- --------------------------------------------------------------------------------
Evergreen Total Return Fund's cumulative total return (Class Y, no-load
shares) since our annual report on January 31, 1995, through July 31, was
+13.84%*. At this writing, the Fund's calendar year-to-date total return is
+19.93%. An assumed $10,000 investment in the Fund at inception on September 7,
1978, would have grown to $94,339 by July 31, 1995, providing an average annual
compounded rate of return of +14.18%. The Fund's average annual compounded rates
of return for the 1, 5, and 10-year periods ended July 31, 1995, were +13.62%,
+9.94% and +9.95%, respectively.
Our strategy aims at providing the protection against the effects of
inflation which may not be available in bond investments. By investing in
undervalued equities which on average have yields more than double that of the
S&P 500 Reinvested Index**, we are implementing this strategy. During the
six-month period under review, the Fund (Class Y, no-load shares) sustained its
high and continuous income flow while aiming for significant capital
appreciation, through investment primarily in undervalued, quality equities or
convertible securities. A minimum cash distribution of $1.08 per share (Class Y,
no-load) has been paid for each of the last nine years. The Fund (Class Y,
no-load shares) has been given an "A" rating for down market performance for the
down market periods from June, 1983, through June, 1995, by Forbes Magazine in
its semi-annual fund survey in the August 28, 1995 issue. The Fund has been
given an "A" rating by Forbes during each of the past eight years. The beta for
the Fund, a statistical measurement of volatility, of .6 is substantially lower
than that of the S & P 500 of 1.0. (For additional performance information,
please see the fourth page of this letter.)
MERGERS AND ACQUISITIONS
Since its inception, investment in undervalued issues and consolidating
fields has been a strategic thrust for the Fund. A total of 96 mergers or
acquisitions of Fund holdings have been completed as of July 31, 1995, with an
average gain of 53.2%. Once again, there is a broadening of mergers and
acquisition activity in many industries. Since the first of the year, mergers
and acquisitions have continued at a heady pace. U.S. companies are flush with
cash flow from the three years of solid profit growth. Business Week recently
reported that the low dollar in 1995 has motivated the foreign companies to
boost their acquisitions of U.S. companies by nearly $12 billion, to more than
$39 billion, in the first half of the year. The first half of 1995 broke records
for announced mergers and acquisitions, according to Investment Dealers' Digest.
This year, we have seen consolidation in the banking and thrift sector
continue at a rapid pace. Illustratively, in March, Comerica, Inc. acquired
University Bank and Trust Co., one of our holdings, for a gain to the portfolio
of 41% (held almost 2 years). This brings our total number of completed bank and
thrift acquisitions to 27 since inception of the Fund with an average gain of
58.6%. At the end of July, banks represented the Fund's largest sector
investment.
Consolidation is occurring in other industries as well. The proposed
communications bill has prompted a number of merger and acquisition
announcements in the broadcasting field. Cost and margin pressures are prompting
merger and acquisitions in health care products and services companies and among
traditional retailers. Most recently, electric utilities have moved into the
- --------------------------------------------------------------------------------
FIGURES REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS
* Performance figures include reinvestment of income dividends and capital
gain distributions, if any. Investment return and principal value will
fluctuate. Investors' shares, when redeemed, may be worth more or less than
their original cost.
** Unmanaged index of selected securities.
8/95
<PAGE>
- --------------------------------------------------------------------------------
consolidation phase. In August, PECO Energy Co. made a takeover offer for PP&L
Resources, a significant Fund holding. The deregulation now occurring in the
electric utility industry is creating pressure to reduce cost structure through
synergies. This will probably prompt more utilities to make acquisition or
merger proposals. We believe the Fund is well positioned to benefit from these
new and accelerated merger trends.
PORTFOLIO
Banks were the best performing group in the portfolio for the six-month
period under review, with an actual as-weighted performance of +24.7%. The boom
in mergers in the bank industry contributed to the good performance of bank
stocks. In addition, banks generally reported sustained earnings growth with net
interest margins maintained during this declining interest rate environment.
Many banks were also buying back stock which helped their stock prices. Thrifts
also had a good performance for similar reasons.
Our largest bank purchase during the first half of the fiscal year was
Banker's Trust, which has appreciated 33% since purchase in March. We had
purchased this stock with a 7% yield after it declined over one third in price
when investors became concerned about recent operating reversals. When the stock
fell below book value, we judged it to be undervalued with a strong business
franchise and prospects for recovery.
Health care products and services stocks were also positively impacted by
improved earnings and, in some cases, by acquisition possibilities looming on
the horizon. Of particular note was the realized gain of 65% from the partial
sale of Shared Medical System, held one year and ten months.
Convertible issues also contributed positively to the Fund's performance
during the six-month period. Most notable was the 43% increase in the National
Semiconductor $3.25 Convertible Preferred, the 34% increase in Ceridian Corp.
5-1/2% Convertible Preferred and the 25% increase in the Philippine Long
Distance 7% GDS Convertible Preferred+. These issues have benefited from the
strong growth trend of worldwide capital spending on technology. In the
Philippines, spending on telephone infrastructure had previously lagged world
averages. The present government is now committed to upgrading
telecommunications to foster economic growth.
Concerns about effects of deregulation on the electric utility business
contributed to underperformance of the sector until recently. The slowdown in
consumer spending dampened the performance of several of our retail issues and
consumer products and services companies. Fortunately, even though auto sales
declined, our new position in Chrysler Corp. provided good appreciation,
especially when Kirk Kerkorian, the billionaire investor, attempted to wrest
control of the company.
The biggest sector shift for the portfolio was our net commitment of
over $40 million of new monies to the real estate sector, raising the Fund's
real estate holdings from 7.0% of net assets to 11.8% as of July 31. We
purchased these issues after observing that real estate issues had lagged the
market since the last quarter of 1994. As it became evident that the Federal
Reserve was shifting from a stance of tightening interest rates to one of
easing, we reasoned the economics would improve for these stocks. We found the
apartment real estate investment trusts were particularly attractive as demand
for rental housing has caught up with, and is projected to exceed, supply in
many areas of the U.S.
- --------------------------------------------------------------------------------
+ Internatioaal investing may involve certain additional risks such as currency
fluctuations and political instability.
