75 %3 None
    Maximum deferred sales charge (as a % of either the redemption amount or initial investment, whichever is lower) None 3 None

    3. Investments of $1 million or more are not subject to a front-end sales charge, but will be subject to a contingent deferred sales charge of 1.00% upon redemption within one year after the month of purchase.

    Annual Fund Operating Expenses (expenses that are deducted from Fund assets)
    Management Fees 12b-1 Fees Other Expenses Total Fund Operating Expenses 4
    Class A 0.35 % 0.25 % 0.24 % 0.84 %
    Class I 0.35 % 0.00 % 0.24 % 0.59 %

    4. From time to time, the Fund's investment advisor may, at its discretion, reduce or waive its fees or reimburse the Fund for certain of its expenses in order to 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 fee waivers, Total Fund Operating Expenses are estimated to be 0.80% for Class A, and 0.55% for Class I.

    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 are the same as described in the table above. Your actual costs may be higher or lower.

    Example of Fund Expenses
    Assuming Redemption At End of Period
    After: Class A Class I
    1 year $ 557 $ 60
    3 years $ 730 $ 189
    5 years $ 919 $ 329
    10 years $ 1,463 $ 738

    Offit U.S. Government Securities Fund

    FUND FACTS:

    Goal:

  • Current Income

    • Principal Investment:

  • U.S. Government Securities

    • Class of Shares Offered in this Prospectus:

  • Class I

    • Investment Advisor:

  • OFFITBANK Fund Advisors

    • Portfolio Managers:

  • By Team

    • Dividend Payment Schedule:

  • Monthly

    • INVESTMENT GOAL

    The Fund seeks current income.

    INVESTMENT STRATEGY

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

    The Fund is a non-diversified fund that normally invests at least 80% of its assets in debt instruments issued or guaranteed by the U.S. government, its agencies, or instrumentalities, such as U.S. Treasury obligations, mortgage-backed securities, asset-backed securities, and collateralized mortgage obligations (CMOs) issued by U.S. government agencies, including but not limited to the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Government National Mortgage Association (Ginnie Mae). The Fund also may invest up to 20% of its assets in other fixed income securities rated AAA by Standard & Poor's Ratings Services or Fitch IBCA, or Aaa by Moody's Investors Services, Inc., or deemed by the portfolio managers to be of comparable quality, including foreign governmental debt obligations, non-U.S. dollar denominated debt obligations of the U.S. government; and corporate debt obligations such as asset-backed securities.

    The Fund is not limited with regard to the maturities of the securities in which it may invest. Investment decisions are based on a continual evaluation of the supply and demand for capital, the current and future shape of the yield curve, underlying trends in the direction of interest rates and relative value among market sectors.

    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:

    • Interest Rate Risk
    • Credit Risk
    • Foreign Investment Risk
    • Mortgage-Backed and Asset-Backed Securities Risk
    • Non-Diversification 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 the Class I shares of the Fund in each calendar year since the Class I shares’ inception on 7/1/1997. 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 I Shares (%) 1
    1998 1999 2000 2001
    9.82 - 1.95 11.98 7.41

    Best Quarter: 3rd Quarter 1998 + 6.26 %1
    Worst Quarter: 1st Quarter 1999 - 1.52 %1
    Year-to-date total return through 9/30/2002 is +8.45%. 1

    The next table lists the Fund’s average annual total return for Class I over the past one year and since inception. This table is intended to provide you with some indication of the risks of investing in the Fund by comparing its performance with the Merrill Lynch 5 Year U.S. Treasury Index (MLUSTI), an unmanaged market index that provides a broad-based performance measure of the U.S. Treasury market consisting of securities with five-year maturities. 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 7/1/1997
    Class I 7/1/1997 7.41 % N/A N/A 6.99 %
    Class I 2 7/1/1997 4.17 % N/A N/A 4.41 %
    (after taxes on distributions)
    Class I 2 7/1/1997 4.49 % N/A N/A 4.31 %
    (after taxes on distributions and sale of Fund shares)
    MLUSTI 7.50 % N/A N/A 6.98 %

    1. Historical performance shown for Class I is based on the performance of the Select shares of the Fund’s predecessor fund, OFFIT U.S. Government Securities Fund.

