EVERGREEN GROWTH & INCOME FUND /NY/, 485B24E, 1995-05-02

EVERGREEN GROWTH & INCOME FUND /NY/
485B24E, 1995-05-02

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Registration No. 33-6700
- - --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------

FORM N-1A

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 /x/

Pre-Effective Amendment No. / /

Post-Effective Amendment No. 11 /x/

and/or

REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 /x/

Amendment No. 12 /x/
(Check appropriate box or boxes)
--------------------

THE EVERGREEN GROWTH AND INCOME FUND
(Exact name of registrant as specified in charter)

2500 Westchester Avenue
Purchase, N.Y. 10577
(Address of Principal Executive Offices)

(Registrant's Telephone Number, Including Area Code (914) 694-2020)

Joseph J. McBrien, Esq.
Evergreen Asset Management Corp.
2500 Westchester Avenue, Purchase, N.Y. 10577
(Name and address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box)
/x/ Immediately upon filing pursuant to paragraph (b) or
/ / on (date) pursuant to paragraph (b) or
/ / 60 days after filing pursuant to paragraph (a)(i) or
/ / on (date) pursuant to paragraph (a)(i) or
/ / 75 days after filing pursuant to paragraph (a)(ii) or
/ / on (date) pursuant to paragraph (a)(ii) of Rule 485

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

Registrant has registered an indefinite number of shares under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940.
Registrant's Rule 24f-2 notice for its fiscal year ended December 31, 1994, was
filed on or about February 28, 1995.

CALCULATION OF REGISTRATION FEE UNDER THE SECURITRIES ACT OF 1933

Proposed
Title of Maximum
Securities Amount Offering Proposed Amount of
Being Being Price Per Maximum Aggregate Registration
Registered Registered Share Offering Price** Fee

Shares of
Beneficial
Interest Indefinite* N/A N/A N/A

Shares of
Beneficial
Interest 300,200 $16.20 $289,997 $100.00

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

*Pursuant to the provisions of Rule 24f-2(c)(1) under the Investment Company Act
of 1940, Registrant has registered an indefinite number of shares of capital
stock under the Securities Act of 1933. Registrant filed the Rule 24f-2 Notice
for the year ended December 31, 1994, on or about February 27, 1995.

**The calculation of the maximum aggregate offering price was made pursuant to
Rule 24e-2 under the Investment Company Act of 1940, and was based upon an
offering price of $16.20, equal to the net asset value per share of the Fund on
April 21, 1995, pursuant to Rule 457(c) under the Securities Act of 1933. The
total number of shares redeemed by the Fund during its fiscal year ended
December 31, 1994, was 3,032,322. Of this number, 0 shares have been used for
reduction pursuant to paragraph (a) of Rule 24e-2 on all previous filings of
post-effective amendments during the current year, and 2,750,023 shares have
been used for reduction pursuant to paragraph (c) of Rule 24f-2 in all previous
filings during the current year. 282,299 of the redeemed shares are being used
for the reduction in the post-effective amendment being filed herein. While no
fee is required for the 282,299 shares, the Registrant has elected to register
for $100 an additional $289,997 of shares (approximately 17,901 shares at $16.20
per share).

<PAGE>

CROSS REFERENCE SHEET
(as required by Rule 481(a))

N-1A Item No. Location in Prospectus(es)

Part A

Item 1. Cover Page Cover Page

Item 2. Synopsis and Fee Table Overview of the Fund(s);
Expense Information

Item 3. Condensed Financial Information Financial Highlights

Item 4. General Description of Registrant Cover Page; Description of
the Funds; General
Information

Item 5. Management of the Fund Management of the Fund(s);
General Information

Item 5A. Management's Discussion Management's Discussion of
Fund Performance

Item 6. Capital Stock and Other Securities Dividends, Distributions and
Taxes; General
Information

Item 7. Purchase of Securities Being Offered Purchase and Redemption of
Shares

Item 8. Redemption or Repurchase Purchase and Redemption of
Shares

Item 9. Pending Legal Proceedings Not Applicable

Location in Statement of
Part B Additional Information

Item 10. Cover Page Cover Page

Item 11. Table of Contents Table of Contents

Item 12. General Information and History Not Applicable

Item 13. Investment Objectives and Policies Investment Objectives and
Policies;Investment
Restrictions; Other
Restrictions and
Operating Policies

Item 14. Management of the Fund Management

Item 15. Control Persons and Principal Management
Holders of Securities

Item 16. Investment Advisory and Other Services Investment Adviser;
Purchase of Shares

Item 17. Brokerage Allocation Allocation of Brokerage

Item 18. Capital Stock and Other Securities Purchase of Shares

Item 19. Purchase, Redemption and Pricing of Distribution Plans; Purchase
Securities Being Offered of Shares; Net Asset Value

Item 20. Tax Status Additional Tax Information

Item 21. Underwriters Distribution Plans; Purchase
of Shares

Item 22. Calculation of Performance Data Performance Information

Item 23. Financial Statements Financial Statements

Part C

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.

<PAGE>

--------------------------------------------------------------
PROSPECTUS May
1, 1995

Evergreen Growth and Income Funds
--------------------------------------------------------

CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
-------------------------

EVERGREEN TOTAL RETURN FUND

EVERGREEN GROWTH AND INCOME FUND

EVERGREEN AMERICAN RETIREMENT FUND

EVERGREEN SMALL CAP EQUITY INCOME FUND

EVERGREEN FOUNDATION FUND

EVERGREEN TAX STRATEGIC FOUNDATION FUND

The Evergreen Growth and Income Funds (the "Funds") are designed to
provide investors with a selection of investment alternatives which seek to
provide capital growth, income and diversification. This Prospectus provides
information regarding the Class A, Class B and Class C shares offered by the
Funds. Each Fund is, or is a series of, an open-end, diversified, management
investment company. This Prospectus sets forth concise information about the
Funds that a prospective investor should know before investing. The address of
the Funds is 2500 Westchester Avenue, Purchase, New York 10577.

A "Statement of Additional Information" for the Funds and the other
funds in the Evergreen Group of mutual funds (collectively, with the Funds the
"Evergreen Funds") dated May 1, 1995 has been filed with the Securities and
Exchange Commission and is incorporated by reference herein. The Statement of
Additional Information provides information regarding certain matters discussed
in this Prospectus and other matters which may be of interest to investors, and
may be obtained without charge by calling the Funds at (800) 807-2940. There can
be no assurance that the investment objective of any Fund will be achieved.
Investors are advised to read this Prospectus carefully.

The shares offered by this Prospectus are not deposits or obligations of First
Union or any subsidiaries of First Union, are not endorsed or guaranteed by
First Union or any subsidiaries of First Union, and are not insured or otherwise
protected by the Federal Deposit Insurance Corporation, the Federal Reserve
Board, or any other government agency and involve risk, including the possible
loss of principal.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Keep This Prospectus for Future Reference

<PAGE>

TABLE OF CONTENTS

OVERVIEW OF THE FUNDS 2
EXPENSE INFORMATION 3
FINANCIAL HIGHLIGHTS 5
DESCRIPTION OF THE FUNDS
Investment Objectives And Policies 12
Investment Practices And Restrictions 17
MANAGEMENT OF THE FUNDS
Investment Adviser 21
Sub-Adviser 22
Distribution Plans And Agreements 22

PURCHASE AND REDEMPTION OF SHARES
How To Buy Shares 23
How To Redeem Shares 25
Exchange Privilege 26
Shareholder Services 27
Effect Of Banking Laws 28
OTHER INFORMATION
Dividends, Distributions And Taxes 28
Management's Discussion of Fund
Performance 29
General Information 34

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

OVERVIEW OF THE FUNDS
----------------------------------------------------------------------------

The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Funds" and "Management of the Funds".

The Investment Adviser to the Funds is Evergreen Asset Management Corp.
(the "Adviser") which, with its predecessors, has served as investment adviser
to the Evergreen Funds since 1971. The Adviser is a wholly-owned subsidiary of
First Union National Bank of North Carolina ("FUNB"), which in turn is a
subsidiary of First Union Corporation, one of the ten largest bank holding
companies in the United States.

The Evergreen Total Return Fund attempts to maximize the "total return"
on its portfolio of investments. It invests primarily in common and preferred
stocks, securities convertible into or exchangeable for common stocks and fixed
income securities.

Evergreen Growth and Income Fund (formerly known as The Evergreen Value
Timing Fund) seeks to achieve a return composed of capital appreciation in the
value of its shares and current income. The Fund will attempt to meet its
objective by investing in the securities of companies which are undervalued in
the marketplace relative to those companies' assets, breakup value, earnings, or
potential earnings growth.

The Evergreen American Retirement Fund seeks, in order of priority,
conservation of capital, reasonable income and capital growth. To achieve these
objectives, the Fund invests in a diversified and balanced portfolio of equity
and fixed income securities, with emphasis on income-producing securities which
appear to have potential for capital appreciation. Investments in equity
securities will be limited to 75% of the value of the Fund's total assets
measured at the time any such investment is made. Normally, the Fund anticipates
that approximately half of the fixed income portion of the Fund's portfolio will
be invested in marketable obligations of, or guaranteed by, the United States
Government, its agencies or instrumentalities.

Evergreen Small Cap Equity Income Fund attempts to maximize the "total
return" on its portfolio of investments. The Fund invests in common and
preferred stocks, securities convertible into or exchangeable for common stocks
and fixed income securities. In attempting to achieve its objective, the Fund
invests primarily in companies with total market capitalization of less than
$500 million.

Evergreen Foundation Fund seeks, in order of priority, reasonable
income, conservation of capital and capital appreciation. The Fund invests
principally in income-producing common and preferred stocks, securities
convertible into or exchangeable for common stocks and fixed income securities.

Evergreen Tax Strategic Foundation Fund attempts to maximize the
after-tax "total return" on its portfolio of investments. The Fund invests in
common and preferred stocks and securities convertible into or exchangeable for
common stocks and municipal securities. Under normal circumstances, the Fund
anticipates that, at the close of each quarter of its taxable year, at least 50%
of the value of its total assets will be invested in municipal securities.

There is no assurance the investment objective of any Fund will be
achieved.

<PAGE>

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

EXPENSE INFORMATION
- - --------------------------------------------------------------------------------

The table set forth below summarizes the shareholder transaction costs
associated with an investment in each Class A, Class B and Class C Shares of a
Fund. For further information see "Purchase and Redemption of Fund Shares" and
"Other Classes of Shares".
<TABLE>
<S> <C> <C> <C>

SHAREHOLDER TRANSACTION EXPENSES Class A Shares Class B Shares Class C Shares
Maximum Sales Charge Imposed on 4.75% None None
Purchases (as a % of offering price)

Sales Charge on Dividend Reinvestments None None None
None

Contingent Deferred Sales Charge
(as a % of original purchase
price or redemption proceeds,
whichever is lower) None 5% during the first 1% during the
year, 4% during the first year and
second year, 3% during 0% thereafter
the third and fourth
years, 2% during the
fifth year, 1% during
the sixth and seventh
years and 0% after the
seventh year

Redemption Fee None None None

Exchange Fee None None None
</TABLE>

The following tables show for each Fund the annual operating expenses
(as a percentage of average net assets) attributable to each Class of Shares,
together with examples of the cumulative effect of such expenses on a
hypothetical $1,000 investment in each Class for the periods specified assuming
(i) a 5% annual return, and (ii) redemption at the end of each period and,
additionally for Class B and C, no redemption at the end of each period.

In the following examples (i) the expenses for Class A Shares assume
deduction of the maximum 4.75% sales charge at the time of purchase, (ii) the
expenses for Class B Shares and Class C Shares assume deduction at the time of
redemption (if applicable) of the maximum contingent deferred sales charge
applicable for that time period, and (iii) the expenses for Class B Shares
reflects the conversion to Class A Shares eight years after purchase (years
eight through ten, therefore, reflect Class A expenses).

Evergreen Total Return Fund
<TABLE>
<CAPTION>

Examples
Assuming Redemption Assuming No
Annual Operating Expenses at End of Period Redemption
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Class A Class B Class C Class A Class B Class C Class B Class C
------- ------- ------- ------- ------- ------- ------- -------
Advisory Fees 1.00% 1.00% 1.00% After 1 Year $ 62 $ 73 $ 33 $ 23 $ 23
12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 92 $ 100 $ 70 $ 70 $ 70
Other Expenses .24% .24% .24% After 5 Years $125 $140 $120 $120 $120
-- ---- -- ---- -- ---- After 10 Years $217 $230 $257 $230 $257
Total 1.49% 2.24% 2.24%
----- ----- -----

</TABLE>

Evergreen Growth and Income Fund
<TABLE>
<CAPTION>

Examples
Assuming Redemption Assuming No
Annual Operating Expenses at End of Period Redemption

Class A Class B Class C Class A Class B Class C Class B Class C
------- ------- ------- ------- ------- ------- ------- -------
Advisory Fees 1.00% 1.00% 1.00% After 1 Year $ 63 $ 74 $ 34 $ 24 $ 24
12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 95 $103 $ 73 $ 73 $ 73
Other Expenses .33% .33% .33% After 5 Years $129 $145 $125 $125 $125
----- ----- ----- After 10 Years $226 $239 $267 $239 $267
Total 1.58% 2.33% 2.33%
----- ----- -----

</TABLE>

Evergreen American Retirement Fund
<TABLE>
<CAPTION>

Examples
Assuming Redemption Assuming No
Annual Operating Expenses at End of Period Redemption
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Class A Class B Class C Class A Class B Class C Class B Class C
------- ------- ------- ------- ------- ------- ------- -------
Advisory Fees .75% .75% .75% After 1 Year $ 62 $ 73 $ 33 $ 23 $ 23
12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 94 $101 $ 71 $ 71 $ 71
Other Expenses .53% .53% .53% After 5 Years $127 $142 $122 $122 $122
------ ------ ------ After 10 Years $221 $234 $262 $234 $262
Total 1.53% 2.28% 2.28%
----- ----- -----
</TABLE>

<PAGE>
EVERGREEN SMALL CAP EQUITY INCOME FUND

EXAMPLES
--------
Assuming Redemption Assuming No
ANNUAL OPERATING EXPENSES at End of Period Redemption
------------------------- ---------------- ----------
Class A Class B Class C Class A Class B Class C Class B Class C
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees 1.00% 1.00% 1.00% After 1 Year $ 64 $ 75 $ 35 $ 25 $ 25
12b-1 Fees* .25% 1.00% 1.00% After 3 Years $100 $108 $ 78 $ 78 $ 78
Other Expenses After 5 Years $138 $153 $133 $133 $133
(after reimbursement)** .50% .50% .50% After 10 Years $244 $257 $284 $257 $284
------- ------- ------
Total 1.75% 2.50% 2.50%
------- ------- ------
</TABLE>

EVERGREEN FOUNDATION FUND

EXAMPLES
--------
Assuming Redemption Assuming No
ANNUAL OPERATING EXPENSES at End of Period Redemption
------------------------- ---------------- ----------
Class A Class B Class C Class A Class B Class C Class B Class C
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees .875% .875% .875% After 1 Year $ 61 $ 72 $ 32 $ 22 $ 22
12b-1 Fees* .250% 1.000% 1.000% After 3 Years $ 89 $ 97 $ 67 $ 67 $ 67
Other Expenses .265% .265% .265% After 5 Years $120 $135 $115 $115 $115
------- ------- ------- After 10 Years $206 $219 $247 $219 $247
Total 1.390% 2.140% 2.140%
------- ------- -------
</TABLE>

EVERGREEN TAX STRATEGIC FOUNDATION FUND

EXAMPLES
--------
Assuming Redemption Assuming No
ANNUAL OPERATING EXPENSES at End of Period Redemption
------------------------- ---------------- ----------
Class A Class B Class C Class A Class B Class C Class B Class C
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees . 875% .875% .875% After 1 Year $ 64 $ 75 $ 35 $ 25 $ 25
12b-1 Fees* .250% 1.000% 1.000% After 3 Years $100 $108 $ 78 $ 78 $ 78
Other Expenses After 5 Years $138 $153 $133 $133 $133
(after reimbursement ** .625% .625% .625% After 10 Years $244 $257 $284 $257 $284
------- ------ ------
Total 1.750% 2.500% 2.500%
------- ------ ------

</TABLE>

*For Class B and Class C Shares, a portion of the 12b-1 Fees equivalent to .25
of 1% of average annual assets will be shareholder servicing-related.
Distribution-related 12b-1 Fees will be limited to .75 of 1% of average annual
assets as permitted under the rules of the National Association of Securities
Dealers, Inc.