<PAGE>
OUTLOOK
Currently, the economy appears to be on a slow growth course with the
advantage of low inflation, the goal aimed at by the Federal Reserve with its
policy of tightening interest rates from February, 1994, to February, 1995. As
the economy began to sag and reported inflation seemed under control, the
Federal Reserve reversed policy and lowered interest rates by one-quarter
percent at its July 6 policy meeting. We believe a likely course for the rest of
1995 is for the Federal Reserve to take a cautious approach, with the aim to
facilitate domestic stability without weakening the dollar.
We have discussed our strategic investments of undervalued special
situations and those which we believe will benefit from merger and acquisition
activity. As we proceed in the second half of our fiscal year, our investment
group is broadening its strategic search for other changes which will produce
additional growth prospects. At a historically high point in the stock market,
we think it is important to be rooted in value issues coupled with yield. These
two factors will help us to weather any downturn which may develop in the
market.
We recognize the needs of Evergreen Total Return Fund's investors and
remain dedicated to our efforts to sustain both current income and capital
appreciation.
Sincerely,
Stephen A. Lieber Nola Maddox Falcone
Chairman President
Evergreen Asset Evergreen Asset
Management Corp. Management Corp.
September 26, 1995
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE AT A GLANCE
PERFORMANCE FOR PERIODS ENDED JULY 31, 1995*
CLASS Y CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES
------- ------- ------- -------
6-month total return +13.8% +8.4% +8.4% +12.4%
12-month total return +13.6% +8.2% +8.1% +12.1%
5-year average annual
compound return +9.9% +8.9% +9.6% +9.8%
10-year average annual
compound return +10.0% +9.4% +9.9% +9.9%
Average annual compound return
since inception on 9/7/78 +14.2% +13.9% +14.2% +14.1%
- --------------------------------------------------------------------------------
FIGURES REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS.
* Performance figures include reinvestment of income dividends and capital gain
distributions, if any. Investment return and principal value will fluctuate.
Investors' shares, when redeemed, may be worth more or less than their original
cost.
Effective 1/3/95, the Fund adopted a multi-class distribution arrangement to
issue additional classes of shares, designated as Class A, Class B and Class C.
The Fund's performance for its Class A shares (subject to a maximum front-end
sales charge of 4.75%), its Class B shares (subject to a maximum contingent
deferred sales charge of 5%) and its Class C shares (subject to a 1% contingent
deferred sales charge within the first year of purchase) for the period prior to
1/3/95, has been calculated based on the performance of the existing no-load
(Class Y) shares as adjusted for any front-end or back-end sales charges.
Performance data prior to 1/3/95 does not reflect any 12b-1 fees, and if
reflected, the returns would be lower. Performance data beginning from 1/3/95
reflects actual performance including 12b-1 fees.
The Fund may incur 12b-1 expenses up to an annual maximum of .75 of 1% of its
aggregate average daily net assets attributable to Class A shares, 1% of its
aggregate average daily net assets attributable to each its Class B and Class C
shares. For the foreseeable future, however, management intends to limit such
payments on the Class A shares to .25 of 1% of the Fund's aggregate average
daily net assets.
The adviser is currently waiving a portion of the expenses for the Fund's Class
A, B and C shares. Had expenses not been absorbed, returns for Class A, B, and C
shares would have been lower.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
July 31, 1995 (Unaudited)
COMMON STOCKS -- 62.0% SHARES VALUE
------ -----
AUTOMOTIVE EQUIPMENT
& MANUFACTURING -- 4.0%
Chrysler Corp. 468,000 $ 22,815,000
Ford Motor Co. 552,600 15,956,325
-------------
38,771,325
-------------
BANKS -- 9.6%
Amsouth Bancorporation 111,900 3,930,488
BancorpSouth, Inc. 71,000 2,875,500
Bankers Trust New York Corp. 458,500 29,573,250
Barnett Banks, Inc. 2,200 122,100
Boatmen's Bancshares, Inc. 21,000 763,875
CB Bancshares, Inc. 164,000 4,838,000
CCB Financial Corp. 94,850 4,244,538
Citizens Bancorp 72,000 2,214,000
Deposit Guaranty Corp. 140,000 5,460,000
F & M National Corp. 110,807 1,786,763
First of America Bank Corp. 4,900 201,513
First Tennessee National Corp. 10,000 492,500
First Virginia Banks, Inc. 155,500 5,986,750
Firstbank of Illinois Co. 7,500 204,375
Firstmerit Corp. 5,600 151,200
Interchange Financial
Services Corp.* 135,200 2,687,100
Jefferson Bankshares, Inc. 278,251 5,982,397
Magna Group, Inc. 160,000 3,610,000
Meridian Bancorp, Inc. 320,000 12,320,000
One Valley Bancorp of
West Virginia, Inc. 10,000 307,500
Susquehanna Bancshares, Inc. 49,500 1,274,625
United Bankshares, Inc. 3,500 102,375
USBanCorp, Inc. 107,320 2,683,000
-------------
91,811,849
-------------
CHEMICALS -- 0.8%
Imperial Chemical Industries
PLC-ADR 156,100 7,863,538
-------------
CONSUMER PRODUCTS