    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 assume a complete sale of Fund shares at the end of the 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 estimated for the Fund’s fiscal year ending 12/31/2002.

    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 I 0.35 % 0.00 % 0.31 % 0.66 %

    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 fee waivers, Total Fund Operating Expenses are estimated to be 0.55% for Class I.

    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 are the same as described in the table above. Your actual costs may be higher or lower.

    Example of Fund Expenses
    Assuming Redemption At End of Period
    After: Class I
    1 year $ 67
    3 years $ 211
    5 years $ 368
    10 years $ 822

    THE FUNDS' INVESTMENT ADVISOR

    An investment advisor manages a Fund's investments and supervises its daily business affairs. The investment advisor for these Evergreen funds is OFFITBANK Fund Advisors, a subsidiary of Wachovia Corporation (Wachovia), the fourth largest bank holding company in the United States, with over $333.8 billion in consolidated assets as of 9/30/2002. Wachovia is located at 301 South College Street, Charlotte, North Carolina 28288-0013.

    OFFITBANK Fund Advisors (OFFITBANK) is the investment advisor to the Funds. OFFITBANK has been managing mutual funds and private accounts since 1994 and manages over $1.03 billion in investment assets for 9 of the Evergreen funds as of 9/30/2002. OFFITBANK is located at 520 Madison Avenue, New York, NY 10022.

    Each Fund will pay OFFITBANK the following annual contractual advisory fees based on a percentage of the Fund’s average daily net assets:

    Fund % of the Fund's average daily net assets
    Offit High Yield Fund First $200 million 0.85 %
    Next $400 million 0.75 %
    Over $600 million 0.65 %
    Offit Mortgage Securities Fund 0.35 %
    Offit U.S. Government Securities Fund 0.35 %

    THE FUNDS' PORTFOLIO MANAGERS

    Offit High Yield Fund

    The Fund is managed by a team of portfolio management professionals from OFFITBANK'S High Yield Bond team, with team members responsible for various sectors.

    Offit Mortgage Securities Fund

    The Fund is managed by a team of portfolio management professionals from OFFITBANK's Core Fixed Income team, with team members responsible for various sectors.

    Offit U.S. Government Securities Fund

    The Fund is managed by a team of portfolio management professionals from OFFITBANK'S Customized Fixed Income team, with team members responsible for various 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 Funds 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. In addition, developments that occur in foreign countries between the close of the foreign markets and the Fund's valuation time may not be reflected in the Fund's NAV. As a result, the value of the Fund may change on days when the investor will not be able to purchase or redeem the Fund's shares. The value of the Fund will reflect these activities on the next trading day of the NYSE. If a determination is made that a foreign event or development is significant enough to have a material effect on the Fund's NAV, the securities will be priced at fair value.

    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. Each Fund offered in this prospectus offers up to two different share classes: Class A and Class I. To determine which classes of shares are offered by each Fund, see the Fund Facts section next to each Fund’s Risk/Return Summary previously presented. Class A has its own sales charge while Class I does not have a sales charge. For additional information regarding these fees, see "Service Fees and Commissions Paid to Investment Firms" in part two of the SAI. Pay particularly close attention to the fee structure of each class so you know how much you will be paying before you invest.

    Class A

    If you select Class A shares, you may pay a front-end sales charge of up to 4.75%, but you do not pay a deferred sales charge. In addition, Class A shares are subject to an expense known as 12b-1 fees.

