EVERGREEN AMERICAN RETIREMENT TRUST, 485APOS, 1995-07-06

EVERGREEN AMERICAN RETIREMENT TRUST
485APOS, 1995-07-06

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Registration No.33-19317
- --------------------------------------------------------------------------------

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. 12 /x/

and/or

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

Amendment No. 13 /x/
(Check appropriate box or boxes)
--------------------

THE EVERGREEN AMERICAN RETIREMENT TRUST
(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)
/ / Immediately upon filing pursuant to paragraph (b) or
/ / on (date) pursuant to paragraph (b) or
/x/ 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.

<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.

******************************************************************************

PROSPECTUS July 7, 1995
EVERGREEN(SM) GROWTH AND INCOME FUNDS (Evergreen Logo appears here)
EVERGREEN BALANCED FUND
EVERGREEN GROWTH AND INCOME FUND
EVERGREEN VALUE FUND
EVERGREEN AMERICAN RETIREMENT FUND
EVERGREEN FOUNDATION FUND
EVERGREEN TOTAL RETURN FUND
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
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 certain
other funds in the Evergreen Group of mutual funds dated July 7, 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
EVERGREEN(SM) is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.

<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS 2
EXPENSE INFORMATION 3
FINANCIAL HIGHLIGHTS 5
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies 14
Investment Practices and Restrictions 18
MANAGEMENT OF THE FUNDS
Investment Advisers 23
Sub-Adviser 24
Distribution Plans and Agreements 25
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 26
How to Redeem Shares 28
Exchange Privilege 29
Shareholder Services 30
Effect of Banking Laws 30
OTHER INFORMATION
Dividends, Distributions and Taxes 31
Management's Discussion of Fund Performance 32
General Information 35
</TABLE>

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 EVERGREEN GROWTH AND INCOME FUND, EVERGREEN
AMERICAN RETIREMENT FUND, EVERGREEN FOUNDATION FUND, and EVERGREEN TOTAL RETURN
FUND is Evergreen Asset Management Corp. ("Evergreen Asset") which, with its
predecessors, has served as an investment adviser to the Evergreen Funds since
1971. Evergreen Asset 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 Capital Management Group of FUNB ("CMG") serves as investment adviser to
EVERGREEN BALANCED FUND and EVERGREEN VALUE FUND.
EVERGREEN BALANCED FUND (formerly First Union Balanced Portfolio) seeks
to produce long-term total return through capital appreciation, dividends, and
interest income.
EVERGREEN GROWTH AND INCOME 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.
EVERGREEN VALUE FUND (formerly First Union Value Portfolio) seeks
long-term capital growth, with current income as a secondary objective.
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 U.S. government,
its agencies or instrumentalities.
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 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.
THERE IS NO ASSURANCE THAT THE INVESTMENT OBJECTIVE OF ANY FUND WILL BE
ACHIEVED.
2

<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 the
Fund. For further information see "Purchase and Redemption of Fund Shares" and
"General Information -- Other Classes of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES Class A Shares Class B Shares Class C Shares
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases 4.75% None None
(as a % of offering price)
Sales Charge on Dividend Reinvestments None None None
Contingent Deferred Sales Charge (as a % of None 5% during the first year, 4% during the 1% during the
original purchase price or redemption second year, 3% during the third and fourth first year and
proceeds, whichever is lower) years, 2% during the fifth year, 1% during 0% thereafter
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 estimated 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 BALANCED FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of no
ANNUAL OPERATING EXPENSES Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees .50% .50% .50% After 1 Year $ 56 $ 66 $ 26 $ 16
Administrative Fees .06% .06% .06% After 3 Years $ 74 $ 81 $ 51 $ 81
12b-1 Fees* .25% .75% .75% After 5 Years $ 93 $ 108 $ 88 $ 88
Shareholder Service Fees -- .25% .25% After 10 Years $ 150 $ 163 $ 192 $ 163
Other Expenses .06% .06% .06%
Total .87% 1.62% 1.62%
<CAPTION>
Class C
<S> <C><C>
Advisory Fees $ 16
Administrative Fees $ 51
12b-1 Fees* $ 88
Shareholder Service Fees $ 192
Other Expenses
Total
</TABLE>

EVERGREEN GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of no
ANNUAL OPERATING EXPENSES Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees 1.00% 1.00% 1.00% After 1 Year $ 63 $ 74 $ 34 $ 24
12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 95 $ 103 $ 73 $ 73
Other Expenses .33% .33% .33% After 5 Years $ 129 $ 145 $ 125 $ 125
Total 1.58% 2.33% 2.33% After 10 Years $ 226 $ 239 $ 267 $ 239
<CAPTION>
Class C
<S> <C><C>
Advisory Fees $ 24
12b-1 Fees* $ 73
Other Expenses $ 125
Total $ 267
</TABLE>

EVERGREEN VALUE FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of no
ANNUAL OPERATING EXPENSES Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees .50% .50% .50% After 1 Year $ 56 $ 67 $ 27 $ 17
Administrative Fees .06% .06% .06% After 3 Years $ 75 $ 82 $ 52 $ 52
12b-1 Fees* .25% .75% .75% After 5 Years $ 95 $ 110 $ 90 $ 90
Shareholder Service Fees -- .25% .25% After 10 Years $ 154 $ 167 $ 197 $ 167
Other Expenses .10% .10% .10%
Total .91% 1.66% 1.66%
<CAPTION>
Class C
<S> <C><C>
Advisory Fees $ 17
Administrative Fees $ 52
12b-1 Fees* $ 90
Shareholder Service Fees $ 197
Other Expenses
Total
</TABLE>

<PAGE>
EVERGREEN AMERICAN RETIREMENT FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of No
ANNUAL OPERATING EXPENSES Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees .75% .75% .75% After 1 Year $ 62 $ 73 $ 33 $ 23
12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 94 $ 101 $ 71 $ 71
Other Expenses .53% .53% .53% After 5 Years $ 127 $ 142 $ 122 $ 122
Total 1.53% 2.28% 2.28% After 10 Years $ 221 $ 234 $ 262 $ 234
<CAPTION>
Class C
<S> <C><C>
Advisory Fees $ 23
12b-1 Fees* $ 71
Other Expenses $ 122
Total $ 262
</TABLE>

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

EVERGREEN TOTAL RETURN FUND
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of No
ANNUAL OPERATING EXPENSES Period Redemption
Class B Class C Class A Class B Class C Class B
Class A
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees 1.00% 1.00% 1.00% After 1 Year $ 62 $ 73 $ 33 $ 23
12b-1 Fees* .25% 1.00% 1.00% After 3 Years $ 92 $ 100 $ 70 $ 70
Other Expenses .24% .24% .24% After 5 Years $ 125 $ 140 $ 120 $ 120
Total 1.49% 2.24% 2.24% After 10 Years $ 217 $ 230 $ 257 $ 230
<CAPTION>
Class C
<S> <C><C>
Advisory Fees $ 23
12b-1 Fees* $ 70
Other Expenses $ 120
Total $ 257
</TABLE>

*Class A Shares can pay up to .75 of 1% of average net assets as a 12b-1 Fee.
For the forseeable future, the Class A 12b-1 Fees will be limited to .25 of 1%
of average net assets. For Class B and Class C Shares of EVERGREEN GROWTH AND
INCOME FUND, EVERGREEN AMERICAN RETIREMENT FUND, EVERGREEN FOUNDATION FUND and
EVERGREEN TOTAL RETURN FUND, a portion of the 12b-1 Fees equivalent to .25 of 1%
of average net assets will be shareholder servicing-related.
Distribution-related 12b-1 Fees will be limited to .75 of 1% of average net
assets as permitted under the rules of the National Association of Securities
Dealers, Inc.
From time to time, each Fund's investment adviser may, at its
descretion, reduce or waive its fees or reimburse the Funds for certain of their
expenses in order to reduce their expense ratios. Each Fund's investment adviser
may cease these waivers and reimbursements at any time.
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 for the most recent fiscal period. Such expenses have been restated
to reflect current fee arrangements and in the case of Funds that did not offer
all of the above-referenced Classes of shares during such periods, the amounts
set forth in the tables are based on the expenses incurred by the Classes which
were offered. THE 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 charges permitted under the rules
of the National Association of Securities Dealers, Inc.
4

<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund if shorter for EVERGREEN BALANCED FUND and EVERGREEN VALUE FUND has
been audited by KPMG Peat Marwick LLP, each Fund's independent auditors, for
EVERGREEN FOUNDATION FUND has been audited by Price Waterhouse LLP, the Fund's
independent auditors and for EVERGREEN AMERICAN RETIREMENT FUND, EVERGREEN
GROWTH AND INCOME FUND and EVERGREEN TOTAL RETURN FUND has been audited by Ernst
& Young LLP, each Fund's independent auditors. A report of KPMG Peat Marwick
LLP, Price Waterhouse LLP, or Ernst & Young LLP, as the case may be, on the
audited information with respect to each Fund is incorporated by reference in
the Fund's Statement of Additional Information. The following information for
each Fund should be read in conjunction with the financial statements and
related notes which are incorporated by reference in the Fund's Statement of
Additional Information.
No financial highlights are shown for Class A, B or C Shares of EVERGREEN
GROWTH and INCOME FUND, EVERGREEN AMERICAN RETIREMENT FUND or EVERGREEN
FOUNDATION FUND, since these classes did not have any operations prior to
December 31, 1994.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN BALANCED FUND -- CLASS A, B, C AND Y SHARES
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C CLASS Y SHARES
CLASS B SHARES SHARES
JUNE 10, JANUARY 26, SEPTEMBER 2,
1991* 1993* 1994*
YEAR ENDED THROUGH YEAR ENDED THROUGH THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, YEAR ENDED DECEMBER 31,
1994 1993 1992 1991 1994 1993 1994 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value,
beginning of
period............. $12.07 $11.41 $11.02 $10.00 $12.08 $11.54 $12.00 $12.07 $11.41 $11.02
Income (loss) from
investment
operations:
Net investment
income............. .43 .42 .42 .30 .36 .34 .18 .46 .45 .46
Net realized and
unrealized gain
(loss) on
investments........ (.71) .75 .43 1.08 (.71) .65 (.61) (.71) .75 .42
Total from
investment
operations....... (.28) 1.17 .85 1.38 (.35) .99 (.43) (.25) 1.20 .88
Less distributions
to shareholders
from:
Net investment
income............. (.43) (.42) (.42) (.35) (.36) (.34) (.21) (.46) (.45) (.45)
Net realized
gains.............. (.19) (.09) (.04) (.01) (.19) (.09) (.19) (.19) (.09) (.04)
In excess of net
investment
income............. -- -- -- -- -- (.02)(a) -- -- -- --
Total
distributions.... (.62) (.51) (.46) (.36) (.55) (.45) (.40) (.65) (.54) (.49)
Net asset value, end
of period.......... $11.17 $12.07 $11.41 $11.02 $11.18 $12.08 $11.17 $11.17 $12.07 $11.41
TOTAL RETURN+....... (2.4%) 10.4% 7.9% 11.8% (3.0%) 8.7% (3.6%) (2.2%) 10.7% 8.2%
RATIOS &
SUPPLEMENTAL
DATA
Net assets, end of
period
(000's omitted).... $41,010 $35,032 $17,408 $334 $100,052 $ 65,475 $195 $778,657 $760,147 $520,232
Ratios to average
net assets:
Expenses........... .89% .91% .91% .92%++ 1.48% 1.41%++ 1.64%++ .64% .66% .66%
Net investment
income............. 3.69% 3.61% 3.93% 4.38%++ 3.12% 3.09%++ 3.23%++ 3.93% 3.86% 4.20%
Portfolio turnover
rate............... 35% 19% 12% 19% 35% 19% 35% 35% 19% 12%
<CAPTION>

APRIL 1,
1991*
THROUGH
DECEMBER 31,
1991
<S> <C>
PER SHARE DATA
Net asset value,
beginning of
period............. $10.00
Income (loss) from
investment
operations:
Net investment
income............. .36
Net realized and
unrealized gain
(loss) on
investments........ 1.03
Total from
investment
operations....... 1.39
Less distributions
to shareholders
from:
Net investment
income............. (.36)
Net realized
gains.............. (.01)
In excess of net
investment
income............. --
Total
distributions.... (.37)
Net asset value, end
of period.......... $11.02
TOTAL RETURN+....... 15.0%
RATIOS &
SUPPLEMENTAL
DATA
Net assets, end of
period
(000's omitted).... $247,472
Ratios to average
net assets:
Expenses........... .68%++
Net investment
income............. 4.86%++
Portfolio turnover
rate............... 19%
</TABLE>

* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized.
(a) Distributions in excess of net investment income for the year ended December
31, 1993 were the result of certain book and tax differences. These
differences did not represent a return of capital for federal income tax
purposes for the year ended December 31, 1993.
5

<PAGE>
EVERGREEN GROWTH AND INCOME FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993 1992 1991 1990 1989 1988**
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning
of period................. $15.41 $14.18 $12.99 $10.72 $12.03 $10.62 $9.38
Income (loss) from
investment operations:
Net investment income....... .14 .14 .15 .19 .30 .52 .19
Net realized and unrealized
gain (loss) on
investments............... .12 1.91 1.65 2.58 (.84) 2.17 2.10
Total from investment
operations.............. .26 2.05 1.80 2.77 (.54) 2.69 2.29
Less distributions to
shareholders from:
Net investment income....... (.14) (.14) (.15) (.19) (.30) (.52) (.19)
Net realized gains.......... (1.01) (.68) (.46) (.31) (.47) (.76) (.86)
Total distributions....... (1.15) (.82) (.61) (.50) (.77) (1.28) (1.05)
Net asset value, end of
period.................... $14.52 $15.41 $14.18 $12.99 $10.72 $12.03 $10.62
TOTAL RETURN+............... 1.7% 14.4% 13.8% 25.8% (4.5%) 25.4% 24.6%
RATIOS &
SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)........... $73,457 $77,062 $63,841 $47,763 $36,222 $31,540 $24,399
Ratios to average net
assets:
Expenses.................. 1.33% 1.26% 1.33% 1.41% 1.50% 1.54% 1.56%
Net investment income..... .96% .99% 1.18% 1.55% 2.62% 4.13% 1.70%
Portfolio turnover rate..... 29% 28% 30% 23% 41% 53% 41%
<CAPTION>
OCTOBER 15,
1986* THROUGH
DECEMBER 31,
1987** 1986**
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning
of period................. $10.05 $10.00
Income (loss) from
investment operations:
Net investment income....... .20 .07
Net realized and unrealized
gain (loss) on
investments............... (.63) (.02)
Total from investment
operations.............. (.43) .05
Less distributions to
shareholders from:
Net investment income....... (.24) --
Net realized gains.......... -- --
Total distributions....... (.24) --
Net asset value, end of
period.................... $9.38 $10.05
TOTAL RETURN+............... (4.3%) .5%
RATIOS &
SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)........... $21,471 $20,696
Ratios to average net
assets:
Expenses.................. 1.76% 1.73%++
Net investment income..... 1.90% 3.23%++
Portfolio turnover rate..... 48% 4%
</TABLE>

* Commencement of operations.
** Net investment income is based on the average monthly shares outstanding for
the periods indicated.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized.
++ Annualized.
6

<PAGE>
EVERGREEN VALUE FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
JANUARY 3, 1991*
THROUGH
YEAR ENDED DECEMBER 31, DECEMBER 31,
1994 1993 1992 1991
<S> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period...................................... $17.63 $17.11 $17.08 $14.28
Income from investment operations:
Net investment income..................................................... .56 .52 .49 .47
Net realized and unrealized gain (loss) on investments.................... (.20) 1.12 .90 3.53
Total from investment operations........................................ .36 1.64 1.39 4.00
Less distributions to shareholders from:
Net investment income..................................................... (.56) (.52) (.49) (.47)
Net realized gains........................................................ (.82) (.58) (.87) (.73)
In excess of net investment income........................................ -- (.02)(b) -- --
Total distributions..................................................... (1.38) (1.12) (1.36) (1.20)
Net asset value, end of period............................................ $16.61 $17.63 $17.11 $17.08
TOTAL RETURN+............................................................. 2.1% 9.7% 8.3% 25.4%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................................. $507,028 $463,087 $326,154 $271,391
Ratios to average net assets:
Expenses................................................................ .68% .65% .68%(a) .69%++(a)
Net investment income................................................... 3.21% 2.98% 2.90%(a) 3.04%++(a)
Portfolio turnover rate................................................... 70% 46% 56% 69%
</TABLE>

* Commencement of class operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
JANUARY 3, 1991
YEAR ENDED THROUGH
DECEMBER 31, 1992 DECEMBER 31, 1991
<S> <C> <C>
Expenses.................................................. .69% .77%
Net investment income..................................... 2.89% 2.96%
</TABLE>

(b) Distributions in excess of net investment income for the period ended
December 31, 1993 were the result of certain book and tax timing
differences. These distributions did not represent a return of capital for
federal income tax purposes for the year ended December 31, 1993.
7

<PAGE>
EVERGREEN VALUE FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
NINE
MONTHS
ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31, YEAR ENDED MARCH 31,
1994 1993 1992 1991 1990* 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period.......................... $17.63 $17.11 $17.08 $14.61 $15.12 $14.45 $12.83 $14.66
Income (loss) from investment
operations......................
Net investment income............ .52 .47 .44 .46 .36 .54 .36 .26
Net realized and unrealized gain
(loss) on investments........... (.20) 1.10 .89 3.17 (.44) 1.70 2.11 (1.30)
Total from investment
operations.................... .32 1.57 1.33 3.63 (.08) 2.24 2.47 (1.04)
Less distributions to
shareholders from:
Net investment income............ (.51) (.47) (.43) (.43) (.36) (.57) (.38) (.26)
Net realized gains............... (.82) (.58) (.87) (.73) (.02) (1.00) (.47) (.53)
In excess of net investment
income.......................... -- -- -- -- (.05)(c) -- -- --
Total distributions............. (1.33) (1.05) (1.30) (1.16) (.43) (1.57) (.85) (.79)
Net asset value, end of
period.......................... $16.62 $17.63 $17.11 $17.08 $14.61 $15.12 $14.45 $12.83
TOTAL RETURN+.................... 1.9% 9.3% 8.0% 25.1% (.5%) 15.5% 19.7% (7.1%)
RATIOS &
SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)................. $188,807 $189,983 $169,310 $135,565 $104,637 $95,995 $83,121 $21,914
Ratios to average net assets:
Expenses........................ .93% .99% 1.01%(a) .96%(a) 1.39%++ 1.55% 1.71% 1.74%
Net investment
income........................ 2.96% 2.63% 2.37%(a) 2.78%(a) 3.28%++ 3.42% 2.72% 1.92%
Portfolio turnover
rate (b)........................ 70% 46% 56% 69% 13% 11% 24% 24%
<CAPTION>

1987 1986
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period.......................... $12.35 $10.04
Income (loss) from investment
operations......................
Net investment income............ .15 .19
Net realized and unrealized gain
(loss) on investments........... 2.38 2.32
Total from investment
operations.................... 2.53 2.51
Less distributions to
shareholders from:
Net investment income............ (.13) (.20)
Net realized gains............... (.09) --
In excess of net investment
income.......................... -- --
Total distributions............. (.22) (.20)
Net asset value, end of
period.......................... $14.66 $12.35
TOTAL RETURN+.................... 20.8% 25.3%
RATIOS &
SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)................. $23,221 $5,595
Ratios to average net assets:
Expenses........................ 1.97% 2.00%
Net investment
income........................ 1.41% 2.34%
Portfolio turnover
rate (b)........................ 20% 20%
</TABLE>

* The Fund changed its fiscal year end to December 31.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1992 1991
<S> <C> <C>
Expenses........................................................................... 1.02% 1.05%
Net investment income.............................................................. 2.36% 2.69%
</TABLE>

(b) Portfolio turnover rate for periods ending on or after March 31, 1986
include certain U.S. government obligations.
(c) Distributions in excess of net investment income for the period ended
December 31, 1990 were a result of certain book and tax timing differences.
These distributions did not represent a return of capital for federal
income tax purposes for the year ended December 31, 1990.
8

<PAGE>
EVERGREEN VALUE FUND -- CLASS B AND C SHARES
<TABLE>
<CAPTION>
CLASS C
CLASS B SHARES SHARES
FEBRUARY 2, SEPTEMBER 2,
1993* 1994*
YEAR ENDED THROUGH THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1994
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.......................................... $17.63 $17.24 $18.28
Income (loss) from investment operations:
Net investment income......................................................... .42 .35 .19
Net realized and unrealized gain (loss) on investments........................ (.20) 1.01 (.81)
Total from investment operations............................................ .22 1.36 (.62)
Less distributions to shareholders from:
Net investment income......................................................... (.41) (.35) (.19)
Net realized gains............................................................ (.82) (.58) (.82)
In excess of net investment income............................................ -- (.04)(a) (.04)(a)
Total distributions......................................................... (1.23) (.97) (1.05)
Net asset value, end of period................................................ $16.62 $17.63 $16.61
TOTAL RETURN+................................................................. 1.3% 8.0% (3.4%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)..................................... $104,297 $ 59,953 $485
Ratios to average net assets:
Expenses.................................................................... 1.53% 1.48%++ 1.68%++
Net investment income....................................................... 2.36% 2.09%++ 2.16%++
Portfolio turnover rate....................................................... 70% 46% 70%
</TABLE>

* Commencement of class operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Contingent deferred sales charge is not
reflected.
++ Annualized.
(a) Distributions in excess of net investment income, for the Class B Shares,
for the period ended December 31, 1993 and for the Class C Shares, for the
period ended December 31, 1994, were the result of certain book and tax
timing differences. These distributions did not represent a return of
capital for federal income tax purposes for the year ended December 31, 1993
and December 31, 1994.
9

<PAGE>
EVERGREEN AMERICAN RETIREMENT FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period........... $11.60 $10.95 $10.52 $9.59 $10.41 $10.09
Income (loss) from investment operations:
Net investment income.......................... .60 .56 .66 .60 .60 .57
Net realized and unrealized gain (loss) on
investments.................................. (.93) .96 .55 1.15 (.66) .76
Total from investment operations............. (.33) 1.52 1.21 1.75 (.06) 1.33
Less distributions to shareholders from:
Net investment income.......................... (.60) (.60) (.61) (.60) (.60) ) (.59
Net realized gains............................. -- (.24) (.17) (.22) (.16) ) (.42
In excess of net realized gains................ -- (.03)(b) -- -- -- --
Total distributions.......................... (.60) (.87) (.78) (.82) (.76) )(1.01
Net asset value, end of period................. $10.67 $11.60 $10.95 $10.52 $9.59 $10.41
TOTAL RETURN+.................................. (2.9%) 14.1% 11.8% 18.8% (.5%) 13.4%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)...... $37,176 $37,336 $23,781 $15,632 $12,351 $ 11,610
Ratios to average net assets:
Expenses..................................... 1.28% 1.36% 1.51%(a) 1.50%(a) 1.50%(a) (1.88%a)
Net investment income........................ 5.40% 5.13% 6.23%(a) 5.91%(a) 6.04%(a) (5.49%a)
Portfolio turnover rate........................ 136% 92% 151% 97% 33% 152%
<CAPTION>
MARCH 14,
1988*
THROUGH
DECEMBER 31,
1988**
<S> <C>
PER SHARE DATA
Net asset value, beginning of period........... $10.00
Income (loss) from investment operations:
Net investment income.......................... .39
Net realized and unrealized gain (loss) on
investments.................................. .18
Total from investment operations............. .57
Less distributions to shareholders from:
Net investment income.......................... (.36)
Net realized gains............................. (.12)
In excess of net realized gains................ --
Total distributions.......................... (.48)
Net asset value, end of period................. $10.09
TOTAL RETURN+.................................. 5.8%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)...... $9,449
Ratios to average net assets:
Expenses..................................... 2.00%++
Net investment income........................ 5.01%++
Portfolio turnover rate........................ 52%
</TABLE>

* Commencement of operations.
** Investment income, expenses and net investment income are based upon the
average monthly shares outstanding for the period indicated.
+ Total return is calculated on net asset value for the period indicated and is
not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1992 1991 1990 1989
<S> <C> <C> <C> <C>
Expenses.................................................... 1.59% 1.82% 1.95% 2.03%
Net investment income....................................... 6.15% 5.59% 5.59% 5.34%
</TABLE>

(b) Distributions in excess of net realized gains were the result of certain
book and tax timing differences. These distributions did not represent a
return of capital for federal income tax purposes.
10

<PAGE>
EVERGREEN FOUNDATION FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
JANUARY 2, 1990*
YEAR ENDED DECEMBER 31, THROUGH
1994 1993 1992 1991 DECEMBER 31, 1990
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period................................. $13.12 $11.98 $10.75 $8.95 $10.00
Income (loss) from investment operations:
Net investment income................................................ .42 .31 .27 .33 1.23(b)
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 period....................................... $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 period (in millions).............................. $332 $240 $64 $11 $2
Ratios to average net assets:
Expenses........................................................... 1.14% 1.20% 1.40%(a) 1.20%(a) 0%(a)++
Net investment income.............................................. 3.51% 2.81% 2.93%(a) 2.86%(a) 15.07%(a,b)++
Portfolio turnover rate.............................................. 33% 60% 127% 178% 131%
</TABLE>

* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized.
++ Annualized
(a) Net of expense waivers and reimbursements by the Adviser. If the Fund had
borne all expenses that were assumed or waived by the investment adviser,
the annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
JANUARY 2, 1990
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
1992 1991 1990
<S> <C> <C> <C>
Expenses................................................... 1.43% 2.58% 3.64%
Net investment income...................................... 2.90% 1.48% 11.43%
</TABLE>

(b) Includes receipt of a special dividend representing $.62 per share net
investment income and 7.59% of average net assets.
11

<PAGE>
EVERGREEN TOTAL RETURN FUND -- CLASS A, B AND C SHARES
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
<S> <C> <C> <C>
JANUARY 3, 1995*
THROUGH JANUARY 31, 1995
PER SHARE DATA
Net asset value, beginning of period........................................................ $17.09 $17.09 $17.09
Income 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%
</TABLE>

* Commencement of class operations.
** Portfolio turnover rate is calculated for the ten month period ended January
31, 1995.
+ Total return calculated is for the period indicated and is not annualized.
Initial sales charge or contingent deferred sales charge is not reflected.
++ Annualized.
12

<PAGE>
EVERGREEN TOTAL RETURN FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
TEN MONTHS
ENDED
JANUARY YEAR ENDED MARCH 31,
31, 1995* 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning
of period........................... $18.29 $20.90 $18.82 $18.12 $18.26 $17.92 $17.11 $20.37 $19.72
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
Net realized and unrealized gain
(loss) on investments............... (.55) (1.41) 2.51 .70 (.08) .36 .79 (2.64) 1.76
Total from investment
operations........................ .32 (.33) 3.62 1.78 .94 1.43 1.91 (1.58) 2.90
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)
Net realized gains.................... (.25) (1.20) (.46) -- -- -- (.02) (.88) (1.11)
Total distributions................. (1.33) (2.28) (1.54) (1.08) (1.08) (1.09) (1.10) (1.68) (2.25)
Net asset value, end of period........ $17.28 $18.29 $20.90 $18.82 $18.12 $18.26 $17.92 $17.11 $20.37
TOTAL RETURN+......................... 1.9% (2.1%) 20.2% 10.2% 5.8% 7.9% 1.3% (7.8%) 15.7%
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
Ratios to average net assets:
Expenses............................ 1.24%++ 1.18% 1.18% 1.21% 1.23% 1.18% 1.02%** 1.01%** 1.02%**
Net investment income............... 5.70%++ 5.29% 5.65% 5.73% 5.90% 5.64% 6.36%** 5.80%** 5.68%**
Portfolio turnover rate............... 151% 106% 164% 137% 137% 89% 86% 81% 44%
<CAPTION>

1986
<S> <C>
PER SHARE DATA
Net asset value, beginning
of period........................... $16.63
Income (loss) from investment
operations:
Net investment income................. 1.03
Net realized and unrealized gain
(loss) on investments............... 4.26
Total from investment
operations........................ 5.29
Less distributions to shareholders
from:
Net investment income................. (1.22)
Net realized gains.................... (.98)
Total distributions................. (2.20)
Net asset value, end of period........ $19.72
TOTAL RETURN+......................... 35.2%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(in millions)....................... $408
Ratios to average net assets:
Expenses............................ 1.11%**
Net investment income............... 6.06%**
Portfolio turnover rate............... 65%
</TABLE>

* On September 21, 1994, the Fund changed its fiscal year end to January 31.
** Net of expense limitation in fiscal years 1986, 1987, 1988 and 1989.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized.
++ Annualized.
13

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

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

INVESTMENT OBJECTIVES AND POLICIES

Evergreen Balanced Fund

The investment objective of the Evergreen Balanced Fund (formerly First
Union Balanced Portfolio) is to achieve a long-term total return through capital
appreciation, dividends and interest income. This objective is a fundamental
policy and may not be changed without shareholder approval. The Fund invests in
common and preferred stocks for growth and fixed income securities to provide a
stable income flow. There can be no assurance that the Fund's investment
objective will be achieved.

The percentage of the Fund's assets invested in common and preferred
stocks will vary from time to time in accordance with changing economic and
market conditions. It is anticipated that over the long term the Fund's
portfolio will average 60% in common and preferred stocks and 40% in bonds.
However, normally the Fund's asset allocation will range between 40-75% in
common and preferred stocks, 25-50% fixed income securities (including some
convertible securities) and 0-25% cash equivalents. Moderate shifts between
types of assets are made in an attempt to maximize returns or reduce risk.

The Funds invest in common, preferred and convertible preferred stocks
and bonds of U.S. companies with a minimum of $100 million in market
capitalization and which are listed on major stock exchanges or traded
over-the-counter. The criteria for such investment selection includes a
company's financial strength (such as cash flow and low debt-to-equity ratio),
earnings growth and price in relation to current earnings, dividends and book
value to identify growth opportunities. The Fund may also invest in American
Depositary Receipts ("ADRs") of foreign companies which are traded on the New
York or American Stock Exchanges or the over-the-counter market.

The fixed income portion of the Fund's portfolio may be invested in
corporate bonds (including convertible bonds) which are rated A or higher by
Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc.
("Moody's") or any other nationally recognized statistical rating organization
("SRO"), or which, if unrated, are considered to be of comparable quality by the
Fund's investment adviser. Bonds are selected based upon the outlook for
interest rates and their yield in relation to other bonds of similar quality and
maturity. The maturities of these bonds may be medium (i.e., from five to ten
years) to long-term (i.e., over ten years), but in no event will they be longer
than twenty years.

The Fund also invests in securities which are either issued or
guaranteed by the U.S. government, its agencies or instrumentalities. These
securities include direct obligations of the U.S. Treasury, such as U.S.
Treasury bills, notes and bonds; and notes, bonds and discount notes of U.S.
government agencies or instrumentalities, such as the Farm Credit System,
including the National Bank for Cooperatives, Farm Credit Banks and Banks for
Cooperatives, Farmers Home Administration, Federal Home Loan Banks, Federal Home
Loan Mortgage Corporation, Federal National Mortgage Association, Government
National Mortgage Association, Student Loan Marketing Association, Tennessee
Valley Authority, Export-Import Bank of the United State, Commodity Credit
Corporation, Federal Financing Bank and National Credit Union Administration.
Some of these securities are supported by the full faith and credit of the U.S.
government, and others are supported only by the credit of the agency or
instrumentality.

The Fund may also invest short-term in cash equivalents for defensive
purposes; securities issued and/or guaranteed by the U.S. government, its
agencies or instrumentalities, and repurchase agreements collateralized by
eligible investments.

As of December 31, 1992, 1993 and 1994, approximately 59%, 63% and 55%,
respectively, of the Fund's portfolio consisted of equity securities. The Fund
may employ certain additional investment strategies which are discussed in
"Investment Practices and Restrictions", 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 Fund's
investment 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 analytical and research capabilities of the Fund's investment
adviser 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.

It is anticipated that the annual portfolio turnover rate for the Fund
will not exceed 100%. The Fund may employ certain additional investment
strategies which are discussed in "Investment Practices and Restrictions",
below.

Evergreen Value Fund

The investment objective of the Evergreen Value Fund (formerly the
First Union Value Portfolio) is long-term capital appreciation with current
income as a secondary objective. The Fund's objective is a fundamental policy
and may not be changed without shareholder approval. Normally, at least 75% of
the Fund's assets will be invested in equity securities of U.S. companies with
prospects for earnings growth and dividends. There can be no assurance that the
Fund's investment objective will be achieved.

The Fund's investments, in order of priority, consist of:

common and preferred stocks, bonds and convertible preferred
stock of U.S. companies with a minimum market capitalization of $100
million which are listed on the New York or American Stock Exchanges or
traded in over-the-counter markets. The primary consideration is for
those industries and companies with the potential for capital
appreciation; income is a secondary consideration;

ADRs of foreign companies traded on the New York or American
Stock Exchanges or the over-the-counter market;

foreign securities (either foreign or U.S. securities traded
in foreign markets). The Fund may also invest in obligations
denominated in foreign currencies. In making these decisions, the
Fund's investment adviser will consider such factors as the condition
and growth potential of various economies and securities markets,
currency and taxation implications and other pertinent financial,
social, national and political factors. (See "Investment Practices and
Restrictions Special Risk Considerations");

convertible bonds rated no lower than BBB by S&P or Baa by
Moody's or, if not rated, determined to be of comparable quality by the
Fund's investment adviser;

money market instruments;

fixed rate notes and bonds and adjustable and variable rate
notes of companies whose common stock the Fund may acquire rated no
lower than BBB by S&P or Baa by Moody's or which, if not rated,
determined to be of comparable quality by the Fund's investment adviser
(up to 5% of total assets);

zero coupon bonds issued or guaranteed by the U.S. government,
its agencies or instrumentalities (up to 5% of total assets);

obligations, including certificates of deposit and bankers'
acceptances, of banks or savings and loan associations having at least
$1 billion in deposits and insured by the Bank Insurance Fund or the
Savings Association Insurance Fund, including U.S. branches of foreign
banks and foreign branches of U.S. banks; and

prime commercial paper, including master demand notes rated no
lower than A-1 by S&P or Prime 1 by Moody's.

Bonds rated BBB by S&P or Baa by Moody's may have speculative
characteristics. Changes in economic conditions or other circumstances
are more likely to weaken such bonds' prospects for principal and
interests payments than higher rated bonds. However, like the higher
rated bonds, these securities are considered investment grade.

As of December 31, 1992, 1993 and 1994, approximately 92%, 95% and 97%,
respectively, of the Fund's portfolio consisted of equity securities. The Fund
may employ certain additional investment strategies which are discussed in
"Investment Practices and Restrictions", 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's
objective is a fundamental policy and may not be changed without shareholder
approval.

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 investment 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 Fund's investment 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 Fund's investment 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 U.S. 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 U.S. 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.

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. The Fund may employ certain additional investment
strategies which are discussed in "Investment Practices and Restrictions",
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 Fund's investment adviser have potential for
capital enhancement.

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 objectives will be achieved. The
Fund's objective is a fundamental policy and may not be changed without
shareholder approval.

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 investment 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 Fund's investment 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 U.S. government,
its agencies or instrumentalities, including issues of the U.S. 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 U.S.
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 Fund's
investment adviser will take into account the obligation of the bank in
assessing the quality of such security.

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 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.

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 investment 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 judgment of
the Fund's investment adviser, 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 or A-2 by 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. See the discussion above with
respect to Evergreen Value Fund.

It is anticipated that the annual portfolio turnover rate for the Fund
may exceed 100%. The Fund may employ certain additional investment strategies
which are discussed in "Investment Practices and Restrictions", below.

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 Funds'
investment advisers, 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 Evergreen Asset 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 Evergreen Total Return Fund, Evergreen Growth and
Income Fund, Evergreen American Retirement Fund and Evergreen Foundation Fund on
those exchanges. The portfolio turnover rate for each Fund is set forth in the
tables contained in the section entitled "Financial Highlights". 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, except Evergreen
American Retirement Fund, may not borrow money except as a temporary measure to
facilitate redemption requests or for extraordinary or emergency purposes.
Evergreen American Retirement Fund may borrow for purposes of leverage. 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 Funds' investment advisers 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 the net assets of the Evergreen
Total Return Fund, Evergreen Growth and Income Fund and Evergreen American
Retirement Fund, 30% of the net assets of the Evergreen Foundation Fund, and 5%
of the value of the total assets of Evergreen Balanced Fund and Evergreen Value
Fund, 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.

