N-CSR 1 edg152302.htm International Balanced Income Fund
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-21799

     International Balanced Income Fund
_____________________________________________________________
(Exact name of registrant as specified in charter)

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

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

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

Date of fiscal year end: October 31, 2007

Date of reporting period: October 31, 2007

Item 1 - Reports to Stockholders.



Evergreen International Balanced Income Fund


    table of contents 
1    LETTER TO SHAREHOLDERS 
4    FINANCIAL HIGHLIGHTS 
5    SCHEDULE OF INVESTMENTS 
15    STATEMENT OF ASSETS AND LIABILITIES 
16    STATEMENTS OF OPERATIONS 
17    STATEMENTS OF CHANGES IN NET ASSETS 
18    NOTES TO FINANCIAL STATEMENTS 
26    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 
27    AUTOMATIC DIVIDEND REINVESTMENT PLAN 
28    ADDITIONAL INFORMATION 
36    TRUSTEES AND OFFICERS 

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

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

The fund has filed with the New York Stock Exchange (“NYSE”) its chief executive officer certification regarding compliance with the NYSE’s listing standards and has filed with the SEC the certification of its chief executive officer and chief financial officer required by section 302 of the Sarbanes-Oxley Act.

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

Evergreen InvestmentsSM is a service mark of Evergreen Investment Management Company, LLC.
Copyright 2007, Evergreen Investment Management Company, LLC.

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

LETTER TO SHAREHOLDERS

December 2007


Dennis H. Ferro

President and Chief Executive Officer

Dear Shareholder:

We are pleased to provide the Annual Report for Evergreen International Balanced Income Fund for the period ended October 31, 2007.

Foreign equity markets delivered solid returns during the twelvemonth period ended October 31, 2007, with stock values driven higher by a durable, worldwide economic expansion. Results were more uneven in the closing months of the twelve-month period, however, as weakness in the U.S. housing industry led to rapidly deteriorating conditions in the subprime mortgage market, raising anxieties in credit markets throughout the globe and roiling equity markets. Stability was restored late in the twelve-month period when the U.S. Federal Reserve Board (the “Fed”) and other major central banks intervened and injected additional liquidity into the capital markets. These actions restored confidence and equity markets regained their upward price momentum over the final two and a half months of the fiscal year.

Fixed income markets produced more modest but positive returns, despite increasing volatility in the final months related to the U.S. housing and mortgage markets. There was a general flight to quality in bond markets as investors sought out the highest-quality securities, especially U.S. Treasuries and other sovereign debt.

Foreign economies continued to expand over the twelve-month period, propelled by explosive

1

LETTER TO SHAREHOLDERS continued

growth in China, India and other emerging markets, improving prospects in Europe and steady growth in the U.S. Among the major industrialized nations, only Japan’s economy exhibited any signs of sluggishness. Despite the problems in housing and subprime mortgages, the domestic economy continued to grow. Solid growth in exports and in business investment helped offset declining residential values, while steadily increasing employment levels and moderately rising wages increased prospects that healthy consumer spending patterns would be sustained. U.S. Gross Domestic Product grew at an annual rate of 4.9% in the third quarter of 2007 as personal spending climbed by 3% — twice the level of the second quarter of 2007, when the economy expanded at a brisk rate of 3.8% . Nevertheless the capital markets, roiled by the subprime and housing industry concerns, appeared increasingly volatile, leading the major central banks, including the Fed, to adjust their policies late in the fiscal period and begin injecting additional liquidity into the financial system.

The management team for Evergreen International Balanced Income Fund continued to seek a high level of income, primarily through investments in the stocks of stable, high-dividend paying foreign companies, while maintaining exposure to foreign debt securities. To add to income potential, this closed-end fund also wrote call options on international indexes.

2

LETTER TO SHAREHOLDERS continued

As always, we encourage investors to maintain diversified investment portfolios in pursuit of their long-term investment goals.

Please visit us at EvergreenInvestments.com for more information about our funds and other investment products available to you. From the Web site, you may also access details about daily fund prices, yields, dividend rates and fund facts about Evergreen closed-end funds. Thank you for your continued support of Evergreen Investments.

Sincerely,


Dennis H. Ferro

President and Chief Executive Officer
Evergreen Investment Company, Inc.

 

Special Notice to Shareholders:

Please visit our Web site at EvergreenInvestments.com for statements from President and Chief Executive Officer, Dennis Ferro, regarding the firm’s recent settlement with the Securities and Exchange Commission (SEC) and prior settlement with the National Association of Securities Dealers (NASD).

3

FINANCIAL HIGHLIGHTS

(For a common share outstanding throughout each period)

    Year Ended    Year Ended April 30, 
    October 31, 
    20071    2007  20062 
Net asset value, beginning of period    $ 21.61    $ 20.59  $ 19.103 
Income from investment operations           
Net investment income (loss)    0.50    0.84  0.39 
Net realized and unrealized gains or losses on investments    1.41    1.93  1.83 
Total from investment operations    1.91    2.77  2.22 
Distributions to common shareholders           
Net investment income    (0.47)    (1.09)  (0.69) 
Net realized gains    (0.40)    (0.66)  0 
Total distributions to common shareholders    (0.87)    (1.75)  (0.69) 
Offering costs charged to capital for common shares    0    0  (0.04) 
Net asset value, end of period    $ 22.65    $ 21.61  $ 20.59 
Market value, end of period    $ 22.15    $ 22.06  $ 19.07 
Total return based on market value4    4.62%    26.00%  (1.16%) 
Ratios and supplemental data           
Net assets of common shareholders, end of period (thousands)    $262,092    $249,600  $235,819 
Ratios to average net assets applicable to common shareholders           
 Expenses including waivers/reimbursements but excluding expense reductions    1.14%5    1.20%  1.20%5 
 Expenses excluding waivers/reimbursements and expense reductions    1.14%5    1.29%  1.27%5 
 Net investment income (loss)    4.61%5    4.12%  3.96%5 
Portfolio turnover rate    39%    90%  42% 

1 For the six months ended October 31, 2007. The Fund changed its fiscal year end from April 30 to October 31, effective October 31, 2007.

2 For the period from October 31, 2005 (commencement of operations), to April 30, 2006.

3 Initial public offering price of $20.00 per share less underwriting discount of $0.90 per share.

4 Total return is calculated assuming a purchase of common stock on the first day and a sale on the last day of the period reported. Dividends and distributions, if any, are assumed for purposes of these calculations to be reinvested at prices obtained under the Fund’s Automatic Dividend Reinvestment Plan. Total return does not reflect brokerage commissions or sales charges.

5 Annualized

See Notes to Financial Statements

4

SCHEDULE OF INVESTMENTS

October 31, 2007

    Principal         
    Amount        Value 
CORPORATE BONDS 0.1%             
INDUSTRIALS 0.1%             
Commercial Services & Supplies 0.1%             
ARAMARK Corp., 8.50%, 02/01/2015 (cost $368,537)    $ 350,000    $    356,125 
FOREIGN BONDS - CORPORATE (PRINCIPAL AMOUNT DENOMINATED             
IN CURRENCY INDICATED) 11.5%             
CONSUMER DISCRETIONARY 0.8%             
Automobiles 0.4%             
DaimlerChrysler AG, 5.125%, 11/10/2008 GBP    550,000        1,128,444 
Hotels, Restaurants & Leisure 0.1%             
Royal Caribbean Cruises, Ltd., 5.625%, 01/27/2014 EUR    255,000        352,246 
Multi-line Retail 0.3%             
Marks & Spencer Group plc, 6.375%, 11/07/2011 GBP    300,000        627,084 
CONSUMER STAPLES 1.4%             
Beverages 0.3%             
Canandaigua Brands, Inc., 8.50%, 11/15/2009 GBP    300,000        637,718 
Food Products 0.7%             
Nestle SA, 5.50%, 11/18/2009 AUD    2,070,000        1,854,357 
Tobacco 0.4%             
British American Tobacco plc, 5.75%, 12/09/2013 GBP    550,000        1,113,722 
ENERGY 0.2%             
Oil, Gas & Consumable Fuels 0.2%             
GAZPROM OAO, 6.58%, 10/31/2013 GBP    250,000        508,044 
FINANCIALS 7.9%             
Capital Markets 1.0%             
Ahold Finance USA, Inc., 6.50%, 03/14/2017 GBP    200,000        408,514 
Merrill Lynch & Co., Inc., 10.71%, 03/08/2017 BRL    2,000,000        1,126,785 
Morgan Stanley, 10.09%, 05/03/2017 BRL    2,000,000        1,100,731 
            2,636,030 
Commercial Banks 5.2%             
European Investment Bank, 8.00%, 10/21/2013 ZAR    26,700,000        3,874,943 
Kommunalbanken AS, 6.00%, 02/25/2011 AUD    5,900,000        5,259,679 
Landwirtsch Rentenbank, 5.75%, 06/15/2011 AUD    5,025,000        4,439,379 
            13,574,001 
Consumer Finance 1.0%             
Bombardier Capital Funding, Ltd., 6.75%, 05/14/2009 GBP    280,000        583,852 
Dali Capital plc, 7.25%, 11/25/2009 RUB    35,000,000        1,415,266 
SLM Corp., 5.375%, 12/15/2010 GBP    185,000        356,780 
Virgin Media Finance plc, 9.75%, 04/15/2014 GBP    160,000        335,127 
            2,691,025 
Diversified Financial Services 0.1%             
Lighthouse Group plc, 8.00%, 04/30/2014 EUR    235,000        354,314 

See Notes to Financial Statements

5

SCHEDULE OF INVESTMENTS continued

October 31, 2007

    Principal         
    Amount        Value 
FOREIGN BONDS - CORPORATE (PRINCIPAL AMOUNT DENOMINATED             
IN CURRENCY INDICATED) continued             
FINANCIALS continued             
Insurance 0.6%             
ASIF III Jersey, Ltd., 4.375%, 12/30/2008 GBP    790,000    $    1,603,693 
INDUSTRIALS 0.4%             
Machinery 0.4%             
Harsco Corp., 7.25%, 10/27/2010 GBP    550,000        1,184,357 
MATERIALS 0.6%             
Chemicals 0.4%             
BOC Group, 5.875%, 04/29/2009 GBP    550,000        1,139,135 
Containers & Packaging 0.2%             
Owens-Illinois European Group BV, 6.875%, 03/31/2017 EUR    260,000        365,961 
TELECOMMUNICATION SERVICES 0.2%             
Diversified Telecommunication Services 0.2%             
Deutsche Telekom AG, 6.25%, 12/09/2010 GBP    200,000        418,617 
           Total Foreign Bonds - Corporate (Principal Amount Denominated in             
               Currency Indicated) (cost $27,114,600)            30,188,748 
FOREIGN BONDS - GOVERNMENT (PRINCIPAL AMOUNT DENOMINATED             
IN CURRENCY INDICATED) 13.8%             
Brazil, 10.25%, 01/10/2028 BRL p    2,200,000        1,274,678 
Canada, 6.25%, 06/15/2015 NZD    5,600,000        3,907,141 
International Bank for Reconstruction and Development, 5.75%,             
     06/25/2010 RUB    50,000,000        2,019,782 
Korea:             
     4.75%, 06/10/2009 KRW    1,372,000,000        1,508,374 
     5.25%, 09/10/2015 KRW    4,700,000,000        5,129,581 
Mexico, 10.00%, 12/05/2024 MXN    64,350,000        7,200,614 
Norway, 6.00%, 05/16/2011 NOK    38,100,000        7,336,163 
Sweden:             
     5.25%, 03/15/2011 SEK    24,155,000        3,913,805 
     5.50%, 10/08/2012 SEK    23,000,000        3,807,198 
           Total Foreign Bonds - Government (Principal Amount Denominated in             
                Currency Indicated) (cost $33,502,456)            36,097,336 
YANKEE OBLIGATIONS - CORPORATE 1.0%             
FINANCIALS 0.1%             
Consumer Finance 0.1%             
Virgin Media Finance plc, 9.125%, 08/15/2016 (p)    $ 330,000        349,800 
TELECOMMUNICATION SERVICES 0.7%             
Diversified Telecommunication Services 0.6%             
Telecom Italia SpA, 4.75%, 05/19/2014    1,000,000        1,405,734 
Wireless Telecommunication Services 0.1%             
Vimpel Communications, 8.25%, 05/23/2016    330,000        342,969 

See Notes to Financial Statements

6

SCHEDULE OF INVESTMENTS continued

October 31, 2007

                        Principal         
                        Amount         Value 
YANKEE OBLIGATIONS - CORPORATE continued                 
UTILITIES 0.2%                                 
Multi-Utilities 0.2%                             
National Power Corp., FRN, 9.61%, 08/23/2011            $ 500,000    $    548,646 
Total Yankee Obligations - Corporate    (cost $2,601,188)                2,647,149 
YANKEE OBLIGATIONS - GOVERNMENT  0.7%                 
Colombia, 8.25%, 12/22/2014                    500,000        573,500 
Philippines, 8.00%, 01/15/2016                    350,000        398,125 
Turkey, 9.00%, 06/30/2011 -                    500,000        557,500 
Venezuela, 10.75%, 09/19/2013                    300,000        336,300 
Total Yankee Obligations - Government  (cost $1,827,632)                1,865,425 
 
                    Country    Shares        Value 
COMMON STOCKS 60.1%                             
CONSUMER DISCRETIONARY  4.9%                         
Automobiles 0.4%                             
DaimlerChrysler AG                    Germany    6,042        667,126 
Toyota Motor Corp.                    Japan    5,700        326,107 
                                993,233 
Hotels, Restaurants & Leisure  0.8%                         
OPAP SA                    Greece    54,200        2,212,972 
Media 1.9%                                 
Arnoldo Mondadori Editore SpA p                Italy    74,944        741,346 
Macquarie Communications Infrastructure Group        Australia    425,609        2,293,976 
Pearson plc                    United Kingdom    69,673        1,158,128 
Wolters Kluwer NV                    Netherlands    21,170        664,942 
                                4,858,392 
Multi-line Retail  0.5%                             
PPR SA                    France    6,766        1,342,995 
Specialty Retail  0.9%                             
H&M Hennes & Mauritz AB, Class B            Sweden    14,300        951,410 
Inditex SA p                    Spain    11,849        884,309 
Lindex AB                    Sweden    27,500        497,327 
                                2,333,046 
Textiles, Apparel & Luxury Goods 0.4%                         
adidas AG                    Germany    14,604        975,622 
CONSUMER STAPLES 6.3%                             
Beverages 2.5%                                 
Coca-Cola Amatil, Ltd.                Australia    109,492        1,042,123 
Diageo plc                    United Kingdom    83,695        1,918,427 