    The front-end sales charge is deducted from your investment before it is invested. The actual charge depends on the amount invested, as shown below:

    Your investment As a % of NAV excluding sales charges As a % of your investment Dealer commission as a % of NAV
    Up to $49,999 4.75 % 4.99 % 4.25 %
    $50,000-$99,999 4.50 % 4.71 % 4.25 %
    $100,000-$249,999 3.75 % 3.90 % 3.25 %
    $250,000-$499,999 2.50 % 2.56 % 2.00 %
    $500,000-$999,999 2.00 % 2.04 % 1.75 %
    $1,000,000-$2,999,999 0.00 % 0.00 % 1.00% of the first $2,999,999, plus,
    $3,000,000-$4,999,999 0.00 % 0.00 % 0.50% of the next $2,000,000, plus
    $5,000,000 or greater 0.00 % 0.00 % 0.25% of amounts equal to or over $5,000,000

    Although no front-end sales charge applies to purchases of $1 million and over, you will pay a 1.00% deferred sales charge if you redeem any such shares within one year after the month of purchase.

    Class A shares are offered at NAV to corporate or certain other qualified retirement plans, or non-qualified deferred compensation plans of Title I ERISA tax-sheltered annuities or TSA plans sponsored by an organization having 100 or more eligible employees (certain plans may require a greater number of eligible employees). Such purchases are subject to a dealer commission of 1.00% of the amount of purchase (subject to recapture upon early redemption) if redeemed within 12 months after the month of purchase.

    Three ways you can reduce your Class A sales charges:

    1. Rights of Accumulation. You may add the value of all of your existing Evergreen funds investments in all share classes, excluding Evergreen money market funds, to determine the front-end sales charge to be applied to your current Class A purchase.
    2. Letter of Intent. You may reduce the front-end sales charge on a current purchase if you agree to invest at least $50,000 in Class A shares of an Evergreen fund over a 13-month period. You will pay the same sales charge as if you had invested the full amount all at one time. The Fund will hold a certain portion of your investment in escrow until your commitment is met.
    3. Combined Purchases. You may reduce your front-end sales charge if you purchase Class A shares in multiple Evergreen funds, excluding Evergreen money market funds, at the same time. The combined dollar amount invested will determine the front-end sales charge applied to all of your current purchases. For example, if you invested $75,000 in each of two different Evergreen funds, you would pay a sales charge based on a $150,000 purchase (i.e., 3.75% of the offering price, rather than 4.50%).
    Contact your investment professional or a service representative at Evergreen Service Company, LLC at 1.800.343.2898 if you think you may qualify for any of these services. For more information on these services see "Sales Charge Waivers and Reductions" in the SAI.

    Each Fund may also sell Class A shares at NAV without a front-end or deferred sales charge to the Directors, Trustees, officers and employees of the Fund, and the advisory affiliates of Wachovia, and to members of their immediate families, to registered representatives of firms with dealer agreements with Evergreen Distributor, Inc. (EDI), and to a bank or trust company acting as trustee for a single account.

    Class I

    Each Fund offers Class I shares at NAV without a front-end sales charge, deferred sales charge or 12b-1 fees. Class I shares are only offered to investment advisory clients of an investment advisor of an Evergreen fund (or its advisory affiliates), through special arrangements entered into on behalf of the Evergreen funds with certain financial services firms, certain institutional investors and persons who owned Class Y shares in registered name in an Evergreen fund on or before December 31, 1994.

    Calculating the Deferred Sales Charge

    If imposed, the Fund deducts the deferred sales charge from the redemption proceeds you would otherwise receive. The deferred sales charge is a percentage of the lesser of (i) the NAV of the shares at the time of redemption or (ii) the shareholder's original net cost for such shares. Upon request for redemption, the Fund will first seek to redeem shares not subject to the deferred sales charge and then shares held the longest in an effort to keep the deferred sales charge a shareholder must pay as low as possible. The deferred sales charge on any redemption is, to the extent permitted by the NASD Regulation, Inc., paid to EDI or its predecessor.