There is the risk that when lending portfolio securities, the
securities may not be available to a Fund on a timely basis and the Fund may,
therefore, lose the opportunity to sell the securities at a desirable price. In
addition, in the event that a borrower of securities would file for bankruptcy
or become insolvent, disposition of the securities may be delayed pending court
action.

Short Sales. The Evergreen Total Return Fund, Evergreen Growth and Income Fund,
Evergreen Balanced Fund, Evergreen American Retirement Fund and Evergreen
Foundation 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 and Evergreen Foundation
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.

Illiquid or Restricted Securities. Evergreen Growth and Income Fund, Evergreen
American Retirement Fund, Evergreen Foundation Fund and Evergreen Total Return
Fund may invest up to 15% of their net assets, and Evergreen Balanced Fund and
Evergreen Value Fund may invest up to 10% of their net assets, in illiquid
securities and other securities which are not readily marketable, including
non-negotiable time deposits, certain restricted securities not deemed by the
Trustees to be liquid and 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 Funds' investment advisers to be illiquid or not readily
marketable and, therefore, are not subject to the aforementioned 15% or 10 %
limits. 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 Funds' investment advisers 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%, or with respect to Evergreen Value Fund 10%, of
its assets invested in illiquid or not readily marketable securities.

Repurchase Agreements and Reverse Repurchase Agreements. Evergreen Growth and
Income Fund, Evergreen Balanced Fund, Evergreen Value Fund and Evergreen Total
Return Fund may enter into repurchase agreements 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 Funds' investment advisers will review and
continually monitor the creditworthiness of each institution with which a Fund
enters into a repurchase agreement to evaluate these risks.

Evergreen Balanced Fund and Evergreen Value Fund may borrow money by
entering into a "reverse repurchase agreement" by which it agrees 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 the Fund enters into a reverse repurchase
agreement, it will place in a segregated custodial account cash, U.S. 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 the Fund may decline below the repurchase price of those securities.
Each Fund will not enter into reverse repurchase agreements exceeding 5% of the
value of its total assets.

When-Issued and Delayed Delivery Transactions. Evergreen Balanced Fund and
Evergreen Value Fund may purchase securities on a when-issued or delayed
delivery basis. These transactions are arrangements in which a Fund purchases
securities with payment and delivery scheduled for a future time. The seller's
failure to complete these transactions may cause a Fund to miss a price or yield
considered to be advantageous. Settlement dates may be a month or more after
entering into these transactions, and the market values of the securities
purchased may vary from the purchase prices. Accordingly, a Fund may pay more or
less than the market value of the securities on the settlement date. The Funds
may dispose of a commitment prior to settlement if the Funds investment adviser
deems it appropriate to do so. In addition, the Funds may enter into
transactions to sell their purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase similar
securities at later dates. The Funds may realize short-term profits or losses
upon the sale of such commitments.

Fixed Income Securities - Downgrades. If any security invested in by any of the
Funds loses its rating or has its rating reduced after the Fund has purchased
it, the Fund is not required to sell or otherwise dispose of the security, but
may consider doing so.

Options and Futures. Each of 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 the Funds
if, afterwards, securities comprising more than 25% of the market value of the
equity securities of Evergreen Growth and Income Fund and Evergreen Total Return
Fund, or 15% of the market value of the equity securities of Evergreen American
Retirement Fund 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 (i) 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 transaction" may be
entered into with respect to a call option written by a Fund for the purpose of
closing its position.

Evergreen Balanced Fund and Evergreen Value Fund may engage in options
and futures transactions. Options and futures transactions are intended to
enable a Fund to manage market, interest rate or exchange rate risk, and the
Funds do not use these transactions for speculation or leverage.

Evergreen Balanced Fund and Evergreen Value Fund may attempt to hedge
all or a portion of their portfolios through the purchase of both put and call
options on their portfolio securities and listed put options on financial
futures contracts for portfolio securities. The Funds may also write covered
call options on their portfolio securities to attempt to increase their current
income. The Funds will maintain their positions in securities, option rights and
segregated cash subject to puts and calls until the options are exercised,
closed or have expired. An option position may be closed out only on an exchange
which provides a secondary market for an option of the same series. The Funds
may purchase listed put options on financial futures contracts. These options
will be used only to protect portfolio securities against decreases in value
resulting from market factors such as an anticipated increase in interest rates.

The Funds may write (i.e., sell) covered call and put options. By
writing a call option, a Fund becomes obligated during the term of the option to
deliver the securities underlying the option upon payment of the exercise price.
By writing a put option, a Fund becomes obligated during the term of the option
to purchase the securities underlying the option at the exercise price if the
option is exercised. The Funds may also write straddles (combinations of covered
puts and calls on the same underlying security).

Evergreen Balanced Fund and Evergreen Value Fund may only write
"covered" options. This means that so long as a Fund is obligated as the writer
of a call option, it will own the underlying securities subject to the option
or, in the case of call options on U.S. Treasury bills, the Fund might own
substantially similar U.S. Treasury bills. A Fund will be considered "covered"
with respect to a put option it writes if, so long as it is obligated as the
writer of the put option, it deposits and maintains with its custodian in a
segregated account liquid assets having a value equal to or greater than the
exercise price of the option.

The principal reason for writing call or put options is to obtain,
through a receipt of premiums, a greater current return than would be realized
on the underlying securities alone. The Funds receive a premium from writing a
call or put option which they retain whether or not the option is exercised. By
writing a call option, the Funds might lose the potential for gain on the
underlying security while the option is open, and by writing a put option the
Funds might become obligated to purchase the underlying securities for more than
their current market price upon exercise.

Evergreen Balanced Fund and Evergreen Value Fund may also, as stated
previously, purchase futures contracts and options thereon. A futures contract
is a firm commitment by two parties: the seller, who agrees to make delivery of
the specific type of instrument called for in the contract ("going short"), and
the buyer, who agrees to take delivery of the instrument ("going long") at a
certain time in the future. Financial futures contracts call for the delivery of
particular debt instruments issued or guaranteed by the U.S. Treasury or by
specific agencies or instrumentalities of the U.S. government. If a Fund would
enter into financial futures contracts directly to hedge its holdings of fixed
income securities, it would enter into contracts to deliver securities at an
undetermined price (i.e., "go short") to protect itself against the possibility
that the prices of its fixed income securities may decline during the Fund's
anticipated holding period. A Fund would "go long" (agree to purchase securities
in the future at a predetermined price) to hedge against a decline in market
interest rates.

The Funds may also enter into currency and other financial futures
contracts and write options on such contracts. The Funds intend to enter into
such contracts and related options for hedging purposes. The Funds will enter
into futures on securities, currencies or index-based futures contracts in order
to hedge against changes in interest or exchange rates or securities prices. A
futures contract on securities or currencies is an agreement to buy or sell
securities or currencies during a designated month at whatever price exists at
that time. A futures contact on a securities index does not involve the actual
delivery of securities, but merely requires the payment of a cash settlement
based on changes in the securities index. The Funds do not make payment or
deliver securities upon entering into a futures contract. Instead, they put down
a margin deposit, which is adjusted to reflect changes in the value of the
contract and which remains in effect until the contract is terminated.

The Funds may sell or purchase currency and other financial futures
contracts. When a futures contract is sold by a Fund, the profit on the contract
will tend to rise when the value of the underlying securities or currencies
declines and to fall when the value of such securities or currencies increases.
Thus, the Funds sell futures contracts in order to offset a possible decline in
the profit on their securities or currencies. If a futures contract is purchased
by a Fund, the value of the contract will tend to rise when the value of the
underlying securities or currencies increases and to fall when the value of such
securities or currencies declines.

The Funds may enter into closing purchase and sale transactions in
order to terminate a futures contract and may buy or sell put and call options
for the purpose of closing out their options positions. The Funds ability to
enter into closing transactions depends on the development and maintenance of a
liquid secondary market. There is no assurance that a liquid secondary market
will exist for any particular contract or at any particular time. As a result,
there can be no assurance that the Funds will be able to enter into an
offsetting transaction with respect to a particular contract at a particular
time. If the Funds are not able to enter into an offsetting transaction, the
Funds will continue to be required to maintain the margin deposits on the
contract and to complete the contract according to its terms, in which case the
Funds would continue to bear market risk on the transaction.

Risk Characteristics of Options and Futures. Although options and futures
transactions are intended to enable the Funds to manage market, exchange or
interest rate risks, these investment devices can be highly volatile, and the
Funds use of them can result in poorer performance (i.e., the Funds return may
be reduced). The Funds attempt to use such investment devices for hedging
purposes may not be successful. Successful futures strategies require the
ability to predict future movements in securities prices, interest rates and
other economic factors. When the Funds use financial futures contract and
options on financial futures contract as hedging devices, there is a risk that
the prices of the securities subject to the financial futures contracts and
options on financial futures contracts may not correlate perfectly with the
prices of the securities in the Funds' portfolios. This may cause the financial
futures contract and any related options to react to market changes differently
than the portfolio securities. In addition, the Funds investment adviser could
be incorrect in its expectations and forecasts about the direction or extent of
market factors, such as interest rates, securities price movements and other
economic factors. Even if the Funds investment adviser correctly predicts
interest rate movements, a hedge could be unsuccessful if changes in the value
of a Fund's futures position did not correspond to changes in the value of its
financial futures contracts. It is not certain that a secondary market for
positions in financial futures contracts or for options on financial futures
contracts will exist at all times. Although the Funds investment adviser will
consider liquidity before entering into financial futures contracts or options
on financial futures contracts transactions, there is no assurance that a liquid
secondary market on an exchange will exist for any particular financial futures
contract or option on a financial futures contract at any particular time. The
Funds ability to establish and close out financial futures contracts and options
on financial futures contract positions depends on this secondary market. If a
Fund is unable to close out its position due to disruptions in the market or
lack of liquidity, the Fund may lose money on the futures contract or option,
and the losses to the Fund could be significant.

Special Risk Considerations

Investment in Foreign Securities. Evergreen Total Return Fund, Evergreen
Balanced Fund and Evergreen Value Fund may invest in foreign securities.
Investments in foreign securities require 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.

Additionally, accounting procedures and government supervision may be
less stringent than those applicable to U.S. companies. It may also be more
difficult to enforce contractual obligations abroad than would be the case in
the United States because of differences in the legal systems. Foreign
securities may be subject to foreign taxes, which may reduce yield, and may be
less marketable than comparable U.S. securities. All these factors are
considered by each Fund's investment adviser before making any of these types of
investments.

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.

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.

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

MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------

INVESTMENT ADVISERS

The management of each Fund is supervised by the Trustees of the Trust
under which the Fund has been established ("Trustees"). Evergreen Asset
Management Corp. ("Evergreen Asset") has been retained by Evergreen Total Return
Fund, Evergreen Growth and Income Fund, Evergreen American Retirement Fund and
Evergreen Foundation Fund as investment adviser. Evergreen Asset succeeded on
June 30, 1994 to the advisory business of the same name, but under different
ownership, which was organized in 1971. Evergreen Asset, with its predecessors,
has served as investment adviser to the Evergreen mutual funds since 1971.
Evergreen Asset is a wholly-owned subsidiary of First Union National Bank of
North Carolina ("FUNB"). The address of Evergreen Asset is 2500 Westchester
Avenue, Purchase, New York 10577. FUNB is a subsidiary of First Union
Corporation ("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 Evergreen Asset and, along with Theodore J. Israel, Jr.,
were the owners of Evergreen Asset's predecessor and the former general partners
of Lieber & Company, which, as described below, provides certain subadvisory
services to Evergreen Asset in connection with its duties as investment adviser
to the Funds. The Capital Management Group of FUNB ("CMG") serves as investment
adviser to Evergreen Balanced Fund and Evergreen Value 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 all the series of
Evergreen Investment Trust (formerly known as First Union 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.

As investment adviser to Evergreen Total Return Fund, Evergreen Growth
and Income Fund, Evergreen American Retirement Fund and Evergreen Foundation
Fund, Evergreen Asset manages each Fund's investments, provides various
administrative services and supervises each Fund's daily business affairs,
subject to the authority of the Trustees. Evergreen Asset is entitled to receive
a from each of Evergreen Total Return Fund and Evergreen Growth and Income Fund
fee equal to 1% of average daily net assets on an annual basis on the first $750
million in assets, .9 of 1% of average daily net assets on an annual basis on
the next $250 million in assets, and .8 of 1% of average daily net assets on an
annual basis on assets over $1 billion. Evergreen Asset is entitled to receive
from Evergreen Foundation Fund a fee equal to .875 of 1% of average daily net
assets on an annual basis on the first $750 million in assets, .75 of 1% of
average daily net assets on an annual basis on the next $250 million in assets,
and .7 of 1% of average daily net assets on an annual basis on assets over $1
billion, and from Evergreen American Retirement Fund a fee equal to .75 of 1% of
average daily net assets on an annual basis on the first $1 billion in assets,
and .7 of 1% of average daily net assets on an annual basis on assets over $1
billion. The fee paid by Evergreen Total Return Fund and Evergreen Growth and
Income Fund is higher than the rate paid by most other investment companies. The
total expenses of each Fund for the fiscal year ended December 31, 1994,
expressed as a percentage of average daily net assets on an annual basis are set
forth in the section entitled "Financial Highlights".

CMG manages investments and supervises the daily business affairs of
Evergreen Balanced Fund and Evergreen Value Fund and, as compensation therefor,
is entitled to receive an annual fee equal to .50 of 1% of average daily net
assets of each Fund. The total annualized operating expenses of Evergreen
Balanced Fund and Evergreen Value Fund for their most recent fiscal year ended
December 31, 1994, are set forth in the section entitled "Financial Highlights".
Evergreen Asset serves as administrator to Evergreen Balanced Fund and Evergreen
Value Fund and is entitled to receive a fee based on the average daily net
assets of these Funds at a rate based on the total assets of the mutual funds
administered by Evergreen Asset for which CMG or Evergreen Asset also serve as
investment adviser, calculated in accordance with the following schedule: .050%
of the first $7 billion; .035% on the next $3 billion; .030% on the next $5
billion; .020% on the next $10 billion; .015% on the next $5 billion; and .010%
on assets in excess of $30 billion. Furman Selz Incorporated, the parent of
Evergreen Funds Distributor, Inc., distributor for the Evergreen group of mutual
funds, serves as sub-administrator to Evergreen Balanced Fund and Evergreen
Value Fund and is entitled to receive a fee from each Fund calculated on the
average daily net assets of each Fund at a rate based on the total assets of the
mutual funds administered by Evergreen Asset for which CMG or Evergreen Asset
also serve as investment adviser, calculated in accordance with the following
schedule: .0100% of the first $7 billion; .0075% on the next $3 billion; .0050%
on the next $15 billion; and .0040% on assets in excess of $25 billion. The
total assets of the mutual funds administered by Evergreen Asset for which CMG
or Evergreen Asset serve as investment adviser as of March 31, 1995 were
approximately $8 billion.

The portfolio manager for Evergreen Total Return Fund is Nola Maddox
Falcone, C.F.A., who is President and Co-Chief Executive Officer of Evergreen
Asset. Ms. Falcone has served as the principal manager of Evergreen Total Return
Fund since 1985. The portfolio manager for Evergreen Foundation Fund is Stephen
A. Lieber, who is Chairman and Co-Chief Executive Officer of the Evergreen
Asset. Mr. Lieber has served as such Fund's principal manager since its
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 has been
associated with the Evergreen Asset and its predecessor since prior to 1989.

The portfolio manager for Evergreen Balanced Fund since its inception
in January 1991 is R. Dean Hawes, who is a Vice President of FUNB and is the
Director of Employee Benefit Portfolio Management. Mr. Hawes joined FUNB in 1981
after spending five years with Merrill Lynch, Pierce, Fenner, & Smith and
Townsend Investments. William T. Davis, Jr., the portfolio manager of Evergreen
Value Fund since March, 1991, is a Vice President of FUNB and has been with
First Union since 1986. Prior to that, Mr. Davis served as a securities analyst
for Seibels Bruce (Insurance) Group.

SUB-ADVISER

Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company which provides that Lieber & Company's research department and staff
will furnish Evergreen Asset with information, investment recommendations,
advice and assistance, and will be generally available for consultation on the
portfolios of Evergreen Total Return Fund, Evergreen Growth and Income Fund,
Evergreen American Retirement Fund and Evergreen Foundation Fund. Lieber &
Company will be reimbursed by Evergreen Asset 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 Evergreen Total Return Fund,
Evergreen Growth and Income Fund, Evergreen American Retirement Fund and
Evergreen Foundation Fund for the services provided by Lieber & Company. 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 aggregate average daily net assets
attributable to each Fund's Class A shares, 1.00% of the aggregate average daily
net assets attributable to the Class B and Class C shares of Evergreen Total
Return Fund, Evergreen Growth and Income Fund, Evergreen American Retirement
Fund and Evergreen Foundation Fund, and .75 of 1% of the aggregate average daily
net assets attributable to the Class B and Class C shares of Evergreen Balanced
Fund and Evergreen Value Fund. Payments under the Plans adopted with respect to
Class A shares 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 may constitute a service
fee to be used for providing ongoing personal services and/or the maintenance of
shareholder accounts. Evergreen Balanced Fund and Evergreen Value Fund have
each, in addition to the Plans adopted with respect to their Class B and Class C
shares, adopted shareholder service plans ("Service Plans") relating to the
Class B and Class C shares which permit each Fund to incur a fee of up to .25 of
1% of the aggregate average daily net assets attributable to the Class B and
Class C shares for ongoing personal services and/or the maintenance of
shareholder accounts. Such service fee payments to financial intermediaries for
such purposes, whether pursuant to a Plan or Service Plan, will not to exceed
.25% of the aggregate average daily net assets attributable to each Class of
shares of each Fund.

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 ( and in the case
of Evergreen Balanced Fund and Evergreen Value Fund, the Service 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 each Fund's investment adviser or their
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.

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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
"General Information" - "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

------------------------ ----------------- --------------- ------------------
Commission to
Dealer/Agent
as a % of the Net as a % of the as a % of
Amount of Purchase Amount Invested Offering Price 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; investment advisers, consultants or financial planners who
place trades for their own accounts or the accounts of their clients and who
charge such clients a management, consulting, advisory or other fee; clients of
investment advisers or financial planners who place trades for their own
accounts if the accounts are linked to the master account of such investment
advisers or financial planners on the books of the broker-dealer through whom
shares are purchased; institutional clients of broker-dealers, including
retirement and deferred compensation plans and the trusts used to fund these
plans, which place trades through an omnibus account maintained with a Fund by
the broker-dealer; shareholders of record on October 12, 1990 in any series of
Evergreen Investment Trust in existence on that date, and the members of their
immediate families; employees of FUNB and its affiliates, EFD and any
broker-dealer with whom EFD has entered into an agreement to sell shares of the
Funds, and members of the immediate families of such employees; and upon the
initial purchase of an Evergreen mutual fund by investors reinvesting the
proceeds from a redemption within the preceeding thirty days of shares of other
mutual funds, provided such shares were initially purchased with a front-end
sales charge or subject to a CDSC. Certain broker-dealers or other financial
institutions may impose a fee on transactions in shares of a Fund.

Class A shares may also be purchased at net asset value by qualified
and non-qualified employee benefit and savings plans which make shares of the
Funds and the other Evergreen mutual 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 mutual funds available through a qualified plan meeting the
criteria specified under (a). In connection with sales made to plans of the type
described in the preceeding sentence that are clients of broker-dealers, and
which do not qualify for sales at net asset value under the conditions set forth
in the paragraph above, payments may be made 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 and/or shareholder service 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 and/or shareholder service 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.

With respect to Class B Shares, no CDSC will be imposed on: (1) the
portion of redemption proceeds attributable to increases in the value of the
account due to increases in the net asset value per Share, (2) Shares acquired
through reinvestment of dividends and capital gains, (3) Shares held for more
than seven years after the end of the calendar month of acquisition, (4)
accounts following the death or disability of a shareholder, or (5) minimum
required distributions to a shareholder over the age of 70 1/2 from an IRA or
other retirement plan.

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 the 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 and/or shareholder service fees, 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 its investment adviser
incurs. If such investor is an existing shareholder, a Fund may redeem shares
from an investor's account to reimburse the Fund or its investment adviser for
any loss. In addition, such investors may be prohibited or restricted from
making further purchases in any of the Evergreen mutual 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. Certain
financial intermediaries may require that you give instructions earlier than
4:00 p.m.

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 the phone number on the front page of this Prospectus between the
hours of 8:00 a.m. and 5:30 p.m. (Eastern time) each business day (i.e., any
weekday exclusive of days on which the Exchange or State Street's offices are
closed). The 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 redemption 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
sixty 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 1940 Act
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 mutual funds through your financial
intermediary, or by telephone or mail as described below. An exchange which
represents an initial investment in another Evergreen mutual 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 mutual 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 mutual
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 the phone number on the front page of this
Prospectus. 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 on the front page of this Prospectus.
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 mutual 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". Each Fund's investment adviser may provide compensation to
organizations providing administrative and recordkeeping services to plans which
make shares of the Evergreen mutual funds available to their participants.

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.

Tax Sheltered Retirement Plans. You may open a pension and profit sharing
account in any Evergreen mutual fund (except those funds having an objective of
providing tax free income), including: (i) Individual Retirement Accounts
("IRAs") and Rollover IRAs; (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.

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. Evergreen
Asset, since it is a subsidiary of FUNB, and CMG are 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 CMG or Evergreen Asset 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 CMG or Evergreen Asset were prevented from continuing
to provide the services called for under the investment advisory agreement, it
is expected that the Trustees 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. 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.

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.

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

A discussion of the performance of Evergreen Growth and Income Fund,
Evergreen American Retirement Fund, Evergreen Foundation Fund and Evergreen
Total Return Fund for their most recent fiscal year is set forth below. A
similar discussion relating to Evergreen Balanced Fund and Evergreen Value Fund
is contained in the annual report of each Fund for the fiscal year ended
December 31, 1994.

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 investment 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 depressing
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 benefited 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 U.S. 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 benefited 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 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, Evergreen Asset 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.

Evergreen Total Return Fund.

Steady income flow has been an important goal since the inception of
the Fund. The Fund continued its annual $1.08 per share income dividend. 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, Evergreen Asset 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 -3.00%, 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 when 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. Evergreen Asset 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. Evergreen Asset 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, Evergreen Asset 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, thereby 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]

GENERAL INFORMATION

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 is a separate series of The
Evergreen American Retirement Trust, a Massachusetts business trust organized in
1987. Evergreen Foundation Fund is a separate series of the Evergreen Foundation
Trust, a Massachusetts business trust organized in 1989. Evergreen Balanced Fund
and Evergreen Value Fund are separate investment series of Evergreen Investment
Trust (formerly First Union Funds), which is a Massachusetts business trust
organized in 1984. 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, shareholder service 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 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. Furman Selz Incorporated, also acts as
sub-administrator to Evergreen Balanced Fund and Evergreen Value Fund and which
provides certain sub-administrative services to Evergreen Asset in connection
with its role as investment adviser to Evergreen Growth and Income Fund,
Evergreen American Retirement Fund, Evergreen Foundation Fund and Evergreen
Total Return Fund, including providing personnel to serve as officers of the
Funds.

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 Funds for
which Evergreen Asset serves as investment adviser as of December 30, 1994, (ii)
certain institutional investors and (iii) investment advisory clients of CMG,
Evergreen Asset or their 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 and shareholder
servicing 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 ("SEC"), 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 Trusts
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.

<PAGE>
INVESTMENT ADVISER

Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN GROWTH AND INCOME FUND, EVERGREEN AMERICAN RETIREMENT FUND,
EVERGREEN FOUNDATION FUND, EVERGREEN TOTAL RETURN FUND

Capital Management Group of First Union National Bank, 210 South College
Street, Charlotte, North Carolina, 28228
EVERGREEN BALANCED FUND, EVERGREEN VALUE FUND

CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827

LEGAL COUNSEL
Sullivan & Worcester, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
EVERGREEN FOUNDATION FUND

Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116-5072
EVERGREEN TOTAL RETURN FUND, EVERGREEN GROWTH AND INCOME FUND, EVERGREEN
AMERICAN RETIREMENT FUND

KPMG Peat Marwick LLP, One Mellon Bank Center, Pittsburgh, Pennsylvania 15219
EVERGREEN BALANCED FUND, EVERGREEN VALUE FUND

DISTRIBUTOR
Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017

<PAGE>

<PAGE>
PROSPECTUS July 7, 1995
EVERGREEN(SM) GROWTH AND INCOME FUNDS (Evergreen Logo appears here)
EVERGREEN BALANCED FUND
EVERGREEN GROWTH AND INCOME FUND
EVERGREEN VALUE FUND
EVERGREEN AMERICAN RETIREMENT FUND
EVERGREEN FOUNDATION FUND
EVERGREEN TOTAL RETURN FUND
CLASS Y SHARES
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.
A "Statement of Additional Information" for the Funds and certain
other funds in the Evergreen Group of mutual funds dated July 7, 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) 235-0064. 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
EVERGREEN(SM) is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.

<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS
EXPENSE INFORMATION
FINANCIAL HIGHLIGHTS
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies
Investment Practices and Restrictions
MANAGEMENT OF THE FUNDS
Investment Advisers
Sub-Adviser
Distribution Plans and Agreements
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares
How to Redeem Shares
Exchange Privilege
Shareholder Services
Effect of Banking Laws
OTHER INFORMATION
Dividends, Distributions and Taxes
Management's Discussion of Fund Performance
General Information
</TABLE>

<PAGE>
EXPENSE INFORMATION
The table set forth below summarizes the shareholder transaction costs
associated with an investment in the Class Y Shares of the Fund. For further
information see "Purchase and Redemption of Shares".
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Maximum Sales Charge Imposed on Purchases None
Sales Charge on Dividend Reinvestments None
Contingent Deferred Sales Charge None
Redemption Fee None
Exchange Fee (only applies after 4 exchanges per year) $5.00
</TABLE>

The following table shows for the Fund the estimated 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 BALANCED FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees .50%
After 1 Year $ 6
Administrative Fees .06%
After 3 Years $ 20
12b-1 Fees --
After 5 Years $ 35
Other Expenses .06%
After 10 Years $ 77
Total .62%
</TABLE>

EVERGREEN GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees 1.00%
After 1 Year $ 14
12b-1 Fees --
After 3 Years $ 42
Other Expenses .33%
After 5 Years $ 73
After 10 Years $ 160
Total 1.33%
</TABLE>

EVERGREEN VALUE FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees .50%
After 1 Year $ 7
Administrative Fees .06%
After 3 Years $ 21
12b-1 Fees --
After 5 Years $ 37
Other Expenses .10%
After 10 Years $ 82
Total .66%
</TABLE>

EVERGREEN AMERICAN RETIREMENT FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees .75%
After 1 Year $ 13
12b-1 Fees --
After 3 Years $ 41
Other Expenses .53%
After 5 Years $ 70
After 10 Years $ 155
Total 1.28%
</TABLE>

<PAGE>
EVERGREEN FOUNDATION FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees .875%
After 1 Year $ 12
12b-1 Fees --
After 3 Years $ 36
Other Expenses .265%
After 5 Years $ 63
After 10 Years $ 139
Total 1.14%
</TABLE>

EVERGREEN TOTAL RETURN FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees 1.00%
After 1 Year $ 13
12b-1 Fees --
After 3 Years $ 39
Other Expenses .24%
After 5 Years $ 68
After 10 Years $ 150
Total 1.24%
</TABLE>

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 Y Class for the most recent fiscal period. Such expenses have
been restated to reflect current fee arrangements. THE 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.
4

<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent years or the life of the Fund
if shorter for EVERGREEN BALANCED FUND and EVERGREEN VALUE FUND has been audited
by KPMG Peat Marwick LLP, each Fund's independent auditors, for EVERGREEN
FOUNDATION FUND has been audited by Price Waterhouse LLP, the Fund's independent
auditors and for EVERGREEN AMERICAN RETIREMENT FUND, EVERGREEN GROWTH AND INCOME
FUND and EVERGREEN TOTAL RETURN FUND has been audited by Ernst & Young LLP, each
Fund's independent auditors. A report of KPMG Peat Marwick LLP, Price Waterhouse
LLP, or Ernst & Young LLP, as the case may be, on the audited information with
respect to each Fund is incorporated by reference in the Fund's Statement of
Additional Information. The following information for each Fund should be read
in conjunction with the financial statements and related notes which are
incorporated by reference in the Fund's Statement of Additional Information.
No financial highlights are shown for Class A, B or C shares of EVERGREEN
GROWTH AND INCOME FUND, EVERGREEN AMERICAN RETIREMENT FUND or EVERGREEN
FOUNDATION FUND, since these classes did not have any operations prior to
December 31, 1994.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN BALANCED FUND -- CLASS A, B, C AND Y SHARES
<TABLE>
<CAPTION>
CLASS A CLASS Y
SHARES CLASS B CLASS C SHARES
SHARES SHARES
JUNE 10, JANUARY 26, SEPTEMBER 2,
1991* 1993* 1994*
YEAR ENDED THROUGH YEAR ENDED THROUGH THROUGH YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1992 1991 1994 1993 1994 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value,
beginning of
period............. $12.07 $11.41 $11.02 $10.00 $12.08 $11.54 $12.00 $12.07 $11.41 $11.02
Income (loss) from
investment
operations:
Net investment
income............. .43 .42 .42 .30 .36 .34 .18 .46 .45 .46
Net realized and
unrealized gain
(loss) on
investments........ (.71) .75 .43 1.08 (.71) .65 (.61) (.71) .75 .42
Total from
investment
operations....... (.28) 1.17 .85 1.38 (.35) .99 (.43) (.25) 1.20 .88
Less distributions
to shareholders
from:
Net investment
income............. (.43) (.42) (.42) (.35) (.36) (.34) (.21) (.46) (.45) (.45)
Net realized
gains.............. (.19) (.09) (.04) (.01) (.19) (.09) (.19) (.19) (.09) (.04)
In excess of net
investment
income............. -- -- -- -- -- (.02)(a) -- -- -- --
Total
distributions..... (.62) (.51) (.46) (.36) (.55) (.45) (.40) (.65) (.54) (.49)
Net asset value, end
of period.......... $11.17 $12.07 $11.41 $11.02 $11.18 $12.08 $11.17 $11.17 $12.07 $11.41
TOTAL RETURN+....... (2.4%) 10.4% 7.9% 11.8% (3.0%) 8.7% (3.6%) (2.2%) 10.7% 8.2%
RATIOS &
SUPPLEMENTAL DATA
Net assets, end of
period
(000's omitted).... $41,010 $35,032 $17,408 $334 $100,052 $65,475 $195 $778,657 $760,147 $520,232
Ratios to average
net assets:
Expenses........... .89% .91% .91% .92%++ 1.48% 1.41%++ 1.64%++ .64% .66% .66%
Net investment
income............. 3.69% 3.61% 3.93% 4.38%++ 3.12% 3.09%++ 3.23%++ 3.93% 3.86% 4.20%
Portfolio turnover
rate............... 35% 19% 12% 19% 35% 19% 35% 35% 19% 12%
<CAPTION>

APRIL 1,
1991*
THROUGH
DECEMBER 31,
1991
<S> <C>
PER SHARE DATA
Net asset value,
beginning of
period............. $10.00
Income (loss) from
investment
operations:
Net investment
income............. .36
Net realized and
unrealized gain
(loss) on
investments........ 1.03
Total from
investment
operations....... 1.39
Less distributions
to shareholders
from:
Net investment
income............. (.36)
Net realized
gains.............. (.01)
In excess of net
investment
income............. --
Total
distributions..... (.37)
Net asset value, end
of period.......... $11.02
TOTAL RETURN+....... 15.0%
RATIOS &
SUPPLEMENTAL DATA
Net assets, end of
period
(000's omitted).... $247,472
Ratios to average
net assets:
Expenses........... .68%++
Net investment
income............. 4.86%++
Portfolio turnover
rate............... 19%
</TABLE>

* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized.
(a) Distributions in excess of net investment income for the year ended
December 31, 1993 were the result of certain book and tax differences.
These differences did not represent a return of capital for federal income
tax purposes for the year ended December 31, 1993.
5

<PAGE>
EVERGREEN GROWTH AND INCOME FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993 1992 1991 1990 1989 1988** 1987**
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period...... $15.41 $14.18 $12.99 $10.72 $12.03 $10.62 $9.38 $10.05
Income (loss) from investment operations:
Net investment income..................... .14 .14 .15 .19 .30 .52 .19 .20
Net realized and unrealized gain (loss) on
investments............................. .12 1.91 1.65 2.58 (.84) 2.17 2.10 (.63)
Total from investment operations........ .26 2.05 1.80 2.77 (.54) 2.69 2.29 (.43)
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 period............ $14.52 $15.41 $14.18 $12.99 $10.72 $12.03 $10.62 $9.38
TOTAL RETURN+............................. 1.7% 14.4% 13.8% 25.8% (4.5%) 25.4% 24.6% (4.3%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted)................................ $73,457 $77,062 $63,841 $47,763 $36,222 $31,540 $24,399 $21,471
Ratios to average net assets:
Expenses................................ 1.33% 1.26% 1.33% 1.41% 1.50% 1.54% 1.56% 1.76%
Net investment income................... .96% .99% 1.18% 1.55% 2.62% 4.13% 1.70% 1.90%
Portfolio turnover rate................... 29% 28% 30% 23% 41% 53% 41% 48%
<CAPTION>
OCTOBER 15, 1986*
THROUGH
DECEMBER 31, 1986**
<S> <C>
PER SHARE DATA
Net asset value, beginning of period...... $10.00
Income (loss) from investment operations:
Net investment income..................... .07
Net realized and unrealized gain (loss) on
investments............................. (.02)
Total from investment operations........ .05
Less distributions to shareholders from:
Net investment income..................... --
Net realized gains........................ --
Total distributions..................... --
Net asset value, end of period............ $10.05
TOTAL RETURN+............................. .5%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted)................................ $20,696
Ratios to average net assets:
Expenses................................ 1.73%++
Net investment income................... 3.23%++
Portfolio turnover rate................... 4%
</TABLE>

<PAGE>
EVERGREEN VALUE FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
JANUARY 3, 1991*
YEAR ENDED DECEMBER 31, THROUGH DECEMBER
1994 1993 1992 31, 1991
<S> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period...................................... $17.63 $17.11 $17.08 $14.28
Income from investment operations:
Net investment income..................................................... .56 .52 .49 .47
Net realized and unrealized gain (loss) on investments.................... (.20) 1.12 .90 3.53
Total from investment operations........................................ .36 1.64 1.39 4.00
Less distributions to shareholders from:
Net investment income..................................................... (.56) (.52) (.49) (.47)
Net realized gains........................................................ (.82) (.58) (.87) (.73)
In excess of net investment income........................................ -- (.02)(b) -- --
Total distributions..................................................... (1.38) (1.12) (1.36) (1.20)
Net asset value, end of period............................................ $16.61 $17.63 $17.11 $17.08
TOTAL RETURN+............................................................. 2.1% 9.7% 8.3% 25.4%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)................................. $507,028 $463,087 $326,154 $271,391
Ratios to average net assets:
Expenses................................................................ .68% .65% .68%(a) .69%++(a)
Net investment income................................................... 3.21% 2.98% 2.90%(a) 3.04%++(a)
Portfolio turnover rate................................................... 70% 46% 56% 69%
</TABLE>

<PAGE>
EVERGREEN VALUE FUND -- CLASS A SHARES
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31, YEAR ENDED MARCH 31,
1994 1993 1992 1991 1990* 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period.......................... $17.63 $17.11 $17.08 $14.61 $15.12 $14.45 $12.83 $14.66
Income (loss) from investment
operations:
Net investment income............ .52 .47 .44 .46 .36 .54 .36 .26
Net realized and unrealized gain
(loss) on investments........... (.20) 1.10 .89 3.17 (.44) 1.70 2.11 (1.30)
Total from investment
operations.................... .32 1.57 1.33 3.63 (.08) 2.24 2.47 (1.04)
Less distributions to
shareholders from:
Net investment
income.......................... (.51) (.47) (.43) (.43) (.36) (.57) (.38) (.26)
Net realized gains............... (.82) (.58) (.87) (.73) (.02) (1.00) (.47) (.53)
In excess of net investment
income.......................... -- -- -- -- (.05)(c) -- -- --
Total distributions............. (1.33) (1.05) (1.30) (1.16) (.43) (1.57) (.85) (.79)
Net asset value, end of period... $16.62 $17.63 $17.11 $17.08 $14.61 $15.12 $14.45 $12.83
TOTAL RETURN+.................... 1.9% 9.3% 8.0% 25.1% (.5%) 15.5% 19.7% (7.1%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)................. $188,807 $189,983 $169,310 $135,565 $104,637 $95,995 $83,121 $21,914
Ratios to average net assets:
Expenses........................ .93% .99% 1.01%(a) .96%(a) 1.39%++ 1.55% 1.71% 1.74%
Net investment income........... 2.96% 2.63% 2.37%(a) 2.78%(a) 3.28%++ 3.42% 2.72% 1.92%
Portfolio turnover rate (b)...... 70% 46% 56% 69% 13% 11% 24% 24%
<CAPTION>