& SERVICES -- 3.0%
ADT, Inc.+ 452,772 5,433,264
Flexsteel Industries, Inc. 229,804 2,700,197
Heinz (H.J.) Co. 200,200 8,683,675
Kellwood Co. 201,900 3,937,050
Knape & Vogt Manufacturing Co. 250,640 4,104,230
Oxford Industries, Inc. 186,300 3,376,688
Russ Berrie & Co., Inc. 41,700 604,650
-------------
28,839,754
-------------
ENERGY -- 2.1%
CMS Energy Corp.* 394,700 7,055,263
Elf Aquitaine-ADR 14,100 551,663
Equitable Resources, Inc. 272,700 7,567,425
YPF Sociedad Anonima-ADR 300,000 5,212,500
-------------
20,386,851
-------------
FINANCE & INSURANCE -- 2.2%
Hartford Steam Boiler Inspection
& Insurance Co. 395,200 17,586,400
Provident Life & Accident Insurance
Co. of America Cl. B 141,600 3,309,900
-------------
20,896,300
-------------
HEALTH CARE PRODUCTS
& SERVICES -- 6.7%
ADAC Laboratories 728,000 9,737,000
Bristol-Myers Squibb Co. 374,700 25,947,975
Schering-Plough Corp. 217,800 10,127,700
Shared Medical Systems Corp. 102,500 4,266,563
Warner-Lambert Co. 153,600 12,902,400
Zeneca Group PLC-ADR 30,000 1,601,250
-------------
64,582,888
-------------
INDUSTRIAL, COMMERCIAL GOODS
& SERVICES -- 1.0%
Automated Security Holdings
PLC-ADR+ 1,076,274 1,345,342
Dun & Bradstreet Corp. 151,300 8,510,625
Lindberg Corp. 47,800 322,650
-------------
10,178,617
-------------
REAL ESTATE -- 11.8%
Bay Apartment Communities, Inc. 125,000 2,484,375
Burnham Pacific Properties, Inc. 155,000 2,208,750
Chelsea GCA Realty, Inc. 174,100 4,831,275
Columbus Realty Trust 522,000 10,048,500
DeBartolo Realty Corp. 1,051,200 15,111,000
Equity Residential Properties
Trust 250,200 7,380,900
Evans Withycombe Residential,
Inc. 63,900 1,230,075
Factory Stores of America, Inc. 170,400 3,748,800
Gables Residential Trust 430,200 9,464,400
Glimcher Realty Trust 66,100 1,412,888
HGI Realty, Inc.* 513,552 12,774,606
Irvine Apartment Communities,
Inc. 138,500 2,423,750
Kranzco Realty Trust* 611,700 11,316,450
Security Capital Pacific Trust 39,591 717,587
Simon Property Group, Inc. 604,100 14,800,450
South West Property Trust, Inc. 336,000 4,032,000
Trinet Corporate Realty Trust,
Inc. 171,900 4,770,225
Tucker Properties Corp. 364,700 4,102,875
-------------
112,858,906
-------------
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
July 31, 1995 (Unaudited) (continued)
COMMON STOCKS -- (continued) SHARES VALUE
------ -----
RETAILING -- 2.8%
Jacobson Stores, Inc. 55,500 $ 603,562
K Mart Corp. 167,600 2,639,700
Mercantile Stores Co., Inc. 217,600 10,145,600
Penney (J.C.) Co., Inc. 233,000 11,271,375
Strawbridge & Clothier Cl. A 128,475 2,408,906
-------------
27,069,143
-------------
THRIFT INSTITUTIONS -- 0.6%
CFX Corp. 94,386 1,592,764
Eagle Financial Corp. 30,800 669,900
People's Savings Financial
Corp.* 149,000 2,942,750
Washington Federal Savings
& Loan Association of Seattle 17,050 370,838
-------------
5,576,252
-------------
UTILITIES-ELECTRIC -- 11.8%
Atlantic Energy, Inc. 455,400 8,311,050
Commonwealth Energy System 9,900 365,062
FPL Group, Inc. 402,500 15,395,625
Houston Industries, Inc. 245,600 10,745,000
LG & E Energy Corp. 194,600 7,516,425
PP & L Resources, Inc. 431,100 8,298,675
Public Service Enterprise
Group, Inc. 335,000 9,296,250
SCECorp 727,500 12,458,437
Texas Utilities Co. 391,300 13,255,287
TNP Enterprises, Inc. 515,000 8,433,125
Unicom Corp. 494,500 13,722,375
Washington Water Power Co. 351,800 5,452,900
-------------
113,250,211
-------------
UTILITIES -- GAS -- 1.2%
Brooklyn Union Gas Co. 162,000 3,948,750
New Jersey Resources Corp. 30,900 733,875
Nicor, Inc. 91,100 2,311,662
Piedmont Natural Gas Co., Inc. 213,600 4,245,300
-------------
11,239,587
-------------
UTILITIES -- TELEPHONE -- 2.9%
BCE, Inc. 185,800 5,783,025
Southern New England
Telecommunications, Corp. 500,700 17,148,975
Telecom Corp. of New Zealand
Ltd. 12,400 795,150
Telefonos de Mexico,
S.A. de C.V.-ADR++ 117,800 3,887,400
-------------
27,614,550
-------------
OTHER SECURITIES-- 1.5% 13,995,200
-------------
TOTAL COMMON STOCKS
(COST $623,444,384) 594,934,971
-------------
CONVERTIBLE PREFERRED
STOCKS -- 21.3% SHARES VALUE
------ -----
BANKS -- 3.5%
Barnett Banks, Inc.
$4.00 Cumulative Cv Pfd
Series C 193,200 13,717,200
Firstar Corp.
$1.75 Cumulative Cv Pfd
Series D 112,500 4,190,625
Hudson Chartered Bancorp, Inc.
7.25% Cv Pfd Series B 39,500 464,125
ONBANCorp, Inc.
6.75% Cv Pfd Series B 351,971 9,591,209
Second Bancorp Inc.
$1.50 Cumulative Cv Pfd
Series A-1 75,000 2,137,500
Union Planters Corp.
8.00% Cumulative Cv Pfd
Series E 96,200 3,415,100
-------------
33,515,759
-------------
BUILDING & CONSTRUCTION -- 0.2%
Southdown, Inc.
$2.875 Cumulative Cv Pfd
Series D 56,500 2,429,500
-------------
BUSINESS EQUIPMENT
& SERVICES -- 1.4%
Ceridian Corp.
5.50% Cumulative Cv
Exchangeable Pfd
Depositary Shares 30,000 2,767,500
General Motors Corp. Cl. E
$3.25 Cv Pfd Depositary Shares
Series C 85,100 5,361,300
National Semiconductor Corp.
$3.25 Cv Pfd 54,000 5,292,000
-------------
13,420,800
-------------
CHEMICALS -- 1.5%
Atlantic Richfield Co.
9.00% Cumulative Cv Pfd 546,500 14,892,125
-------------
ELECTRICAL EQUIPMENT
& ELECTRONICS -- 1.8%
Westinghouse Electric Corp.
$1.53 Cumulative Cv Pfd
Series B 700,000 9,975,000
Westingtonhouse Electric Corp.
