<PAGE>
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Vestaur Securities, Inc.
File No. 811-2320; 2-47081
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
5) Total fee paid:
-----------------------------------------------------------------------
<PAGE>
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount Previously Paid:
----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
3) Filing Party:
----------------------------------------------------------------------
4) Date Filed:
----------------------------------------------------------------------
-2-
<PAGE>
VESTAUR SECURITIES, INC.
123 South Broad Street,
Philadelphia, Pennsylvania 19109
--------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2000
--------------
TO THE STOCKHOLDERS
OF VESTAUR SECURITIES, INC.
Notice is hereby given that the Annual Meeting of Stockholders of Vestaur
Securities, Inc. (the "Fund") will be held on Wednesday, May 10, 2000, at
11:00 a.m. local time, at the Greater Philadelphia Chamber of Commerce, 200
South Broad Street, Suite 700, Philadelphia, PA 19102, for the following
purposes:
1. To elect a Board of nine Directors to serve until the next annual
meeting and until their successors shall have been elected and qualified.
2. To ratify the action of the Board of Directors in selecting Deloitte &
Touche, LLP as auditors to examine the books and financial statements of
Vestaur Securities, Inc., for the period commencing December 1, 1999 and
ending November 30, 2000.
3. To amend the Fund's investment objective to clarify the securities
available for investment by the Fund.
4. The transaction of such other business as may properly be brought
before the meeting.
Stockholders of record at the close of business on March 24, 2000 will be
entitled to vote at the Annual Meeting. A complete list of the stockholders
entitled to vote at the meeting shall be available for examination by any
stockholder at the principal office of the Fund during normal business hours
from April 29, 1999 until the commencement of the meeting, at which time the
list will be available at the place of the meeting.
It is hoped that you will attend the meeting, but if you cannot do so,
please fill in and sign the enclosed proxy, and return it in the accompanying
envelope as promptly as possible. Any stockholder attending can vote in person
even though a proxy has already been returned.
By Order of the Board of Directors
KAREN G. BATER
Secretary and Vice President
Philadelphia, Pennsylvania
April 9, 2000
<PAGE>
VESTAUR SECURITIES, INC.
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by and
on behalf of the Board of Directors of Vestaur Securities, Inc. ("Vestaur" or
the "Fund") for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at the Greater Philadelphia Chamber of Commerce, 200 South
Broad Street, Suite 700, Philadelphia, Pennsylvania 19102, on Wednesday, May
10, 2000 at 11:00 a.m., local time. The address of the principal office of the
Fund is 123 South Broad Street, Philadelphia, Pennsylvania 19109.
Proxy Solicitation
All proxies in the enclosed form which are properly executed and returned to
the Fund will be voted as provided therein at the Annual Meeting or at any
adjournments thereof. A stockholder executing and returning a proxy has the
power to revoke it at any time before it is exercised by giving written notice
of such revocation to the Secretary of the Fund. Signing and mailing the proxy
will not affect your right to give a later proxy or to attend the Annual
Meeting and vote your shares in person.
The Board of Directors intends to bring before the meeting the matters set
forth in Items 1 through 3 in the foregoing notice. The persons named in the
enclosed proxy and acting thereunder will vote with respect to Items 1 through
3 in accordance with the directions of the stockholders as specified on the
proxy card; if no choice is specified, the shares will be voted FOR the
election of the nine directors named under Item 1; FOR ratification of Deloitte
& Touche, LLP as auditors under Item 2; and FOR the amendment to the investment
objective to clarify securities available for the Fund's investment under Item
3. If any other matters are properly presented to the meeting for action, it is
intended that the persons named in the enclosed proxy and acting thereunder
will vote in accordance with the views of management thereon. Abstentions and
broker non-votes are counted for quorum purposes. With regard to the election
of directors, votes may be cast in favor or withheld; votes that are withheld
will be excluded entirely from the vote and will have no effect. Abstentions
will be excluded from a vote on the proposal to ratify approval of accountants.
For this reason, abstentions and broker non-votes will have no effect on the
proposal to ratify approval of accountants because it requires the affirmative
vote of a majority of shares cast at the meeting. An abstention will have the
effect of a vote against Item 3, the proposal to amend the Fund's objective.
Under the rules of the New York Stock Exchange, Inc., brokers who hold shares
in street name for customers have the authority to vote on certain items when
they have not received instructions from beneficial owners. Brokers that do not
receive instructions are entitled to vote on the election of directors.