1987 1986
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period.......................... $12.35 $10.04
Income (loss) from investment
operations:
Net investment income............ .15 .19
Net realized and unrealized gain
(loss) on investments........... 2.38 2.32
Total from investment
operations.................... 2.53 2.51
Less distributions to
shareholders from:
Net investment
income.......................... (.13) (.20)
Net realized gains............... (.09) --
In excess of net investment
income.......................... -- --
Total distributions............. (.22) (.20)
Net asset value, end of period... $14.66 $12.35
TOTAL RETURN+.................... 20.8% 25.3%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)................. $23,221 $5,595
Ratios to average net assets:
Expenses........................ 1.97% 2.00%
Net investment income........... 1.41% 2.34%
Portfolio turnover rate (b)...... 20% 20%
</TABLE>

(b) Portfolio turnover rate for periods ended on or after March 31, 1986 include
certain U.S. government obligations.
(c) Distributions in excess of net investment income for the period ended
December 31, 1990 were a result of certain book and tax timing differences.
These distributions did not represent a return of capital for federal
income tax purposes for the year ended December 31, 1990.
8

<PAGE>
EVERGREEN VALUE FUND -- CLASS B AND C SHARES
<TABLE>
<CAPTION>
CLASS B CLASS C
SHARES SHARES
FEBRUARY 2, SEPTEMBER 2,
1993* 1994*
YEAR ENDED THROUGH THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1994
<S> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.......................................... $17.63 $17.24 $18.28
Income (loss) from investment operations:
Net investment income......................................................... .42 .35 .19
Net realized and unrealized gain (loss) on investments........................ (.20) 1.01 (.81)
Total from investment operations............................................ .22 1.36 (.62)
Less distributions to shareholders from:
Net investment income......................................................... (.41) (.35) (.19)
Net realized gains............................................................ (.82) (.58) (.82)
In excess of net investment income............................................ -- (.04)(a) (.04)(a)
Total distributions......................................................... (1.23) (.97) (1.05)
Net asset value, end of period................................................ $16.62 $17.63 $16.61
TOTAL RETURN+................................................................. 1.3% 8.0% (3.4%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)..................................... $104,297 $ 59,953 $485
Ratios to average net assets:
Expenses.................................................................... 1.53% 1.48%++ 1.68%++
Net investment income....................................................... 2.36% 2.09%++ 2.16%++
Portfolio turnover rate....................................................... 70% 46% 70%
</TABLE>

<PAGE>
EVERGREEN AMERICAN RETIREMENT FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period..... $11.60 $10.95 $10.52 $9.59 $10.41 $ 10.09
Income (loss) from investment operations:
Net investment income.................... .60 .56 .66 .60 .60 .57
Net realized and unrealized gain (loss)
on investments......................... (.93) .96 .55 1.15 (.66) .76
Total from investment operations....... (.33) 1.52 1.21 1.75 (.06) 1.33
Less distributions to shareholders from:
Net investment income.................... (.60) (.60) (.61) (.60) (.60) (.59)
Net realized gains....................... -- (.24) (.17) (.22) (.16) (.42)
In excess of net realized gains.......... -- (.03)(b) -- -- -- --
Total distributions.................... (.60) (.87) (.78) (.82) (.76) (1.01)
Net asset value, end of period........... $10.67 $11.60 $10.95 $10.52 $9.59 $ 10.41
TOTAL RETURN+............................ (2.9%) 14.1% 11.8% 18.8% (.5%) 13.4%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted)............................... $37,176 $37,336 $23,781 $15,632 $12,351 $11,610
Ratios to average net assets:
Expenses............................... 1.28% 1.36% 1.51%(a) 1.50%(a) 1.50%(a) 1.88%(a)
Net investment income.................. 5.40% 5.13% 6.23%(a) 5.91%(a) 6.04%(a) 5.49%(a)
Portfolio turnover rate.................. 136% 92% 151% 97% 33% 152%
<CAPTION>
MARCH 14, 1988*
THROUGH
DECEMBER 31, 1988**
<S> <C>
PER SHARE DATA
Net asset value, beginning of period..... $ 10.00
Income (loss) from investment operations:
Net investment income.................... .39
Net realized and unrealized gain (loss)
on investments......................... .18
Total from investment operations....... .57
Less distributions to shareholders from:
Net investment income.................... (.36)
Net realized gains....................... (.12)
In excess of net realized gains.......... --
Total distributions.................... (.48)
Net asset value, end of period........... $ 10.09
TOTAL RETURN+............................ 5.8%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted)............................... $9,449
Ratios to average net assets:
Expenses............................... 2.00%++
Net investment income.................. 5.01%++
Portfolio turnover rate.................. 52%
</TABLE>

* Commencement of operations.
** Investment income, expenses and net investment income are based upon the
average monthly shares outstanding for the period indicated.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1992 1991 1990 1989
<S> <C> <C> <C> <C>
Expenses...................................................... 1.59% 1.82% 1.95% 2.03%
Net investment income......................................... 6.15% 5.59% 5.59% 5.34%
</TABLE>

* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized.
++ Annualized
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 2, 1990
DECEMBER 31, THROUGH DECEMBER 31,
1992 1991 1990
<S> <C> <C> <C>
Expenses.............................................. 1.43% 2.58% 3.64%
Net investment income................................. 2.90% 1.48% 11.43%
</TABLE>

(b) Includes receipt of a special dividend representing $.62 per share net
investment income and 7.59% of average net assets.
11

<PAGE>
EVERGREEN TOTAL RETURN FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
TEN MONTHS
ENDED
JANUARY YEAR ENDED MARCH 31,
31, 1995* 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period.............................. $18.29 $20.90 $18.82 $18.12 $18.26 $17.92 $17.11 $20.37 $19.72
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
Net realized and unrealized gain
(loss) on investments............... (.55) (1.41) 2.51 .70 (.08) .36 .79 (2.64) 1.76
Total from investment operations.... .32 (.33) 3.62 1.78 .94 1.43 1.91 (1.58) 2.90
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)
Net realized gains.................... (.25) (1.20) (.46) -- -- -- (.02) (.88) (1.11)
Total distributions................. (1.33) (2.28) (1.54) (1.08) (1.08) (1.09) (1.10) (1.68) (2.25)
Net asset value, end of period........ $17.28 $18.29 $20.90 $18.82 $18.12 $18.26 $17.92 $17.11 $20.37
TOTAL RETURN+......................... 1.9% (2.1%) 20.2% 10.2% 5.8% 7.9% 1.3% (7.8%) 15.7%
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
Ratios to average net assets:
Expenses............................ 1.24%++ 1.18% 1.18% 1.21% 1.23% 1.18% 1.02%** 1.01%** 1.02%**
Net investment income............... 5.70%++ 5.29% 5.65% 5.73% 5.90% 5.64% 6.36%** 5.80%** 5.68%**
Portfolio turnover rate............... 151% 106% 164% 137% 137% 89% 86% 81% 44%
<CAPTION>

1986
<S> <C>
PER SHARE DATA
Net asset value, beginning of
period.............................. $16.63
Income (loss) from investment
operations:
Net investment income................. 1.03
Net realized and unrealized gain
(loss) on investments............... 4.26
Total from investment operations.... 5.29
Less distributions to shareholders
from:
Net investment income................. (1.22)
Net realized gains.................... (.98)
Total distributions................. (2.20)
Net asset value, end of period........ $19.72
TOTAL RETURN+......................... 35.2%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (in
millions)........................... $408
Ratios to average net assets:
Expenses............................ 1.11%**
Net investment income............... 6.06%**
Portfolio turnover rate............... 65%
</TABLE>

* 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 charge or contingent deferred
sales charge is not reflected.
++ Annualized.
13

<PAGE>
14

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

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

INVESTMENT OBJECTIVES AND POLICIES

Evergreen Balanced Fund

Evergreen Growth and Income Fund

Evergreen Value Fund

The Fund's investments, in order of priority, consist of:

ADRs of foreign companies traded on the New York or American
Stock Exchanges or the over-the-counter market;

convertible bonds rated no lower than BBB by S&P or Baa by
Moody's or, if not rated, determined to be of comparable quality by the
Fund's investment adviser;

money market instruments;

zero coupon bonds issued or guaranteed by the U.S. government,
its agencies or instrumentalities (up to 5% of total assets);

prime commercial paper, including master demand notes rated no
lower than A-1 by S&P or Prime 1 by Moody's.

Evergreen American Retirement Fund

Evergreen Foundation Fund

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.

Evergreen Total Return Fund

INVESTMENT PRACTICES AND RESTRICTIONS

Special Risk Considerations

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

MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------

INVESTMENT ADVISERS

SUB-ADVISER

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

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

HOW TO BUY SHARES

Eligible Investors may purchase Fund shares at net asset value by mail
or wire as described below. The Funds impose no sales charges on Class Y shares.
Class Y shares are the only class of shares 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 minimum
initial investment is $1,000, which may be waived in certain situations. There
is no minimum for subsequent investments. Investors may make subsequent
investments by establishing a Systematic Investment Plan or a Telephone
Investment Plan.

Purchases by Mail or Wire. Each investor must complete the enclosed Share
Purchase Application and mail it together with a check made payable to the Fund
whose shares are being purchased, to State Street Bank and Trust Company ("State
Street") at P.O. Box 9021, Boston, Massachusetts 02205-9827. Checks not drawn on
U.S. banks will be subject to foreign collection which will delay an investor's
investment date and will be subject to processing fees.

When making subsequent investments, an investor should either enclose
the return remittance portion of the statement, or indicate on the face of the
check, the name of the Fund in which an investment is to be made, the exact
title of the account, the address, and the Fund account number. Purchase
requests should not be sent to a Fund in New York. If they are, the Fund must
forward them to State Street, and the request will not be effective until State
Street receives them.

Initial investments may also be made by wire by (i) calling State
Street at 800-423-2615 for an account number and (ii) instructing your bank,
which may charge a fee, to wire federal funds to State Street, as follows: State
Street Bank and Trust Company, ABA No.0110-0002-8, Attn: Custodian and
Shareholder Services. The wire must include references to the Fund in which an
investment is being made, account registration, and the account number. A
completed Application must also be sent to State Street indicating that the
shares have been purchased by wire, giving the date the wire was sent and
referencing the account number. Subsequent wire investments may be made by
existing shareholders by following the instructions outlined above. It is not
necessary, however, for existing shareholders to call for another account
number.

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
market 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.

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.

The Share Purchase Application may not be used to invest in any of the
prototype retirement plans for which the Funds are an available investment. For
information about the requirements to make such investments, including copies of
the necessary application forms, please call the telephone number set forth on
the cover page of this Prospectus. A Fund cannot accept investments specifying a
certain price or date and reserves the right to reject any specific purchase
order, including orders in connection with exchanges from the other Evergreen
Funds. Although not currently anticipated, each Fund reserves the right to
suspend the offer of shares for a period of time.

Shares of each Fund are sold at the net asset value per share next
determined after a shareholder's order is received. Investments by federal funds
wire or by check will be effective upon receipt by State Street. Qualified
institutions may telephone orders for the purchase of Fund shares. Investors may
also purchase shares through a broker/dealer, which may charge a fee for the
service.

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 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 15 days). Once a redemption request has
been telephoned or mailed, it is irrevocable and may not be modified or
canceled.

Redeeming Shares Directly by Mail or Telephone. Send a signed letter of
instruction or stock power form to 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 enclosed 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 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. Each Fund imposes a
fee of $5 per exchange on shareholders who exchange in excess of four times per
calendar year. 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.

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, Evergreen Funds Distributor, Inc.("EFD"), the distributor of the
Funds, or the toll-free number on the front page of this Prospectus. 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.

EFFECT OF BANKING LAWS

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

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

DIVIDENDS, DISTRIBUTIONS AND TAXES

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

Evergreen Growth and Income Fund

[CHART]

Evergreen American Retirement Fund

[CHART]

Evergreen Foundation Fund.

Evergreen Total Return Fund.

[CHART]

GENERAL INFORMATION

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 the only class of shares offered by this Prospectus
and are only available to (i) all shareholders of record in one or more of the
Funds for which Evergreen Asset serves as investment adviser as of December 30,
1994, (ii) certain institutional investors and (iii) investment advisory clients
of CMG, Evergreen Asset or their 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 and
shareholder servicing 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.

<PAGE>
INVESTMENT ADVISER
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN GROWTH AND INCOME FUND, EVERGREEN AMERICAN RETIREMENT FUND,
EVERGREEN FOUNDATION FUND, EVERGREEN TOTAL RETURN FUND
Capital Management Group of First Union National Bank, 210 South College
Street, Charlotte, North Carolina, 28228
EVERGREEN BALANCED FUND, EVERGREEN VALUE FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827
LEGAL COUNSEL
Sullivan & Worcester, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
EVERGREEN FOUNDATION FUND
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116-5072
EVERGREEN TOTAL RETURN FUND, EVERGREEN GROWTH AND INCOME FUND, EVERGREEN
AMERICAN RETIREMENT FUND
KPMG Peat Marwick LLP, One Mellon Bank Center, Pittsburgh, Pennsylvania 15219
EVERGREEN BALANCED FUND, EVERGREEN VALUE FUND
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017
536123

PROSPECTUS July 7, 1995
EVERGREEN(SM) SPECIALTY GROWTH AND INCOME FUNDS (Evergreen Logo appears here)
EVERGREEN UTILITY FUND
EVERGREEN TAX STRATEGIC FOUNDATION FUND
EVERGREEN SMALL CAP EQUITY INCOME FUND
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
The Evergreen Specialty Growth and Income Funds (the "Funds") are
designed to provide investors with a selection of investment alternatives
which seek to provide current income, capital appreciation or after-tax
"total return". 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 certain
other funds in the Evergreen Group of mutual funds dated July 7, 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
EVERGREEN(SM) is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.

<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
OVERVIEW OF THE FUNDS 2
EXPENSE INFORMATION 3
FINANCIAL HIGHLIGHTS 5
DESCRIPTION OF THE FUNDS
Investment Objectives and Policies 8
Investment Practices and Restrictions 10
MANAGEMENT OF THE FUNDS
Investment Advisers 15
Sub-Adviser 16
Distribution Plans and Agreements 17
PURCHASE AND REDEMPTION OF SHARES
How to Buy Shares 18
How to Redeem Shares 20
Exchange Privilege 21
Shareholder Services 22
Effect of Banking Laws 23
OTHER INFORMATION
Dividends, Distributions and Taxes 23
Management's Discussion of Fund Performance 24
General Information 25
</TABLE>

The following tables show for each Fund the estimated 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 UTILITY FUND (A)
<TABLE>
<CAPTION>
EXAMPLES
Assuming
Assuming Redemption at End of no
ANNUAL OPERATING EXPENSES Period Redemption
Class A Class B Class C Class B
Class A Class B Class C
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees .50% .50% .50%
After 1 Year $ 57 $ 68 $ 28 $ 18
Administrative Fees .06% .06% .06%
After 3 Years $ 78 $ 85 $ 55 $ 55
12b-1 Fees* .25% .75% .75%
After 5 Years $ 100 $ 114 $ 94 $ 94
Shareholder Service Fees -- .25% .25%
After 10 Years $ 163 $ 176 $ 205 $ 176
Other Expenses .18% .18% .18%
Total .99% 1.74% 1.74%
<CAPTION>
Class C
<S> <C> <C>
After 1 Year $ 18
Administrative Fees
After 3 Years $ 55
12b-1 Fees*
After 5 Years $ 94
Shareholder Service Fees
After 10 Years $ 205
Other Expenses
Total
<CAPTION>
Advisory Fees
</TABLE>

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

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

<PAGE>
*Class A Shares can pay up to .75 of 1% of average net assets as a 12b-1 Fee.
For the forseeable future, the Class A Shares 12b-1 Fees will be limited to .25
of 1% of average net assets. For Class B and Class C Shares of Evergreen Small
Cap Equity Income Fund and Evergreen Tax Strategic Foundation Fund, a portion of
the 12b-1 Fees equivalent to .25 of 1% of average net assets will be shareholder
servicing-related. Distribution-related 12b-1 Fees will be limited to .75 of 1%
of average net assets as permitted under the rules of the National Association
of Securities Dealers, Inc.
**Reflects agreements by Evergreen Asset 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.
(a) Estimated annual operating expenses reflect the combination of First Union
Utility Portfolio and ABT Utility Income Fund.
From time to time, each Fund's investment adviser may, at its discretion,
reduce or waive its fees or reimburse the Funds for certain of their expenses in
order to reduce their expense ratios. Each Fund's investment adviser may cease
these waivers and reimbursements at any time.
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 for the year ended December 31, 1994. Such amounts have been
restated to reflect current fee arrangements and in the case of Funds that did
not offer all of the above-referenced Classes of shares during such periods, the
amounts set forth in the tables are based on the expenses incurred by the
Classes which were offered. THE 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.
4

<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund if shorter for EVERGREEN UTILITY FUND has been audited by KPMG Peat
Marwick LLP, the Fund's independent auditors, for EVERGREEN TAX STRATEGIC
FOUNDATION FUND has been audited by Price Waterhouse LLP, the Fund's independent
auditors and for EVERGREEN SMALL CAP EQUITY INCOME FUND has been audited by
Ernst & Young LLP, the Fund's independent auditors. A report of KPMG Peat
Marwick LLP, Price Waterhouse LLP, or Ernst & Young LLP, as the case may be, on
the audited information with respect to each Fund is incorporated by reference
in the Fund's Statement of Additional Information. The following information for
each Fund should be read in conjunction with the financial statements and
related notes which are incorporated by reference in the Fund's Statement of
Additional Information.
No financial highlights are shown for Class A, B or C Shares of Evergreen
Tax Strategic Foundation Fund and Evergreen Small Cap Equity Income Fund since
these classes did not have any operations prior to December 31, 1994.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN UTILITY FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
JANUARY 4, JANUARY 4, SEPTEMBER 2, FEBRUARY 28,
1994* 1994* 1994* 1994*
THROUGH THROUGH THROUGH THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1994 1994 1994
<S> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.......................... $10.00 $10.00 $9.33 $9.51
Income (loss) from investment operations:
Net investment income......................................... .45 .39 .12 .37
Net realized and unrealized loss on investments............... (1.01) (1.01) (.33) (.50)
Total from investment operations............................ (.56) (.62) (.21) (.13)
Less distributions to shareholders from:
Net investment income......................................... (.44) (.38) (.11) (.37)
In excess of net investment income............................ -- -- -- (.01)(b)
Total distributions......................................... (.44) (.38) (.11) (.38)
Net asset value, end of period................................ $9.00 $9.00 $9.01 $9.00
TOTAL RETURN+................................................. (5.6%) (6.2%) (2.2%) (1.6%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)..................... $4,190 $28,792 $128 $5,201
Ratios to average net assets:
Expenses (a)................................................ .53%++ 1.27%++ 1.94%++ .40%++
Net investment income (a)................................... 5.07%++ 4.19%++ 3.96%++ 4.93%++
Portfolio turnover rate....................................... 23% 23% 23% 23%
</TABLE>

JANUARY 4, JANUARY 4, SEPTEMBER 2, FEBRUARY 28,
1994 1994 1994 1994
THROUGH THROUGH THROUGH THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
<S> <C> <C> <C> <C>
1994 1994 1994 1994
Expenses............................ 1.43% 2.11% 2.78% 1.24%
Net investment income............... 4.17% 3.35% 3.12% 4.09%
</TABLE>

(b) Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These
distributions do not represent a return of capital for federal income tax
purposes.
5

<PAGE>
EVERGREEN TAX STRATEGIC FOUNDATION FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
NOVEMBER 2, 1993*
YEAR ENDED THROUGH
DECEMBER 31, 1994 DECEMBER 31, 1993
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of period................................................ $ 10.31 $ 10.00
Income from investment operations:
Net investment income............................................................... .27 .05
Net realized and unrealized gain 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 period...................................................... $ 10.27 $ 10.31
TOTAL RETURN+....................................................................... 3.4% 3.5%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)........................................... $10,575 $5,424
Ratios to average net assets:
Expenses (a)...................................................................... 1.49% 0%++
Net investment income (a)......................................................... 2.87% 3.65%++
Portfolio turnover rate............................................................. 245% 25%
</TABLE>

* Commencement of operations.
+ Total return is calculated on net asset value per share and for the period
indicated and is not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
NOVEMBER 2, 1993
YEAR ENDED THROUGH
DECEMBER 31, 1994 DECEMBER 31, 1993
<S> <C> <C>
Expenses.................................................. 2.41% 3.10%
Net investment income..................................... 1.95% .54%
</TABLE>

<PAGE>
EVERGREEN SMALL CAP EQUITY INCOME FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
OCTOBER 1, 1993*
YEAR ENDED THROUGH
DECEMBER 31, 1994 DECEMBER 31, 1993
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of period................................................ $ 10.15 $ 10.00
Income (loss) 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.................................................................. (.05) --
Total distributions............................................................. (.38) (.10)
Net asset value, end of period...................................................... $ 9.70 $ 10.15
TOTAL RETURN+....................................................................... (.7%) 2.5%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)........................................... $3,613 $2,236
Ratios to average net assets:
Expenses (a)...................................................................... 1.48% 0%++
Net investment income (a)......................................................... 3.72% 4.07%++
Portfolio turnover rate............................................................. 9% 15%
</TABLE>

* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income (loss) to average
net assets, exclusive of any applicable state expense limitations, would
have been the following:
<TABLE>
<CAPTION>
OCTOBER 1, 1993
YEAR ENDED THROUGH
DECEMBER 31, 1994 DECEMBER 31, 1993
<S> <C> <C>
Expenses.................................................. 4.68% 4.39%
Net investment income (loss).............................. .53% (.33%)
</TABLE>

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

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

INVESTMENT OBJECTIVES AND POLICIES

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.

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 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 investment 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 judgment of the Fund's investment
adviser 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 Investor's Service ("Moody's"), A-2 by Standard and Poor's
Ratings Group ("S&P") or having a comparable rating from another nationally
recognized statistical rating organization ("SRO"); 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 "Investment Practices and Restrictions - Special Risk Considerations",
below.

It is anticipated that the annual portfolio turnover rate for the Fund
will not generally exceed 100%. The Fund may employ certain additional
investment strategies which are discussed in "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
""Investment Practices and Restrictions - "Municipal Securities and Taxable
Investments). There can be no assurance that the Funds investment objective
will be achieved. The objective is fundamental and may not be changed without
shareholder approval.

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 investment 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 Fund's investment 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 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 investment 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 Fund's investment 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.

Evergreen Utility Fund

The investment objective of Evergreen Utility Fund is to achieve a
return consisting of high current income and moderate capital appreciation. The
Fund invests primarily in a diversified portfolio of equity and debt securities
of utility companies that produce, transmit or distribute gas or electrical
energy, as well as those companies which provide communications facilities, such
as telephone and telegraph companies. As a matter of investment policy, the Fund
will invest at least 65% of the value of its total assets in utility companies
that derive 50% of their revenues from utilities or assets relating to utility
industries. In addition, the Fund may invest up to 35% of its assets in common
stock of non-utility companies. There can be no assurance that the Fund's
investment objective will be achieved.

<PAGE>

The Fund may invest in:

common and preferred stocks, bonds and convertible preferred
stocks of utility companies selected by the Fund's investment adviser
on the basis of traditional research techniques, including assessment
of earnings and dividend growth prospects and of the risk and
volatility of the individual company's industry. However, other
factors, such as product position, market share or profitability may
also be considered by the Fund's investment adviser. The Fund will only
invest its assets in debt securities rated Baa or higher by Moody's or
BBB or higher by S&P or which, if unrated, are considered to be of
comparable quality by the Fund's investment adviser;

securities which are either issued or guaranteed by the U.S.
government, its agencies or instrumentalities. These securities include
direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes and bonds; and notes, bonds and discount notes of U.S. government
agencies or instrumentaltiies such as the Farm Credit System, including
the National Bank for Cooperatives, Farm Credit Banks and Banks for
Cooperatives, Farmers Home Administration, Federal Home Loan Banks,
Federal Home Loan Mortgage Corporation, Federal National Mortgage
Association, Government National Mortgage Association, Student Loan
Marketing Association, Tennessee Valley Authority, Export-Import Bank
of the United State, Commodity Credit Corporation, Federal Financing
Bank and National Credit Union Administration. Some of these securities
are supported by the full faith and credit of the U.S. government, and
others are supported only by the full faith and credit of the agency or
instrumentality;

commercial paper, including master demand notes;

American Depositary Receipts ("ADRs") of foreign companies
traded on the New York or American Stock Exchanges or the
over-the-counter market;

foreign securities (either foreign or U.S. securities traded
in foreign markets). The Fund may also invest in other obligations
denominated in foreign currencies. In making these decisions, the
Fund's investment adviser will consider such factors as the condition
and growth potential of various economies and securities markets,
currency and taxation considerations and other pertinent financial,
social, national and political factors. (See "Investment Practices and
Restrictions" - "Other Investment Policies" and "Foreign Investments".)
The Fund will not invest more than 10% of its assets in foreign
securities;

obligations, including certificates of deposit and bankers'
acceptances, of banks or savings and loan associations having at least
$1 billion in deposits and insured by the Bank Insurance Fund or the
Savings Association Mortagage Fund, including U.S. branches of foreign
banks and foreign branches of U.S. banks; and

securities of other investment companies.

Bonds rated Baa by Moody's or BBB by S&P may have speculative
characteristics. Changes in economic conditions or other circumstances are more
likely to weaken such bonds' prospects for principal and interest payments than
higher rated bonds. However, like the higher rated bonds, these securities are
considered investment grade.

As of December 31, 1994 approximately 88% of the Fund's portfolio
consisted of equity securities. The Fund may employ certain additional
investment strategies which are discussed in "Investment Practices and
Restrictions", below.

INVESTMENT PRACTICES AND RESTRICTIONS

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 Evergreen Asset 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 Evergreen Small Cap Equity Income Fund and
Evergreen Tax Strategic Foundation Fund on those exchanges. See the Statement of
Additional Information for further information regarding the brokerage
allocation practices of these 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 Funds' investment advisers 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 the total assets of the Evergreen
Small Cap Equity Income Fund and Evergreen Tax Strategic Foundation Fund, and
15% of the value of the total assets of Evergreen Utility Fund, 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.

There is the risk that when lending portfolio securities, the securities may not
be available to a Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities files for bankruptcy or becomes insolvent,
dispostion of the securities may be delayed pending court action.

Illiquid or Restricted 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 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. Illiquid
securities include certain restricted securities not determined by the Trustees
to be liquid, non-negotiable time deposits and repurchase agreements providing
for settlement in more than seven days after notice. 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 Funds' investment
advisers 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 each Fund's investment 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. The Funds may enter
into 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 Funds' investment advisers will review and continually monitor
the creditworthiness of each institution with which a Fund enters into a
repurchase agreement to evaluate these risks.

The Funds 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, U.S. 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 and
Evergreen Utility 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
Funds will only use futures instruments for hedging, not speculative, purposes.
The Funds may not enter into futures contracts or related options if,
immediately thereafter, more than 30% of a Fund's total assets would be hedged
thereby or the amounts committed to margin and premiums paid for unexpired
options would exceed 5% of a Fund's total assets. These transactions include
brokerage costs and require each Fund to segregate liquid high grade debt or
cash to cover contracts which would require them to purchase securities. The
Funds may lose the expected benefit of the transactions if securities prices or
interest rates move in an unanticipated manner. In addition, if a 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 and Evergreen Utility
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 Funds
will be able to close out positions in a specific contract at a specific time.
Each Fund will not enter into a particular index-based futures contract unless
the Fund's investment adviser determines that a correlation exists between price
movements in the index-based futures contract and in securities in a Fund's
portfolio. Such correlation is not likely to be perfect, since each Fund's
portfolio is not likely to contain the same securities used in the index.

Evergreen Small Cap Equity Income Fund and Evergreen Utility Fund may
attempt to earn income from selling (writing) call options on futures contracts
in instances where each Fund's investment 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, a 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.

Options And Futures. Evergreen Utility Fund may deal in put and call options. A
call option gives the purchaser the right to buy, and the writer the obligation
to sell, the underlying asset at the exercise price during the option period. A
put option gives the purchaser the right to sell, and the writer the obligation
to buy, the underlying asset at the exercise price during the option period. The
writer of a covered call owns assets that are acceptable for escrow and the
writer of a secured put invests an amount not less than the exercise price in
eligible assets to the extent that it is obligated as a writer. If a call
written by a Fund is exercised, the Fund forgoes any possible profit from an
increase in the market price of the underlying asset over the exercise price
plus the premium received. In writing puts, there is a risk that a Fund may be
required to take delivery of the underlying asset at a disadvantageous price.

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. The Municipal Securities in which
Evergreen Tax Strategic Foundation Fund may invest 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 5% or less of its total
assets.

When-Issued Securities. Evergreen Utility Fund and Evergreen Tax Strategic
Foundation Fund may purchase securities on a "when-issued" basis (i.e., for
delivery beyond the normal settlement date at a stated price and yield). The
Funds generally would not pay for such securities or start earning interest on
them until they are received. However, when the Funds purchase securities on a
when-issued basis, they assume 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 a 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 the total assets of
Evergreen Tax Strategic Foundation Fund and 20% of the total assets of Evergreen
Utility Fund. 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 Fund's investment adviser, present
minimal credit risks.

Taxable Fixed Income Investments. Evergreen Tax Strategic Foundation Fund may,
however, temporarily invest up to 20% of its total 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 U.S. 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 U.S. banks with
assets of $1 billion or more.

Fixed-Income Securities -- Downgrades. If any security invested in by any of the
Funds loses its rating or has its rating reduced after the Fund has purchased
it, the Fund is not required to sell or otherwise dispose of the security, but
may consider doing so.

Special Risk Considerations

Investments in the Utility Industry. In view of the Evergreen Utility Fund's
investment concentration, investors should be aware of certain risks associated
with the utility industry in general. These include difficulties in earning
adequate returns on investments despite frequent rate increases, restrictions on
operations and increased costs and delays due to governmental regulations,
building or construction delays, environmental regulations, difficulty of the
capital markets in absorbing utility debt and equity securities, and
difficulties in obtaining fuel at reasonable prices.

The Fund's investment adviser believes that the risks of investing in
utility securities can be reduced. The professional portfolio management
techniques used by the Fund's investment adviser to attempt to reduce these
risks include credit research. The Fund's investment adviser will perform its
own credit analysis, in addition to using recognized rating agencies and other
sources, including discussions with an issuer's management, the judgment of
other investment analysts, and its own informed judgment. The credit analysis of
the Fund's investment adviser will consider an issuer's financial soundness, its
responsiveness to changes in interest rates and business conditions, its
anticipated cash flow, interest or dividend coverage, and earnings. In
evaluating an issuer, the Fund's investment adviser places special emphasis on
the estimated current value of the issuer's assets rather than historical costs.

Bond prices move inversely to interest rates, i.e., as interest rates
decline the value of the bonds increase and vice versa. The longer the maturity
of a bond, the greater the exposure to market price fluctuations. The same
market factors are reflected in the share price or net asset value of bond funds
which will vary with interest rates. There is no limit on the maturity of the
fixed income securities purchased by the Fund.

Investment in Foreign Securities. Investments by Evergreen Utility Fund in
foreign securities require 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.

ADRs and European Depositary Receipts ("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 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.

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MANAGEMENT OF THE FUNDS
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INVESTMENT ADVISERS

The management of each Fund is supervised by the Trustees of the Trust
under which it has been established ("Trustees"). Evergreen Asset Management
Corp. ( "Evergreen Asset") has been retained by Evergreen Tax Strategic
Foundation Fund and Evergreen Small Cap Equity Income Fund as investment
adviser. Evergreen Asset succeeded on June 30, 1994 to the advisory business of
the same name, but under different ownership, which was organized in 1971.
Evergreen Asset, with its predecessors, has served as investment adviser to the
Evergreen mutual funds since 1971. Evergreen Asset is a wholly-owned subsidiary
of First Union National Bank of North Carolina ("FUNB"). The address of
Evergreen Asset is 2500 Westchester Avenue, Purchase, New York 10577. FUNB is a
subsidiary of First Union Corporation ("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 Evergreen Asset and, along
with Theodore J. Israel, Jr., were the owners of Evergreen Asset's predecessor
and the former general partners of Lieber & Company, which, as described below,
provides certain subadvisory services to Evergreen Asset in connection with its
duties as investment adviser to the Funds. The Capital Management Group of FUNB
("CMG") serves as investment adviser to Evergreen Utility 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 all the series of
Evergreen Investment Trust (formerly known as First Union 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.

As investment adviser to Evergreen Tax Strategic Foundation Fund and
Evergreen Small Cap Equity Income Fund, Evergreen Asset manages each Fund's
investments, provides various administrative services and supervises each Fund's
daily business affairs, subject to the authority of the Trustees. Evergreen
Asset is entitled to receive from Evergreen Small Cap Equity Income Fund a fee
equal to 1% of average daily net assets on an annual basis on the first $750
million in assets, .9 of 1% of average daily net assets on an annual basis on
the next $250 million in assets, and .8 of 1% of average daily net assets on an
annual basis on assets over $1 billion. With respect to Evergreen Tax Strategic
Foundation Fund, Evergreen Asset is entitled to receive a fee equal to .875 of
1% of average daily net assets on an annual basis on the first $750 million in
assets, .75 of 1% of average daily net assets on an annual basis on the next
$250 million in assets, and .7 of 1% of average daily net assets on an annual
basis on assets over $1 billion. The fee paid by Evergreen Small Cap Equity
Income Fund and Evergreen Tax Strategic Foundation 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, Evergreen Asset has agreed to reimburse such Funds 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. The total
expenses as a percentage of average daily net assets on an annual basis of
Evergreen Small Cap Equity Income Fund and Evergreen Tax Strategic Foundation
Fund for the fiscal year ended December 31, 1994 are set forth in the section
entitled "Financial Highlights". 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
Evergreen Asset which may, at its discretion, revise or cease this voluntary
waiver at any time.

CMG manages investments and supervises the daily business affairs of
Evergreen Utility Fund and, as compensation therefor, is entitled to receive an
annual fee equal to .50 of 1% of average daily net assets of the Fund. The total
expenses as a percentage of average daily net assets on an annual basis of
Evergreen Utility Fund for the fiscal year ended December 31, 1994 are set forth
in the section entitled "Financial Highlights". Evergreen Asset serves as
administrator to Evergreen Utility Fund and is entitled to receive a fee based
on the average daily net assets of the Fund at a rate based on the total assets
of the mutual funds administered by Evergreen Asset for which CMG or Evergreen
Asset also serve as investment adviser, calculated in accordance with the
following schedule: .050% of the first $7 billion; .035% on the next $3 billion;
.030% on the next $5 billion; .020% on the next $10 billion; .015% on the next
$5 billion; and .010% on assets in excess of $30 billion. Furman Selz
Incorporated, the parent of Evergreen Funds Distributor, Inc., distributor for
the Evergreen group of mutual funds, serves as sub-administrator to Evergreen
Utility Fund and is entitled to receive a fee from the Fund calculated on the
average daily net assets of the Fund at a rate based on the total assets of the
mutual funds administered by Evergreen Asset for which CMG or Evergreen Asset
also serve as investment adviser, calculated in accordance with the following
schedule: .0100% of the first $7 billion; .0075% on the next $3 billion; .0050%
on the next $15 billion; and .0040% on assets in excess of $25 billion. The
total assets of the mutual funds administered by Evergreen Asset for which CMG
or Evergreen Asset serve as investment adviser as of March 31, 1995 were
approximately $8 billion.