$1.30 Cumulative Cv Pfd
Series C 500,000 7,065,000
-------------
17,040,000
-------------
<PAGE>
- --------------------------------------------------------------------------------
CONVERTIBLE PREFERRED
STOCKS -- (CONTINUED) SHARES VALUE
------ -----
ENERGY -- 2.3%
Valero Energy Corp.
$3.125 Cumulative Cv Pfd 129,700 $ 6,403,937
Unocal Corp.
7.00% Cumlative Cv Pfd 295,000 15,726,450
-------------
22,130,387
-------------
HEALTH CARE PRODUCTS
& SERVICES -- 2.3%
Beverly Enterprises, Inc.
$2.75 Cumulative Cv Pfd 104,300 5,958,137
FHP International Corp.
5.00% Cumulative
Cv Pfd Series A 617,000 15,887,750
-------------
21,845,887
-------------
METAL PRODUCTS & SERVICES -- 5.1%
Freeport-McMoRan
Copper & Gold, Inc.
Cv Pfd Depositary Shares
5.00% Series A 741,900 19,011,187
7.00% Exchangeable 715,400 19,852,350
Magma Copper Co.
Cumulative Cv Pfd
5.625% Series D 6,000 392,250
6.00% Series E 137,400 9,480,600
-------------
48,736,387
-------------
PAPER & PACKAGING -- 1.0%
Stone Container Corp.
$1.75 Cumlative Cv Pfd
Series E 400,000 9,800,000
-------------
PUBLISHING, BROADCASTING
& ENTERTAINMENT -- 0.3%
AMC Entertainment, Inc.
$1.75 Cumulative Cv Pfd 88,000 2,596,000
-------------
THRIFT INSTITUTIONS -- 0.5%
Washington Mutual Savings Bank
$6.00 Noncumulative Cv
Perpetual Pfd Series D 47,400 4,799,250
-------------
TRANSPORTATION -- 0.4%
Burlington Northern, Inc.
6.25% Cumulative
Cv Pfd Series A 47,800 3,537,200
-------------
UTILITIES -- TELEPHONE -- 1.0%
Philippine Long Distance
Telephone Co.
7.00% Series III
Cumulative Cv Pfd
Global Depositary Shares 147,500 9,145,000
-------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(COST $194,304,726) 203,888,295
-------------
CONVERTIBLE DEBENTURES -- 7.4% SHARES VALUE
------ -----
BANKS -- 0.2%
Magna Group, Inc.
8.75% Due 11/01/98 $1,500,000 $ 1,537,500
-------------
BUILDING & CONSTRUCTION -- 1.0%
Cemex, S.A. de C.V.
4.25% Due 11/01/97** 3,100,000 2,511,000
Continental Homes Holding Corp.
6.875% Due 03/15/02 4,000,000 3,700,000
Medusa Corp.
6.00% Due 11/05/03 3,270,000 3,270,000
-------------
9,481,000
-------------
BUSINESS EQUIPMENT
& SERVICES -- 0.4%
3Com Corp.
10.25% Due 11/01/01 2,000,000 2,745,000
Seagate Technology, Inc.
6.75% Due 05/01/12 1,000,000 1,090,000
-------------
3,835,000
-------------
CONSUMER PRODUCTS
& SERVICES -- 1.1%
Fieldcrest Cannon, Inc.
6.00% Due 03/15/12 7,427,000 6,090,140
Michael Stores, Inc.
4.75% Due 01/15/03 5,000,000 4,675,000
-------------
10,765,140
-------------
FINANCE & INSURANCE -- 0.2%
EQUITABLE CO., Inc.
6.125% Due 12/15/24 2,000,000 2,120,000
HEALTH CARE PRODUCTS
& SERVICES -- 0.2%
Beverly Enterprises, Inc.
7.625% Due 03/15/03 1,335,000 1,298,287
Maxxim Medical, Inc.
6.75% Due 03/01/03 950,000 952,375
-------------
2,250,662
-------------
INDUSTRIAL, COMMERCIAL GOODS
& SERVICES -- 1.4%
Avnet, Inc.
6.00% Due 04/15/12 560,000 681,800
General Signal Corp.
5.75% Due 06/01/02 5,500,000 5,775,000
Interface, Inc.
8.00% Due 09/15/13 7,180,000 7,108,200
-------------
13,565,000
-------------
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS
JULY 31, 1995 (UNAUDITED)
CONVERTIBLE DEBENTURES PRINCIPAL
- -- (CONTINUED) AMOUNT VALUE
---------- -----
METAL PRODUCTS & SERVICES -- 0.8%
Quanex Corp.
6.88% Due 06/30/07 $ 8,305,000 $ 8,118,138
-------------
PUBLISHING, BROADCASTING
& ENTERTAINMENT -- 1.9%
Time Warner, Inc.
8.75% Due 01/10/15 17,295,000 18,051,656
-------------
TELECOMMUNICATION SERVICES
& EQUIPMENT -- 0.2%
Jones Intercable, Inc.
7.50% Due 06/01/07 1,600,000 1,680,000
-------------
TOTAL CONVERTIBLE DEBENTURES
(COST $71,562,230) 71,404,096
-------------
SHORT-TERM INVESTMENTS -- 9.1%
U.S. GOVERNMENT & AGENCY
OBLIGATIONS -- 5.5%
Federal Farm Credit Banks
5.70% Due 08/17/95 9,700,000 9,675,427
Federal Home Loan
Mortgage Association
5.63% Due 08/01/95 8,700,000 8,700,000
Federal National
Mortgage Association
5.65% to 5.66%
Due 08/15/95 to 08/23/95 34,400,000 34,290,351
-------------
52,665,778
-------------
COMMERCIAL PAPER -- 3.6%
BMW U.S. Capital Corp.
5.73% to 5.74%
Due 08/21/95 to 09/25/95 7,900,000 7,860,328
Dresdner U.S. Finance, Inc.
5.72% Due 08/17/95 7,300,000 7,281,442
Golden Managers
Acceptance Corp.
5.75% Due 08/30/95 12,800,000 12,740,713
Commercial paper
- -- (continued)
National Rural Utilities
Cooperative Finance Corp.
5.72% Due 08/25/95 4,600,000 $ 4,582,459
Raytheon Co.