**Reflects agreements by the Adviser to limit aggregate operating expenses
(including the Advisory Fees, but excluding interest, taxes, brokerage
commissions, Rule 12b-1 distribution fees and shareholder servicing fees and
extraordinary expenses) of Evergreen Small Cap Equity Income Fund and Evergreen
Tax Strategic Foundation Fund to 1.50% of average net assets until net assets
reach $15 million. Absent such agreements, the estimated annual operating
expenses for each Fund would be 2.75% for Class A and 3.50% for Class B and C
Shares.

The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in each Class of
Shares of the Funds will bear directly or indirectly. The amounts set forth both
in the tables and in the examples are estimated amounts based on the experience
of each Fund's Class Y shares for the fiscal period ended December 31, 1994 in
the case of all Funds other than Evergreen Total Return Fund and January 31,
1995 in the case of Evergreen Total Return Fund. The annualized expense ratios
for Class A, Class B and Class C shares for the period January 3, 1995
(commencement of class operations) to January 31, 1995, were 1.45%, 2.23% and
2.20%, respectively. rTHE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES OR ANNUAL RETURN. ACTUAL EXPENSES AND ANNUAL RETURN MAY
BE GREATER OR LESS THAN THOSE SHOWN. For a more complete description of the
various costs and expenses borne by the Funds see "Management of the Funds". As
a result of asset-based sales charges, long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charges permitted under
the rules of the National Association of Securities Dealers, Inc.

<PAGE>

- - --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- - --------------------------------------------------------------------------------

EVERGREEN TOTAL RETURN FUND - CLASS A, B AND C SHARES

The following selected per share data and ratios for the period January 3,
1995* through January 31, 1995 have been audited by Ernst & Young LLP,
independent auditors for Evergreen Total Return Fund, whose report thereon was
unqualified. This information should be read in conjunction with the financial
statements and notes thereto which are incorporated in the Statement of
Additional Information by reference. The per share data set forth below pertains
to the Classes A, B and C shares of the Fund which are offered through this
Prospectus. See "General Information - Other Classes of Shares".

FOR THE PERIOD JANUARY 3, 1995*
THROUGH JANUARY 31, 1995
-------------------------------

<S> <C> <C> <C>
PER SHARE DATA Class A Class B Class C
--------- --------- -------
Net asset value, beginning of period $17.09 $17.09 $17.09
--------- --------- ------
Income (loss) from investment operations:
Net investment income .02 .02 .01
Net realized and unrealized gain on investments .17 .17 .17
--------- --------- -------

Total from investment operations .19 .19 .18

Net asset value, end of period $17.28 $17.28 $17.27
--------- --------- ------

TOTAL RETURN+ 1.1% 1.1% 1.1%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $119 $599 $24
Ratios to average net assets:
Expenses++ 1.45% 2.23% 2.22%
Net investment income++ 4.09% 3.23% 2.68%
Portfolio turnover rate** 151% 151% 151%

<FN>
- - -------------------
* Commencement of class operations.
** Portfolio turnover rate is calculated for the ten month period ended
January 31, 1995.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charges or contingent
deferred sales charges are not reflected.
++ Annualized.
</FN>
</TABLE>

<PAGE>

EVERGREEN TOTAL RETURN FUND - CLASS Y SHARES

The following selected per share data and ratios for each of the five years
in the period ended March 31, 1994 and the ten months ended January 31, 1995,
have been audited by Ernst & Young LLP, independent auditors for Evergreen Total
Return Fund, whose report thereon was unqualified. This information should be
read in conjunction with the financial statements and notes thereto which are
incorporated in the Statement of Additional Information by reference. The per
share data set forth below pertains to the Class Y shares of the Fund, which are
not offered through this prospectus. See "General Information - Other Classes of
Shares".

TEN MONTHS
ENDED YEAR ENDED MARCH 31,
JANUARY 31, -----------------------------------------------------------------------------------
1995# 1994 1993 1992 1991 1990 1989* 1988* 1987* 1986* 1985*
--------- ---- ---- ---- ---- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA

Net asset value, beginning of
year. . . . . . . . . . . . . . . $18.29 $20.90 $18.82 $18.12 $18.26 $17.92 $17.11 $20.37 $19.72 $16.63 $15.21
------- ------ ------- ------ ------ ------ ------ ------ ------ ------ ------
INCOME (LOSS) FROM
INVESTMENT OPERATIONS:

Net investment income. . . . . . . .87 1.08 1.11 1.08 1.02 1.07 1.12 1.06 1.14 1.03 .87

Net realized and unrealized gain
(loss) on investments . . . . . . (.55) (1.41) 2.51 .70 (.08) .36 .79 (2.64) 1.76 4.26 2.83
------- ------ ------- ------ ------ ------ ------ ------ ------ ------ ------

Total from investment
operations . . . . . . . . . .32 (.33) 3.62 1.78 .94 1.43 1.91 (1.58) 2.90 5.29 3.70
------- ------ ------- ------ ------ ------ ------ ------ ------ ------ ------

LESS DISTRIBUTIONS TO
SHAREHOLDERS FROM:

Net investment income. . . . . . . (1.08) (1.08) (1.08) (1.08) (1.08) (1.09) (1.08) (.80) (1.14) (1.22) (.96)
Net realized gains . . . . . . . . (.25) (1.20) (.46) --- --- --- (.02) (.88) (1.11) (.98) (1.32)
------- ------ ------- ------ ------ ------ ------ ------ ------ ------ ------

Total distributions. . . . . . . (1.33) (2.28) (1.54) (1.08) (1.08) (1.09) (1.10) (1.68) (2.25) (2.20) (2.28)
------- ------ ------- ------ ------ ------ ------ ------ ------ ------ ------

Net asset value, end of period . . $17.28 $18.29 $20.90 $18.82 $18.12 $18.26 $17.92 $17.11 $20.37 $19.72 $16.63
------- ------ ------- ------ ------ ------ ------ ------ ------ ------ ------

TOTAL RETURN . . . . . . . . . . . 1.9%+ (2.1%) 20.2% 10.2% 5.8% 7.9% 1.3% (7.8%) 15.7% 35.2% 27.9%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of
period (in millions). . . . . . . $942 $1,065 $1,142 $1,032 $1,151 $1,292 $1,312 $1,346 $1,636 $408 $84
Ratios to average net assets:
Expenses . . . . . . . . . . . . 1.24%++ 1.18% 1.18% 1.21% 1.23% 1.18% 1.02%** 1.01%** 1.02%** 1.11%** 1.31%
Net investment income. . . . . . 5.70%++ 5.29% 5.65% 5.73% 5.90% 5.64% 6.36%** 5.80%** 5.68%** 6.06%** 6.18%
Portfolio turnover rate. . . . . . 151% 106% 164% 137% 137% 89% 86% 81% 44% 65% 82%

<FN>
- - ------------
# On September 21, 1994, the Fund changed its fiscal year-end to January 31.
* Not included in report of Ernst & Young LLP referred to above.
** Net of expense limitation in fiscal years 1986, 1987, 1988 and 1989.
+ Total return calculated for the ten months ended January 31, 1995 is
not annualized.
++ Annualized.
</FN>
</TABLE>

<PAGE>

EVERGREEN GROWTH AND INCOME FUND

The following selected per share data and ratios for each of the five years
in the period ended December 31, 1994 have been audited by Ernst & Young LLP,
independent auditors for Evergreen Growth and Income Fund, whose report thereon
was unqualified. This information should be read in conjunction with the
financial statements and notes thereto which are incorporated in the Statement
of Additional Information by reference. The per share data set forth below
pertains to the Class Y shares of the Fund, which are not offered through this
prospectus. See "Other Classes of Shares". No per share data and ratios are
shown for Class A, B or C shares, since these classes did not have any
operations prior to December 31, 1994.

PERIOD FROM
YEAR ENDED DECEMBER 31, 10/15/86*
------------------------------------------------------------------ TO
PER SHARE DATA 1994 1993 1992 1991 1990 1989+ 1988**+ 1987**+ 12/31/86**+
---- ---- ---- ---- ---- ----- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
year. . . . . . . . . . . . . . . . . . . $15.41 $14.18 $12.99 $10.72 $12.03 $10.62 $9.38 $10.05 $10.00
------ ------ ------ ------ ------ ------ ----- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . .14 .14 .15 .19 .30 .52 .19 .20 .07
Net realized and unrealized gain
(loss) on investments. . . . . . . . . . .12 1.91 1.65 2.58 (.84) 2.17 2.10 (.63) (.02)
------ ------ ------ ------ ------ ------ ----- ------ ------

Total from investment operations . . . . .26 2.05 1.80 2.77 (.54) 2.69 2.29 (.43) .05
------ ------ ------ ------ ------ ------ ----- ------ ------
LESS DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income. . . . . . . . . . . (.14) (.14) (.15) (.19) (.30) (.52) (.19) (.24) ---
Net realized gains . . . . . . . . . . . . (1.01) (.68) (.46) (.31) (.47) (.76) (.86) --- ---
------ ------ ------ ------ ------ ------ ----- ------ ------
Total distributions. . . . . . . . . . . (1.15) (.82) (.61) (.50) (.77) (1.28) (1.05) (.24) ---
------ ------ ------ ------ ------ ------ ----- ------ ------
Net asset value, end of year . . . . . . . $14.52 $15.41 $14.18 $12.99 $10.72 $12.03 $10.62 $9.38 $10.05
------ ------ ------ ------ ------ ------ ----- ------ ------
TOTAL RETURN***. . . . . . . . . . . . . . 1.7% 14.4% 13.8% 25.8% (4.5%) 25.4% 24.6% (4.3%) 0.5%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year
(in millions). . . . . . . . . . . . . . $73 $77 $64 $48 $36 $32 $24 $21 $21
Ratios to average to average net assets: .
Expenses . . . . . . . . . . . . . . . . 1.33% 1.26% 1.33% 1.41% 1.50% 1.54% 1.56% 1.76% 1.73%++
Net investment income. . . . . . . . . . .96% .99% 1.18% 1.55% 2.62% 4.13% 1.70% 1.90% 3.23%++
Portfolio turnover rate. . . . . . . . . . 29% 28% 30% 23% 41% 53% 41% 48% 4%++

<FN>
- - ------------
* Commencement of operations.
** Net investment income is based on the average monthly shares
outstanding for the periods indicated.
*** Total return is calculated for the periods indicated and is not
annualized.
+ Not included in report of Ernst & Young LLP referred to above.
++ Annualized.
</FN>
</TABLE>

<PAGE>

EVERGREEN AMERICAN RETIREMENT FUND

The following selected per share data and ratios for each of the five years
in the period ended December 31, 1994 have been audited by Ernst & Young LLP,
independent auditors for Evergreen American Retirement Fund, whose report
thereon was unqualified. This information should be read in conjunction with the
financial statements and notes thereto which are incorporated in the Statement
of Additional Information by reference. The per share data set forth below
pertains to the Class Y shares of the Fund, which are not offered through this
prospectus. See "Other Classes of Shares". No per share data and ratios are
shown for Class A, B or C shares, since these classes did not have any
operations prior to December 31, 1994.

PERIOD FROM
YEAR ENDED DECEMBER 31, 3/14/88*
-------------------------------------------------------- to
PER SHARE DATA 1994 1993 1992 1991 1990 1989++ 12/31/88**++
---- ---- ---- ---- ----- ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year . . . $11.60 $10.95 $10.52 $9.59 $10.41 $10.09 $10.00
------ ------ ------ ------ ------ ------ ------

INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . .60 .56 .66 .60 .60 .57 .39
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . (.93) .96 .55 1.15 (.66) .76 .18
------ ------ ------ ------ ------ ------ ------

Total from investment operations . . . (.33) 1.52 1.21 1.75 (.06) 1.33 .57
------ ------ ------ ------ ------ ------ ------

LESS DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income . . . . . . . (.60) (.60) (.61) (.60) (.60) (.59) (.36)
From net realized gains. . . . . . . . . ---- (.24) (.17) (.22) (.16) (.42) (.12)
In excess of net realized gains. . . . . ---- (.03) ---- ---- ---- ---- ----
------ ------ ------ ------ ------ ------ ------

Total distributions. . . . . . . . . . (.60) (.87) (.78) (.82) (.76) (1.01) (.48)
------ ------ ------ ------ ------ ------ ------

Net asset value, end of year . . . . . . $10.67 $11.60 $10.95 $10.52 $9.59 $10.41 $10.09
------ ------ ------ ------ ------- ------ ------

TOTAL RETURN+. . . . . . . . . . . . . . (2.9%) 14.1% 11.8% 18.8% (.5%) 13.4% 5.8%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year (in millions). . $37 $37 $24 $16 $12 $11 $9
Ratios to average net assets:
Expenses . . . . . . . . . . . . . . . 1.28% 1.36% 1.51%(a) 1.50%(a) 1.50%(a) 1.88%(a) 2.00%(b)
Net investment income. . . . . . . . . 5.40% 5.13% 6.23%(a) 5.91%(a) 6.04%(a) 5.49%(a) 5.01%(b)
Portfolio turnover rate. . . . . . . . . 136% 92% 151% 97% 33% 152% 52%

<FN>

- - ------------
(a) Net of voluntary expense reimbursements by the Adviser. If the Fund had
borne all expenses that were assumed by the Adviser, the annualized ratios
of expenses and net investment income to average net assets would have
been 1.59% and 6.15%, respectively for the year ended December 31, 1992,
1.82% and 5.59%, respectively, for the year ended December 31, 1991, 1.95%
and 5.59%, respectively, for the year ended December 31, 1990, 2.03% and
5.34%, respectively, for the year ended December 31, 1989.
(b) Annualized.
+ Total return is calculated for the periods indicated and is not
annualized.
++ Not included in report of Ernst & Young LLP referred to above.
* Commencement of operations.
** Investment income, expenses and net investment income are based upon the
average monthly shares outstanding for the period indicated.
</FN>
</TABLE>

<PAGE>

EVERGREEN SMALL CAP EQUITY INCOME FUND

The following selected per share data and ratios in each of the two years
in the period ended December 31, 1994 have been audited by Ernst & Young, LLP,
independent auditors for Evergreen Small Cap Equity Income Fund, whose report
thereon was unqualified. This information should be read in conjunction with the
financial statements and notes thereto which are incorporated in the Statement
of Additional Information by reference. The per share data set forth below
pertains to the Class Y shares of the Fund, which are not offered through this
prospectus. See "Other Classes of Shares". No per share data and ratios are
shown for Class A, B or C shares, since these classes did not have any
operations prior to December 31, 1994.

FOR THE PERIOD
OCTOBER 1, 1993*
YEAR ENDED THROUGH
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- -----------------
<S> <C> <C>
PER SHARE DATA

Net asset value, beginning of year. . . . $10.15 $10.00
------- -------

INCOME FROM INVESTMENT OPERATIONS:
Net investment income . . . . . . . . . . .34 .10
Net realized and unrealized gain
(loss) on investments . . . . . . . . . (.41) .15
-------- --------
Total from investment operations. . . . (.07) .25
-------- --------

LESS DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income. . . . . . . . . . (.33) (.10)

Net realized gains on investments . . . (.05) ----
-------- --------
Total distributions (.38) (.10)
-------- --------

Net asset value, end of year. . . . . . $9.70 $10.15
-------- --------

TOTAL RETURN . . . . . . . . . . . . . (.7%) 2.5%++
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year
(in millions) . . . . . . . . . . . . $4 $2
Ratios to average net assets:
Expenses +. . . . . . . . . . . . . . 1.48% 0%**
Net investment income+. . . . . . . . 3.72% 4.07%**
Portfolio turnover rate . . . . . . . . 9% 15%

<FN>
- - ------------
* Commencement of operations.
** Annualized.
+ Net of advisory fee waiver and expense absorption. If the Fund had borne
all expenses that were assumed or waived by the Adviser, the ratios of
expenses and net investment income (loss) to average net assets, exclusive
of any applicable state expense limitations, would have been 4.68% and
.53%, respectively, for the year ended December 31, 1994, and 4.39% and
(.33%), respectively, for the period October 1, 1993 through
December 31, 1993.
++ Total return calculated for the period October 1, 1993 through
December 31, 1993 is not annualized.
</FN>
</TABLE>

<PAGE>

EVERGREEN FOUNDATION FUND

The following selected per share data and ratios for the four annual
periods ended December 31, 1994, and for the period January 2,1990 (commencement
of operations) to December 31, 1990, have been audited by Price Waterhouse LLP,
independent accountants for Evergreen Foundation Fund, whose report thereon was
unqualified. This information should be read in conjunction with the financial
statements and notes thereto which are incorporated in the Statement of
Additional Information by reference. The per share data set forth below pertains
to the Class Y shares of the Fund, which are not offered through this
prospectus. See "Other Classes of Shares". No per share data and ratios are
shown for Class A, B or C shares, since these classes did not have any
operations prior to December 31, 1994.