The portfolio manager for Evergreen Small Cap Equity Income Fund is
Nola Maddox Falcone, C.F.A., who is President and Co-Chief Executive Officer of
Evergreen Asset. Ms. Falcone has served as the principal manager of the Fund
since 1993. Stephen A. Lieber, who is Chairman and Co-Chief Executive Officer of
Evergreen Asset, together with James T. Colby, III, serve as the portfolio
managers for Evergreen Tax Strategic Foundation Fund. Mr. Lieber makes all
allocation decisions and investment decisions for the equity portion of the
portfolio and Mr. Colby manages the fixed-income portion. Mr. Colby has served
as a fixed-income portfolio manager with Evergreen Asset 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 of Evergreen Utility Fund since its inception
is H. Bradley Donovan, who is an Assistant Vice President of FUNB, and has been
with First Union since 1992. Prior to that, Mr. Donovan had served as a
portfolio manager and equity analyst at The Bank of Boston.

SUB-ADVISER

Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company which provides that Lieber & Company's research department and staff
will furnish Evergreen Asset with information, investment recommendations,
advice and assistance, and will be generally available for consultation on the
portfolios of Evergreen Tax Strategic Foundation Fund and Evergreen Small Cap
Equity Income Fund. Lieber & Company will be reimbursed by Evergreen Asset 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
Evergreen Tax Strategic Foundation Fund and Evergreen Small Cap Equity Income
Fund for the services provided by Lieber & Company. 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 aggregate average daily net assets
attributable to each Fund's Class A shares, 1.00% of the aggregate average daily
net assets attributable to the Class B and Class C shares of Evergreen Tax
Strategic Foundation Fund and Evergreen Small Cap Equity Income Fund, and .75 of
1% of the aggregate average daily net assets attributable to the Class B and
Class C shares of Evergreen Utility Fund. Payments under the Plans adopted with
respect to Class A shares 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 may constitute a
service fee to be used for providing ongoing personal services and/or the
maintenance of shareholder accounts. Evergreen Utility Fund has, in addition to
the Plans adopted with respect to its Class B and Class C shares, adopted
shareholder service plans ("Service Plans") relating to the Class B and Class C
shares which permit the Fund to incur a fee of up to .25 of 1% of the aggregate
average daily net assets attributable to the Class B and Class C shares for
ongoing personal services and/or the maintenance of shareholder accounts. Such
service fee payments to financial intermediaries for such purposes, whether
pursuant to a Plan or Service Plan, will not to exceed .25% of the aggregate
average daily net assets attributable to each Class of shares of each Fund.

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 ( and in the case
of Evergreen Utility Fund, the Service Plan), 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 each Fund's investment adviser or their affiliates, for personal services
rendered to shareholders and/or the maintenance of shareholder accounts.

<PAGE>

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

HOW TO BUY 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

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

With respect to Class B Shares and Class C Shares, no CDSC will be
imposed on: (1) the portion of redemption proceeds attributable to increases in
the value of the account due to increases in the net asset value per Share, (2)
Shares acquired through reinvestment of dividends and capital gains, (3) Shares
held for more than seven years (in the case of Class B Shares) or one year (in
the case of Class C Shares) after the end of the calendar month of acquisition,
(4) accounts following the death or disability of a shareholder, or (5) minimum
required distributions to a shareholder over the age of 70 1/2 from an IRA or
other retirement plan.

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 and/or shareholder service fees, 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 its investment adviser
incurs. If such investor is an existing shareholder, a Fund may redeem shares
from an investor's account to reimburse the Fund or or its investment adviser
for any loss. In addition, such investors may be prohibited or restricted from
making further purchases in any of the Evergreen mutual funds.

HOW TO REDEEM SHARES

Shareholders may withdraw amounts of $1,000 or more from their accounts
by calling the phone number on the front page of this Prospectus between the
hours of 8:00 a.m. and 5:30 p.m. (Eastern time) each business day (i.e., any
weekday exclusive of days on which the Exchange or State Street's offices are
closed). The 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.

General. The redemption 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
sixty 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 Act
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

Exchanges by Telephone and Mail. You may exchange shares with a value of $1,000
or more by telephone by calling the telephone number on the front of this
Prospectus. 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

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

EFFECT OF BANKING LAWS

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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 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.

MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE

A discussion of the performance of Evergreen Tax Strategic Foundation
Fund and Evergreen Small Cap Equity Income Fund for their most recent fiscal
year is set forth below. A similar discussion relating to Evergreen Utility Fund
is contained in the annual report of the Fund for the fiscal year ended December
31, 1994.

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.

[CHART]

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 Evergreen Asset
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.
Evergreen Asset 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 benefited from gains in
companies that provide productivity enhancing services in computerization.

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 Evergreen Asset 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. and
Organization. The Evergreen Small Cap Equity Income Fund is a separate series of
The Evergreen American Retirement Trust, a Massachusetts business trust
organized in 1987. Evergreen Tax Strategic Foundation Fund is a separate series
of the Evergreen Foundation Trust, a Massachusetts business trust organized in
1989. Evergreen Utility Fund is a separate investment series of Evergreen
Investment Trust (formerly First Union Funds), which is a Massachusetts business
trust organized in 1984. 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.

Principal Underwriter. EFD, a wholly-owned subsidiary of Furman Selz
Incorporated, located 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. Furman Selz Incorporated, also acts as
sub-administrator to Evergreen Utility Fund and which provides certain
sub-administrative services to Evergreen Asset in connection with its role as
investment adviser to Evergreen Small Cap Equity Income Fund and Evergreen Tax
Strategic Foundation Fund, including providing personnel to serve as officers of
the Funds.

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 Funds for
which Evergreen Asset serves as investment adviser as of December 30, 1994, (ii)
certain institutional investors and (iii) investment advisory clients of CMG,
Evergreen Asset or their 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 and shareholder
servicing-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

<PAGE>
INVESTMENT ADVISER
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
EVERGREEN TAX STRATEGIC FOUNDATION FUND, EVERGREEN SMALL CAP EQUITY INCOME
FUND
Capital Management Group of First Union National Bank, 201 South College
Street, Charlotte, North Carolina 28288
EVERGREEN UTILITY FUND
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827
LEGAL COUNSEL
Sullivan & Worcester, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP, One Mellon Bank Plaza, Pittsburgh, Pennsylvania 15219
EVERGREEN UTILITY FUND
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036
EVERGREEN TAX STRATEGIC FOUNDATION FUND
Ernst & Young LLP, 200 Clarendon Street, Boston, Massachusetts 02116-5072
EVERGREEN SMALL CAP INCOME EQUITY FUND
DISTRIBUTOR
Evergreen Funds Distributor, Inc., 237 Park Avenue, New York, New York 10017
536116

<PAGE>
PROSPECTUS July 7, 1995
EVERGREEN(SM) SPECIALTY GROWTH AND INCOME FUNDS (Evergreen logo appears here)
EVERGREEN UTILITY FUND
EVERGREEN TAX STRATEGIC FOUNDATION FUND
EVERGREEN SMALL CAP EQUITY INCOME FUND
CLASS Y SHARES
The Evergreen Specialty Growth and Income Funds (the "Funds") are
designed to provide investors with a selection of investment alternatives
which seek to provide current income, capital appreciation or after-tax
"total return". 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.
A "Statement of Additional Information" for the Funds and certain
other funds in the Evergreen Group of mutual funds dated July 7, 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) 235-0064. 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
EVERGREEN(SM) is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.

The following table shows for the Fund the estimated 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 UTILITY FUND (A)
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees .50%
After 1 Year $ 8
Administrative Fees .06%
After 3 Years $ 24
12b-1 Fees --
After 5 Years $ 41
Other Expenses .18%
After 10 Years $ 92
Total .74%
</TABLE>

EVERGREEN TAX STRATEGIC FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees .875%
After 1 Year $ 15
12b-1 Fees --
After 3 Years $ 47
Other Expenses (after reimbursement)* .625%
After 5 Years $ 82
After 10 Years $ 179
Total 1.500%
</TABLE>

EVERGREEN SMALL CAP EQUITY INCOME FUND
<TABLE>
<CAPTION>
ANNUAL OPERATING
EXPENSES EXAMPLE
<S> <C> <C> <C>
Advisory Fees 1.00%
After 1 Year $ 15
12b-1 Fees --
After 3 Years $ 47
Other Expenses (after reimbursement)* .50%
After 5 Years $ 82
After 10 Years $ 179
Total 1.50%
</TABLE>

<PAGE>
(a) Estimated annual operating expenses reflect the combination of First Union
Utility Portfolio and ABT Utility Income Fund.
*Reflects agreements by Evergreen Asset 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 2.50% of average net assets.
From time to time each Fund's investment adviser may, at its discretion,
reduce or waive its fees or reimburse the Funds for certain of their expenses in
order to reduce their expense ratios. Each Fund's investment adviser may cease
these voluntary waivers and reimbursements at any time.
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 for the year ended December 31, 1994. Such amounts have been
restated to reflect current fee arrangements. THE 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.
4

<PAGE>
FINANCIAL HIGHLIGHTS
The tables on the following pages present, for each Fund, financial
highlights for a share outstanding throughout each period indicated. The
information in the tables for the five most recent fiscal years or the life of
the Fund if shorter for EVERGREEN UTILITY FUND has been audited by KPMG Peat
Marwick LLP, the Fund's independent auditors, for EVERGREEN TAX STRATEGIC
FOUNDATION FUND has been audited by Price Waterhouse LLP, the Fund's independent
auditors and for EVERGREEN SMALL CAP EQUITY INCOME FUND has been audited by
Ernst & Young LLP, the Fund's independent auditors. A report of KPMG Peat
Marwick LLP, Price Waterhouse LLP, or Ernst & Young LLP, as the case may be, on
the audited information with respect to each Fund is incorporated by reference
in the Fund's Statement of Additional Information. The following information for
each Fund should be read in conjunction with the financial statements and
related notes which are incorporated by reference in the Fund's Statement of
Additional Information.
No financial highlights are shown for Class A, B or C Shares of EVERGREEN
TAX STRATEGIC FOUNDATION FUND and EVERGREEN SMALL CAP EQUITY INCOME FUND since
these classes did not have any operations prior to December 31, 1994.
Further information about a Fund's performance is contained in the Fund's
annual report to shareholders, which may be obtained without charge.
EVERGREEN UTILITY FUND
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
JANUARY 4, JANUARY 4, SEPTEMBER 2, FEBRUARY 28,
1994* 1994* 1994* 1994*
THROUGH THROUGH THROUGH THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1994 1994 1994
<S> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.......................... $10.00 $10.00 $9.33 $9.51
Income (loss) from investment operations:
Net investment income......................................... .45 .39 .12 .37
Net realized and unrealized loss on investments............... (1.01) (1.01) (.33) (.50)
Total from investment operations............................ (.56) (.62) (.21) (.13)
Less distributions to shareholders from:
Net investment income......................................... (.44) (.38) (.11) (.37)
In excess of net investment income............................ -- -- -- (.01)(b)
Total distributions......................................... (.44) (.38) (.11) (.38)
Net asset value, end of period................................ $9.00 $9.00 $9.01 $9.00
TOTAL RETURN+................................................. (5.6%) (6.2%) (2.2%) (1.6%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)..................... $4,190 $28,792 $128 $5,201
Ratios to average net assets:
Expenses(a)................................................. .53%++ 1.27%++ 1.94%++ .40%++
Net investment income(a).................................... 5.07%++ 4.19%++ 3.96%++ 4.93%++
Portfolio turnover rate....................................... 23% 23% 23% 23%
</TABLE>

* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charge or contingent deferred
sales charge is not reflected.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS Y
SHARES SHARES SHARES SHARES
JANUARY 4, JANUARY 4, SEPTEMBER 2, FEBRUARY 28,
1994 1994 1994 1994
THROUGH THROUGH THROUGH THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1994 1994 1994
<S> <C> <C> <C> <C>
Expenses............................ 1.43% 2.11% 2.78% 1.24%
Net investment income............... 4.17% 3.35% 3.12% 4.09%
</TABLE>

<PAGE>
EVERGREEN TAX STRATEGIC FOUNDATION FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
NOVEMBER 2, 1993*
YEAR ENDED THROUGH
DECEMBER 31, 1994 DECEMBER 31, 1993
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of period................................................ $10.31 $ 10.00
Income from investment operations:
Net investment income............................................................... .27 .05
Net realized and unrealized gain 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 period...................................................... $10.27 $ 10.31
TOTAL RETURN+....................................................................... 3.4% 3.5%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)........................................... $10,575 $5,424
Ratios to average net assets:
Expenses(a)....................................................................... 1.49% 0%++
Net investment income(a).......................................................... 2.87% 3.65%++
Portfolio turnover rate............................................................. 245% 25%
</TABLE>

* Commencement of operations.
+ Total return is calculated on net asset value per share for the period
indicated and is not annualized.
++ Annualized.
(a) Net of expense waivers and reimbursements. If the Fund had borne all
expenses that were assumed or waived by the investment adviser, the
annualized ratios of expenses and net investment income to average net
assets, exclusive of any applicable state expense limitations, would have
been the following:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 2, 1993
DECEMBER 31, THROUGH
1994 DECEMBER 31, 1993
<S> <C> <C>
Expenses.................................................. 2.41% 3.10%
Net investment income..................................... 1.95% .54%
</TABLE>

<PAGE>
EVERGREEN SMALL CAP EQUITY INCOME FUND -- CLASS Y SHARES
<TABLE>
<CAPTION>
OCTOBER 1, 1993*
YEAR ENDED THROUGH
DECEMBER 31, 1994 DECEMBER 31, 1993
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of period................................................ $ 10.15 $ 10.00
Income (loss) 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.................................................................. (.05) --
Total distributions............................................................. (.38) (.10)
Net asset value, end of period...................................................... $ 9.70 $ 10.15
TOTAL RETURN+....................................................................... (.7%) 2.5%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)........................................... $3,613 $2,236
Ratios to average net assets:
Expenses(a)....................................................................... 1.48% 0%++
Net investment income(a).......................................................... 3.72% 4.07%++
Portfolio turnover rate............................................................. 9% 15%
</TABLE>

<PAGE>
8

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

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

INVESTMENT OBJECTIVES AND POLICIES

Evergreen Small Cap Equity Income Fund

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 investment 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 judgment of the Fund's investment
adviser 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 Investor's Service ("Moody's"), A-2 by Standard and Poor's
Ratings Group ("S&P") or having a comparable rating from another nationally
recognized statistical rating organization ("SRO"); 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.

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
""Investment Practices and Restrictions - "Municipal Securities" and "Taxable
Investments"). There can be no assurance that the Fund's investment objective
will be achieved. The objective is fundamental and may not be changed without
shareholder approval.

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 investment 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).

Evergreen Utility Fund

<PAGE>

The Fund may invest in:

commercial paper, including master demand notes;

American Depositary Receipts ("ADRs") of foreign companies
traded on the New York or American Stock Exchanges or the
over-the-counter market;

obligations, including certificates of deposit and bankers'
acceptances, of banks or savings and loan associations having at least
$1 billion in deposits and insured by the Bank Insurance Fund or the
Savings Association Mortagage Fund, including U.S. branches of foreign
banks and foreign branches of U.S. banks; and

securities of other investment companies.

INVESTMENT PRACTICES AND RESTRICTIONS

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 Evergreen Asset 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 Evergreen Small Cap Equity Income Fund and
Evergreen Tax Strategic Foundation Fund on those exchanges. See the Statement of
Additional Information for further information regarding the brokerage
allocation practices of these Funds.

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 Funds' investment advisers 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 the total assets of the Evergreen
Small Cap Equity Income Fund and Evergreen Tax Strategic Foundation Fund, and
15% of the value of the total assets of Evergreen Utility Fund, 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.

There is the risk that when lending portfolio securities, the securities may not
be available to a Fund on a timely basis and the Fund may, therefore, lose the
opportunity to sell the securities at a desirable price. In addition, in the
event that a borrower of securities files for bankruptcy or becomes insolvent,
dispostion of the securities may be delayed pending court action.

Special Risk Considerations

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

MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------

INVESTMENT ADVISERS

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 all the series of
Evergreen Investment Trust (formerly known as First Union 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.

SUB-ADVISER

Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company which provides that Lieber & Company's research department and staff
will furnish Evergreen Asset with information, investment recommendations,
advice and assistance, and will be generally available for consultation on the
portfolios of Evergreen Tax Strategic Foundation Fund and Evergreen Small Cap
Equity Income Fund. Lieber & Company will be reimbursed by Evergreen Asset 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
Evergreen Tax Strategic Foundation Fund and Evergreen Small Cap Equity Income
Fund for the services provided by Lieber & Company. The address of Lieber &
Company is 2500 Westchester Avenue, Purchase, New York 10577. Lieber & Company
is an indirect, wholly-owned, subsidiary of First Union.

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

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

HOW TO BUY SHARES

Eligible investors may purchase Fund shares at net asset value by mail
or wire as described below. The Funds impose no sales charges on Class Y shares.
Class Y shares are the only class of shares 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 minimum
initial investment is $1,000, which may be waived in certain situations. There
is no minimum for subsequent investments. Investors may make subsequent
investments by establishing a Systematic Investment Plan or a Telephone
Investment Plan.

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
market 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.

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 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 15 days). Once a redemption request has
been telephoned or mailed, it is irrevocable and may not be modified or
canceled.

EXCHANGE PRIVILEGE

SHAREHOLDER SERVICES

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

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.

EFFECT OF BANKING LAWS

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

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 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.

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 Small Cap Equity Income Fund.

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 Evergreen Asset
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.
Evergreen Assetr 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 Tax Strategic Foundation Fund

[CHART]

GENERAL INFORMATION

Principal Underwriter. EFD, a wholly-owned subsidiary of Furman Selz
Incorporated, located 237 Park Avenue, New York, New York 10017, is the
principal underwriter of the Funds. Furman Selz Incorporated, also acts as
sub-administrator to Evergreen Utility Fund and which provides certain
sub-administrative services to Evergreen Asset in connection with its role as
investment adviser to Evergreen Small Cap Equity Income Fund and Evergreen Tax
Strategic Foundation Fund, including providing personnel to serve as officers of
the Funds.

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 the only class of shares offered by this Prospectus
and are only available to (i) all shareholders of record in one or more of the
Funds for which Evergreen Asset serves as investment adviser as of December 30,
1994, (ii) certain institutional investors and (iii) investment advisory clients
of CMG, Evergreen Asset or their 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 and
shareholder servicing-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

STATEMENT OF ADDITIONAL INFORMATION

July 7, 1995

THE EVERGREEN GROWTH AND INCOME FUNDS

2500 Westchester Avenue, Purchase, New York 10577

800-807-2940

Evergreen Balanced Fund (formerly First Union Balanced Portfolio) ("Balanced")
Evergreen Growth and Income Fund ("Growth and Income")
The Evergreen Total Return Fund ("Total Return")
The Evergreen American Retirement Fund ("American Retirement")
Evergreen Small Cap Equity Income Fund ("Small Cap")
Evergreen Foundation Fund ("Foundation")
Evergreen Tax Strategic Foundation Fund ("Tax Strategic")
Evergreen Utility Fund (formerly First Union Utility Portfolio) ("Utility")
Evergreen Value Fund (formerly First Union Value Portfolio) ("Value")

This Statement of Additional Information pertains to all classes of shares of
the Funds listed below. It is not a prospectus and should be read in conjunction
with the Prospectus dated July 7, 1995 for the Fund in which you are making or
contemplating an investment. The Evergreen Growth and Income Funds are offered
through four separate prospectuses: one offering Class A, Class B and Class C
shares, and a separate prospectus offering Class Y shares of Balanced, Growth
and Income, Total Return, American Retirement, Foundation and Value; and one
offering Class A, Class B and Class C shares and a separate prospectus offering
Class Y shares of Small Cap, Tax Strategic and Utility. Copies of each
Prospectus may be obtained without charge by calling the number listed above.

TABLE OF CONTENTS

Page
Investment Objectives and Policies................................
Investment Restrictions...........................................
Non-Fundamental Operating Policies................................
Certain Risk Considerations.......................................
Management........................................................
Investment Adviser................................................
Distribution Plans................................................
Allocation of Brokerage...........................................
Additional Tax Information........................................
Net Asset Value...................................................
Purchase of Shares................................................
Performance Information...........................................
Financial Statements..............................................

Appendix A - Note, Bond And Commercial Paper Ratings

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES
(See also "Description of the Funds - Investment Objective
and Policies" in each Fund's Prospectus)

The investment objective of each Fund and a description of the securities in
which each Fund may invest is set forth under "Description of the Funds -
"Investment Objective and Policies" in the relevant Prospectus. The investment
objectives of Balanced, Utility and Value are fundamental and cannot be changed
without the approval of shareholders. The following expands upon the discussion
in the Prospectus regarding certain investments of each Fund.

U.S. Government Securities

The types of U.S. government securities in which the Funds may invest
generally include direct obligations of the U.S. Treasury such as U. S. Treasury
bills, notes and bonds and obligations issued or guaranteed by U.S. government
agencies or instrumentalities. These securities are backed by:

(i) the full faith and credit of the U.S. Treasury;

(ii) the issuer's right to borrow from the U.S. Treasury;

(iii) the discretionary authority of the U.S. government to purchase
certain obligations of agencies or instrumentalities; or

(iv) the credit of the agency or instrumentality issuing the obligations.

Examples of agencies and instrumentalities that may not always receive
financial support from the U.S. government are:

(i) Farm Credit System, including the National Bank for Cooperatives,
Farm Credit Banks and Banks for Cooperatives;

(ii) Farmers Home Administration;

(iii) Federal Home Loan Banks;

(iv) Federal Home Loan Mortgage Corporation;

(v) Federal National Mortgage Association;

(vi) Government National Mortgage Association; and

(vii) Student Loan Marketing Association

Restricted and Illiquid Securities

Each Fund may invest in restricted and illiquid securities. The ability of
the Board of Trustees ("Trustees") to determine the liquidity of certain
restricted securities is permitted under a Securities and Exchange Commission
("SEC") Staff position set forth in the adopting release for Rule 144A under the
Securities Act of 1933 (the "Rule"). The Rule is a non-exclusive, safe-harbor
for certain secondary market transactions involving securities subject to
restrictions on resale under federal securities laws. The Rule provides an
exemption from registration for resales of otherwise restricted securities to
qualified institutional buyers. The Rule was expected to further enhance the
liquidity of the secondary market for securities eligible for sale under the
Rule. The Funds which invest in Rule 144A Securities believe that the Staff of
the SEC has left the question of determining the liquidity of all restricted
securities (eligible for resale under the Rule) for determination by the
Trustees. The Trustees consider the following criteria in determining the
liquidity of certain restricted securities:

(i) the frequency of trades and quotes for the security;

(ii) the number of dealers willing to purchase or sell the security and
the number of other potential buyers;

(iii) dealer undertakings to make a market in the security; and

<PAGE>

(iv) the nature of the security and the nature of the marketplace trades.

Restricted securities would generally be acquired either from institutional
investors who originally acquired the securities in private placements or
directly from the issuers of the securities in private placements. Restricted
securities and securities that are not readily marketable may sell at a discount
from the price they would bring if freely marketable.

When-Issued and Delayed Delivery Securities

Balanced, Tax Strategic, Utility and Value may purchase securities on a
when-issued or delayed delivery basis. These transactions are made to secure
what is considered to be an advantageous price or yield for a Fund. No fees or
other expenses, other than normal transaction costs, are incurred. However,
liquid assets of a Fund sufficient to make payment for the securities to be
purchased are segregated on the Fund's records at the trade date. These assets
are marked to market daily and are maintained until the transaction has been
settled. Balanced, Utility and Value do not intend to engage in when- issued and
delayed delivery transactions to an extent that would cause the segregation of
more than 20% of the total value of their assets and Tax Strategic's commitment
to purchase when-issued securities will not exceed 25% of the Fund's total
assets.

Lending of Portfolio Securities

Each Fund may lend its portfolio securities to generate income and to
offset expenses. The collateral received when a Fund lends portfolio securities
must be valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the lending Fund.
During the time portfolio securities are on loan, the borrower pays the Fund any
dividends or interest paid on such securities. Loans are subject to termination
at the option of the Fund or the borrower. A Fund may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or equivalent collateral
to the borrower or placing broker. A Fund does not have the right to vote
securities on loan, but would terminate the loan and regain the right to vote if
that were considered important with respect to the investment.

Reverse Repurchase Agreements

The Funds other than American Retirement, Foundation, Total Return and
Growth and Income may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase agreement, a
Fund transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate.

The use of reverse repurchase agreements may enable a Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous,
but the ability to enter into reverse repurchase agreements does not ensure that
the Fund will be able to avoid selling portfolio instruments at a
disadvantageous time.

When effecting reverse repurchase agreements, liquid assets of a Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and maintained until the transaction is settled.

Options and Futures Transactions

Options which Balanced, Utility and Value trade must be listed on national
securities exchanges.

.........Purchasing Put and Call Options on Financial Futures Contracts

Balanced, Utility and Value may purchase put and call options on financial
futures contracts (in the case of Utility and Value limited to options on
financial futures contracts for U.S. government securities). Unlike entering
directly into a futures contract, which requires the purchaser to buy a
financial instrument on a set date at an

<PAGE>

undetermined price, the purchase of a put option on a futures contract entitles
(but does not obligate) its purchaser to decide on or before a future date
whether to assume a short position at the specified price.

The Fund may purchase put and call options on futures to protect portfolio
securities against decreases in value resulting from an anticipated increase in
market interest rates. Generally, if the hedged portfolio securities decrease in
value during the term of an option, the related futures contracts will also
decrease in value and the put option will increase in value. In such an event, a
Fund will normally close out its option by selling an identical put option. If
the hedge is successful, the proceeds received by the Fund upon the sale of the
put option plus the realized decrease in value of the hedged securities.

Alternately, a Fund may exercise its put option to close out the position.
To do so, it would enter into a futures contract of the type underlying the
option. If the Fund neither closes out nor exercises an option, the option will
expire on the date provided in the option contract, and only the premium paid
for the contract will be lost.

.........Purchasing Options

Balanced, Utility and Value may purchase both put and call options on their
portfolio securities. These options will be used as a hedge to attempt to
protect securities which a Fund holds or will be purchasing against decreases or
increases in value. A Fund may purchase call and put options for the purpose of
offsetting previously written call and put options of the same series. If the
Fund is unable to effect a closing purchase transaction with respect to covered
options it has written, the Fund will not be able to sell the underlying
securities or dispose of assets held in a segregated account until the options
expire or are exercised.

Balanced, Utility and Value intend to purchase put and call options on
currency and other financial futures contracts for hedging purposes. A put
option purchased by a Fund would give it the right to assume a position as the
seller of a futures contract. A call option purchased by the Fund would give it
the right to assume a position as the purchaser of a futures contract. The
purchase of an option on a futures contract requires the Fund to pay a premium.
In exchange for the premium, the Fund becomes entitled to exercise the benefits,
if any, provided by the futures contract, but is not required to take any action
under the contract. If the option cannot be exercised profitably before it
expires, the Fund's loss will be limited to the amount of the premium and any
transaction costs.

Utility and Value currently do not intend to invest more than 5% of their
net assets in options transactions.

Balanced, Utility, Value and Small Cap, may not purchase or sell futures
contracts or related options if immediately thereafter the sum of the amount of
margin deposits on the Fund's existing futures positions and premiums paid for
related options would exceed 5% of the market value of the Fund's total assets.
When the Fund purchases futures contracts, an amount of cash and cash
equivalents, equal to the underlying commodity value of the futures contracts
(less any related margin deposits), will be deposited in a segregated account
with the Fund's custodian (or the broker, if legally permitted) to collateralize
the position and thereby insure that the sue of such futures contracts is
unleveraged.

........."Margin" in Futures Transactions

Unlike the purchase or sale of a security, a Fund does not pay or receive
money upon the purchase or sale of a futures contract. Rather, a Fund is
required to deposit an amount of "initial margin" in cash or U.S. Treasury bills
with its custodian (or the broker, if legally permitted). The nature of initial
margin in futures transactions is different from that of margin in securities
transactions in that futures contract initial margin does not involve the
borrowing of funds by a Fund to finance the transactions. Initial margin is in
the nature of a performance bond or good faith deposit on the contract which is
returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied.

A futures contract held by a Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day the Fund pays
or receives cash, called "variation margin," equal to the daily change in value

<PAGE>

of the futures contract. This process is known as "marking to market." Variation
margin does not represent a borrowing or loan by the Fund but is instead
settlement between the Fund and the broker of the amount one would owe the other
if the futures contract expired. In computing its daily net asset value, a Fund
will mark-to-market its open futures positions. The Fund is also required to
deposit and maintain margin when it writes call options on futures contracts.

Balanced will not maintain open positions in futures contracts it has sold
or call options it has written on futures contracts if, in the aggregate, the
value of the open positions (marked to market) exceeds the current market value
of its securities portfolio plus or minus the unrealized gain or loss on those
open positions, adjusted for the correlation of volatility between the hedged
securities and the futures contracts. If this limitation is exceeded at any
time, the Fund will take prompt action to close out a sufficient number of open
contracts to bring its open futures and options positions within this
limitation.

.........Total Return and Growth and Income may write covered call options to a
limited extent on their portfolio securities ("covered options") in an attempt
to earn additional income. The Fund will write only covered call option
contracts and will receive premium income from the writing of such contracts.
Total Return and Growth and Income may purchase call options to close out a
previously written call option. In order to do so, the Fund will make a "closing
purchase transaction" -- the purchase of a call option on the same security with
the same exercise price and expiration date as the call option which it has
previously written. A Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from the writing of the option. If an option is exercised, a Fund
realizes a long-term or short-term gain or loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received.

Junk Bonds

.........Consistent with its strategy of investing in "undervalued" securities,
Growth and Income may invest in lower medium and low-quality bonds also known as
"junk bonds" and may also purchase bonds in default if, in the opinion of the
Adviser, there is significant potential for capital appreciation. Growth and
Income, however, will not invest more than 5% of its total assets in debt
securities which are rated below investment grade. These bonds are regarded as
speculative with respect to the issuer's continuing ability to meet principal
and interest payments. High yield bonds may be more susceptible to real or
perceived adverse economic and competitive industry conditions than investment
grade bonds. A projection of an economic downturn, or higher interest rates, for
example, could cause a decline in high yield bond prices because such events
could lessen the ability of highly leveraged companies to make principal and
interest payments on their debt securities. In addition, the secondary trading
market for high yield bonds may be less liquid than the market for higher grade
bonds, which can adversely affect the ability to dispose of such securities.

Variable and Floating Rate Securities

.........Foundation may invest no more than 5% of its total assets, at the time
of the investment in question, in variable and floating rate securities. The
terms of variable and floating rate instruments provide for the interest rate to
be adjusted according to a formula on certain predetermined dates. Variable and
floating rate instruments that are repayable on demand at a future date are
deemed to have a maturity equal to the time remaining until the principal will
be received on the assumption that the demand feature is exercised on the
earliest possible date. For the purposes of evaluating the interest-rate
sensitivity of the Fund, variable and floating rate instruments are deemed to
have a maturity equal to the period remaining until the next interest-rate
readjustment. For the purposes of evaluating the credit risks of variable and
floating rate instruments, these instruments are deemed to have a maturity equal
to the time remaining until the earliest date the Fund is entitled to demand
repayment of principal.

INVESTMENT RESTRICTIONS

FUNDAMENTAL INVESTMENT RESTRICTIONS

.........Except as noted, the investment restrictions set forth below are
fundamental and may not be changed with respect to each Fund without the

<PAGE>

affirmative vote of a majority of the outstanding voting securities of the Fund.
Where an asterisk (*) appears after a Fund's name, the relevant policy is
non-fundamental with respect to that Fund and may be changed by the Fund's
investment adviser without shareholder approval, subject to review and approval
by the Trustees. As used in this Statement of Additional Information and in the
Prospectus, "a majority of the outstanding voting securities of the Fund" means
the lesser of (1) the holders of more than 50% of the outstanding shares of
beneficial interest of the Fund or (2) 67% of the shares present if more than
50% of the shares are present at a meeting in person or by proxy.

1........Concentration of Assets in Any One Issuer

.........Neither Growth and Income nor Total Return may invest more than 5% of
its net assets, at the time of the investment in question, in the securities of
any one issuer other than the U.S. government and its agencies or
instrumentalities.

.........American Retirement may not invest more than 5% of its total assets, at
the time of the investment in question, in the securities of any one issuer
other than the U.S. government and its agencies or instrumentalities.

........None of Balanced, Foundation, Small Cap, Utility or Value may invest
more than 5% of its total assets, at the time of the investment in question, in
the securities of any one issuer other than the U.S. government and its agencies
or instrumentalities, except that up to 25% of the value of a Fund's total
assets may be invested without regard to such 5% limitation.

.........Tax Strategic may not invest more than 5% of its total assets, at the
time of the investment in question, in the securities of any one issuer other
than the U.S. government and its agencies or instrumentalities, except that up
to 25% of the value of each Fund's total assets may be invested without regard
to such 5% limitation. For this purpose each political subdivision, agency, or
instrumentality and each multi-state agency of which a state is a member, and
each public authority which issues industrial development bonds on behalf of a
private entity, will be regarded as a separate issuer for determining the
diversification of each Fund's portfolio.

2........Ten Percent Limitation on Securities of Any One Issuer

.........None of American Retirement, Foundation, Small Cap, Growth and Income
or Total Return may purchase more than 10% of any class of securities of any one
issuer other than the U.S. government and its agencies or instrumentalities.

.........Neither Value nor Utility may purchase more than 10% of the outstanding
voting securities of any one issuer.

.........Tax Strategic* may not purchase more than 10% of the voting securities
of any one issuer other than the U.S. government and its agencies or
instrumentalities.

3........Investment for Purposes of Control or Management

.........None of American Retirement, Foundation, Growth and Income, Small Cap*,
Tax Strategic*, Total Return, Utility* or Value may invest in companies for the
purpose of exercising control or management.

4........Purchase of Securities on Margin

.........None of American Retirement, Balanced, Foundation, Growth and Income,
Small Cap*, Tax Strategic*, Total Return, Utility or Value may purchase
securities on margin, except that each Fund may obtain such short-term credits
as may be necessary for the clearance of transactions. A deposit or payment by a
Fund of initial or variation margin in connection with financial futures
contracts or related options transactions is not considered the purchase of a
security on margin.

<PAGE>

5........Unseasoned Issuers

.........Neither American Retirement nor Foundation may invest in the securities
of unseasoned issuers that have been in continuous operation for less than three
years, including operating periods of their predecessors.

.........None of Total Return, Value* or Utility* may invest more than 5% of its
total assets in securities of unseasoned issuers that have been in continuous
operation for less than three years, including operating periods of their
predecessors.

.........None of Growth and Income, Small Cap* and Tax Strategic* may invest
more than 15% of its total assets (10% of total net assets in the case of Growth
and Income) in securities of unseasoned issuers that have been in continuous
operation for less than three years, including operating periods of their
predecessors.

6........Underwriting

.........American Retirement, Foundation, Growth and Income, Small Cap,* Tax
Strategic*, Total Return, Balanced, Utility and Value will not underwrite any
issue of securities except as they may be deemed an underwriter under the
Securities Act of 1933 in connection with the sale of securities in accordance
with their investment objectives, policies and limitations.

7........Interests in Oil, Gas or Other Mineral Exploration or Development
Programs

......... None of American Retirement, Foundation, Growth and Income, Small Cap,
Tax Strategic or Total Return may purchase, sell or invest in interests in oil,
gas or other mineral exploration or development programs.

.........Neither Balanced* nor Utility* will purchase interests in oil, gas or
other mineral exploration or development programs or leases, although each Fund
may purchase the securities of other issuers which invest in or sponsor such
programs.

.........Value will not purchase interests in oil, gas or other mineral
exploration or development programs or leases, although it may purchase the
publicly traded securities of companies engaged in such activities.

8........Concentration in Any One Industry

.........Neither Growth and Income nor Total Return may concentrate its
investments in any one industry, except that each Fund may invest up to 25% of
its total net assets in any one industry.

.........None of American Retirement, Foundation, Small Cap and Tax Strategic
may invest 25% or more of its total assets in the securities of issuers
conducting their principal business activities in any one industry; provided,
that this limitation shall not apply (i) with respect to each Fund, to
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities, or (ii) with respect to Tax Strategic, to municipal
securities. For purposes of this restriction, utility companies, gas, electric,
water and telephone companies will be considered separate industries.

.........Balanced and Value will not invest 25% or more of the value of their
total assets in any one industry except Balanced may invest more than 25% and
Value may invest 25% or more of its total assets in securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities.