See Notes to Financial Statements

7

SCHEDULE OF INVESTMENTS continued

October 31, 2007

    Country    Shares         Value 
COMMON STOCKS continued                 
CONSUMER STAPLES continued                 
Beverages continued                 
Foster’s Group, Ltd. p    Australia    130,081    $    772,428 
Grupo Modelo SA de CV, Ser. C    Mexico    131,700        612,704 
Scottish & Newcastle plc    United Kingdom    129,895        2,120,901 
                6,466,583 
Food & Staples Retailing 0.5%                 
Woolworths, Ltd.    Australia    39,610        1,235,578 
Food Products 1.9%                 
Unilever NV p    Netherlands    150,198        4,885,427 
Tobacco 1.4%                 
British American Tobacco Malaysia Berhad    Malaysia    53,100        642,721 
British American Tobacco plc µ    United Kingdom    82,961        3,161,309 
                3,804,030 
ENERGY 5.9%                 
Oil, Gas & Consumable Fuels 5.9%                 
BP plc µ    United Kingdom    353,428        4,594,784 
ENI SpA µ    Italy    69,490        2,536,023 
Royal Dutch Shell plc, Class B    United Kingdom    120,010        5,231,642 
Total SA µ    France    39,544        3,187,093 
                15,549,542 
FINANCIALS 10.5%                 
Capital Markets 0.5%                 
Goldman Sachs Group, Inc.    United States    1,000,000        1,343,675 
Commercial Banks 5.5%                 
Allied Irish Banks plc    Ireland    18,236        457,566 
Australia & New Zealand Banking Group, Ltd. p    Australia    72,731        2,041,828 
Banco Santander Central Hispano SA p    Spain    36,977        807,152 
Bank Leumi Le-Israel BM    Israel    212,958        1,022,230 
Bank of Ireland    Ireland    11,149        206,562 
Barclays plc    United Kingdom    11,257        142,830 
Danske Bank AS    Denmark    12,200        538,708 
Hang Seng Bank, Ltd.    Hong Kong    50,500        1,045,447 
HSBC Holdings plc - London Exchange µ    United Kingdom    20,343        402,972 
Lloyds TSB Group plc µ    United Kingdom    301,169        3,426,140 
Nordea Bank AB    Sweden    53,500        957,342 
Royal Bank of Canada    Canada    25,500        1,504,311 
Societe Generale µ    France    6,551        1,102,835 
Sparebanken Nord-Norge p    Norway    31,000        806,838 
                14,462,761 

See Notes to Financial Statements

8

SCHEDULE OF INVESTMENTS continued

October 31, 2007

            Country    Shares        Value 
COMMON STOCKS continued                         
FINANCIALS continued                         
Diversified Financial Services  3.1%                 
Criteria CaixaCorp SA * p            Spain    251,671    $    1,907,713 
Fortis NV *            Belgium    8,064        116 
Fortis NV - Amsterdam Exchange *            Netherlands    20,161        646,324 
Guoco Group, Ltd.            Bermuda    76,000        1,166,069 
Hellenic Exchanges SA            Greece    41,616        1,452,142 
ING Groep NV            Netherlands    63,056        2,842,183 
                        8,014,547 
Insurance 1.2%                         
Lancashire Holdings plc *            Bermuda    61,474        481,069 
Legal & General Group plc            United Kingdom    613,447        1,792,710 
TrygVesta AS * p            Denmark    10,810        857,798 
                        3,131,577 
Real Estate Investment Trusts  0.2%                 
Parkway Life REIT *            Singapore    7,577        6,510 
Westfield Group Australia            Australia    32,290        656,619 
                        663,129 
HEALTH CARE 0.2%                         
Health Care Providers & Services  0.2%                 
Parkway Holdings, Ltd.            Singapore    151,550        438,518 
INDUSTRIALS 5.7%                         
Aerospace & Defense 0.8%                         
BAE Systems plc            United Kingdom    195,275        2,028,525 
Building Products 0.4%                         
Assa Abloy AB, Class B            Sweden    48,400        1,016,981 
Commercial Services & Supplies  1.3%                 
Biffa plc            United Kingdom    28,908        157,251 
De La Rue plc µ            United Kingdom    191,052        3,266,562 
                        3,423,813 
Construction & Engineering 0.3%                 
Skanska AB, Class B            Sweden    42,200        832,682 
Electrical Equipment 0.1%                         
Schneider Electric SA µ            France    999        137,837 
Industrial Conglomerates 0.4%                     
Barloworld, Ltd.            South Africa    19,228        372,927 
Fraser & Neave, Ltd.            Singapore    165,000        691,988 
                        1,064,915 
Machinery 0.8%                         
Aker Yards ASA p            Norway    71,780        1,190,275 
SKF AB, Class B            Sweden    50,000        976,830 
                        2,167,105 

See Notes to Financial Statements

9

SCHEDULE OF INVESTMENTS continued

October 31, 2007

                Country    Shares        Value 
COMMON STOCKS continued                         
INDUSTRIALS continued                         
Transportation Infrastructure  1.6%                     
Brisa-Autoestradas de Portugal SA            Portugal    45,063    $    639,847 
Macquarie Airports                Australia    393,249        1,605,900 
Macquarie Infrastructure Group            Australia    644,942        1,903,529 
                            4,149,276 
INFORMATION TECHNOLOGY  3.3%                     
Semiconductors & Semiconductor Equipment  0.3%                 
Taiwan Semiconductor Manufacturing Co., Ltd.        Taiwan    163,793        326,915 
Taiwan Semiconductor Manufacturing Co., Ltd., ADR        Taiwan    53,802        572,991 
United Microelectronics Corp.            Taiwan    2        1 
                            899,907 
Software 3.0%                             
Nintendo Co., Ltd.                Japan    6,600        4,165,217 
SAP AG                Germany    16,852        912,848 
Square Enix Co., Ltd. p                Japan    84,400        2,774,015 
                            7,852,080 
MATERIALS 3.0%                             
Chemicals 1.3%                             
Akzo Nobel NV                Netherlands    29,920        2,410,373 
BASF AG                Germany    4,234        585,392 
Imperial Chemical Industries plc            United Kingdom    30,142        413,167 
                            3,408,932 
Construction Materials  0.5%                         
Lafarge SA                France    5,246        855,474 
Pretoria Portland Cement Co., Ltd.            South Africa    35,677        259,365 
Siam Cement                Thailand    26,000        201,954 
                            1,316,793 
Containers & Packaging  0.8%                     
Rexam plc                United Kingdom    193,847        2,192,855 
Metals & Mining 0.2%                             
Teck Cominco, Ltd.                Canada    10,800        537,868 
Paper & Forest Products  0.2%                     
Stora Enso Oyj, Class R                Finland    20,800        382,404 
TELECOMMUNICATION SERVICES 10.6%                     
Diversified Telecommunication Services 8.6%                     
Belgacom SA                Belgium    9,693        463,830 
BT Group plc                United Kingdom    285,090        1,938,253 
Chunghwa Telecom Co., Ltd., ADR            Taiwan    45,478        873,172 
Deutsche Telekom AG *                Germany    33,550        687,945 
France Telecom µ                France    129,360        4,778,389 
Hrvatske Telekom SP GDR 144A            Croatia    10,000        720,000 

See Notes to Financial Statements

10

SCHEDULE OF INVESTMENTS continued

October 31, 2007

        Country    Shares             Value 
COMMON STOCKS continued                     
TELECOMMUNICATION SERVICES continued                 
Diversified Telecommunication Services  continued                 
KT Corp.        South Korea    18,570    $    880,574 
KT Corp., ADR * p        South Korea    39,540        929,981 
Qwest Communications International, Inc.        Sweden    68,000        1,294,282 
Telecom Italia SpA        Italy    968,139        2,503,664 
Telefonica SA p        Spain    191,517        6,332,663 
TeliaSonera AB        Sweden    130,000        1,278,488 
                    22,681,241 
Wireless Telecommunication Services 2.0%                 
China Unicom, Ltd.        Hong Kong    516,000        1,254,043 
StarHub, Ltd.        Singapore    651,500        1,406,258 
Vodafone Group plc µ        United Kingdom    650,664        2,566,036 
                    5,226,337 
UTILITIES 9.7%                     
Electric Utilities 4.9%                     
British Energy Group plc        United Kingdom    74,768        832,436 
E.ON AG        Germany    3,212        627,187 
Enel SpA µ        Italy    368,246        4,405,635 
Fortum Oyj *        Finland    45,600        1,979,275 
Iberdrola SA        Spain    66,092        1,062,117 
Scottish & Southern Energy plc        United Kingdom    91,955        2,981,546 
Spark Infrastructure Group p        Australia    572,676        1,046,922 
                    12,935,118 
Gas Utilities 0.8%                     
Gaz de France        France    22,562        1,283,030 
Snam Rete Gas SpA        Italy    141,982        918,273 
                    2,201,303 
Multi-Utilities 4.0%                     
National Grid plc µ        United Kingdom    202,195        3,377,340 
RWE AG        Germany    16,575        2,264,025 
SUEZ        France    27,249        1,775,731 
United Utilities plc µ        United Kingdom    195,752        2,976,480 
                    10,393,576 
Total Common Stocks (cost $122,622,863)                157,561,175 
PREFERRED STOCKS 0.6%                     
CONSUMER DISCRETIONARY 0.4%                     
Textiles, Apparel & Luxury Goods 0.4%                     
Hugo Boss AG, Var. Rate Pfd.        Germany    16,739        1,131,388 
UTILITIES 0.2%                     
Electric Utilities 0.2%                     
Eletrobras SA, Class B, Var. Rate Pfd.        Brazil    23,800        358,069 
           Total Preferred Stocks (cost $853,851)                    1,489,457 

See Notes to Financial Statements

11

SCHEDULE OF INVESTMENTS continued

October 31, 2007

            Country         Shares             Value 
RIGHTS 0.0%                         
CONSUMER DISCRETIONARY   0.0%                     
Media 0.0%                         
PagesJaunes * (h) + (cost $0)            France    24,158    $    0 
EXCHANGE TRADED FUNDS  6.5%                     
iShares MSCI EAFE Index p             United States    101,274        8,727,793 
Vanguard Europe Pacific *            United States    161,620        8,462,423 
           Total Exchange Traded Funds (cost $16,438,147)                17,190,216 
OTHER 1.6%                         
Bell Aliant Regional Communications Income Fund        Canada    25,648        853,718 
Bell Aliant Regional Communications Income Fund 144A        Canada    5,263        174,862 
Yellow Pages Income Fund µ            Canada    203,734        3,066,894 
           Total Other (cost $3,255,732)                    4,095,474 
 
                Principal         
                Amount        Value 
INVESTMENTS OF CASH COLLATERAL FROM SECURITIES                 
LOANED 11.8%                         
MUTUAL FUND SHARES 11.8%                     
Navigator Prime Portfolio, 5.03% § (cost $30,823,298)            $ 30,823,298        30,823,298 
 
            Country         Shares             Value 
SHORT-TERM INVESTMENTS  2.0%                     
MUTUAL FUND SHARES 2.0%                     
Evergreen Institutional U.S. Government Money Market Fund,                 
Class I, 4.60% q ø (cost $5,196,313)        United States    5,196,313        5,196,313 
Total Investments (cost $244,604,617) 109.7%                    287,510,716 
Other Assets and Liabilities  (9.7%)                    (25,418,964) 
Net Assets Applicable to Common Shareholders  100.0%            $    262,091,752 

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

µ All or a portion of this security is pledged as collateral for written call options.

* Non-income producing security

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

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

+ Security is deemed illiquid.

§ Rate shown is the 1-day annualized yield at period end.

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

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

See Notes to Financial Statements

12

SCHEDULE OF INVESTMENTS continued

October 31, 2007

Summary of Abbreviations 
ADR  American Depository Receipt 
AUD  Australian Dollar 
BRL  Brazilian Real 
EUR  Euro 
FRN  Floating Rate Note 
GBP  Great British Pound 
GDR  Global Depository Receipt 
KRW  Korean Won 
MXN  Mexican Peso 
NOK  Norwegian Krone 
NZD  New Zealand Dollar 
RUB  Russian Ruble 
SEK  Swedish Krona 
ZAR  South African Rand 

The following table shows the percent of total long-term investments by geographic location as of October 31, 2007:

United Kingdom  23.0%    Hong Kong  1.5% 
United States  7.2%    Ireland  1.5% 
Sweden  6.5%    Taiwan  1.1% 
Norway  5.7%    Bermuda  1.0% 
France  5.7%    Brazil  0.9% 
Italy  4.8%    Denmark  0.7% 
Australia  4.5%    Belgium  0.7% 
Germany  3.7%    Israel  0.6% 
Netherlands  3.7%    Philippines  0.6% 
Spain  3.5%    Croatia  0.6% 
Canada  3.2%    Malaysia  0.5% 
South Korea  3.0%    Portugal  0.5% 
Mexico  2.9%    South Africa  0.4% 
Japan  2.8%    Colombia  0.4% 
Luxembourg  2.6%    Turkey  0.3% 
Greece  2.3%    Liberia  0.3% 
Singapore  1.6%    Venezuela  0.2% 
Finland  1.5%    
        100.0%
       

The following table shows portfolio composition as a percent of total long-term investments as of October 31, 2007:

Financials  19.4% 
Foreign Bond - Government  14.4% 
Telecommunication Services  12.0% 
Utilities  10.5% 
Consumer Staples  8.0% 
Exchange Traded Funds  6.8% 
Industrials  6.5% 
Energy  6.4% 
Consumer Discretionary  6.3% 
Materials  3.7% 
Information Technology  3.5% 
Yankee Obligations - Government  0.7% 
Health Care  0.2% 
Other  1.6%
 
  100.0%
 

See Notes to Financial Statements

13

SCHEDULE OF INVESTMENTS continued October 31, 2007

The following table shows the percent of total bonds by credit quality based on Moody’s and Standard & Poor’s ratings as of October 31, 2007 (unaudited):

AAA  44.3% 
AA  13.1% 
A  25.3% 
BBB  8.2% 
BB  6.8% 
B 2.3%
 
  100.0%
 

The following table shows the percent of total bonds based on effective maturity as of October 31, 2007 (unaudited):

Less than 1 year  3.9% 
1 to 3 year(s)  17.4% 
3 to 5 years  36.1% 
5 to 10 years  31.2% 
10 to 20 years  9.7% 
20 to 30 years 1.7% 
 
  100.0%
 

See Notes to Financial Statements

14

STATEMENT OF ASSETS AND LIABILITIES

October 31, 2007

Assets   
Investments in securities, at value (cost $239,408,304) including $29,782,991 of securities   
   loaned  $  282,314,403 
Investments in affiliated money market fund, at value (cost $5,196,313)  5,196,313 
Total investments  287,510,716 
Cash  5,623,572 
Foreign currency, at value (cost $6,414,834)  6,438,849 
Receivable for securities sold  525,088 
Dividends and interest receivable  2,041,076 
Receivable for securities lending income  9,380 
   Total assets  302,148,681 
Liabilities   
Dividends payable applicable to common shareholders  1,687,253 
Payable for securities purchased  6,132,083 
Due to custodian bank  1,147 
Payable for securities on loan  30,823,298 
Written call options, at value (premiums received $1,077,080)  1,320,127 
Advisory fee payable  6,765 
Due to other related parties  356 
Accrued expenses and other liabilities  85,900 
   Total liabilities  40,056,929 
Net assets applicable to common shareholders  $  262,091,752 
Net assets applicable to common shareholders represented by   
Paid-in capital  $  220,761,723 
Overdistributed net investment income  (2,838,781) 
Accumulated net realized gains on investments  1,385,661 
Net unrealized gains on investments  42,783,149 
Net assets applicable to common shareholders  $  262,091,752 
Net asset value per share applicable to common shareholders   
Based on $262,091,752 divided by 11,572,378 common shares issued and outstanding   
   (unlimited number of common shares authorized)  $  22.65 

See Notes to Financial Statements

15

STATEMENTS OF OPERATIONS

  Year Ended Year Ended
  October 31, April 30,
  2007 (a) 2007
Investment income    
Dividends (net of foreign withholding taxes of $400,612 and $751,495,     
   respectively)  $  4,905,102 $  8,043,016
Interest (net of foreign withholding taxes of $22,256 and $42,520, respectively)  2,251,162  4,332,931 
Income from affiliate  42,512  71,815 
Securities lending  11,477  0 
Total investment income  7,210,253  12,447,762 
Expenses     
Advisory fee  1,183,495  2,223,616 
Administrative services fee  62,289  117,032 
Transfer agent fees  14,230  42,114 
Trustees’ fees and expenses  1,000  80,501 
Printing and postage expenses  27,506  83,685 
Custodian and accounting fees  97,386  362,221 
Professional fees  31,592  70,757 
Other  45,141  38,947 
   Total expenses  1,462,639  3,018,873 
   Less: Expense reductions  (472)  (2,709) 
             Fee waivers  0  (209,360) 
   Net expenses  1,462,167  2,806,804 
Net investment income  5,748,086  9,640,958 
Net realized and unrealized gains or losses on investments     
Net realized gains or losses on:     
   Securities  4,512,975  21,039,212 
   Foreign currency related transactions  (1,318,532)  (3,020,419) 
   Written options  (4,288)  (7,692,001) 
Net realized gains on investments  3,190,155  10,326,792 
Net change in unrealized gains or losses on investments  13,165,671  11,995,192 
Net realized and unrealized gains or losses on investments  16,355,826 22,321,984
Net increase in net assets resulting from operations  $  22,103,912  $  31,962,942

(a) For the six months ended October 31, 2007. The Fund changed its fiscal year end from April 30 to October 31, effective October 31, 2007.

