FIRST UNION FUNDS/, N-30D, 1995-08-29

FIRST UNION FUNDS/
N-30D, 1995-08-29

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<PAGE>
EVERGREEN GROWTH AND INCOME FUNDS
(FORMERLY FIRST UNION GROWTH AND INCOME FUNDS)
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
President's Message....................................................... 1
A Review of 1st Half
and Prospects for Remainder of 1995....................................... 2
(Photo of light bulb) UTILITY A Report From Your Portfolio Manager...................................... 4
FUND Statement of Investments.................................................. 5
Statement of Assets and Liabilities....................................... 7
Statement of Operations................................................... 8
Statement of Changes in Net Assets........................................ 9
Financial Highlights...................................................... 10
(Photo of scales) BALANCED A Report From Your Portfolio Manager...................................... 11
FUND Statement of Investments.................................................. 12
Statement of Assets and Liabilities....................................... 16
Statement of Operations................................................... 17
Statement of Changes in Net Assets........................................ 18
Financial Highlights...................................................... 19
(Photo of stock certificate) VALUE A Report From Your Portfolio Manager...................................... 21
FUND Statement of Investments.................................................. 22
Statement of Assets and Liabilities....................................... 24
Statement of Operations................................................... 25
Statement of Changes in Net Assets........................................ 26
Financial Highlights...................................................... 27
Combined Notes to Financial Statements.................................... 30
Trustees and Officers..................................................... IBC
</TABLE>

<PAGE>
EVERGREEN GROWTH & INCOME FUNDS
(FORMERLY FIRST UNION GROWTH AND INCOME FUNDS)
PRESIDENT'S MESSAGE
BY JOHN J. PILEGGI
Dear Valued Shareholder:
I am pleased to present you with the Semi-Annual (Photo of
Report for the Evergreen Growth and Income Funds John J. Pileggi)
(formerly the First Union Growth and Income Funds) for
the six-month period ended June 30, 1995. This Report contains
complete financial information -- including the Investment Reviews and
Statements of Investments for the Evergreen Value Fund, the Evergreen Balanced
Fund and the Evergreen Utility Fund.
As you can see, this Report features our new family of the Evergreen Funds.
This is the result of the First Union Funds combining with and taking the name
of the Evergreen Funds effective July 7, 1995. In addition, we have completed
the acquisition of the ABT Funds, which added two new funds to our expanding
fund family, Florida High Income Municipal Bond and Aggressive Growth funds. The
Evergreen Family of Funds now consists of more than 30 funds, each carefully
designed to help meet specific objectives.
We are excited about the creation of one combined fund family, since it
offers our shareholders a wider range of mutual fund options to help achieve a
broad spectrum of investment needs.
The combination of funds and the acquisition of two new funds provides you
with the following benefits:
(Bullet) a wider array of fund options, many with outstanding track records
(Bullet) free exchanges among all funds*
(Bullet) the investment expertise of two experienced investment advisors -
Evergreen Asset Management Corp. and First Union National Bank of
North Carolina's Capital Management Group
If you wish to receive more complete information about any of the Evergreen
Funds, please call 1-800-807-2940 to speak with a First Union Brokerage
Services' registered representative. We'll be glad to send you a prospectus
describing the fund choices and their objectives, fees and expenses. Please read
the prospectus carefully before you invest or send money.
I hope you're pleased with the recent growth we have experienced, and the
opportunities this growth affords you. As always, we welcome any questions,
comments, and suggestions you may have. We look forward to serving your
investment needs in the months and years to come.
Sincerely,
(Signature of John J. Pileggi)
August 15, 1995
* Exchanges must be within the same class of shares. Share exchanges are subject
to certain limitations described in the prospectus.
1

<PAGE>
EVERGREEN GROWTH AND INCOME FUNDS
(FORMERLY FIRST UNION GROWTH AND INCOME FUNDS)
SOFT LANDING OR PERFECT LANDING?
REVIEW OF 1ST HALF AND PROSPECTS
FOR REMAINDER OF 1995
BY DICK WAGONER, CHIEF INVESTMENT OFFICER
In our last report we stated, "In our view, the (Photo of
investment climate for 1995 is improving," and we Dick Wagoner)
looked for much improved investment returns.
The basis for our optimism was our belief that the
Federal Reserve's interest rate increases, designed to slow the economy and pre-
empt inflation, were, in fact, going to be effective and would permit the
economy to come in for a "soft landing" after a period of rapid growth in 1994.
In addition to the Fed's actions, we believed then as we believe now that
several powerful secular forces -- including global competition, demographics
and significant productivity gains -- are working to keep inflation in check
longer-term.
Current evidence confirms our view of moderating economic growth in 1995.
Leading economic indicators have fallen 4 out of 5 consecutive months and are
likely to fall again. Industrial production and capacity utilization have also
begun to moderate. Further confirming a slowdown were the back-to-back rises in
unemployment in April and May, the first such occurrence in over three years.
These increases along with rising inventories and sluggish retail sales assure
that slower economic growth is at hand for the remainder of the year.
WHILE WE CONTINUE TO BE OPTIMISTIC ABOUT THE INVESTMENT OUTLOOK FOR 1995, WE
BELIEVE THE MARKETS MAY BE GETTING AHEAD OF THEMSELVES IN ANTICIPATION OF A
"PERFECT LANDING."
* The S&P 500 is a reinvested unmanaged composite index of 425 industrial, 20
transportation, and 55 public utility common stocks.
** Unmanaged index of selected securities.
STANDING OVATION FROM WALL STREET
As the economy began to slow, interest rates fell and the markets responded
with a standing ovation to the prospects of a "soft landing" -- perhaps even
anticipating a "perfect landing" in the economy. Through June, the S&P 500
Reinvested Index* 20%, and the Lehman Brothers Intermediate Bond Index** was up
over 9%. An increasing number of investors believe the transition to a slow
growth, low inflation economy will be smooth -- providing a highly favorable
investment climate.
While we continue to be optimistic about the investment outlook for 1995, we
believe the markets may be getting ahead of themselves in anticipation of a
"perfect landing" rather than a slowdown which is likely to be characterized by
modestly higher inflation, a choppy and subdued pattern of economic growth, and
less favorable corporate earnings comparisons.
STOCKS ADVANCE BROADLY LED BY TECHNOLOGY
The S&P 500 Index continued the powerful advance which began early in the
year throughout the first half. New highs were generated in all the major
averages, driven initially by earnings reports that were above expectations, and
later in the period by meaningful declines in intermediate and long-term
interest rates.
Technology stocks continued to lead the market in the second quarter with
particular strength in the high-tech components of the group (i.e.,
semiconductors, computer software and computer systems). Demand appears to be
running far in advance of ability to supply, which is creating somewhat of a
shortage mentality.
Interest rate declines supported a strong advance in the financial sector,
with money center banks providing excellent returns. Brokerage related stocks
were also strong, reflecting the continued advances in the financial markets.
Weakness in the period was concentrated in the energy and consumer cyclical
sectors.
2

<PAGE>
EVERGREEN GROWTH AND INCOME FUNDS
(FORMERLY FIRST UNION GROWTH AND INCOME FUNDS)
REVIEW OF 1ST HALF AND PROSPECTS
FOR REMAINDER OF 1995 -- (CONTINUED)
SECOND HALF OUTLOOK
The investment climate for the balance of 1995 is likely to require a more
cautious stance on the part of investors.
The first half of the year witnessed a rapid run-up in equity prices, powered
by declining interest rates and improved corporate profit performance. Interest
rate declines reflected the moderation in economic growth brought on by the
Federal Reserve's actions in 1994 to slow the forward momentum of the economy
and relieve potential inflationary pressures. By mid-year 1995, tangible
evidence was available to indicate that those policies had been successful, and
the Fed signaled a moderation of its stance. This indicates that further
substantial interest rate declines from current levels are less likely, removing
one of the driving forces behind higher stock prices.
Unexpectedly, strong earnings were an additional factor in lifting stock
prices. For the balance of 1995 and into 1996, we believe profit comparisons
will be less robust related to the moderation in the economy and more difficult
year-over-year comparisons. In the absence of a further slowdown in the economy,
profits should continue to grow, but at a more measured pace.
Valuations on stocks are high reflecting the aforementioned variables. While
this in and of itself is not a reason for stocks to fall, it indicates that a
reasonable degree of caution is appropriate.
At this point, it appears that the economic recovery is intact and that
inflation is under control. U.S. manufacturing competitiveness is high related
to corporate restructuring and the level of the dollar in world markets.
Productivity gains have had a powerful impact on our ability to keep inflation
under control.
Business capital spending remains high, which bodes well for a continuation
of these trends. Nonetheless, we are approaching the sixth year of the economic
recovery and one must be more cognizant of risks to the outlook, given that we
are in the mature phase.
The fixed income markets have also reached levels where further reductions
will be more moderate and will require further evidence that the economy is not
going to repeat its strong second half performance of 1994. We believe that
interest rates may move upward moderately (7% bond yield) as economic data
reflects more growth after three months of very weak growth. However, we do not
expect a recurrence of 4% plus growth, and we believe interest rates will
decline.
Actions on the political front may be the wildcard looking forward. Over the
next 18 months, the issues of tax reform, deficit reduction and Presidential
election politics will all be on the front pages. Positive action on the deficit
could have very positive implications for the financial markets.
3

<PAGE>
EVERGREEN UTILITY FUND
(FORMERLY FIRST UNION UTILITY PORTFOLIO)
(Photo of Light Bulb)
A REPORT FROM YOUR
PORTFOLIO MANAGER
BY BRAD DONOVAN
The S&P Utility Composite finished the first half of the (Photo of
year up 12%, which compares with the 19% rise in the S&P 500 Brad Donovan)
Reinvested Index*. Natural gas stocks continue to lead the
sector, rising 19% in price, followed by the telephone and
electric utility industries, each up 11% in price.
Within Evergreen Utility Fund, we continue to focus on
companies with financial and operating strength that have
attractive current income and the potential for modest capital
appreciation. Further, we have diversified the Fund across
sectors of the utility industry and have added several
companies outside the utility sector as the
prospectus allows up to 10% in such investments.
Given positive news on deregulation in the electric utility industry, we have
increased our weight in electrics and have initiated new positions in Eastern
Utilities Associates and TNP Enterprises. The dividend yield on the electric
utility industry as compared with the broader stock market and the bond market
indicates that the group exhibits value compared with both stocks and bonds.
While the group performed well during the second quarter, we expect electrics
(and utilities in general) to outperform if investors become more defensive.
The Senate passed their version of the Telecommunications Bill and the House
will begin debate on their version of the Bill in early July. The thrust of both
bills is to open the local telephone market to competition and allow the
Regional Bell Holding Companies (RBOCs) into the out-of-region long distance
market, which is currently dominated by AT&T, MCI Communications and Sprint. In
our opinion, if the final bill signed by the President is similar to the current
versions in both the House and Senate, the long distance sector is poised to
gain more from enactment than the RBOCs. Accordingly, we have been reducing our
weightings in SBC Communications, Bell Atlantic and BellSouth.
The Fund is currently 43% invested in electric utilities, 41% in
telecommunications, 6% natural gas stocks and 10% non-utilities.
* The S&P 500 is a reinvested unmanaged composite index of 425 industrial, 20
transportation, and 55 public utility common stocks.
4