.........Utility will not invest more than 25% of its total assets (valued at
the time of investment) in securities of companies engaged principally in any
one industry other than the utilities industry, except that this restriction
does not apply to cash or cash items and securities issued or guaranteed by the
U.S. government, its agencies or instrumentalities.

9........Warrants

.........None of American Retirement, Growth and Income, Small Cap,* or Total
Return may invest more than 5% of its net assets in warrants, and, of this

<PAGE>

amount, no more than 2% of each Fund's net assets may be invested in warrants
that are listed on neither the New York nor the American Stock Exchange.

.........Neither Foundation nor Tax Strategic* may invest more than 5% of its
net assets in warrants, and of this amount, no more than 2% of each Fund's net
assets may be invested in warrants that are listed on neither the New York nor
the American Stock Exchanges.

.........Utility* and Value* will not invest more than 5% of their net assets in
warrants, including those acquired in units or attached to other securities. To
comply with certain state restrictions, Utility and Value will limit their
investment in such warrants not listed on the New York Stock Exchange or the
American Stock Exchange to 2% of their net assets. (If state restrictions
change, this latter restriction may be changed without notice to shareholders).
For purposes of this restriction, warrants acquired by the Funds' in units or
attached to securities may be deemed to be without value.

10.......Ownership by Trustees/Officers

.........None of American Retirement, Balanced*, Foundation, Growth and Income,
Small Cap*, Tax Strategic*, Total Return, Utility* or Value* may purchase or
retain the securities of any issuer if (i) one or more officers or Trustees of a
Fund or its investment adviser individually owns or would own, directly or
beneficially, more than 1/2 of 1% of the securities of such issuer, and (ii) in
the aggregate, such persons own or would own, directly or beneficially, more
than 5% of such securities.

11.......Short Sales

.........Neither American Retirement nor Foundation may make short sales of
securities unless, at the time of each such sale and thereafter while a short
position exists, each Fund owns the securities sold or securities convertible
into or carrying rights to acquire such securities.

.........None of Growth and Income, Tax Strategic* and Total Return may make
short sales of securities unless, at the time of each such sale and thereafter
while a short position exists, each Fund owns an equal amount of securities of
the same issue or owns securities which, without payment by the Fund of any
consideration, are convertible into, or are exchangeable for, an equal amount of
securities of the same issue.

.........Small Cap,* may not make short sales of securities unless, at the time
of each such sale and thereafter while a short position exists, each Fund owns
an equal amount of securities of the same issue or owns securities which,
without payment by the Fund of any consideration, are convertible into, or are
exchangeable for, an equal amount of securities of the same issue (and provided
that transactions in futures contracts and options are not deemed to constitute
selling securities short).

.........Balanced will not make short sales of securities or maintain a short
position, unless at all times when a short position is open it owns an equal
amount of such securities or of securities which, without payment of any further
consideration are convertible into or exchangeable for securities of the same
issue as, and equal in amount to, the securities sold short. The use of short
sales will allow the Fund to retain certain bonds in its portfolio longer than
it would without such sales. To the extent that the Fund receives the current
income produced by such bonds for a longer period than it might otherwise, the
Fund's investment objective is furthered.

.........Utility and Value will not sell any securities short.

12.......Lending of Funds and Securities

.........Neither Small Cap nor Tax Strategic may lend its funds to other
persons, except through the purchase of a portion of an issue of debt securities
publicly distributed or the entering into of repurchase agreements.

.........None of American Retirement, Foundation, Growth and Income and Total
Return may lend its funds to other persons, except through the purchase of a
portion of an issue of debt securities publicly distributed.

<PAGE>

.........None of Foundation, Small Cap or Tax Strategic, may lend its portfolio
securities, unless the borrower is a broker, dealer or financial institution
that pledges and maintains collateral with the Fund consisting of cash or
securities issued or guaranteed by the U.S. government having a value at all
times not less than 100% of the current market value of the loaned securities,
including accrued interest, provided that the aggregate amount of such loans
shall not exceed 30% of the Fund's total assets.

.........Neither American Retirement or Growth and Income may lend its portfolio
securities, unless the borrower is a broker, dealer or financial institution
that pledges and maintains collateral with the Fund consisting of cash or
securities issued or guaranteed by the U.S. government having a value at all
times not less than 100% of the value of the loaned securities (100% of the
current market value for American Retirement), provided that the aggregate
amount of such loans shall not exceed 30% of the Fund's net assets.

.........Total Return may not lend its portfolio securities, unless the borrower
is a broker, dealer or financial institution that pledges and maintains
collateral with the Fund consisting of cash, letters of credit or securities
issued or guaranteed by the U.S. government having a value at all times not less
than 100% of the current market value of the loaned securities (100% of the
value of the loaned securities for Total Return), including accrued interest,
provided that the aggregate amount of such loans shall not exceed 30% of the
Fund's net assets.

.........Balanced will not lend any of its assets except portfolio securities in
accordance with its investment objective, policies and limitations.

.........Utility will not lend any of its assets, except portfolio securities up
to 15% of the value of its total assets. This does not prevent the Fund from
purchasing or holding corporate or government bonds, debentures, notes,
certificates of indebtedness or other debt securities of an issuer, repurchase
agreements, or other transactions which are permitted by the Fund's investment
objectives and policies or the Declaration of Trust governing the Fund.

.........Value will not lend any of its assets except that it may purchase or
hold corporate or government bonds, debentures, notes, certificates of
indebtedness or other debt securities of an issuer, repurchase agreements or
other transactions which are permitted by the Fund's investment objectives and
policies or the Declaration of Trust by which the Fund is governed or lend
portfolio securities valued at not more than 5% of its total assets to
broker-dealers.

13.......Commodities

.........Tax Strategic may not purchase, sell or invest in commodities,
commodity contracts or financial futures contracts.

.........Small Cap may not purchase, sell or invest in physical commodities
unless acquired as a result of ownership of securities or other instruments (but
this shall not prevent the Fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed by
physical commodities).

.........None of American Retirement, Foundation, Growth and Income, Total
Return may purchase, sell or invest in commodities or commodity contracts.

.........None of Balanced, Utility or Value will purchase or sell commodities or
commodity contracts; however, each Fund may enter into futures contracts on
financial instruments or currency and sell or buy options on such contracts.

14.......Real Estate

.........Small Cap may not purchase or invest in real estate or interests in
real estate (but this shall not prevent either Fund from investing in marketable
securities issued by companies such as real estate investment trusts which deal
in real estate or interests therein).

<PAGE>

.............None of American Retirement, Foundation, Growth and Income, Tax
Strategic or Total Return may purchase, sell or invest in real estate or
interests in real estate, except that (i) each Fund may purchase, sell or invest
in marketable securities of companies holding real estate or interests in real
estate, including real estate investment trusts, and (ii) Tax Strategic may
purchase, sell or invest in municipal securities or other debt securities
secured by real estate or interests therein.

.........None of Balanced, Utility or Value will buy or sell real estate
although each Fund may invest in securities of companies whose business involves
the purchase or sale of real estate or in securities which are secured by real
estate or interests in real estate. Neither Utility nor Value will invest in
limited partnership interests in real estate.

15.......Borrowing, Senior Securities, Repurchase Agreements and Reverse
Repurchase Agreements

.........None of American Retirement, Foundation or Total Return may borrow
money except from banks as a temporary measure to facilitate redemption requests
which might otherwise require the untimely disposition of portfolio investments
and for extraordinary or emergency purposes (and, with respect to American
Retirement only, for leverage), provided that the aggregate amount of such
borrowings shall not exceed 5% of the value of the Fund's total net assets (5%
of total assets for American Retirement and Foundation) at the time of any such
borrowing, or mortgage, pledge or hypothecate its assets, except in an amount
sufficient to secure any such borrowing. Neither American Retirement nor
Foundation may issue senior securities, except as permitted by the Investment
Company Act of 1940. Neither Foundation nor American Retirement may enter into
repurchase agreements or reverse repurchase agreements.

.........Neither Small Cap nor Tax Strategic, may borrow money, issue senior
securities or enter into reverse repurchase agreements, except for temporary or
emergency purposes, and not for leveraging, and then in amounts not in excess of
10% of the value of each Fund's total assets at the time of such borrowing; or
mortgage, pledge or hypothecate any assets except in connection with any such
borrowing and in amounts not in excess of the lesser of the dollar amounts
borrowed or 10% of the value of each Fund's total assets at the time of such
borrowing, provided that each of Small Cap, Tax Strategic, will not purchase any
securities at any time when borrowings, including reverse repurchase agreements,
exceed 5% of the value of its total assets. No Fund will enter into reverse
repurchase agreements exceeding 5% of the value of its total assets.

........Growth and Income may not borrow money except from banks as a temporary
measure for extraordinary or emergency purposes, provided that the aggregate
amount of such borrowings shall not exceed 5% of the value of the Fund's total
assets at the time of such borrowing; or mortgage, pledge or hypothecate its
assets, except in an amount not exceeding 15% of its assets taken at cost to
secure such borrowing. Growth and Income may not issue senior securities, as
defined in the Investment Company Act of 1940, except that this restriction
shall not be deemed to prohibit the Fund from (i) making any permitted
borrowings, mortgages or pledges, (ii) lending its portfolio securities, or
(iii) entering into permitted repurchase transactions.

.........Balanced and Utility will not issue senior securities except that each
Fund may borrow money and engage in reverse repurchase agreements in amounts up
to one-third of the value of its total assets, including the amounts borrowed
and except to the extent a Fund may enter into futures contracts. The Funds will
not borrow money or engage in reverse repurchase agreements for investment
leverage, but rather as a temporary, extraordinary or emergency measure to
facilitate management of their portfolios by enabling them to, for example, meet
redemption requests when the liquidation of portfolio securities is deemed to be
inconvenient or disadvantageous. A Fund will not purchase any securities while
any borrowings are outstanding. Utility will not purchase any securities while
borrowings in excess of 5% of its total assets are outstanding. Neither
Balanced, nor Utility will mortgage, pledge or hypothecate any assets except to
secure permitted borrowings. In these cases, Balanced and Utility may pledge
assets having a market value not exceeding the lesser of the dollar amounts
borrowed or 15% of the value of total assets at the time of borrowing. Margin
deposits for the purchase and sale of financial futures contracts and related
options and segregation or collateral arrangements made in connection with
options activities are not deemed to be a pledge.

<PAGE>

.........Value will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements as a temporary measure
for extraordinary or emergency purposes and then only in amounts not in excess
of 10% of the value of its total assets; provided that while borrowings exceed
5% of the Fund's total assets, any such borrowings will be repaid before
additional investments are made. The Fund will not purchase any securities while
borrowings in excess of 5% of the value of its total assets are outstanding. The
Fund will not borrow money or engage in reverse repurchase agreements for
investment leverage purposes. Value will not mortgage, pledge or hypothecate any
assets except to secure permitted borrowings. In these cases, Value may pledge
assets having a market value not exceeding the lesser of the dollar amounts
borrowed or 10% of the value of total assets at the time of borrowing. Margin
deposits for the purchase and sale of financial futures contracts and related
options and segregation or collateral arrangements made in connection with
options activities are not deemed to be a pledge.

16.......Joint Trading

.........None of American Retirement, Foundation, Growth and Income, Small
Cap,* Tax Strategic,* or Total Return may participate on a joint or joint and
several basis in any trading account in any securities. (The "bunching of orders
for the purchase or sale of portfolio securities with its investment adviser or
accounts under its management to reduce brokerage commissions, to average prices
among them or to facilitate such transactions is not considered a trading
account in securities for purposes of this restriction).

17.......Options

.........Foundation and Tax Strategic* may not write, purchase or sell put or
call options, or combinations thereof.

.........Neither Growth and Income nor Total Return may write, purchase or sell
put or call options, or combinations thereof, except that each Fund is
authorized to write covered call options on portfolio securities and to purchase
call options in closing purchase transactions, provided that (i) such options
are listed on a national securities exchange, (ii) the aggregate market value of
the underlying securities does not exceed 25% of the Fund's net assets, taken at
current market value on the date of any such writing, and (iii) the Fund retains
the underlying securities for so long as call options written against them make
the shares subject to transfer upon the exercise of any options.

.........American Retirement may not write, purchase or sell put or call
options, or combinations thereof, except that the Fund is authorized (i) to
write call options traded on a national securities exchange against no more than
15% of the value of the equity securities (including securities convertible into
equity securities) held in its portfolio, provided that the Fund owns the
optioned securities or securities convertible into or carrying rights to acquire
the optioned securities and (ii) to purchase call options in closing purchase
transactions.

.........Utility* will not purchase put options on securities unless the
securities are held in the Fund's portfolio and not more than 5% of the Fund's
total assets would be invested in premiums on open put options. Utility* will
not write call options on securities unless securities are held in the Fund's
portfolio or unless the Fund is entitled to them in deliverable form without
further payment or after segregating cash in the amount of any further payment.

18.......Investment in Equity Securities

.........American Retirement may not invest more than 75% of the value of its
total assets in equity securities (including securities convertible into equity
securities).

19.......Investing in Securities of Other Investment Companies

.........Balanced*, Utility and Value will purchase securities of investment
companies only in open-market transactions involving customary broker's
commissions. However, these limitations are not applicable if the securities are
acquired in a merger, consolidation or acquisition of assets. It should be noted
that investment companies incur certain expenses

<PAGE>

such as management fees and therefore any investment by a Fund in shares of
another investment company would be subject to such duplicate expenses.

.........Each other Fund may purchase the securities of other investment
companies, except to the extent such purchases are not permitted by applicable
law.

20.......Restricted Securities

.........Balanced and Value will not invest more than 10% of their net assets in
securities subject to restrictions on resale under the Securities Act of 1933
(except for, in the case of Balanced, certain restricted securities which meet
criteria for liquidity established by the Trustees).

.........Utility* will not invest more than 10% of the value of its net assets
in securities subject to restrictions on resale under the Securities Act of
1933, except for commercial paper issued under Section 4(2) of the Securities
Act of 1933 and certain other restricted securities which meet the criteria for
liquidity as established by the Trustees. To comply with certain state
restrictions, the Fund will limit these transactions to 5% of its total assets.
(If state restrictions change this latter restriction may be revised without
shareholder approval or notification).

NON FUNDAMENTAL OPERATING POLICIES

.........Certain Funds have adopted additional non-fundamental operating
policies. Operating policies may be changed by the Board of Trustees without a
shareholder vote.

1........Futures and Options Transactions

.........Small Cap* will not: (i) sell futures contracts, purchase put options
or write call options if, as a result, more than 30% of the Fund's total assets
would be hedged with futures and options under normal conditions; (ii) purchase
futures contracts or write put options if, as a result, the Fund's total
obligations upon settlement or exercise of purchased futures contracts and
written put options would exceed 30% of its total assets; or (iii) purchase call
options if, as a result, the current value of option premiums for options
purchased by the Fund would exceed 5% of the Fund's total assets. These
limitations do not apply to options attached to, or acquired or traded together
with their underlying securities, and do not apply to securities that
incorporate features similar to options.

2........Illiquid Securities.

.........None of American Retirement, Foundation, Growth and Income, Small Cap,
Tax Strategic or Total Return may invest more than 15% of its net assets in
illiquid securities and other securities which are not readily marketable,
including repurchase agreements which have a maturity of longer than seven days,
but excluding securities eligible for resale under Rule 144A of the Securities
Act of 1933, as amended, which the Trustees have determined to be liquid.

.........Balanced* and Utility* will not invest more than 10% (in the case of
Balanced) or 15% (in the case of Utility) of its net assets in illiquid
securities, including repurchase agreements providing for settlement in more
than seven days after notice and certain securities determined by the Trustees
not to be liquid and, in the case of Utility, in non-negotiable time deposits.

3........Other. In order to comply with certain state blue sky limitations:
-----

...........Each of American Retirement, Foundation, Growth and Income, Small
Cap, Tax Strategic and Total Return interprets fundamental investment
restriction 7 to prohibit investments in oil, gas and mineral leases.

...........Each of American Retirement, Foundation, Growth and Income, Small
Cap, Tax Strategic and Total Return interprets fundamental investment
restriction 14 to prohibit investment in real estate limited partnerships which
are not readily marketable.

<PAGE>

...........Foundation interprets fundamental investment restriction 11 to permit
short sales only where the Fund owns the securities sold or securities
convertible into or carrying rights to acquire such securities without payment
of any additional consideration therefor.

...........Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in percentage
resulting from any change in value or net assets will not result in a violation
of such restriction.

CERTAIN RISK CONSIDERATIONS

...........There can be no assurance that a Fund will achieve its investment
objective and an investment in the Fund involves certain risks which are
described under "Description of the Funds - Investment Objective and Policies"
in the Prospectus.

......... In addition, the ability of Tax Strategic to achieve its investment
objective is dependent on the continuing ability of the issuers of Municipal
Bonds in which the Fund invests -- and of banks issuing letters of credit
backing such securities -- to meet their obligations with respect to the payment
of interest and principal when due. The ratings of Moody's Investors Service,
Inc., Standard & Poor's Ratings Group and other nationally recognized rating
organizations represent their opinions as to the quality of Municipal Bonds
which they undertake to rate. Ratings are not absolute standards of quality;
consequently, Municipal Bonds with the same maturity, coupon, and rating may
have different yields. There are variations in Municipal Bonds, both within a
particular classification and between classifications, resulting from numerous
factors.

......... Unlike other types of investments, Municipal Bonds have traditionally
not been subject to regulation by, or registration with, the Securities and
Exchange Commission, although there have been proposals which would provide for
regulation in the future.

......... The federal bankruptcy statutes relating to the debts of political
subdivisions and authorities of states of the United States provide that, in
certain circumstances, such subdivisions or authorities may be authorized to
initiate bankruptcy proceedings without prior notice to or consent of creditors,
which proceedings could result in material and adverse changes in the rights of
holders of their obligations. In addition, there have been lawsuits challenging
the issuance of pollution control revenue bonds or the validity of their
issuance under state or Federal law which could ultimately affect the validity
of those Municipal Bonds or the tax-free nature of the interest thereon.

MANAGEMENT

The Trustees and executive officers of the Trusts, their ages, addresses
and principal occupations during the past five years are set forth below:

Laurence B. Ashkin (67), 180 East Pearson Street, Chicago, IL-Trustee. Real
estate developer and construction consultant since 1980; President of Centrum
Equities since 1987 and Centrum Properties, Inc. since 1980.

Foster Bam*(68), Greenwich Plaza, Greenwich, CT-Trustee. Partner in the law firm
of Cummings and Lockwood since 1968.

James S. Howell (70), 4124 Crossgate Road, Charlotte, NC-Chairman and Trustee.
Retired Vice President of Lance Inc. (food manufacturing); Chairman of the
Distribution Comm. Foundation for the Carolinas from 1989 to 1993.

Robert J. Jeffries (72), 2118 New Bedford Drive, Sun City Center, FL-Trustee.
Corporate consultant since 1967.

Gerald M. McDonnell (55), 821 Regency Drive, Charlotte, NC-Trustee. Sales
Representative with Nucor-Yamoto Inc. (steel producer) since 1988.

<PAGE>

Thomas L. McVerry (56), 4419 Parkview Drive, Charlotte, NC-Trustee. Director of
Carolina Cooperative Federal Credit Union since 1990 and Rexham Corporation from
1988 to 1990; Vice President of Rexham Industries, Inc. (diversified
manufacturer) from 1989 to 1990; Vice President-Finance and Resources, Rexham
Corporation from 1979 to 1990.

William Walt Pettit*(39), Holcomb and Pettit, P.A., 207 West Trade St.,
Charlotte, NC-Trustee. Partner in the law firm Holcomb and Pettit, P.A. since
1990; Attorney, Clontz and Clontz from 1980 to 1990.

Russell A. Salton, III, M.D. (47), Primary Physician Care, 1515 Mockingbird
Lane, Charlotte, NC-Trustee. President, Primary Physician Care since 1990.

Michael S. Scofield (52), 212 S. Tryon Street Suite 980, Charlotte, NC-Trustee.
Attorney, Law Offices of Michael S. Scofield since prior to 1989.

John J. Pileggi (35), 237 Park Avenue, Suite 910, New York, NY-President and
Treasurer. Senior Managing Director, Furman Selz Incorporated since 1992,
Managing Director from 1984 to 1992.

Joan V. Fiore (39), 237 Park Avenue, Suite 910, New York, NY-Secretary. Managing
Director and Counsel, Furman Selz Incorporated since 1991; Staff Attorney,
Securities and Exchange Commission from 1986 to 1991.

Except for Messrs. Ashkin, Bam and Jeffries, who are not Trustees of
Evergreen Investment Trust, the Trustees and officers listed above hold the same
positions with a total of ten registered investment companies offering a total
of thirty-one investment funds within the Evergreen mutual fund complex.

- --------

* Mr. Bam and Mr. Pettit may each be deemed to be an "interested person"
within the meaning of the Investment Company Act of 1940, as amended (the "1940
Act").

The officers of the Trusts are all officers and/or employees of Furman Selz
Incorporated. Furman Selz Incorporated is the parent of Evergreen Funds
Distributor, Inc., the distributor of each Class of shares of each Fund.

The Funds do not pay any direct remuneration to any officer or Trustee who
is an "affiliated person" of either First Union National Bank of North Carolina
or Evergreen Asset Management Corp. or their affiliates. See "Investment
Adviser." Currently, none of the Trustees is an "affiliated person" as defined
in the 1940 Act. The Trusts pay each Trustee who is not an "affiliated person"
an annual retainer and a fee per meeting attended, plus expenses (and $50 for
each telephone conference meeting) as follows:

Name of Trust/Fund Annual Retainer Meeting Fee

Total Return 5,500 300
Growth and Income 500 100
The Evergreen American Retirement Trust 1,000
American Retirement 100
Small Cap 100
Evergreen Foundation Trust 500
Foundation 100
Tax Strategic 100
Evergreen Investment Trust 9,000** 1,500**
Balanced
Utility
Value

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

** Evergreen Investment Trust pays an annual retainer to each trustee and a
per-meeting fee that are allocated among its fifteen series. Additionally, each
member of the Audit Committee receives $200 for attendance at each meeting of
the of the Audit Committee and an additional fee is paid to the Chairman of the
Board of $2,000.

<PAGE>

Set forth below for each of the Trustees is the aggregate compensation
paid to such Trustees by each Trust for the fiscal year ended December 31, 1994
(fiscal year ended January 31, 1995 for Total Return)

Total
Compensation
Aggregate Compensation From Trust From Trusts &
Fund Complex
Name of Total Growth Retirement Foundation Investment Paid
Person Return* & Income Trust Trust Trust** to Trustees
- ------ ------ -------- ---------- ---------- ---------- -----------

Laurence Ashkin 7,150 1,050 1,569 1,137 29,800

Foster Bam 7,150 1,050 1,569 1,137 29,850

James S. Howell 3,150 400 660 444 14,900 26,900

Robert J.
Jeffries 7,150 1,050 1,569 1,137 29,800

Gerald M.
McDonnell 3,450 500 760 544 11,900 26,100

Thomas L.
McVerry 3,450 500 760 544 11,900 26,150

William Walt
Pettit 3,450 500 760 544 11,900 26,100

Russell A.
Salton, III, M.D. 3,450 500 760 544 11,900 26,100

Michael S.
Scofield 3,400 500 710 494 11,700 25,650

* Total Return changed its fiscal year end during the period covered by the
foregoing table from March 31 to January 31. Accordingly, the Trustees fees
reported in the foregoing table reflect, for Total Return, the period from April
1, 1994 to January 31, 1995.

** Formerly known as First Union Funds.

No officer or Trustee of the Trusts owned B or C shares of any Fund as
of the date hereof. The number and percent of outstanding shares of each Fund
owned by officers and Trustees as a group on June 15, 1995, is as follows:

No. of Shares Owned
By Officers and Ownership by Officers and
Trustees Trustees as a % of Class Y
Name of Fund as a Group Shares Outstanding

Balanced -0- -0-
Total Return 31,953 .06%
Growth and Income 116,111 2.08%
American Retirement 63,016 1.93%
Small Cap -0- -0-
Foundation 213,803 .74%
Tax Strategic -0- -0-
Utility -0- -0-
Value -0- -0-

Set forth below is information with respect to each person, who, to
each Fund's knowledge, owned beneficially or of record more than 5% of a class

<PAGE>

of each Fund's total outstanding shares and their aggregate ownership of the
Fund's total outstanding shares as of June 15, 1995.

Name of % of
Name and Address Fund/Class No. of Shares Class/Fund
- ---------------- ---------- ------------- ---------------

Fubs & Co. Febo Balanced/C 9,013 45.90%/.01%
Naomi Hamuy
Benjamin Hamyu Poa
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Balanced/C 1,847 9.41%/0%
Leroy Selby, Jr.
Leroy Selby, III
C/O First Union National Bank
301 S. Tron Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Balanced/C 1,330 6.77%/0%
Mary Martha McBee Summerour
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank Balanced/Y 67,402,700 98.22%/42.98%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Total Return/A 6,946 9.36%/.01%
Addice Denham and
Lucretia Young
C/O First Union National Bank
301 S. Tryon Street
Charlotee, NC 28288-0001

Fubs & Co. Febo Total Return/A 4,167 5.62%/.01%
Janet P. Lipov and
Larry A. Lipov
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Total Return/C 693 13.53%/0%
Emmett L. Howell
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Total Return/C 691 13.53%/0%
Emmett L. Howell
1221 W. Broad Street
Griffin, GA 30223-2154

Fubs & Co. Febo Total Return/C 579 11.35%/0%
Grace L. Nielsen Trust
Grace L. Nielsen TTEE
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Total Return/C 1,153 22.57%/0%
F. C. Tyler and
Lisette W. Tyler
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Total Return/C 284 5.57%/0%
Richard D. Dresdner
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Total Return/C 532 10.43%/0%
John P. Kolb
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

<PAGE>

Fubs & Co. Febo Total Return/C 545 10.88%/0%
Wanda L. Cardin
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Total Return/C 538 10.53%/0%
Betty C. Starrett
Willis M. Callaway, Jr.
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank-NC Total Return/C 537 10.53%/0%
C/F, Inc.
Marsha Marie Berls IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

John Hancock Clearing Corp. Growth & Income/C 3,079 5.34%/.04%
1 World Financial Center
200 Liberty Street
New York, NY 10281-1003

Fubs & Co. Febo Growth & Income/C 29,868 51.78%/.42%
Clara Caudill
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Charles Schwab & Co. Inc. Growth & Income/Y 792,727 14.17%/11.11%
Reinvest Account
Attn. Mutual Funds Dept.
101 Mongomery Street
San Francisco, CA 94104-4122

First Union National Bank/EB/INT Growth & Income/Y 485,404 8.67%/6.80%
Reinvest Account
Attn. Trust Operations Fund Group
401 S. Tryon Street, 3rd Floor
CMG 1151
Charlotte, NC 28202-1911

Stephen A. Lieber Growth & Income/Y 498,119 8.90%/6.98%
C/O Lieber & Co.
Purchase, NY 10577

Fubs & Co. Febo American Retirement/A 1,704 13.14%/.05%
Theodora H. Wendler
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo American Retirement/A 2,248 17.33%/.07%
Walter E. Gilbert
Alice J. Gilbert
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank- American Retirement/A 1,796 13.84%/.05%
VA C/F
Ruth L. Harris IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank- American Retirement/A 1,696 13.07%/.05%
VA C/F
William P. Clements IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank- American Retirement/A 1,926 14.84%/.06%
FL C/F
Audrey F. Newell IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

<PAGE>

First Union National Bank- American Retirement/A 1,571 12.11%/.05%
GA C/F
William Lee Barker IRA

C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo American Retirement/B 3,801 5.65%/.11%
Walter E. Vermilya
506 Pleasant Hill Drive
Richmond, VA 23236

First Union National Bank Cust American Retirement/B 5,414 8.04%/.16%
Fredric C. Porton
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo American Retirement/B 4,645 6.90%/.14%
Edyth E. Brigham Rev. Liv.
Trust
Edyth E. Brigham TTEE
U/A/D 04/03/76
C/O First Union National Bank
301 S Tryon Street Charlotte, NC
28288-0001

First Union National Bank- American Retirement/C 751 97.45%/.02%
VA C/F
James L. Wilkinson Rollover IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Charles Schwab & Co. Inc. American Retirement/Y 183,524 5.63%/5.48%
Cash Account
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122

Charles Schwab & Co. Inc.
Reinvest Account
Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122 American Retirement/Y 689,073 21.12%/20.58%

Stephen A. Lieber American Retirement/Y 166,600 5.11%/4.98%
C/O Lieber & Co.
Purchase, NY 10577

Fubs & Co. Febo Small Cap/A 8,158 48.96%/1.44%
Elizabeth M. Screven
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank- Small Cap/A 1,038 8.26%/.24%
FL C/F
Aura Dominguez
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Small Cap/A 2,484 19.75%/.58%
Dorothy Friedland
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank- Small Cap/B 824 6.59%/.19%
NC C/F
Harold T. Brooks IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank Small Cap/B 727 5.82%/.17%
Manuel A. Barrios DDS
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

<PAGE>

Fubs & Co. Febo Small Cap/B 632 5.05%/.15%
Silvia M. Tamayo
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank- Small Cap/B 681 5.45%/.16%
VA C/F
Wayne H. Sherman IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank- Small Cap/B 1,253 10.02%/.29%
NC C/F
J. Kevin Moore IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank- Small Cap/B 1,439 11.51%/.34%
FL C/F
Robert H. Carr IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank- Small Cap/B 1,317 10.53%/.31%
NC C/F
Eric W. Johnson IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank- Small Cap/C 104 5.38%/.02%
FL C/F, Inc.
Michael A. Sorg IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank- Small Cap/C 104 5.38%/.02%
FL C/F, Inc.
Matthew R. Sorg IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank- Small Cap/C 1,289 66.75%/.30%
VA C/F, Inc.
Bruce S. Barker SEP
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank- Small Cap/C 412 21.36%/.10%
VA C/F
Brenton S. Farmer SEP
C/O First Union National Bank
301 S Tryon Street
Charlotte, NC 28288-0001

Nola Maddox Falcone Small Cap/Y 53,272 13.31%/12.46%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577

Stephen A. Lieber Small Cap/Y 106,548 26.62%/24.95%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577

Charles Schwab & Co. Inc. Small Cap/Y 26,816 6.70%/6.27%
Reinvest Account
101 Montgomery Street
Mutual Fund Dept.
San Francisco, CA 94104-4122

First Union National Bank/EB Small Cap/Y 87,728 18.92%/20.53%
Cash Account
Attn: Trust Operations Fund
401 S. Tryon Street
3rd Floor CMG 11
Charlotte, NC 28202-1911

<PAGE>

North Carolina Trust Co. Foundation/A 178,455 7.25%/.46%
FBO Miller Clinic

C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Foundation/C 18,070 5.45%/.05%
Holmes Drug Co. Inc.
Employees Pension Plan
U/A/D 01/02/69
F/B/O William J. Miller
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Foundation/C 28,715 8.86%/.07%
Clara Caudill
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Charles Schwab & Co. Inc. Foundation/Y 4,943 17.13%/12.69%
101 Montgomery Street
San Francisco, CA 94104-4122

Mac & Co. Foundation/Y 3,862,477 13.38%/9.92%
A/C 195-643
C/O Mellon Bank NA
Mutual Funds
P.O. Box 320
Pittsburgh, PA 15230-0320

Eleanor C. McCallum TR Tax Strategic /A 5,577 10.47%/.42%
Eleanor C. McCallum Living
Trust U/A 1/14/93
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC
28288-0001

Eleanor C. McCallum TTEE Tax Strategic /A 3,601 7.14%/.27%
McCallum Family Trust
U/A/D 2/9/94
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC
28288-0001

Fubs & Co. Febo Tax Strategic /A 4,576 8.59%/.35%
Curtis J. Morris
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Tax Strategic /A 3,542 6.65%/.27%
Judy A. Smith
C/O First Union National Bank
301 S Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Tax Strategic /A 4,269 8.02%/.32%
Dr. Thomas E. Baily, Sr.
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Tax Strategic /A 4,441 8.34%/.34%
Norman N. Dorosin
Harriette H. Dorosin
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. FBO Tax Strategic /A 4,226 7.94%/.32%
Lie Lin
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Tax Strategic /B 11,791 5.26%/.89%
Dr. Charles Wm. Kepner
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

<PAGE>

Fubs & Co. Febo Tax Strategic /B 12,378 5.52%/.94%
Susan Hooper

C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Tax Strategic /C 4,758 37.31%/.36%
Harry A. Edwards Jr.
Linda R. Edwards
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Tax Strategic /C 675 5.30%/.07%
Evie Kontos
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Tax Strategic /C 782 6.14%/.06%
Pearl L. Holland Trustee
Pearl L. Holland Rev. Trust
U/A/D 12/04/89
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC
28288-0001

Fubs & Co. Febo Tax Strategic /C 6,516 51.09%/.49%
Wade H. Moser, Jr. M.D.
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Nola Maddox Falcone Tax Strategic /Y 95,494 9.24%/7.22%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577

Constance E. Lieber Tax Strategic /Y 55,928 5.41%/4.23%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577

Stephen A. Lieber Tax Strategic/Y 484,652 46.89%/36.65%
C/O Lieber & Co.
2500 Westchester Avenue
Purchase, NY 10577

Fubs & Co. Febo Utility/C 5,556 35.50%/.13%
Elsie B. Strom
Lewis F. Strom
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Utility/C 3,020 19.30%/.07%
Laura Alyce Hulbert
Ronald F. Hulbert
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Utility/C 1,107 7.07%/.03%
Evelyn L. Smith
Greg Smith
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Utility/C 1,086 6.94%/.03%
Max Ray
Jeralyne Ray
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank Utility/Y 567,133 83.92%/13.18%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001

<PAGE>

First Union National Bank Utility/Y 108,640 18.08%/12.52%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Value/C 6,055 18.68%/.14%
Benjamin Hamuy
Naomi Hamuy POA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

Fubs & Co. Febo Value/C 4,307 13.29%/.10
C. Wilson Construction Company
Profit Sharing Plan
U/A/D 7-1-87
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC
28288-0001

Fubs & Co. Febo Value/C 1,826 5.63%/.04%
William H. Smith
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank- Value/C 1,716 5.30%/.04%
FL C/F
St. Elmo Dowling IRA
C/O First Union National Bank
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank Value/Y 31,721,695 90.20%/60.43%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001

First Union National Bank Value/Y 3,442,203 9.79%/6.56%
Trust Accounts
Attn: Ginny Batten
11th Floor CMG-1151
301 S. Tryon Street
Charlotte, NC 28288-0001

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

*As a result of his ownership of 36.65%, of the shares of Tax
Strategic, respectively, on June 15, 1995, Mr. Lieber may be deemed to "control"
the Fund, as that term is defined in the 1940 Act. As a result of its
beneficial ownership of 26.63% of the shares of American Retirement on June 15,
1995, Charles Schwab & Co., Inc. may be deemed to "control" the Fund, as that
term is defined in the 1940 Act.

**First Union National Bank of North Carolina and its affiliates act in
various capacities for numerous accounts. As a result of its ownership of
42.98%, 66.99% and 25.7% of Balanced, Value and Utility, respectively, on June
15, 1995, First Union National Bank of North Carolina may be deemed to "control"
each Fund as that term is defined in the 1940 Act.

INVESTMENT ADVISER
(See also "Management of the Fund" in each Fund's Prospectus)

The investment adviser of Total Return, Growth and Income, American
Retirement, Small Cap, Foundation and Tax Strategic is Evergreen Asset
Management Corp., a New York corporation, with offices at 2500 Westchester
Avenue, Purchase, New York or ("Evergreen Asset" or the "Adviser."). Evergreen
Asset is owned by First Union National Bank of North Carolina ("FUNB" or the
"Adviser") which, in turn, is a subsidiary of First Union Corporation ("First
Union"), a bank holding company headquartered in Charlotte, North Carolina. The
investment adviser of Balanced, Utility and Value is FUNB which provides
investment advisory services through its Capital Management Group. The Directors
of Evergreen Asset are Richard K. Wagoner and Barbara I. Colvin. The executive
officers of Evergreen Asset are Stephen A. Lieber, Chairman and Co-Chief
Executive Officer, Nola Maddox Falcone, President and Co-Chief Executive
Officer, Theodore J. Israel, Jr., Executive Vice President, Joseph J. McBrien,
Senior Vice President and General Counsel, and George R. Gaspari, Senior Vice
President and Chief Financial Officer.