    Promotional Incentives on Dealer Commissions

    EDI may, from time to time, provide promotional incentives, including reallowance and/or payment of up to the entire sales charge, to certain investment firms. Such incentives may, at EDI’s discretion, be limited to investment firms who allow their individual selling representatives to participate in such additional commissions. Please consult the SAI for more information regarding promotional incentives.

    HOW TO BUY SHARES

    Evergreen funds make investing easy. Once you decide on an amount and a share class, simply fill out an application and send in your payment, or talk to your investment professional or an Evergreen funds service representative.

    Minimum Initial Purchase of Class A Shares Minimum Initial Purchase of Class I Shares Minimum Additional Purchases
    Regular Accounts $ 1,000 $ 1,000,000 1 None
    IRAs $ 250 N/A 2 None
    Systematic Investment Plan $ 50 N/A 2$ 25/monthly (for Class A) 2

    1. Minimum initial purchase amount does not apply to former Class Y shareholders.

    2. Former Class Y shareholders may invest at the Class A share amounts.

    Method Opening an Account Adding to an Account
    By Mail or through an Investment Professional
    • Complete and sign the account application. Applications may be downloaded off our website at EvergreenInvestments.com.
    • Make the check payable to Evergreen funds. Cash, credit cards, third party checks, credit card checks or money orders will not be accepted.
    • Mail the application and your check to the address below:

      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

    • Or deliver them to your investment professional (provided he or she has a broker-dealer arrangement with EDI).
    • Make your check payable to Evergreen funds.
    • Write a note specifying:
      • the Fund name
      • share class
      • your account number
      • the name(s) in which the account is registered
    • Mail to the address to the left or deliver to your investment professional (provided he or she has a broker-dealer arrangement with EDI).
    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 trading day’s closing price. 3
    • 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, or by calling the Evergreen Express Line at 1.800.346.3858 or visiting our website at EvergreenInvestments.com. 4
    • 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 funds family. 5
    • 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).
    Systematic Investment Plan (SIP) 6
    • You can transfer money automatically from your bank account into your Fund on a monthly or quarterly basis.
    • Initial investment minimum is $50 if you invest at least $25 per month with this service.
    • To enroll, check off the box on the account application and provide:
      • your bank account information
      • the amount and date of your monthly or quarterly investment
    • To establish automatic investing for an existing account, call 1.800.343.2898 for an application.
    • The minimum is $25 per month or $75 per quarter.
    • You can also establish an investing program through direct deposit from your paycheck. Call 1.800.343.2898 for details.

    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.

    4. 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.

    5. 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.

    6. Evergreen Investment Services, Inc. (EIS) will fund a $50 initial investment in Class A shares of the Evergreen funds for employees of Wachovia and its affiliates when the employee enrolls in a new Evergreen SIP and agrees to subsequent monthly investments of $50. EIS will fund a $100 initial investment in Class A shares of the Evergreen funds for employees of Wachovia when the employee enrolls in a new Evergreen SIP through a CAP account and agrees to subsequent monthly investments of $100. To be eligible for either of these offers, the employee must open an account with Wachovia Securities, Inc. to execute the transactions. If the employee redeems his shares within 12 months after the month of purchase, EIS reserves the right to reclaim its $50 or $100 initial investment.

    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 funds 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 next market trading 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 Funds
      P.O. Box 8400
      Boston, MA 02266-8400

      Overnight Address:

      Evergreen Funds
      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.
    • To redeem from an IRA or other retirement account, call 1.800.343.2898 for special instructions.
    Redeem Your Shares in Person
    • You may also redeem your shares by contacting your investment professional or an Evergreen funds service representative.
    • A fee may be charged for this service.
    Systematic Withdrawal Plan (SWP)
    • You can transfer money automatically from your Fund account on a monthly or quarterly basis - without redemption fees.
    • The withdrawal can be mailed to you, or deposited directly into your bank account.
    • The minimum is $75 per month.
    • The maximum is 1.00% of your account per month or 3.00% per quarter.
    • To enroll, call 1.800.343.2898 for instructions.