YEAR ENDED DECEMBER 31, FOR THE PERIOD
------------------------------------ JANUARY 2, 1990* TO
PER SHARE DATA 1994 1993 1992 1991 DECEMBER 31, 1990
------- ------- ------- ------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year . . . . . $13.12 $11.98 $10.75 $8.95 $10.00
------- ------- ------- ------- -------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income. . . . . . . . . . . . .42 .31 .27 .33 1.23+
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . (.57) 1.55 1.83 2.77 (.59)
------- ------- ------- ------- -------
Total from investment operations . . . . . (.15) 1.86 2.10 3.10 .64
------- ------- ------- ------- -------

LESS DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income. . . . . . . . . . . . (.42) (.31) (.24) (.33) (1.17)
Net realized gains . . . . . . . . . . . . . (.28) (.41) (.63) (.97) (.52)
------- ------- ------- ------- -------

Total distributions. . . . . . . . . . . . (.70) (.72) (.87) (1.30) (1.69)
------- ------- ------- ------- -------

Net asset value, end of year . . . . . . . . $12.27 $13.12 $11.98 $10.75 $8.95
------- ------- ------- ------- -------

TOTAL RETURN . . . . . . . . . . . . . . . . (1.1%) 15.7% 20.0% 36.4% 6.6%++
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year
(in millions). . . . . . . . . . . . . . . $332 $240 $64 $11 $2
Ratios to average net assets:
Expenses . . . . . . . . . . . . . . . . . 1.14% 1.20% 1.40%(1) 1.20%(2) ----(3)
Net investment income. . . . . . . . . . . 3.51% 2.81% 2.93%(1) 2.86%(2) 15.07%(3)+
Portfolio turnover rate. . . . . . . . . . . 33% 60% 127% 178% 131%

<FN>
- - ------------
(1) Net of voluntary expense limitation by the Adviser equal to .03% of average
daily net assets.
(2) Net of voluntary expense limitation and absorption of expenses by the
Adviser equal to 1.38% of average daily net assets.
(3) Annualized and net of the absorption of all Fund expenses by the Adviser
equal to 3.64% of average daily net assets.
+ Includes receipt of a special dividend representing $.62 per share net
investment income and 7.59% of average net assets.
++ Total return is calculated for the period January 2, 1990 to
December 31, 1990 and is not annualized.
* Commencement of operations.
</FN>
</TABLE>

<PAGE>

EVERGREEN TAX STRATEGIC FOUNDATION FUND

The following selected per share data and ratios for the year ended
December 31, 1994, and for the period November 2, 1993 (commencement of
operations) through December 31, 1993, have been audited by Price Waterhouse
LLP, independent accountants for Evergreen Tax Strategic Foundation Fund, whose
report thereon was unqualified. This information should be read in conjunction
with the financial statements and notes thereto which are incorporated in the
Statement of Additional Information by reference. The per share data set forth
below pertains to the Class Y shares of the Fund, which are not offered through
this prospectus. See "Other Classes of Shares". No per share data and ratios are
shown for Class A, B or C shares, since these classes did not have any
operations prior to December 31, 1994.

FOR THE PERIOD
NOVEMBER 2, 1993*
YEAR ENDED THROUGH
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- -----------------
<S> <C> <C>
PER SHARE DATA

Net asset value, beginning of year . . . . . $10.31 $10.00
------ ------

INCOME FROM INVESTMENT OPERATIONS:
Net investment income . . . . . . . . . . . .27 .05

Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . .08 .31
------ ------

Total from investment operations . . . . . .35 .36
------ ------
------ ------

LESS DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income . . . . . . . . . . . . (.27) (.05)
Net realized gains . . . . . . . . . . . . . (.12) ---
------ ------

Total distributions . . . . . . . . . . . . (.39) (.05)
------ ------
------ ------

Net asset value, end of year. . . . . . . . . $10.27 $10.31
------ ------
------ ------

TOTAL RETURN . . . . . . . . . . . . . . . . 3.4% 3.5%**

RATIOS & SUPPLEMENTAL DATA:
Net assets, end of year
(in millions) . . . . . . . . . . . . . . . $11 $5

Ratios to average net assets:
Expenses++ . . . . . . . . . . . . . . . . 1.49% 0%+

Net investment income++ . . . . . . . . . . 2.87% 3.65%+

Portfolio turnover rate . . . . . . . . . . . 245% 25%

<FN>
- - ------------
* Commencement of operations.
** Total return calculated for the period November 2, 1993 through December
31, 1993 is not annualized.
+ Annualized
++ Net of advisory fee waivers and expense absorption. If the Fund had borne
all expenses that were assumed or waived by the Adviser, the annualized
ratios of expenses and net investment income to average net assets,
exclusive of any applicable state expense limitations, would have been
2.41% and 1.95%, respectively, for the year ended December 31, 1994, and
3.10% and .54%, respectively, for the period November 2, 1993 through
December 31, 1993.
</FN>
</TABLE>

<PAGE>

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

DESCRIPTION OF THE FUNDS
-----------------------------------------------------------------------------

INVESTMENT OBJECTIVES AND POLICIES

Evergreen Total Return Fund

The investment objective of Evergreen Total Return Fund is to achieve a
return consisting of current income and capital appreciation in the value of its
shares. The emphasis on current income and capital appreciation will be
relatively equal although, over time, changes in the outlook for market
conditions and the level of interest rates will cause the Fund to vary its
emphasis between these two elements in its search for the optimum return for its
shareholders. The Fund seeks to achieve its investment objective through
investments in common stocks, preferred stocks, securities convertible into or
exchangeable for common stocks and fixed income securities. The Fund may invest
up to 20% of its total assets in the securities of foreign issuers either
directly or in the form of American Depository Receipts ("ADRs"), European
Depository Receipts ("EDRs") or other securities convertible into securities of
foreign issuers. The Fund may also write covered call options. The Fund's
investment objective is a fundamental policy. There can be no assurance that the
Fund's investment objective will be achieved. See "Special Risk Considerations".

To the extent that the Fund seeks capital appreciation, it expects that
its investments will provide growth over the long-term. Investments, however,
may be made on occasion for the purpose of short-term capital appreciation if
the Fund believes that such investments will benefit its shareholders.

The Fund may make investments in securities (other than options)
regardless of whether or not such securities are traded on a national securities
exchange. The value of portfolio securities and their yields, as well as
opportunities to realize net gains from a covered call options writing program,
are expected to fluctuate over time because of varying general economic and
market conditions.

The Fund's portfolio will vary over time depending upon the economic
outlook and market conditions. The composition of its portfolio will be largely
unrestricted and subject to the discretion of the Fund's Adviser. Ordinarily,
the Fund anticipates that approximately 75% of its portfolio will consist of
equity securities and the other 25% of debt securities (including convertible
debt securities). As of March 31, 1993 and 1994 and January 31, 1995,
approximately 88%, 96% and 91%, respectively, of the Fund's portfolio consisted
of equity securities. The balance of the Fund's portfolio consisted of debt
securities (including convertible debt securities). If, in the Adviser's
judgment, the appreciation potential for equity securities exceeds the return
available from debt securities or government securities, investments in equity
securities could exceed 75% of the Fund's portfolio. Most equity investments,
however, will be income producing. The quality standards for debt securities
include: Obligations of banks having total assets of at least one billion
dollars which are members of the FDIC; commercial paper rated no lower than P-2
by Moody's Investors Service, Inc. ("Moody's") or A-2 by Standard & Poor's
Ratings Group ("S&P"); and non-convertible debt securities rated no lower than
Baa by Moody's or BBB by Standard & Poor's. Securities rated Baa or BBB may have
speculative characteristics.

The Fund may also invest without limitation in debt securities, U.S.
government securities, cash and cash equivalents for defensive purposes, write
covered call options and lend portfolio securities. It is anticipated that the
annual portfolio turnover rate for the Fund may exceed 100%. For the fiscal
years ended March 31, 1993 and 1994, and the ten month period ended January 31,
1995, the Fund's portfolio turnover rate was 164%, 106% and 151%, respectively.
See "Investment Practices and Restrictions" and "Special Risk Considerations",
below.

Evergreen Growth and Income Fund

The investment objective of Evergreen Growth and Income Fund (formerly
known as the Evergreen Value Timing Fund) is to achieve a return composed of
capital appreciation in the value of its shares and current income. (The Fund's
investment objective is a fundamental policy.) There can be no assurance that
the Fund's investment objective will be achieved.

The Fund seeks to achieve its investment objective by investing in the
securities of companies which are undervalued in the marketplace relative to
those companies' assets, breakup value, earnings or potential earnings growth.
These companies are often found among those which have had a record of financial
success but are currently in disfavor in the marketplace for reasons the Adviser
perceives as temporary or erroneous. Such investments when successfully timed
are expected to be the means for achieving the Fund's investment objective. This
inherently contrarian approach may require greater reliance upon the Adviser's
analytical and research capabilities than an investment in certain other equity
funds. Consequently, an investment in the Fund may involve more risk than other
equity funds. The Fund should not be considered suitable for investors who are
unable or unwilling to assume the risks of loss inherent in such a program. Nor
should the Fund be considered a balanced or complete investment program.

The Fund will use the "value timing" approach as a process for
purchasing securities when events indicate that fundamental investment values
are being ignored in the marketplace. Fundamental investment value is based on
one or more of the following: assets -- tangible and intangible (examples of the
latter include brand names or licenses), capitalization of earnings, cash flow
or potential earnings growth. A discrepancy between market valuation and
fundamental value often arises due to the presence of unrecognized assets or
business opportunities, or as a result of incorrectly perceived or short-term
negative factors. Changes in regulations, basic economic or monetary shifts and
legal action (including the initiation of bankruptcy proceedings) are some of
the factors that create these capital appreciation opportunities. If the
securities in which the Fund invests never reach their perceived potential or
the valuation of such securities in the marketplace does not in fact reflect
significant undervaluation, there may be little or no appreciation or a
depreciation in the value of such securities.

The Fund will invest primarily in common stocks and securities
convertible into or exchangeable for common stock. It is anticipated that the
Fund's investments in these securities will contribute to the Fund's return
primarily through capital appreciation. In addition, the Fund will invest in
nonconvertible preferred stocks and debt securities. It is anticipated that the
Fund's investments in these securities will also produce capital appreciation
but the current income component of return will be a more significant factor in
their selection. However, the Fund will invest in nonconvertible preferred stock
and debt securities only if the anticipated capital appreciation plus income
from such investments is equivalent to that anticipated from investments in
equity or equity-related securities. The Fund may invest up to 5% of its total
assets in debt securities which are rated below investment grade, commonly known
as "junk bonds". Investments of this type are subject to greater risk of loss of
principal and interest. Additional information regarding "junk bonds" is
contained in the Statement of Additional Information.

The Fund may also invest without limitation in cash and cash
equivalents and short-term corporate debt securities for defensive purposes,
write covered call options and lend portfolio securities. See "Investment
Practices" and "Special Risk Considerations", below. It is anticipated that the
annual portfolio turnover rate for the Fund will not exceed 100%. For the fiscal
years ended December 31, 1992, 1993 and 1994, the Fund's portfolio turnover rate
was 30%, 28% and 29%, respectively. See "Investment Practices and Restrictions"
and "Special Risk Considerations", below.

Evergreen American Retirement Fund

The investment objectives of Evergreen American Retirement Fund in
order of priority are conservation of capital, reasonable income and capital
growth. The Fund offers a structured investment approach designed specifically
for retirees and persons contemplating retirement which may also be appropriate
for the qualified retirement plans of smaller companies. There can be no
assurance that the Fund's investment objectives will be achieved.

The Fund will invest in a diversified and balanced portfolio of equity
and fixed income securities, with emphasis on income-producing securities which
appear to have potential for capital enhancement. Ordinarily, the Fund
anticipates that approximately 50% of its portfolio will consist of equity
securities (including securities convertible into equity securities) and 50% of
fixed income securities. The Fund's Adviser may vary the amount invested in each
type of security in response to changing market conditions to take advantage of
relative undervaluation in either the stock or bond markets. The Fund will,
however, not make an additional investment in equity securities if more than 75%
of its total assets at the time the investment is made would include investments
in equity securities. Generally, approximately half of the equity portion of the
Fund's portfolio will be invested in common stocks which the Adviser believes
will yield current income and have potential for long-term capital growth and
half in bonds and preferred stocks convertible into such common stock.

With respect to the fixed income portion of the Fund's portfolio,
emphasis will be placed on acquiring non-speculative issues expected to
fluctuate little in value, except with changes in prevailing interest rates. The
market value of the debt obligations in the Fund's portfolio can be expected to
vary inversely to changes in prevailing interest rates. The Fund may at times
emphasize the generation of interest income by investing in high-yielding debt
securities, with short and medium to long-term maturities. Investment in medium
(i.e., with maturities from five to ten years) to long-term (i.e., with
maturities over ten years) debt securities may also be made with a view to
realizing capital appreciation when the Adviser believes that interest rates on
such investments may decline, thereby increasing their market value.

Normally, the Fund anticipates that approximately half of the fixed
income portion of the Fund's portfolio will be invested in marketable
obligations of, or guaranteed by, the United States Government, its agencies or
instrumentalities which are supported by the full faith and credit of the United
States or by the right of the issuer to borrow from the United States Treasury.
These include issues of the Treasury, such as bills, certificates of
indebtedness, notes and bonds, and issues of agencies and instrumentalities
established under the authority of an act of Congress. Agencies or
instrumentalities whose securities are supported by the full faith and credit of
the United States include, but are not limited to, the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration and Government National Mortgage
Association. Examples of agencies or instrumentalities whose securities are
supported by the right of the issuer to borrow from the Treasury include, but
are not limited to, the Federal Home Loan Bank, Federal Intermediate Credit
Banks, Federal National Mortgage Association and Tennessee Valley Authority. The
balance will be invested in corporate obligations rated no lower than A by
Moody's or S&P.

The Fund may also invest in cash and cash equivalents for defensive
purposes, write covered call options, make short sales of securities "against
the box", and lend portfolio securities. See "Investment Practices" and "Special
Risk Considerations", below. It is anticipated that the annual portfolio
turnover rate for the Fund will generally not exceed 100% for the equity portion
of its portfolio and 200% for the fixed income portion. For the fiscal years
ended December 31, 1992, 1993 and 1994, the Fund's portfolio turnover rate was
151%, 92% and 136%, respectively. See "Investment Practices and Restrictions"
and "Special Risk Considerations", below.

Evergreen Small Cap Equity Income Fund

The investment objective of Evergreen Small Cap Equity Income Fund is
to achieve a return consisting of current income and capital appreciation in the
value of its shares. The emphasis on current income and capital appreciation
will be relatively equal although, over time, changes in market conditions and
the level of interest rates may cause the Fund to vary its emphasis between
these two elements in its search for the optimum return for its shareholders.
The Fund seeks to achieve its investment objective through investments in common
stocks, preferred stocks, securities convertible into or exchangeable for common
stocks and fixed income securities. Under normal conditions, the Fund will
invest at least 65% of its total assets in equity securities (including
convertible debt securities) of companies that, at the time of purchase, have
"total market capitalization" -- present market value per share multiplied by
the total number of shares outstanding -- of less than $500 million. The Fund's
investment objective is a fundamental policy.

The Fund may make investments in securities regardless of whether or
not such securities are traded on a national securities exchange. The value of
portfolio securities and their yields are expected to fluctuate over time
because of varying general economic and market conditions. Accordingly, there
can be no assurance that the Fund's investment objective will be achieved.

The Fund may invest up to 35% of its total assets in equity securities
of companies that at the time of purchase have a total market capitalization of
$500 million or more, and in excess of that percentage during temporary
defensive periods.

The Fund's portfolio will vary over time depending upon the economic
outlook and market conditions. The composition of its portfolio will be subject
to the discretion of the Fund's Adviser. Ordinarily, the Fund anticipates that
most of its portfolio will consist of equity securities and convertible debt
securities. A significant portion of the equity investments, however, will be
income producing. If in the Adviser's judgment a defensive position is
appropriate, the Fund may take a defensive position and invest without limit in
debt securities or government securities or hold its assets in cash or cash
equivalents. The quality standards for debt securities include: Obligations of
banks and commercial paper rated no lower than P-2 by Moody's, A-2 by S&P or
having a comparable rating from another nationally recognized statistical rating
organization; and non-convertible debt securities rated no lower than Baa by
Moody's or BBB by S&P. Securities rated Baa or BBB may have speculative
characteristics.