On June 30, 1994, Evergreen Asset and Lieber and Company ("Lieber")
were acquired by First Union through certain of its subsidiaries. Evergreen
Asset was acquired by FUNB, a wholly-owned subsidiary (except for directors'
qualifying shares) of First Union, by merger into EAMC Corporation ("EAMC") a
wholly-owned subsidiary of FUNB. EAMC then assumed the name "Evergreen Asset
Management Corp." and succeeded to the business of Evergreen Asset.
Contemporaneously with the succession of EAMC to the business of Evergreen Asset
and its assumption of the name "Evergreen Asset Management Corp.", Total Return,
Growth and Income, American Retirement, Small Cap, Foundation and Tax Strategic
entered into a new investment advisory agreement with EAMC and into a
distribution agreement with Evergreen Funds Distributor, Inc. (the
"Distributor"), a subsidiary of Furman Selz Incorporated. At that time, EAMC
also entered into a new sub-advisory agreement with Lieber pursuant to which
Lieber provides certain services to Evergreen Asset in connection with its
duties as investment adviser.

The partnership interests in Lieber, a New York general partnership, were
acquired by Lieber I Corp. and Lieber II Corp., which are both wholly-owned
subsidiaries of FUNB. The

<PAGE>

business of Lieber is being continued. The new advisory and sub-advisory
agreements were approved by the shareholders of Total Return, Growth and Income,
American Retirement, Small Cap, Foundation and Tax Strategic at their meeting
held on June 23, 1994, and became effective on June 30, 1994.

Under its Investment Advisory Agreement with each Fund, each Adviser
has agreed to furnish reports, statistical and research services and
recommendations with respect to each Fund's portfolio of investments. In
addition, each Adviser provides office facilities to the Funds and performs a
variety of administrative services. Each Fund pays the cost of all of its other
expenses and liabilities, including expenses and liabilities incurred in
connection with maintaining their registration under the Securities Act of 1933,
as amended, and the 1940 Act, printing prospectuses (for existing shareholders)
as they are updated, state qualifications, share certificates, mailings,
brokerage, custodian and stock transfer charges, printing, legal and auditing
expenses, expenses of shareholder meetings and reports to shareholders.
Notwithstanding the foregoing, each Adviser will pay the costs of printing and
distributing prospectuses used for prospective shareholders.

The method of computing the investment advisory fee for each Fund is
described in such Fund's Prospectus. The advisory fees paid by each Fund for the
three most recent fiscal periods reflected in its registration statement are set
forth below:

BALANCED Year Ended Year Ended Year Ended
12/31/94 12/31/93 12/31/92
Advisory Fee $4,621,512 $3,425,786 $2,319,251
========== ========== ==========

TOTAL RETURN Year Ended Year Ended Year Ended
1/31/95 3/31/94 3/31/93
Advisory Fee $8,542,289 $11,613,964 $10,671,425
========== =========== ===========
Expense
FOUNDATION Year Ended Year Ended Year Ended
12/31/94 12/31/93 12/31/92
Advisory Fee $2,551,768 $1,290,748 $257,141
========== ========== ========
Expense
Reimbursement $ 7,926
--------

SMALL CAP Year Ended Year Ended
12/31/94 12/31/93
Advisory Fee $ 29,075 $ 4,929
-------- --------
Waiver ($29,075) ($ 4,929)
Net Advisory Fee $ 0 $ 0
========= =========
Expense
Reimbursement $63,704 $16,800
------- -------

UTILITY Year Ended
12/31/94
Advisory Fee $153,458
---------
Waiver ($152,038)

Net Advisory Fee $1,420
=========

GROWTH AND INCOME Year Ended Year Ended Year Ended
12/31/94 12/31/93 12/31/92
Advisory Fee $684,891 $722,166 $528,190
======== ======== ========

AMERICAN Year Ended Year Ended Year Ended
RETIREMENT 12/31/94 12/31/93 12/31/92
Advisory Fee $292,628 $226,080 $152,055
======== ======== ========

Reimbursement $ 16,093
--------
TAX STRATEGIC Year Ended Year Ended
12/31/94 12/31/93
Advisory Fee $ 65,915 $ 4,989
-------- -------
Waiver ($65,915) ($4,989)
Net Advisory Fee $ 0 $ 0
========== =========
Expense
Reimbursement $ 3,777 $ 12,700
--------- ---------

VALUE Year Ended Year Ended Year Ended
12/31/94 12/31/93 12/31/92
Advisory Fee $3,850,673 $3,016,457 $2,208,618

Total Return changed its fiscal year end from March 31 to January 31
during the periods covered by the foregoing table. Accordingly, the investment
advisory fees reported in the foregoing table reflect for Total Return, the
period from April 1, 1994 to January 31, 1995. In addition, Small Cap, Tax
Strategic and Utility commenced operations on October 1, 1993, November 2, 1993
and January 4, 1994, respectively, and, therefore, the first year's figures set
forth in the table above reflect for Small Cap and Tax Strategic investment
advisory fees paid for the period from commencement of operations through
December 31, 1993 and, with respect to Utility, December 31, 1994.

Expense Limitations

Each Adviser's fee will be reduced by, or the Adviser will reimburse
the Funds for any amount necessary to prevent such expenses (exclusive of taxes,
interest, brokerage commissions and extraordinary expenses, but inclusive of the
Adviser's fee) from exceeding the most restrictive of the expense limitations
imposed by state securities commissions

<PAGE>

of the states in which the Funds' shares are then registered or qualified for
sale. Reimbursement, when necessary, will be made monthly in the same manner in
which the advisory fee is paid. Currently the most restrictive state expense
limitation is 2.5% of the first $30,000,000 of the Fund's average daily net
assets, 2% of the next $70,000,000 of such assets and 1.5% of such assets in
excess of $100,000,000.

In addition, each Adviser has in some instances voluntarily limited
(and may in the future limit) expenses of certain of the Funds. For the four
month period January 1, 1992 to April 30, 1992, Evergreen Asset voluntarily
limited the expenses of American Retirement to 1.50% of average net assets.

Evergreen Asset has voluntarily agreed to reimburse Small Cap and Tax
Strategic to the extent that any of these Funds' 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) exceed 1.50% of their average net assets until such time
as said Funds' net assets reach $15 million.

During the fiscal year ended December 31, 1992, Evergreen Asset
voluntarily absorbed a portion of Foundation's expenses and reimbursed the Fund
for expenses in excess of the voluntary expense limitation in an amount equal to
.03% of its average daily net assets. The voluntary expense limitation and the
absorption of Fund expenses ceased on May 1, 1992.

The Investment Advisory Agreements are terminable, without the payment
of any penalty, on sixty days' written notice, by a vote of the holders of a
majority of each Fund's outstanding shares, or by a vote of a majority of each
Trust's Trustees or by the respective Adviser. The Investment Advisory
Agreements will automatically terminate in the event of their assignment. Each
Investment Advisory Agreement provides in substance that the Adviser shall not
be liable for any action or failure to act in accordance with its duties
thereunder in the absence of willful misfeasance, bad faith or gross negligence
on the part of the Adviser or of reckless disregard of its obligations
thereunder. The Investment Advisory Agreements with respect to Total Return,
Growth and Income, American Retirement, Small Cap, Foundation and Tax Strategic
were approved by each Fund's shareholders on June 23, 1994, became effective on
June 30, 1994, and will continue in effect until June 30, 1996, and thereafter
from year to year provided that their continuance is approved annually by a vote
of a majority of the Trustees of each Trust including a majority of those
Trustees who are not parties thereto or "interested persons" (as defined in the
1940 Act) of any such party, cast in person at a meeting duly called for the
purpose of voting on such approval or a majority of the outstanding voting
shares of each Fund. With respect to Balanced, Utility and Value, the Investment
Advisory Agreement dated February 28, 1985 and amended from time to time
thereafter was last approved by the Trustees of Evergreen Investment Trust
(formerly, First Union Funds) on April 20, 1995 and it will continue from year
to year with respect to each Fund provided that such continuance is approved
annually by a vote of a majority of the Trustees of Evergreen Investment Trust
including a majority of those Trustees who are not parties thereto or
"interested persons" of any such party cast in person at a meeting duly called
for the purpose of voting on such approval or by a vote of a majority of the
outstanding voting securities of each Fund.

Certain other clients of each Adviser may have investment objectives
and policies similar to those of the Funds. Each Adviser (including the
sub-adviser) may, from time to time, make recommendations which result in the
purchase or sale of a particular security by its other clients simultaneously
with a Fund. If transactions on behalf of more than one client during the same
period increase the demand for securities being purchased or the supply of
securities being sold, there may be an adverse effect on price or quantity. It
is the policy of each Adviser to allocate advisory recommendations and the
placing of orders in a manner which is deemed equitable by the Adviser to the
accounts involved, including the Funds. When two or more of the clients of the
Adviser (including one or more of the Funds) are purchasing or selling the same
security on a given day from the same broker-dealer, such transactions may be
averaged as to price.

Although the investment objectives of the Funds are not the same, and
their investment decisions are made independently of each other, they rely upon
the same resources for investment advice and recommendations. Therefore, on
occasion, when a particular security meets the different investment objectives
of the various Funds, they may simultaneously purchase or sell the same
security. This could have a detrimental effect on the price and quantity of the
security available to each Fund. If simultaneous transactions

<PAGE>

occur, the Adviser attempts to allocate the securities, both as to price and
quantity, in accordance with a method deemed equitable to each Fund and
consistent with their different investment objectives. In some cases,
simultaneous purchases or sales could have a beneficial effect, in that the
ability of one Fund to participate in volume transactions may produce better
executions for that Fund.

Each Fund has adopted procedures under Rule 17a-7 of the 1940 Act to permit
purchase and sales transactions to be effected between each Fund and the other
registered investment companies for which either Evergreen Asset or FUNB acts as
investment adviser or between the Fund and any advisory clients of Evergreen
Asset, FUNB or Lieber & Company. Each Fund may from time to time engage in such
transactions but only in accordance with these procedures and if they are
equitable to each participant and consistent with each participant's investment
objectives.

Prior to July 1, 1995, Federated Administrative Services, a subsidiary
of Federated Investors, provided legal, accounting and other administrative
personnel and support services to each of the portfolios of Evergreen Investment
Trust. The Trust paid a fee for such services at the following annual rate: .15%
on the first $250 million average daily net assets of the Trust; .125% on the
next $250 million; .10% on the next $250 million and .075% on assets in excess
of $250 million. For the fiscal years ended December 31, 1994, 1993 and 1992,
Balanced incurred $779,584, $597,752 and $427,255, respectively, in
administrative service costs. For the period from January 4, 1994 (commencement
of operations) to December 31, 1994, Utility incurred $104,384 in administrative
service costs, all of which was voluntarily waived. For the fiscal years ended
December 31, 1994, 1993 and 1992, Value incurred $649,487, $526,836 and $407,134
in administrative service costs, of which $17,263 were voluntarily waived in
1992.

Commencing July 1, 1995, Evergreen Asset will provide administrative
services to each of the portfolios of Evergreen Investment Trust for a fee based
on the average daily net assets of each fund administered by Evergreen Asset for
which Evergreen Asset or FUNB also serves as investment adviser, calculated
daily and payable monthly at the following annual rates: .050% on the first $7
billion; .035% on the next $3 billion; .030% on the next $5 billion; .020% on
the next $10 billion; .015% on the next $5 billion; and .010% on assets in
excess of $30 billion. Furman Selz Incorporated, the parent of the Distributor,
serves as sub-administrator to Balanced, Utility and Value and is entitled to
receive a fee from each Fund calculated on the average daily net assets of each
Fund at a rate based on the total assets of the mutual funds administered by
Evergreen Asset for which FUNB or Evergreen Asset also serve as investment
adviser, calculated in accordance with the following schedule: .0100% of the
first $7 billion; .0075% on the next $3 billion; .0050% on the next $15 billion;
and .0040% on assets in excess of $25 billion. The total assets of mutual funds
administered by Evergreen Asset for which Evergreen Asset or FUNB serves as
investment adviser as of March 31, 1995 were approximately $7.95 billion.

DISTRIBUTION PLANS

Reference is made to "Management of the Fund - Distribution Plans and
Agreements" in the Prospectus of each Fund for additional disclosure regarding
the Funds' distribution arrangements. Distribution fees are accrued daily and
paid monthly on the Class A, B and C shares and are charged as class expenses,
as accrued. The distribution fees attributable to the Class B shares and Class C
shares are designed to permit an investor to purchase such shares through
broker-dealers without the assessment of a front-end sales charge, and, in the
case of Class C shares, without the assessment of a contingent deferred sales
charge after the first year following purchase, while at the same time
permitting the Distributor to compensate broker-dealers in connection with the
sale of such shares. In this regard the purpose and function of the combined
contingent deferred sales charge and distribution services fee on the Class B
shares and the Class C shares, are the same as those of the front-end sales
charge and distribution fee with respect to the Class A shares in that in each
case the sales charge and/or distribution fee provide for the financing of the
distribution of the Fund's shares.

Under the Rule 12b-1 Distribution Plans that have been adopted by each
Fund with respect to each of its Class A, Class B and Class C shares (each a
"Plan" and collectively, the "Plans"), the Treasurer of each Fund reports the
amounts expended under the Plan and the purposes for which such expenditures
were made to the Trustees of each Trust for their review on a quarterly basis.
Also, each Plan provides that the selection and nomination of

<PAGE>

Trustees who are not "interested persons" of each Trust (as defined in the 1940
Act) are committed to the discretion of such disinterested Trustees then in
office.

Each Adviser may from time to time and from its own funds or such other
resources as may be permitted by rules of the Securities and Exchange Commission
make payments for distribution services to the Distributor; the latter may in
turn pay part or all of such compensation to brokers or other persons for their
distribution assistance.

Growth and Income, Total Return, American Retirement, Small Cap,
Foundation and Tax Strategic commenced offering Class A, B or C shares on
January 3, 1995. Each Plan with respect to such Funds became effective on
December 30, 1994 and was initially approved by the sole shareholder of each
Class of shares of each Fund with respect to which a Plan was adopted on that
date and by the unanimous vote of the Trustees of each Trust, including the
disinterested Trustees voting separately, at a meeting called for that purpose
and held on December 13, 1994. The Distribution Agreements between each Fund and
the Distributor pursuant to which distribution fees are paid under the Plans by
each Fund with respect to its Class A, Class B and Class C shares were also
approved at the December 13, 1994 meeting by the unanimous vote of the Trustees,
including the disinterested Trustees voting separately. Each Plan and
Distribution Agreement will continue in effect for successive twelve-month
periods provided, however, that such continuance is specifically approved at
least annually by the Trustees of each Trust or by vote of the holders of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
that Class, and, in either case, by a majority of the Trustees of the Trust who
are not parties to the Agreement or interested persons, as defined in the 1940
Act, of any such party (other than as Trustees of the Trust) and who have no
direct or indirect financial interest in the operation of the Plan or any
agreement related thereto.

Prior to July 8, 1995, Federated Securities Corp., a subsidiary of
Federated Investors, served as the distributor for Balanced, Utility and Value
as well as other portfolios of Evergreen Investment Trust. The Distribution
Agreements between each Fund and the Distributor pursuant to which distribution
fees are paid under the Plans by each Fund with respect to its Class A, Class B
and Class C shares were approved on June 15, 1995 by the unanimous vote of the
Trustees including the disinterested Trustees voting separately.

The Plans permit the payment of fees to brokers and others for
distribution and shareholder-related administrative services and to
broker-dealers, depository institutions, financial intermediaries and
administrators for administrative services as to Class A, Class B and Class C
shares. The Plans are designed to (i) stimulate brokers to provide distribution
and administrative support services to each Fund and holders of Class A, Class B
and Class C shares and (ii) stimulate administrators to render administrative
support services to the Fund and holders of Class A, Class B and Class C shares.
The administrative services are provided by a representative who has knowledge
of the shareholder's particular circumstances and goals, and include, but are
not limited to providing office space, equipment, telephone facilities, and
various personnel including clerical, supervisory, and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding Class
A, Class B and Class C shares; assisting clients in changing dividend options,
account designations, and addresses; and providing such other services as the
Fund reasonably requests for its Class A, Class B and Class C shares.

In addition to the Plans, Balanced, Utility and Value have each adopted
a Shareholder Services Plan whereby shareholder servicing agents may receive
fees from the Fund for providing services which include, but are not limited to,
distributing prospectuses and other information, providing shareholder
assistance, and communicating or facilitating purchases and redemptions of Class
B and Class C shares of the Fund.

In the event that a Plan or Distribution Agreement is terminated or not
continued with respect to one or more Classes of a Fund, (i) no distribution
fees (other than current amounts accrued but not yet paid) would be owed by the
Fund to the Distributor with respect to that Class or Classes, and (ii) the Fund
would not be obligated to pay the Distributor for any amounts expended under the
Distribution Agreement not previously recovered by the Distributor from
distribution services fees in respect of shares of such Class or Classes through
deferred sales charges.

All material amendments to any Plan or Distribution Agreement must be
approved by a vote of the Trustees of a Trust or the holders of the Fund's
outstanding voting securities,

<PAGE>

voting separately by Class, and in either case, by a majority of the
disinterested Trustees, cast in person at a meeting called for the purpose of
voting on such approval; and any Plan or Distribution Agreement may not be
amended in order to increase materially the costs that a particular Class of
shares of a Fund may bear pursuant to the Plan or Distribution Agreement without
the approval of a majority of the holders of the outstanding voting shares of
the Class affected. With respect to Balanced, Utility, and Value, amendments to
the Shareholder Services Plan require a majority vote of the disinterested
Trustees but do not require a shareholders vote. Any Plan, Shareholder Services
Plan or Distribution Agreement may be terminated (a) by a Fund without penalty
at any time by a majority vote of the holders of the outstanding voting
securities of the Fund, voting separately by Class or by a majority vote of the
Trustees who are not "interested persons" as defined in the 1940 Act, or (b) by
the Distributor. To terminate any Distribution Agreement, any party must give
the other parties 60 days' written notice; to terminate a Plan only, the Fund
need give no notice to the Distributor. Any Distribution Agreement will
terminate automatically in the event of its assignment.

For the fiscal year ended December 31, 1994, Balanced incurred $102,621
and Value incurred $473,347 in distribution services fees on behalf of Class A
shares. For the period from January 4, 1994 (commencement of operations) to
December 31, 1994, Utility incurred $9,658 in distribution services fees on
behalf of Class A shares.

For the fiscal year ended December 31, 1994, Balanced incurred $670,202
and Value incurred $621,330 in distribution services fees of Class B shares. For
the period from January 4, 1994 (commencement of operations) to December 31,
1994, Utility incurred $169,007 in distribution services fees on behalf of Class
B shares.

For the period from September 2, 1994 (commencement of operations) to
December 31, 1994, Balanced incurred $310, Value incurred $716 and Utility
incurred $232 in distribution services fees on behalf of Class C shares.

Shareholder Services Plans - Balanced, Utility and Value

For the period ended December 31, 1994, Balanced incurred shareholder
services fees of $83,641 and $103 on behalf of Class B shares and Class C
shares, respectively; Utility incurred shareholder services fees of $24,141 and
$77 on behalf of Class B shares and Class C shares, respectively; and Value
incurred shareholder services fees of $83,225 and $239 on behalf of Class B
shares and Class C shares, respectively.

ALLOCATION OF BROKERAGE

Decisions regarding each Fund's portfolio are made by its Adviser,
subject to the supervision and control of the Trustees. Orders for the purchase
and sale of securities and other investments are placed by employees of the
Adviser, all of whom, in the case of Evergreen Asset, are associated with
Lieber. In general, the same individuals perform the same functions for the
other funds managed by the Adviser. A Fund will not effect any brokerage
transactions with any broker or dealer affiliated directly or indirectly with
the Adviser unless such transactions are fair and reasonable, under the
circumstances, to the Fund's shareholders. Circumstances that may indicate that
such transactions are fair or reasonable include the frequency of such
transactions, the selection process and the commissions payable in connection
with such transactions.

A substantial portion of the transactions in equity securities for each
Fund will occur on domestic stock exchanges. Transactions on stock exchanges
involve the payment of brokerage commissions. In transactions on stock exchanges
in the United States, these commissions are negotiated, whereas on many foreign
stock exchanges these commissions are fixed. In the case of securities traded in
the foreign and domestic over-the-counter markets, there is generally no stated
commission, but the price usually includes an undisclosed commission or markup.
Over-the-counter transactions will generally be placed directly with a principal
market maker, although the Fund may place an over-the-counter order with a
broker-dealer if a better price (including commission) and execution are
available.

It is anticipated that most purchase and sale transactions involving
fixed income securities will be with the issuer or an underwriter or with major
dealers in such securities acting as principals. Such transactions are normally
on a net basis and generally do not involve payment of brokerage commissions.
However, the cost of securities purchased

<PAGE>

from an underwriter usually includes a commission paid by the issuer to the
underwriter. Purchases or sales from dealers will normally reflect the spread
between bid and ask prices.

In selecting firms to effect securities transactions, the primary
consideration of each Fund shall be prompt execution at the most favorable
price. A Fund will also consider such factors as the price of the securities and
the size and difficulty of execution of the order. If these objectives may be
met with more than one firm, the Fund will also consider the availability of
statistical and investment data and economic facts and opinions helpful to the
Fund. To the extent that receipt of these services for which the Adviser or its
affiliates might otherwise have paid, it would tend to reduce their expenses.

Under Section 11(a) of the Securities Exchange Act of 1934, as amended,
and the rules adopted thereunder by the Securities and Exchange Commission,
Lieber may be compensated for effecting transactions in portfolio securities for
a Fund on a national securities exchange provided the conditions of the rules
are met. Each Fund advised by Evergreen Asset has entered into an agreement with
Lieber authorizing Lieber to retain compensation for brokerage services. In
accordance with such agreement, it is contemplated that Lieber, a member of the
New York and American Stock Exchanges, will, to the extent practicable, provide
brokerage services to the Fund with respect to substantially all securities
transactions effected on the New York and American Stock Exchanges. In such
transactions, a Fund will seek the best execution at the most favorable price
while paying a commission rate no higher than that offered to other clients of
Lieber or that which can be reasonably expected to be offered by an unaffiliated
broker-dealer having comparable execution capability in a similar transaction.
However, no Fund will engage in transactions in which Lieber would be a
principal. While no Fund advised by Evergreen Asset contemplates any ongoing
arrangements with other brokerage firms, brokerage business may be given from
time to time to other firms. In addition, the Trustees have adopted procedures
pursuant to Rule 17e-1 under the 1940 Act to ensure that all brokerage
transactions with Lieber, as an affiliated broker-dealer, are fair and
reasonable.

Any profits from brokerage commissions accruing to Lieber as a result
of portfolio transactions for the Fund will accrue to FUNB and to its ultimate
parent, First Union. The Investment Advisory Agreements does not provide for a
reduction of the Adviser's fee with respect to any fund by the amount of any
profits earned by Lieber from brokerage commissions generated by portfolio
transactions of the Fund.

The following chart shows: (1) the brokerage commissions paid by each
Fund advised by Evergreen Asset during their last three fiscal years; (2) the
amount and percentage thereof paid to Lieber; and (3) the percentage of the
total dollar amount of all portfolio transactions with respect to which
commissions have been paid which were effected by Lieber:

TOTAL RETURN Period Ended Year Ended Year Ended
1/31/95 3/31/94 3/31/93
Total Brokerage $3,755,606 $3,234,684 $4,873,169
Commissions
Dollar Amount and % $3,465,900 $3,199,114 $4,842,437
paid to Lieber 92% 99% 99%
% of Transactions
Effected by Lieber 97% 99% 99%

FOUNDATION Year Ended Year Ended Year Ended
12/31/94 12/31/93 12/31/92
Total Brokerage $282,250 $291,295 $128,811
Commissions
Dollar Amount and % $276,985 $284,864 $124,801
paid to Lieber 98% 98% 97%
% of Transactions
Effected by Lieber 98% 98% 96%

SMALL CAP Year Ended Period Ended
12/31/94 12/31/93
Total Brokerage $3,998 $2,091
Commissions
Dollar Amount and % $3,618 $1,729
paid to Lieber 90% 83%
% of Transactions

<PAGE>

Effected by Lieber 90% 73%

GROWTH AND INCOME Year Ended Year Ended Year Ended
12/31/94 12/31/93 12/31/92
Total Brokerage $80,871 $76,427 $66,266
Commissions
Dollar Amount and % $71,721 $66,670 $57,686
paid to Lieber 89% 87% 87%
% of Transactions
Effected by Lieber 88% 84% 86%

AMERICAN RETIREMENT Year Ended Year Ended Year Ended
12/31/94 12/31/93 12/31/92
Total Brokerage $203,922 $99,435 $99,293
Commissions
Dollar Amount and % $202,838 $96,950 $98,793
paid to Lieber 99% 98% 99%
% of Transactions
Effected by Lieber 99% 98% 99%

TAX STRATEGIC Year Ended Period Ended
12/31/94 12/31/93
Total Brokerage $24,872 $3,260
Commissions
Dollar Amount and % $24,072 $3,210
paid to Lieber 97% 98%
% of Transactions
Effected by Lieber 98% 98%

Total Return changed its fiscal year end from March 31 to January 31
during the periods covered by the foregoing table. Accordingly, the commissions
reported in the foregoing table reflect for Total Return the period from April
1, 1994 to January 31, 1995. In addition, Small Cap and Tax Strategic commenced
operations on October 1, 1993 and November 2, 1993, respectively, and,
therefore, the first year's figures set forth in the table above reflect
commissions paid for the period from commencement of operations through December
31, 1993.

Balanced, Value and Utility did not pay any commissions to Lieber. For
the fiscal years ended December 31, 1994, 1993 and 1992, Balanced paid $450,569,
$389,044 and $152,802, respectively, in commissions on brokerage transactions.
For the period from January 4, 1994 (commencement of operations) to December 31,
1994, Utility paid $66,294 in commissions on brokerage transactions. For the
fiscal years ended December 31, 1994, 1993 and 1992, Value paid $1,437,338,
$894,400 and $642,338, respectively, in commissions on brokerage transactions.

ADDITIONAL TAX INFORMATION
(See also "Taxes" in the Prospectus)

Each Fund has qualified and intends to continue to qualify for and
elect the tax treatment applicable to regulated investment companies ("RIC")
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). (Such qualification does not involve supervision of management or
investment practices or policies by the Internal Revenue Service.) In order to
qualify as a regulated investment company, a Fund must, among other things, (a)
derive at least 90% of its gross income from dividends, interest, payments with
respect to proceeds from securities loans, gains from the sale or other
disposition of securities and other income (including gains from options,
futures or forward contracts) derived with respect to its business of investing
in such securities; (b) derive less than 30% of its gross income from the sale
or other disposition of securities, options, futures or forward contracts (other
than those on foreign currencies), or foreign currencies (or options, futures or
forward contracts thereon) that are not directly related to the RIC's principal
business of investing in securities (or options and futures with respect
thereto) held for less than three months; and (c) diversify its holdings so
that, at the end of each quarter of its taxable year, (i) at least 50% of the
market value of the Fund's total assets is represented by cash, U.S. government
securities and other securities limited in respect of any one issuer, to an
amount not greater than 5% of the Fund's total assets and 10% of the outstanding
voting securities of such issuer, and (ii) not more than 25% of the value of its
total assets is invested in the securities of any one issuer (other than U.S.
Government securities and securities of other regulated investment companies).
By so qualifying, a Fund is not subject to Federal income tax if it timely
distributes its investment company taxable income and any net realized capital
gains. A 4% nondeductible excise tax will be imposed on a Fund to the extent it
does not meet certain distribution requirements by the end of each calendar
year. Each Fund anticipates meeting such distribution requirements.

Dividends paid by a Fund from investment company taxable income
generally will be taxed to the shareholders as ordinary income. Investment
company taxable income includes net investment income and net realized
short-term gains (if any). Any dividends received by a Fund from domestic
corporations will constitute a portion of the Fund's gross investment income. It
is anticipated that this portion of the dividends paid by a Fund (other than
distributions of securities profits) will qualify for the 70% dividends-received
deduction for corporations. Shareholders will be informed of the amounts of
dividends which so qualify.

Distributions of the excess of net long-term capital gain over net
short-term capital loss are taxable to shareholders (who are not exempt from
tax) as long-term capital gain, regardless of the length of time the shares of a
Fund have been held by such shareholders. Short-term capital gains distributions
are taxable to shareholders who are not exempt from tax as ordinary income. Such
distributions are not eligible for the dividends-received deduction. Any loss
recognized upon the sale of shares of a Fund held by a shareholder for six
months or less will be treated as a long-term capital loss to the extent that
the shareholder received a long-term capital gain distribution with respect to
such shares.

<PAGE>

Distributions of investment company taxable income and any net
short-term capital gains will be taxable as ordinary income as described above
to shareholders (who are not exempt from tax), whether made in shares or in
cash. Shareholders electing to receive distributions in the form of additional
shares will have a cost basis for Federal income tax purposes in each share so
received equal to the net asset value of a share of a Fund on the reinvestment
date.

Distributions by each Fund result in a reduction in the net asset value
of the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution nevertheless would be taxable as
ordinary income or capital gain as described above to shareholders (who are not
exempt from tax), even though, from an investment standpoint, it may constitute
a return of capital. In particular, investors should be careful to consider the
tax implications of buying shares just prior to a distribution. The price of
shares purchased at that time includes the amount of the
forthcoming distribution. Those purchasing just prior to a distribution will
then receive what is in effect a return of capital upon the distribution which
will nevertheless be taxable to shareholders subject to taxes.

Upon a sale or exchange of its shares, a shareholder will realize a
taxable gain or loss depending on its basis in the shares. Such gains or loss
will be treated as a capital gain or loss if the shares are capital assets in
the investor's hands and will be a long-term capital gain or loss if the shares
have been held for more than one year. Generally, any loss realized on a sale or
exchange will be disallowed to the extent shares disposed of are replaced within
a period of sixty-one days beginning thirty days before and ending thirty days
after the shares are disposed of. Any loss realized by a shareholder on the sale
of shares of the Fund held by the shareholder for six months or less will be
disallowed to the extent of any exempt interest dividends received by the
shareholder with respect to such shares, and will be treated for tax purposes as
a long-term capital loss to the extent of any distributions of net capital gains
received by the shareholder with respect to such shares.

All distributions, whether received in shares or cash, must be reported
by each shareholder on his or her Federal income tax return. Each shareholder
should consult his or her own tax adviser to determine the state and local tax
implications of Fund distributions.

Shareholders who fail to furnish their taxpayer identification numbers
to a Fund and to certify as to its correctness and certain other shareholders
may be subject to a 31% Federal income tax backup withholding requirement on
dividends, distributions of capital gains and redemption proceeds paid to them
by the Fund. If the withholding provisions are applicable, any such dividends or
capital gain distributions to these shareholders, whether taken in cash or
reinvested in additional shares, and any redemption proceeds will be reduced by
the amounts required to be withheld. Investors may wish to consult their own tax
advisers about the applicability of the backup withholding provisions.

The foregoing discussion relates solely to U.S. Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens and residents and U.S. domestic
corporations, partnerships, trusts and estates). It does not reflect the special
tax consequences to certain taxpayers (e.g., banks, insurance companies, tax
exempt organizations and foreign persons). Shareholders are encouraged to
consult their own tax advisers regarding specific questions relating to Federal,
state and local tax consequences of investing in shares of a Fund. Each
shareholder who is not a U.S. person should consult his or her tax adviser
regarding the U.S. and foreign tax consequences of ownership of shares of a
Fund, including the possibility that such a shareholder may be subject to a U.S.
withholding tax at a rate of 31% (or at a lower rate under a tax treaty) on
amounts treated as income from U.S. sources under the Code.

Special Tax Considerations for Tax Strategic

With respect to Tax Strategic, to the extent that the Fund distributes
exempt interest dividends to a shareholder, interest on indebtedness incurred or
continued by such shareholder to purchase or carry shares of the Fund is not
deductible. Furthermore, entities or persons who are "substantial users" (or
related persons) of facilities financed by "private activity" bonds (some of
which were formerly referred to as "industrial development" bonds) should
consult their tax advisers before purchasing shares of the Fund. "Substantial
user" is defined generally as including a "non-exempt

<PAGE>

person" who regularly uses in its trade or business a part of a facility
financed from the proceeds of industrial development bonds.

The percentage of the total dividends paid by a Fund with respect to
any taxable year that qualifies as exempt interest dividends will be the same
for all shareholders of the Fund receiving dividends with respect to such year.
If a shareholder receives an exempt interest dividend with respect to any share
and such share has been held for six months or less, any loss on the sale or
exchange of such share will be disallowed to the extent of the exempt interest
dividend amount.

NET ASSET VALUE

The following information supplements that set forth in each Prospectus
under the subheading "How to Buy Shares - How the Funds Value Their Shares" in
the Section entitled "Purchase and Redemption of Shares".

The public offering price of shares of a Fund is its net asset value,
plus, in the case of Class A shares, a sales charge which will vary depending on
the purchase alternative chosen by the investor, as more fully described in the
Prospectus. See "Purchase of Shares - Class A Shares - Front-End Sales Charge
Alternative. " On each Fund business day on which a purchase or redemption order
is received by a Fund and trading in the types of securities in which a Fund
invests might materially affect the value of Fund shares, the per share net
asset value of each such Fund is computed in accordance with the Declaration of
Trust and By-Laws governing each Fund as of the next close of regular trading on
the New York Stock Exchange (the "Exchange") (currently 4:00 p.m. Eastern time)
by dividing the value of the Fund's total assets, less its liabilities, by the
total number of its shares then outstanding. A Fund business day is any weekday,
exclusive of national holidays on which the Exchange is closed and Good Friday.
For each Fund, securities for which the primary market is on a domestic or
foreign exchange and over-the-counter securities admitted to trading on the
NASDAQ National List are valued at the last quoted sale or, if no sale, at the
mean of closing bid and asked prices and portfolio bonds are presently valued by
a recognized pricing service when such prices are believed to reflect the fair
value of the security. Over-the-counter securities not included in the NASDAQ
National List for which market quotations are readily available are valued at a
price quoted by one or more brokers. If accurate quotations are not available,
securities will be valued at fair value determined in good faith by the Board of
Trustees.

The respective per share net asset values of the Class A, Class B,
Class C and Class Y shares are expected to be substantially the same. Under
certain circumstances, however, the per share net asset values of the Class B
and Class C shares may be lower than the per share net asset value of the Class
A shares (and, in turn, that of Class A shares may be lower than Class Y shares)
as a result of the greater daily expense accruals, relative to Class A and Class
Y shares, of Class B and Class C shares relating to distribution services fees
(and, with respect to Balanced, Utility and Value, shareholder service fee) and,
to the extent applicable, transfer agency fees and the fact that Class Y shares
bear no additional distribution, shareholder service or transfer agency related
fees. While it is expected that, in the event each Class of shares of a Fund
realizes net investment income or does not realize a net operating loss for a
period, the per share net asset values of the four classes will tend to converge
immediately after the payment of dividends, which dividends will differ by
approximately the amount of the expense accrual differential among the Classes,
there is no assurance that this will be the case. In the event one or more
Classes of a Fund experiences a net operating loss for any fiscal period, the
net asset value per share of such Class or Classes will remain lower than that
of Classes that incurred lower expenses for the period.

To the extent that any Fund invests in non-U.S. dollar denominated
securities, the value of all assets and liabilities will be translated into
United States dollars at the mean between the buying and selling rates of the
currency in which such a security is denominated against United States dollars
last quoted by any major bank. If such quotations are not available, the rate of
exchange will be determined in accordance with policies established by the Fund.
The Trustees will monitor, on an ongoing basis, a Fund's method of valuation.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York. In addition, European or Far Eastern
securities trading generally or in a particular country or countries may not
take place on all business days in New York.

<PAGE>

Furthermore, trading takes place in various foreign markets on days which are
not business days in New York and on which the Fund's net asset value is not
calculated. Such calculation does not take place contemporaneously with the
determination of the prices of the majority of the portfolio securities used in
such calculation. Events affecting the values of portfolio securities that occur
between the time their prices are determined and the close of the Exchange will
not be reflected in a Fund's calculation of net asset value unless the Trustees
deem that the particular event would materially affect net asset value, in which
case an adjustment will be made. Securities transactions are accounted for on
the trade date, the date the order to buy or sell is executed. Dividend income
and other distributions are recorded on the ex-dividend date, except certain
dividends and distributions from foreign securities which are recorded as soon
as the Fund is informed after the ex-dividend date.