    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 Evergreen Distributors, Inc. ("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.

    Payroll Deduction (Class A only)

    If you want to invest automatically through your paycheck, call us to find out how you can set up direct payroll deductions. The amounts deducted will be invested in your Fund account using the Electronic Funds Transfer System. We will provide the Fund account number. Your payroll department will let you know the date of the pay period when your investment begins. Visit our website at EvergreenInvestments.com for more information.

    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.

    Reinstatement Privileges

    Within 90 days of redemption, you may re-establish your investment at the current NAV by reinvesting some, or all, of your redemption proceeds into the same share class of any Evergreen fund. If a deferred sales charge was deducted from your redemption proceeds, the full amount of the deferred sales charge will be credited to your account at the NAV on the date of reinstatement and your deferred sales charge schedule will resume from the time of the original redemption.

    THE TAX CONSEQUENCES OF INVESTING
    IN THE FUNDS

    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 Funds 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. Each 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 Funds generally distribute 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 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.

    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 Funds.

    Retirement Plans

    You may invest in an Evergreen fund through various retirement plans, including IRAs, 401(k) plans, Simplified Employee Plans (SEPs), 403(b) plans, 457 plans and others. For special rules concerning these plans, including applications, restrictions, tax advantages, and potential sales charge waivers, contact your investment professional. To determine if a retirement plan may be appropriate for you, consult your tax advisor.

    FEES AND EXPENSES OF THE FUNDS

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

    Management Fee

    The management fee pays for the normal expenses of managing the Fund, including portfolio manager salaries, research costs, 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 average daily net assets of Class A shares. However, currently the 12b-1 fees for Class A shares are limited to 0.25% of the average daily net assets of the class. These fees 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 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 not charged directly to your account, 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 share in each share class of the Funds - how much income it earned, how much of this income was passed along as a distribution and how much the return was reduced by expenses. The tables for each Fund for the year ended December 31, 2001 have been derived from financial information audited by KPMG LLP, the predecessor funds' independent auditors. The tables for each Fund for the periods prior to December 31, 2001 have been derived from financial information audited by the predecessor funds' previous auditors. For a more complete picture of the Funds' financial statements, please see the the SAI as well as the predecessor funds' Annual Report.

    Offit High Yield Fund

    Six Months Ended
    June 30, 2002 Year Ended December 31, Period Ended December 31,
    (unaudited) 2001 2000 1998 1997 1
    CLASS A 2, 3
    Net asset value, beginning of period $ 7.49
    		$ 7.92
    		$ 9.91
    		$ 10.34
    		$ 10.37
    Income from investment operations
    Net investment income 0.30 0.76 0.02 0.60 0.32
    Net realized and unrealized gains or losses on securities - 0.42
    		- 0.44
    		- 1.99
    		- 0.43
    		0.09
    Total from investment operations - 0.12
    		0.32
    		- 1.97
    		0.17
    		0.41
     
    Distributions to shareholders from
    Net investment income - 0.31 - 0.75 - 0.02 - 0.60 - 0.32
    Net realized gains 0
    		0
    		0
    		0
    		- 0.12
    Total distributions to shareholders - 0.31
    		- 0.75
    		- 0.02
    		- 0.60
    		- 0.44
     
    Net asset value, end of period $ 7.06
    		$ 7.49
    		$ 7.92
    		$ 9.91
    		$ 10.34
    Total return 4- 1.70 % 4.02 %- 4.57 % 0.67 % 3.93 %
    Ratios and supplemental data
    Net assets, end of period (thousands) $ 3,887 $ 5,166 $ 2,660 $ 7 $ 15
    Ratios to average net assets
       Expenses 5 1.24 %6 1.17 % 1.13 %6 0.93 %6 1.03 %6
       Net investment income 8.14 %6 9.55 % 9.11 %6 9.54 %6 7.87 %6
    Portfolio turnover rate 18 % 40 % 22 % 36 % 47 %