5.71% Due 08/08/95 2,000,000 1,997,779
* -------------
34,462,721
-------------
TOTAL SHORT-TERM INVESTMENTS
(COST $87,128,499) 87,128,499
-------------
TOTAL INVESTMENTS
(COST $976,439,839) 99.8% 957,355,861
OTHER ASSETS AND LIABILITIES -- NET .2 1,984,681
----- -------------
TOTAL NET ASSETS 100.0% $959,340,542
----- =============
ADR-American Depositary Receipts.
+Non-income producing.
*Investment in non-controlled affiliates-holdings over 5% of outstanding
voting securities. During the six months ended July 31, 1995, the Fund
recognized $1,123,408 in dividend income.
**Exempt from registration under Rule 144A of the Securities Act of 1933. These
securities may be resold in transactions exempt from registration, normally
to qualified institutional buyers. At July 31, 1995, these securities
amounted to $2,511,000 or .3% of total net assets.
++Common stock with the following covered call options outstanding:
Shares
Subject Exercise Expiration
to Call Price Date Value
------- -------- ---------- -----
Telefonos de Mexico,
S.A. de C.V.-ADR ...... 58,900 $35 8/18/95 $ 29,450
Telefonos de Mexico,
S.A. de C.V.-ADR ...... 58,900 35 11/17/95 128,402
--------
Total covered call options
(premiums received $319,080) $157,852
========
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1995 (UNAUDITED)
ASSETS:
Investments at market value (identified cost $976,439,839) $957,355,861
Receivable for investment securities sold 11,509,742
Dividends and interest receivable 4,860,093
Receivable for Fund shares sold 142,955
Receivable from Adviser 14,953
Prepaid expenses 60,751
- --------------------------------------------------------------------------------
Total assets 973,944,355
- --------------------------------------------------------------------------------
LIABILITIES:
Due to custodian bank 246,294
Payable for investment securities purchased 11,664,488
Payable for Fund shares repurchased 1,283,689
Covered call options written at market value (premium
received $319,080) 157,852
Accrued advisory fee 801,626
Accrued expenses 449,864
- --------------------------------------------------------------------------------
Total liabilities 14,603,813
- --------------------------------------------------------------------------------
NET ASSETS:
Paid-in capital 1,021,125,705
Accumulated net realized loss on investment transactions (46,136,692)
Undistributed net investment income 3,274,317
Net unrealized depreciation of investments (18,922,788)
- --------------------------------------------------------------------------------
Net assets $959,340,542
- --------------------------------------------------------------------------------
CALCULATION OF NET ASSET VALUE PER SHARE:
CLASS A SHARES
Net asset value per share
($1,964,371/102,860 shares of beneficial interest outstanding) $19.10
Sales charge--4.75% of offering price .95
------
Maximum offering price $20.05
======
CLASS B SHARES
Net asset value per share
($5,034,624/264,194 shares of beneficial interest outstanding) $19.06
======
CLASS C SHARES
Net asset value per share
($148,130/7,775 shares of beneficial interest outstanding) $19.05
======
CLASS Y SHARES
Net asset value per share
($952,193,417/49,850,943 shares of beneficial interest outstanding) $19.10
======
================================================================================
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JULY 31, 1995 (UNAUDITED)
INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding taxes of $326,575) $31,700,613
Interest 2,647,581
Total income 34,348,194
EXPENSES:
Advisory fee $4,691,811
Distribution fee-Class A shares 1,178
Distribution and shareholder services
fees-Class B shares 12,932
Distribution and shareholder services
fees-Class C shares 421
Transfer agent fee 609,671
Custodian fee 114,050
Reports and notices to shareholders 112,700
Registration and filing fees 56,696
Professional fees 55,877
Trustees' fees and expenses 33,788
Interest 31,633
Insurance 15,081
Other 30,813
----------
5,766,651
Less expense reimbursement (29,242)
----------
Total expenses 5,737,409
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 28,610,785
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments:
Net realized gain on investments 2,701,405
Net decrease in unrealized depreciation of investments 91,780,502
- --------------------------------------------------------------------------------
Net gain on investments 94,481,907
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $123,092,692
================================================================================
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED TEN MONTHS
JULY 31, 1995 ENDED
(UNAUDITED) JANUARY 31, 1995
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 28,610,785 $ 48,729,584
Net realized gain (loss) on investments 2,701,405 (47,796,906)
Net decrease in unrealized depreciation of
investments 91,780,502 18,363,029
- --------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 123,092,692 19,295,707
-------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME
Class A shares (27,978) --
Class B shares (68,077) --
Class C shares (2,344) --
Class Y shares (27,701,582) (60,967,416)
- --------------------------------------------------------------------------------
Total distributions from net investment
income (27,799,981) (60,967,416)
- --------------------------------------------------------------------------------
IN EXCESS OF NET INVESTMENT INCOME
Class A shares (3,490) --
Class B shares (10,856) --
Class C shares (437) --
- --------------------------------------------------------------------------------
Total distribution in excess of net
investment income (14,783) --
- --------------------------------------------------------------------------------
NET REALIZED GAINS ON INVESTMENTS-CLASS Y SHARES -- (13,895,906)
- --------------------------------------------------------------------------------
Total distribution to shareholders (27,814,764) (74,863,322)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
Net decrease resulting from Fund share
transactions (78,326,158) (66,784,811)
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets 16,951,770 (122,352,426)
NET ASSETS:
Beginning of year 942,388,772 1,064,741,198
- --------------------------------------------------------------------------------
End of period (including undistributed net
investment income of $3,274,317 and
$2,478,296, respectively) $959,340,542 $942,388,772
================================================================================
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1995 (UNAUDITED)
NOTE 1--ORGANIZATION
The Evergreen Total Return Fund (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. On September 21, 1994, the Fund's
Trustees approved a change in the Fund's accounting and tax year-end from March
31 to January 31.