 

See Notes to Financial Statements

16

STATEMENTS OF CHANGES IN NET ASSETS

  Year Ended  Year Ended  Year Ended 
  October 31,     April 30,  April 30, 
       2007 (a)  2007   2006 (b) 
Operations       
Net investment income  $ 5,748,086  $ 9,640,958  $  4,418,342 
Net realized gains on investments  3,190,155  10,326,792  3,356,802 
Net change in unrealized gains or losses on investments  13,165,671  11,995,192  17,622,286 
Net increase in net assets resulting from operations  22,103,912  31,962,942  25,397,430 
Distributions to common shareholders from   
Net investment income  (5,442,345)  (12,522,220)  (7,915,572) 
Net realized gains  (4,674,302)  (7,586,232)  0 
   Total distributions to common shareholders  (10,116,647)  (20,108,452)  (7,915,572) 
Capital share transactions   
Net proceeds from issuance of common shares  0  0  218,667,000 
 
Common share offering expenses charged to paid-in capital  0  0  (430,000) 
Net asset value of common shares issued under the   
   Automatic Dividend Reinvestment Plan  504,271  1,926,784  0 
Net increase in net assets resulting from capital share   
   transactions  504,271  1,926,784  218,237,000 
Total increase in net assets applicable to common   
   shareholders  12,491,536  13,781,274  235,718,858 
Net assets applicable to common shareholders   
Beginning of period  249,600,216  235,818,942  100,084 
End of period  $ 262,091,752  $ 249,600,216  $  235,818,942 
Overdistributed net investment income  $ (2,838,781)  $ (3,613,243)  $  (1,845,350) 

(a) For the six months ended October 31, 2007. The Fund changed its fiscal year end from April 30 to October 31, effective October 31, 2007.

(b) For the period from October 31, 2005 (commencement of operations), to April 30, 2006.

See Notes to Financial Statements

17

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION

Evergreen International Balanced Income Fund (the “Fund”) was organized as a statutory trust under the laws of the state of Delaware on August 16, 2005 and is registered as a diversified closed-end management investment company under the Investment Company Act of 1940, as amended. The primary investment objective of the Fund is to provide a high level of income.

2. SIGNIFICANT ACCOUNTING POLICIES

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

a. Valuation of investments

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

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

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

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

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

b. Repurchase agreements

Securities pledged as collateral for repurchase agreements are held by the custodian bank or in a segregated account in the Fund’s name until the agreements mature. Collateral for certain tri-

18

NOTES TO FINANCIAL STATEMENTS continued

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

c. Foreign currency translation

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

d. Forward foreign currency contracts

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

e. Securities Lending

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

f. Options

The Fund may write covered put or call options. When a Fund writes an option, an amount equal to the premium received is recorded as a liability and is subsequently adjusted to the current market value of the written option. Premiums received from written options, which expire unexercised, are recognized as realized gains from investments on the expiration date. The difference between the premium received and the amount paid on effecting a closing purchase transaction,

19

NOTES TO FINANCIAL STATEMENTS continued

including brokerage commissions, is treated as a realized gain or loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in calculating the realized gain or loss on the sale. If a put option is exercised, the premium reduces the cost of the security purchased. The Fund, as a writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option.

The Fund may also purchase call or put options. The premium is included in the Statement of Assets and Liabilities as an investment which is subsequently adjusted to the current market value of the option. Premiums paid for purchased options which expire are recognized as realized losses from investments on the expiration date. Premiums paid for purchased options which are exercised or closed are added to the amount paid or offset against the proceeds on the underlying security to determine the realized gain or loss. The risk of loss associated with purchased options is limited to the premium paid.

g. Security transactions and investment income

Security transactions are recorded on trade date. Realized gains and losses are computed using the specific cost of the security sold. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. Dividend income is recorded on the ex-dividend date or in the case of some foreign securities, on the date when the Fund is made aware of the dividend. Foreign income and capital gains realized on some securities may be subject to foreign taxes, which are accrued as applicable.

h. Federal taxes

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

i. Distributions

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

Reclassifications have been made to the Fund’s components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax regulations. The primary permanent differences causing such reclassifications are due to passive foreign investment companies and dividend redesignations. During the year ended October 31, 2007, the following amounts were reclassified:
Overdistributed net investment income  $ 468,721 
Accumulated net realized gains on investments  (468,721) 

3. ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES

Evergreen Investment Management Company, LLC (“EIMC”), an indirect, wholly-owned subsidiary of Wachovia Corporation (“Wachovia”), is the investment advisor to the Fund and is paid an annual fee of 0.95% of the Fund’s average daily total assets. Total assets consist of the net

20

NOTES TO FINANCIAL STATEMENTS continued

assets of the Fund plus borrowings, reverse repurchase agreements, dollar rolls or the issuance of debt securities to the extent excluded in calculating net assets.

First International Advisors, Inc. d/b/a Evergreen International Advisors (“FIA”), an indirect, wholly-owned subsidiary of Wachovia, is an investment sub-advisor to the Fund and is paid by EIMC for its services to the Fund.

Analytic Investors, Inc. is the investment sub-advisor managing the Fund’s option strategy and is paid by EIMC for its services to the Fund.

From time to time, EIMC may voluntarily or contractually waive its fee and/or reimburse expenses in order to limit operating expenses. During the year ended April 30, 2007, EIMC contractually waived its advisory fee in the amount of $209,360.

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

Evergreen Investment Services, Inc. (“EIS”), an indirect, wholly-owned subsidiary of Wachovia, is the administrator to the Fund. As administrator, EIS provides the Fund with facilities, equipment and personnel and is paid an annual administrative fee of 0.05% of the Fund’s average daily total assets.

4. CAPITAL SHARE TRANSACTIONS

The Fund has authorized an unlimited number of common shares with no par value. For the six month period ended October 31, 2007, the year ended April 30, 2007 and the period ended April 30, 2006, the Fund issued 23,792, 93,346 and 11,455,240 common shares, respectively.

5. INVESTMENT TRANSACTIONS

Cost of purchases and proceeds from sales of investment securities (excluding short-term securities) were $99,180,881 and $109,272,505, respectively, for the six month period ended October 31, 2007 and $211,329,023 and $226,598,184, respectively, for the year ended April 30, 2007.

During the six month period ended October 31, 2007, the Fund loaned securities to certain brokers. At October 31, 2007, the value of securities on loan and the total value of collateral received for securities loaned amounted to $29,782,991 and $30,823,298, respectively.

During the six month period ended October 31, 2007, the Fund had written call option activity as follows:

  Number of Premiums
Contracts Received
Options outstanding at April 30, 2007  2,140  $  919,038 
Options written  8,499  6,870,717 
Options expired  (4,255)  (2,510,434) 
Options closed  (5,060)  (4,202,241) 
Options outstanding at October 31, 2007  1,324  $  1,077,080 

21

NOTES TO FINANCIAL STATEMENTS continued

Open call options written at October 31, 2007 were as follows:

Expiration       Number of   Strike   Market   Premiums
Date   Index   Contracts   Price   Value   Received
11/16/2007   Amsterdam                
    Exchanges Index   263   560 EUR   $  104,625   $  196,475
11/16/2007   KBW Bank Index   406   103 USD   120,785   102,783
11/16/2007   Morgan Stanley                
    Cyclical Index   39   1,080 USD   38,220   42,783
11/16/2007   CAC 40 Index   202   5,800 EUR   333,620   222,260
11/16/2007   S&P/MIB Index   145   40,500 EUR   319,880   228,046
11/16/2007   AMEX                
    Biotechnology                
    Index   50   840 USD   70,750   65,850
11/16/2007   S&P SmallCap                
    600 Index   97   430 USD   84,269   77,309
11/16/2007   AMEX Natural                
    Gas Index   75   560 USD   154,125   70,275
11/16/2007   S&P 400                
    MidCap Index   47   900 USD   93,853   71,299

During the year ended April 30, 2007, the Fund had written option activities as follows:

    Number of   Premiums
    Contracts   Received
Options outstanding at April 30, 2006   1,082   $     1,166,575
Options written   16,758   15,053,418
Options expired   (5,578)   (4,998,423)
Options closed   (10,122)   (10,302,532)
Options outstanding at April 30, 2007   2,140   $        919,038

On October 31, 2007, the aggregate cost of securities for federal income tax purposes was $245,750,439. The gross unrealized appreciation and depreciation on securities based on tax cost was $41,991,721 and $231,444, respectively, with a net unrealized appreciation of $41,760,277.

6. DISTRIBUTIONS TO SHAREHOLDERS

As of October 31, 2007, the components of distributable earnings on a tax basis were as follows:

Undistributed        Temporary 
Long-term    Unrealized    Book/Tax 
Capital Gain    Appreciation    Differences 
$1,287,438    $41,769,030    $(1,726,439) 

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

22

NOTES TO FINANCIAL STATEMENTS continued

The tax character of distributions paid was as follows:

    Six Month         
    Period Ended    Year Ended    Year Ended 
    October 31, 2007    April 30, 2007    April 30, 2006 
Ordinary Income    $  5,442,345       $ 12,522,220     $  7,915,572  
Long-term Capital Gain    4,674,302       7,586,232     0  

7. EXPENSE REDUCTIONS

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

8. DEFERRED TRUSTEES’ FEES

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

9. REGULATORY MATTERS AND LEGAL PROCEEDINGS

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

EIS has entered into an agreement with the NASD (now known as the Financial Industry Regulatory Authority (“FINRA”)) settling allegations that EIS (i) arranged for Evergreen fund portfolio trades to be directed to Wachovia Securities, LLC, an affiliate of EIS that sold Evergreen fund shares, during the period of January 2001 to December 2003 and (ii) provided non-cash compensation by sponsoring offsite meetings attended by Wachovia Securities, LLC brokers during that period, where the eligibility of a broker to attend the meetings depended upon the broker meeting certain sales targets of Evergreen fund shares. Pursuant to the settlement agreement, EIS has agreed to a censure and a fine of $4,200,000. EIS neither admitted nor denied the allegations and findings set forth in its agreement with the NASD.

23

NOTES TO FINANCIAL STATEMENTS continued

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

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

10. NEW ACCOUNTING PRONOUNCEMENTS

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB statement 109 (“FIN 48”). FIN 48 supplements FASB 109 by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Fund’s financial statements have not been impacted by the adoption of FIN 48. However, the conclusions regarding FIN 48 may be subject to review and adjustment at a later date based on factors including, but not limited to, further implementation guidance expected from FASB, and on-going analysis of tax laws, regulations, and interpretations thereof.

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

24

NOTES TO FINANCIAL STATEMENTS continued

11. SUBSEQUENT DISTRIBUTIONS

The Fund declared the following distributions to common shareholders:

             Net
Declaration    Record    Payable    Investment
Date    Date    Date    Income
October 19, 2007    November 15, 2007    December 3, 2007    $0.1458
November 16, 2007    December 17, 2007    January 2, 2008    $0.1458
December 6, 2007    January 16, 2008    February 1, 2008    $0.1458

These distributions are not reflected in the accompanying financial statements.

25

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Trustees and Shareholders
Evergreen International Balanced Income Fund

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the Evergreen International Balanced Income Fund as of October 31, 2007 and the related statements of operations for the period from May 1, 2007 to October 31, 2007 and for the year ended April 30, 2007, statements of changes in net assets and financial highlights for the period from May 1, 2007 to October 31, 2007, the year ended April 30, 2007, and the period from October 31, 2005 (commencement of operations) to April 30, 2006. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 2007 by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Evergreen International Balanced Income Fund as of October 31, 2007, the results of its operations, changes in its net assets and financial highlights for each of the periods described above, in conformity with U.S. generally accepted accounting principles.

Boston, Massachusetts
December 27, 2007

26

AUTOMATIC DIVIDEND REINVESTMENT PLAN (unaudited)

All common shareholders are eligible to participate in the Automatic Dividend Reinvestment Plan (“the Plan”). Pursuant to the Plan, unless a common shareholder is ineligible or elects otherwise, all cash dividends and capital gains distributions are automatically reinvested by Computershare Trust Company, N.A., as agent for shareholders in administering the Plan (“Plan Agent”), in additional common shares of the Fund. Whenever the Fund declares an ordinary income dividend or a capital gain dividend (collectively referred to as “dividends”) payable either in shares or in cash, nonparticipants in the Plan will receive cash, and participants in the Plan will receive the equivalent in shares of common shares. The shares are acquired by the Plan Agent for the participant’s account, depending upon the circumstances described below, either (i) through receipt of additional unissued but authorized common shares from the Fund (“newly issued common shares”) or (ii) by purchase of outstanding common shares on the open market (open-market purchases) on the New York Stock Exchange or elsewhere. If, on the payment date for any dividend or distribution, the net asset value per share of the common shares is equal to or less than the market price per common share plus estimated brokerage commissions (“market premium”), the Plan Agent will invest the amount of such dividend or distribution in newly issued shares on behalf of the participant. The number of newly issued common shares to be credited to the participant’s account will be determined by dividing the dollar amount of the dividend by the net asset value per share on the date the shares are issued, provided that the maximum discount from the then current market price per share on the date of issuance may not exceed 5%. If on the dividend payment date the net asset value per share is greater than the market value or market premium (“market discount”), the Plan Agent will invest the dividend amount in shares acquired on behalf of the participant in open-market purchases. There will be no brokerage charges with respect to shares issued directly by the Fund as a result of dividends or capital gains distributions payable either in shares or in cash. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Plan Agent’s open-market purchases in connection with the reinvestment of dividends. The automatic reinvestment of dividends and distributions will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such dividends. All correspondence concerning the Plan should be directed to the Plan Agent at P.O. Box 43010, Providence, Rhode Island 02940-3010 or by calling 1-800-730-6001.

27

ADDITIONAL INFORMATION (unaudited)

FEDERAL TAX DISTRIBUTIONS

Pursuant to Section 852 of the Internal Revenue Code, the Fund has designated long-term capital gain distributions of $4,674,302 for the fiscal year ended October 31, 2007.

With respect to dividends paid from investment company taxable income during the fiscal year ended October 31, 2007, the Fund designates 81.16% of ordinary income and any short-term capital gain distributions as Qualified Dividend Income in accordance with the Internal Revenue Code. Complete 2007 year-end tax information will be reported on your 2007 Form 1099-DIV, which shall be provided to you in early 2008.

Pursuant to Section 853 of the Internal Revenue Code, the Fund elects to pass through foreign taxes that have been withheld at the fund level to its shareholders so that they may take a foreign tax credit. For the year ended October 31, 2007, the total amount of foreign taxes expected to be passed through to shareholders was $385,637 on foreign source income of $5,305,714. Complete information regarding the Fund’s foreign tax credit pass through to shareholders for 2007 will be reported in conjunction with Form 1099-DIV.

MEETING OF SHAREHOLDERS

The Annual Meeting of Shareholders for the Fund was held on August 10, 2007. On June 15, 2007, the record date for the meeting, the Fund had $247,165,628 of net assets of which $229,597,404 (92.89%) of net assets were represented at the meeting.