    Six Months Ended
    June 30, 2002 Year Ended December 31,
    (unaudited) 2001 2000 1999 1998 1997
    CLASS I 2
    Net asset value, beginning of period $ 7.48
    		$ 7.92
    		$ 9.11
    		$ 9.91
    		$ 10.34
    		$ 10.15
    Income from investment operations
    Net investment income 0.31 0.77 0.76 0.90 0.88 0.87
    Net realized and unrealized gains or losses on securities - 0.41
    		- 0.44
    		- 1.13
    		- 0.79
    		- 0.43
    		0.31
    Total from investment operations - 0.10
    		0.33
    		- 0.37
    		0.11
    		0.45
    		1.18
     
    Distributions to shareholders from
    Net investment income - 0.32 - 0.77 - 0.82 - 0.91 - 0.88 - 0.87
    Net realized gains 0
    		0
    		0
    		0
    		0
    		- 0.12
    Total distributions to shareholders - 0.32
    		- 0.77
    		- 0.82
    		- 0.91
    		- 0.88
    		- 0.99
     
    Net asset value, end of period $ 7.06
    		$ 7.48
    		$ 7.92
    		$ 9.11
    		$ 9.91
    		$ 10.34
    Total return - 1.45 % 4.14 %- 4.34 % 1.10 % 4.49 % 12.09 %
    Ratios and supplemental data
    Net assets, end of period (thousands) $ 607,388 $ 773,536 $ 945,788 $ 1,454,507 $ 1,739,622 $ 1,346,553
    Ratios to average net assets
       Expenses 5 0.99 %6 0.92 % 0.88 % 0.82 % 0.84 % 0.87 %
       Net investment income 8.39 %6 9.78 % 9.36 % 8.91 % 8.67 % 8.67 %
    Portfolio turnover rate 18 % 40 % 22 % 42 % 36 % 47 %

    1. For the period from August 14, 1997 (commencement of class operations) through December 31, 1997.

    2. On November 8, 2002, the assets and certain liabilities of OFFIT High Yield Fund were acquired by Evergreen Offit High Yield Fund. Shareholders of Advisor and Select shares of OFFIT High Yield Fund became owners of Class A and Class I shares, respectively, of Evergreen Offit High Yield Fund. OFFIT High Yield Fund was the accounting and performance survivor of this transaction. The financial highlights are those of OFFIT High Yield Fund, the predecessor fund.

    3. There were no Advisor shares outstanding of the Fund's predecessor fund, OFFIT High Yield Fund for the period ended December 31, 1999.

    4. Excluding applicable sales charges

    5. The ratio of expenses to average net assets excludes expense reductions but includes fee waivers.

    6. Annualized

    Offit Mortgage Securities Fund

    Six Months Ended
    June 30, 2002 Year Ended December 31,
    (unaudited) 2001 2000 1999 1998 1997 1
    CLASS I 2
    Net asset value, beginning of period $ 10.24
    		$ 10.10
    		$ 9.71
    		$ 10.28
    		$ 10.17
    		$ 10.00
    Income from investment operations
    Net investment income 0.28 0.60 0.62 0.59 0.58 0.29
    Net realized and unrealized gains or losses on securities 0.14
    		0.15
    		0.39
    		- 0.57
    		0.14
    		0.22
    Total from investment operations 0.42
    		0.75
    		1.01
    		0.02
    		0.72
    		0.51
     
    Distributions to shareholders from
    Net investment income - 0.28 - 0.61 - 0.62 - 0.59 - 0.59 - 0.30
    Net realized gains 0
    		0
    		0
    		0
    		- 0.02
    		- 0.04
    Total distributions to shareholders - 0.28
    		- 0.61
    		- 0.62
    		- 0.59
    		- 0.61
    		- 0.34
     