The affirmative vote of a plurality of the shares present in person or
represented by proxy at the meeting is required for the election of Directors
(Item 1) and the affirmative vote of a majority of the shares cast at the
meeting is required for ratification of the selection of independent public
accountants (Item 2). Approval of the amendment to the investment objective
(Item 3) requires the affirmative vote of a "majority of the outstanding voting
securities." The term "majority of the outstanding voting securities" means the
vote, at the annual meeting of the security holders, (a) of 67% or more of the
voting securities present at such meeting, if the holders of more than 50% of
the outstanding voting securities are present or represented by proxy; or (b)
of more than 50% of the outstanding voting securities.
In the event a quorum is not present at the meeting or in the event that a
quorum is present but sufficient votes to approve the proposed item are not
received, the persons named as proxies may propose one or more
2
<PAGE>
adjournments of the meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of those shares
represented at such meeting in person or by proxy. The persons named as proxies
will vote those proxies that they are entitled to vote FOR any such proposal,
IN FAVOR of such an adjournment, and will vote those proxies required to be
voted AGAINST any such proposal, AGAINST any such adjournment.
The Fund will bear the costs of preparing, printing and mailing this proxy
statement, the proxies and any additional materials which may be furnished to
stockholders. Solicitation may be undertaken by mail, telephone, facsimile and
personal contact. The Fund has engaged Corporate Investor Communications, Inc.
to solicit proxies from brokers, banks, other institutional holders and
individual stockholders for a fee of approximately $4,500. This fee will be
borne by the Fund. The Annual Report of the Fund has been mailed to all
stockholders entitled to vote at the Annual Meeting. The Fund will furnish,
without charge, a copy of the Annual Report to a stockholder upon request.
Stockholder requests should be directed to Carol Kosel, Evergreen Funds, 200
Berkeley Street, Boston, Massachusetts 02116-5034. Telephone by collect call to
(617) 210-3231. This proxy statement and form of proxy were first sent to
stockholders on or about April 9, 2000.
Voting Securities and Principal Holders Thereof
Holders of Common Stock of the Fund of record at the close of business March
24, 2000 will be entitled to vote at the Annual Meeting or any adjournment
thereof. As of January 31, 2000, the Fund has outstanding 6,794,105 shares of
Common Stock. The stockholders are entitled to one vote per share of Common
Stock on all business of the Annual Meeting. To the knowledge of the Fund,
there is no beneficial owner of more than 5% of the outstanding Common Stock of
the Fund.
The officers and directors of the Fund as a group beneficially own in the
aggregate 5,085.327 shares (.07%) of the outstanding Common Stock of the Fund
and less than 1% of the outstanding securities of First Union Corporation
("First Union"), parent of First Union National Bank ("FUNB" or the "Adviser"),
respectively.
I. ELECTION OF DIRECTORS (Proposal 1)
At the Annual Meeting nine Directors, constituting the entire Board of
Directors of the Fund, are to be elected to hold office until the next annual
meeting and until their successors are elected and shall have qualified. If any
nominee for any reason becomes unable to serve, the persons named as proxies
will vote for the election of such other persons as they believe will carry on
the present policies of the Fund and as they deem to be qualified. The Board of
Directors has no reason to believe that any of the nine nominees will be unable
to serve. Mr. Jansing was previously a Director of the Fund from its inception
in 1972 until his resignation in July, 1974. The ages, principal occupations
and certain other affiliations of the nominees, the amount of stock owned
beneficially, directly or indirectly, in the Fund and the years they first
became Directors of the Fund are as follows:
3
<PAGE>
<TABLE>
<CAPTION>
Shares Owned
Beneficially,
Age, Principal First directly or Percent of
Occupation and Other Became indirectly Class
Name and Address Affiliations Director 3/24/00 3/24/00
---------------- -------------------- -------- ------------- ----------
<C> <S> <C> <C> <C>
Steven S. Elbaum (51) Chairman and Chief 1999 -0- --
1790 Broadway Executive Officer of The
New York, NY 10019 Alpine Group, Inc.
(Holding Company;
telecommunication and
electronics); Chairman
of the Board and Chief
Executive Officer of
Superior Telecom Inc.;
Chairman of the Board of
PolyVision Corporation
(Information Display);
Former Director of
Interim Services, Inc.