Proposal 1— Election of Directors:

    Net Assets    Net Assets 
    Voted “For”    Voted “Withheld” 
Charles A. Austin III    $ 226,699,174    $ 2,898,230     
Gerald M. McDonnell    226,515,327    3,082,077     
Patricia B. Norris    226,668,622    2,928,782     
Richard J. Shima    226,608,865    2,988,539     

28

ADDITIONAL INFORMATION (unaudited) continued

INFORMATION ABOUT THE REVIEW AND APPROVAL OF THE FUND’S INVESTMENT ADVISORY AGREEMENT

Each year, the Fund’s Board of Trustees is required to consider whether to continue in place the Fund’s investment advisory agreements. In September 2007, the Trustees, including a majority of the Trustees who are not interested persons (as that term is defined in the 1940 Act) of the Fund, of FIA, of Analytics Investors, Inc. (together with FIA, the “Sub-Advisors”), or of EIMC, approved the continuation of the Fund’s investment advisory agreements. (References below to the “Fund” are to Evergreen International Balanced Income Fund; references to the “funds” are to the Evergreen funds generally.)

At the same time, the Trustees considered the continuation of the investment advisory agreements for all of the funds, and the description below refers in many cases to the Trustees’ process and conclusions in connection with their consideration of this matter for all of the funds. (See “Certain Fund-Specific Considerations” below for a discussion regarding certain factors considered by the Trustees relating specifically to the Fund.) In all of its deliberations, the Board of Trustees and the disinterested Trustees were advised by independent counsel to the disinterested Trustees and counsel to the funds.

The review process. The 1940 Act requires that the Board of Trustees request and evaluate, and that EIMC and any sub-advisors furnish, such information as may reasonably be necessary to evaluate the terms of a fund’s advisory agreements. The review process began at the time of the last advisory contract-renewal process in September 2006. In the course of that process, the Trustees identified a number of funds that had experienced either short-term or longer-term performance issues. During the following months, the Trustees reviewed information relating to any changes in the performance of those funds and/or any changes in the investment process or the investment teams responsible for the management of the funds. In addition, during the course of the year, the Trustees reviewed information regarding the investment performance of all of the funds and identified additional funds that they believed warranted further attention based on performance since September 2006.

In spring 2007, a committee of the Board of Trustees (the “Committee”), working with EIMC management, determined generally the types of information the Board would review and set a timeline detailing the information required and the dates for its delivery to the Trustees. The independent data provider Keil Fiduciary Strategies LLC (“Keil”) was engaged to provide fund-specific and industry-wide data to the Board containing information of a nature and in a format generally prescribed by the Committee, and the Committee worked with Keil and EIMC to develop appropriate groups of peer funds for each fund. The Committee also identified a number of expense, performance, and other issues and requested specific information as to those issues.

The Trustees reviewed, with the assistance of an independent industry consultant retained by the disinterested Trustees, the information provided by EIMC and the Sub-Advisors in response to the Committee’s requests and the information provided by Keil. The Trustees formed small committees to review individual funds in greater detail. In addition, the Trustees requested information regarding, among other things, brokerage practices of the funds, the use of derivatives by

29

ADDITIONAL INFORMATION (unaudited) continued

the funds, strategic planning for the funds, analyst and research support available to the portfolio management teams, and information regarding the various fall-out benefits received directly and indirectly by EIMC and its affiliates from the funds. The Trustees requested and received additional information following that review.

The Committee met several times by telephone to consider the information provided by EIMC. The Committee met with representatives of EIMC in early September. At a meeting of the full Board of Trustees later in September, the Committee reported the results of its discussions with EIMC, and the full Board met with representatives of EIMC, engaged in further review of the materials provided to them, and approved the continuation of each of the advisory and sub-advisory agreements.

The disinterested Trustees discussed the continuation of the funds’ advisory agreements with representatives of EIMC and in multiple private sessions with legal counsel at which no personnel of EIMC were present. In considering the continuation of the agreements, the Trustees did not identify any particular information or consideration that was all-important or controlling, and each Trustee attributed different weights to various factors. The Trustees evaluated information provided to them both in terms of the Evergreen mutual funds generally and with respect to each fund, including the Fund, specifically as they considered appropriate; although the Trustees considered the continuation of the agreements as part of the larger process of considering the continuation of the advisory contracts for all of the funds, their determination to continue the advisory agreements for each of the funds was ultimately made on a fund-by-fund basis.

This summary describes a number of the most important, but not necessarily all, of the factors considered by the Board and the disinterested Trustees.

Information reviewed. The Board of Trustees and committees of the Board of Trustees meet periodically during the course of the year. At those meetings, the Board receives a wide variety of information regarding the services performed by EIMC, the investment performance of the funds, and other aspects of the business and operations of the funds. At those meetings, and in the process of considering the continuation of the agreements, the Trustees considered information regarding, for example, the funds’ investment results; the portfolio management teams for the funds and the experience of the members of those teams, and any recent changes in the membership of the teams; portfolio trading practices; compliance by the funds, EIMC, and the Sub-Advisors with applicable laws and regulations and with the funds’ and EIMC’s compliance policies and procedures; risk evaluation and oversight procedures at EIMC; services provided by affiliates of EIMC to the funds and shareholders of the funds; and other information relating to the nature, extent, and quality of services provided by EIMC and the Sub-Advisors. The Trustees considered a number of changes in portfolio management personnel at EIMC and its advisory affiliates in the year since September 2006, and recent changes in compliance personnel at EIMC, including the appointment of a new Chief Compliance Officer for the funds.

The Trustees considered the rates at which the funds pay investment advisory fees, and the efforts generally by EIMC and its affiliates as sponsors of the funds. The data provided by Keil showed

30

ADDITIONAL INFORMATION (unaudited) continued

the management fees paid by each fund in comparison to the management fees of other peer mutual funds, in addition to data regarding the investment performance of the funds in comparison to other peer mutual funds. The Trustees were assisted by the independent industry consultant in reviewing the information presented to them.

The Trustees also considered that EIS, an affiliate of EIMC, serves as administrator to the funds and receives a fee for its services as administrator. In their comparison of the advisory fee paid by the funds with those paid by other mutual funds, the Trustees took into account administrative fees paid by the funds and those other mutual funds. The Board considered that EIS serves as distributor to the funds generally and receives fees from the funds for those services. They considered other so-called “fall-out” benefits to EIMC and its affiliates due to their other relationships with the funds, including, for example, soft-dollar services received by EIMC attributable to transactions entered into by EIMC for the benefit of the funds and brokerage commissions received by Wachovia Securities, LLC, an affiliate of EIMC, from transactions effected by it for the funds. The Trustees also noted that an affiliate of EIMC receives compensation for serving as a securities lending agent for the funds.

Nature and quality of the services provided. The Trustees considered that EIMC and its affili-ates generally provide a comprehensive investment management service to the funds. They noted that EIMC and the Sub-Advisors formulate and implement an investment program for the Fund. They noted that EIMC makes its personnel available to serve as officers of the funds, and concluded that the reporting and management functions provided by EIMC with respect to the funds were generally satisfactory. The Trustees considered the investment philosophy of the Fund’s portfolio management team, and considered the in-house research capabilities of EIMC and its affiliates, as well as other resources available to EIMC, including research services available to it from third parties. The Board considered the managerial and financial resources available to EIMC and its affiliates, and the commitment that the Wachovia organization has made to the funds generally. On the basis of these factors, they determined that the nature and scope of the services provided by EIMC and the Sub-Advisors were consistent with their respective duties under the investment advisory agreements and appropriate and consistent with the investment programs and best interests of the funds.

The Trustees noted the resources EIMC and its affiliates have committed to the regulatory, compliance, accounting, tax and oversight of tax reporting, and shareholder servicing functions, and the number and quality of staff committed to those functions, which they concluded were appropriate and generally in line with EIMC’s responsibilities to the Fund and to the funds generally. The Board and the disinterested Trustees concluded, within the context of their overall conclusions regarding the funds’ advisory agreements, that they were generally satisfied with the nature, extent, and quality of the services provided by the Sub-Advisors and EIMC, including services provided by EIS under its administrative services agreements with the funds.

Investment performance. The Trustees considered the investment performance of each fund, both by comparison to other comparable mutual funds and to broad market indices. The Trustees emphasized that the continuation of the investment advisory agreements for a fund should not

31

ADDITIONAL INFORMATION (unaudited) continued

be taken as any indication that the Trustees did not believe investment performance for any specific fund might not be improved, and they noted that they would continue to monitor closely the investment performance of the funds going forward.

Advisory and administrative fees. The Trustees recognized that EIMC does not seek to provide the lowest cost investment advisory service, but to provide a high quality, full-service investment management product at a reasonable price. They also noted that EIMC has in many cases sought to set its investment advisory fees at levels consistent with industry norms. The Trustees noted that, in certain cases, a fund’s management fees were higher than many or most other mutual funds in the same Keil peer group. However, in each case, the Trustees determined on the basis of the information presented that the level of management fees was not excessive.

Certain Fund-specific considerations. The Trustees noted that, for the one-year period ended December 31, 2006, the Fund had outperformed a 60%/40% blend of the Morgan Stanley Capital International Europe, Australasia, and Far East Index and the Merrill Lynch Global Market Index (excluding U.S.), and a majority of the funds against which the Trustees compared the Fund’s performance.

The Trustees noted that the management fee paid by the Fund was lower than the management fees paid by the limited number of the other funds against which the Trustees compared the Fund’s management fee, and also noted that the level of profitability realized by EIMC in respect of the fee did not appear excessive.

Economies of scale. The Trustees considered that, in light of the fact that the Fund is not making a continuous offering of its shares, the likelihood of substantial increases in economies of scale was relatively low, although they determined to continue to monitor the Fund’s expense ratio and the profitability of the investment advisory agreements to EIMC in the future for reasonableness in light of future growth of the Fund.

Profitability. The Trustees considered information provided to them regarding the profitability to the EIMC organization of the investment advisory, administration, and transfer agency (with respect to the open-end funds only) fees paid to EIMC and its affiliates by each of the funds. They considered that the information provided to them was necessarily estimated, and that the profitability information provided to them, especially on a fund-by-fund basis, did not necessarily provide a definitive tool for evaluating the appropriateness of each fund’s advisory fee. They noted that the levels of profitability of the funds to EIMC varied widely, depending on among other things the size and type of fund. They considered the profitability of the funds in light of such factors as, for example, the information they had received regarding the relation of the fees paid by the funds to those paid by other mutual funds, the investment performance of the funds, and the amount of revenues involved. In light of these factors, the Trustees concluded that the profitability of any of the funds, individually or in the aggregate, should not prevent the Trustees from approving the continuation of the agreements.

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35

TRUSTEES AND OFFICERS

TRUSTEES1

Charles A. Austin III  Investment Counselor, Anchor Capital Advisors, LLC. (investment advice); Director, The Andover 
Trustee  Companies (insurance); Trustee, Arthritis Foundation of New England; Former Director, The 
DOB: 10/23/1934  Francis Ouimet Society (scholarship program); Former Director, Executive Vice President and 
Term of office since: 1991  Treasurer, State Street Research & Management Company (investment advice) 
Other directorships: None   
K. Dun Gifford  Chairman and President, Oldways Preservation and Exchange Trust (education); Trustee, 
Trustee  Treasurer and Chairman of the Finance Committee, Cambridge College 
DOB: 10/23/1938   
Term of office since: 1974   
Other directorships: None   
Dr. Leroy Keith, Jr.  Managing Director, Almanac Capital Management (commodities firm); Trustee, Phoenix 
Trustee  Fund Complex; Director, Diversapack Co. (packaging company); Former Partner, Stonington 
DOB: 2/14/1939  Partners, Inc. (private equity fund); Former Director, Obagi Medical Products Co.; Former 
Term of office since: 1983  Director, Lincoln Educational Services 
Other directorships: Trustee,   
Phoenix Fund Complex (consisting   
of 60 portfolios as of 12/31/2006)   
Gerald M. McDonnell  Manager of Commercial Operations, CMC Steel (steel producer) 
Trustee   
DOB: 7/14/1939   
Term of office since: 1988   
Other directorships: None   
Patricia B. Norris  President and Director of Buckleys of Kezar Lake, Inc. (real estate company); Former President 
Trustee  and Director of Phillips Pond Homes Association (home community); Former Partner, 
DOB: 4/9/1948  PricewaterhouseCoopers, LLP (independent registered public accounting firm) 
Term of office since: 2006   
Other directorships: None   
William Walt Pettit  Partner and Vice President, Kellam & Pettit, P.A. (law firm); Director, Superior Packaging Corp. 
Trustee  (packaging company); Member, Superior Land, LLC (real estate holding company), Member, 
DOB: 8/26/1955  K&P Development, LLC (real estate development); Former Director, National Kidney Foundation 
Term of office since: 1988  of North Carolina, Inc. (non-profit organization) 
Other directorships: None   
David M. Richardson  President, Richardson, Runden LLC (executive recruitment business development/consulting 
Trustee  company); Consultant, Kennedy Information, Inc. (executive recruitment information and 
DOB: 9/19/1941  research company); Consultant, AESC (The Association of Executive Search Consultants); 
Term of office since: 1982  Director, J&M Cumming Paper Co. (paper merchandising); Former Trustee, NDI Technologies, LLP 
(communications)   
Other directorships: None   
Dr. Russell A. Salton III  President/CEO, AccessOne MedCard, Inc.; Former Medical Director, Healthcare Resource 
Trustee  Associates, Inc. 
DOB: 6/2/1947   
Term of office since: 1984   
Other directorships: None   
Michael S. Scofield  Retired Attorney, Law Offices of Michael S. Scofield; Former Director and Chairman, Branded 
Trustee  Media Corporation (multi-media branding company) 
DOB: 2/20/1943   
Term of office since: 1984   
Other directorships: None   

36

TRUSTEES AND OFFICERS continued

Richard J. Shima  Independent Consultant; Director, Hartford Hospital; Trustee, Greater Hartford YMCA; Former 
Trustee  Director, Trust Company of CT; Former Director, Old State House Association; Former Trustee, 
DOB: 8/11/1939  Saint Joseph College (CT) 
Term of office since: 1993   
Other directorships: None   
Richard K. Wagoner, CFA2  Member and Former President, North Carolina Securities Traders Association; Member, Financial 
Trustee  Analysts Society 
DOB: 12/12/1937   
Term of office since: 1999   
Other directorships: None   
OFFICERS   
Dennis H. Ferro3  Principal occupations: President and Chief Executive Officer, Evergreen Investment Company, 
President  Inc. and Executive Vice President, Wachovia Bank, N.A.; former Chief Investment Officer, 
DOB: 6/20/1945  Evergreen Investment Company, Inc. 
Term of office since: 2003   
Kasey Phillips4  Principal occupations: Senior Vice President, Evergreen Investment Services, Inc.; Former Vice 
Treasurer  President, Evergreen Investment Services, Inc.; Former Assistant Vice President, Evergreen 
DOB: 12/12/1970  Investment Services, Inc. 
Term of office since: 2005   
Michael H. Koonce4  Principal occupations: Senior Vice President and General Counsel, Evergreen Investment 
Secretary  Services, Inc.; Secretary, Senior Vice President and General Counsel, Evergreen Investment 
DOB: 4/20/1960  Management Company, LLC and Evergreen Service Company, LLC; Senior Vice President and 
Term of office since: 2000  Assistant General Counsel, Wachovia Corporation 
Robert Guerin4,5  Principal occupations: Chief Compliance Officer, Evergreen Funds and Senior Vice President 
Chief Compliance Officer  of Evergreen Investments Co, Inc; Former Managing Director and Senior Compliance Officer, 
DOB: 9/20/1965  Babson Capital Management LLC; Former Principal and Director, Compliance and Risk 
Term of office since: 2007  Management, State Street Global Advisors; Former Vice President and Manager, Sales Practice 
  Compliance, Deutsche Asset Management.