<PAGE>
EVERGREEN UTILITY FUND
(FORMERLY FIRST UNION UTILITY PORTFOLIO)
STATEMENT OF INVESTMENTS
JUNE 30, 1995
(Photo of light bulb) (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <C> <S> <C>
COMMON STOCKS -- 92.4%
UTILITIES -- 81.5%
35,000 * Airtouch Communications, Inc..... $ 997,500
17,100 American Electric Power Co.,
Inc.............................. 600,638
8,400 American Water Works, Inc. 266,700
24,800 Ameritech Corp................... 1,091,200
15,000 AT & T Corp...................... 796,875
7,000 Atlanta Gas & Light Co........... 243,250
10,000 Bell Atlantic Corp............... 560,000
21,000 BellSouth Corp................... 1,333,500
8,400 British Telecommunications, Inc.
ADR.............................. 527,100
30,100 Carolina Power & Light Co........ 910,525
38,000 CINERGY Corp..................... 997,500
7,200 Consolidated Natural Gas Co...... 271,800
34,350 DQE, Inc......................... 807,225
24,200 Eastern Enterprises.............. 722,975
25,000 Eastern Utility Association...... 565,625
8,000 Empresa Nacional de Electricidad
S.A. ADR......................... 394,000
7,600 Enron Corp....................... 266,950
20,000 Factory Stores of America,
Inc.............................. 410,000
22,000 FPL Group, Inc................... 849,750
20,000 Frontier Corp.................... 480,000
41,300 General Public Utilities Corp.... 1,228,675
46,700 GTE Corp......................... 1,593,638
10,000 Hong Kong Telecommunications
ADR.............................. 198,750
20,000 Illinova Corp.................... 507,500
50,000 MCI Communications Corp.......... 1,100,000
30,100 Nacional Financiera, S.N.C.
PRIDES........................... 933,100
40,000 New England Electric Systems..... 1,380,000
10,000 NICOR, Inc....................... 268,750
28,000 NIPSCO Industries, Inc........... 952,000
8,000 North Carolina Natural Gas
Corp............................. 174,000
20,000 NYNEX Corp....................... 805,000
57,000 Pacific Telesis Group............ 1,524,750
19,000 Pacificorp....................... 356,250
40,000 PECO Energy Co................... 1,105,000
7,000 Piedmont Natural Gas, Inc........ 145,250
25,000 Powergen Place, ADR.............. 306,250
<CAPTION>
SHARES VALUE
<C> <C> <S> <C>
COMMON STOCKS -- CONTINUED
UTILITIES -- CONTINUED
15,000 SBC Communications, Inc.......... $ 714,375
45,600 SCANA Corp....................... 1,020,300
65,000 * Shandong Huaneng Power
Development S.A. ADR............. 495,625
20,000 Southern Co...................... 447,500
15,000 Southwest Gas Corp............... 213,750
30,200 Teco Energy, Inc................. 660,625
10,000 * Tele Danmark ADR................. 280,000
24,000 Telefonica de Argentina S.A.
ADR.............................. 594,000
17,000 Telefonica de Espana S.A.
ADR.............................. 658,750
25,000 TNP Enterprises, Inc............. 403,125
30,000 Unicom Corp...................... 798,750
30,000 U.S. West, Inc................... 1,248,750
30,000 Wisconsin Energy Corp............ 840,000
34,047,576
BASIC INDUSTRY -- .9%
20,200 Hanson PLC ADR................... 356,025
CONSUMER NON-DURABLES -- 1.4%
9,000 American Brands, Inc............. 357,750
15,000 K-mart Corp...................... 219,375
577,125
ENERGY -- 2.1%
4,100 Atlantic Richfield Co............ 449,975
6,300 Exxon Corp....................... 444,938
894,913
FINANCE -- .7%
5,000 Bankers Trust NY Corp............ 310,000
HEALTH TECHNOLOGY -- 1.0%
6,000 Bristol-Myers Squibb Co.......... 408,750
REAL ESTATE INVESTMENT TRUST --
4.8%
11,600 HealthCare REIT, Inc............. 234,900
7,000 Highwoods Properties, Inc........ 178,500
10,500 JDN Realty Trust Corp............ 213,938
60,000 Sovran Self Storage, Inc. REIT... 1,380,000
2,007,338
TOTAL COMMON STOCKS
(COST $37,622,740)........ 38,601,727
</TABLE>
5

<PAGE>
EVERGREEN UTILITY FUND
(FORMERLY FIRST UNION UTILITY PORTFOLIO)
STATEMENT OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1995
(Photo of light bulb) (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
CORPORATE BONDS -- 4.4%
<C> <C> <S> <C>
UTILITIES -- 4.4%
$ 175,000 Florida Power Corp.,
8.625%, 11/1/21.................. $ 188,787
210,000 Madison Gas & Electric Co.,
7.70%, 2/15/28................... 215,049
1,000,000 Norsk Hydro,
7.75%, 6/15/23................... 1,038,593
350,000 Pennsylvania Power & Light Co.,
9.25%, 10/1/19................... 390,591
TOTAL CORPORATE BONDS (COST
$1,868,305)............... 1,833,020
<CAPTION>
PRINCIPAL VALUE
<C> <C> <S> <C>
U.S. TREASURY OBLIGATIONS -- 0.5%
$ 210,000 United States Treasury Notes,
9.50%, 11/15/95
(COST $230,475).................. $ 212,950
**REPURCHASE AGREEMENT -- 1.7%
715,273 Cantor Fitzgerald 6.025%,
dated 6/30/95, due 7/3/95
(amortized cost)................. 715,273
TOTAL INVESTMENTS -- 99.0%
(COST $40,436,793).......... 41,362,970
OTHER ASSETS AND LIABILITIES --
NET 1.0%.................... 432,711
TOTAL NET ASSETS 100%.......... $41,795,681
</TABLE>

* Non-income producing securities.
** Fully collateralized by U.S. government and/or agency obligations based on
market prices at June 30, 1995.
The following abbreviations are used in this portfolio:
ADR -- American Depository Receipts
PRIDES -- Provisionally Redeemable Income Debt Exchangeable for Stock
REIT -- Real Estate Investment Trust
See accompanying notes to financial statements.
6

<PAGE>
EVERGREEN UTILITY FUND
(FORMERLY FIRST UNION UTILITY PORTFOLIO)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
(Photo of light bulb) (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments at value (identified cost $40,436,793)............................................................. $41,362,970
Receivable for investment securities sold...................................................................... 1,359,349
Dividends and interest receivable.............................................................................. 191,290
Receivable for Fund shares sold................................................................................ 95,522
Prepaid expenses............................................................................................... 65,892
Total assets................................................................................................ 43,075,023
LIABILITIES:
Payable for investment securities purchased.................................................................... 958,973
Due to custodian bank.......................................................................................... 266,402
Payable for Fund shares repurchased............................................................................ 51,635
Withholding tax liability...................................................................................... 2,332
Total liabilities........................................................................................... 1,279,342
NET ASSETS........................................................................................................ $41,795,681
NET ASSETS CONSIST OF:
Paid-in capital................................................................................................ $41,033,328
Undistributed net investment income............................................................................ 14,537
Accumulated net realized loss.................................................................................. (178,361)
Net unrealized appreciation of investments..................................................................... 926,177
Net assets.................................................................................................. $41,795,681
CALCULATION OF NET ASSET VALUE PER SHARE:
Class A Shares ($4,601,285 471,366 shares of beneficial interest outstanding).................................. $ 9.76
Sales charge -- 4.75% of offering price........................................................................ 0.49
Maximum offering price...................................................................................... $ 10.25
Class B Shares ($30,817,312 3,155,846 shares of beneficial interest outstanding)............................... $ 9.77
Class C Shares ($153,632 15,720 shares of beneficial interest outstanding)..................................... $ 9.77
Class Y Shares ($6,223,452 637,013 shares of beneficial interest outstanding).................................. $ 9.77
</TABLE>

See accompanying notes to financial statements.
7

<PAGE>
EVERGREEN UTILITY FUND
(FORMERLY FIRST UNION UTILITY PORTFOLIO)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995
(Photo of light bulb) (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends......................................................................................... $ 931,222
Interest.......................................................................................... 147,397
Total income................................................................................... 1,078,619
EXPENSES:
Advisory fee...................................................................................... $ 99,092
Administrative personnel and services fees........................................................ 16,382
Distribution fee -- Class A Shares................................................................ 5,366
Distribution and shareholder services fees -- Class B Shares...................................... 148,087
Distribution and shareholder services fees -- Class C Shares...................................... 703
Transfer agent fee................................................................................ 31,467
Custodian fee..................................................................................... 26,073
Registration and filing fees...................................................................... 12,553
Reports and notices to shareholders............................................................... 5,376
Professional fees................................................................................. 4,420
Insurance expense................................................................................. 2,457
Trustees' fees and expenses....................................................................... 276
Other............................................................................................. 2,522
354,774
Less: Fee waivers and expense reimbursements...................................................... (101,253)
Total expenses................................................................................. 253,521
Net investment income................................................................................ 825,098
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments.................................................................. (84,705)
Net change in unrealized appreciation of investments.............................................. 3,322,447
Net gain on investments.............................................................................. 3,237,742
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................. $4,062,840
</TABLE>

See accompanying notes to financial statements.
8

<PAGE>
EVERGREEN UTILITY FUND
(FORMERLY FIRST UNION UTILITY PORTFOLIO)
STATEMENT OF CHANGES IN NET ASSETS
(Photo of light bulb)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
JUNE 30, ENDED
1995 DECEMBER 31,
(UNAUDITED) 1994*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income........................................................................ $ 825,098 $ 1,350,527
Net realized loss on investments............................................................. (84,705) (93,656)
Net change in unrealized appreciation (depreciation) of investments.......................... 3,322,447 (2,396,270)
Net increase (decrease) in net assets resulting from operations........................... 4,062,840 (1,139,399)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME:
Class A Shares............................................................................... (101,068) (191,065)
Class B Shares............................................................................... (589,263) (922,823)
Class C Shares............................................................................... (2,735) (1,182)
Class Y Shares............................................................................... (137,428) (210,047)
Total distributions to shareholders
from net investment income................................................................ (830,494) (1,325,117)
IN EXCESS OF NET INVESTMENT INCOME:
Class Y Shares............................................................................... -- (5,477)
Total distribution to shareholders
in excess of net investment income........................................................ -- (5,477)
Total distributions to shareholders.......................................................... (830,494) (1,330,594)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold.................................................................... 3,964,796 49,288,964
Proceeds from reinvestment of dividends...................................................... 616,940 1,133,996
Payments for shares redeemed................................................................. (4,330,127) (9,641,241)
Net increase resulting from Fund share transactions.......................................... 251,609 40,781,719
Net increase in net assets................................................................ 3,483,955 38,311,726
NET ASSETS:
Beginning of period.......................................................................... 38,311,726 --
End of period (including undistributed net investment income of
$14,537 and $19,933, respectively)........................................................ $41,795,681 $ 38,311,726
</TABLE>