NOTE 2--ISSUANCE OF MULTIPLE CLASSES OF SHARES
On January 3, 1995, the Fund adopted a multiple class distribution program and
created three new classes of shares designated Class A, Class B and Class C
shares. The then existing shares of the Fund were designated Class Y (no-load)
shares. Class A shares are offered with a front-end sales charge of 4.75% which
will be reduced on purchases in excess of $100,000. Class B shares are offered
with a contingent deferred sales charge payable when shares are redeemed which
would decline from 5% to zero over a seven year period (after which it is
expected that they will convert to Class A shares). Class C shares are offered
with a contingent deferred sales charge of 1% on shares redeemed during the
first year of purchase. All four classes of shares have identical voting,
dividend, liquidation and other rights, except that certain classes bear
different distribution expenses (see Note 5) and have exclusive voting rights
with respect to their distribution plan.
NOTE 3--SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
SECURITY VALUATION: Portfolio securities that are listed on a securities
exchange are valued at the last quoted sales price on the day the valuation
is made. Price information on listed securities is taken from the exchange
where the security is primarily traded. Such securities not traded on the
valuation date are valued at the mean between the bid and asked price.
Unlisted securities for which market quotations are readily available are
valued at a price quoted by one or more brokers. Debt securities (other than
short-term obligations) are normally valued on the basis of valuations
provided by a pricing service when such prices are believed to reflect the
value of such securities. Securities for which no quotations are readily
available, are valued at fair value as determined in good faith by the
Trustees. Short-term obligations purchased with maturities of 60 days or less
are stated at amortized cost which approximates market value. Cost of
securities is determined and gains and losses are based upon the specific
identification method for both financial statement and Federal income tax
purposes.
FEDERAL TAXES: It is the Fund's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies, and to
distribute timely all of its taxable income and net capital gains to its
shareholders. Therefore, no Federal income or excise tax provision is
required.
At January 31, 1995, the Fund had a net capital loss carryover of
approximately $22,833,000 which will be available through January 31, 2003 to
offset future net capital gains, if any, to the extent provided by the
Treasury regulations. To the extent that this carryover is used to offset
future capital gains, it is probable that the gains so offset will not be
distributed to shareholders.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on
the ex-distribution date. The amount of distributions from net investment
income and net realized capital gains are determined in accordance with
Federal income tax regulations, which may differ from generally accepted
accounting principles. These "book/tax" differences are either considered
temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the capital
accounts based on their Federal tax-basis treatment; temporary differences do
not require reclassification. Distributions which exceed net investment
<PAGE>
- --------------------------------------------------------------------------------
income and net realized capital gains for financial reporting purposes but
not for tax purposes are reported as distributions in excess of net
investment income or net realized capital gains. To the extent distributions
exceed current and accumulated earnings and profits for Federal income tax
purposes, they are reported as distributions of paid-in capital.
ALLOCATION OF EXPENSES: Expenses specifically identifiable to a class of
shares are charged to that class. Other expenses common to the Fund are
primarily allocated to the classes in the Fund in proportion to net assets.
OTHER: Security transactions are accounted for on the trade date, the date
the order to buy or sell is executed. Dividend income is recorded on the
ex-dividend date and interest income is recognized on the accrual basis.
NOTE 4--ADVISORY FEE AND RELATED PARTY TRANSACTIONS
the adviser, an affiliate of Lieber & Company, is the investment adviser to
the Fund and also furnishes the Fund with administrative services. The Adviser,
which is an indirect, wholly-owned subsidiary of First Union Corporation,
succeeded on June 30, 1994 to the advisory business of the same name but under
different ownership. The Adviser is entitled to a fee, accrued daily and paid
monthly, for the performance of its services based on a percentage of the Fund's
daily net assets as shown in the table below which was effective July 1, 1995.
Advisory fees calculated for the period February 1, 1995 through June 30, 1995
were accrued daily at the rate of 1% of daily net assets.
Advisory Fee Daily Net Assets
----------- ----------------
1.00%. ........... on the first $750 million
.90%. ........... on the next $250 million
.80%. ........... on assets in excess of $1 billion
For the six months ended July 31, 1995, the Adviser voluntarily reimbursed
Class A, Class B, and Class C shares for certain class specific expenses in the
amount of $10,214 for each of the Class A and Class C shares and $8,814 for
Class B shares. The Adviser may, at its discretion, revise or cease these
voluntary reimbursements at any time.
Total operating expenses of the Fund, exclusive of taxes, interest, brokerage
fees, 12b-1 distribution and shareholder services fees and extraordinary
expenses are subject to the most restrictive of state expense limitations, as
may be amended from time to time, under the rules and regulations of states
where the Fund is authorized to sell its shares. If in any fiscal year such
operating expenses exceed the most restrictive limitation then in effect, the
Adviser will reimburse the Fund for the amount of such excess. Such amount, if
any, will be calculated daily and credited on a monthly basis. For the six
months ended July 31, 1995 the Fund's expenses did not exceed the most
restrictive limitation in effect.
Lieber & Company is the investment sub-adviser to the Fund and also provides
brokerage services with respect to substantially all security transactions of
the Fund effected on the New York or American Stock Exchanges. For transactions
executed during the six months ended July 31, 1995, the Fund incurred brokerage
commissions of $1,491,577 with Lieber & Company. For the six months ended July
31, 1995, Lieber & Company was reimbursed by the Adviser, at no additional
expense to the Fund, for its cost of providing investment advisory services to
the Adviser.
NOTE 5--DISTRIBUTION AND SHAREHOLDER SERVICES FEES
The Fund has adopted for each if its Class A, Class B and Class C shares, a
Distribution Plan (the "Plans") pursuant to Rule 12b-1 under the Act. Under the
terms of the Plans, the Fund may incur distribution-related and shareholder
servicing-related expenses which may not exceed, as a percentage of average
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
daily net assets on an annual basis, .75 of 1% of Class A shares and 1% for both
Class B and Class C shares. The payments under the Class A Plan will be
voluntarily limited to .25 of 1%.
In connection with the Plans, the Fund has entered into a distribution
agreement with Evergreen Funds Distributor, Inc. ("EFD"), a subsidiary of Furman
Selz Incorporated, whereby the Fund will compensate EFD for its services at a
rate which may not exceed, as a percentage of average daily net assets on an
annual basis, .25 of 1% for Class A shares and .75 of 1% for both Class B and
Class C shares. Such fees are accrued daily and paid monthly. The Agreement
provides that EFD will use such fees to finance activities that promote the sale
of Class A, Class B and Class C shares.