1 The Board of Trustees is classified into three classes of which one class is elected annually. Each Trustee serves a three-year term concurrent with the class from which the Trustee is elected. Each Trustee oversees 91 Evergreen funds. Correspondence for each Trustee may be sent to Evergreen Board of Trustees, P.O. Box 20083, Charlotte, NC 28202.

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

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

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

5 Mr. Guerin’s information is as of June 14, 2007, the effective date of his approval by the Board of Trustees as Chief Compliance Officer of the Evergreen funds.

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Item 2 - Code of Ethics

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

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

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

Item 3 - Audit Committee Financial Expert

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

Items 4 – Principal Accountant Fees and Services

The following table represents fees for professional audit services rendered by KPMG LLP, for the audits of each of the 1 series of the Registrant’s annual financial statements for the fiscal years ended October 31, 2007, April 30, 2007 and April 30, 2006, and fees billed for other services rendered by KPMG LLP.

         2007    2007    2006 
Audit fees    $80,600    $63,200    $0 
Audit-related fees    0    0    0 
Tax fees (1)    0    0    0 
Non-audit fees (2)    1,208,367    808,367    950,575 
All other fees    0    0    0 
     Total fees    $1,288,697    $871,567    $950,575 

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

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

Evergreen Funds
Evergreen Income Advantage Fund
Evergreen Multi-Sector Income Fund
Evergreen Utilities and High Income Fund
Evergreen International Balanced Income Fund
Evergreen Global Dividend Opportunity Fund

Audit and Non-Audit Services Pre-Approval Policy

I. Statement of Principles

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

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

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

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

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

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

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

II. Delegation

As provided in the Act and the SEC’s rules, the Audit Committee may delegate either type of pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions of the Audit Committee at its next scheduled meeting.

III. Audit Services

The annual Audit services engagement terms and fees will be subject to the specific pre-approval of the Audit Committee. Audit services include the annual financial statement audit and other procedures required to be performed by the independent auditor to be able to form an opinion on the Funds’ financial statements. These other procedures include information systems and procedural reviews and testing performed in order to understand and place reliance on the systems of internal control, and consultations relating to the audit. Audit services also include the attestation engagement for the independent auditor’s report on management’s report on internal controls for financial reporting. The Audit Committee will monitor the Audit services engagement as necessary, but no less than on a quarterly basis, and will also approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Fund service providers or other items. In addition to the annual Audit services engagement approved by the Audit Committee, the Audit Committee may grant general pre-approval to other Audit services, which are those services that only the independent auditor reasonably can provide. Other Audit services may include services associated with SEC registration statements, periodic reports and other documents filed with the SEC or other documents issued in connection with mergers or acquisitions.

IV. Audit-related Services

Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Funds’ financial statements or that are traditionally performed by the independent auditor. Because the Audit Committee believes that the provision of Audit-related services does not impair the independence of the auditor and is consistent with SEC’s rules on auditor independence, the Audit Committee may grant general pre-approval to Audit-related services. Audit-related services include, among others, due diligence services pertaining to potential business acquisitions/dispositions; accounting consultations related to accounting, financial reporting or disclosure matters not classified as “Audit services”; assistance with understanding and implementing new accounting and financial reporting guidance from rulemaking authorities; agreed-upon or expanded audit procedures related to accounting records required to respond to or comply with financial, accounting or regulatory reporting matters; and assistance with internal control reporting requirements.

V. Tax Services

The Audit Committee believes that the independent auditor can provide Tax services to the Funds such as tax compliance, tax planning and tax advice without impairing the auditor’s independence, and the SEC has stated that the independent auditor may provide such services. Hence, the Audit Committee believes it may grant general pre-approval to those Tax services that have historically been provided by the auditor, that the Audit Committee has reviewed and believes would not impair the independence of the auditor, and that are consistent with the SEC’s rules on auditor independence. The Audit Committee will not permit the retention of the independent auditor in connection with a transaction initially recommended by the independent auditor, the sole business purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee will consult with the Director of Fund Administration, the Vice President of Tax Services or outside counsel to determine that the tax planning and reporting positions are consistent with this policy.

All Tax services involving large and complex transactions must be specifically pre-approved by the Audit Committee, including: tax services proposed to be provide by the independent auditor to any executive officer or director of the Funds, in his or her individual capacity, where such services are paid for by the Funds or the investment advisor.

VI. All Other Services

The Audit Committee believes, based on the SEC’s rules prohibiting the independent auditor from providing specific non-audit services, that other types of non-audit services are permitted. Accordingly, the Audit Committee believes it may grant general pre-approval to those permissible non-audit services classified as All Other services that it believes are routine and recurring services, would not impair the independence of the auditor and are consistent with the SEC’s rules on auditor independence.

The SEC’s rules and relevant guidance should be consulted to determine the precise definitions of the SEC’s prohibited non-audit services and the applicability of exceptions to certain of the prohibitions.

VII. Pre-Approval Fee Levels or Budgeted Amounts

Pre-approval fee levels or budgeted amounts for all services to be provided by the independent auditor will be established annually by the Audit Committee. Any proposed services exceeding these levels or amounts will require specific pre-approval by the Audit Committee. The Audit Committee is mindful of the overall relationship of fees for audit and non-audit services in determining whether to pre-approve any such services. For each fiscal year, the Audit Committee may determine to ratio between the total amount of fees for Audit, Audit-related and Tax services, and the total amount of fees for services classified as All Other services.

VIII. Procedures

All requests or applications for services to be provided by the independent auditor that do not require specific approval by the Audit Committee will be submitted to the Director of Fund Administration or Assistant Director of Fund Administration and must include a detailed description of the services to be rendered. The Director/Assistant Director of Fund Administration will determine whether such services are included within the list of services that have received the general pre-approval of the Audit Committee. The Audit Committee will be informed on a quarterly basis (or more frequent if requested by the audit committee) of any such services rendered by the independent auditor.

Request or applications to provide services that require specific approval by the Audit Committee will be submitted to the Audit Committee by both the independent auditor and the Director/Assistant Director of Fund Administration, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC’s rules on auditor independence.

The Audit Committee has designated the Chief Compliance Officer to monitor the performance of all services provided by the independent auditor and to determine whether such services are in compliance with this policy. The Chief Compliance Officer will report to the Audit Committee on a periodic basis on the results of its monitoring. Both the Chief Compliance Officer and management will immediately report to the chairman of the Audit Committee any breach of this policy that comes to the attention of the Chief Compliance Officer or any member of management.

The Audit Committee will also review the internal auditor’s annual internal audit plan to determine that the plan provides for the monitoring of the independent auditor’s services.

IX. Additional Requirements

The Audit Committee has determined to take additional measures on an annual basis to meet its responsibility to oversee the work of the independent auditor and to assure the auditor’s independence from the Funds, such as reviewing a formal written statement from the independent auditor delineating all relationships between the independent auditor and the Funds, the Funds’ investment advisor and related parties of the investment advisor, consistent with Independence Standards Board Standard No. 1, and discussing with the independent auditor its methods and procedures for ensuring independence.

Items 5 – Audit Committee of Listed Registrants

The Fund has a separately designated standing audit committee established in accordance with

Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The audit committee of the Fund is comprised of Russell A. Salton, III, Patricia B. Norris and the Chairman of the Committee, Charles A. Austin III, each of whom is an Independent Trustee.

Item 6 – Schedule of Investments

Please see schedule of investments contained in the Report to Stockholders included under Item 1 of this Form N-CSR.

Item 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

The Registrant has delegated the voting of proxies relating to its voting securities to its investment advisor, Evergreen Investment Management Company, LLC (the “Advisor”).

Proxy Voting Policy and Procedures

Evergreen Investment Management Company, LLC — February 1, 2007

Statement of Principles

Evergreen Investment Management Company (Evergreen) recognizes it has a fiduciary duty to vote proxies on behalf of clients who have delegated such responsibility to Evergreen, and that in all cases proxies should be voted in a manner reasonably believed to be in the clients' best interest.

Proxy Committee

Evergreen has established a proxy committee (Committee) which is a sub-committee of Evergreen's Investment Policy Committee. The Committee is responsible for approving Evergreen's proxy voting policies, procedures and guidelines, for overseeing the proxy voting process, and for reviewing proxy voting on a regular basis. The Committee will meet quarterly to review reports of all proxies voted for the prior period and to conduct other business as required.

Share Blocking

Evergreen does not vote global proxies, with share blocking restrictions, requiring shares to be prohibited from sale.

Conflicts of Interest

Evergreen recognizes that under certain circumstances it may have a conflict of interest in voting proxies on behalf of its clients. Such circumstances may include, but are not limited to, situations where Evergreen or one or more of its affiliates has a client or customer relationship with the issuer of the security that is the subject of the proxy vote.

In most cases, structural and informational barriers within Evergreen and Wachovia Corporation will prevent Evergreen from becoming aware of the relationship giving rise to the potential conflict of interest. In such circumstances, Evergreen will vote the proxy according to its standard guidelines and procedures described above.

If persons involved in proxy voting on behalf of Evergreen become aware of a potential conflict of interest, the Committee shall consult with Evergreen's Legal Department and consider whether to implement special procedures with respect to the voting of that proxy, including whether an independent third party should be retained to vote the proxy.

Concise Domestic Proxy Voting Guidelines

The following is a concise summary of the Evergreen Investments Management Company LLC proxy voting policy guidelines for 2007.

1. Auditors

Ratifying Auditors

Vote FOR proposals to ratify auditors, unless:

  • An auditor has a financial interest in or association with the company, and is therefore not independent;
  • There is reason to believe that the independent auditor has rendered an opinion which is neither accurate nor indicative of the company’s financial position; or
  • Fees for non-audit services are excessive.

2. Board of Directors

Voting on Director Nominees in Uncontested Elections

Vote CASE-BY-CASE on director nominees, examining, but not limited to, the following factors:

  • Composition of the board and key board committees;
  • Attendance at board and committee meetings;
  • Corporate governance provisions and takeover activity;
  • Disclosures under Section 404 of the Sarbanes-Oxley Act;
  • Long-term company performance relative to a market and peer index;
  • Extent of the director’s investment in the company;
  • Existence of related party transactions;
  • Whether the chairman is also serving as CEO;
  • Whether a retired CEO sits on the board;
  • Number of outside boards at which a director serves.
  • Majority vote standard for director elections without a provision to allow for plurality voting when there are more nominees than seats.

WITHHOLD from individual directors who:

  • Attend less than 75 percent of the board and committee meetings without a valid excuse (such as illness, service to the nation, work on behalf of the company);
  • Sit on more than six public company boards;
  • Are CEOs of public companies who sit on the boards of more than two public companies besides their own (withhold only at their outside boards).

WITHHOLD from the entire board (except for new nominees, who should be considered on a CASE-BY-CASE basis) if:

  • The company’s proxy indicates that not all directors attended 75% of the aggregate of their board and committee meetings, but fails to provide the required disclosure of the names of the directors involved. If this information cannot be obtained, withhold from all incumbent directors;
  • The company’s poison pill has a dead-hand or modified dead-hand feature. Withhold every year until this feature is removed;
  • The board adopts or renews a poison pill without shareholder approval since the beginning of 2005, does not commit to putting it to shareholder vote within 12 months of adoption or reneges on a commitment to put the pill to a vote and has not yet been withheld from for this issue;
  • The board failed to act on a shareholder proposal that received approval by a majority of the shares outstanding the previous year;
  • The board failed to act on a shareholder proposal that received approval of the majority of shares cast for the previous two consecutive years;
  • The board failed to act on takeover offers where the majority of the shareholders tendered their shares;
  • At the previous board election, any director received more than 50 percent withhold votes of the shares cast and the company has failed to address the issue(s) that caused the high withhold rate;
  • The company is a Russell 3000 company that underperformed its industry group (GICS group) under the criteria discussed in the section “Performance Test for Directors”.

WITHHOLD from inside directors and affiliated outside directors when:

  • The inside or affiliated outside director serves on any of the three key committees: audit, compensation, or nominating;
  • The company lacks an audit, compensation, or nominating committee so that the full board functions as that committee;
  • The company lacks a formal nominating committee, even if board attests that the independent directors fulfill the functions of such a committee;
  • The full board is less than majority independent.

WITHHOLD from the members of the Audit Committee if:

  • The non-audit fees paid to the auditor are excessive;
  • A material weakness identified in the Section 404 disclosures rises to a level of serious concern; there are chronic internal control issues and an absence of established effective control mechanisms.
  • There is persuasive evidence that the audit committee entered into an inappropriate indemnification agreement with its auditor that limits the ability of the company, or its shareholders, to pursue legitimate legal recourse against the audit firm.

WITHHOLD from the members of the Compensation Committee if:

  • There is a negative correlation between chief executive pay and company performance;
  • The company reprices underwater options for stock, cash or other consideration without prior shareholder approval, even if allowed in their equity plan;
  • The company fails to submit one-time transfers of stock options to a shareholder vote;
  • The company fails to fulfill the terms of a burn rate commitment they made to shareholders;
  • The company has backdated options (see “Options Backdating” policy);
  • The company has poor compensation practices (see “Poor Pay Practices” policy). Poor pay practices may warrant withholding votes from the CEO and potentially the entire board as well.

WITHHOLD from directors, individually or the entire board, for egregious actions or failure to replace management as appropriate.

Classification/Declassification of the Board

Vote AGAINST proposals to classify the board. Vote FOR proposals to repeal classified boards and to elect all directors annually.

Independent Chair (Separate Chair/CEO)

Generally vote FOR shareholder proposals requiring the position of chair be filled by an independent director unless there are compelling reasons to recommend against the proposal, such as a counterbalancing governance structure. This should include all of the following:

  • Designated lead director, elected by and from the independent board members with clearly delineated and comprehensive duties. (The role may alternatively reside with a presiding director, vice chairman, or rotating lead director; however the director must serve a minimum of one year in order to qualify as a lead director.) At a minimum these should include:

  o Presiding at all meetings of the board at which the chairman is not present, including
    executive sessions of the independent directors,
o Serving as liaison between the chairman and the independent directors,
o Approving information sent to the board,
o Approving meeting agendas for the board,
o Approves meetings schedules to assure that there is sufficient time for discussion of all
    agenda items,
o Having the authority to call meetings of the independent directors,
o If requested by major shareholders, ensuring that he is available for consultation and
     direct communication;

  • Two-thirds independent board;
  • All-independent key committees;
  • Established governance guidelines;
  • The company does not under-perform its peers.

Majority Vote Shareholder Proposals

Generally vote FOR precatory and binding resolutions requesting that the board change the company’s bylaws to stipulate that directors need to be elected with an affirmative majority of votes cast, provided it does not conflict with the state law where the company is incorporated. Binding resolutions need to allow for a carve-out for a plurality vote standard when there are more nominees than board seats. Companies are strongly encouraged to also adopt a post-election policy (also know as a director resignation policy) that will provide guidelines so that the company will promptly address the situation of a holdover director.

3. Proxy Contests

Voting for Director Nominees in Contested Elections

Vote CASE-BY-CASE on the election of directors in contested elections, considering the following factors:

  • Long-term financial performance of the target company relative to its industry;
  • Management’s track record;
  • Background to the proxy contest;
  • Qualifications of director nominees (both slates);
  • Strategic plan of dissident slate and quality of critique against management;
  • Likelihood that the proposed goals and objectives can be achieved (both slates);
  • Stock ownership positions.