PURCHASE OF SHARES

The following information supplements that set forth in each Prospectus
under the heading "Purchase and Redemption of Shares - How To Buy Shares."

General

Shares of each Fund will be offered on a continuous basis at a price
equal to their net asset value plus an initial sales charge at the time of
purchase (the "front-end sales charge alternative"), with a contingent deferred
sales charge (the deferred sales charge alternative"), or without any front-end
sales charge, but with a contingent deferred sales charge imposed only during
the first year after purchase (the "level-load alternative"), as described
below. Class Y shares which, as described below, are not offered to the general
public, are offered without any front-end or contingent sales charges. Shares of
each Fund are offered on a continuous basis through (i) investment dealers that
are members of the National Association of Securities Dealers, Inc. and have
entered into selected dealer agreements with the Distributor ("selected
dealers"), (ii) depository institutions and other financial intermediaries or
their affiliates, that have entered into selected agent agreements with the
Distributor ("selected agents"), or (iii) the Distributor. The minimum for
initial investments is $1,000; there is no minimum for subsequent investments.
The subscriber may use the Share Purchase Application available from the
Distributor for his or her initial investment. Sales personnel of selected
dealers and agents distributing a Fund's shares may receive differing
compensation for selling Class A, Class B or Class C shares.

Investors may purchase shares of a Fund in the United States either
through selected dealers or agents or directly through the Distributor. A Fund
reserves the right to suspend the sale of its shares to the public in response
to conditions in the securities markets or for other reasons.

Each Fund will accept unconditional orders for its shares to be
executed at the public offering price equal to the net asset value next
determined (plus for Class A shares, the applicable sales charges), as described
below. Orders received by the Distributor prior to the close of regular trading
on the Exchange on each day the Exchange is open for trading are priced at the
net asset value computed as of the close of regular trading on the Exchange on
that day (plus for Class A shares the sales charges). In the case of orders for
purchase of shares placed through selected dealers or agents, the applicable
public offering price will be the net asset value as so determined, but only if
the selected dealer or agent receives the order prior to the close of regular
trading on the Exchange and transmits it to the Distributor prior to its close
of business that same day (normally 5:00 p.m. Eastern time). The selected dealer
or agent is responsible for transmitting such orders by 5:00 p.m. If the
selected dealer or agent fails to do so, the investor's right to that day's
closing price must be settled between the investor and the selected dealer or
agent. If the selected dealer or agent receives the order after the close of
regular trading on the Exchange, the price will be based on the net asset value
determined as of the close of regular trading on the Exchange on the next day it
is open for trading.

Following the initial purchase of shares of a Fund, a shareholder may
place orders to purchase additional shares by telephone if the shareholder has
completed the appropriate portion of the Share Purchase Application. Payment for
shares purchased by telephone can be made only by Electronic Funds Transfer from
a bank account maintained by the shareholder at a bank that is a member of the
National Automated Clearing House Association ("ACH"). If a shareholder's
telephone purchase request is received before 3:00 p.m. New York time on a

<PAGE>

Fund business day, the order to purchase shares is automatically placed the same
Fund business day for non-money market funds, and two days following the day the
order is received for money market funds, and the applicable public offering
price will be the public offering price determined as of the close of business
on such business day. Full and fractional shares are credited to a subscriber's
account in the amount of his or her subscription. As a convenience to the
subscriber, and to avoid unnecessary expense to a Fund, stock certificates
representing Class Y shares of a Fund are not issued except upon written request
to the Fund by the shareholder or his or her authorized selected dealer or
agent. This facilitates later redemption and relieves the shareholder of the
responsibility for and inconvenience of lost or stolen certificates. No
certificates are issued for fractional shares, although such shares remain in
the shareholder's account on the records of a Fund, or for Class A, B or C
shares of any Fund.

Alternative Purchase Arrangements

Each Fund issues four classes of shares: (i) Class A shares, which are
sold to investors choosing the front-end sales charge alternative; (ii) Class B
shares, which are sold to investors choosing the deferred sales charge
alternative; (iii) Class C shares, which are sold to investors choosing the
level-load sales charge alternative; and (iv) Class Y shares, which are offered
only to (a) persons who at or prior to December 30, 1994 owned shares in a
mutual fund advised by Evergreen Asset, (b) certain investment advisory clients
of the Advisers and their affiliates, and (c) institutional investors. The four
classes of shares each represent an interest in the same portfolio of
investments of the Fund, have the same rights and are identical in all respects,
except that (I) only Class A, Class B and Class C shares are subject to a Rule
12b-1 distribution fee, (II) Class B and Class C shares of Balanced, Utility and
Value are subject to a shareholder service fee, (III) Class A shares bear the
expense of the front-end sales charge and Class B and Class C shares bear the
expense of the deferred sales charge, (IV) Class B shares and Class C shares
each bear the expense of a higher Rule 12b-1 distribution services fee and
shareholder service fee than Class A shares and, in the case of Class B shares,
higher transfer agency costs, (V) with the exception of Class Y shares, each
Class of each Fund has exclusive voting rights with respect to provisions of the
Rule 12b-1 Plan pursuant to which its distribution services (and, to the extent
applicable, shareholder service) fee is paid which relates to a specific Class
and other matters for which separate Class voting is appropriate under
applicable law, provided that, if the Fund submits to a simultaneous vote of
Class A, Class B and Class C shareholders an amendment to the Rule 12b-1 Plan
that would materially increase the amount to be paid thereunder with respect to
the Class A shares, the Class A shareholders and the Class B and Class C
shareholders will vote separately by Class, and (VI) only the Class B shares are
subject to a conversion feature. Each Class has different exchange privileges
and certain different shareholder service options available.

The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is most beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, and other
circumstances. Investors should consider whether, during the anticipated life of
their investment in the Fund, the accumulated distribution services (and, to the
extent applicable, shareholder service) fee and contingent deferred sales
charges on Class B shares prior to conversion, or the accumulated distribution
services (and, to the extent applicable, shareholder service) fee on Class C
shares, would be less than the front-end sales charge and accumulated
distribution services fee on Class A shares purchased at the same time, and to
what extent such differential would be offset by the higher return of Class A
shares. Class B and Class C shares will normally not be suitable for the
investor who qualifies to purchase Class A shares at the lowest applicable sales
charge. For this reason, the Distributor will reject any order (except orders
for Class B shares from certain retirement plans) for more than $2,500,000 for
Class B or Class C shares.

Class A shares are subject to a lower distribution services fee and no
shareholder service fee and, accordingly, pay correspondingly higher dividends
per share than Class B shares or Class C shares. However, because front-end
sales charges are deducted at the time of purchase, investors purchasing Class A
shares would not have all their funds invested initially and, therefore, would
initially own fewer shares. Investors not qualifying for reduced front-end sales
charges who expect to maintain their investment for an extended period of time
might consider purchasing Class A shares because the accumulated continuing
distribution (and, to the extent applicable, shareholder service) charges on
Class B shares or Class C shares may exceed the front-end sales charge on Class
A

<PAGE>

shares during the life of the investment. Again, however, such investors must
weigh this consideration against the fact that, because of such front-end sales
charges, not all their funds will be invested initially.

Other investors might determine, however, that it would be more
advantageous to purchase Class B shares or Class C shares in order to have all
their funds invested initially, although remaining subject to higher continuing
distribution services (and, to the extent applicable, shareholder service) fees
and, in the case of Class B shares, being subject to a contingent deferred sales
charge for a seven-year period. For example, based on current fees and expenses,
an investor subject to the 4.75% front-end sales charge would have to hold his
or her investment approximately seven years for the Class B and Class C
distribution services (and, to the extent applicable, shareholders service)
fees, to exceed the front-end sales charge plus the accumulated distribution
services fee of Class A shares. In this example, an investor intending to
maintain his or her investment for a longer period might consider purchasing
Class A shares. This example does not take into account the time value of money,
which further reduces the impact of the Class B and Class C distribution
services (and, to the extent applicable, shareholder service) fees on the
investment, fluctuations in net asset value or the effect of different
performance assumptions.

Those investors who prefer to have all of their funds invested
initially but may not wish to retain Fund shares for the seven year period
during which Class B shares are subject to a contingent deferred sales charge
may find it more advantageous to purchase Class C shares.

With respect to each Fund, the Trustees have determined that currently
no conflict of interest exists between or among the Class A, Class B, Class C
and Class Y shares. On an ongoing basis, the Trustees, pursuant to their
fiduciary duties under the 1940 Act and state laws, will seek to ensure that no
such conflict arises.

Front-end Sales Charge Alternative--Class A Shares

The public offering price of Class A shares for purchasers choosing the
front-end sales charge alternative is the net asset value plus a sales charge as
set forth in the Prospectus for each Fund.

Shares issued pursuant to the automatic reinvestment of income
dividends or capital gains distributions are not subject to any sales charges.
The Fund receives the entire net asset value of its Class A shares sold to
investors. The Distributor's commission is the sales charge set forth in the
Prospectus for each Fund, less any applicable discount or commission "reallowed"
to selected dealers and agents. The Distributor will reallow discounts to
selected dealers and agents in the amounts indicated in the table in the
Prospectus. In this regard, the Distributor may elect to reallow the entire
sales charge to selected dealers and agents for all sales with respect to which
orders are placed with the Distributor.

Set forth below is an example of the method of computing the offering
price of the Class A shares of each Fund. The example assumes a purchase of
Class A shares of a Fund aggregating less than $100,000 subject to the schedule
of sales charges set forth in the Prospectus at a price based upon the net asset
value of Class A shares of each Fund at the end of each Fund's latest fiscal
year.

Net Per Share
Asset Sales
Value Charge Date
<S> <C> <C> <C>

Balanced $11.17 $.56 12/31/94

Growth and

<PAGE>

Income $14.52 $.72 12/31/94 $15.24

Total Return $17.28 $.86 1/31/95 $18.14

American
Retirement $10.67 $.53 12/31/94 $11.20

Small Cap $9.70 $.48 12/31/94 $10.18

Offering Net Per Share Offering
Price Asset Sales Price Per
Per Share Value Charge Date Share
<C> <C> <C> <C> <C> <C>

Foundation $12.27 $.61 12/31/94 $12.88

Tax Strategic $10.27 $.51 12/31/94 $10.78

Utility $ 9.00 $.45 12/31/94 $ 9.45

$11.73 Value $16.62 $.83 12/31/94 $17.45

Prior to January 3, 1995, shares of the Funds other than Balanced,
Utility and Value were offered exclusively on a no-load basis and, accordingly,
no underwriting commissions were paid in respect of sales of shares of the Funds
or retained by the Distributor. In addition, since Class B and Class C shares
were not offered prior to January 3, 1995, contingent deferred sales charges
have been paid to the distributor with respect to Class B or Class C shares only
since January 3, 1995.

With respect to Balanced, Utility and Value for the periods indicated,
the following commissions were paid to and amounts were retained by Federated
Securities Corp., which, prior to July 8, 1995, was the principal underwriter of
portfolios of Evergreen Investment Trust:

Year Ended Year Ended Year Ended
12/31/94 12/31/93 12/31/92
BALANCED:
Commissions Received $605,000 $283,000 $360,000
Commissions Retained 12,000 42,000 55,000

VALUE:
Commissions Received $1,003,000 $392,000 $713,000
Commissions Retained 36,000 59,000 107,000

Period From
January 4, 1994
UTILITY: to December 31, 1994

Commissions Received $243,000
Commissions Retained 10,000

With respect to Total Return for the period indicated, the following
commissions were paid to and amounts were retained by Evergreen Funds
Distributor Inc:

Period from January 3, 1995
TOTAL RETURN to January 31, 1995

Commissions Received
Commissions Retained

Investors choosing the front-end sales charge alternative may under
certain circumstances be entitled to pay reduced sales charges. The
circumstances under which such investors may pay reduced sales charges are
described below.

Combined Purchase Privilege. Certain persons may qualify for the sales
charge reductions by combining purchases of shares of one or more Evergreen
mutual funds other than the money market funds into a single "purchase", if the
resulting "purchase" totals at least $100,000. The term "purchase" refers to:
(i) a single purchase by an individual, or to concurrent purchases, which in the
aggregate are at least equal to the prescribed amounts, by an individual, his or
her spouse and their children under the age of 21 years purchasing shares for
his, her or their own account(s); (ii) a single purchase by a trustee or other
fiduciary purchasing shares for a single trust, estate or single fiduciary
account although more than one beneficiary is involved; or (iii) a single
purchase for the employee benefit plans of a single employer. The term
"purchase" also includes purchases by any "company", as the term is defined in
the 1940 Act, but does not include purchases by any such company which has not
been in existence for at least six months or which has no purpose other than the
purchase of shares of a Fund or shares of other registered investment companies
at a discount. The term "purchase" does not include purchases by any group of
individuals whose sole organizational nexus is that the participants therein are

<PAGE>

credit card holders of a company, policy holders of an insurance company,
customers of either a bank or broker-dealer or clients of an investment adviser.
A "purchase" may also include shares, purchased at the same time through a
single selected dealer or agent, of any Evergreen mutual fund. Currently, the
Evergreen mutual funds include:

Evergreen Fund
Evergreen Global Real Estate Equity Fund Evergreen U.S. Real Estate Equity Fund
The Evergreen Limited Market Fund, Inc. Evergreen Growth and Income Fund
Evergreen Total Return Fund Evergreen American Retirement Fund Evergreen Small
Cap Equity Income Fund Evergreen Tax Strategic Foundation Fund Evergreen
Short-Intermediate Municipal Fund Evergreen Short-Intermediate Municipal Fund-CA
Evergreen Tax Exempt Money Market Fund Evergreen Money Market Fund Evergreen
U.S. Government Fund* Evergreen Foundation Fund Evergreen Florida High Income
Fund Evergreen Aggressive Growth Fund Evergreen Balanced Fund* Evergreen Utility
Fund* Evergreen Value Fund* Evergreen Fixed Income Fund* Evergreen Managed Bond
Fund* Evergreen Emerging Markets Growth Fund* Evergreen International Equity
Fund* Evergreen Treasury Money Market Fund* Evergreen Florida Municipal Bond
Fund* Evergreen Georgia Municipal Bond Fund* Evergreen North Carolina Municipal
Bond Fund* Evergreen South Carolina Municipal Bond Fund* Evergreen Virginia
Municipal Bond Fund* Evergreen High Grade Tax Free Fund*

* Prior to July 7, 1995, each Fund was named "First Union" instead of "Evergreen."

Prospectuses for the Evergreen Mutual Funds may be obtained without
charge by contacting the Distributor or the Advisers at the address or
telephone number shown on the front cover of this Statement of Additional
Information.

Cumulative Quantity Discount (Right of Accumulation). An investor's
purchase of additional Class A shares of a Fund may qualify for a Cumulative
Quantity Discount. The applicable sales charge will be based on the total of:

(i) the investor's current purchase;

(ii) the net asset value (at the close of business on the
previous day) of (a) all Class A, Class B and Class C shares
of the Fund held by the investor and (b) all such shares of
any other Evergreen Mutual Fund held by the investor; and

(iii) the net asset value of all shares described in paragraph
(ii) owned by another shareholder eligible to combine his or
her purchase with that of the investor into a single
"purchase" (see above).

For example, if an investor owned Class A, B or C shares of an
Evergreen mutual fund worth $200,000 at their then current net asset value and,
subsequently, purchased Class A shares of a Fund worth an additional $100,000,
the sales charge for the $100,000 purchase would be at the 3.00% rate applicable
to a single $300,000 purchase of shares of the Fund, rather than the 3.75% rate.

<PAGE>

To qualify for the Combined Purchase Privilege or to obtain the
Cumulative Quantity Discount on a purchase through a selected dealer or agent,
the investor or selected dealer or agent must provide the Distributor with
sufficient information to verify that each purchase qualifies for the privilege
or discount.

Statement of Intention. Class A investors may also obtain the reduced
sales charges shown in the Prospectus by means of a written Statement of
Intention, which expresses the investor's intention to invest not less than
$100,000 within a period of 13 months in Class A shares (or Class A, Class B
and/or Class C shares) of the Fund or any other Evergreen mutual fund. Each
purchase of shares under a Statement of Intention will be made at the public
offering price or prices applicable at the time of such purchase to a single
transaction of the dollar amount indicated in the Statement of Intention. At the
investor's option, a Statement of Intention may include purchases of Class A, B
or C shares of the Fund or any other Evergreen mutual fund made not more than 90
days prior to the date that the investor signs a Statement of Intention;
however, the 13-month period during which the Statement of Intention is in
effect will begin on the date of the earliest purchase to be included.

Investors qualifying for the Combined Purchase Privilege described
above may purchase shares of the Evergreen mutual funds under a single Statement
of Intention. For example, if at the time an investor signs a Statement of
Intention to invest at least $100,000 in Class A shares of the Fund, the
investor and the investor's spouse each purchase shares of the Fund worth
$20,000 (for a total of $40,000), it will only be necessary to invest a total of
$60,000 during the following 13 months in shares of the Fund or any other
Evergreen mutual fund, to qualify for the 3.75% sales charge on the total amount
being invested (the sales charge applicable to an investment of $100,000).

The Statement of Intention is not a binding obligation upon the investor to
purchase the full amount indicated. The minimum initial investment under a
Statement of Intention is 5% of such amount. Shares purchased with the first 5%
of such amount will be held in escrow (while remaining registered in the name of
the investor) to secure payment of the higher sales charge applicable to the
shares actually purchased if the full amount indicated is not purchased, and
such escrowed shares will be involuntarily redeemed to pay the additional sales
charge, if necessary. Dividends on escrowed shares, whether paid in cash or
reinvested in additional Fund shares, are not subject to escrow. When the full
amount indicated has been purchased, the escrow will be released. To the extent
that an investor purchases more than the dollar amount indicated on the
Statement of Intention and qualifies for a further reduced sales charge, the
sales charge will be adjusted for the entire amount purchased at the end of the
13-month period. The difference in sales charge will be used to purchase
additional shares of the Fund subject to the rate of sales charge applicable to
the actual amount of the aggregate purchases.

Investors wishing to enter into a Statement of Intention in conjunction
with their initial investment in Class A shares of the Fund should complete the
appropriate portion of the Subscription Application found in the Prospectus
while current Class A shareholders desiring to do so can obtain a form of
Statement of Intention by contacting a Fund at the address or telephone number
shown on the cover of this Statement of Additional Information.

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

Reinstatement Privilege. A Class A shareholder who has caused any or
all of his or her shares of the Fund to be redeemed or repurchased may reinvest
all or any portion of the redemption or repurchase proceeds in Class A shares of
the Fund at net asset value without any sales charge, provided that such
reinvestment is made within 30 calendar days after the redemption or repurchase
date. Shares are sold to a reinvesting shareholder at the net asset value next
determined as described above. A reinstatement pursuant to this privilege will
not cancel the redemption or repurchase transaction; therefore, any gain or loss
so realized will be recognized for Federal tax purposes except that no loss will
be recognized to the extent that the proceeds are reinvested in shares of the
Fund. The reinstatement

<PAGE>

privilege may be used by the shareholder only once, irrespective of the number
of shares redeemed or repurchased, except that the privilege may be used without
limit in connection with transactions whose sole purpose is to transfer a
shareholder's interest in the Fund to his or her individual retirement account
or other qualified retirement plan account. Investors may exercise the
reinstatement privilege by written request sent to the Fund at the address
shown on the cover of this Statement of Additional Information.

Sales at Net Asset Value. In addition to the categories of investors
set forth in the Prospectus, each Fund may sell its Class A shares at net asset
value, i.e., without any sales charge, to: (i) certain investment advisory
clients of the Advisers or their affiliates; (ii) officers and present or former
Trustees of the Trust; present or former trustees of other investment companies
managed by the Adviser; present or retired full-time employees of the Adviser;
officers, directors and present or retired full-time employees of the Adviser,
the Distributor, and their affiliates; officers, directors and present and
full-time employees of selected dealers or agents; or the spouse, sibling,
direct ancestor or direct descendant (collectively "relatives") of any such
person; or any trust, individual retirement account or retirement plan account
for the benefit of any such person or relative; or the estate of any such person
or relative, if such shares are purchased for investment purposes (such shares
may not be resold except to the Fund); (iii) certain employee benefit plans for
employees of the Adviser, the Distributor and their affiliates; (iv) persons
participating in a fee-based program, sponsored and maintained by a registered
broker-dealer and approved by the Distributor, pursuant to which such persons
pay an asset-based fee to such broker-dealer, or its affiliate or agent, for
service in the nature of investment advisory or administrative services. These
provisions are intended to provide additional job-related incentives to persons
who serve the Funds or work for companies associated with the Funds and selected
dealers and agents of the Funds. Since these persons are in a position to have a
basic understanding of the nature of an investment company as well as a general
familiarity with the Fund, sales to these persons, as compared to sales in the
normal channels of distribution, require substantially less sales effort.
Similarly, these provisions extend the privilege of purchasing shares at net
asset value to certain classes of institutional investors who, because of their
investment sophistication, can be expected to require significantly less than
normal sales effort on the part of the Funds and the Distributor.

Deferred Sales Charge Alternative--Class B Shares

Investors choosing the deferred sales charge alternative purchase Class
B shares at the public offering price equal to the net asset value per share of
the Class B shares on the date of purchase without the imposition of a sales
charge at the time of purchase. The Class B shares are sold without a front-end
sales charge so that the full amount of the investor's purchase payment is
invested in the Fund initially.

Proceeds from the contingent deferred sales charge are paid to the
Distributor and are used by the Distributor to defray the expenses of the
Distributor related to providing distribution-related services to the Fund in
connection with the sale of the Class B shares, such as the payment of
compensation to selected dealers and agents for selling Class B shares. The
combination of the contingent deferred sales charge and the distribution
services fee (and, with respect to Balanced, Utility and Value, the shareholder
service fee) enables the Fund to sell the Class B shares without a sales charge
being deducted at the time of purchase. The higher distribution services fee
(and, with respect to Balanced, Utility and Value, the shareholder service fee)
incurred by Class B shares will cause such shares to have a higher expense ratio
and to pay lower dividends than those related to Class A shares.

Contingent Deferred Sales Charge. Class B shares which are redeemed
within seven years of purchase will be subject to a contingent deferred sales
charge at the rates set forth in the Prospectus charged as a percentage of the
dollar amount subject thereto. The charge will be assessed on an amount equal to
the lesser of the cost of the shares being redeemed or their net asset value at
the time of redemption. Accordingly, no sales charge will be imposed on
increases in net asset value above the initial purchase price. In addition, no
contingent deferred sales charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions. The amount of the
contingent deferred sales charge, if any, will vary depending on the number of
years from the time of payment for the purchase of Class B shares until the time
of redemption of such shares.

<PAGE>

In determining the contingent deferred sales charge applicable to a
redemption, it will be assumed, that the redemption is first of any Class A
shares or Class C shares in the shareholder's Fund account, second of Class B
shares held for over eight years or Class B shares acquired pursuant to
reinvestment of dividends or distributions and third of Class B shares held
longest during the eight-year period.

To illustrate, assume that an investor purchased 100 Class B shares at
$10 per share (at a cost of $1,000) and in the second year after purchase, the
net asset value per share is $12 and, during such time, the investor has
acquired 10 additional Class B shares upon dividend reinvestment. If at such
time the investor makes his or her first redemption of 50 Class B shares, 10
Class B shares will not be subject to charge because of dividend reinvestment.
With respect to the remaining 40 Class B shares, the charge is applied only to
the original cost of $10 per share and not to the increase in net asset value of
$2 per share. Therefore, of the $600 of the shares redeemed $400 of the
redemption proceeds (40 shares x $10 original purchase price) will be charged at
a rate of 4.0% (the applicable rate in the second year after purchase for a
contingent deferred sales charge of $16).

The contingent deferred sales charge is waived on redemptions of shares
(i) following the death or disability, as defined in the Code, of a shareholder,
or (ii) to the extent that the redemption represents a minimum required
distribution from an individual retirement account or other retirement plan to a
shareholder who has attained the age of 70-1/2.

Conversion Feature. At the end of the period ending seven years after
the end of the calendar month in which the shareholder's purchase order was
accepted, Class B shares will automatically convert to Class A shares and will
no longer be subject to a higher distribution services fee (and, with respect to
Balanced, Utility and Value, the shareholder service fee) imposed on Class B
shares. Such conversion will be on the basis of the relative net asset values of
the two classes, without the imposition of any sales load, fee or other charge.
The purpose of the conversion feature is to reduce the distribution services fee
paid by holders of Class B shares that have been outstanding long enough for the
Distributor to have been compensated for the expenses associated with the sale
of such shares.

For purposes of conversion to Class A, Class B shares purchased through
the reinvestment of dividends and distributions paid in respect of Class B
shares in a shareholder's account will be considered to be held in a separate
sub-account. Each time any Class B shares in the shareholder's account (other
than those in the sub-account) convert to Class A, an equal pro-rata portion of
the Class B shares in the sub-account will also convert to Class A.

The conversion of Class B shares to Class A shares is subject to the
continuing availability of an opinion of counsel to the effect that (i) the
assessment of the higher distribution services fee (and, with respect to
Balanced, Utility and Value, shareholder service fee) and transfer agency costs
with respect to Class B shares does not result in the dividends or distributions
payable with respect to other Classes of a Fund's shares being deemed
"preferential dividends" under the Code, and (ii) the conversion of Class B
shares to Class A shares does not constitute a taxable event under Federal
income tax law. The conversion of Class B shares to Class A shares may be
suspended if such an opinion is no longer available at the time such conversion
is to occur. In that event, no further conversions of Class B shares would
occur, and shares might continue to be subject to the higher distribution
services fee for an indefinite period which may extend beyond the period ending
eight years after the end of the calendar month in which the shareholder's
purchase order was accepted.

Level-Load Alternative--Class C Shares

Investors choosing the level load sales charge alternative purchase
Class C shares at the public offering price equal to the net asset value per
share of the Class C shares on the date of purchase without the imposition of a
front-end sales charge. However, you will pay a 1.0% contingent deferred sales
charge if you redeem shares during the first year after purchase. No charge is
imposed in connection with redemptions made more than one year from the date of
purchase. Class C shares are sold without a front-end sales charge so that the
Fund will receive the full amount of the investor's purchase payment and after
the first year without a contingent deferred sales charge so that the investor
will receive as proceeds upon redemption the entire net asset value of his or
her Class C shares. The Class C distribution services fee (and, with respect to
Balanced, Utility and Value, shareholder service fee)

<PAGE>

enables the Fund to sell Class C shares without either a front-end or contingent
deferred sales charge. However, unlike Class B shares, Class C shares do not
convert to any other class shares of the Fund. Class C shares incur higher
distribution services fees (and, with respect to Balanced, Utility and Value,
shareholder service fees) than Class A shares, and will thus have a higher
expense ratio and pay correspondingly lower dividends than Class A shares.

Class Y Shares

Class Y shares are not offered to the general public and are available
only to (i) persons who at or prior to December 30, 1994 owned shares in a
mutual fund advised by Evergreen Asset, (ii) certain investment advisory clients
of the Advisers and their affiliates, and (iii) institutional investors. Class Y
shares do not bear any Rule 12b-1 distribution expenses and are not subject to
any front-end or contingent deferred sales charges.

GENERAL INFORMATION ABOUT THE FUNDS (See also "Other
Information - General Information"
in each Fund's Prospectus)

Capitalization and Organization

Each of the Evergreen Growth and Income Fund and Evergreen Total Return
Fund is a Massachusetts business trust. 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. The
Evergreen Foundation Fund and Evergreen Tax Strategic Foundation Fund are each
separate series of the Evergreen Foundation Trust, a Massachusetts business
trust. The Evergreen Balanced Fund, Evergreen Utility Fund and Evergreen Value
Fund, which prior to July 7, 1995 were known as the First Union Balanced
Portfolio, First Union Utility Portfolio and First Union Value Portfolio,
respectively, are each separate series of Evergreen Investment Trust, a
Massachusetts business trust. On July 7, 1995, First Union Funds changed its
name to Evergreen Investment Trust. On December 14, 1992, The Salem Funds
changed its name to First Union Funds. The above-named Trusts are individually
referred to in this Statement of Additional Information as the "Trust" and
collectively as the "Trusts." Each Trust is governed by a board of trustees.
Unless otherwise stated, references to the "Board of Trustees" or "Trustees" in
this Statement of Additional Information refer to the Trustees of all the
Trusts.

Total Return and Growth and Income may issue an unlimited number of
shares of beneficial interest with a $0.001 par value. American Retirement,
Small Cap, Foundation and Tax Strategic may issue an unlimited number of shares
of beneficial interest with a $0.0001 par value. Balanced, Value and Utility may
issue an unlimited number of shares of beneficial interest without par value.
All shares of these Funds have equal rights and privileges. Each share is
entitled to one vote, to participate equally in dividends and distributions
declared by the Funds and on liquidation to their proportionate share of the
assets remaining after satisfaction of outstanding liabilities. Shares of these
Funds are fully paid, nonassessable and fully transferable when issued and have
no pre-emptive, conversion or exchange rights. Fractional shares have
proportionally the same rights, including voting rights, as are provided for a
full share.

Under each Trust's Declaration of Trust, each Trustee will continue in
office until the termination of the Fund or his or her earlier death,
incapacity, resignation or removal. Shareholders can remove a Trustee upon a
vote of two-thirds of the outstanding shares of beneficial interest of the
Trust. Vacancies will be filled by a majority of the remaining Trustees, subject
to the 1940 Act. As a result, normally no annual or regular meetings of
shareholders will be held, unless otherwise required by the Declaration of Trust
of each Trust or the 1940 Act.

Shares have noncumulative voting rights, which means that the holders
of more than 50% of the shares voting for the election of Trustees can elect
100% of the Trustees if they choose to do so and in such event the holders of
the remaining shares so voting will not be able to elect any Trustees.

The Trustees of each Trust are authorized to reclassify and issue any
unissued shares to any number of additional series without shareholder approval.
Accordingly, in the

<PAGE>

future, for reasons such as the desire to establish one or more additional
portfolios of a Trust with different investment objectives, policies or
restrictions, additional series of shares may be created by one or more Funds.
Any issuance of shares of another series or class would be governed by the 1940
Act and the law of the State of Massachusetts. If shares of another series of a
Trust were issued in connection with the creation of additional investment
portfolios, each share of the newly created portfolio would normally be entitled
to one vote for all purposes. Generally, shares of all portfolios would vote as
a single series on matters, such as the election of Trustees, that affected all
portfolios in substantially the same manner. As to matters affecting each
portfolio differently, such as approval of the Investment Advisory Agreement and
changes in investment policy, shares of each portfolio would vote separately.

In addition any Fund may, in the future, create additional classes of
shares which represent an interest in the same investment portfolio. Except for
the different distribution related an other specific costs borne by such
additional classes, they will have the same voting and other rights described
for the existing classes of each Fund.

Procedures for calling a shareholders' meeting for the removal of the
Trustees of each Trust, similar to those set forth in Section 16(c) of the 1940
Act will be available to shareholders of each Fund. The rights of the holders of
shares of a series of a Fund may not be modified except by the vote of a
majority of the outstanding shares of such series.

An order has been received from the Securities and Exchange Commission
permitting the issuance and sale of multiple classes of shares representing
interests in each Fund. In the event a Fund were to issue additional Classes of
shares other than those described herein, no further relief from the Securities
and Exchange Commission would be required.

Distributor

Evergreen Funds Distributor, Inc. (the "Distributor"), 230 Park Avenue,
New York, New York 10169, serves as each Fund's principal underwriter, and as
such may solicit orders from the public to purchase shares of any Fund. The
Distributor is not obligated to sell any specific amount of shares and will
purchase shares for resale only against orders for shares. Under the Agreement
between the Fund and the Distributor, the Fund has agreed to indemnify the
Distributor, in the absence of its willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations thereunder, against certain
civil liabilities, including liabilities under the Securities Act of 1933, as
amended.

Counsel

Sullivan & Worcester, Washington, D.C., serves as counsel to the Funds.

Independent Auditors

Ernst & Young LLP has been selected to be the independent auditors of
Total Return, Growth and Income, American Retirement and Small Cap.

Price Waterhouse LLP has been selected to be the independent auditors
of Foundation and Tax Strategic.

KPMG Peat Marwick LLP has been selected to be the independent auditors
of Balanced, Utility and Value.

PERFORMANCE INFORMATION

Total Return

From time to time a Fund may advertise its "total return." Computed
separately for each class, the Fund's "total return" is its average annual
compounded total return for recent one, five, and ten-year periods (or the
period since the Fund's inception). The Fund's total return for such a 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 such
investment at the end of the period. For purposes of computing total return,
income dividends and capital gains distributions paid on shares of the Fund are
assumed to have been reinvested when paid and the maximum sales charge
applicable to purchases of

<PAGE>

Fund shares is assumed to have been paid. The Fund will include performance data
for Class A, Class B, Class C and Class Y shares in any advertisement or
information including performance data of the Fund.

With respect to Total Return, Growth and Income, American Retirement,
Small Cap, Foundation and Tax Strategic, the shares of each Fund outstanding
prior to January 3, 1995 have been reclassified as Class Y shares. The average
annual compounded total return for each Class of shares offered by the Funds for
the most recently completed one, five and ten year fiscal periods is set forth
in the table below.

TOTAL RETURN 1 Year 5 Years 10 Years
Ended Ended Ended
1/31/95 1/31/95 1/31/95
Class A -9.79% 6.34% 9.06%
Class B -9.68% 7.08% 9.59%
Class C -6.22% 7.36% 9.58%
Class Y -5.29% 7.37% 9.59%

From
GROWTH AND 1 Year 5 Years 10/15/86
INCOME Ended Ended (inception)
12/31/94 12/31/94 to 12/31/94
Class A -3.14% 8.69% 10.53%
Class B -3.02% 9.47% 11.19%
Class C .75% 9.75% 11.19%
Class Y 1.69% 9.75% 11.19%

From
AMERICAN 1 Year 5 Years 3/14/88
RETIREMENT Ended Ended (inception)
12/31/94 12/31/94 to 12/31/94
Class A -7.47% 6.89% 7.86%
Class B -7.46% 7.64% 8.55%
Class C -3.78% 7.93% 8.64%
Class Y -2.86% 7.93% 8.64%

From
SMALL CAP 1 Year 10/1/93
Ended (inception)
12/31/94 to 12/31/94

Class A -5.37% -2.41%
Class B -5.43% -1.67%
Class C -1.61% 1.44%
Class Y -0.65% 1.44%

FOUNDATION 1 Year From 1/2/90
Ended (inception)
12/31/94 to 12/31/94

Class A -5.82% 13.72%
Class B -5.80% 14.60%
Class C -2.06% 14.83%
Class Y -1.12% 14.83%

TAX STRATEGIC 1 Year From 11/02/93
Ended (inception) to
12/31/94 12/31/94

Class A -1.47% 1.74%
Class B -1.54% 2.67%
Class C 2.44% 6.06%
Class Y 3.44% 6.06%

BALANCED 1 Year
Ended From inception*
12/31/94 to 12/31/94

Class A -7.03% 6.05%
Class B -7.85% 0.64%
Class C -- -4.53%
Class Y -2.15% 8.30%

UTILITY From inception**
to 12/31/94

<PAGE>

Class A -10.10%
Class B -10.93%
Class C - 3.20%
Class Y - 1.55%

VALUE 1 Year 5 Years
Ended Ended From inception***
12/31/94 12/31/94 to 12/31/94

Class A -2.98% 6.71% 11.06%
Class B -3.80% -- 3.15%
Class C -- -- -4.40%
Class Y 2.07% -- 11.06%

* Inception date: Class A - June 6, 1991; Class B - January 25, 1993; Class C -
September 2, 1994; Class Y - April 1, 1991.

** Inception date: Class A - January 4, 1994; Class B - January 4, 1994; Class C
- - September 2, 1994; Class Y - February 28, 1994.

*** Inception date: Class A - April 12, 1985; Class B - January 25, 1993; Class
C - September 2, 1994; Class Y - December 31, 1990.

The performance numbers for Growth and Income, American Retirement,
Small Cap, Foundation and Tax Strategic for the Class A, Class B and Class C
shares are hypothetical numbers based on the performance for Class Y shares as
adjusted for any applicable front-end sales charge or contingent deferred sales
charge. For Total Return the performance numbers for the Class A, Class B and
Class C shares are hypothetical numbers based upon the performance for the Class
Y shares as adjusted for any applicable front-end sales charges or contingent
deferred sales charge through January 3, 1995 (commencement of class operations)
and the actual performance of each class subsequent to January 3, 1995. The
performance data calculated prior to January 3, 1995, does not reflect any Rule
12b-1 fees. If such fees were reflected the returns would be lower.