A portion of the payments under the Class B and Class C Plans, up to .25 of 1%
of average daily net assets may constitute a shareholder services fee. EFD has
entered into a Shareholder Services Agreement with First Union Brokerage
Services ("FUBS"), an affiliate of the Adviser, whereby EFD will compensate FUBS
for certain services provided to shareholders and/or for the maintenance of
shareholder's accounts relating to the Fund's Class B and Class C shares. Such
fees are accrued daily and paid monthly.
NOTE 6--PORTFOLIO TRANSACTIONS
Cost of purchases and proceeds from sales of investments, other than
short-term obligations, aggregated $639,237,445 and $755,943,500, respectively,
for the six months ended July 31, 1995.
The aggregate cost of investments owned at July 31, 1995, for Federal income
tax purposes is $976,493,965 due to sales of certain portfolio securities on
which losses are deferred for Federal income tax purposes. Gross unrealized
appreciation and depreciation of securities was $41,395,111 and $60,533,215,
respectively, resulting in net unrealized depreciation for Federal income tax
purposes of $19,138,104.
NOTE 7--FINANCING AGREEMENT
The Fund has a financing agreement with State Street Bank and Trust Company
(the "Bank"), which provides the Fund with a line of credit, in the aggregate
amount of the lesser of $50,000,000 or 5% of the value of the Fund's net assets,
to be accessed for temporary or emergency purposes. Borrowings under the line
bear interest at 1% above the Bank's cost of funds as set periodically by the
Bank and are secured by securities pledged by the Fund. During the six months
ended July 31, 1995, the Fund had borrowings outstanding for 15 days under the
line of credit and incurred $31,633 in interest charges related to these
borrowings. The Fund's average amount of debt outstanding during the period
aggregated $869,613 at a weighted average interest rate of 7.33%. The Fund had
no outstanding borrowings at July 31, 1995.
<PAGE>
NOTE 8--SHARES OF BENEFICIAL INTEREST
There is an unlimited number of $.001 par value shares of beneficial interest
authorized, divided into four classes, designated Class A, Class B, Class C and
Class Y shares. Transaction in shares of beneficial interest were as follows:
SIX MONTHS ENDED
JULY 31, 1995
(UNAUDITED)
- ------------------------------------------------------
SHARES DOLLARS
- ------------------------------------------------------
CLASS A
Shares sold 102,750 $1,877,757
Shares issued on reinvestment
of distributions 1,537 28,981
Shares redeemed (8,334) (158,018)
- ------------------------------------------------------
Net increase 95,953 $1,748,720
- ------------------------------------------------------
CLASS B
Shares sold 232,187 $4,234,243
Shares issued on reinvestment
of distributions 3,895 71,833
Shares redeemed (6,569) (122,256)
- ------------------------------------------------------
Net increase 229,513 $4,183,820
- ------------------------------------------------------
CLASS C
Shares sold 6,471 $118,260
Shares issued on reinvestment
of distributions 125 2,289
Shares redeemed (211) (3,718)
- ------------------------------------------------------
Net increase 6,385 $116,831
- ------------------------------------------------------
CLASS Y
Shares sold 1,101,390 $19,936,194
Shares issued on reinvestment
of distributions 1,375,880 24,934,752
Shares redeemed (7,126,540) (129,246,475)
- ------------------------------------------------------
Net decrease (4,649,270) ($84,375,529)
- ------------------------------------------------------
TOTAL NET DECREASE RESULTING
FROM FUND SHARE
TRANSACTIONS (4,317,419) ($78,326,158)
======================================================
TEN MONTHS ENDED
JANUARY 31, 1995
- ------------------------------------------------------
SHARES DOLLARS
- ------------------------------------------------------
CLASS A*
Shares sold 6,908 $119,191
Shares redeemed -- --
- ------------------------------------------------------
Net increase 6,908 $119,191
- ------------------------------------------------------
CLASS B*
Shares sold 34,681 $598,442
Shares redeemed -- --
- ------------------------------------------------------
Net increase 34,681 $598,442
- ------------------------------------------------------
CLASS C*
Shares sold 1,391 $23,953
Shares redeemed -- --
- ------------------------------------------------------
Net increase 1,391 $23,953
- ------------------------------------------------------
CLASS Y
Shares sold 2,744,616 $49,305,685
Shares issued on reinvestment
of distributions 3,880,023 68,046,447
Shares redeemed (10,340,626) (184,878,529)
- ------------------------------------------------------
Net decrease (3,715,987) ($67,526,397)
- ------------------------------------------------------
TOTAL NET DECREASE
RESULTING FROM FUND
SHARES TRANSACTIONS (3,673,007) ($66,784,811)
======================================================
* For Class A, Class B and Class C, the Fund share transaction activity
reflects the period from commencement of class operations, January 3, 1995
through January 31, 1995.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
CLASS A SHARES CLASS B SHARES CLASS C SHARES
--------------------------- --------------------------- ---------------------------
Six Months For the Period Six Months For the Period Six Months For the Period
Ended January 3, 1995* Ended January 3, 1995* Ended January 3, 1995*
July 31, 1995 through July 31, 1995 through July 31, 1995 through
PER SHARE DATA (unaudited) January 31, 1995 (unaudited) January 31, 1995 (unaudited) January 31, 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $17.28 $17.09 $17.28 $17.09 $17.27 $17.09
Income from investment
operations:
Net investment income .49 .02 .48 .02 .48 .01
Net realized and
unrealized gain (loss)
on investments 1.87 .17 1.80 .17 1.80 .17
- -----------------------------------------------------------------------------------------------------------------------
Total from investment
operations 2.36 .19 2.28 .19 2.28 .18
- -----------------------------------------------------------------------------------------------------------------------
Less distributions
to shareholders from:
Net investment income (.51) -- (.50) -- (.49) --
In excess of net
investment income (.03) -- -- -- (.01) --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions (.54) -- (.50) -- (.50) --
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of
period $19.10 $17.28 $19.06 $17.28 $19.05 $17.27
=======================================================================================================================
TOTAL RETURN 13.8% 1.1% 13.4% 1.1% 13.4% 1.1%
RATIOS &
SUPPLEMENTAL DATA
Net assets, end of period
(in millions) $1,965 $119 $5,035 $599 $148 $24
Ratios to average net assets:
Expenses++ 1.34%(a) 1.45% 2.09%(a) 2.23% 2.08%(a) 2.22%
Net investment income++ 5.91%(a) 4.09% 5.22%(a) 3.23% 5.51%(a) 2.68%
Portfolio turnover rate** 71% 151% 71% 151% 71% 151%
=======================================================================================================================
</TABLE>
*Commencement of class operations.