Reimbursing Proxy Solicitation Expenses

Vote CASE-BY-CASE on proposals to reimburse proxy solicitation expenses. When voting in conjunction with support of a dissident slate, vote FOR the reimbursement of all appropriate proxy solicitation expenses associated with the election.

4. Takeover Defenses

Poison Pills

Vote FOR shareholder proposals requesting that the company submit its poison pill to a shareholder vote or redeem it UNLESS the company has: (1) A shareholder approved poison pill in place; or (2) The company has adopted a policy concerning the adoption of a pill in the future specifying that the board will only adopt a shareholder rights plan if either:

  • Shareholders have approved the adoption of the plan; or
  • The board, in its exercise of its fiduciary responsibilities, determines that it is in the best interest of shareholders under the circumstances to adopt a pill without the delay in adoption that would result from seeking stockholder approval (i.e. the “fiduciary out” provision). A poison pill adopted under this fiduciary out will be put to a shareholder ratification vote within twelve months of adoption or expire. If the pill is not approved by a majority of the votes cast on this issue, the plan will immediately terminate.

Vote FOR shareholder proposals calling for poison pills to be put to a vote within a time period of less than one year after adoption. If the company has no non-shareholder approved poison pill in place and has adopted a policy with the provisions outlined above, vote AGAINST the proposal. If these conditions are not met, vote FOR the proposal, but with the caveat that a vote within twelve months would be considered sufficient.

Vote CASE-by-CASE on management proposals on poison pill ratification, focusing on the features of the shareholder rights plan. Rights plans should contain the following attributes:

  • No lower than a 20 percent trigger, flip-in or flip-over;
  • A term of no more than three years;
  • No dead-hand, slow-hand, no-hand or similar feature that limits the ability of a future board to redeem the pill;
  • Shareholder redemption feature (qualifying offer clause); if the board refuses to redeem the pill 90 days after a qualifying offer is announced, ten percent of the shares may call a special meeting or seek a written consent to vote on rescinding the pill.

Supermajority Vote Requirements

Vote AGAINST proposals to require a supermajority shareholder vote.

Vote FOR proposals to lower supermajority vote requirements.

5. Mergers and Corporate Restructurings

For mergers and acquisitions, review and evaluate the merits and drawbacks of the proposed transaction, balancing various and sometimes countervailing factors including:

  • Valuation - Is the value to be received by the target shareholders (or paid by the acquirer) reasonable? While the fairness opinion may provide an initial starting point for assessing valuation reasonableness, emphasis is placed on the offer premium, market reaction and strategic rationale.
  • Market reaction - How has the market responded to the proposed deal? A negative market reaction should cause closer scrutiny of a deal.
  • Strategic rationale - Does the deal make sense strategically? From where is the value derived? Cost and revenue synergies should not be overly aggressive or optimistic, but reasonably achievable. Management should also have a favorable track record of successful integration of historical acquisitions.
  • Negotiations and process - Were the terms of the transaction negotiated at arm's-length? Was the process fair and equitable? A fair process helps to ensure the best price for shareholders.
    Significant negotiation "wins" can also signify the deal makers' competency. The comprehensiveness of the sales process (e.g., full auction, partial auction, no auction) can also affect shareholder value.
  • Conflicts of interest - Are insiders benefiting from the transaction disproportionately and inappropriately as compared to non-insider shareholders? As the result of potential conflicts, the directors and officers of the company may be more likely to vote to approve a merger than if they did not hold these interests. Consider whether these interests may have influenced these directors and officers to support or recommend the merger.
  • Governance - Will the combined company have a better or worse governance profile than the current governance profiles of the respective parties to the transaction? If the governance profile is to change for the worse, the burden is on the company to prove that other issues (such as valuation) outweigh any deterioration in governance.

6. State of Incorporation

Reincorporation Proposals

Vote CASE-BY-CASE on proposals to change a company's state of incorporation, taking into consideration both financial and corporate governance concerns, including the reasons for reincorporating, a comparison of the governance provisions, comparative economic benefits, and a comparison of the jurisdictional laws. Vote FOR reincorporation when the economic factors outweigh any neutral or negative governance changes.

7. Capital Structure

Common Stock Authorization

Vote CASE-BY-CASE on proposals to increase the number of shares of common stock authorized for issuance. Vote FOR proposals to approve increases beyond the allowable increase when a company's shares are in danger of being de-listed or if a company's ability to continue to operate as a going concern is uncertain. In addition, for capital requests less than or equal to 300 percent of the current authorized shares that marginally fail the calculated allowable cap (i.e., exceed the allowable cap by no more than 5 percent), on a CASE-BY-CASE basis, vote FOR the increase based on the company's performance and whether the company’s ongoing use of shares has shown prudence.

Issue Stock for Use with Rights Plan

Vote AGAINST proposals that increase authorized common stock for the explicit purpose of implementing a non-shareholder approved shareholder rights plan (poison pill).

Preferred Stock

Vote AGAINST proposals authorizing the creation of new classes of preferred stock with unspecified voting, conversion, dividend distribution, and other rights ("blank check" preferred stock). Vote AGAINST proposals to increase the number of blank check preferred stock authorized for issuance when no shares have been issued or reserved for a specific purpose.

Vote FOR proposals to create "de-clawed" blank check preferred stock (stock that cannot be used as a takeover defense). Vote FOR proposals to authorize preferred stock in cases where the company specifies the voting, dividend, conversion, and other rights of such stock and the terms of the preferred stock appear reasonable. Vote CASE-BY-CASE on proposals to increase the number of blank check preferred shares after analyzing the number of preferred shares available for issue given a company's industry and performance in terms of shareholder returns.

8. Executive and Director Compensation

Poor Pay Practices

WITHHOLD from compensation committee members, CEO, and potentially the entire board, if the company has poor compensation practices, such as:

  • Egregious employment contracts (e.g., those containing multi-year guarantees for bonuses and grants);
  • Excessive perks that dominate compensation (e.g., tax gross-ups for personal use of corporate aircraft);
  • Huge bonus payouts without justifiable performance linkage or proper disclosure;
  • Performance metrics that are changed (e.g., canceled or replaced during the performance period without adequate explanation of the action and the link to performance);
  • Egregious pension/SERP (supplemental executive retirement plan) payouts (e.g., the inclusion of additional years of service not worked or inclusion of performance-based equity awards in the pension calculation);
  • New CEO awarded an overly generous new hire package (e.g., including excessive “make whole” provisions or any of the poor pay practices listed in this policy);
  • Excessive severance provisions (e.g., including excessive change in control payments);
  • Change in control payouts without loss of job or substantial diminution of job duties;
  • Internal pay disparity;
  • Options backdating (covered in a separate policy); and

Equity Compensation Plans

Vote CASE-BY-CASE on equity-based compensation plans. Vote AGAINST the plan if:

  • The total cost of the company’s equity plans is unreasonable;
  • The plan expressly permits the repricing of stock options without prior shareholder approval;
  • There is a disconnect between CEO pay and the company’s performance;
  • The company’s three year burn rate exceeds the greater of 2 percent and the mean plus 1 standard deviation of its industry group; or
  • The plan is a vehicle for poor pay practices.

Director Compensation

Vote CASE-BY-CASE on compensation plans for non-employee directors, based on the cost of the plans against the company’s allowable cap. Vote for the plan if ALL of the following qualitative factors in the board’s compensation plan are met and disclosed in the proxy statement:

  • Stock ownership guidelines with a minimum of three times the annual cash retainer.
  • Vesting schedule or mandatory holding/deferral period:

  o A minimum vesting of three years for stock options or restricted stock; or
o Deferred stock payable at the end of a three-year deferral period.

  • A balanced mix between cash and equity. If the mix is heavier on equity, the vesting schedule or deferral period should be more stringent, with the lesser of five years or the term of directorship.
  • No retirement/benefits and perquisites for non-employee directors; and
  • A table with a detailed disclosure of the cash and equity compensation for each non-employee director for the most recent fiscal year.

Employee Stock Purchase Plans--Qualified Plans

Vote CASE-BY-CASE on qualified employee stock purchase plans. Vote FOR plans if:

  • Purchase price is at least 85 percent of fair market value;
  • Offering period is 27 months or less; and
  • The number of shares allocated to the plan is ten percent or less of the outstanding shares.

Employee Stock Purchase Plans--Non-Qualified Plans

Vote CASE-by-CASE on nonqualified employee stock purchase plans. Vote FOR plans with:

  • Broad-based participation (i.e., all employees with the exclusion of individuals with 5 percent or more of beneficial ownership of the company);
  • Limits on employee contribution (a fixed dollar amount or a percentage of base salary);
  • Company matching contribution up to 25 percent of employee’s contribution, which is effectively a discount of 20 percent from market value;
  • No discount on the stock price on the date of purchase since there is a company matching contribution.

Options Backdating

In cases where a company has practiced options backdating, WITHHOLD on a CASE-BY-CASE basis from the members of the compensation committee, depending on the severity of the practices and the subsequent corrective actions on the part of the board. WITHHOLD from the compensation committee members who oversaw the questionable options grant practices or from current compensation committee members who fail to respond to the issue proactively, depending on several factors, including, but not limited to:

  • Reason and motive for the options backdating issue, such as inadvertent vs. deliberate grant date changes;
  • Length of time of options backdating;
  • Size of restatement due to options backdating;
  • Corrective actions taken by the board or compensation committee, such as canceling or repricing backdated options, or recouping option gains on backdated grants;
  • Adoption of a grant policy that prohibits backdating, and creation of a fixed grant schedule or window period for equity grants going forward.

Severance Agreements for Executives/Golden Parachutes

Vote FOR shareholder proposals to require golden parachutes or executive severance agreements to be submitted for shareholder ratification, unless the proposal requires shareholder approval prior to entering into employment contracts. Vote on a CASE-BY-CASE basis on proposals to ratify or cancel golden parachutes. An acceptable parachute should include:

  • A trigger beyond the control of management;
  • The amount should not exceed three times base amount (defined as the average annual taxable W-2 compensation during the five years prior to the year in which the change of control occurs;
  • Change-in-control payments should be double-triggered, i.e., (1) after a change in the company’s ownership structure has taken place, and (2) termination of the executive as a result of the change in control.

9. Corporate Responsibility

Animal Rights

Generally vote AGAINST proposals to phase out the use of animals in product testing unless:

  • The company is conducting animal testing programs that are unnecessary or not required by regulation;
  • The company is conducting animal testing when suitable alternatives are accepted and used at peer firms;
  • The company has been the subject of recent, significant controversy related to its testing programs.

Generally vote FOR proposals seeking a report on the company’s animal welfare standards.

Drug Pricing and Re-importation

Generally vote AGAINST proposals requesting that companies implement specific price restraints on pharmaceutical products unless the company fails to adhere to legislative guidelines or industry norms in its product pricing. Vote CASE-BY-CASE on proposals requesting that the company evaluate their product pricing considering:

  • The existing level of disclosure on pricing policies;
  • Deviation from established industry pricing norms;
  • The company’s existing initiatives to provide its products to needy consumers;
  • Whether the proposal focuses on specific products or geographic regions.

Generally vote FOR proposals requesting that companies report on the financial and legal impact of their policies regarding prescription drug re-importation unless such information is already publicly disclosed.

Generally vote AGAINST proposals requesting that companies adopt specific policies to encourage or constrain prescription drug re-importation.

Genetically Modified Foods

Vote AGAINST proposals asking companies to voluntarily label genetically engineered (GE) ingredients in their products or alternatively to provide interim labeling and eventually eliminate GE ingredients due to the costs and feasibility of labeling and/or phasing out the use of GE ingredients.

Tobacco

Most tobacco-related proposals (such as on second-hand smoke, advertising to youth and spin-offs of tobacco-related business) should be evaluated on a CASE-BY-CASE basis.

Toxic Chemicals

Generally vote FOR resolutions requesting that a company discloses its policies related to toxic chemicals. Vote CASE-BY-CASE on resolutions requesting that companies evaluate and disclose the potential financial and legal risks associated with utilizing certain chemicals. Generally vote AGAINST resolutions requiring that a company reformulate its products within a certain timeframe unless such actions are required by law in specific markets.

Arctic National Wildlife Refuge

Generally vote AGAINST request for reports outlining potential environmental damage from drilling in the Arctic National Wildlife Refuge (ANWR) unless:

  • New legislation is adopted allowing development and drilling in the ANWR region;
  • The company intends to pursue operations in the ANWR; and
  • The company has not disclosed an environmental risk report for its ANWR operations.

Concentrated Area Feeding Operations (CAFOs)

Vote FOR resolutions requesting that companies report to shareholders on the risks and liabilities associated with CAFOs unless:

  • The company has publicly disclosed guidelines for its corporate and contract farming operations, including compliance monitoring; or
  • The company does not directly source from CAFOs.

Global Warming and Kyoto Protocol Compliance

Generally vote FOR proposals requesting a report on greenhouse gas emissions from company operations and/or products unless this information is already publicly disclosed or such factors are not integral to the company’s line of business. Generally vote AGAINST proposals that call for reduction in greenhouse gas emissions by specified amounts or within a restrictive time frame unless the company lags industry standards and has been the subject of recent, significant fines or litigation resulting from greenhouse gas emissions.

Generally vote FOR resolutions requesting that companies outline their preparations to comply with standards established by Kyoto Protocol signatory markets unless:

  • The company does not maintain operations in Kyoto signatory markets;
  • The company already evaluates and substantially discloses such information; or,
  • Greenhouse gas emissions do not significantly impact the company’s core businesses.

Political Contributions

Vote CASE-BY-CASE on proposals to improve the disclosure of a company's political contributions considering: any recent significant controversy or litigation related to the company’s political contributions or governmental affairs; and the public availability of a policy on political contributions. Vote AGAINST proposals barring the company from making political contributions.

Link Executive Compensation to Social Performance

Vote CASE-BY-CASE on proposals to review ways of linking executive compensation to social factors, such as corporate downsizings, customer or employee satisfaction, community involvement, human rights, environmental performance, predatory lending, and executive/employee pay disparities.

Outsourcing/Offshoring

Vote CASE-BY-CASE on proposals calling for companies to report on the risks associated with outsourcing, considering: the risks associated with certain international markets; the utility of such a report; and the existence of a publicly available code of corporate conduct that applies to international operations.

Human Rights Reports

Vote CASE-BY-CASE on requests for reports detailing the company’s operations in a particular country and on proposals to implement certain human rights standards at company facilities or those of its suppliers and to commit to outside, independent monitoring.

10. Mutual Fund Proxies

Election of Directors

Vote CASE-BY-CASE on the election of directors and trustees, following the same guidelines for uncontested directors for public company shareholder meetings. However, mutual fund boards do not usually have compensation committees, so do not withhold for the lack of this committee.

Converting Closed-end Fund to Open-end Fund

Vote CASE-BY-CASE on conversion proposals, considering the following factors:

  • Past performance as a closed-end fund;
  • Market in which the fund invests;
  • Measures taken by the board to address the discount; and
  • Past shareholder activism, board activity, and votes on related proposals.

Establish Director Ownership Requirement

Generally vote AGAINST shareholder proposals that mandate a specific minimum amount of stock that directors must own in order to qualify as a director or to remain on the board.

Reimburse Shareholder for Expenses Incurred

Vote CASE-BY-CASE on shareholder proposals to reimburse proxy solicitation expenses. When supporting the dissidents, vote FOR the reimbursement of the solicitation expenses.

Concise Global Proxy Voting Guidelines

Following is a concise summary of general policies for voting global proxies. In addition, country- and market-specific policies, which are not captured below.

Financial Results/Director and Auditor Reports

Vote FOR approval of financial statements and director and auditor reports, unless:

  • there are concerns about the accounts presented or audit procedures used; or
  • the company is not responsive to shareholder questions about specific items that should be publicly disclosed.