See accompanying notes to financial statements.
* For the period from January 4, 1994 (commencement of operations) to December
31, 1994.
9

<PAGE>
EVERGREEN UTILITY FUND
(FORMERLY FIRST UNION UTILITY PORTFOLIO)
(Photo of light bulb) FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
SIX MONTHS JANUARY 4, SIX MONTHS JANUARY 4, SIX MONTHS SEPTEMBER 2,
ENDED 1994* ENDED 1994* ENDED 1994*
JUNE 30, THROUGH JUNE 30, THROUGH JUNE 30, THROUGH
1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31,
(UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED) 1994
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.... $9.00 $10.00 $9.00 $10.00 $9.01 $9.33
Income (loss) from investment
operations:
Net investment income................... .22 .45 .19 .39 .18 .12
Net realized and unrealized gain (loss)
on investments........................ .76 (1.01) .77 (1.01) .76 (.33)
Total from investment operations.... .98 (.56) .96 (.62) .94 (.21)
Less distributions to shareholders from:
Net investment income................... (.22) (.44) (.19) (.38) (.18) (.11)
In excess of net investment income...... -- -- -- -- -- --
Total distributions................. (.22) (.44) (.19) (.38) (.18) (.11)
Net asset value, end of period.......... $9.76 $9.00 $9.77 $9.00 $9.77 $9.01
TOTAL RETURN(|)......................... 11.0% 5.6% 10.7% (6.2%) 10.6% (2.2%)
RATIO & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted).............................. $4,601 $4,190 $30,817 $28,792 $154 $128
Ratios to average net assets:
Expenses (a)(|)(|).................... .75% .53% 1.50% 1.27% 1.50% 1.94%
Net investment income (a)(|)(|)....... 4.70% 5.07% 3.95% 4.19% 3.91% 3.96%
Portfolio turnover rate................. 33% 23% 33% 23% 33% 23%
<CAPTION>
CLASS Y SHARES
SIX MONTHS FEBRUARY 28,
ENDED 1994*
JUNE 30, THROUGH
1995 DECEMBER 31,
(UNAUDITED) 1994
<S> <C> <C>
PER SHARE DATA
Net asset value, beginning of period.... $9.00 $9.51
Income (loss) from investment
operations:
Net investment income................... .23 .37
Net realized and unrealized gain (loss)
on investments........................ .77 (.50)
Total from investment operations.... 1.00 (.13)
Less distributions to shareholders from:
Net investment income................... (.23) (.37)
In excess of net investment income...... -- (.01)
Total distributions................. (.23) (.38)
Net asset value, end of period.......... $9.77 $9.00
TOTAL RETURN(|)......................... 11.2% (1.6%)
RATIO & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted).............................. $6,223 $5,201
Ratios to average net assets:
Expenses (a)(|)(|).................... .50% .40%
Net investment income (a)(|)(|)....... 4.91% 4.93%
Portfolio turnover rate................. 33% 23%
</TABLE>

* Commencement of class operations.
(|) Total return is calculated on net asset value per share for the period
indicated and is not annualized. Initial sales charges or contingent
deferred sales charges are not reflected.
(|)(|) Annualized.
(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 Y
CLASS A SHARES CLASS B SHARES CLASS C SHARES SHARES
SIX MONTHS JANUARY 4, SIX MONTHS JANUARY 4, SIX MONTHS SEPTEMBER 2, SIX MONTHS
ENDED 1994 ENDED 1994 ENDED 1994 ENDED
JUNE 30, THROUGH JUNE 30, THROUGH JUNE 30, THROUGH JUNE 30,
1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31, 1995
(UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Expenses............................... 1.26% 1.43% 2.01% 2.11% 2.01% 2.78% 1.01%
Net investment income.................. 4.19% 4.17% 3.44% 3.35% 3.40% 3.12% 4.40%
<CAPTION>

FEBRUARY 28,
1994
THROUGH
DECEMBER 31,
1994
<S> <C>
Expenses............................... 1.24%
Net investment income.................. 4.09%
</TABLE>

<PAGE>
EVERGREEN BALANCED FUND
(FORMERLY FIRST UNION BALANCED PORTFOLIO)
(Photo of scales)

A REPORT FROM YOUR
PORTFOLIO MANAGER
BY DEAN HAWES
The economic slowdown that began at year-end became much (Photo of
more pronounced as the second quarter progressed. The soft Dean Hawes)
landing is here! The recent string of economic releases seems
to be implying a broad deceleration in economic growth.
At the beginning of the year, the net assets of the
Evergreen Balanced Fund were invested 55% in stocks, 40% in
bonds and 5% in cash equivalent investments, and was
well-positioned for the slowdown we anticipated.
As interest rates on intermediate and long-term bonds
plummeted during the first half, our bond investments, with an
average maturity of approximately 9 years,
appreciated in value providing an attractive total return. We
believe bonds represent reasonable value today and continue to maintain our
9-year target maturity.
Similarly stocks, enjoyed a tremendous first half. As the third quarter
progresses, the market environment should become more difficult. The current
economic slowdown increases the likelihood that more second quarter earnings
releases will be disappointing. Analysts may also begin reducing estimates for
the balance of the year. Unless the Fed continues to lower short-term interest
rates, the timing could be right for a market setback. We would view an
intermediate-term correction from current levels as normal and healthy; and not
as the beginning of a bear market.
From an industry sector standpoint, we remain broadly diversified with
continued emphasis on stocks of goods/export companies. Within this sector, we
continue to like technology stocks. However, we are deferring new purchases here
based on their recent sharp price increases. Good values are being found in the
specialty and general merchandise retailers. When the consumer returns to the
malls, these stocks should do well.
The Fund remains diversified by asset class, utilizing both bonds and stocks.
The Fund is further diversified as the stocks in the portfolio represent broad
cross-section of corporate America. We are currently positioned for a slowing
economy and for a stock market vulnerable to a setback. A late-summer or autumn
correction would be viewed as an opportunity to reposition the portfolio for an
economy that should be strengthening going into year-end.
11

<PAGE>
EVERGREEN BALANCED FUND
(FORMERLY FIRST UNION BALANCED PORTFOLIO)
STATEMENT OF INVESTMENTS
JUNE 30, 1995
(Photo of scales) (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <C> <S> <C>
COMMON STOCKS -- 55.2%
AEROSPACE/DEFENSE -- 1.6%
100,000 Boeing Co.................... $ 6,262.500
125,000 Rayatheon Co................. 9,703,125
15,965,625
BANKING & FINANCE -- 4.8%
120,000 Bank America Corp............ 6,315,000
267,000 Boatmen's Bancshares, Inc.... 9,411,750
65,000 Central Fidelity Banks,
Inc.......................... 1,982,500
190,000 Corestates Financial Corp.... 6,626,250
97,400 First Virginia Banks, Inc.... 3,652,500
200,000 National City Corp........... 5,875,000
150,000 Nationsbank Corp............. 8,043,750
200,000 NBD Bancorp, Inc............. 6,400,000
48,306,750
BASIC INDUSTRY -- 2.4%
350,000 Hanson PLC -- ADR............ 6,168,750
115,000 International Paper Co....... 9,861,250
130,000 Phelps Dodge Corp............ 7,670,000
23,700,000
CHEMICALS -- 2.7%
41,000 Air Products &
Chemicals, Inc............... 2,285,750
105,000 Dow Chemical Co.............. 7,546,875
140,000 DuPont (E.I.) de Nemours
& Co......................... 9,625,000
150,000 Imperial Chemical Industries,
PLC -- ADR................... 7,312,500
26,770,125
CONGLOMERATE/DIVERSIFIED -- .9%
150,000 Textron, Inc................. 8,718,750
CONSUMER DURABLES -- 1.2%
125,000 General Motors Corp.......... 5,859,375
150,000 Goodyear Tire and
Rubber Co.................... 6,187,500
12,046,875
CONSUMER PRODUCTS -- 2.2%
100,000 Eastman Kodak Co............. 6,062,500
175,000 Nestle S.A. -- ADR........... 9,106,125
504,150 Sunbeam Oster, Inc........... 6,995,081
22,163,706
<CAPTION>
SHARES VALUE
<C> <C> <S> <C>
COMMON STOCKS -- CONTINUED
DATA PROCESSING -- 1.6%
150,000 * COMPAQ Computer Corp......... $ 6,806,250
175,000 Sunguard Data Systems, Inc... 9,143,750
15,950,000
DRUGS -- 1.1%
260,000 Schering-Plough Corp......... 11,472,500
ELECTRONICS -- 2.8%
260,000 GTE Corp..................... 8,872,500
160,000 Hewlett-Packard Co........... 11,920,000
160,000 SBC Communications, Inc...... 7,620,000
28,412,500
ENERGY -- 5.1%
182,000 Chevron Corp................. 8,485,750
145,000 Exxon Corp................... 10,240,625
125,000 Mobil Corp................... 12,000,000
90,000 Royal Dutch Petroleum Co..... 10,968,750
140,000 Texaco, Inc.................. 9,187,500
50,882,625
FINANCE -- 1.0%
220,000 Beneficial Corp.............. 9,680,000
FINANCIAL SERVICES -- .5%
50,000 Federal National Mortgage
Association.................. 4,718,750
FOOD & BEVERAGE -- 2.7%
122,500 CPC International, Inc....... 7,564,375
150,400 McCormick & Co............... 3,233,600
200,000 McDonalds Corp............... 7,825,000
250,000 Seagram Co, Ltd.............. 8,656,250
27,279,225
FOREST PRODUCTS -- 1.2%
250,000 Weyerhaeuser Co.............. 11,781,250
HEALTHCARE & COSMETICS -- .7%
513,900 Tenet Healthcare Corp........ 7,387,313
INSURANCE -- 2.4%
225,000 American General Corp........ 7,593,750
220,000 Providian Corp............... 7,975,000
195,000 Travelers, Inc............... 8,531,250
24,100,000
MACHINERY-DIVERSIFIED -- .6%
150,000 Ingersoll Rand Co............ 5,737,500
</TABLE>
12