**Portfolio turnover rate is not annualized. For the period January 3, 1995
through January 31, 1995, the rate is calculated for the ten month period
ended January 31, 1995.
+Total return is calculated on net asset value per share for the periods
indicated and is not annualized. Initial sales charge or contingent deferred
sales charges are not reflected.
++Annualized. Due to the recent commencement of their offering, the ratios for
Class A, Class B and Class C shares are not necessarily comparable to that of
the Class Y shares, and are not necessarily indicative of future ratios.
(a)Net of voluntary expense reimbursements. If the Fund had borne all expenses
that were assumed by the Adviser, the annualized ratios of expenses and net
investment income (loss) to average daily net assets would be 3.51% and
3.74%, respectively, for Class A shares, 2.77% and 4.54%, respectively, for
Class B shares and 26.12% and (18.53%), respectively, for Class C shares.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
CLASS Y SHARES
SIX MONTHS TEN MONTHS
ENDED ENDED
JULY 31, 1995 JANUARY 31, YEAR ENDED MARCH 31,
---------------------------------------------------------------
PER SHARE DATA (UNAUDITED) 1995* 1994 1993 1992 1991 1990
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 17.28 $ 18.29 $ 20.90 $ 18.82 $ 18.12 $ 18.26 $ 17.92
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .56 .87 1.08 1.11 1.08 1.02 1.07
Net realized and unrealized
gain (loss) on investments 1.80 (.55) (1.41) 2.51 .70 (.08) .36
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment
operations 2.36 .32 (.33) 3.62 1.78 .94 1.43
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions to shareholders from:
Net investment income (.54) (1.08) (1.08) (1.08) (1.08) (1.08) (1.09)
Net realized gains -- (.25) (1.20) (.46) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions (.54) (1.33) (2.28) (1.54) (1.08) (1.08) (1.09)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 19.10 $ 17.28 $ 18.29 $ 20.90 $ 18.82 $ 18.12 $ 18.26
====================================================================================================================================
TOTAL RETURN+ 13.8% 1.9% (2.1)% 20.2% 10.2% 5.8% 7.9%
RATIOS & SUPPLEMENTAL DATA:
Net assets, end of period
(in millions) $ 952 $ 942 $1,065 $1,142 $1,032 $1,151 $1,292
Ratios to average net assets:
Expenses 1.22%++ 1.24% ++ 1.18% 1.18% 1.21% 1.23% 1.18%
Net investment income 6.08%++ 5.70%++ 5.29% 5.65% 5.73% 5.90% 5.64%
Portfolio turnover rate** 71% 151% 106% 164% 137% 137% 89%
====================================================================================================================================
</TABLE>
* On September 21, 1994, the Fund's Trustees approved a change in the Fund's
fiscal year end from March 31 to January 31. ** Portfolio turnover rate is
calculated for the periods indicated and is not annualized.
+ Total return is calculated for the periods indicated and is not annualized.
++Annualized.
See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
EVERGREEN FAMILY OF FUNDS
DOMESTIC GROWTH FUNDS
U.S. Real Estate Equity Fund
Aggressive Growth Fund
Limited Market Fund
Evergreen Fund
INTERNATIONAL/GLOBAL GROWTH FUNDS
Global Real Estate Equity Fund
Emerging Markets Growth Fund
International Equity Fund
GROWTH AND INCOME FUNDS
Growth & Income Fund
Value Fund
Total Return Fund
Evergreen Foundation Fund
Balanced Fund
American Retirement Fund
SPECIALTY GROWTH AND INCOME FUNDS
Small Cap Equity Income Fund
Tax Strategic Foundation Fund
Utility Fund
INCOME FUNDS
U.S. Government Fund
Fixed Income Fund
STATE TAX-FREE FUNDS
Florida High Income Municipal Bond Fund
Florida Municipal Bond Fund
Georgia Municipal Bond Fund
North Carolina Municipal Bond Fund
South Carolina Municipal Bond Fund
Virginia Municipal Bond Fund
TAX FREE FUNDS
High Grade Tax Free Fund
Short-Intermediate Municipal Fund-California
Short-Intermediate Municipal Fund
MONEY MARKET FUNDS
Money Market Fund
Tax Exempt Money Market Fund
Treasury Money Market Fund
<PAGE>
TRUSTEES
Laurence B. Ashkin
Foster Bam
James S. Howell
Robert J. Jeffries
Gerald M. McDonnell
Thomas L. McVerry
William Walt Pettit
Russell A. Salton, III, M.D.
Michael S. Scofield
INVESTMENT ADVISER
Evergreen Asset Management Corp.
2500 Westchester Avenue
Purchase, New York 10577
CUSTODIAN & TRANSFER AGENT
State Street Bank and Trust Company
INDEPENDENT ACCOUNTANTS
Ernst & Young LLP
LEGAL COUNSEL
Sullivan & Worcester
DISTRIBUTOR
Evergreen Funds Distributor, Inc.
The investment adviser to the Evergreen Funds is Evergreen Asset
Management Corp., which is wholly owned by First Union National Bank
of North Carolina. Investments in the Evergreen Funds are not endorsed
or guaranteed by First Union, are not deposits or other obligations of
First Union, are not insured or otherwise protected by the U.S.
Government, the FDIC or any other government agency and involve
investment risks, including possible loss of principal.
The Evergreen Funds are sponsored and distributed by Evergreen Funds
Distributor, Inc. which is independent of Evergreen and First Union.
The financial information included herein is taken from the records of
the Fund without examination by the Fund's independent accountants,
who do not express an opinion thereon.
EVERGREEN TOTAL RETURN FUND
2500 Westchester Avenue
Purchase, New York 10577 #536731
EVERGREEN
TOTAL RETURN FUND
SEMI-ANNUAL REPORT [LOGO]
JULY 31, 1995