Appointment of Auditors and Auditor Compensation

Vote FOR the reelection of auditors and proposals authorizing the board to fix auditor fees, unless:

  • there are serious concerns about the accounts presented or the audit procedures used;
  • the auditors are being changed without explanation; or
  • nonaudit-related fees are substantial or are routinely in excess of standard annual audit fees.

Vote AGAINST the appointment of external auditors if they have previously served the company in an executive capacity or can otherwise be considered affiliated with the company.

Appointment of Internal Statutory Auditors

Vote FOR the appointment or reelection of statutory auditors, unless:

  • there are serious concerns about the statutory reports presented or the audit procedures used;
  • questions exist concerning any of the statutory auditors being appointed; or
  • the auditors have previously served the company in an executive capacity or can otherwise be considered affiliated with the company.

Allocation of Income

Vote FOR approval of the allocation of income, unless:

  • the dividend payout ratio has been consistently below 30 percent without adequate explanation; or
  • the payout is excessive given the company's financial position.

Stock (Scrip) Dividend Alternative

Vote FOR most stock (scrip) dividend proposals.

Vote AGAINST proposals that do not allow for a cash option unless management demonstrates that the cash option is harmful to shareholder value.

Amendments to Articles of Association

Vote amendments to the articles of association on a CASE-BY-CASE basis.

Change in Company Fiscal Term

Vote FOR resolutions to change a company's fiscal term unless a company's motivation for the change is to postpone its AGM.

Lower Disclosure Threshold for Stock Ownership

Vote AGAINST resolutions to lower the stock ownership disclosure threshold below five percent unless specific reasons exist to implement a lower threshold.

Amend Quorum Requirements

Vote proposals to amend quorum requirements for shareholder meetings on a CASE-BY-CASE basis.

Transact Other Business

Vote AGAINST other business when it appears as a voting item.

Director Elections

Vote FOR management nominees in the election of directors, unless:

  • Adequate disclosure has not been met in a timely fashion;
  • There are clear concerns over questionable finances or restatements;
  • There have been questionable transactions with conflicts of interest;
  • There are any records of abuses against minority shareholder interests; and
  • The board fails to meet minimum corporate governance standards.

Vote FOR individual nominees unless there are specific concerns about the individual, such as criminal wrongdoing or breach of fiduciary responsibilities.

Vote AGAINST shareholder nominees unless they demonstrate a clear ability to contribute positively to board deliberations.

Vote AGAINST individual directors if repeated absences at board meetings have not been explained (in countries where this information is disclosed).

Vote AGAINST labor representatives if they sit on either the audit or compensation committee, as they are not required to be on those committees.

Director Compensation

Vote FOR proposals to award cash fees to nonexecutive directors unless the amounts are excessive relative to other companies in the country or industry.

Vote nonexecutive director compensation proposals that include both cash and share-based components on a CASE-BY-CASE basis.

Vote proposals that bundle compensation for both nonexecutive and executive directors into a single resolution on a CASE-BY-CASE basis.

Vote AGAINST proposals to introduce retirement benefits for nonexecutive directors.

Discharge of Board and Management

Vote FOR discharge of the board and management, unless:

  • there are serious questions about actions of the board or management for the year in question; or
  • legal action is being taken against the board by other shareholders.

Vote AGAINST proposals to remove approval of discharge of board and management from the agenda.

Director, Officer, and Auditor Indemnification and Liability Provisions

Vote proposals seeking indemnification and liability protection for directors and officers on a CASE-BY-CASE basis.

Vote AGAINST proposals to indemnify auditors.

Board Structure

Vote FOR proposals to fix board size.

Vote AGAINST the introduction of classified boards and mandatory retirement ages for directors. Vote AGAINST proposals to alter board structure or size in the context of a fight for control of the company or the board.

Share Issuance Requests General Issuances

Vote FOR issuance requests with preemptive rights to a maximum of 100 percent over currently issued capital.

Vote FOR issuance requests without preemptive rights to a maximum of 20 percent of currently issued capital.

Specific Issuances

Vote on a CASE-BY-CASE basis on all requests, with or without preemptive rights.

Increases in Authorized Capital

Vote FOR nonspecific proposals to increase authorized capital up to 100 percent over the current authorization unless the increase would leave the company with less than 30 percent of its new authorization outstanding.

Vote FOR specific proposals to increase authorized capital to any amount, unless:

  • the specific purpose of the increase (such as a share-based acquisition or merger) does not meet established guidelines for the purpose being proposed; or
  • the increase would leave the company with less than 30 percent of its new authorization outstanding after adjusting for all proposed issuances

Vote AGAINST proposals to adopt unlimited capital authorizations.

Reduction of Capital

Vote FOR proposals to reduce capital for routine accounting purposes unless the terms are unfavorable to shareholders.

Vote proposals to reduce capital in connection with corporate restructuring on a CASE-BY-CASE basis.

Capital Structures

Vote FOR resolutions that seek to maintain or convert to a one share, one vote capital structure.

Vote AGAINST requests for the creation or continuation of dual class capital structures or the creation of new or additional supervoting shares.

Preferred Stock

Vote FOR the creation of a new class of preferred stock or for issuances of preferred stock up to 50 percent of issued capital unless the terms of the preferred stock would adversely affect the rights of existing shareholders.

Vote FOR the creation/issuance of convertible preferred stock as long as the maximum number of common shares that could be issued upon conversion meets established guidelines on equity issuance requests.

Vote AGAINST the creation of a new class of preference shares that would carry superior voting rights to the common shares.

Vote AGAINST the creation of blank check preferred stock unless the board clearly states that the authorization will not be used to thwart a takeover bid.

Vote proposals to increase blank check preferred authorizations on a CASE-BY-CASE basis.

Debt Issuance Requests

Vote nonconvertible debt issuance requests on a CASE-BY-CASE basis, with or without preemptive rights. Vote FOR the creation/issuance of convertible debt instruments as long as the maximum number of common shares that could be issued upon conversion meets established guidelines on equity issuance requests.

Vote FOR proposals to restructure existing debt arrangements unless the terms of the restructuring would adversely affect the rights of shareholders.

Pledging of Assets for Debt

Vote proposals to approve the pledging of assets for debt on a CASE-BY-CASE basis.

Increase in Borrowing Powers

Vote proposals to approve increases in a company's borrowing powers on a CASE-BY-CASE basis.

Share Repurchase Plans

Vote FOR share repurchase plans, unless:

  • clear evidence of past abuse of the authority is available; or
  • the plan contains no safeguards against selective buybacks.

Reissuance of Shares Repurchased

Vote FOR requests to reissue any repurchased shares unless there is clear evidence of abuse of this authority in the past.

Capitalization of Reserves for Bonus Issues/Increase In Par Value

Vote FOR requests to capitalize reserves for bonus issues of shares or to increase par value.

Reorganizations/Restructurings

Vote reorganizations and restructurings on a CASE-BY-CASE basis.

Mergers and Acquisitions

Vote CASE-BY-CASE on mergers and acquisitions taking into account the following:

For every M&A analysis, we review publicly available information as of the date of the report and evaluates the merits and drawbacks of the proposed transaction, balancing various and sometimes countervailing factors including:

  • Valuation - Is the value to be received by the target shareholders (or paid by the acquirer) reasonable? While the fairness opinion may provide an initial starting point for assessing valuation reasonableness, we place emphasis on the offer premium, market reaction, and strategic rationale.
  • Market reaction - How has the market responded to the proposed deal? A negative market reaction will cause more scrutiny.
  • Strategic rationale - Does the deal make sense strategically? From where is the value derived? Cost and revenue synergies should not be overly aggressive or optimistic, but reasonably achievable. Management should also have a favorable track record of successful integration of historical acquisitions.
  • Conflicts of interest - Are insiders benefiting from the transaction disproportionately and inappropriately as compared to non-insider shareholders? We will consider whether any special interests may have influenced these directors and officers to support or recommend the merger.
  • Governance - Will the combined company have a better or worse governance profile than the current governance profiles of the respective parties to the transaction? If the governance profile is to change for the worse, the burden is on the company to prove that other issues (such as valuation) outweigh any deterioration in governance.

Vote AGAINST if the companies do not provide sufficient information upon request to make an informed voting decision.

Mandatory Takeover Bid Waivers

Vote proposals to waive mandatory takeover bid requirements on a CASE-BY-CASE basis.

Reincorporation Proposals

Vote reincorporation proposals on a CASE-BY-CASE basis.

Expansion of Business Activities

Vote FOR resolutions to expand business activities unless the new business takes the company into risky areas.

Related-Party Transactions

Vote related-party transactions on a CASE-BY-CASE basis.

Compensation Plans

Vote compensation plans on a CASE-BY-CASE basis.

Antitakeover Mechanisms

Vote AGAINST all antitakeover proposals unless they are structured in such a way that they give shareholders the ultimate decision on any proposal or offer.

Shareholder Proposals

Vote all shareholder proposals on a CASE-BY-CASE basis.

Vote FOR proposals that would improve the company's corporate governance or business profile at a reasonable cost.

Vote AGAINST proposals that limit the company's business activities or capabilities or result in significant costs being incurred with little or no benefit.

Item 8 – Portfolio Managers of Closed-End Management Investment Companies.

Francis Claro, CFA is a Managing Director, Senior Portfolio Manager and Head of Evergreen’s International Developed Markets team. He has been with Evergreen or one of its predecessor firms since 1994 and was a co-portfolio manager of Evergreen Latin America Fund and Evergreen Emerging Markets Growth Fund from 1997 to 1999 when he became co-portfolio manager of Evergreen Global Opportunities Fund.

Joseph Desantis is a Chief Investment Officer and Managing Director with Evergreen’s Fundamental Equity group. Prior to joining Evergreen in 2005, Joe served as a Managing Director and Head of Equities-Americas with Deutsche Asset Management in New York (2000-2005)

Michael William Lee is the Director of Trading and Senior Portfolio Manager for Evergreen International Advisors. He is one of four senior member of the investment team that forms the Investment Strategy Committee. Michael has been with Evergreen or one of its predecessor firms since 1992.

Tony Norris is Managing Director, Chief Investment Officer and Senior Portfolio Manager with Evergreen International Advisors. Tony has been with Evergreen or one of its predecessor firms since 1990.

Alex Perrin is the Director of Research and Senior Portfolio Manager with Evergreen International Advisors. He is one of four senior member of the investment team that forms the Investment Strategy Committee. Alex has been with Evergreen or one of its predecessor firms since 1992.

Peter Wilson is Managing Director, Chief Operating Officer and Senior Portfolio Manager with Evergreen International Advisors. Peter is one of four senior member of the investment team that forms the Investment Strategy Committee. Peter has been with Evergreen or one of its predecessor firms since 1989.

Other Funds and Accounts Managed. The following table provides information about the registered investment companies and other pooled investment vehicles and accounts managed by the portfolio managers of the Fund as of the Fund’s most recent fiscal year ended October 31, 2007.

 Portfolio Manager        (Assets in 
        thousands) 
 Joseph DeSantis     Assets of registered investment companies managed     
 
     Evergreen International Balanced Income Fund    $262,092 
     Evergreen Global Dividend Opportunity Fund    968,795 
     TOTAL    $1,230,887 
     Those subject to performance fee    $961,118 
     Number of other pooled investment vehicles managed    0 
     Assets of other pooled investment vehicles managed    $0 
     Number of those subject to performance fee    0 
    Assets of those subject to performance fee    $0 
     Number of separate accounts managed    0 
     Assets of separate accounts managed    $0 
     Number of those subject to performance fee    0 
     Assets of those subject to performance fee    $0 
 
Portfolio Manager        (Assets in 
        thousands) 
Francis Claro    Assets of registered investment companies managed     
    Evergreen Global Opportunities Fund*    $725,288 
    Evergreen International Balanced Income Fund*    262,092 
    Evergreen International Equity Fund    3,493,555 
    Evergreen VA International Equity Fund    329,917 
    Clarington Global Small Cap Fund*    95,130 
    TA IDEX Multi Manager International Fund    637,690 
    MMA Praxis International Fund    195,488 
    TOTAL    $5,739,160 
    Those subject to performance fee    0 
    Number of other pooled investment vehicles managed    1 
           Assets of other pooled investment vehicles managed    $26,762 
             Number of those subject to performance fee    1 
             Assets of those subject to performance fee    $26,762 
    Number of separate accounts managed    7 
           Assets of separate accounts managed    $320,323 
           Number of those subject to performance fee    0 
           Assets of those subject to performance fee    $0 
           * Mr. Claro is not fully responsible for the management of the entire     
           portfolios of Evergreen Global Opportunities Fund, Clarington Global     
           Small Cap Fund, and Evergreen International Balanced Income Fund.     
           As of October 31, 2007, he was responsible only for approximately     
           $686.4 million of the $1,082.5 million in assets in these funds.     
 
Portfolio Manager         
Tony Norris    Assets of registered investment companies managed     
 
    Evergreen Core Plus Bond Fund*    287,932 
    Evergreen International Bond Fund    1,116,300 
    Evergreen Multi Sector Income Fund Total*    1,188,396 
    Evergreen International Balanced Income Fund*    262,092 
 
           TOTAL    $ 2,854,720 
           Those subject to performance fee    0 
    Number of other pooled investment vehicles managed    5 
           Assets of other pooled investment vehicles managed    $ 943,061 
           Number of those subject to performance fee    0 
             Assets of those subject to performance fee    $0 
    Number of separate accounts managed    27 
           Assets of separate accounts managed    $ 17,534,442 
           Number of those subject to performance fee    0 
           Assets of those subject to performance fee    0 
           * Mr. Norris is not fully responsible for the management of the entire     
           portfolios of Evergreen Core Plus Bond Fund, Evergreen Multi Sector     
           Income Fund and Evergreen International Balanced Income Fund.     
           As of October 31, 2007, he was responsible only for approximately     
           $418.0 million of the $1,738.4 million in assets in these funds.     
 
 
 
Michael Lee    Assets of registered investment companies managed     
 
    Evergreen Core Plus Bond Fund*    287,932 
    Evergreen International Bond Fund    1,116,300 
    Evergreen Multi Sector Income Fund Total*    1,188,396 
    Evergreen International Balanced Income Fund*    262,092 
 
           TOTAL    $ 2,854,720 
           Those subject to performance fee    0 
    Number of other pooled investment vehicles managed    5 
           Assets of other pooled investment vehicles managed    $ 943,061 
           Number of those subject to performance fee    0 
             Assets of those subject to performance fee    $0 
    Number of separate accounts managed    27 
           Assets of separate accounts managed    $ 17,534,442 
           Number of those subject to performance fee    0 
           Assets of those subject to performance fee    0 
           * Mr. Lee is not fully responsible for the management of the entire     
           portfolios of Evergreen Core Plus Bond Fund, Evergreen Multi Sector     
           Income Fund and Evergreen International Balanced Income Fund.     
           As of October 31, 2007, he was responsible only for approximately     
           $418.0 million of the $1,738.4 million in assets in these funds.     
 
 
Alex Perrin    Assets of registered investment companies managed     
 
    Evergreen Core Plus Bond Fund*    287,932 
    Evergreen International Bond Fund    1,116,300 
    Evergreen Multi Sector Income Fund Total*    1,188,396 
    Evergreen International Balanced Income Fund*    262,092 
 
           TOTAL    $ 2,854,720 
           Those subject to performance fee    0 
    Number of other pooled investment vehicles managed    5 
           Assets of other pooled investment vehicles managed    $ 943,061 
           Number of those subject to performance fee    0 
             Assets of those subject to performance fee    $0 
    Number of separate accounts managed    27 
           Assets of separate accounts managed    $ 17,534,442 
           Number of those subject to performance fee    0 
           Assets of those subject to performance fee    0 
           * Mr. Perrin is not fully responsible for the management of the entire     
           portfolios of Evergreen Core Plus Bond Fund, Evergreen Multi Sector     
           Income Fund and Evergreen International Balanced Income Fund.     
           As of October 31, 2007, he was responsible only for approximately     
           $418.0 million of the $1,738.4 million in assets in these funds.     
 