<PAGE>
EVERGREEN BALANCED FUND
(FORMERLY FIRST UNION BALANCED PORTFOLIO)
STATEMENT OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1995
(Photo of scales) (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <C> <S> <C>
COMMON STOCKS -- CONTINUED
MANUFACTURING/DISTRIBUTING --
1.3%
260,000 Avnet, Inc................... $12,577,500
17,500 U S Industries, Inc.......... 238,438
12,815,938
MULTI-INDUSTRY -- 5.0%
150,000 Emerson Electric Co.......... 10,725,000
180,000 General Electric Co.......... 10,147,500
55,000 ITT Corp..................... 6,462,500
110,000 Temple Inland, Inc........... 5,238,750
145,000 United Technologies Corp..... 11,328,125
418,500 Westinghouse Electric
Corp......................... 6,120,563
50,022,438
OFFICE EQUIPMENT &
SUPPLIES -- .7%
180,000 Pitney Bowes, Inc............ 6,907,500
OIL & GAS -- 1.1%
75,000 Atlantic Richfield Co........ 8,231,250
100,000 Unocal Corp.................. 2,762,500
10,993,750
REIT'S -- 1.1%
396,800 HealthCare REIT, Inc......... 8,035,200
100,500 Highwood Properties, Inc..... 2,562,750
10,597,950
RETAIL & APPAREL -- 3.3%
114,350 American Stores Co........... 3,216,094
100,000 Dayton Hudson Corp........... 7,175,000
200,000 Dillard Department
Stores, Inc.................. 5,875,000
250,000 Family Dollar Stores, Inc.... 3,687,500
352,800 Fruit Of The Loom, Inc....... 7,452,900
100,000 Sears Roebuck & Co........... 5,987,500
33,393,994
TELEPHONE -- 1.5%
148,000 Bell Atlantic Corp........... 8,288,000
150,000 U.S. West, Inc............... 6,243,750
14,531,750
TOBACCO -- 2.0%
225,000 American Brands, Inc......... 8,943,750
150,000 Philip Morris Cos., Inc...... 11,156,250
20,100,000
<CAPTION>
SHARES VALUE
<C> <C> <S> <C>
COMMON STOCKS -- CONTINUED
TRANSPORTATION -- 1.5%
150,000 Conrail, Inc................. $ 8,343,750
100,000 Norfolk Southern Corp........ 6,737,500
15,081,250
UTILITIES -- 2.2%
268,200 Carolina Power & Light Co.... 8,113,050
150,000 General Public Utility
Corp......................... 4,462,500
450,000 Southern Co.................. 10,068,750
22,644,300
TOTAL COMMON STOCKS
(COST $455,668,937)... 552,162,364
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS -- 18.7%
ASSET-BACKED
SECURITIES -- 1.2%
$ 1,675,626 Fleet Financial Home
Equity Trust,
6.70%, 1/16/06............... 1,683,176
10,000,018 Resolution Trust Corporation,
7.50%, 9/25/22............... 10,108,368
11,791,544
BANKING -- 5.7%
3,000,000 Boatmen's Bancshares, Inc.,
6.75%, 3/15/03............... 2,973,468
1,740,000 DR Structured Finance Corp.,
8.375%, 8/15/15.............. 1,648,650
5,000,000 First Chicago Corp.,
9.875%, 8/15/00.............. 5,685,545
40,000,000 Svenska Handelsbanker,
5.950%, 8/15/95.............. 39,652,000
7,000,000 Wells Fargo & Co.,
5.65%, 8/21/95............... 6,997,879
56,957,542
CHEMICALS -- .6%
5,000,000 Dow Chemical Co.,
8.625%, 4/1/06............... 5,680,065
CONSUMER PRODUCTS -- .6%
5,000,000 General Mills, Inc.,
9.00%, 12/20/02.............. 5,620,240
</TABLE>

<PAGE>
EVERGREEN BALANCED FUND
(FORMERLY FIRST UNION BALANCED PORTFOLIO)
STATEMENT OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1995
(Photo of scales) (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CORPORATE BONDS -- CONTINUED
ENERGY -- 1.2%
$ 4,000,000 Atlantic Richfield Co., 9.00%,
4/1/21........................ $ 4,695,628
2,000,000 BP North America, Inc.,
9.875%, 3/15/04............... 2,413,490
4,400,000 Texaco Capital Corp.,
7.90%, 2/13/97................ 4,516,855
11,625,973
FINANCE AND INSURANCE -- 5.2%
407,931 CIT Group Securitization
Corp.,
4.70%, 6/15/18................ 401,151
12,550,000 Chrysler Financial Corp.,
10.34%, 5/15/08............... 12,954,599
5,500,000 Dean Witter, Discover & Co.,
6.75%, 10/15/13............... 5,089,282
5,500,000 General Electric Capital
Corp.,
8.75%, 3/14/03................ 6,136,559
2,750,000 International Bank for
Reconstruction & Development
Co.,
7.95%, 5/15/16................ 3,024,555
5,000,000 Merrill Lynch Pierce, Fenner &
Smith, Inc.,
7.00%, 4/27/08................ 4,934,450
4,250,000 Norwest Financial, Inc.,
7.10%, 11/15/96............... 4,303,491
10,000,000 Salomon, Inc.,
4.83%, 11/23/95............... 9,929,300
5,000,000 Smith Barney Holdings, Inc.,
5.50%, 1/15/99................ 4,832,390
51,605,777
FOOD AND BEVERAGE -- .4%
4,250,000 PepsiCo, Inc.,
7.625%, 11/1/98............... 4,414,535
HARDWARE & TOOLS -- .4%
4,300,000 Stanley Works,
7.375%, 12/15/02.............. 4,463,916
MEDICAL EQUIPMENT -- .5%
5,000,000 Baxter International, Inc.,
7.25%, 2/15/08................ 5,139,370
POLLUTION CONTROL -- .2%
1,400,000 Waste Management,
International, plc ADS
8.75%, 5/1/18................. 1,593,214
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CORPORATE BONDS -- CONTINUED
SOVEREIGN GOVERNMENT -- .5%
$ 5,000,000 Ontario Province CDA, 7.75%,
6/4/02........................ $ 5,298,595
TOBACCO -- .6%
1,405,000 Philip Morris Cos., Inc.
8.75%, 12/1/96................ 1,450,884
5,000,000 Philip Morris Cos., Inc.,
8.65%, 5/15/98................ 5,272,230
6,723,114
UTILITIES -- .3%
3,600,000 Union Electric Co.,
8.00%, 12/15/22............... 3,785,443
MISCELLANEOUS -- 1.3%
5,000,000 General American
Transportation Corp.,
9.30%, 8/1/95................. 5,015,340
7,000,000 (|)(|) Jet Equipment Trust,
9.41%, 6/15/10................ 7,941,080
12,956,420
TOTAL CORPORATE BONDS
(COST $177,940,824).... 187,655,748
GOVERNMENT BONDS -- 21.6%
9,000,000 Federal Home Loan Mortgage
Corporation,
6.55%, 6/2/98................. 9,020,223
Government National
Mortgage Association
3,549,865 8.50%, 5/15/21................ 3,688,512
2,712,108 8.50%, 7/15/21................ 2,818,034
5,001,962 8.50%, 6/15/22................ 5,197,323
2,944,032 9.00%, 9/15/21................ 3,094,896
5,018,456 9.00%, 10/15/21............... 5,275,620
2,924,599 9.50%, 2/15/21................ 3,100,987
23,175,372
United States Treasury Bills
20,000,000 7.625%, 2/15/07............... 21,300,000
10,000,000 9.125%, 5/15/09............... 11,846,860
10,000,000 9.250%, 1/15/96............... 10,184,360
43,331,220
United States Treasury Bonds
8,000,000 6.375%, 7/15/99............... 8,120,000
10,000,000 7.500%, 2/15/05............... 10,896,860
20,000,000 8.75%, 5/15/17................ 24,675,000
32,400,000 8.875%, 8/15/17............... 40,479,750
84,171,610
</TABLE>

<PAGE>
EVERGREEN BALANCED FUND
(FORMERLY FIRST UNION BALANCED PORTFOLIO)
STATEMENT OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1995
(Photo of scales) (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
GOVERNMENT BONDS -- CONTINUED
United States
Treasury Notes
$ 15,000,000 9.125%, 5/15/18............ $ 19,209,375
10,000,000 8.125%, 2/15/98............ 10,540,610
10,000,000 8.50%, 8/15/95............. 10,034,360
13,000,000 8.625%, 10/15/95........... 13,109,668
3,500,000 8.875%, 11/15/98........... 3,809,526
56,703,539
TOTAL GOVERNMENT BONDS
(COST
$210,271,593)....... 216,401,964
**REPURCHASE AGREEMENT -- 3.2%
32,496,000 Donaldson, Lufkin &
Jenrette Securities Corp.
6.0%, dated 6/30/95, due
7/3/95 (amortized cost).... 32,496,000
TOTAL INVESTMENTS --
98.7% (COST
$876,377,354)......... 988,716,076
OTHER ASSETS AND
LIABILITIES -- NET
1.3%.................. 12,747,890
TOTAL NET ASSETS --
100%.................. $1,001,463,966
</TABLE>

* Non-income producing securities.
** Fully collateralized by U.S. government and/or agency obligations based on
market prices at June 30, 1995.
(|)(|) Restricted security which represents an investment in a security not
registered under the Securities Act of 1933. At June 30, 1995 this
security amounted to .8% of net assets.
ADR -- American Depository Receipts
ADS -- American Depository Shares
REIT -- Real Estate Investment Trust
See accompanying notes to financial statements.
15

<PAGE>
EVERGREEN BALANCED FUND
(FORMERLY FIRST UNION BALANCED PORTFOLIO)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
(Photo of scales) (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $876,377,354)......................................................... $ 988,716,076
Cash........................................................................................................ 1,475
Dividends and interest receivable........................................................................... 7,521,050
Receivable for Fund shares sold............................................................................. 7,497,970
Receivable for investment securities sold................................................................... 395,148
Prepaid expenses............................................................................................ 14,475
Total assets.......................................................................................... 1,004,146,194
LIABILITIES:
Payable for Fund shares repurchased......................................................................... 1,896,578
Payable for investment securities purchased................................................................. 716,716
Accrued expenses............................................................................................ 47,864
Withholding tax liability................................................................................... 21,070
Total liabilities..................................................................................... 2,682,228
NET ASSETS..................................................................................................... $1,001,463,966
NET ASSETS CONSIST OF:
Paid-in capital............................................................................................. $ 876,556,386
Undistributed net investment income......................................................................... 887,267
Undistributed net realized gains............................................................................ 11,681,591
Net unrealized appreciation of investments.................................................................. 112,338,722
Net assets............................................................................................ $1,001,463,966
CALCULATION OF NET ASSET VALUE PER SHARE:
Class A Shares ($41,332,348 3,307,261 shares of beneficial interest outstanding)............................ $ 12.50
Sales charge -- 4.75% of offering price..................................................................... 0.62
Maximum offering price................................................................................ $ 13.12
Class B Shares ($105,706,570 8,450,664 shares of beneficial interest outstanding)........................... $ 12.51
Class C Shares ($247,416 19,802 shares of beneficial interest outstanding).................................. $ 12.49
Class Y Shares ($854,177,632 68,335,466 shares of beneficial interest outstanding).......................... $ 12.50
</TABLE>