The Fund may invest in real estate investment trusts ("Reits"). Equity
Reits invest directly in real property while mortgage Reits invest in mortgages
on real property. The Fund does not intend to invest in Reits that are primarily
mortgage Reits. Equity Reits usually provide a high current yield plus the
opportunity of long-term price appreciation of real estate values. Reits may be
subject to certain risks associated with the direct ownership of real estate.
See "Special Risk Considerations", below.

The Fund may also invest in cash and cash equivalents for defensive
purposes, invest in financial futures contracts and options thereon, and lend
portfolio securities. See "Investment Practices" and "Special Risk
Considerations", below. It is anticipated that the annual portfolio turnover
rate for the Fund will not generally exceed 100%. For the period October 1, 1993
(commencement of operations) to December 31, 1993 and the fiscal year ended
December 31, 1994, the Fund's portfolio turnover rate was 15% and 9%,
respectively. See "Investment Practices and Restrictions" and "Special Risk
Considerations", below.

Evergreen Foundation Fund

The investment objectives of Evergreen Foundation Fund, in order of
priority, are reasonable income, conservation of capital and capital
appreciation. The Fund seeks to achieve these objectives by investing in a
combination of common stocks, preferred stocks, securities convertible into or
exchangeable for common stocks, corporate and U.S. Government debt obligations,
and short-term debt instruments, such as commercial paper. Additionally, income
from time to time may be generated by the lending of securities. The Fund's
common stock investments will include those which (at the time of purchase) pay
dividends and in the view of the Adviser have potential for capital enhancement.

The Fund's asset allocation will vary from time to time in accordance
with changing economic and market conditions, including: inflation rates,
business cycle trends, business regulations and tax law impacts on the
investment markets. The composition of its portfolio will be largely
unrestricted and subject to the discretion of the Fund's Adviser. Under normal
circumstances, the Fund anticipates that at least 25% of its net assets will
consist of fixed income securities. The balance will be invested in equity
securities (including securities convertible into equity securities).

In selecting fixed income securities for the Fund's portfolio, emphasis
will be placed on issues expected to fluctuate little in value other than as a
result of changes in prevailing interest rates. The market value of the debt
obligations in the Fund's portfolio can be expected to vary inversely to changes
in prevailing interest rates. The Fund may at times emphasize the generation of
interest income by investing in high-yielding debt securities, with short,
medium or long-term maturities. While fixed income investments will generally be
made for the purpose of generating interest income, investments in medium to
long term debt securities (i.e., those with maturities from five to ten years
and those with maturities over ten years, respectively) may be made with a view
to realizing capital appreciation when the Adviser believes changes in interest
rates will lead to an increase in the value of such securities. The fixed income
portion of the Fund's portfolio may include:

1. Marketable obligations of, or guaranteed by, the United States
Government, its agencies or instrumentalities, including issues of the United
States Treasury, such as bills, certificates of indebtedness, notes and bonds,
and issues of agencies and instrumentalities established under the authority of
an act of Congress. Some of these securities are supported by the full faith and
credit of the United States Government, and others are supported only by the
credit of the agency or instrumentality. Agencies or instrumentalities whose
securities are supported by the full faith and credit of the United States
include, but are not limited to, the Federal Housing Administration Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration and Government National Mortgage Association. Agencies or
instrumentalities whose securities are supported only by the credit of the
agency or instrumentality include the Interamerican Development Bank and the
International Bank for Reconstruction and Development. These obligations are
supported by appropriated but unpaid commitments of their member countries.
There are no assurances that the commitments will be fulfilled in the future.

2. Corporate obligations rated no lower than A by Moody's or S&P.

3. Obligations of banks or banking institutions having total assets of
more than $2 billion which are members of the Federal Deposit Insurance
Corporation.

4. Commercial paper of high quality (rated no lower than A-2 by S&P or
Prime-2 by Moody's or, if not rated, issued by companies which have an
outstanding long-term debt issue rated AAA or AA by S&P or Aaa or Aa by
Moody's).

Certain obligations may be entitled to the benefit of standby letters of credit
or similar commitments issued by banks and, in such instances, the Adviser will
take into account the obligation of the bank in assessing the quality of such
security.

The Fund may also invest in cash and cash equivalents for defensive
purposes and lend portfolio securities. It is anticipated that the annual
portfolio turnover rate for the Fund will generally not exceed 100% for the
equity portion of its portfolio and 200% for the fixed income portion. For the
fiscal years ended December 31, 1992, 1993 and 1994, the Fund's portfolio
turnover rate was 127%, 60% and 33%, respectively. See "Investment Practices and
Restrictions" and "Special Risk Considerations", below.

Evergreen Tax Strategic Foundation Fund

The investment objective of Evergreen Tax Strategic Foundation Fund is
to maximize the after-tax "total return" on its portfolio of investments. Total
return consists of current income and capital appreciation in the value of its
shares. The Fund seeks to achieve this objective by investing in common stocks,
preferred stocks and securities convertible into or exchangeable for common
stocks. It will also invest in debt obligations issued by states and possessions
of the United States and by the District of Columbia, and their political
subdivisions and duly constituted authorities, the interest from which is exempt
from Federal income tax. Such securities are generally known as Municipal
Securities. The Fund may also invest in taxable debt securities. (See "Municipal
Securities" and "Taxable Investments"). There can be no assurance that the
Fund's investment objective will be achieved.

The Fund's asset allocation will vary from time to time in accordance
with changing economic and market conditions, including: inflation rates,
business cycle trends, business regulations and tax law impacts on the
investment markets. The composition of its portfolio will be largely
unrestricted and subject to the discretion of the Fund's Adviser. Under normal
circumstances, the Fund anticipates that, at the close of each quarter of its
taxable year, at least 50% of the value of its total assets will be invested in
Municipal Securities. The balance will be invested in equity securities
(including securities convertible into equity securities).

With respect to the fixed income portion of the Fund's portfolio,
emphasis will be placed on acquiring issues expected to fluctuate little in
value, except with changes in prevailing interest rates. The market value of the
Municipal Securities in the Fund's portfolio can be expected to vary inversely
to changes in prevailing interest rates. The Fund may at times emphasize the
generation of interest income by investing in high-yielding debt securities,
with short, medium or long-term maturities. Investment in medium (i.e., with
maturities from five to ten years) to long-term (i.e., with maturities over ten
years) debt securities may also be made with a view to realizing capital
appreciation when the Adviser believes that interest rates on such investments
may decline, thereby increasing their market value.

In general, the Fund will invest in Municipal Securities only if they
are determined to be of high or upper medium quality. These include bonds rated
BBB or higher by S&P or Baa by Moody's or another nationally recognized
statistical rating organization ("SRO"). For a description of such ratings see
the Statement of Additional Information. The Fund may purchase Municipal
Securities which are unrated at the time of purchase, if such securities are
determined by the Fund's Adviser to be of comparable quality. Certain Municipal
Securities (primarily variable rate demand notes) may be entitled to the benefit
of standby letters of credit or similar commitments issued by banks and, in such
instances, the Adviser will take into account the obligation of the bank in
assessing the quality of such security. Medium grade bonds are more susceptible
to adverse economic conditions or changing circumstances than higher grade
bonds.

Interest income on certain types of bonds issued after August 7, 1986
to finance nongovernmental activities is an item of "tax-preference" subject to
the Federal alternative minimum tax for individuals and corporations. To the
extent the Fund invests in these "private activity" bonds (some of which were
formerly referred to as "industrial development" bonds), individual and
corporate shareholders, depending on their status, may be subject to the
alternative minimum tax on the part of the Fund's distributions derived from the
bonds. As a matter of fundamental policy, 80% of the Fund's investments in
Municipal Securities will be invested in Municipal Securities the interest from
which is not subject to the Federal alternative minimum tax.

The Fund may also invest in cash and cash equivalents for defensive
purposes and lend portfolio securities. See "Investment Practices and
Restrictions" and "Special Risk Considerations", below. It is anticipated that
the annual portfolio turnover rate for the Fund will generally not exceed 100%
for the equity portion of its portfolio and 200% for the fixed income portion.
For the period from November 2, 1993 (commencement of operations) to December
31, 1993, and the fiscal year ended December 31, 1994, the Fund's portfolio
turnover rate was 25% and 245%, respectively.

INVESTMENT PRACTICES AND RESTRICTIONS

Defensive Investments. The Funds may invest without limitation in high quality
money market instruments, such as notes, certificates of deposit or bankers'
acceptances, or U.S. Government securities if, in the opinion of the Adviser,
market conditions warrant a temporary defensive investment strategy.

Portfolio Turnover and Brokerage. A portfolio turnover rate of 100% would occur
if all of a Fund's portfolio securities were replaced in one year. The portfolio
turnover rate experienced by a Fund directly affects brokerage commissions and
other transaction costs which the Fund must pay. A high rate of portfolio
turnover will increase such costs. It is contemplated that Lieber & Company, an
affiliate of the Adviser and a member of the New York and American Stock
Exchanges, will to the extent practicable effect substantially all of the
portfolio transactions for the Funds on those exchanges. See the Statement of
Additional Information for further information regarding the brokerage
allocation practices of the Funds.

Borrowing. As a matter of fundamental policy, the Funds may not borrow money
except from banks as a temporary measure to facilitate redemption requests or
for extraordinary or emergency purposes. The proceeds from borrowings may be
used to facilitate redemption requests which might otherwise require the
untimely disposition of portfolio securities. The specific limits applicable to
borrowing by each Fund are set forth in the Statement of Additional Information.

Lending of Portfolio Securities. In order to generate income and to offset
expenses, the Funds may lend portfolio securities to brokers, dealers and other
financial institutions. The Adviser will monitor the creditworthiness of such
borrowers. Loans of securities by the Funds, if and when made, may not exceed
30% of the value of a Fund's total assets and must be collateralized by cash or
U.S. Government securities that are maintained at all times in an amount equal
to at least 100% of the current market value of the securities loaned, including
accrued interest. While such securities are on loan, the borrower will pay a
Fund any income accruing thereon, and the Fund may invest the cash collateral in
portfolio securities, thereby increasing its return. Any gain or loss in the
market price of the loaned securities which occurs during the term of the loan
would affect a Fund and its investors. A Fund has the right to call a loan and
obtain the securities loaned at any time on notice of not more than five
business days A Fund may pay reasonable fees in connection with such loans.

Short Sales. The Evergreen American Retirement Fund may, as a defensive
strategy, make short sales of securities. A short sale occurs when a seller
sells a security and makes delivery to the buyer by borrowing the security.
Short sales of a security are generally made in cases where the seller expects
the market value of the security to decline. To complete a short sale, the
seller must replace the security borrowed by purchasing it at the market price
at the time of replacement, or by delivering securities from the seller's own
position to the lender. In the event the market value of a security sold short
were to increase, the seller would realize a loss to the extent that the cost of
purchasing the security for delivery to the lender were greater than the
proceeds from the short sale. In the event a short sale is completed by delivery
of securities to the lender from the seller's own position, the seller would
forego any gain that would otherwise be realized on such securities. The
Evergreen American Retirement Fund may only make short sales "against the box"
which means it must own the securities sold short, or other securities
convertible into, or which carry rights to acquire, such securities.

Writing Options. Evergreen Total Return Fund, Evergreen Growth and Income Fund
and Evergreen American Retirement Fund may write covered call options on certain
portfolio securities in an attempt to earn income and realize a higher return on
its portfolio. A call option may not be written by Evergreen Total Return Fund
and Evergreen American Retirement Fund if, afterwards, securities comprising
more than 15% of the market value of either Fund's equity securities would be
subject to call options. A Fund realizes income from the premium paid to it in
exchange for writing the call option. Once it has written a call option on a
portfolio security and until the expiration of such option, a Fund forgoes the
opportunity to profit from increases in the market price of such security in
excess of the exercise price of the call option. Should the price of the
security on which a call has been written decline, a Fund retains the risk of
loss, which would be offset to the extent the Fund has received premium income.
A Fund will only write "covered" call options traded on U.S. national securities
exchanges. An option will be deemed covered when a Fund either owns the security
(or securities convertible into such security) on which the option has been
written in an amount sufficient to satisfy the obligations arising under the
option; or (ii) a Fund's Custodian maintains cash or high-grade liquid debt
securities belonging to the Fund in an amount not less that the amount needed to
satisfy the Fund's obligations with respect to options written on securities it
does not own. A "closing purchase transactions" may be entered into with respect
to a call option written by a Fund for the purpose of closing its position.

Illiquid Securities. Each Fund may invest up to 15% of its net assets in
illiquid securities and other securities which are not readily marketable,
except that Evergreen Total Return Fund, Evergreen Small Cap Equity Income Fund
and Evergreen Tax Strategic Foundation Fund may only invest up to 10% of their
assets in repurchase agreements with maturities longer than seven days.
Securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, which have been determined to be liquid, will not be considered by the
Adviser to be illiquid or not readily marketable and, therefore, are not subject
to the aforementioned 15% limit. The inability of a Fund to dispose of illiquid
or not readily marketable investments readily or at a reasonable price could
impair the Fund's ability to raise cash for redemptions or other purposes. The
liquidity of securities purchased by a Fund which are eligible for resale
pursuant to Rule 144A will be monitored by the Adviser on an ongoing basis,
subject to the oversight of the Trustees. In the event that such a security is
deemed to be no longer liquid, a Fund's holdings will be reviewed to determine
what action, if any, is required to ensure that the retention of such security
does not result in a Fund having more than 15% of its assets invested in
illiquid or not readily marketable securities.

Repurchase Agreements and Reverse Repurchase Agreements. Repurchase agreements
may be entered into with member banks of the Federal Reserve System, including
the Custodian or primary dealers in U.S. Government securities. A repurchase
agreement is an arrangement pursuant to which a buyer purchases a security and
simultaneously agrees to resell it to the vendor at a price that results in an
agreed-upon market rate of return which is effective for the period of time
(which is normally one to seven days, but may be longer) the buyer's money is
invested in the security. The arrangement results in a fixed rate of return that
is not subject to market fluctuations during the holding period. A Fund requires
continued maintenance of collateral with its Custodian in an amount at least
equal to the repurchase price (including accrued interest). In the event a
vendor defaults on its repurchase obligation, a Fund might suffer a loss to the
extent that the proceeds from the sale of the collateral were less than the
repurchase price. If the vendor becomes the subject of bankruptcy proceedings, a
Fund might be delayed in selling the collateral. The Adviser will review and
continually monitor the creditworthiness of each institution with which a Fund
enters into a repurchase agreement to evaluate these risks.

Evergreen Small Cap Equity Income Fund and Evergreen Tax Strategic
Foundation Fund may borrow money by entering into a "reverse repurchase
agreement" by which a Fund may agree to sell portfolio securities to financial
institutions such as banks and broker-dealers, and to repurchase them at a
mutually agreed upon date and price, for temporary or emergency purposes. At the
time a Fund enters into a reverse repurchase agreement, it will place in a
segregated custodial account cash, United States Government securities or liquid
high grade debt obligations having a value at least equal to the repurchase
price (including accrued interest) and will subsequently monitor the account to
ensure that such equivalent value is maintained. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the repurchase price of those securities. A Fund will not enter
into reverse repurchase agreements exceeding 5% of the value of its total
assets.

Futures and Related Options. Evergreen Small Cap Equity Income Fund may, to a
limited extent, enter into financial futures contracts, including futures
contracts based on securities indices, purchase and sell options on such futures
contracts, and engage in related closing transactions to the extent available to
hedge all or a portion of its portfolio, or as an efficient means of regulating
its exposure to the equity markets. The Fund will only use futures instruments
for hedging, not speculative, purposes. The Fund may not enter into futures
contracts or related options if, immediately thereafter, more than 30% of the
Fund's assets would be hedged thereby or the amounts committed to margin and
premiums paid for unexpired options would exceed 5% of the Fund's assets. These
transactions include brokerage costs and require the Fund to segregate liquid
high grade debt or cash to cover contracts which would require it to purchase
securities. The Fund may lose the expected benefit of the transactions if
securities prices or interest rates move in an unanticipated manner. In
addition, if the Fund purchases futures contract on indices of securities, their
value may not fluctuate in proportion to the value of the Fund's securities,
limiting its ability to hedge effectively.

While the Evergreen Small Cap Equity Income Fund will enter into
futures contracts only if there appears to be a liquid secondary market for such
contracts, there can be no assurance that the Fund will be able to close out its
position in a specific contract at a specific time. The Fund will not enter into
a particular index-based futures contract unless the Adviser determines that a
correlation exists between price movements in the index-based futures contract
and in securities in the Fund's portfolio. Such correlation is not likely to be
perfect, since the Fund's portfolio is not likely to contain the same securities
used in the index.