A Fund's total return is not fixed and will fluctuate in response to
prevailing market conditions or as a function of the type and quality of the
securities in a Fund's portfolio and its expenses. Total return information is
useful in reviewing a Fund's performance but such information may not provide a
basis for comparison with bank deposits or other investments which pay a fixed
yield for a stated period of time. An investor's principal invested in a Fund is
not fixed and will fluctuate in response to prevailing market conditions.

YIELD CALCULATIONS

From time to time, a Fund may quote its yield in advertisements or in
reports or other communications to shareholders. Yield quotations are expressed
in annualized terms and may be quoted on a compounded basis. Yields are computed
by dividing the Fund's interest income (as defined in the SEC yield formula) for
a given 30-day or one month period, net of expenses, by the average number of
shares entitled to receive distributions during the period, dividing this figure
by the Fund's net asset value per share at the end of the period and annualizing
the result (assuming compounding of income) in order to arrive at an annual
percentage rate. The formula for calculating yield is as follows:

YIELD = 2[(a-b+1)6-1]
cd

Where a = Interest earned during the period
b = Expenses accrued for the period (net of reimbursements) c = The
average daily number of shares outstanding during the period
that were entitled to receive dividends
d = The maximum offering price per share on the last day of the period

Income is calculated for purposes of yield quotations in accordance
with standardized methods applicable to all stock and bond funds. Gains and
losses generally are excluded from the calculation. Income calculated for
purposes of determining a Fund's yield differs from income as determined for
other accounting purposes. Because of the

<PAGE>

different accounting methods used, and because of the compounding assumed in
yield calculations, the yields quoted for a Fund may differ from the rate of
distributions a Fund paid over the same period, or the net investment income
reported in a Fund's financial statements.

Yield information is useful in reviewing a Fund's performance, but
because yields fluctuate, such information cannot necessarily be used to compare
an investment in a Fund's shares with bank deposits, savings accounts and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that yield
is a function of the kind and quality of the instruments in the Funds'
investment portfolios, portfolio maturity, operating expenses and market
conditions.

It should be recognized that in periods of declining interest rates the
yields will tend to be somewhat higher than prevailing market rates, and in
periods of rising interest rates the yields will tend to be somewhat lower.
Also, when interest rates are falling, the inflow of net new money to a Fund
from the continuous sale of its shares will likely be invested in instruments
producing lower yields than the balance of the Fund's investments, thereby
reducing the current yield of the Fund. In periods of rising interest rates, the
opposite can be expected to occur.

The yield of each Fund for the thirty-day period ended December 31,
1994 (May 31, 1995 with respect to Tax Strategic, Growth & Income, American
Retirement, Small Cap, Total Return and Foundation) for each Class of shares
offered by the Funds is set forth in the table
below:

Total Return Tax Strategic
Class A 4.14% Class A 2.59%
Class B 3.62% Class B 2.00%
Class C 3.62% Class C 1.99%
Class Y 4.44% Class Y 2.97%

Growth and Income Balanced
Class A .69% Class A - 4.36%
Class B 0% Class B - 3.82%
Class C .01% Class C - 3.82%
Class Y .92% Class Y - 4.84%

American Retirement Utility
Class A 3.24% Class A - 4.67%
Class B 2.68% Class B - 4.14%
Class C 2.67% Class C - 4.14%
Class Y 3.52% Class Y - 5.16%

Small Cap Value
Class A 3.17% Class A - 3.04%
Class B 2.59% Class B - 2.42%
Class C 2.68% Class C - 2.42%
Class Y 3.57% Class Y - 3.45%

Foundation
Class A 3.41%
Class B 2.90%
Class C 2.47%
Class Y 3.76%

Non-Standardized Performance

In addition to the performance information described above, a Fund may
provide total return information for designated periods, such as for the most
recent six months or most recent twelve months. This total return information is
computed as described under "Total Return" above except that no annualization is
made.

GENERAL

<PAGE>

From time to time, a Fund may quote its performance in advertising and other
types of literature as compared to the performance of the Standard & Poor's 500
Composite Stock Price Index, the Dow Jones Industrial Average, Russell 2000
Index, or any other commonly quoted index of common stock prices. The Standard &
Poor's 500 Composite Stock Price Index, the Dow Jones Industrial Average and the
Russell 2000 Index are unmanaged indices of selected common stock prices. A
Fund's performance may also be compared to those of other mutual funds having
similar objectives. This comparative performance would be expressed as a ranking
prepared by Lipper Analytical Services, Inc. or similar independent services
monitoring mutual fund performance. A Fund's performance will be calculated by
assuming, to the extent applicable, reinvestment of all capital gains
distributions and income dividends paid. Any such comparisons may be useful to
investors who wish to compare a Fund's past performance with that of its
competitors. Of course, past performance cannot be a guarantee of future
results.

Additional Information

Any shareholder inquiries may be directed to the shareholder's broker
or to each Adviser at the address or telephone number shown on the front cover
of this Statement of Additional Information. This Statement of Additional
Information does not contain all the information set forth in the Registration
Statement filed by the Trusts with the Securities and Exchange Commission under
the Securities Act of 1933. Copies of the Registration Statement may be obtained
at a reasonable charge from the Securities and Exchange Commission or may be
examined, without charge, at the offices of the Securities and Exchange
Commission in Washington, D.C.

FINANCIAL STATEMENTS

Each Fund's financial statements appearing in their most current fiscal
year Annual Report to shareholders and the report thereon of the independent
auditors appearing therein, namely Ernst & Young, LLP (in the case of Total
Return, Growth and Income, American Retirement and Small Cap), Price Waterhouse
LLP (in the case of Foundation and Tax Strategic) or KPMG Peat Marwick LLP (in
the case of Balanced, Utility and Value) are incorporated by reference in this
Statement of Additional Information. The Annual Reports to Shareholders for each
Fund, which contain the referenced statements, are available upon request and
without charge.

<PAGE>

APPENDIX A - NOTE, BOND AND COMMERCIAL PAPER RATINGS

NOTE RATINGS

Moody's Investors Service, Inc.: MIG-1 -- the best quality. MIG-2 --
high quality, with margins of protection ample though not so large as in the
preceding group. MIG-3 -- favorable quality, with all security elements
accounted for, but lacking the undeniable strength of the preceding grades.
Market access for refinancing, in particular, is likely to be less well
established.

Standard & Poor's Ratings Group, Inc.: SP-1 -- Very strong or strong
capacity to pay principal and interest. SP-2 -- Satisfactory capacity to pay
principal and interest.

BOND RATINGS

Moody's Investors Service: Aaa -- judged to be the best quality, carry
the smallest degree of investment risk; Aa -- judged to be of high quality by
all standards; A -- possess many favorable investment attributes and are to be
considered as higher medium grade obligations; Baa -- considered as medium grade
obligations which are neither highly protected nor poorly secured. Moody's
Investors Service also applies numerical indicators, 1, 2 and 3, to rating
categories Aa through Baa. The modifier 1 indicates that the security is in the
higher end of its rating category; the modifier 2 indicates a mid-range ranking;
and 3 indicates a ranking toward the lower end of the category.

Standard & Poor's Ratings Group: AAA -- highest grade obligations,
possesses the ultimate degree of protection as to principal and interest; AA --
also qualify as high grade obligations, and in the majority of instances differ
from AAA issues only in small degree; A -- regarded as upper medium grade, have
considerable investment strength but are not entirely free from adverse effects
of changes in economic and trade conditions, interest and principal are regarded
as safe; BBB -- regarded as having adequate capacity to pay interest and repay
principal but are more susceptible than higher rated obligations to the adverse
effects of changes in economic and trade conditions. Standard & Poor's Ratings
Group applies indicators "+", no character, and "-" to the above rating
categories AA through BBB. The indicators show relative standing within the
major rating categories.

Duff & Phelps: AAA - highest credit quality, with negligible risk
factors; AA -- high credit quality, with strong protection factors and modest
risk, which may vary very slightly from time to time because of economic
conditions; A -- average credit quality with adequate protection factors, but
with greater and more variable risk factors in periods of economic stress. The
indicators "+" and "-" to the AA and A categories indicate the relative position
of a credit within those rating categories.

Fitch Investor Service: AAA -- highest credit quality, with an
exceptionally strong ability to pay interest and repay principal; AA -- very
high credit quality, with a very strong ability to pay interest and repay
principal; A -- high credit quality, considered strong as regards principal and
interest protection, but may be more vulnerable to adverse changes in economic
conditions; and BBB -- satisfactory credit quality with adequate ability with
regard to interest and principal, and likely to be affected by adverse changes
in economic conditions and circumstances. The indicators "+" and "-" to the AA,
A and BBB categories indicate the relative position of a credit within those
rating categories.

COMMERCIAL PAPER RATINGS

Moody's Investors Service, Inc.: Commercial paper rated "Prime" carries
the smallest degree of investment risk. The modifiers 1, 2 and 3 are used to
denote relative strength within this highest classification.

Standard & Poor's Ratings Group: "A" is the highest commercial paper
rating category utilized by Standard & Poor's Ratings Group which uses the
numbers 1+, 1, 2 and 3 to denote relative strength within its "A"
classification.

Duff & Phelps: Duff 1 is the highest commercial paper rating category
utilized by Duff & Phelps which uses + or - to denote relative strength within
this classification. Duff 2 represents good certainty of timely payment, with
minimal risk factors. Duff 3

<PAGE>

represents satisfactory protection factors, with risk factors larger and subject
to more variation.

Fitch Investor Service: F-1+ -- denotes exceptionally strong credit
quality given to issues regarded as having strongest degree of assurance for
timely payment; F-1 -- very strong credit quality, with only slightly less
degree of assurance for timely payment than F-1+; F-2 -- good credit quality,
carrying a satisfactory degree of assurance for timely payment.

******************************************************************************

<PAGE>
THE EVERGREEN AMERICAN RETIREMENT TRUST

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

a. Financial Statements

Included in Part A of this Registration Statement:

Financial Highlights for The Evergreen American Retirement Fund for the
fiscal period from March 14, 1988 (commencement of operations) through
December 31, 1988 and for the fiscal years ended December 31, 1989
through December 31, 1994 (audited).

Financial Highlights for Evergreen Small Cap Equity Income Fund for the
fiscal period from October 1, 1993 (commencement of operations) through
December 31, 1993, and for the fiscal year ended December 31, 1994
(audited).

Included in Part B of this Registration Statement:*

Statements of Investments for The Evergreen American Retirement Fund
and Evergreen Small Cap Equity Income Fund as of
December 31, 1994 (audited)

Statements of Assets and Liabilities for The Evergreen American
Retirement Fund and Evergreen Small Cap Equity Income Fund
as of December 31, 1994 (audited)

Statements of Operations of The Evergreen American Retirement Fund and
Evergreen Small Cap Equity Income Fund
for the year ended December 31, 1994 (audited)

Statements of Changes in Net Assets of The Evergreen American
Retirement Fund and Evergreen Small Cap Equity Income Fund for
the fiscal years ended December 31, 1993 and 1994 (audited)

Financial Highlights of The Evergreen American Retirement Fund and
Evergreen Small Cap Equity Income Fund

Notes to Financial Statements of The Evergreen American Retirement Fund
and Evergreen Small Cap Equity Income Fund

Report of Independent Auditors of The Evergreen American Retirement
Fund and Evergreen Small Cap Equity Income Fund

Statements, schedules and historical information other than those
listed above have been omitted since they are either not applicable or
are not required or the required information is shown in the financial
statements or notes thereto.

b. Exhibits

Number Description

1(A) Declaration of Trust**
1(B) Certification of Amendment to Declaration of Trust**
1(C) Form of Instrument providing for the Establishment and
Designation of Classes**
2 By-Laws**
3 None
4 Instruments Defining Rights of Shareholders**
5(A) Investment Advisory Agreement**
5(B) Investment Subadvisory Agreement**
6 Distribution Agreement**
7 None
8 Custodian Agreement***
9 None
10 None
11 Consent of Ernst & Young, independent auditors
12 None
13 None
14 None
15 Rule 12b-1 Distribution Plans**
16 Performance Quotation Computation
17 Copy of Financial Data Schedules
18 Not applicable
19 Not Applicable

Other Exhibits:
Performance Schedule

- --------------------------
* Incorporated by reference to the Annual Report to Shareholders for
the fiscal year ended December 31, 1994 which has been previously filed
with the Commission and by reference to the Semi-Annual and Annual
Reports of Registrant on form NSAR for the aforementioned period.
** Incorporated by reference to Post-Effective Amendment No. 10 to
Registrant's registration statement on Form N-1A, File No. 33-19317
filed January 3, 1995.
*** Incorporated by reference to Post-Effective Amendment No. to
Registrant's registration statement on Form N-1A, File No. 33-19317
filed, 19.

Item 25. Persons Controlled by or Under Common Control with Registrant

As a result of its beneficial ownership of 26.63% of the shares of
American Retirement on June 15, 1995, Charles Schwab & Co., Inc. may be
deemed to "control" the Fund, as that term is defined in the 1940 Act.

Item 26. Number of Holders of Securities (as of June 15, 1995)

(1) (2)
Title of Class Number of Record
Shareholders

Evergreen American Retirement Fund:
Class Y Shares of Beneficial Interest ($0.0001 par value) 1,308

Class A Shares of Beneficial Interest ($0.0001 par value) 20

Class B Shares of Beneficial Interest ($0.0001 par value) 54

Class C Shares of Beneficial Interest ($0.0001 par value) 6

Evergreen Small Cap Equity Income Fund:
Class Y Shares of Beneficial Interest ($0.0001 par value) 253

Class A Shares of Beneficial Interest ($0.0001 par value) 23

Class B Shares of Beneficial Interest ($0.0001 par value) 33

Class C Shares of Beneficial Interest ($0.0001 par value) 10

Item 27. Indemnification

Article XI of the Registrant's By-laws contains the following
provisions regarding indemnification of Trustees and officers:

SECTION 11.1 Actions Against Trustee or Officer. The Trust shall
indemnify any individual who is a present or former Trustee or officer of the
Trust and who, by reason of his position as such, was, is, or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
any action or suit by or in the right of the Trust) against expenses, including
attorneys' fees, judgments, fines, and amounts paid in settlement, actually and
reasonably incurred by him in connection with the claim, action, suit, or
proceeding, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon the plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.

SECTION 11.2 Derivative Actions Against Trustees or Officers. The Trust
shall indemnify any individual who is a present or former Trustee or officer of
the Trust and who, by reason of his position as such, was, is, or is threatened
to be made a party to any threatened, pending or completed action or suit by or
on behalf of the Trust to obtain a judgment or decree in its favor, against
expenses, including attorneys' fees, actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust, except that no indemnification shall be made in
respect of any claim, issue or matter as to which the individual has been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the Trust, except to the extent that the court in which the action or
suit was brought determines upon application that, despite the adjudication of
liability but in view of all circumstances of the case, the person is fairly and
reasonably entitled to indemnity for those expenses which the court shall deem
proper, provided such Trustee or officer is not adjudged to be liable by reason
of his wilful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office.

SECTION 11.3 Expenses of Successful Defense. To the extent that a
Trustee or officer of the Trust has been successful on the merits or otherwise
in defense of any action, suit or proceeding referred to in Section 11.1 or 11.2
or in defense of any claim, issue, or matter therein, he shall be indemnified
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection therewith.

SECTION 11.4 Required Standard of Conduct.

(a) Unless a court orders otherwise, any indemnification under
Section 11.1 or 11.2 may be made by the Trust only as authorized in the specific
case after a determination that indemnification of the Trustee or officer is
proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 11.1 or 11.2. The determination shall be made by:
(i) the Trustees, by a majority vote of a quorum consisting of Trustees who were
not parties to the action, suit or proceeding; or if the required quorum is not
obtainable, or if a quorum of disinterested Trustees so directs, (ii) an
independent legal counsel in a written opinion.

(b) Nothing contained in this Article XI shall be construed to
protect any Trustee or officer of the Trust against any liability to the Trust
or its Shareholders to which he would otherwise be subject by reason of wilful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office (any such conduct being hereinafter called
"Disabling Conduct"). No indemnification shall be made pursuant to this Article
XI unless:

(i) There is a final determination on the merits by a court or other body
before whom the action, suit or proceeding was brought that the individual to be
indemnified was not liable by reason of Disabling Conduct; or

(ii) In the absence of such a judicial determination, there is a reasonable
determination, based upon a review of the facts, that such individual was not
liable by reason of Disabling Conduct, which determination shall be made by:

(A) A majority of a quorum of Trustees who are neither
"interested persons" of the Trust, as defined in section 2(a) (19) of the 1940
Act, nor parties to the action, suit or proceeding; or

(B) An independent legal counsel in a written opinion.

SECTION 11.5 Advance Payments. Notwithstanding any provision of this
Article XI, any advance payment of expenses by the Trust to any Trustee or
officer of the Trust shall be made only upon the undertaking by or on behalf of
such Trustee or officer to repay the advance unless it is ultimately determined
that he is entitled to indemnification as above provided, and only if one of the
following conditions is met:

(a) the Trustee or officer to be indemnified provides a security for his
undertaking; or

(b) The Trust is insured against losses arising by reason of any lawful
advances; or

(c) There is a determination, based on a review of readily available facts,
that there is reason to believe that the Trustee or officer to be indemnified
ultimately will be entitled to indemnification, which determination shall be
made by:

(i) A majority of a quorum of Trustees who are neither
"interested persons" of the Trust, as defined in Section 2(a) (19) of the 1940
Act, nor parties to the action, suit or proceeding; or

(ii) An independent legal counsel in a written opinion.

SECTION 11.6 Former Trustees and Officers. The indemnification provided
by this Article XI shall continue as to an individual who has ceased to be a
Trustee or officer of the Trust and inure to the benefit of the legal
representatives of such individual and shall not be deemed exclusive of any
other rights to which any Trustee, officer, employee or agent of the Trust may
be entitled under any agreement, vote of Trustees or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding office as such; provided, that no Person may satisfy any right of
indemnity granted herein or to which he may be otherwise entitled, except out of
the Trust Property, and no Shareholder shall be personally liable with respect
to any claim for indemnity.

SECTION 11.7 Insurance. The Trust may purchase and maintain insurance
on behalf of any person who is or was a Trustee, officer, employee, or agent of
the Trust, against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such. However, the Trust shall
not purchase insurance to indemnify any Trustee or officer against liability for
any conduct in respect of which the 1940 Act prohibits the Trust itself from
indemnifying him.

SECTION 11.8 Other Rights to Indemnification. The indemnification
provided for herein shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under any By-Law, agreement, vote
of Shareholders or disinterested Trustees or otherwise.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer, or controlling person of the Registrant in
connection with the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

Item 28. Business or Other Connections of Investment Adviser

(a) For a description of the other business of the investment adviser, see
the section entitled "Management of the Funds-Investment Adviser" in Part A.

Evergreen Asset Management Corp., the Registrant's investment adviser, and
Lieber and Company, the Registrant's sub-adviser also act as such to the
Evergreen Trust, The Evergreen Total Return Fund, The Evergreen Limited Market
Fund, Inc., Evergreen Growth and Income Fund, The Evergreen Money Market Trust,
The Evergreen American Retirement Trust, The Evergreen Municipal Trust,
Evergreen Real Estate Equity Trust and Evergreen Fixed-Income Trust, all
registered investment companies. Stephen A. Lieber, Theodore J. Israel, Jr.,
Nola Maddox Falcone, George R. Gaspari and Joseph J. McBrien, officers of the
Adviser and Lieber and Company, were, prior to June 30, 1994 officers and/or
directors or trustees of the Registrant and the other funds for which the
Adviser acts as investment adviser. Evergreen Asset Management Corp. and Lieber
and Company are wholly-owned subsidiaries of First Union National Bank Of North
Carolina.

The Trustees and principal executive officers of First Union National Bank
of North Carolina, parent of the Registrants's investment adviser and
sub-adviser, and the Directors of First Union National Bank of North Carolina,
are set forth in the following tables:

FIRST UNION NATIONAL BANK OF NORTH CAROLINA
BOARD OF DIRECTORS

Ben Mayo Boddie Raymond A. Bryan, Jr.
Chairman & CEO Chairman & CEO
Boddie-Noell Enterprises, Inc. T.A. Loving Company
P.O. Box 1908 P.O. Drawer 919
Rocky Mount, NC 27802 Goldsboro, NC 27530

John F.A.V. Cecil John W. Copeland
President President
Biltmore Dairy Farms, Inc. Ruddick Corporation
P.O. Box 5355 2000 Two First Union Center
Asheville, NC 28813 Charlotte, NC 28282

John Crosland, Jr. J. William Disher
Chairman of the Board Chairman & President
The Crosland Group, Inc. Lance Incorporated
135 Scaleybark Road P.O. Box 32368
Charlotte, NC 28209 Charlotte, NC 28232

Frank H. Dunn Malcolm E. Everett, III
Chairman and CEO President
First Union National Bank First Union National Bank
of North Carolina of North Carolina
One First Union Center 310 S. Tryon Street
Charlotte, NC 28288-0006 Charlotte, NC 28288-0156

James F. Goodmon Shelton Gorelick
President & Chief President
Executive Officer SGIC, Inc.
Capitol Broadcasting 741 Kenilworth Ave., Suite 200
Company, Inc. Charlotte, NC 28204
2619 Western Blvd.
Raleigh, NC 27605

Charles L. Grace James E. S. Hynes
President Chairman
Cummins Atlantic, Inc. Hynes Sales Company, Inc.
P.O. Box 240729 P.O. Box 220948
Charlotte, NC 28224-0729 Charlotte, NC 28222

Daniel W. Mathis Earl N. Phillips, Jr.
Vice Chairman President
First Union National Bank First Factors Corporation
of North Carolina P.O. Box 2730
One First Union Center High Point, NC 27261
Charlotte, NC 28288-0009

J. Gregory Poole, Jr. John P. Rostan, III
Chairman & President Senior Vice President
Gregory Poole Equipment Company Waldensian Bakeries, Inc.
P.O. Box 469 P.O. Box 220
Raleigh, NC 27602 Valdese, NC 28690

Nelson Schwab, III Charles M. Shelton, Sr.
Chairman & CEO Chairman & CEO
Paramount Parks The Shelton Companies, Inc
8720 Red Oak Boulevard, Suite 315 3600 One First Union Center
Charlotte, NC 28217 Charlotte, NC 28202

George Shinn Harley F. Shuford, Jr.
Owner and Chairman President and CEO
Shinn Enterprises, Inc. Shuford Industries
One Hive Drive P.O. Box 608
Charlotte, NC 28217 Hickory, NC 28603

FIRST UNION NATIONAL BANK OF NORTH CAROLINA
EXECUTIVE OFFICERS

James Maynor, President, First Union Mortgage Corporation; Austin
A. Adams, Executive Vice President; Howard L. Arthur, Senior Vice
President; Robert T. Atwood, Executive Vice President and Chief
Financial Officer; Marion A. Cowell, Jr., Executive Vice
President, Secretary and General Counsel; Edward E. Crutchfield,
Jr., Chairman, CEO, First Union Corporation; Frank H. Dunn, Jr.,
Chairman and CEO; Malcolm E. Everett, III, President; John R.
Georgius, President, First Union Corporation; James Hatch, Senior
Vice President and Corporate Controller; Don R. Johnson,
Executive Vice President; Mark Mahoney, Senior Vice President;
Barbara K. Massa, Senior Vice President; Daniel W. Mathis, Vice
Chairman; H. Burt Melton, Executive Vice President; Malcolm T.
Murray, Jr., Executive Vice President; Alvin T. Sale, Executive
Vice President; Louis A. Schmitt, Jr., Executive Vice President;
Ken Stancliff, Senior Vice President and Corporate Treasurer;
Richard K. Wagoner, Executive Vice President and General Fund
Officer.

All of the Executive Officers are located at the following
address: First Union National Bank of North Carolina, One First
Union Center, Charlotte, NC 28288.

Item 29. Principal Underwriters

Evergreen Funds Distributor, Inc. The Director and principal
executive officers are:

Director Michael C. Petrycki

Officers Robert A. Hering President
Michael C. Petrycki Vice President
Gordon Forrester Vice President
Lawrence Wagner VP, Chief Financial Officer
Steven D. Blecher VP, Treasurer, Secretary
Elizabeth Q. Solazzo Assistant Secretary
Thalia M. Cody Assistant Secretary

Evergreen Funds Distributor, Inc. acts as Distributor for the
following registered investment companies or separate series thereof:

Evergreen Trust
Evergreen Fund
Evergreen Aggressive Growth Fund
The Evergreen Real Estate Equity Trust:
Evergreen Global Real Estate Equity Fund
Evergreen U.S. Real Estate Equity Fund
The Evergreen Limited Market Fund, Inc.
Evergreen Growth and Income Fund
The Evergreen Total Return Fund
The Evergreen American Retirement Trust:
The Evergreen American Retirement Fund
Evergreen Small Cap Equity Income Fund
The Evergreen Foundation Trust:
Evergreen Foundation Fund
Evergreen Tax Strategic Foundation Fund
The Evergreen Municipal Trust:
Evergreen Short-Intermediate Municipal Fund
Evergreen Short-Intermediate Municipal Fund-CA
Evergreen Florida High Income Municipal Bond Fund
Evergreen Tax Exempt Money Market Fund
The Evergreen Money Market Fund
Evergreen Investment Trust
Evergreen Emerging Markets Growth Fund
Evergreen International Equity Fund
Evergreen Balanced Fund
Evergreen Value Fund
Evergreen Utility Fund
Evergreen Fixed Income Fund
Evergreen Managed Bond Fund
Evergreen U.S. Government Fund
Evergreen Florida Municipal Bond Fund
Evergreen Georgia Municipal Bond Fund
Evergreen North Carolina Municipal Bond Fund
Evergreen South Carolina Municipal Bond Fund
Evergreen Virginia Municipal Bond Fund
Evergreen High Grade Tax Free Fund
Evergreen Treasury Money Market Fund

Item 30. Location of Accounts and Records

Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained at the offices of the Registrant's Custodian, State
Street Bank and Trust Company, 2 Heritage Drive, North Quincy, Massachusetts
02171 or the offices of Evergreen Asset Management Corp., 2500 Westchester
Avenue, Purchase, New York 10577.

Item 31. Management Services

Not Applicable.

Item 32. Undertakings

Not Applicable.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant certifies
that it has duly caused this Post-Effective Amendment No. 12 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in The City of New York, State of New York, on the 5th day of July,
1995.

Evergreen American Retirement Trust

by /s/John J. Pileggi
-----------------------------
John J. Pileggi, President

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment No. 12 to the Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.

Signatures Title Date
- ----------- ----- ----

/s/ John J. Pileggi
- ------------------------------- President and June 30, 1995
John J. Pileggi Treasurer

/s/ Laurence B. Ashkin
- ------------------------------- Trustee June 30, 1995
Laurence B. Ashkin

/s/ Foster Bam
- ------------------------------- Trustee June 30, 1995
Foster Bam

/s/ James S. Howell
- ------------------------------- Trustee June 30, 1995
James S. Howell

/s/ Robert J. Jeffries
- ------------------------------- Trustee June 30, 1995
Robert J. Jeffries

/s/ Gerald M. McDonnell
- ------------------------------- Trustee June 30, 1995
Gerald M. McDonnell

/s/ Thomas L. McVerry
- ------------------------------- Trustee June 30, 1995
Thomas L. McVerry

/s/ William Walt Pettit
- ------------------------------- Trustee June 30, 1995
William Walt Pettit

/s/ Russell A. Salton, III, M.D
- ------------------------------- Trustee June 30, 1995
Russell A. Salton, III, M.D

/s/ Michael S. Scofield
- ------------------------------- Trustee June 30, 1995
Michael S. Scofield

<PAGE>

INDEX TO EXHIBITS

Exhibit
Number Description

11 Consent of Independent
Accountants

16 Performance Quotation Computation

17 Financial Data Schedules

Other Exhibits:

Performance Schedule

<PAGE>

</TABLE>

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We Consent to the references to our firm under the captions "Financial
Highlights" in the Class Y shares Prospectus and in the Class A, B and C shares
Prospectus, "Independent Auditors" and "Financial Statements" in the Statement
of Additional Information and to the incorporation by reference in
Post-Effective Amendment No. 12 to the Registration Statement (Form N-1A, File
No. 33-19317) and related Prospectus of The Evergreen American Retirement Fund
of our report, dated February 10, 1995, on the financial statements and
financial highlights of The Evergreen American Retirement Fund and the Evergreen
Small Cap Equity Income Fund (each a portfo1io of the Evergreen American
Retirement Trust) included in their respective 1994 Annual Reports to
Shareholders'.

/s/ Ernst & Young LLP
ERNST & YOUNG LLP

Boston, Massachusetts
July 3, 1995

EVERGREEN AMERICAN RETIREMENT FUND
COMPUTATION OF AVERAGE ANNUAL COMPOUNDED TOTAL RETURN

\ n /------------------
\ / ERV = P(1 + T)
\/

Definitions: P = initial $1,000 investment
T = average annual total return
ERV = ending redeemable value of the initial investment

Formula to solve for "T":
ERV
For one year calculation: T = _____________ - 1
P

/------------------
\ n / ERV
For multi-year periods: T = \ / ___________ - 1
\/ P

To solve for ERV:

1. Initial investment on of $1,000 at maximum offering price of
$7.93, resulting in 120.048 shares.

2. All dividends and distributions are assumed to be reinvested on ex-date,
resulting in additional shares (6.533).

3. Total of shares held after reinvestment is multiplied by ending NAV
(12/31/94) resulting in ERV.

Example:
(120.048 + 6.533) X $7.35 = $930.37 = ERV

930.37
T = --------------- - 1
1,0000

T = .93037 - 1

T = .0696

T = -6.96

T = annual total return

<PAGE>

EVERGREEN SMALL CAP EQUITY INCOME FUND
COMPUTATION OF AVERAGE ANNUAL COMPOUNDED TOTAL RETURN

\ n /------------------
\ / ERV = P(1 + T)
\/

Definitions: P = initial $1,000 investment
T = average annual total return
ERV = ending redeemable value of the initial investment

Formula to solve for "T":
ERV
For one year calculation: T = _____________ - 1
P

/------------------
\ n / ERV
For multi-year periods: T = \ / ___________ - 1
\/ P

To solve for ERV:

1. Initial investment on of $1,000 at maximum offering price of
$7.93, resulting in 120.048 shares.

2. All dividends and distributions are assumed to be reinvested on ex-date,
resulting in additional shares (6.533).

3. Total of shares held after reinvestment is multiplied by ending NAV
(12/31/94) resulting in ERV.

Example:
(120.048 + 6.533) X $7.35 = $930.37 = ERV

930.37
T = --------------- - 1
1,0000

T = .93037 - 1

T = .0696

T = -6.96

T = annual total return

<S> <C>

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> Evergreen American Retirement Fund Class Y

<PERIOD-TYPE> 12-Mos
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 40,661,933
<INVESTMENTS-AT-VALUE> 40,311,672
<RECEIVABLES> 1,540,741
<ASSETS-OTHER> 164,462
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 42,016,875
<PAYABLE-FOR-SECURITIES> 4,732,231
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 108,705
<TOTAL-LIABILITIES> 4,840,936
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 37,815,415
<SHARES-COMMON-STOCK> 3,485,622
<SHARES-COMMON-PRIOR> 3,218,542
<ACCUMULATED-NII-CURRENT> 13,904
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (303,119)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (350,261)
<NET-ASSETS> 37,175,939
<DIVIDEND-INCOME> 1,666,876
<INTEREST-INCOME> 936,837
<OTHER-INCOME> 0
<EXPENSES-NET> 497,548
<NET-INVESTMENT-INCOME> 2,106,165
<REALIZED-GAINS-CURRENT> (224,124)
<APPREC-INCREASE-CURRENT> (3,049,986)
<NET-CHANGE-FROM-OPS> (1,167,945)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,092,261)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 974,228
<NUMBER-OF-SHARES-REDEEMED> 869,600
<SHARES-REINVESTED> 162,452
<NET-CHANGE-IN-ASSETS> (159,571)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (78,995)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 292,628
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 497,548
<AVERAGE-NET-ASSETS> 39,017,073
<PER-SHARE-NAV-BEGIN> 11.600
<PER-SHARE-NII> 0.600
<PER-SHARE-GAIN-APPREC> (0.930)
<PER-SHARE-DIVIDEND> 0.600
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.670
<EXPENSE-RATIO> 128
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> Evergreen Small Cap Equity Income Class Y

<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 3,650,628
<INVESTMENTS-AT-VALUE> 3,535,904
<RECEIVABLES> 43,854
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 63,795
<TOTAL-ASSETS> 3,643,553
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 30,731
<TOTAL-LIABILITIES> 30,731
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3,705,489
<SHARES-COMMON-STOCK> 372,314
<SHARES-COMMON-PRIOR> 220,374
<ACCUMULATED-NII-CURRENT> 6,591
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15,466
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (114,724)
<NET-ASSETS> 3,612,822
<DIVIDEND-INCOME> 92,104
<INTEREST-INCOME> 59,349
<OTHER-INCOME> 0
<EXPENSES-NET> 43,172
<NET-INVESTMENT-INCOME> 108,281
<REALIZED-GAINS-CURRENT> 33,143
<APPREC-INCREASE-CURRENT> (150,229)
<NET-CHANGE-FROM-OPS> (3,805)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 101,829
<DISTRIBUTIONS-OF-GAINS> 19,339
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 186,565
<NUMBER-OF-SHARES-REDEEMED> 44,916
<SHARES-REINVESTED> 10,291
<NET-CHANGE-IN-ASSETS> 1,376,340
<ACCUMULATED-NII-PRIOR> 139
<ACCUMULATED-GAINS-PRIOR> (3,338)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 210
<GROSS-ADVISORY-FEES> 29,075
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 106,876
<AVERAGE-NET-ASSETS> 2,907,487
<PER-SHARE-NAV-BEGIN> 10.150
<PER-SHARE-NII> 0.340
<PER-SHARE-GAIN-APPREC> (0.410)
<PER-SHARE-DIVIDEND> 0.330
<PER-SHARE-DISTRIBUTIONS> 0.050
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.700
<EXPENSE-RATIO> 148
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

COMPARISON OF CUMULATIVE TOTAL RETURN SINCE INCEPTION
AMONG EVERGREEN SMALL CAP EQUITY INCOME FUND CLASS Y,
NASDAQ COMPOSITE INDEX AND RUSSELL 2000 INDEX

Value of Value of Value of
Evergreen NASDAQ Russell
Period Small Cap Composite 2000
Ended Income Fund Index Index

Sep-30-1993 $10,000 $10,000 $10,000
Oct-31-1993 $10,050 $10,216 $10,258
Nov-30-1993 $10,060 $9,890 $9,924
Dec-31-1993 $10,246 $10,184 $10,263
Jan-31-1994 $10,479 $10,494 $10,584
Feb-28-1994 $10,479 $10,390 $10,546
Mar-31-1994 $10,034 $9,746 $9,990
Apr-30-1994 $9,971 $9,621 $10,049
May-31-1994 $9,961 $9,638 $9,937
Jun-30-1994 $9,920 $9,254 $9,602
Jul-31-1994 $10,042 $9,466 $9,759
Aug-31-1994 $10,268 $10,036 $10,303
Sep-30-1994 $10,340 $10,019 $10,268
Oct-31-1994 $10,254 $10,192 $10,227
Nov-30-1994 $9,954 $9,837 $9,814
Dec-30-1994 $10,180 $9,858 $10,077

COMPARISON OF CUMULATIVE TOTAL RETURN SINCE INCEPTION
AMONG EVERGREEN AMERICAN RETIREMENT FUND CLASS Y, LEHMAN
GENERAL BOND MUTUAL FUND INDEX AND WILSHIRE 5000 INDEX.

Value of
Value of Lehman Value of
Evergreen General Bond Wilshire
Period American Mutual Fund 5000
Ended Retirement Index Index

Apr-1-1988 $10,000 $10,000 $10,000
Dec-31-1988 $10,579 $10,386 $10,919
Dec-31-1989 $12,000 $11,864 $14,104
Dec-31-1990 $11,943 $12,846 $13,232
Dec-31-1991 $14,188 $14,918 $17,759
Dec-31-1992 $15,866 $16,049 $19,352
Dec-31-1993 $18,093 $17,819 $21,562
Dec-31-1994 $17,576 $17,194 $21,433