See accompanying notes to financial statements.
16

<PAGE>
EVERGREEN BALANCED FUND
(FORMERLY FIRST UNION BALANCED PORTFOLIO)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995
(Photo of scales) (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends.................................................................................... $ 8,596,913
Interest..................................................................................... 15,539,139
Total income........................................................................... 24,136,052
EXPENSES:
Advisory fee................................................................................. $2,377,204
Administrative personnel and services fees................................................... 392,991
Distribution fee-Class A Shares.............................................................. 50,528
Distribution and shareholder services fees-Class B Shares.................................... 507,977
Distribution and shareholder services fees-Class C Shares.................................... 1,083
Custodian fee................................................................................ 110,423
Transfer agent fee........................................................................... 80,986
Registration and filing fees................................................................. 28,392
Professional fees............................................................................ 13,556
Reports and notices to shareholders.......................................................... 10,587
Insurance.................................................................................... 9,934
Trustees' fees and expenses.................................................................. 9,635
Other........................................................................................ 2,793
Total expenses......................................................................... 3,596,089
Net investment income........................................................................... 20,539,963
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments............................................................. 12,066,511
Net change in unrealized appreciation of investments......................................... 95,033,100
Net gain on investments......................................................................... 107,099,611
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................ $127,639,574
</TABLE>

See accompanying notes to financial statements.
17

<PAGE>
EVERGREEN BALANCED FUND
(FORMERLY FIRST UNION BALANCED PORTFOLIO)
(Photo of scales) STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR
JUNE 30, 1995 ENDED
(UNAUDITED) DECEMBER 31, 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................................................... $ 20,539,963 $ 35,492,616
Net realized gain on investments.................................................... 12,066,511 15,321,171
Net change in unrealized appreciation (depreciation) of investments................. 95,033,100 (72,298,630)
Net increase (decrease) in net assets resulting from operations.................. 127,639,574 (21,484,843)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME:
Class A Shares...................................................................... (821,724) (1,519,114)
Class B Shares...................................................................... (1,711,005) (2,795,862)
Class C Shares...................................................................... (3,760) (1,794)
Class Y Shares...................................................................... (17,611,821) (31,021,065)
Total distributions to shareholders from net investment income...................... (20,148,310) (35,337,835)
NET REALIZED GAINS:
Class A Shares...................................................................... -- (699,327)
Class B Shares...................................................................... -- (1,691,363)
Class C Shares...................................................................... -- (3,132)
Class Y Shares...................................................................... -- (13,311,813)
Total distributions to shareholders from net realized gains......................... -- (15,705,635)
Total distributions to shareholders.............................................. (20,148,310) (51,043,470)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold........................................................... 90,952,717 306,060,376
Proceeds from reinvestment of dividends............................................. 19,734,637 49,902,518
Payment for shares redeemed......................................................... (136,628,013) (224,174,850)
Net increase (decrease) from Fund share transactions............................. (25,940,659) 131,788,044
Net increase in net assets....................................................... 81,550,605 59,259,731
NET ASSETS:
Beginning of period................................................................. 919,913,361 860,653,630
End of period (including undistributed net investment income of $887,267 and
$495,614, respectively)........................................................... $1,001,463,966 $ 919,913,361
</TABLE>

See accompanying notes to financial statements.
18

<PAGE>
EVERGREEN BALANCED FUND -- CLASS A AND B SHARES
(FORMERLY FIRST UNION BALANCED PORTFOLIO)
(Photo of scales) FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
JUNE 10,
1991* SIX MONTHS
SIX MONTHS ENDED YEAR ENDED THROUGH ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, DECEMBER 31, JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994 1993 1992 1991 (UNAUDITED) 1994
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period........................ $11.17 $12.07 $11.41 $11.02 $10.00 $11.18 $12.08
Income (loss) from investment
operations:
Net investment income.......... .25 .43 .42 .42 .30 .20 .36
Net realized and unrealized
gain (loss) on investments.... 1.32 (.71) .75 .43 1.08 1.33 (.71)
Total from investment
operations.................. 1.57 (.28) 1.17 .85 1.38 1.53 (.35)
Less distributions to
shareholders from:
Net investment income.......... (.24) (.43) (.42) (.42) (.35) (.20) (.36)
Net realized gains............. -- (.19) (.09) (.04) (.01) -- (.19)
In excess of net investment
income........................ -- -- -- -- -- -- --
Total distributions........... (.24) (.62) (.51) (.46) (.36) (.20) (.55)
Net asset value, end of
period........................ $12.50 $11.17 $12.07 $11.41 $11.02 $12.51 $11.18
TOTAL RETURN(|)................. 14.2% (2.4%) 10.4% 7.9% 11.8% 13.8% (3.0%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)............... $41,332 $41,010 $35,032 $17,408 $334 $105,707 $100,052
Ratios to average net assets:
Expenses....................... .89%(|)(|) .89% .91% .91% .92%(|)(|) 1.64%(|)(|) 1.48%
Net investment income.......... 4.19%(|)(|) 3.69% 3.61% 3.93% 4.38%(|)(|) 3.44%(|)(|) 3.12%
Portfolio turnover rate......... 23% 35% 19% 12% 19% 23% 35%
<CAPTION>

JANUARY 26,
1993*
THROUGH
DECEMBER 31,
1993
<S> <C>
PER SHARE DATA
Net asset value, beginning of
period........................ $11.54
Income (loss) from investment
operations:
Net investment income.......... .34
Net realized and unrealized
gain (loss) on investments.... .65
Total from investment
operations.................. .99
Less distributions to
shareholders from:
Net investment income.......... (.34)
Net realized gains............. (.09)
In excess of net investment
income........................ (.02)
Total distributions........... (.45)
Net asset value, end of
period........................ $12.08
TOTAL RETURN(|)................. 8.7%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)............... $65,475
Ratios to average net assets:
Expenses....................... 1.41%(|)(|)
Net investment income.......... 3.09%(|)(|)
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.
19

<PAGE>
EVERGREEN BALANCED FUND -- CLASS C AND Y SHARES
(FORMERLY FIRST UNION BALANCED PORTFOLIO)
(Photo of scales) FINANCIAL HIGHLIGHTS -- (CONTINUED)
<TABLE>
<CAPTION>
CLASS C SHARES CLASS Y SHARES
SEPTEMBER 2,
SIX MONTHS 1994* SIX MONTHS
ENDED THROUGH ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994 (UNAUDITED) 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period....... $11.17 $12.00 $11.17 $12.07 $11.41 $11.02
Income (loss) from investment operations:
Net investment
income................................... .18 .18 .26 .46 .45 .46
Net realized and unrealized gain (loss) on
investments.............................. 1.34 (.61) 1.33 (.71) .75 .42
Total from investment operations........ 1.52 (.43) 1.59 (.25) 1.20 .88
Less distributions to shareholders from:
Net investment
income................................... (.18) (.21) (.26) (.46) (.45) (.45)
Net realized gains........................ -- (.19) -- (.19) (.09) (.04)
In excess of net investment income........ (.02) -- -- -- -- --
Total distributions...................... (.20) (.40) (.26) (.65) (.54) (.49)
Net asset value, end of period............. $12.49 $11.17 $12.50 $11.17 $12.07 $11.41
TOTAL RETURN(|)............................ 13.7% (3.6%) 14.3% (2.2%) 10.7% 8.2%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted).......................... $247 $195 $854,178 $778,657 $760,147 $520,232
Ratios to average net assets:
Expenses.................................. 1.64%(|)(|) 1.64%(|)(|) .64%(|)(|) .64% .66% .66%
Net investment
income................................... 3.45%(|)(|) 3.23%(|)(|) 4.44%(|)(|) 3.93% 3.86% 4.20%
Portfolio turnover rate.................... 23% 35% 23% 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 class operations.
(|) 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.
20

<PAGE>
EVERGREEN VALUE FUND
(FORMERLY FIRST UNION VALUE PORTFOLIO)
(Photo of Stock Certificate)
A REPORT FROM YOUR
PORTFOLIO MANAGER
BY BILL DAVIS
Given our view of slower economic growth in 1995 and an (Photo of
improved investment climate, the Evergreen Value Fund's Bill Davis)
strategy early in the year was to become less defensive than
it had been in 1994. Funds were gradually committed to "early
cycle" stocks as earnings estimates became more realistic and
prospects for Fed easing increased.
The stock market's rapid advance during the first quarter
and into the second quarter, however, caused us to become more
cautious as time progressed, as we believed the market had
become somewhat extended.

Of particular concern has been the rapid run-up in
technology stocks and the almost speculative atmosphere which exists with some
issues. Unlike many funds which are heavily weighted toward technology, the
Value Fund is taking a cautious posture with an underweighting in technology as
compared with that of the S&P 500 Reinvested Index.*
Other than the previously mentioned underweighting in technology, Evergreen
Value Fund sector weightings are fairly close to those of the S&P. Utilities are
slightly overweighted, since they appear cheap versus other stocks as well as
bonds.
Financials have been reduced to a market weighting -- those stocks have done
well and would suffer if the bond market corrects. Two subsectors that appear
attractive are retailers, which usually perform well in a slowing (but not
recessionary) economy, and conglomerates, where restructuring opportunities are
numerous.
Even though the market is clearly vulnerable to disappointment, a major
correction (i.e., more than 7%) seems unlikely since the advance has been based
on rather sound fundamentals and is broad-based. We believe the Fund is
well-positioned today for a modest stock market correction as it is broadly
diversified and value characteristics remain intact. The Fund's P/E (price to
earnings) ratio is 11.7x, or 25% below the S&P's 15.5x, and its dividend yield
is almost 1% above that of the S&P. Finally, the cash position is now around
10%, reflecting more the absence of values than any fear of a significant market
decline.
* The S&P 500 is a reinvested unmanaged composite index of 425 industrial, 20
transportation, and 55 public utility common stocks.
21