Evergreen Small Cap Equity Income Fund may attempt to earn income from
selling (writing) call options on futures contracts in instances where the
Adviser believes that the long-term investments held by the Fund which are the
subjects of such contracts will remain stable or experience a decline with
respect to the U.S. dollar during the term of the option. By selling such an
option, the Fund forgoes all or part of the appreciation potential involved in
holding investments that are the subject of the futures contract on which an
option was written and may be forced to make untimely liquidations of its
investments to meet its obligations under the option contract.

Municipal Securities. As noted above, Evergreen Tax Strategic Foundation Fund
may invest in Municipal Securities, which include municipal bonds, short-term
municipal notes and tax exempt commercial paper. "Municipal bonds" are debt
obligations issued to obtain funds for various public purposes that are exempt
from Federal income tax in the opinion of issuer's counsel. The two principal
classifications of municipal bonds are "general obligation" and "revenue" bonds.
General obligation bonds are secured by the issuer's pledge of its full faith,
credit and taxing power for the payment of principal and interest. Revenue bonds
are payable only from the revenues derived from a particular facility or class
of facilities or, in some cases, from the proceeds of a special excise tax or
other specific source such as from the user of the facility being financed. The
term "municipal bonds" also includes "moral obligation" issues which are
normally issued by special purpose authorities. Industrial development bonds
("IDBs") and private activity bonds ("PABs") are in most cases revenue bonds and
are not payable from the unrestricted revenues of the issuer. The credit quality
of IDBs and PABs is usually directly related to the credit standing of the
corporate user of the facilities being financed. Participation interests are
interests in municipal bonds, including IDBs and PABs, and floating and variable
rate obligations that are owned by banks. These interests carry a demand feature
permitting the holder to tender them back to the bank, which demand feature is
backed by an irrevocable letter of credit or guarantee of the bank. A put bond
is a municipal bond which gives the holder the unconditional right to sell the
bond back to the issuer at a specified price and exercise date, which is
typically well in advance of the bond's maturity date. "Short-term municipal
notes" and "tax exempt commercial paper" include tax anticipation notes, bond
anticipation notes, revenue anticipation notes and other forms of short-term
loans. Such notes are issued with a short-term maturity in anticipation of the
receipt of tax funds, the proceeds of bond placements and other revenues.

Floating Rate and Variable Rate Obligations. Municipal Securities also include
certain variable rate and floating rate municipal obligations with or without
demand features. These variable rate securities do not have fixed interest
rates; rather, those rates fluctuate based upon changes in specified market
rates, such as the prime rate, or are adjusted at predesignated periodic
intervals. Certain of these obligations may carry a demand feature that gives
the Evergreen Tax Strategic Foundation Fund the right to demand prepayment of
the principal amount of the security prior to its maturity date. The demand
obligation may or may not be backed by letters of credit or other guarantees of
banks or other financial institutions. Such guarantees may enhance the quality
of the security. The Evergreen Tax Strategic Foundation Fund will limit the
value of its investments in any floating or variable rate securities which are
not readily marketable and in all other not readily marketable securities to 15%
or less of its total assets.

When-Issued Securities. Evergreen Tax Strategic Foundation Fund may purchase
Municipal Securities on a "when-issued" basis (i.e., for delivery beyond the
normal settlement date at a stated price and yield). The Evergreen Tax Strategic
Foundation Fund generally would not pay for such securities or start earning
interest on them until they are received. However, when the Fund purchases
Municipal Securities on a when-issued basis, it assumes the risks of ownership
at the time of purchase, not at the time of receipt. Failure of the issuer to
deliver a security purchased by the Evergreen Tax Strategic Foundation Fund on a
when-issued basis may result in the Fund incurring a loss or missing an
opportunity to make an alternative investment. Commitments to purchase
when-issued securities will not exceed 25% of a Fund's total assets. The
Evergreen Tax Strategic Foundation Fund will maintain cash or high quality
short-term securities in a segregated account with its custodian in an amount
equal to such commitments. The Fund does not intend to purchase when-issued
securities for speculative purposes but only in furtherance of its investment
objective.

Stand-by Commitments. Evergreen Tax Strategic Foundation Fund may also acquire
"stand-by commitments" with respect to Municipal Securities held in its
portfolio. Under a stand-by commitment, a dealer agrees to purchase, at the
Fund's option, specified Municipal Securities at a specified price. Failure of
the dealer to purchase such Municipal Securities may result in a Fund incurring
a loss or missing an opportunity to make an alternative investment. The
Evergreen Tax Strategic Foundation Fund expects that stand-by commitments
generally will be available without the payment of direct or indirect
consideration. However, if necessary and advisable, the Fund may pay for
stand-by commitments either separately in cash or by paying a higher price for
portfolio securities which are acquired subject to such a commitment (thus
reducing the yield to maturity otherwise available for the same securities). The
total amount paid in either manner for outstanding stand-by commitments held in
the Evergreen Tax Strategic Foundation Fund's portfolio will not exceed 10% of
the value of the Fund's total assets calculated immediately after each stand-by
commitment is acquired. The Fund will maintain cash or high quality short-term
securities in a segregated account with its custodian in an amount equal to such
commitments. The Fund will enter into stand-by commitments only with banks and
broker-dealers that, in the judgment of the Adviser, present minimal credit
risks.

Taxable Investments. Evergreen Tax Strategic Foundation Fund may, however,
temporarily invest up to 20% of its assets in taxable securities under any one
or more of the following circumstances: (a) pending investment of proceeds of
sale of Fund shares or of portfolio securities, (b) pending settlement of
purchases of portfolio securities, and (c) to maintain liquidity for the purpose
of meeting anticipated redemptions. In addition, the Fund may temporarily invest
more than 20% of its total assets in taxable securities for defensive purposes.
The Fund may invest for defensive purposes during periods when the Fund's assets
available for investment exceed the available Municipal Securities that meet the
Fund's quality and other investment criteria. Taxable securities in which the
Fund may invest on a short-term basis include obligations of the United States
Government, its agencies or instrumentalities, including repurchase agreements
with banks or securities dealers involving such securities; time deposits
maturing in not more than seven days; other debt securities rated within the two
highest ratings assigned by any major rating service; commercial paper rated in
the highest grade by Moody's, S&P or any SRO; and certificates of deposit issued
by United States branches of United States banks with assets of $1 billion or
more.

Special Risk Considerations

Investment in Foreign Securities. Investments in foreign securities
requires consideration of certain factors not normally associated with
investments in securities of U.S. issuers. For example, a change in the value of
any foreign currency relative to the U.S. dollar will result in a corresponding
change in the U.S. dollar value of securities denominated in that currency.
Accordingly, a change in the value of any foreign currency relative to the U.S.
dollar will result in a corresponding change in the U.S. dollar value of the
assets of the Fund denominated or traded in that currency. If the value of a
particular foreign currency falls relative to the U.S. dollar, the U.S. dollar
value of the assets of a Fund denominated in such currency will also fall. The
performance of a Fund will be measured in U.S. dollars.

Securities markets of foreign countries generally are not subject to
the same degree of regulation as the U.S. markets and may be more volatile and
less liquid. Lack of liquidity may affect a Fund's ability to purchase or sell
large blocks of securities and thus obtain the best price. The lack of uniform
accounting standards and practices among countries impairs the validity of
direct comparisons of valuation measures (such as price/earnings ratios) for
securities in different countries. In addition, a Fund may incur costs
associated with currency hedging and the conversion of foreign currency into
U.S. dollars and may be adversely affected by restrictions on the conversion or
transfer of foreign currency. Other considerations include political and social
instability, expropriation, the lack of available information, higher
transaction costs (including brokerage charges), increased custodian charges
associated with holding foreign securities and different securities settlement
practices. Settlement periods for foreign securities, which are sometimes longer
than those for securities of U.S. issuers, may affect portfolio liquidity. These
different settlement practices may cause missed purchasing opportunities and/or
the loss of interest on money market and debt investments pending further equity
or long-term debt investments. In addition, foreign securities held by a Fund
may be traded on days that the Fund does not value its portfolio securities,
such as Saturdays and customary business holidays, and, accordingly, a Fund's
net asset value may be significantly affected on days when shareholders do not
have access to the Fund.

ADRs and EDRs and other securities convertible into securities of
foreign issuers may not necessarily be denominated in the same currency as the
securities into which they may be converted but rather in the currency of the
market in which they are traded. ADRs are receipts typically issued by an
American bank or trust company which evidence ownership of underlying securities
issued by a foreign corporation. EDRs are receipts issued in Europe by banks or
depositories which evidence a similar ownership arrangement. Generally ADRs, in
registered form, are designed for use in United States securities markets and
EDRs, in bearer form, are designed for use in European securities markets.

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

Investments in Small Companies. Investment in the securities of small or newly
formed companies involves greater risk than investments in larger, more
established issuers. The Evergreen Small Cap Equity Income Fund may invest to a
large extent in small or newly formed companies which have limited product
lines, markets or financial resources and may lack management depth. The
securities of such companies may have limited marketability and may be subject
to more abrupt or erratic movements in price than securities of larger, more
established companies, or equity securities in general.

Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the Statement of Additional Information.
Unless otherwise noted, the restrictions and policies set forth above are not
fundamental and may be changed without shareholder approval. Shareholders will
be notified of any changes in policies that are not fundamental.

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MANAGEMENT OF THE FUNDS
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INVESTMENT ADVISER

The management of each Fund is supervised by its Trustees. Evergreen
Asset Management Corp. (the "Adviser") has been retained by each Fund as
investment adviser. The Adviser succeeded on June 30, 1994 to the advisory
business of the same name, but under different ownership, which was organized in
1971. The Adviser to the Funds, with its predecessors, has served as investment
adviser to the Evergreen Funds since 1971. The Adviser is a wholly-owned
subsidiary of First Union National Bank of North Carolina ("FUNB"). The address
of the Adviser is 2500 Westchester Avenue, Purchase, New York 10577. FUNB is a
subsidiary of First Union, one of the ten largest bank holding companies in the
United States. Stephen A. Lieber and Nola Maddox Falcone serve as the chief
investment officers of the Adviser and, along with Theodore J. Israel, Jr., were
the owners of the Adviser's predecessor and the former general partners of
Lieber & Company, which, as described below, provides certain subadvisory
services to the Adviser in connection with its duties as investment adviser to
the Fund.

First Union is a bank holding company headquartered in Charlotte, North
Carolina, which had $77.9 billion in consolidated assets as of March 31, 1995.
First Union and its subsidiaries provide a broad range of financial services to
individuals and businesses through offices in 36 states. The Capital Management
Group of FUNB manages or otherwise oversees the investment of over $36 billion
in assets belonging to a wide range of clients, including the First Union family
of mutual funds. First Union Brokerage Services, Inc., a wholly-owned subsidiary
of FUNB, is a registered broker-dealer that is principally engaged in providing
retail brokerage services consistent with its federal banking authorizations.
First Union Capital Markets Corp., a wholly-owned subsidiary of First Union, is
a registered broker-dealer principally engaged in providing, consistent with its
federal banking authorizations, private placement, securities dealing, and
underwriting services.

The Adviser manages each Fund's investments, provides various
administrative services and supervises each Fund's daily business affairs,
subject to the authority of the Trustees of each Fund. The Adviser is entitled
to receive a fee equal to 1% of each Fund's average daily net assets on an
annual basis from each of Evergreen Total Return Fund, Evergreen Growth and
Income Fund and Evergreen Small Cap Equity Income Fund. The Adviser is entitled
to receive from Evergreen Foundation Fund and Evergreen Tax Strategic Foundation
Fund a fee equal to .875 of 1% of each Fund's average daily net assets on an
annual basis and from Evergreen American Retirement Fund a fee equal to .75 of
1% of its average daily net assets on an annual basis. The fee paid by Evergreen
Total Return Fund, Evergreen Growth and Income Fund and Evergreen Small Cap
Equity Income Fund is higher than the rate paid by most other investment
companies. Until Evergreen Small Cap Equity Income Fund and Evergreen Tax
Strategic Foundation Fund reach $15 million in net assets, the Adviser has
agreed to reimburse each Fund to the extent that their aggregate operating
expenses exceed 1.50% of its average daily net assets for any fiscal year. Any
reimbursement pursuant to the foregoing will be exclusive of interest, taxes,
brokerage commissions, Rule 12b-1 distribution fees and shareholder servicing
fees and extraordinary expenses. For the fiscal period ended December 31, 1994,
total expenses as a percentage of average daily net assets on an annual basis of
each of the Class Y shares of the Funds, other than Evergreen Total Return Fund,
were as follows: Evergreen Growth and Income Fund 1.33%; Evergreen American
Retirement Fund 1.28%; Evergreen Small Cap Equity Income Fund 1.48%; Evergreen
Foundation Fund 1.14%; and Evergreen Tax Strategic Foundation Fund 1.49%. For
the fiscal year ended January 31, 1995, total expenses as a percentage of
average daily net assets on an annual basis of the Evergreen Total Return Fund
were 1.24% for the Class Y shares. For the period January 3, 1995 through
January 31, 1995, total expenses as a percentage of average daily net assets on
an annual basis for the Class A, Class B and Class C shares of the Evergreen
Total Return Fund were 1.45%, 2.23% and 2.22%, respectively. The above-mentioned
expense ratios for Evergreen Small Cap Equity Income Fund and Evergreen Tax
Strategic Retirement Fund are net of voluntary advisory fee waivers and expense
reimbursements by the Adviser. The Adviser may, at its discretion, revise or
cease this voluntary waiver at any time.

The portfolio manager for Evergreen Total Return Fund and Evergreen Small
Cap Equity Income Fund is Nola Maddox Falcone, C.F.A., who is President and
Co-Chief Executive Officer of the Adviser. Ms. Falcone has served as the
principal manager of Evergreen Total Return Fund since 1985 and Evergreen Small
Cap Equity since its inception. The portfolio manager for Evergreen Foundation
Fund is Stephen A. Lieber, who is Chairman and Co-Chief Executive Officer of the
Adviser. Mr. Lieber has served as such Fund's principal manager since its
inception. Mr. Lieber also acts as portfolio manager, together with James T.
Colby, III, for Evergreen Tax Strategic Foundation Fund. Mr. Lieber will make
all allocation decisions and investment decisions for the equity portion of the
portfolio and Mr. Colby will manage the fixed-income portion. Mr. Colby has
served as a fixed-income portfolio manager with the Adviser since 1992. Prior to
that, Mr. Colby served as Vice President-Investments at American Express Company
from 1987 to 1992. Both have served as the Fund's principal managers since
inception. The portfolio manager for Evergreen Growth and Income Fund is Edmund
H. Nicklin, Jr. C.F.A. Mr. Nicklin has served as the Fund's principal manager
since its inception. The portfolio manager for Evergreen American Retirement
Fund is Irene D. O'Neill, C.F.A. Ms. O'Neill has served as the Fund's principal
manager since its inception. Each of the aforementioned individuals (except for
Mr. Colby) has been associated with the Adviser and its predecessor since prior
to 1989.

SUB-ADVISER

The Adviser has entered into sub-advisory agreements with Lieber &
Company with respect to each Fund which provides that Lieber & Company's
research department and staff will furnish the Adviser with information,
investment recommendations, advice and assistance, and will be generally
available for consultation on each Fund's portfolio. Lieber & Company will be
reimbursed by the Adviser in connection with the rendering of services on the
basis of the direct and indirect costs of performing such services. There is no
additional charge to the Funds for the services provided by Lieber & Company. It
is contemplated that Lieber & Company will, to the extent practicable, effect
substantially all of the portfolio transactions for the Funds on the New York
and American Stock Exchanges. The address of Lieber & Company is 2500
Westchester Avenue, Purchase, New York 10577. Lieber & Company is an indirect,
wholly-owned, subsidiary of First Union.

DISTRIBUTION PLANS AND AGREEMENTS

Rule 12b-1 under the Investment Company Act of 1940 permits an
investment company to pay expenses associated with the distribution of its
shares in accordance with a duly adopted plan. Each Fund has adopted for each of
its Class A, Class B and Class C shares a Rule 12b-1 plan (each, a "Plan" or
collectively the "Plans"). Under the Plans, each Fund may incur
distribution-related and shareholder servicing-related expenses which may not
exceed an annual rate of .75 of 1% of the Fund's aggregate average daily net
assets attributable to Class A shares, 1.00% of the Fund's aggregate average
daily net assets attributable to the Class B shares and 1.00% of the Fund's
aggregate average daily net assets attributable to the Class C shares. Payments
with respect to Class A shares under the Plan are currently voluntarily limited
to .25 of 1% of each Fund's aggregate average daily net assets attributable to
Class A shares. The Plans provide that a portion of the fee payable thereunder
in an amount not to exceed .25% of the aggregate average daily net assets of
each Fund attributable to each Class of shares may constitute a service fee to
be used for providing ongoing personal service and/or the maintenance of
shareholder accounts.