    Net asset value, end of period $ 10.38
    		$ 10.24
    		$ 10.10
    		$ 9.71
    		$ 10.28
    		$ 10.17
    Total return 4.15 % 7.54 % 10.86 % 0.23 % 7.26 % 5.10 %
    Ratios and supplemental data
    Net assets, end of period (thousands) $ 87,412 $ 80,169 $ 45,024 $ 62,309 $ 54,461 $ 17,037
    Ratios to average net assets
       Expenses 3 0.50 %4 0.50 % 0.50 % 0.50 % 0.50 % 0.50 %4
       Net investment income 5.47 %4 5.77 % 6.39 % 5.92 % 5.72 % 5.77 %4
    Portfolio turnover rate 53 % 60 % 33 % 29 % 78 % 81 %

    1. For the period from July 1, 1997 (commencement of class operations) through December 31, 1997.

    2. On November 8, 2002, the assets and certain liabilities of OFFIT Mortgage Securities Fund were acquired by Evergreen Offit Mortgage Securities Fund. Shareholders of Select shares of OFFIT Mortgage Securities Fund became owners of Class I shares of Evergreen Offit Mortgage Securities Fund. OFFIT Mortgage Securities Fund was the accounting and performance survivor of this transaction. The financial highlights are those of OFFIT Mortgage Securities Fund, the predecessor fund.

    3. The ratio of expenses to average net assets excludes expense reductions but includes fee waivers.

    4. Annualized

    Offit U.S. Government Securities Fund

    Six Months Ended
    June 30, 2002 Year Ended December 31,
    (unaudited) 2001 2000 1999 1998 1997 1
    CLASS I 2
    Net asset value, beginning of period $ 10.24
    		$ 10.32
    		$ 9.76
    		$ 10.46
    		$ 10.17
    		$ 10.00
    Income from investment operations
    Net investment income 0.18 0.44 0.57 0.49 0.50 0.27
    Net realized and unrealized gains or losses on securities 0.16
    		0.31
    		0.56
    		- 0.69
    		0.48
    		0.19
    Total from investment operations 0.34
    		0.75
    		1.13
    		- 0.20
    		0.98
    		0.46
     
    Distributions to shareholders from
    Net investment income - 0.18 - 0.44 - 0.57 - 0.49 - 0.50 - 0.28
    Net realized gains 0
    		- 0.39
    		0
    		- 0.01
    		- 0.19
    		- 0.01
    Total distributions to shareholders - 0.18
    		- 0.83
    		- 0.57
    		- 0.50
    		- 0.69
    		- 0.29
     
    Net asset value, end of period $ 10.40
    		$ 10.24
    		$ 10.32
    		$ 9.76
    		$ 10.46
    		$ 10.17
    Total return 3.35 % 7.41 % 11.98 %- 1.95 % 9.82 % 4.71 %
    Ratios and supplemental data
    Net assets, end of period (thousands) $ 31,687 $ 40,192 $ 52,693 $ 42,422 $ 39,359 $ 3,955
    Ratios to average net assets
       Expenses 3 0.50 %4 0.50 % 0.50 % 0.50 % 0.50 % 0.50 %4
       Net investment income 3.50 %4 4.20 % 5.74 % 4.85 % 4.59 % 5.32 %4
    Portfolio turnover rate 402 % 868 % 592 % 225 % 423 % 153 %

    1. For the period from July 1, 1997 (commencement of class operations) through December 31, 1997.

    2. On November 8, 2002, the assets and certain liabilities of OFFIT U.S. Government Securities Fund were acquired by Evergreen Offit U.S. Government Securities Fund. Shareholders of Select shares of OFFIT U.S. Government Securities Fund became owners of Class I shares of Evergreen Offit U.S. Government Securities Fund. OFFIT U.S. Government Securities Fund was the accounting and performance survivor of this transaction. The financial highlights are those of OFFIT U.S. Government Securities Fund, the predecessor fund.