<PAGE>
EVERGREEN VALUE FUND
(FORMERLY FIRST UNION VALUE PORTFOLIO)
STATEMENT OF INVESTMENTS
JUNE 30, 1995
(Photo of Stock Certificate) (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- 91.3%
AEROSPACE/DEFENSE -- 5.3%
306,800 Boeing Co..................... $ 19,213,350
431,200 Raytheon Co................... 33,471,900
52,685,250
BANKING & FINANCE -- 6.1%
410,000 Boatmen's Bancshares, Inc..... 14,452,500
541,200 Central Fidelity Banks, Inc... 16,506,600
337,700 First Tennessee National
Corp.......................... 15,660,838
510,000 National City Corp............ 14,981,250
61,601,188
CHEMICALS/PLASTICS -- 7.7%
605,600 Air Products &
Chemicals, Inc................ 33,762,200
230,000* FMC Corp...................... 15,467,500
255,000 Rohm & Haas Co................ 13,993,125
310,000 Tenneco Inc................... 14,260,000
77,482,825
COMMUNICATION -- .8%
150,000 Harris Corp................... 7,743,750
CONSUMER DURABLES -- 1.6%
535,000 Ford Motor Co................. 15,916,250
CONSUMER PRODUCTS -- 6.6%
804,400 American Brands, Inc.......... 31,974,900
453,500 Philip Morris Cos., Inc....... 33,729,063
65,703,963
ENERGY -- 9.8%
252,600 Atlantic Richfield Co......... 27,722,850
575,000 Chevron Corp.................. 26,809,375
200,000 Exxon Corp.................... 14,125,000
444,900 Texaco, Inc................... 29,196,563
97,853,788
FOOD & BEVERAGE -- 4.5%
545,600 Anheuser Busch Cos., Inc...... 31,031,000
637,500 McCormick & Co................ 13,706,250
44,737,250
HEALTHCARE & COSMETICS -- 4.5%
231,400 Bristol Meyers Squibb Co...... 15,764,125
320,000 Schering-Plough Corp.......... 14,120,000
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS -- CONTINUED
HEALTHCARE & COSMETICS --
CONTINUED
180,000 Warner Lambert Co............. $ 15,547,500
45,431,625
INSURANCE -- 6.7%
1,050,000 American General Corp......... 35,437,500
878,400 Providian Corp................ 31,842,000
67,279,500
MULTI-INDUSTRY -- 4.4%
500,000 General Electric Co........... 28,187,500
139,800 ITT Corp...................... 16,426,500
44,614,000
OFFICE EQUIPMENT -- 3.4%
885,100 Pitney Bowes, Inc............. 33,965,712
PROCESS INDUSTRIES -- 1.6%
450,000 Ball Corp..................... 15,693,750
PRODUCER MANUFACTURING -- 2.4%
300,000 Briggs & Stratton Corp........ 10,350,000
235,000 Textron, Inc.................. 13,659,375
24,009,375
RETAIL & APPAREL -- 10.4%
1,143,000 American Stores Co............ 32,146,875
187,500 Dayton Hudson Corp............ 13,453,125
565,000 Dillard Department
Stores, Inc................... 16,596,875
660,000 May Department Stores Co...... 27,472,500
428,200 Melville Corp................. 14,665,850
104,335,225
TRANSPORTATION -- 3.1%
470,000 Norfolk Southern Corp......... 31,666,250
UTILITIES -- 12.4%
480,000 Carolina Power & Light Co..... 14,520,000
1,088,400 General Public Utility Corp... 32,379,900
865,000 GTE Corp...................... 29,518,125
1,215,700 NICOR, Inc.................... 32,671,937
710,000 Southern Co................... 15,886,250
124,976,212
TOTAL COMMON STOCKS
(COST $801,151,351)........... 915,695,913
</TABLE>

<PAGE>
EVERGREEN VALUE FUND
(FORMERLY FIRST UNION VALUE PORTFOLIO)
STATEMENT OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1995
(Photo of Stock Certificate) (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
<C> <S> <C>
U.S. TREASURY SECURITIES -- 1.0%
$ 10,000,000 U.S. Treasury Notes,
6.50%, 11/30/96
(cost $9,885,156)........... $ 10,096,860
**REPURCHASE AGREEMENT -- 8.2%
82,166,000 Donaldson, Lufkin &
Jenrette Securities Corp.,
6.0%, dated 6/30/95, due
7/3/95 (amortized cost)..... 82,166,000
TOTAL INVESTMENTS --
100.5% (COST
$893,202,507)............... 1,007,958,773
OTHER ASSETS AND
LIABILITIES --
NET (.5)%................... (4,649,938)
NET ASSETS --
100%........................ $1,003,308,835
</TABLE>

* Non-income producing securities.
** Fully collateralized by U.S. government and/or agency obligations based on
market prices at June 30, 1995.
See accompanying notes to financial statements.
23

<PAGE>
EVERGREEN VALUE FUND
(FORMERLY FIRST UNION VALUE PORTFOLIO)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
(Photo of Stock Certificate) (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments at value (identified cost $893,202,507)......................................................... $1,007,958,773
Cash........................................................................................................ 29,988
Dividends and interest receivable........................................................................... 2,454,174
Receivable for Fund shares sold............................................................................. 1,064,078
Total assets.......................................................................................... 1,011,507,013
LIABILITIES:
Payable for Fund shares repurchased......................................................................... 6,922,737
Payable for investment securities purchased................................................................. 1,040,550
Accrued expenses............................................................................................ 234,891
Total liabilities..................................................................................... 8,198,178
NET ASSETS..................................................................................................... $1,003,308,835
NET ASSETS CONSIST OF:
Paid-in capital............................................................................................. $ 867,008,123
Distributions in excess of net investment income............................................................ (664,108)
Undistributed net realized gains............................................................................ 22,208,554
Net unrealized appreciation of investments.................................................................. 114,756,266
Net assets............................................................................................ $1,003,308,835
CALCULATION OF NET ASSET VALUE PER SHARE:
Class A shares ($210,363,459 10,923,649 shares of beneficial interest outstanding)............................ $19.26
Sales charge -- 4.75% of offering price....................................................................... 0.96
Maximum offering price..................................................................................... $20.22
Class B shares ($121,196,530 6,293,064 shares of beneficial interest outstanding)............................. $19.26
Class C shares ($626,156 32,541 shares of beneficial interest outstanding).................................... $19.24
Class Y shares ($671,122,690 34,853,415 shares of beneficial interest outstanding)............................ $19.26
</TABLE>

See accompanying notes to financial statements.
24

<PAGE>
EVERGREEN VALUE FUND
(FORMERLY FIRST UNION VALUE PORTFOLIO)
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995
(Photo of Stock Certificate) (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends.................................................................................... $ 15,610,380
Interest..................................................................................... 1,600,686
Total income.............................................................................. 17,211,066
EXPENSES:
Advisory fee................................................................................. $2,264,453
Administrative personnel and services fees................................................... 374,216
Distribution fee -- Class A shares........................................................... 248,036
Distribution and shareholder services fees -- Class B Shares................................. 560,505
Distribution and shareholder services fees -- Class C Shares................................. 2,799
Transfer agent fee........................................................................... 226,964
Custodian fee................................................................................ 110,852
Registration and filing fees................................................................. 20,102
Professional fees............................................................................ 11,207
Reports and notices to shareholders.......................................................... 10,946
Insurance.................................................................................... 8,725
Trustees' fees and expenses.................................................................. 8,374
Other........................................................................................ 2,881
Total expenses......................................................................... 3,850,060
Net investment income........................................................................... 13,361,006
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments............................................................. 22,849,455
Net change in unrealized appreciation of investments......................................... 109,494,495
Net gain on investments......................................................................... 132,343,950
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................ $145,704,956
</TABLE>

See accompanying notes to financial statements.
25

<PAGE>
EVERGREEN VALUE FUND
(FORMERLY FIRST UNION VALUE PORTFOLIO)
STATEMENT OF CHANGES IN NET ASSETS
(Photo of Stock Certificate)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED
1995 DECEMBER 31,
(UNAUDITED) 1994
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................................................... $ 13,361,006 $ 23,555,892
Net realized gain on investments........................................................ 22,849,455 37,989,054
Net change in unrealized appreciation (depreciation) of investments..................... 109,494,495 (46,787,958)
Net increase in net assets resulting from operations................................. 145,704,956 14,756,988
DISTRIBUTIONS TO SHAREHOLDERS FROM:
NET INVESTMENT INCOME:
Class A Shares.......................................................................... (2,823,593) (5,495,722)
Class B Shares.......................................................................... (1,203,736) (1,952,154)
Class C Shares.......................................................................... (6,031) (2,060)
Class Y Shares.......................................................................... (9,278,469) (15,879,870)
Total distributions to shareholders from net investment income.................... (13,311,829) (23,329,806)
IN EXCESS OF NET INVESTMENT INCOME:
Class B Shares.......................................................................... (50) (24,340)
Class C Shares.......................................................................... (65) (951)
Class Y Shares.......................................................................... (278,638) --
Total distribution to shareholders in excess of net investment income................... (278,753) (25,291)
NET REALIZED GAINS:
Class A Shares.......................................................................... (41,512) (8,939,524)
Class B Shares.......................................................................... (23,772) (4,906,369)
Class C Shares.......................................................................... (122) (22,671)
Class Y Shares.......................................................................... (132,485) (24,431,670)
Total distribution to shareholders from net realized gains.............................. (197,891) (38,300,234)
Total distribution to shareholders................................................... (13,788,473) (61,655,331)
FUND SHARE TRANSACTIONS:
Proceeds from shares sold............................................................... 175,942,182 270,641,999
Proceeds from reinvestment of dividends................................................. 12,802,723 57,894,547
Payment for shares redeemed............................................................. (117,969,326) (194,045,034)
Net increase resulting from Fund share transactions.................................. 70,775,579 134,491,512
Net increase in net assets........................................................... 202,692,062 87,593,169
NET ASSETS:
Beginning of period..................................................................... 800,616,773 713,023,604
End of period (including distributions in excess of net investment income of ($664,108)
and ($434,532), respectively)......................................................... $1,003,308,835 $800,616,773
</TABLE>