Each Fund has also entered into a distribution agreement (each a
"Distribution Agreement" or collectively the "Distribution Agreements") with
Evergreen Funds Distributor, Inc. ("EFD"). Pursuant to the Distribution
Agreements, each Fund will compensate EFD for its services as distributor at a
rate which may not exceed an annual rate of .25 of 1% of a Fund's aggregate
average daily net assets attributable to Class A shares, .75 of 1% of a Fund's
aggregate average daily net assets attributable to the Class B shares and .75 of
1% of a Fund's aggregate average daily net assets attributable to the Class C
shares. The Distribution Agreements provide that EFD will use the distribution
fee received from a Fund for payments (i) to compensate broker-dealers or other
persons for distributing shares of the Funds, including interest and principal
payments made in respect of amounts paid to broker-dealers or other persons that
have been financed (EFD may assign its rights to receive compensation under the
Plans to secure such financings), (ii) to otherwise promote the sale of shares
of the Fund, and (iii) to compensate broker-dealers, depository institutions and
other financial intermediaries for providing administrative, accounting and
other services with respect to the Fund's shareholders. The financing of
payments made by EFD to compensate broker-dealers or other persons for
distributing shares of the Funds may be provided by First Union or its
affiliates. The Funds may also make payments under the Plans, in amounts up to
.25 of 1% of a Fund's aggregate average daily net assets on an annual basis
attributable to Class B and Class C shares, to compensate organizations, which
may include EFD and the Adviser or its affiliates, for personal services
rendered to shareholders and/or the maintenance of shareholder accounts.

The Funds may not pay any distribution or services fees during any
fiscal period in excess of the amounts set forth above. Since EFD's compensation
under the Distribution Agreements is not directly tied to the expenses incurred
by EFD, the amount of compensation received by it under the Distribution
Agreements during any year may be more or less than its actual expenses and may
result in a profit to EFD. Distribution expenses incurred by EFD in one fiscal
year that exceed the level of compensation paid to EFD for that year may be paid
from distribution fees received from a Fund in subsequent fiscal years.

The Plans are in compliance with rules of the National Association of
Securities Dealers, Inc. which effectively limit the annual asset-based sales
charges and service fees that a mutual fund may pay on a class of shares to .75
of 1% and .25 of 1%, respectively, of the average annual net assets attributable
to that class. The rules also limit the aggregate of all front-end, deferred and
asset-based sales charges imposed with respect to a class of shares by a mutual
fund that also charges a service fee to 6.25% of cumulative gross sales of
shares of that class, plus interest at the prime rate plus 1% per annum.

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

PURCHASE AND REDEMPTION OF SHARES
-----------------------------------------------------------

HOW TO BUY SHARES

You can purchase shares of any of the Funds through broker-dealers,
banks or other financial intermediaries, or directly through EFD. The minimum
initial investment is $1,000, which may be waived in certain situations. There
is no minimum for subsequent investments. Investments of $25 or more are allowed
under the systematic investment program. Share certificates are not issued for
Class A, Class B and Class C shares. In states where EFD is not registered as a
broker-dealer shares of a Fund will only be sold through other broker-dealers or
other financial institutions that are registered. See the Share Purchase
Application and Statement of Additional Information for more information. Only
Class A, Class B and Class C shares are offered through this prospectus (See
"Other Classes of Shares").

Class A Shares-Front-End Sales Charge Alternative. You can purchase Class A
shares at net asset value plus an initial sales charge, as follows:

Initial Sales Charge

------------------------ -----------------------------------------------------
as a % of as a % Commission to
the Net of the Dealer/Agent as
Amount of Purchase Amount Invested Offering Price a % of Offering Price
------------------------ -----------------------------------------------------
------------------------ -----------------------------------------------------

------------------------ -----------------------------------------------------
------------------------ -----------------------------------------------------
Less than $100,000 4.99% 4.75% 4.25%
------------------------ -----------------------------------------------------
------------------------ -----------------------------------------------------
$100,000 - $249,999 3.90% 3.75% 3.25%
------------------------ -----------------------------------------------------
------------------------ -----------------------------------------------------
$250,000 - $499,999 3.09% 3.00% 2.50%
------------------------ -----------------------------------------------------
------------------------ -----------------------------------------------------
$500,000 - $999,999 2.04% 2.00% 1.75%
------------------------ -----------------------------------------------------
------------------------ -----------------------------------------------------
$1,000,000 - $2,499,999 1.01% 1.00% 1.00%
------------------------ -----------------------------------------------------
------------------------ -----------------------------------------------------
Over $2,500,000 .25% .25% .25%
------------------------ -----------------------------------------------------

No front-end sales charges are imposed on Class A shares purchased by
institutional investors, which may include bank trust departments and registered
investment advisers, and through qualified and non-qualified employee benefit
and savings plans which make shares of the Funds and the other Evergreen Funds
available to their participants, and which: (a) are employee benefit plans
having at least $1,000,000 in investable assets, or 250 or more eligible
participants; or (b) are non-qualified benefit or profit sharing plans which are
sponsored by an organization which also makes the Evergreen Funds available
through a qualified plan meeting the criteria specified under (a). Payments may
be made to broker-dealers or other financial intermediaries whose employee
benefit plan clients purchase shares under the foregoing front-end sales charge
exemption in an amount equal to .50 of 1% of the net asset value of shares
purchased. These payments are subject to reclaim in the event shares are
redeemed within 12 months after purchase.

When Class A shares are sold, EFD will normally retain a portion of the
applicable sales charge and pay the balance to the broker-dealer or other
financial intermediary through whom the sale was made. EFD may also pay fees to
banks from sales charges for services performed on behalf of the bank's
customers in connection with the purchase of shares of the Funds. In addition to
compensation paid at the time of sale, entities whose clients have purchased
Class A shares may receive a trailing commission equal to .25 of 1% of the
average daily value on an annual basis of Class A shares held by their clients.
Certain purchases of Class A shares may qualify for reduced sales charges in
accordance with a Fund's Combined Purchase Privilege, Cumulative Quantity
Discount, Statement of Intention, Privilege for Certain Retirement Plans and
Reinstatement Privilege. Consult the Share Purchase Application and Statement of
Additional Information for additional information concerning these reduced sales
charges.

Class B Shares-Deferred Sales Charge Alternative. You can purchase Class B
shares at net asset value without an initial sales charge. However, you may pay
a contingent deferred sales charge ("CDSC") if you redeem shares within seven
years after purchase. Shares obtained from dividend or distribution reinvestment
are not subject to the CDSC. The amount of the CDSC (expressed as a percentage
of the lesser of the current net asset value or original cost) will vary
according to the number of years from the purchase of Class B shares as set
forth below.

Year Since Purchase Contingent Deferred Sales Charge
FIRST 5%
SECOND 4%
THIRD and FOURTH 3%
FIFTH 2%
SIXTH and SEVENTH 1%

The CDSC is deducted from the amount of the redemption and is paid to EFD. The
CDSC will be waived on redemptions of shares following the death or disability
of a shareholder, to meet distribution requirements for certain qualified
retirement plans or in the case of certain redemptions made under a Fund's
Systematic Cash Withdrawal Plan. Class B shares are subject to higher
distribution fees than Class A shares for a period of seven years (after which
it is expected that they will convert to Class A shares) . The higher fees mean
a higher expense ratio, so Class B shares pay correspondingly lower dividends
and may have a lower net asset value than Class A shares. See the Statement of
Additional Information for further details.

Class C Shares--Level-Load Alternative. You can purchase Class C shares without
any initial sales charge and, therefore, the full amount of your investment will
be used to purchase Fund shares. However, you will pay a 1.0% CDSC if you redeem
shares during the first year after purchase. Class C shares incur higher
distribution fees than Class A shares but, unlike Class B shares, do not convert
to any other class of shares of the Fund. The higher fees mean a higher expense
ratio, so Class C shares pay correspondingly lower dividends and may have a
lower net asset value than Class A shares. Shares obtained from dividend or
distribution reinvestment are not subject to the CDSC.

No contingent deferred sales charge will be imposed on Class C shares
purchased by institutional investors, and through employee benefit and savings
plans eligible for the exemption from front-end sales charges described under
"Class A Shares-Front End Sales Charge Alternative", above. Broker-dealers and
other financial intermediaries whose clients have purchased Class C shares may
receive a trailing commission equal to .75 of 1% of the average daily value of
such shares on an annual basis held by their clients more than one year from the
date of purchase. The payment of trailing commissions will commence immediately
with respect to shares eligible for exemption from the contingent deferred sales
charge normally applicable to Class C shares.

How the Funds Value Their Shares. The net asset value of each Class of shares of
a Fund is calculated by dividing the value of the amount of the Fund's net
assets attributable to that Class by the number of outstanding shares of that
Class. Shares are valued each day the New York Stock Exchange (the "Exchange")
is open as of the close of regular trading (currently 4:00 p.m. Eastern time).
The securities in a Fund are valued at their current market value determined on
the basis of market quotations or, if such quotations are not readily available,
such other methods as a Fund's Trustees believe would accurately reflect fair
value. Non-dollar denominated securities will be valued as of the close of the
Exchange at the closing price of such securities in their principal trading
market.

General. The decision as to which Class of shares is more beneficial to you
depends on the amount of your investment and the length of time you will hold
it. If you are making a large investment, thus qualifying for a reduced sales
charge, you might consider Class A shares. If you are making a smaller
investment, you might consider Class B shares since 100% of your purchase is
invested immediately and since such shares will convert to Class A shares, which
incur lower ongoing distribution charges, after seven years. If you are unsure
of the time period of your investment, you might consider Class C shares since
there are no initial sales charges and, although there is no conversion feature,
the CDSC only applies to redemptions made during the first year. Consult your
financial intermediary for further information. The compensation received by
dealers and agents may differ depending on whether they sell Class A, Class B or
Class C shares. There is no size limit on purchases of Class A shares.

In addition to the discount or commission paid to dealers, EFD will
from time to time pay to dealers additional cash or other incentives that are
conditioned upon the sale of a specified minimum dollar amount of shares of a
Fund and/or other Evergreen Mutual Funds. Such incentives will take the form of
payment for attendance at seminars, lunches, dinners, sporting events or theater
performances, or payment for travel, lodging and entertainment incurred in
connection with travel by persons associated with a dealer and their immediate
family members to urban or resort locations within or outside the United States.
Such a dealer may elect to receive cash incentives of equivalent amount in lieu
of such payments.

Additional Purchase Information. As a condition of this offering, if a purchase
is canceled due to nonpayment or because an investor's check does not clear, the
investor will be responsible for any loss a Fund or the Adviser incurs. If such
investor is an existing shareholder, a Fund may redeem shares from an investor's
account to reimburse the Fund or the Adviser for any loss. In addition, such
investors may be prohibited or restricted from making further purchases in any
of the Evergreen Funds.

HOW TO REDEEM SHARES

You may "redeem", i.e., sell your shares in a Fund to the Fund on any
day the Exchange is open, either directly or through your financial
intermediary. The price you will receive is the net asset value (less any
applicable CDSC for Class B or Class C shares) next calculated after the Fund
receives your request in proper form. Proceeds generally will be sent to you
within seven days. However, for shares recently purchased by check, a Fund will
not send proceeds until it is reasonably satisfied that the check has been
collected (which may take up to 10 days). Once a redemption request has been
telephoned or mailed, it is irrevocable and may not be modified or canceled.

Redeeming Shares Through Your Financial Intermediary. A Fund must receive
instructions from your financial intermediary before 4:00 p.m. Eastern time for
you to receive that day's net asset value (less any applicable CDSC for Class B
or C shares). Your financial intermediary is responsible for furnishing all
necessary documentation to a Fund and may charge you for this service.

Redeeming Shares Directly by Mail or Telephone. Send a signed letter of
instruction or stock power form to State Street Bank and Trust Company ("State
Street") which is the registrar, transfer agent and dividend-disbursing agent
for each Fund. Stock power forms are available from your financial intermediary,
State Street, and many commercial banks. Additional documentation is required
for the sale of shares by corporations, financial intermediaries, fiduciaries
and surviving joint owners. Signature guarantees are required for all redemption
requests for shares with a value of more than $10,000 or where the redemption
proceeds are to be mailed to an address other than that shown in the account
registration. A signature guarantee must be provided by a bank or trust company
(not a Notary Public), a member firm of a domestic stock exchange or by other
financial institutions whose guarantees are acceptable to State Street.

Shareholders may withdraw amounts of $1,000 or more from their accounts
by calling State Street (800-423-2615) between the hours of 9:00 a.m. and 4:00
p.m. (Eastern time) each business day (i.e., any weekday exclusive of days on
which the New York Stock Exchange or State Street's offices are closed). The New
York Stock Exchange is closed on New Year's Day, Presidents Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Redemption requests made after 4:00 p.m. (Eastern time) will be processed using
the net asset value determined on the next business day. Such redemption
requests must include the shareholder's account name, as registered with a Fund,
and the account number. During periods of drastic economic or market changes,
shareholders may experience difficulty in effecting telephone redemptions.
Shareholders who are unable to reach a Fund or State Street by telephone should
follow the procedures outlined above for redemption by mail.

The telephone redemption service is not made available to shareholders
automatically. Shareholders wishing to use the telephone redemption service must
indicate this on the Share Purchase Application and choose how the redemption
proceeds are to be paid. Redemption proceeds will either (i) be mailed by check
to the shareholder at the address in which the account is registered or (ii) be
wired to an account with the same registration as the shareholder's account in a
Fund at a designated commercial bank. State Street currently deducts a $5 wire
charge from all redemption proceeds wired. This charge is subject to change
without notice. A shareholder who decides later to use this service, or to
change instructions already given, should fill out a Shareholder Services Form
and send it to State Street Bank and Trust Company, P.O. Box 9021, Boston,
Massachusetts 02205-9827, with such shareholder's signature guaranteed by a bank
or trust company (not a Notary Public), a member firm of a domestic stock
exchange or by other financial institutions whose guarantees are acceptable to
State Street. Shareholders should allow approximately ten days for such form to
be processed. The Funds will employ reasonable procedures to verify that
telephone requests are genuine. These procedures include requiring some form of
personal identification prior to acting upon instructions and tape recording of
conversations. If the Fund fails to follow such procedures, it may be liable for
any losses due to unauthorized or fraudulent instructions. The Fund shall not be
liable for following telephone instructions reasonably believed to be genuine.
Also, the Fund reserves the right to refuse a telephone redemption request, if
it is believed advisable to do so. Financial intermediaries may charge a fee for
handling telephonic requests. The telephone redemption option may be suspended
or terminated at any time without notice.

General. The sale of shares is a taxable transaction for Federal tax purposes.
Under unusual circumstances, a Fund may suspend redemptions or postpone payment
for up to seven days or longer, as permitted by Federal securities law. The
Funds reserve the right to close an account that through redemption has remained
below $1,000 for 30 days. Shareholders will receive 60 days' written notice to
increase the account value before the account is closed. The Funds have elected
to be governed by Rule 18f-1 under the Investment Company Act of 1940 pursuant
to which each Fund is obligated to redeem shares solely in cash, up to the
lesser of $250,000 or 1% of a Fund's total net assets during any ninety day
period for any one shareholder. See the Statement of Additional Information for
further details.

EXCHANGE PRIVILEGE

How To Exchange Shares. You may exchange some or all of your shares for shares
of the same Class in the other Evergreen Funds through your financial
intermediary, or by telephone or mail as described below. An exchange which
represents an initial investment in another Evergreen Fund must amount to at
least $1,000. Once an exchange request has been telephoned or mailed, it is
irrevocable and may not be modified or canceled. Exchanges will be made on the
basis of the relative net asset values of the shares exchanged next determined
after an exchange request is received. Exchanges are subject to minimum
investment and suitability requirements.

Each of the Evergreen Funds have different investment objectives and
policies. For complete information, a prospectus of the Fund into which an
exchange will be made should be read prior to the exchange. An exchange is
treated for Federal income tax purposes as a redemption and purchase of shares
and may result in the realization of a capital gain or loss. Shareholders are
limited to five exchanges per calendar year, with a maximum of three per
calendar quarter. This exchange privilege may be modified or discontinued at any
time by the Fund upon sixty days' notice to shareholders and is only available
in states in which shares of the fund being acquired may lawfully be sold.

No CDSC will be imposed in the event Class B or Class C shares are
exchanged for Class B or Class C shares, respectively, of other Evergreen Funds.
If you redeem shares, the CDSC applicable to the Class B or Class C shares of
the Evergreen Mutual Fund originally purchased for cash is applied. Also, Class
B shares will continue to age following an exchange for purposes of conversion
to Class A shares and determining the amount of the applicable CDSC.