 
 
Peter Wilson    Assets of registered investment companies managed     
 
    Evergreen Core Plus Bond Fund*    287,932 
    Evergreen International Bond Fund    1,116,300 
    Evergreen Multi Sector Income Fund Total*    1,188,396 
    Evergreen International Balanced Income Fund*    262,092 
 
           TOTAL    $ 2,854,720 
           Those subject to performance fee    0 
    Number of other pooled investment vehicles managed    5 
           Assets of other pooled investment vehicles managed    $ 943,061 
           Number of those subject to performance fee    0 
             Assets of those subject to performance fee    $0 
    Number of separate accounts managed    27 
           Assets of separate accounts managed    $ 17,534,442 
           Number of those subject to performance fee    0 
           Assets of those subject to performance fee    0 
           * Mr. Wilson is not fully responsible for the management of the entire     
           portfolios of Evergreen Core Plus Bond Fund, Evergreen Multi Sector     
           Income Fund and Evergreen International Balanced Income Fund.     
           As of October 31, 2007, he was responsible only for approximately     
           $418.0 million of the $1,738.4 million in assets in these funds.     

Conflicts of Interest. EIMC. Portfolio managers may experience certain conflicts of interest in managing the Funds’ investments, on the one hand, and the investments of other accounts, including other Evergreen funds, on the other. For example, if a portfolio manager identifies a limited investment opportunity, such as an initial public offering, that may be suitable for more than one Fund or other account, a Fund may not be able to take full advantage of that opportunity due to an allocation of that investment across all eligible funds and accounts. EIMC’s policies and procedures relating to the allocation of investment opportunities address these potential conflicts by limiting portfolio manager discretion and are intended to result in fair and equitable allocations among all products managed by that portfolio manager or team that might be eligible for a particular investment. However, there is no guarantee that such procedures will detect each and every situation where a conflict arises.

The management of multiple Funds and other accounts may give rise to potential conflicts of interest, particularly if the Funds and accounts have different objectives, benchmarks and time horizons, as the portfolio manager must allocate his or her time and investment ideas across multiple funds and accounts. For example, in certain instances, a portfolio manager may take conflicting positions in a particular security for different accounts, by selling a security for one account and continuing to hold it for another account. In addition, the management of other accounts may require the portfolio manager to devote less than all of his or her time to a Fund, which may constitute a conflict with the interest of the Fund. EIMC seeks to manage such competing interests for the time and attention of portfolio managers by having portfolio managers focus on a particular investment discipline, such as investing in large capitalization equity securities. Accordingly, portfolio holdings, position sizes, and industry and sector exposures tend to be similar across similar portfolios, which may minimize the potential for conflicts of interest.

EIMC does not receive a performance fee for its management of the Funds, other than Evergreen Large Cap Equity Fund. EIMC and/or a portfolio manager may have an incentive to allocate favorable or limited opportunity investments or structure the timing of investments to favor accounts other than the Funds – for instance, those that pay a higher advisory fee and/or have a performance fee. The policies of EIMC, however, require that portfolio managers treat all accounts they manage equitably and fairly.

EIMC has a policy allowing it to aggregate sale and purchase orders of securities for all accounts with similar orders if, in EIMC’s reasonable judgment, such aggregation is reasonably likely to result generally in lower per-share brokerage commission costs. In such an event, each client may be charged or credited, as the case may be, the average transaction price of all securities purchased or sold in such transaction. As a result, however, the price may be less favorable to a client than it would be if similar transactions were not being executed concurrently for other accounts. In addition, in many instances, the purchase or sale of securities for accounts will be effected simultaneously with the purchase or sale of like securities for other accounts. Such transactions may be made at slightly different prices, due to the volume of securities purchased or sold. EIMC has also adopted policies and procedures in accordance with Rule 17a-7 under the 1940 Act relating to transfers effected without a broker-dealer between registered investment companies or a registered investment company client and another advisory client, to ensure compliance with the rule and fair and equitable treatment of both clients involved in such transactions.

Portfolio managers may also experience certain conflicts between their own personal interests and the interests of the accounts they manage, including the Funds. One potential conflict arises from the weighting methodology used in determining bonuses, as described below, which may give a portfolio manager an incentive to allocate a particular investment opportunity to a product that has a greater weighting in determining his or her bonus. Another potential conflict may arise if a portfolio manager were to have a larger personal investment in one fund than he or she does in another, giving the portfolio manager an incentive to allocate a particular investment opportunity to the fund in which he or she holds a larger stake. EIMC’s Code of Ethics addresses potential conflicts of interest that may arise in connection with a portfolio manager’s activities outside EIMC by prohibiting, without prior written approval from the Code of Ethics Compliance Officer, portfolio managers from participating in investment clubs and from providing investment advice to, or managing, any account or portfolio in which the portfolio manager does not have a beneficial interest and that is not a client of EIMC.

Conflicts of Interest. Crow Point. Crow Point manages other investment vehicles, including some that may have investment objectives and strategies similar to the Fund’s. The management of multiple funds and other accounts may require the portfolio manager to devote less than all of his or her time to the Fund, particularly if the other funds and accounts have different objectives, benchmarks and time horizons. The portfolio manager may also be required to allocate his or her investment ideas across multiple funds and accounts. In addition, if a portfolio manger identifies a limited investment opportunity, such as an initial public offering, that may be suitable for more than one fund or other account, the Fund may not be able to take full advantage of that opportunity due to an allocation of that investment across all eligible funds and accounts. Further, security purchase and sale orders for multiple accounts often are aggregated for purpose of execution. Although such aggregation generally benefits clients, it may cause the price or brokerage costs to be less favorable to a particular client than if similar transactions were not being executed concurrently for other accounts. It may also happen that the Fund’s advisor or subadvisor will determine that it would be in the best interest, and consistent with the investment policies, of another account to sell a security (including by means of a short sale) that the Fund holds long, potentially resulting in a decrease in the market value of the security held by the Fund.

The structure of a portfolio manager’s or an investment advisor’s compensation may create an incentive for the portfolio manager or investment advisor to favor accounts whose performance has a greater impact on such compensation. The portfolio manager may, for example, have an incentive to allocate favorable or limited opportunity investments or structure the timing of investments to favor such accounts. Similarly, if a portfolio manager holds a larger personal investment in one fund than he or she does in another, the portfolio manager may have an incentive to favor the fund in which he or she holds a larger stake.

In general, Crow Point has policies and procedures that attempt to address the various potential conflicts of interest described above. However, there is no guarantee that such procedures will detect or address each and every situation where a conflict arises.

All employees of Crow Point are bound by the company’s Code of Ethics and compliance policies and procedures. Crow Point’s chief compliance officer monitors and reviews compliance regularly. Crow Point’s Code of Ethics and compliance procedures have been reviewed and accepted by EIMC. In addition, side-by-side trading rules have been agreed between EIMC and Crow Point as part of existing sub-advisory arrangements which are intended to ensure that shareholders of the sub-advised Evergreen funds are not disadvantaged in favor of other clients or investors of Crow Point in any investment, trading or allocations.

Compensation. EIMC. For EIMC, portfolio managers’ compensation consists primarily of a base salary and an annual bonus. Each portfolio manager’s base salary is reviewed annually and adjusted based on consideration of various factors specific to the individual portfolio manager, including, among others, experience, quality of performance record and breadth of management responsibility, and based on a comparison to competitive market data provided by external compensation consultants.

The annual bonus pool for portfolio managers and other employees that are eligible to receive bonuses is determined based on the overall profitability of the firm during the relevant year. The annual bonus has an investment performance component, which accounts for a majority of the annual bonus, and a subjective evaluation component. The amount of the investment performance component is based on the pre-tax investment performance of the funds and accounts managed by the individual (or one or more appropriate composites of such funds and accounts) over the prior five years compared to the performance over the same time period of an appropriate benchmark (typically a broadbased index or universe of external funds or managers with similar characteristics). See the information below relating to other funds and accounts managed by the portfolio managers for the specific benchmarks used in evaluating performance. In calculating the amount of the investment performance component, performance for the most recent year is weighted 25%, performance for the most recent three-year period is weighted 50% and performance for the most recent five-year period is weighted 25%. In general, the investment performance component is determined using a weighted average of investment performance of each product managed by the portfolio manager, with the weighting done based on the amount of assets the portfolio manager is responsible for in each such product. For example, if a portfolio manager was to manage a mutual fund with $400 million in assets and separate accounts totaling $100 million in assets, performance with respect to the mutual fund would be weighted 80% and performance with respect to the separate accounts would be weighted 20%. In certain cases, portfolio weights within the composite may differ from the actual weights as determined by assets. For example, a very small fund’s weight within a composite may be increased to create a meaningful contribution.

To be eligible for an investment performance related bonus, the time-weighted average percentile rank must be above the 50th percentile. A portfolio manager has the opportunity to maximize the investment component of the incentive payout by generating performance at or above the 25th percentile level.

In determining the subjective evaluation component of the bonus, each manager is measured against predetermined objectives and evaluated in light of other discretionary considerations. Objectives are set in several categories, including teamwork, participation in various assignments, leadership, and development of staff.

For calendar year 2007, the investment performance component of each portfolio manager’s bonus will be determined based on comparisons to the benchmarks (either to the individual benchmark or one or more composites of all or some of such benchmarks) indicated below. The benchmarks may change for purposes of calculating bonus compensation for calendar year 2007.

Portfolio Manager    Benchmark 
Francis Claro    Callan CAl Intl Small Cap Equity Univ 
    Lipper Global Small/Mid-Cap Growth Funds 
    Lipper Emerging Markets Funds 
    Callan Blend 65% CAl Intl Small Cap Equity 35% CAl SMID Cap 
    Growth 
    Lipper Gold Oriented Funds 
 
Joseph Desantis    Lipper Equity Income Funds 
    Lipper Large Cap Core Funds 
    Lipper Large Cap Growth Funds 
    Lipper Multi Cap Growth Funds 
    Lipper Mid-Cap Growth Funds 
    Lipper Large-Cap Growth Funds 
    Lipper Small-Cap Value Funds 
    Lipper Health/Biotechnology Funds 
    Lipper Mixed-Asset Target Alloc Consv Funds 
    Lipper Mixed-Asset Target Alloc Growth Funds 
    Lipper Global Small/Mid-Cap Growth 
    Lipper Small-Cap Growth Funds 
    Callan CAl SMID Cap Growth Univ 
    Lipper Emerging Markets 
    Callan Blend 65% CAl Intl Small Cap Equity 35% CAl SMID Cap 
    Growth 
    Callan Cal Intl Eq Core Univ 
    Lipper Gold Oriented Funds 
    Lipper Utility Funds 
     
Michael William Lee    Lipper International Income Funds 
Tony Norris    Lipper International Income Funds 
Alex Perrin    Lipper International Income Funds 
Peter Wilson    Lipper International Income Funds 

EIMC portfolio managers that manage certain privately offered pooled investment vehicles may also receive a portion of the advisory fees and/or performance fees charged by EIMC (or an affiliate of EIMC) to such clients. Unless described in further detail below, none of the portfolio managers of the Funds receives such compensation.

In addition, portfolio managers may participate, at their election, in various benefits programs, including the following:

• medical, dental, vision and prescription benefits,

• life, disability and long-term care insurance,

• before-tax spending accounts relating to dependent care, health care, transportation and parking, and

• various other services, such as family counseling and employee assistance programs, prepaid ordiscounted legal services, health care advisory programs and access to discount retail services.

These benefits are broadly available to EIMC employees. Senior level employees, including many portfolio managers but also including many other senior level executives, may pay more or less than employees that are not senior level for certain benefits, or be eligible for, or required to participate in, certain benefits programs not available to employees who are not senior level. For example, only senior level employees above a certain compensation level are eligible to participate in the Wachovia Corporation deferred compensation plan, and certain senior level employees are required to participate in the deferred compensation plan.

Compensation. Crow Point. Portfolio managers at Crow Point are paid a fixed salary and participate in the profits of the firm in proportion to their equity ownership in the firm.

Fund Holdings. The tables below presents the dollar range of investment each portfolio manager beneficially holds in each fund he manages as well as the dollar range of total exposure to the Evergreen family of funds (including both open-end and closed-end funds) as of the Funds’ fiscal year ended October 31, 2007. Total exposure equals the sum of (i) the portfolio manager’s beneficial ownership in direct Evergreen fund holdings, plus (ii) the portfolio manager’s Evergreen fund holdings through the Wachovia Corporation 401(k) plan, plus (iii) the portfolio manager’s Wachovia Corporation deferred compensation plan exposure to Evergreen funds.

Evergreen International Balanced Income Fund 
Francis Claro    None 
Joseph Desantis    $50,001-$100,000 
Michael William Lee    None 
Tony Norris    None 
Alex Perrin    None 
Peter Wilson    None 
 
Evergreen Family of Funds     
Francis Claro    $500,001-$1,000,000 
Joseph Desantis    $100,001-$500,000 
Michael William Lee    None 
Tony Norris    None 
Alex Perrin    None 
Peter Wilson    None 

The table below presents the dollar range of total exposure to the Evergreen family of funds (including both open-end and closed-end funds) by certain members of senior management of EIMC and its affiliates that are involved in Evergreen’s mutual fund business as of October 31, 2006. Total exposure equals the sum of (i) the individual’s beneficial ownership in direct Evergreen fund holdings, plus (ii) the individual’s Evergreen fund holdings through the Wachovia Corporation 401(k) plan, plus (iii) the individual’s Wachovia Corporation deferred compensation plan exposure to Evergreen funds.

Peter Cziesko    $100,001 – $500,000 
Executive Managing Director and     
President of Global Distribution, EIMC     
 
Dennis Ferro    Over $1,000,000 
Chief Executive Officer and Chief     
Investment Officer, EIMC     
 
Richard Gershen    $500,001 – $1,000,000 
Head of Business Strategy, Risk and     
Product Management, EIMC     
 
W. Douglas Munn    $500,001 – $1,000,000 
Chief Operating Officer, EIMC     
 
Patrick O’Brien    Over $1,000,000 
President, Institutional Division, EIMC     

Item 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

If applicable/not applicable at this time.

Item 10 – Submission of Matters to a Vote of Security Holders

There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees that have been implemented since the Registrant last provided disclosure in response to the requirements of this Item.

Item 11 - Controls and Procedures

(a) The Registrant's principal executive officer and principal financial officer have evaluated the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) within 90 days of this filing and have concluded that the Registrant's disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the Registrant in this Form N-CSR was recorded, processed, summarized, and reported timely.

(b) There has been no changes in the Registrant's internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonable likely to affect, the Registrant’s internal control over financial reporting .

Item 12 - Exhibits

File the exhibits listed below as part of this Form. Letter or number the exhibits in the sequence indicated.

(a) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit.

(b)(1) Separate certifications for the Registrant's principal executive officer and principal financial officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are attached as EX99.CERT.

(b)(2) Separate certifications for the Registrant's principal executive officer and principal financial officer, as required by Section 1350 of Title 18 of United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Rule 30a-2(b) under the Investment Company Act of 1940, are attached as EX99.906CERT. The certifications furnished pursuant to this paragraph are not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certifications are not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates them by reference.

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Evergreen International Balanced Income Fund

By: _______________________
Dennis H. Ferro
Principal Executive Officer

Date: December 28, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By: _______________________
Dennis H. Ferro
Principal Executive Officer

Date: December 28, 2007

By: ________________________
Kasey Phillips
Principal Financial Officer

Date: December 28, 2007