See accompanying notes to financial statements.
26

<PAGE>
EVERGREEN VALUE FUND -- CLASS A SHARES
(FORMERLY FIRST UNION VALUE PORTFOLIO)
FINANCIAL HIGHLIGHTS
(Photo of Stock Certificate)
<TABLE>
<CAPTION>
NINE MONTHS
SIX MONTHS ENDED ENDED
JUNE 30, 1995 YEAR ENDED DECEMBER 31, DECEMBER 31,
(UNAUDITED) 1994 1993 1992 1991 1990*
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of
period............................... $16.62 $17.63 $17.11 $17.08 $14.61 $15.12
Income (loss) from investment
operations:
Net investment income................... .26 .52 .47 .44 .46 .36
Net realized and unrealized gain (loss)
on investments....................... 2.64 (.20) 1.10 .89 3.17 (.44)
Total from investment operations..... 2.90 .32 1.57 1.33 3.63 (.08)
Less distributions to shareholders from:
Net investment
income............................... (.26) (.51) (.47) (.43) (.43) (.36)
Net realized gains...................... -- (.82) (.58) (.87) (.73) (.02)
In excess of net investment income...... -- -- -- -- -- (.05)
Total distributions.................. (.26) (1.33) (1.05) (1.30) (1.16) (.43)
Net asset value, end of period.......... $19.26 $16.62 $17.63 $17.11 $17.08 $14.61
TOTAL RETURN(|)......................... 17.5% 1.9% 9.3% 8.0% 25.1% (.5%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted)...................... $ 210,363 $188,807 $189,983 $169,310 $135,565 $104,637
Ratios to average net assets:
Expenses............................. .92%(|)(|) .93% .99% 1.01%(a) .96%(a) 1.39%(|)(|)
Net investment income................ 2.90%(|)(|) 2.96% 2.63% 2.37%(a) 2.78%(a) 3.28%(|)(|)
Portfolio turnover rate (b)............. 36% 70% 46% 56% 69% 13%
</TABLE>

* The Fund changed its fiscal year end from March 31 to December 31.
(|) 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 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 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 includes certain U.S. government obligations.
27

<PAGE>
EVERGREEN VALUE FUND -- CLASS B AND C SHARES
(FORMERLY FIRST UNION VALUE PORTFOLIO)
FINANCIAL HIGHLIGHTS
(Photo of Stock Certificate)
<TABLE>
<CAPTION>
CLASS B SHARES CLASS C SHARES
FEBRUARY 2, SEPTEMBER 2,
SIX MONTHS 1993* SIX MONTHS 1994*
ENDED YEAR ENDED THROUGH ENDED THROUGH
JUNE 30, 1995 DECEMBER 31, DECEMBER 31, JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994 1993 (UNAUDITED) 1994
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period...... $16.62 $17.63 $17.24 $16.61 $18.28
Income (loss) from investment operations:
Net investment income..................... .19 .42 .35 .19 .19
Net realized and unrealized gain (loss) on
investments............................ 2.64 (.20) 1.01 2.63 (.81)
Total from investment operations....... 2.83 .22 1.36 2.82 (.62)
Less distributions to shareholders from:
Net investment income..................... (.19) (.41) (.35) (.19) (.19)
Net realized gains........................ -- (.82) (.58) -- (.82)
In excess of net investment
income................................. -- -- (.04) -- (.04)
Total distributions.................... (.19) (1.23) (.97) (.19) (1.05)
Net asset value, end of period............ $19.26 $16.62 $17.63 $19.24 $16.61
TOTAL RETURN(|)........................... 17.1% 1.3% 8.0% 17.1% (3.4%)
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's
omitted)............................... $121,197 $104,297 $ 59,953 $626 $485
Ratios to average net assets:
Expenses............................... 1.67%(|)(|) 1.53% 1.48%(|)(|) 1.67%(|)(|) 1.68%(|)(|)
Net investment income.................. 2.15%(|)(|) 2.36% 2.09%(|)(|) 2.16%(|)(|) 2.16%(|)(|)
Portfolio turnover rate................... 36% 70% 46% 36% 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.
28

<PAGE>
EVERGREEN VALUE FUND -- CLASS Y SHARES
(FORMERLY FIRST UNION VALUE PORTFOLIO)
FINANCIAL HIGHLIGHTS
(Photo of Stock Certificate)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JANUARY 3, 1991*
JUNE 30, 1995 YEAR ENDED DECEMBER 31, THROUGH DECEMBER
(UNAUDITED) 1994 1993 1992 31, 1991
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value, beginning of period................ $16.61 $17.63 $17.11 $17.08 $14.28
Income from investment operations:
Net investment income............................... .27 .56 .52 .49 .47
Net realized and unrealized gain (loss)
on investments................................... 2.66 (.20) 1.12 .90 3.53
Total from investment operations................. 2.93 .36 1.64 1.39 4.00
Less distributions to shareholders from:
Net investment income............................... (.27) (.56) (.52) (.49) (.47)
Net realized gains.................................. -- (.82) (.58) (.87) (.73)
In excess of net investment income.................. (.01) -- (.02) -- --
Total distributions.............................. (.28) (1.38) (1.12) (1.36) (1.20)
Net asset value, end of period...................... $19.26 $16.61 $17.63 $17.11 $17.08
TOTAL RETURN(|)..................................... 17.7% 2.1% 9.7% 8.3% 25.4%
RATIOS & SUPPLEMENTAL DATA
Net assets, end of period (000's omitted)........... $671,123 $507,028 $463,087 $326,154 $271,391
Ratios to average net assets:
Expenses......................................... .67%(|)(|) .68% .65% .68%(a) .69%(|)(|)(a)
Net investment income............................ 3.12%(|)(|) 3.21% 2.98% 2.90%(a) 3.04%(|)(|)(a)
Portfolio turnover rate............................. 36% 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 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>

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
NOTE 1 -- ORGANIZATION
Evergreen Investment Trust (formerly First Union Funds) (the "Trust") is a
Massachusetts business trust registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management company. The Trust
consisted of seventeen funds at June 30, 1995. The financial statements included
herein are only those of the Evergreen Growth and Income Funds -- Evergreen
Utility Fund ("Utility"), Evergreen Balanced Fund ("Balanced") and Evergreen
Value Fund ("Value") collectively referred to as the "Funds" (see Note 7).
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements. These policies are
in conformity with generally accepted accounting principles.
SECURITY VALUATIONS -- Listed equity securities are valued at the last sale
price reported on the primary national securities exchange on which the security
is traded. U.S. Government obligations, corporate bonds and other fixed income
securities are generally valued at the mean between the over-the-counter bid and
asked price as furnished by an independent pricing service. Short term
securities purchased with remaining maturities of sixty days or less are stated
at amortized cost which approximates market value.
SECURITY TRANSACTIONS -- Security transactions are accounted for on the
date purchased or sold. Net realized gains or losses are determined on the
identified cost basis.
INVESTMENT INCOME AND EXPENSES -- Dividend income is recorded on the
ex-dividend date. Interest income and expenses are accrued daily. Premiums and
discounts paid on securities are amortized or acreted into income as required by
the Internal Revenue Code, as amended, (the "Code").
REPURCHASE AGREEMENTS -- Securities pledged as collateral for repurchase
agreements are held by the Federal Reserve Bank and are designated as being held
on the Funds' behalf by its custodian under a book-entry system. The Funds
monitor the adequacy of the collateral on a daily basis, and can require the
seller to provide additional collateral in the event the market value of the
securities pledged falls below the carrying value of the repurchase agreement,
including accrued interest. The Funds will only enter into repurchase agreements
with banks and other financial institutions which are deemed by the Funds'
investment adviser to be creditworthy pursuant to guidelines established by the
Trustees.
DIVIDENDS TO SHAREHOLDERS -- Dividends from net investment income for
Utility are declared and paid monthly. Dividends from net investment income for
Balanced and Value are declared and paid quarterly. Dividends from net realized
capital gains on investments, if any, will be distributed at least annually.
Income distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. To the extent these differences are permanent in nature, such
amounts are reclassified within the capital accounts.
INCOME TAXES -- It is each Fund's policy to meet the requirements of the
Code applicable to regulated investment companies and to distribute
substantially all of its taxable net income to its shareholders. Accordingly, no
provisions for federal income or excise taxes are necessary. To the extent that
realized capital gains can be offset by capital loss carryforwards, it is the
Funds' policy not to distribute such gains. At December 31, 1994 (the Fund's
most recent fiscal year end), Utility had capital loss carryforward of $42,434.
Pursuant to the Code, this capital loss carryforward will expire in 2002.
WHEN ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Funds record
when-issued or delayed delivery transactions on the trade date and maintain
security positions such that sufficient liquid assets will be available to make
payment for the securities purchased. Securities purchased on a when-issued or
delayed delivery basis are marked to market daily and begin earning interest on
the settlement date.
30

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED
(UNAUDITED)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES -- Continued
DEFERRED EXPENSES -- The costs incurred by each Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being amortized
using the straight-line method not to exceed a period of five years from the
Fund's commencement.
NOTE 3 -- INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY AGREEMENT -- First Union National Bank of North
Carolina (the "Adviser"), each Fund's investment adviser, is entitled to a fee
of .50 of 1% of the average daily net assets of each Fund pursuant to an
investment advisory agreement. For Utility, the Adviser voluntarily waived
$84,871 of its advisory fees for the six month period ended June 30, 1995. The
Adviser can modify or terminate this voluntary waiver at any time.
ADMINISTRATIVE AGREEMENT -- Federated Investor Services ("FAS") provided
each Fund with certain administrative personnel and services including certain
clerical and recordkeeping services for the six-month period ended June 30, 1995
(see Note 7). In addition, certain of the Trust's officers and Trustees were
officers or directors of FAS. FAS' fee was based on the level of average net
assets of the Trust for the period, subject to a minimum fee for each Fund. For
Utility, FAS voluntarily waive its fee of $16,382 for the six month period ended
June 30, 1995.
PLAN OF DISTRIBUTION AND SHAREHOLDER SERVICING -- The Trust has adopted a
Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the
terms of the Plan, the Trust compensated Federated Securities Corp. ("FSC"), the
principal distributor, from the net assets of all of the funds in the Trust to
finance activities intended to result in the sale of Class A, Class B and Class
C shares (see Note 7). The Plan provides that the Funds may incur distribution
expenses up to .75 of 1% of the average daily net assets of the Class A, Class B
and Class C shares, annually, to finance such activities. For the six-month
period ended June 30, 1995, FSC limited its fees on Class A shares to .25 of 1%
of Class A shares average daily net assets for each Fund.
Under the terms of a Shareholder Services Agreement with First Union
Brokerage Services ("FUBS"), the Funds will pay FUBS up to .25 of 1% of average
daily net assets of the Funds' Class B and Class C shares for the period. This
fee is designed to obtain certain services for shareholders and to maintain the
shareholder accounts.
TRANSFER AND DIVIDEND DISBURSEMENT AGENT -- Federated Services Company
("FServ") served as Transfer and dividend disbursing agent for the Trust for the
six-month period ended June 30, 1995 (see Note 7). FServ's fee was based on the
size, type and number of accounts and transactions made by shareholders.
ORGANIZATIONAL EXPENSES -- Organizational expenses for Utility were borne
initially by FAS. Utility has agreed to reimburse FAS for such organizational
expenses during the five-year period following the date it commenced operations.
Pursuant to these arrangements, for the six months ended June 30, 1995, the
Utility paid and has a remaining liability as follows:
<TABLE>
<CAPTION>
COMMENCEMENT ORGANIZATIONAL
OF ORGANIZATIONAL EXPENSES
OPERATIONS EXPENSES PAID REMAINING
<S> <C> <C>
1/1/94 $3,333 $ 38,538
</TABLE>