Exchanges Through Your Financial Intermediary. A Fund must receive exchange
instructions from your financial intermediary before 4:00 p.m. Eastern time for
you to receive that day's net asset value. Your financial intermediary is
responsible for furnishing all necessary documentation to a Fund and may charge
you for this service.

Exchanges by Telephone and Mail. You may exchange shares with a value of $1,000
or more by telephone by calling State Street (800-423-2615). Exchange requests
made after 4:00 p.m. (Eastern time) will be processed using the net asset value
determined on the next business day. During periods of drastic economic or
market changes, shareholders may experience difficulty in effecting telephone
exchanges. You should follow the procedures outlined below for exchanges by mail
if you are unable to reach State Street by telephone. If you wish to use the
telephone exchange service you should indicate this on the Share Purchase
Application. As noted above, each Fund will employ reasonable procedures to
confirm that instructions for the redemption or exchange of shares communicated
by telephone are genuine. A telephone exchange may be refused by a Fund or State
Street if it is believed advisable to do so. Procedures for exchanging Fund
shares by telephone may be modified or terminated at any time. Written requests
for exchanges should follow the same procedures outlined for written redemption
requests in the section entitled "How to Redeem Shares", however, no signature
guarantee is required..

SHAREHOLDER SERVICES

The Funds offer the following shareholder services. For more
information about these services or your account, contact your financial
intermediary, EFD or the toll-free number for the Funds, 800 807-2940. Some
services are described in more detail in the Share Purchase Application.

Systematic Investment Plan. You may make monthly or quarterly investments
into an existing account automatically in amounts of not less than $25.

Telephone Investment Plan. You may make investments into an existing account
electronically in amounts of not less than $100 or more than $10,000 per
investment. Telephone investment requests received by 3:00 p.m. (Eastern time)
will be credited to a shareholder's account the day the request is received.

Systematic Cash Withdrawal Plan. When an account of $10,000 or more is opened or
when an existing account reaches that size, you may participate in the Fund's
Systematic Cash Withdrawal Plan by filling out the appropriate part of the Share
Purchase Application. Under this plan, you may receive (or designate a third
party to receive) a monthly or quarterly check in a stated amount of not less
than $100. Fund shares will be redeemed as necessary to meet withdrawal
payments. All participants must elect to have their dividends and capital gain
distributions reinvested automatically. Any applicable Class B CDSC will be
waived with respect to redemptions occurring under a Systematic Cash Withdrawal
Plan during a calendar year to the extent that such redemptions do not exceed
10% of (i) the initial value of the account plus (ii) the value, at the time of
purchase, of any subsequent investments.

Investments Through Employee Benefit and Savings Plans. Certain qualified and
non-qualified benefit and savings plans may make shares of the Funds and the
other Evergreen Funds available to their participants. Investments made by such
employee benefit plans may be exempt from front-end sales charges if they meet
the criteria set forth under "Class A Shares-Front End Sales Charge
Alternative". The Adviser may provide compensation to organizations providing
administrative and recordkeeping services to plans which make shares of the
Evergreen Funds available to their participants.

Retirement Plans. Eligible investors may invest in each Fund under the following
prototype retirement plans: (i) Individual Retirement Account (IRA); (ii)
Simplified Employee Pension (SEP) for sole proprietors, partnerships and
corporations; and (iii) Profit-Sharing and Money Purchase Pension Plans for
corporations and their employees.

Automatic Reinvestment Plan. For the convenience of investors, all dividends and
distributions are automatically reinvested in full and fractional shares of the
Fund at the net asset value per share at the close of business on the record
date, unless otherwise requested by a shareholder in writing. If the transfer
agent does not receive a written request for subsequent dividends and/or
distributions to be paid in cash at least three full business days prior to a
given record date, the dividends and/or distributions to be paid to a
shareholder will be reinvested. If you elect to receive dividends and
distributions in cash and the U.S. Postal Service cannot deliver the checks, or
if the checks remain uncashed for six months, the checks will be reinvested into
your account at the then current net asset value.

EFFECT OF BANKING LAWS

The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of their customer. The
Adviser, since it is a subsidiary of First Union National Bank of North Carolina
("FUNB"), is subject to and in compliance with the aforementioned laws and
regulations.

Changes to applicable laws and regulations or future judicial or
administrative decisions could result in the Adviser being prevented from
continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of a
Fund by its customers. If the Adviser were prevented from continuing to provide
the services called for under the investment advisory agreement, it is expected
that the Trustees or Directors would identify, and call upon each Fund's
shareholders to approve, a new investment adviser. If this were to occur, it is
not anticipated that the shareholders of any Fund would suffer any adverse
financial consequences.
--------------------------------------------------------

OTHER INFORMATION
--------------------------------------------------------

DIVIDENDS, DISTRIBUTIONS AND TAXES

It is the policy of each Fund to distribute to shareholders its
investment company taxable and tax-exempt income, if any, quarterly and any net
realized capital gains annually or more frequently as required as a condition of
continued qualification as a regulated investment company by the Internal
Revenue Code of 1986, as amended (the "Code"). Dividends and distributions
generally are taxable in the year in which they are paid, except any dividends
paid in January that were declared in the previous calendar quarter may be
treated as paid in December of the previous year. Income dividends and capital
gain distributions are automatically reinvested in additional shares of the Fund
making the distribution at the net asset value per share at the close of
business on the record date, unless the shareholder has made a written request
for payment in cash.

Each Fund has qualified and intends to continue to qualify to be
treated as a regulated investment company under the Code. While so qualified, it
is expected that each Fund will not be required to pay any Federal income taxes
on that portion of its investment company taxable income and any net realized
capital gains it distributes to shareholders. The Code imposes a 4%
nondeductible excise tax on regulated investment companies, such as the Funds,
to the extent they do not meet certain distribution requirements by the end of
each calendar year. Each Fund anticipates meeting such distribution
requirements. Except as noted below with respect to Evergreen Tax Strategic
Foundation Fund, most shareholders of the Funds normally will have to pay
Federal income taxes and any state or local taxes on the dividends and
distributions they receive from a Fund whether such dividends and distributions
are made in cash or in additional shares. Questions on how any distributions
will be taxed to the investor should be directed to the investor's own tax
adviser.

Dividends, other than capital gain dividends, paid to shareholders of
Evergreen Tax Strategic Foundation Fund out of tax-exempt interest income earned
by the Fund, however, will not be subject to Federal income tax so long as, at
the close of each quarter of its taxable year, at least 50% of the value of the
Fund's total assets are invested in Municipal Securities. Under current tax law,
some individuals and corporations may be subject to the alternative minimum tax
("AMT") on distributions to shareholders out of income from any private activity
bonds subject to AMT in which the Fund invests. Dividends paid to shareholders
out of income from bonds exempt from the AMT will not be subject to the AMT.
However, under current tax law, certain corporate taxpayers may be subject to
the AMT based on their "adjusted current earnings". Dividends paid from both
types of bonds will be included in such corporation's "adjusted current
earnings" for purposes of computation of the AMT. Market discount recognized on
tax exempt bonds purchased after April 30, 1993, will constitute ordinary
income, not income which is exempt from tax. Long-term capital gains
distributions are taxable as long-term capital gains regardless of how long the
investor has held his or her shares and even though received in additional
shares of the Fund.

Under current law, the highest Federal income tax rate applicable to
net long-term capital gains realized by individuals is 28%. The rate applicable
to corporations is 35%. Certain income from a Fund may qualify for a corporate
dividends-received deduction of 70%. Following the end of each calendar year,
every shareholder of the Fund will be sent applicable tax information and
information regarding the dividends and capital gain distributions made during
the calendar year.

For Evergreen Tax Strategic Foundation Fund these statements will set
forth the percentage of income exempt from Federal taxation, and the amount, if
any, subject to Federal taxation. Moreover, to the extent necessary, these
statements will indicate the amount of dividends which are a specific preference
item for purposes of the AMT. The exemption of interest income for Federal
income tax purposes does not necessarily result in exemption under the income or
other tax law of any state or local taxing authority. Investors should consult
their own tax advisors about the status of distributions from the Fund in their
states and localities. The Fund will notify shareholders annually as to the
interest exempt from Federal taxes earned by the Fund with respect to those
states and possessions in which the Fund had investments. Certain of the Funds
may invest in real estate investment trusts which report the tax characteristics
of their distributions to the Fund annually on a calendar year basis. The timing
of such reporting to a Fund may affect the tax characteristics of distributions
by a Fund to shareholders.

A Fund may be subject to foreign withholding taxes which would reduce
the yield on its investments. Tax treaties between certain countries and the
United States may reduce or eliminate such taxes. Shareholders of a Fund who are
subject to United States Federal income tax may be entitled, subject to certain
rules and limitations, to claim a Federal income tax credit or deduction for
foreign income taxes paid by a Fund. See the Statement of Additional Information
for additional details. A Fund's transactions in options, futures and forward
contracts may be subject to special tax rules. These rules can affect the
amount, timing and characteristics of distributions to shareholders.

Each Fund is required by Federal law to withhold 31% of reportable
payments (which may include dividends, capital gain distributions and
redemptions) paid to certain shareholders. In order to avoid this backup
withholding requirement, you must certify on the Share Purchase Application, or
on a separate form supplied by State Street, that your social security or
taxpayer identification number is correct and that you are not currently subject
to backup withholding or are exempt from backup withholding. A shareholder who
acquires Class A shares of a Fund and sells or otherwise disposes of such shares
within 90 days of acquisition may not be allowed to include certain sales
charges incurred in acquiring such shares for purposes of calculating gain and
loss realized upon a sale or exchange of shares of the Fund.

The foregoing discussion of Federal income tax consequences is based on
tax laws and regulations in effect on the date of this Prospectus,and is subject
to change by legislative or administrative action. As the foregoing discussion
is for general information only, you should also review the discussion of
Additional Tax Information contained in the Statement of Additional Information.
In addition, you should consult your own tax adviser as to the tax consequences
of investments in the Funds, including the application of state and local taxes
which may be different from Federal income tax consequences described above.

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

Evergreen Total Return Fund.

Steady income flow has been an important goal since the inception of
the Fund. The Fund continued its $1.08 per share income dividend, $0.27 cents
per quarter. The dividend was maintained for the seventh successive year.

The portfolio of the Evergreen Total Return Fund, although primarily
equities and convertibles, has a high level of interest rate sensitivity. Since
the Fund seeks to pay a substantial dividend, the Adviser looked toward the
utility sector, financial issues, real estate investment trusts, convertible
preferreds and convertible debentures to provide high yields. The sharp downward
swing in the 1994 bond market had a deleterious effect on the interest sensitive
sectors of the equity and convertible markets, particularly impacting utilities,
financial and convertible issues. During the period from March 31, 1994, through
January 31, 1995, the Dow Jones Utility Average was down -6.23%, the New York
Stock Exchange Financial Index was down -3%, the Merrill Lynch Convertible Index
was down -4.85%, and the Wilshire Real Estate Securities Index was down -3.80%.
The performance of the Class Y no-load shares of the Fund for the same period
was up +1.86%. This compares also with the performance of the Wilshire 5000 of
+6.04% and +3.01% for the Lipper Equity Income Average. One of the best groups
in the portfolio was the health sector which rebounded strongly as the Clinton
Health Care Plan ran into trouble. Restructured companies as well as selected
cyclicals, such as banks and thrift issues and chemicals and energy issues, also
helped the portfolio. Five bank and thrift mergers produced gains.

During the year, the portfolio was restructured to reduce the utility
sector especially electric utilities. The Adviser decided to reduce dependence
on this sector as it faces deregulation and resulting competitive pressures.
Currently, the Fund's focus is on special situations resulting from such events
as rate relief or corporate changes. The Adviser also switched into
international issues in order to diversify risk across country lines and to
reduce the portfolio's sensitivity to changes in U.S. interest rates. Toward the
end of the year, the Adviser added to the portfolio's holdings in the retail
sector as it saw a number of these companies at attractive valuation levels.
Many of these issues were in the process of restructuring providing the
possibility of improved margins in the near future.

The Fund's dividend was funded entirely from net investment income. It
did not represent a return of capital. To maintain the dividend rate the Fund
purchased issues which had dividend increases, and frequently repositioned the
portfolio in order to assure participation in large dividends, particularly from
utility stocks or special dividends announced by other types of companies. The
repositioning of the portfolio resulted in higher brokerage commissions.

As noted above, the Fund's investment objective is to achieve a return
consisting of current income and capital appreciation. To the extent that the
Fund sought to maintain a stable dividend during the past fiscal year and
therefore emphasized current income over capital appreciation, the Fund's
overall return may have been reduced.

On January 3, 1995, the Fund introduced a multiple class distribution
structure. The Fund's total return for the period 1/3/95 to 1/31/95 for the A,
B, C and Y Class of Shares was -3.45% (reflects maximum front end sales charge
of 4.75%), -3.53% (reflects maximum contingent deferred sales charge of 5%),
- - -0.41% (reflects 1% contingent deferred sales charge within first year of
purchase), and 1.47% (no-load), respectively.

[CHART]

Evergreen Growth and Income Fund

The total return of the Class Y no-load shares of the Evergreen Growth
and Income Fund was +1.69% for the year ended December 31, 1994. This return
compared favorably with the +1.31% return of the Standard and Poor's 500
Reinvested Index (the "S&P 500 Index") and the -0.94% return from the Lipper
Growth and Income Fund Average. This performance was achieved through the
implementation of the "value timing" strategy which focuses on undervalued
securities. At year-end 1994, the majority of the portfolio was comprised of
out-of-favor growth companies, restructured companies and other companies which
the Fund's Adviser believes are substantially undervalued.

While the domestic economy's rate of growth accelerated dramatically in
1994, the Federal Reserve's more stringent monetary policy resulted in a less
hospitable environment for financial assets. The Fund performed well relative to
its competition and the S&P 500 Index in 1994, but the Fed's tightening of
monetary policy kept the absolute return low, in keeping with the depresssing
influence on financial assets generally. The principal contributors to the
Fund's positive performance during 1994 were the following industries: (1)
business equipment and services which facilitated the productivity enhancing
efforts of their customers; (2) chemical issues which benefitted from the robust
economic growth and previous restructuring efforts that lowered cost structures;
and (3) shares of healthcare companies which continued their rebound from the
market's adverse reaction to the perceived impact of the healthcare program
proposed by the Clinton Administration in 1993. The industry groups which had
the largest negative impact on the Fund's performance were the following: (i)
banks and thrifts, insurance and utilities, all of which suffered from the
Federal Reserve's more stringent monetary policy; (ii) retail which suffered
from lack of pricing flexibility and excess capacity; and (iii) energy which was
negatively impacted by lower prices for natural gas and declining refining
margins.

[CHART]

Evergreen American Retirement Fund

The total return of the Class Y no-load shares of the Evergreen
American Retirement Fund for the fiscal year ended December 31, 1994, was
- - -2.86%. This performance lagged the Wilshire 5000 Index which returned -.06% and
exceeded the Lehman General Bond Mutual Fund Index which returned -3.51% for the
year. The Fund concentrated the equity portion of its portfolio in high
dividend-paying common stocks, convertible bonds and convertible preferreds.
Fixed-income issues were represented by investments in United States Treasury
and Agency obligations and high quality corporate bonds and notes.

Interest rates rose through much of 1994 as the Federal Reserve moved
to slow the rapid and potentially inflationary pace of U.S. economic growth.
Over the course of the year, the Federal Fund's rate was increased from 3.0% to
5.5%, and market forces lifted interest rates on 30 year U.S. Treasury bonds
from 6.35% to 7.88%. This rising interest rate environment was negative for the
bond market and produced mixed results for the stock market. Because of the
Fund's income-oriented style of investing, this period of rising interest rates
negatively affected performance.

The industry groups which had the largest positive impact on the Fund's
performance included the chemicals and metals industries which benefitted from
rising demand and product prices, and bank stocks which rose in response to
stronger loan growth and reduced loan loss provisions. The Fund was negatively
impacted by its holdings in the automotive industry and related suppliers, and
utility stocks which declined in response to higher interest rates. The Fund's
exposure to utilities was reduced in early 1994 to a group of special situation
companies. But even the improving fundamentals of these companies could not
overcome the impact of rising rates. Despite strong earnings for the auto
industry and suppliers, these stocks declined as the market anticipated slower
consumer spending in response to higher rates.