    3. The ratio of expenses to average net assets excludes expense reductions but includes fee waivers.

    4. Annualized

    OTHER FUND PRACTICES

    The Funds 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 a Fund's portfolio to protect against market decline, to maintain a Fund's exposure to its market, to manage cash or attempt to increase income. Although this is intended to increase returns, these practices may actually reduce returns or increase volatility.

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

    Evergreen Funds



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


    • Money Market Funds
  • California Municipal Money Market Fund
  • Florida Municipal Money Market Fund
  • Money Market Fund
  • Municipal Money Market Fund
  • New Jersey Municipal Money Market Fund
  • New York Municipal Money Market Fund
  • Pennsylvania Municipal Money Market Fund
  • Treasury Money Market Fund
  • U.S. Government Money Market Fund


    • State Municipal Bond Funds
  • Connecticut Municipal Bond Fund
  • Evergreen Offit California Municipal Bond Fund
  • Evergreen Offit New York Municipal Bond Fund
  • Florida High Income Municipal Bond Fund
  • Florida Municipal Bond Fund
  • Georgia Municipal Bond Fund
  • Maryland Municipal Bond Fund
  • New Jersey Municipal Bond Fund
  • North Carolina Municipal Bond Fund
  • Pennsylvania Municipal Bond Fund
  • South Carolina Municipal Bond Fund
  • Virginia Municipal Bond Fund


    • National Municipal Bond Funds
  • Evergreen Offit National Municipal Bond Fund
  • High Grade Municipal Bond Fund
  • High Income Municipal Bond Fund
  • Intermediate Municipal Bond Fund
  • Municipal Bond Fund
  • Short-Intermediate Municipal Bond Fund


    • 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
  • Evergreen Offit High Yield Fund
  • Evergreen Offit Mortgage Securities Fund
  • Evergreen Offit U.S. Government Securities Fund
  • Fixed Income Fund II
  • High Yield Bond Fund
  • Mortgage Securities Fund
  • Select High Yield Bond Fund
  • Strategic Income Fund
  • U.S. Government Fund


    • Balanced Funds
  • Asset Allocation Fund
  • Balanced Fund
  • Foundation Fund
  • Select Balanced Fund
  • Tax Strategic Foundation Fund


    • Domestic Equity Funds I
  • Aggressive Growth Fund
  • Capital Growth Fund
  • Core Equity Fund
  • Emerging Growth Fund
  • Evergreen Fund
  • Growth Fund
  • Large Company Growth Fund
  • Masters Fund
  • Omega Fund
  • Premier 20 Fund
  • Select Small Cap Growth Fund
  • Select Strategic Growth Fund
  • Special Equity Fund
  • Stock Selector Fund
  • Tax Strategic Equity Fund


    • Domestic Equity Funds II
  • Blue Chip Fund
  • Equity Income Fund
  • Equity Index Fund
  • Growth and Income Fund
  • Small Cap Value Fund
  • Special Values Fund
  • Strategic Value Fund
  • Value Fund


    • Sector Funds
  • Health Care Fund
  • Technology Fund
  • Utility and Telecommunications Fund


    • Global and International Funds
  • Emerging Markets Growth Fund
  • Evergreen Offit Emerging Markets Bond Fund
  • Global Leaders Fund
  • Global Opportunities Fund
  • International Bond Fund
  • International Growth Fund
  • Precious Metals Fund


    • 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, other than SIP and SWP, 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 Intermediate and Long Term Bond Funds, Ask for:

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

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

    For questions, other information, or to request a copy, without charge, of the SAI, call 1.800.343.2898 or ask your investment professional. We will mail material within three business days.

    Information about these Funds (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.
    • 562888 RV1 (11/02)

    SEC File No.: 811-08415
  • Evergreen Investments
  • 200 Berkeley Street
  • Boston, MA 02116-5034