As a result of the change in the administration agreement (see Note 7), the
Adviser purchased the remaining unreimbursed initial organizational expenses
from FAS. No change will be made to the payment schedule as a result of this
transaction.
31

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED
(UNAUDITED)
NOTE 4 -- INVESTMENT TRANSACTIONS
The cost of purchases and proceeds from sales of investments, excluding
short-term securities, for the six months ended June 30, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
<S> <C> <C>
Utility......................................................................................... $ 14,316,614 $ 12,694,816
Balanced........................................................................................ 201,723,579 192,947,680
Value........................................................................................... 322,825,333 292,499,422
</TABLE>

On June 30, 1995, the composition of unrealized appreciation and
depreciation of investment securities based on the aggregate cost of investments
for federal tax purposes was as follows:
<TABLE>
<CAPTION>
APPRECIATION DEPRECIATION NET
<S> <C> <C> <C>
Utility......................................................................... $ 2,299,646 ($1,424,691 ) $ 874,955
Balanced........................................................................ 120,367,493 (8,028,771 ) 112,338,772
Value........................................................................... 115,716,361 (2,014,486 ) 113,701,875
</TABLE>

NOTE 5 -- SHARES OF BENEFICIAL INTEREST
There is an unlimited number of no par value shares of beneficial interest
authorized for each of the Funds. The shares are divided into four classes which
are designated Class A, Class B, Class C and Class Y shares. Class A shares are
offered with a front-end sales charge of 4.75%. 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 1%
contingent deferred sales charge on shares redeemed within the first year of
purchase. Class Y shares are sold without a sales charge and are available only
to investment advisory clients of the Adviser and its affiliates, certain
institutional investors and Class Y shareholders of record of certain other
funds managed by the Adviser and its affiliates as of December 30, 1994. All
classes have identical voting, dividend, liquidation and other rights, except
that certain classes bear different distribution expenses (see Note 3) and have
exclusive voting rights with respect to their distribution plan.
32

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED
(UNAUDITED)
NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- Continued
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994*
UTILITY SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
CLASS A
Shares sold.............................................................. 68,217 $ 643,790 1,050,103 $10,216,835
Shares issued on reinvestment of dividends............................... 9,923 93,152 17,247 160,044
Shares redeemed.......................................................... (72,466) (677,888) (601,659) (5,692,851)
Net increase............................................................. 5,674 59,054 465,691 4,684,028
CLASS B
Shares sold.............................................................. 245,058 2,300,570 3,519,138 33,433,097
Shares issued on reinvestment of dividends............................... 54,656 513,316 85,030 784,986
Shares redeemed.......................................................... (341,738) (3,199,626) (406,297) (3,732,308)
Net increase (decrease).................................................. (42,024) (385,740) 3,197,871 30,485,775
CLASS C
Shares sold.............................................................. 2,355 22,121 14,069 129,494
Shares issued on reinvestment of dividends............................... 284 2,667 130 1,182
Shares redeemed.......................................................... (1,117) (10,446) -- --
Net increase............................................................. 1,522 14,342 14,199 130,676
CLASS Y
Shares sold.............................................................. 103,930 998,315 580,992 5,509,538
Shares issued on reinvestment of dividends............................... 816 7,805 20,357 187,784
Shares redeemed.......................................................... (45,396) (442,167) (23,687) (216,082)
Net increase............................................................. 59,350 563,953 577,662 5,481,240
Total net increase resulting from Fund share transactions................ 24,522 $ 251,609 4,255,423 $40,781,719
</TABLE>

* For Class A and B Shares, the Fund share transaction activity is for the
period January 4, 1994 (commencement of class operations) through December
31, 1994. For Class C Shares, the Fund share transaction activity is for the
period September 2, 1994 (commencement of class operations) through December
31, 1994. For Class Y Shares, the Fund share transaction activity is for the
period February 28, 1994 (commencement of class operations) through December
31, 1994.
33

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED
(UNAUDITED)
NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- Continued
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994*
BALANCED AMOUNT SHARES AMOUNT
SHARES
<S> <C> <C> <C> <C>
CLASS A
Shares sold...................................................... 76,754 $ 913,888 1,428,629 $ 17,003,092
Shares issued on reinvestment of dividends....................... 65,845 790,354 186,207 2,147,984
Shares redeemed.................................................. (506,456) (5,960,295) (845,164) (9,900,621)
Net increase (decrease).......................................... (363,857) (4,256,053) 769,672 9,250,455
CLASS B
Shares sold...................................................... 166,676 1,965,737 4,255,156 50,429,083
Shares issued on reinvestment of dividends....................... 136,161 1,637,207 374,859 4,311,708
Shares redeemed.................................................. (800,089) (9,419,017) (1,102,578) (12,868,198)
Net increase (decrease).......................................... (497,252) (5,816,073) 3,527,437 41,872,593
CLASS C
Shares sold...................................................... 2,701 32,377 17,041 196,697
Shares issued on reinvestment of dividends....................... 297 3,578 438 4,924
Shares redeemed.................................................. (675) (8,138) -- --
Net increase..................................................... 2,323 27,817 17,479 201,621
CLASS Y
Shares sold...................................................... 7,394,783 88,040,715 20,165,185 238,431,504
Shares issued on reinvestment of dividends....................... 1,439,706 17,303,498 3,761,875 43,437,902
Shares redeemed.................................................. (10,201,006) (121,240,563) (17,187,695) (201,406,031)
Net increase (decrease).......................................... (1,366,517) (15,896,350) 6,739,365 80,463,375
Total net increase (decrease) resulting from Fund share
transactions................................................... (2,225,303) ($25,940,659) 11,053,953 $131,788,044
</TABLE>

* For Class C Shares, the Fund share transaction activity is for the period
September 2, 1994 (commencement of class operations) through December 31,
1994.
34

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED
(UNAUDITED)
NOTE 5 -- SHARES OF BENEFICIAL INTEREST -- Continued
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994*
VALUE AMOUNT SHARES AMOUNT
SHARES
<S> <C> <C> <C> <C>
CLASS A
Shares sold........................................................ 328,150 $ 5,920,926 1,358,029 $ 23,876,719
Shares issued on reinvestment of dividends......................... 153,111 2,819,896 839,511 14,241,623
Shares redeemed.................................................... (917,814) (16,486,220) (1,612,008) (28,379,135)
Net increase (decrease)............................................ (436,553) (7,745,398) 585,532 9,739,207
CLASS B
Shares sold........................................................ 381,708 6,850,417 3,054,952 53,734,405
Shares issued on reinvestment of dividends......................... 64,338 1,185,953 393,979 6,650,920
Shares redeemed.................................................... (426,985) (7,643,215) (575,508) (10,093,747)
Net increase....................................................... 19,061 393,155 2,873,423 50,291,578
CLASS C
Shares sold........................................................ 3,459 60,981 27,701 488,315
Shares issued on reinvestment of dividends......................... 338 6,224 1,540 25,674
Shares redeemed.................................................... (463) (8,357) (34) (589)
Net increase....................................................... 3,334 58,848 29,207 513,400
CLASS Y
Shares sold........................................................ 9,045,607 163,109,858 10,949,430 192,542,560
Shares issued on reinvestment of dividends......................... 477,119 8,790,650 2,177,091 36,976,330
Shares redeemed.................................................... (5,185,489) (93,831,534) (8,880,310) (155,571,563)
Net increase....................................................... 4,337,237 78,068,974 4,246,211 73,947,327
Total net increase resulting from Fund share transactions.......... 3,923,079 $ 70,775,579 7,734,373 $134,491,512
</TABLE>

* For Class C Shares, the Fund share transaction activity is for the period
September 2, 1994 (commencement of class operations) through December 31,
1994.
NOTE 6 -- RESTRICTED SECURITIES
Restricted securities are securities that may only be resold upon
registration under federal securities laws or in transactions exempt from such
registration. The Funds' restricted securities are valued at the price provided
by dealers in the secondary market or, if no market prices are available, at the
fair value as determined by the Funds' pricing committee. Additional information
on restricted securities held at June 30, 1995 is as follows:
<TABLE>
<CAPTION>
FUND SECURITY ACQUISITION DATE ACQUISITION COST
<S> <C> <C> <C>
Balanced Jet Equipment Trust 12/20/94 $7,000,000
</TABLE>

<PAGE>
COMBINED NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995 -- CONTINUED
(UNAUDITED)
NOTE 7 -- SUBSEQUENT EVENTS
Effective July 1, 1995, the First Union Value Portfolio acquired
substantially all of the net assets by a non-taxable exchange of 5,502,193
shares of ABT Growth and Income Fund for 3,289,535 shares of the First Union
Value Portfolio. The net assets of ABT Growth and Income Fund acquired included
unrealized appreciation of $10,278,721. The aggregate net assets of First Union
Value Portfolio immediately after the combination were $935,777,632. Also
effective July 1, 1995, the First Union Utility Portfolio acquired substantially
all of the net assets by a non-taxable exchange of 8,586,399 shares of ABT
Utility Fund for 10,160,068 shares of First Union Utility Portfolio. The net
assets of ABT Utility Fund acquired included unrealized appreciation of
$6,321,522. The aggregate net assets of First Union Utility Portfolio
immediately after the combination were $140,913,190.
Pursuant to a contract approved by the Trustees on April 20, 1995,
effective July 7, 1995, Evergreen Asset Management Corp. and Boston Financial
Data Services became the Administrator and transfer agent respectively.
Evergreen Funds Distributor, Inc., a wholly owned subsidiary of Furman Selz,
Inc., became the Funds' distributor and sub-administrator. In addition, officers
of Furman Selz, Inc. became the Trust's officers.
Effective July 7, 1995, each of the Funds changed their names as follows:
<TABLE>
<CAPTION>
FORMER NAME NEW NAME
<S> <C>
First Union Utility Portfolio Evergreen Utility Fund
First Union Balanced Portfolio Evergreen Balanced Fund
First Union Value Portfolio Evergreen Value Fund
</TABLE>

<PAGE>
TRUSTEES AND OFFICERS
TRUSTEES:
Mr. James S. Howell, Chairman
Mr. Gerald M. McDonnell
Mr. Thomas L. McVerry
Mr. William W. Pettit
Mr. Russell A. Salton, III M.D.
Mr. Michael S. Scofield
OFFICERS (EFFECTIVE JULY 7, 1995):
John J. Pileggi
President and Treasurer
Joan V. Fiore
Secretary
Sheryl Hirschfeld
Assistant Secretary
Donald E. Brostrom
Assistant Treasurer
Stephen W. St. Clair
Assistant Treasurer