The Fund's practice has been to provide a stable quarterly income
dividend. During the past fiscal year, the Fund distributed a dividend of $0.15
per quarter. These distributions were funded entirely from net investment
income. None represented a return of capital. To maintain the dividend rate the
Fund purchased issues which had dividend increases, and frequently repositioned
the portfolio in order to assure participation in large dividends (particularly
from utility stocks or special dividends announced by other types of companies).
The repositioning of the portfolio resulted in higher brokerage commissions.

As noted above, the Fund's investment objectives in order of priority
are conservation of capital, reasonable income and capital growth. To the extent
that the Fund sought to maintain a stable dividend during the past fiscal year
and therefore emphasized current income over capital growth, the Fund's overall
return may have been reduced. Beginning in the first quarter of 1995, the Fund
changed its dividend strategy. The Fund's income dividend distribution will move
toward a fluctuating dividend and away from the stable dividend pattern of the
past.

[CHART]

Evergreen Small Cap Equity Income Fund.

The Fund's one year performance through December 31, 1994, of -.65% on
the Class Y no-load shares compared favorably with the performance of the NASDAQ
OTC Composite Index (unreinvested) of -3.20% and the Russell 2000 Index of
- - -1.82%. The Fund invests in the shares of higher yielding entrepreneurial
companies of smaller size which the Adviser believes will provide faster growth
than the U.S. economy as a whole. The average market capitalization of the
Fund's portfolio holdings on December 31, 1994, was $160 million.

The Fund's portfolio at year-end was composed of 64.5% common stocks,
4.2% convertible preferreds, 19.5% convertible debentures, and 11.8% in cash
equivalents. Sharp downward swings in the 1994 bond market had a deleterious
effect on the interest sensitive sectors of the equity and convertible market.
The largest sector in the portfolio was in banking where the Adviser believes
there are opportunities for gains from mergers and acquisitions. However, the
short-term performance of banks, finance and other interest sensitive issues was
a drag on the performance during the year. Convertible bonds and preferred
stocks which averaged between a 20-30% weighting in the portfolio were
especially hard hit in this rising interest rate environment. The Adviser
maintained the Fund's holdings because it believed the equities underlying the
convertibles represented strong potential growth values. The positive results in
the portfolio were from gains from takeovers and in health related issues and
restructured companies. The Fund also benefitted from gains in companies that
provide productivity enhancing services in computerization.

[CHART]

Evergreen Foundation Fund.

The total return of the Class Y no-load shares of the Evergreen
Foundation Fund for the almost five years since inception on January 2, 1990 to
December 31, 1994 was +99.57%, which calculated to an average annual compounded
return of +14.83%. This compared favorably with the return of the Standard &
Poor's 500 Reinvested Index (+51.45%) and the Lipper Balanced Fund Average
(+44.03%) for the same time period. For the fiscal year ended 1994, the Fund
produced a total return of -1.12% versus returns of +1.31% for the Standard &
Poor's 500 Reinvested Index and -2.52% for the Lipper Balanced Fund Average.

Asset allocation was a primary determinant of performance. Consistent
with the Fund's investment objectives of reasonable income, conservation of
capital and capital appreciation, the Adviser sought to strategically position
the Fund to maximize opportunities in each asset class. The average allocation
during 1994 was 62% equities, 28% fixed-income and 10% short-term cash
equivalents. The equity portion of the portfolio had a return of +4.91% for
1994. The fixed-income segment of the portfolio, whose primary focus is income
and preservation of capital, was comprised on average of three-quarters
long-term U.S. Government obligations and one-quarter short-term cash
equivalents. It generated a return of -11.06%, which was in line with its
benchmarks, when assessed in terms of credit quality, liquidity and overall
weighted maturity.

The equity segment of the portfolio was largely responsible for the
capital appreciation during 1994. Stock selection focused on issues believed to
be conservatively valued and financially strong. Concentration on health care
issues provided relative outperformance as these issues benefited from renewed
confidence in the growth of pharmaceutical and medical services industries. A
secondary focus on technological issues (semi-conductors and electronic
components) also provided excellent relative performance, as these sectors
benefited from a resurgence in the U.S. economy. The portfolio was negatively
impacted by its investments in real estate companies, utilities and banks.

[CHART]

Evergreen Tax Strategic Foundation Fund

The Fund's total return of its Class Y no-load shares for the fiscal
year ended December 31, 1994, was +3.44%, which compared favorably with the S&P
500 Reinvested Index at +1.31% for the same period. Since inception, the Fund's
return has been +7.12% versus the S & P 500 Reinvested Index at +1.14%.

As described in the Fund's objective, the equity portion of the Fund
focused on specific undervalued sectors (including the health care sector),
producing a return of 12.60% during 1994. And since the Fund's investment policy
seeks to minimize taxable gains, the fixed income portion (which is invested in
municipal bonds) initiated year end swaps during the bond market's decline to
offset gains realized from equity sales. This strategy is central to the concept
of the Fund which is to produce significant after-tax returns to shareholders.
Even had the Adviser not done the swaps, the objective of producing tax
advantaged returns would have been realized since the municipal bond portion of
the Fund yielded high current tax-free income. The fixed income portion of the
portfolio returned -7.20% during the fiscal year, reflecting the dramatic
decline in the fixed income markets. The Federal Reserve tightened short-term
rates several times in 1994 which set off a ripple effect in worldwide bond
markets. In addition, tax loss selling drove prices dramatically lower at year
end. The Lehman Municipal Bond Index was -5.14% for 1994.

[CHART]

GENERAL INFORMATION

Portfolio Transactions. Consistent with the Rules of Fair Practice of the
National Association of Securities Dealers, Inc., and subject to seeking best
price and execution, a Fund may consider sales of its shares as a factor in the
selection of dealers to enter into portfolio transactions with the Fund.

Organization. The Evergreen Total Return Fund is a Massachusetts business trust
organized in 1986, and was originally organized as Maryland corporation in 1978.
Evergreen Growth and Income Fund is a Massachusetts business trust organized in
1986. The Evergreen American Retirement Fund and Evergreen Small Cap Equity
Income Fund are each separate series of The Evergreen American Retirement Trust,
a Massachusetts business trust organized in 1987. Evergreen Foundation Fund and
Evergreen Tax Strategic Foundation Fund are each separate series of the
Evergreen Foundation Trust, a Massachusetts business trust organized in 1989.
The Funds do not intend to hold annual shareholder meetings; shareholder
meetings will be held only when required by applicable law. Shareholders have
available certain procedures for the removal of Trustees.

A shareholder in each class of a Fund will be entitled to his or her
share of all dividends and distributions from a Fund's assets, based upon the
relative value of such shares to those of other Classes of the Fund, and, upon
redeeming shares, will receive the then current net asset value of the Class of
shares of the Fund represented by the redeemed shares less any applicable CDSC.
Each trust named above is empowered to establish, without shareholder approval,
additional investment series, which may have different investment objectives,
and additional classes of shares for any existing or future series. If an
additional series or class were established in a Fund, each share of the series
or class would normally be entitled to one vote for all purposes. Generally,
shares of each series and class would vote together as a single class on
matters, such as the election of Trustees, that affect each series and class in
substantially the same manner. Class A, B, C and Y shares have identical voting,
dividend, liquidation and other rights, except that each class bears, to the
extent applicable, its own distribution and transfer agency expenses as well as
any other expenses applicable only to a specific class. Each class of shares
votes separately with respect to Rule 12b-1 distribution plans and other matters
for which separate class voting is appropriate under applicable law. Shares are
entitled to dividends as determined by the Trustees and, in liquidation of a
Fund, are entitled to receive the net assets of the Fund.

Registrar, Transfer Agent and Dividend-Disbursing Agent. State Street Bank and
Trust Company, P.O. Box 9021, Boston, Massachusetts 02205-9827 acts as each
Fund's registrar, transfer agent and dividend-disbursing agent for a fee based
upon the number of shareholder accounts maintained for the Funds. The transfer
agency fee with respect to the Class B shares will be higher than the transfer
agency fee with respect to the Class A shares or Class C shares.

Principal Underwriter. EFD, a wholly-owned subsidiary of Furman Selz
Incorporated, located at 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. EFD provides personnel to serve as officers
of the Funds.
The salaries and other expenses related to providing such personnel are borne by
EFD.

Other Classes of Shares. Each Fund currently offers four classes of shares,
Class A, Class B, Class C and Class Y, and may in the future offer additional
classes. Class Y shares are not offered by this Prospectus and are only
available to (i) all shareholders of record in one or more of the Evergreen
Funds as of December 30, 1994, (ii) certain institutional investors and (iii)
investment advisory clients of the Adviser and its affiliates. The dividends
payable with respect to Class A, Class B and Class C shares will be less than
those payable with respect to Class Y shares due to the distribution and
distribution related expenses borne by Class A, Class B and Class C shares and
the fact that such expenses are not borne by Class Y shares.

Performance Information. From time to time, the Funds may quote their "total
return" or "yield" for a specified period in advertisements, reports or other
communications to shareholders, Total return and yield are computed separately
for Class A, Class B and Class C shares. A Fund's total return for each such
period is computed by finding, through the use of a formula prescribed by the
Securities and Exchange Commission, the average annual compounded rate of return
over the period that would equate an assumed initial amount invested to the
value of the investment at the end of the period. For purposes of computing
total return, dividends and capital gains distributions paid on shares of a Fund
are assumed to have been reinvested when paid and the maximum sales charges
applicable to purchases of a Fund's shares are assumed to have been paid. Yield
is a way of showing the rate of income the Fund earns on its investments as a
percentage of the Fund's share price. The Fund's yield is calculated according
to accounting methods that are standardized by the SEC for all stock and bond
funds. Because yield accounting methods differ from the method used for other
accounting purposes, the Fund's yield may not equal its distribution rate, the
income paid to your account or the net investment income reported in the Fund's
financial statements. To calculate yield, the Fund takes the interest income it
earned from its portfolio of investments (as defined by the SEC formula) for a
30-day period (net of expenses), divides it by the average number of shares
entitled to receive dividends, and expresses the result as an annualized
percentage rate based on the Fund's share price at the end of the 30-day period.
This yield does not reflect gains or losses from selling securities

Performance data for each class of shares will be included in any
advertisement or sales literature using performance data of a Fund. These
advertisements may quote performance rankings or ratings of a Fund by financial
publications or independent organizations such as Lipper Analytical Services,
Inc. and Morningstar, Inc. or compare a Fund's performance to various indices.
The Fund may also advertise in items of sales literature an "actual distribution
rate" which is computed by dividing the total ordinary income distributed (which
may include the excess of short-term capital gains over losses) to shareholders
for the latest twelve month period by the maximum public offering price per
share on the last day of the period. Investors should be aware that past
performance may not be reflective of future results.

Liability Under Massachusetts Law. Under Massachusetts law, Trustees and
shareholders of a business trust may, in certain circumstances, be held
personally liable for its obligations. The Declarations of Trust under which the
Funds operate provide that no Trustee or shareholder will be personally liable
for the obligations of the Trust and that every written contract made by the
Trust contain a provision to that effect. If any Trustee or shareholder were
required to pay any liability of the Trust, that person would be entitled to
reimbursement from the general assets of the Trust.

Additional Information. This Prospectus and the Statement of Additional
Information, which has been incorporated by reference herein, do not contain all
the information set forth in the Registration Statements filed by the Funds with
the Commission under the Securities Act. Copies of the Registration Statements
may be obtained at a reasonable charge from the Commission or may be examined,
without charge, at the offices of the Commission in Washington, D.C.

--------------------------------------------------------------
PROSPECTUS May 1, 1995

Evergreen Growth and Income Funds
--------------------------------------------------------

CLASS Y SHARES
-------------------------

EVERGREEN TOTAL RETURN FUND

EVERGREEN GROWTH AND INCOME FUND

EVERGREEN AMERICAN RETIREMENT FUND

EVERGREEN SMALL CAP EQUITY INCOME FUND

EVERGREEN FOUNDATION FUND

EVERGREEN TAX STRATEGIC FOUNDATION FUND

The Evergreen Growth and Income Funds (the "Funds") are designed to
provide investors with a selection of investment alternatives which seek to
provide capital growth, income and diversification. This Prospectus provides
information regarding the Class Y shares offered by the Funds. Each Fund is, or
is a series of, an open-end, diversified, management investment company. This
Prospectus sets forth concise information about the Funds that a prospective
investor should know before investing. The address of the Funds is 2500
Westchester Avenue, Purchase, New York 10577.

Keep This Prospectus for Future Reference

<PAGE>

TABLE OF CONTENTS

PURCHASE AND REDEMPTION OF SHARES
How To Buy Shares 22
How To Redeem Shares 23
Exchange Privilege 24
Shareholder Services 25
Effect Of Banking Laws 25
OTHER INFORMATION
Dividends, Distributions And Taxes 26
Management's Discussion of Fund
Performance 27
General Information 31

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

OVERVIEW OF THE FUNDS
---------------------------------------------------------------------

The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Funds" and "Management of the Funds".

There is no assurance the investment objective of any Fund will be
achieved.

<PAGE>

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

EXPENSE INFORMATION
---------------------------------------------------------

The table set forth below summarizes the shareholder transaction costs
associated with an investment in the Class Y Shares of a Fund. For further
information see "Purchases and Redemption of Shares".

SHAREHOLDER TRANSACTION EXPENSES Class Y Shares
Maximum Sales Charge Imposed on Purchases (as a % of None
offering price)

Sales Charge on Dividend Reinvestments None

Contingent Deferred Sales Charge None

Redemption Fee None
Exchange Fee (only applies after 4 exchanges per $5.00
calendar year)

The following tables show for each Fund the annual operating expenses
(as a percentage of average net assets) attributable to Class Y Shares, together
with examples of the cumulative effect of such expenses on a hypothetical $1,000
investment for the periods specified assuming (i) a 5% annual return and (ii)
redemption at the end of each period.

Evergreen Total Return Fund

Annual Operating Expenses Example
Class Y Class Y
Advisory Fees 1.00% After 1 Year $ 13
12b-1 Fees None After 3 Years $ 39
Other Expenses .24% After 5 Years $ 68
-- ----
Total 1.24% After 10 Years $150
-----

Evergreen Growth and Income Fund

Annual Operating Expenses Example
Class Y Class Y
Advisory Fees 1.00% After 1 Year $ 14
12b-1 Fees None After 3 Years $ 42
Other Expenses .33% After 5 Years $ 73
-- ----
Total 1.33% After 10 Years $160
-----

Evergreen American Retirement Fund

Annual Operating Expenses Example
Class Y Class Y
Advisory Fees .75% After 1 Year $ 13
12b-1 Fees None After 3 Years $ 41
Other Expenses .53% After 5 Years $ 70
-- ----
Total 1.28% After 10 Years $155
-----

Evergreen Small Cap Equity Income Fund

Annual Operating Expenses Example
Class Y Class Y
Advisory Fees 1.00% After 1 Year $ 15
12b-1 Fees None After 3 Years $ 47
Other Expenses After 5 Years $ 82
(after .50% After 10 Years $179
-- ----
reimbursement)*
Total 1.50%

<PAGE>

Evergreen Foundation Fund

Annual Operating Expenses Example
Class Y Class Y
Advisory Fees .875% After 1 Year $ 12
12b-1 Fees None After 3 Years $ 36
Other Expenses .265% After 5 Years $ 63
--------
Total 1.140% After 10 Years $139
------

Evergreen Tax Strategic Foundation Fund

Annual Operating Expenses Example
Class Y Class Y
Advisory Fees After 1 Year $ 15
.875%
12b-1 Fees None After 3 Years $ 47
Other Expenses After 5 Years $ 82
(after After 10 Years $179
----
reimbursement)* .625%
-----
Total 1.500%

*Reflects agreements by the Adviser to limit aggregate operating expenses
(including the Adviser's fee, but excluding interest, taxes, brokerage
commissions, Rule 12b-1 distribution fees and shareholder servicing fees, and
extraordinary expenses) of Evergreen Small Cap Equity Income Fund and Evergreen
Tax Strategic Foundation Fund to 1.50% of average net assets until net assets
reach $15 million. Absent such agreements, the annual operating expenses for
each Fund would be 2.50% of average net assets.

The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses that an investor in the Class Y
Shares of the Funds will bear directly or indirectly. The amounts set forth
under "Other Expenses", as well as the amounts set forth in the example, are
estimated amounts for the current fiscal year based on historical experience for
the fiscal period ended December 31, 1994 in the case of Funds other than
Evergreen Total Return Fund and January 31, 1995 in the case of Evergreen Total
Return Fund. THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR INVESTMENT RETURN. ACTUAL EXPENSES OR RETURN MAY BE GREATER
OR LESS THAN THOSE SHOWN. For a more complete description of the various costs
and expenses borne by the Funds see "Management of the Funds".