Paul B. Fay, Jr. (81) President, The Fay 1972 1,694.578 --
3766 Clay Street Improvement Company
San Francisco, CA 94118 (Service Provider to
Money Managers); Trustee
of Odell Charitable
Foundation and Naval War
College Foundation
(Emeritus); Director of
First American Financial
Corporation (Financial
Holding Company);
Director, Compensation
Resource Group
Incorporated (National
Executive Compensation
Consulting firm).
#Robert F. Gurnee (72) Chairman, Financial 1991 200 --
102 Santomera Lane Integrity Group, Inc.
Fairthorne (Bank and Financial
Greenville, DE 19807 Services Consulting
firm); Director, Japan
Equity Fund, Inc., The
Thai Capital Fund;
formerly, Chairman,
Sears Roebuck Acceptance
Corporation and Sears
Receivables Financing
Group; Vice President
and Corporate Treasurer,
Sears, Roebuck and Co.
*
**Glen T. Insley (53) Chairman of the 1998 300 --
Two First Union Center Board, Senior Vice
NC-1157 President of FUNB;
301 South Tryon Street Managing Director of
Charlotte, NC 28288 Fixed Income, First
Capital Group.
#John C. Jansing, Sr. (74) Director, Lord 1972 1,000 --
162 S. Beach Road Abbett & Co. (Managed
Hobe Sound, FL 33455 Group of Mutual Funds);
Director, Alpine Group
Inc.; formerly,
Chairman, Independent
Election Corporation of
America.
Charles P. Pizzi (49) President, Greater 1997 -0- --
200 S. Broad Street Philadelphia Chamber of
Suite 700 Commerce.
Philadelphia, PA 19102
#
**Philip R. Reynolds (72) Treasurer and 1972 1,181.315
43 Montclair Drive Trustee of J. Walton
West Hartford, CT 06107 Bissell Foundation;
formerly, Executive Vice
President, Investments,
Phoenix Mutual Life
Insurance Co.
**Marciarose Shestack (65) Freelance broadcast 1972 709.434
Parkway House journalist and public
2201 Pennsylvania Ave. relations consultant;
Philadelphia, PA 19130 formerly, Consultant of
Philadelphia Developers
Alliance, and President,
Philadelphia Developers
Alliance.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Shares Owned
Beneficially,
Age, Principal First directly or Percent of
Occupation and Other Became indirectly Class
Name and Address Affiliations Director 3/24/00 3/24/00
---------------- -------------------- -------- ------------- ----------
<C> <S> <C> <C> <C>
Robert E. Shultz (60) Senior Vice 1999 -0- --
120 Scarlet Oak Dr. President, The Common
Wilton, CT 06897 Fund; formerly Managing
Director of Client
Relations, Trust Company
of the West; Chairman,
Membership Committee,
Institute for
Quantitative Research in
Finance; Director, LIM
Asia Special Fund;
Partner, Summit
Fiduciary Services.
</TABLE>
- ------------------
# Member of Audit Committee
* Interested Person
** Member of Executive Committee
Under the Investment Company Act of 1940, as amended (the "1940 Act"), Mr.
Insley is an "interested person" of the Fund because he is an officer of the
Adviser. Mr. Pizzi is not considered an "interested person" of the Fund;
however, the Greater Philadelphia Chamber of Commerce is a party to an
investment advisory agreement with the Adviser and maintains certain banking
and trust relationships with First Union. The Fund does not believe that the
relationships are material business relationships. If these circumstances
change, the Board of Directors will determine whether any action is required to
change the composition of the Board.
The officers of the Fund, the period during which each has served, their
ages, principal occupations during the last five years including offices held
with the Adviser, First Union and its affiliated companies and beneficial
ownership of shares of the Common Stock of First Union are as follows:
<TABLE>
<CAPTION>
Common
First Union(1) Stock
Shares Owned Options to
Beneficially Purchase
Name, Age and Office Principal Occupation 3-24-00 3-24-00
-------------------- -------------------- -------------- ----------
<C> <S> <C> <C>
Glen T. Insley (53) Senior Vice President of 6,489(2) 17,800
Chairman of the Board FUNB, Managing Director
since 1998. of Fixed Income, FUNB,
First Capital Group.
Dung Vukhac (56) Senior Vice President of 15,647(3) 14,110
President since 1995. FUNB; formerly, Managing
Director, Senior Vice
President, Fixed Income
Services, CoreStates
Investment Advisers,
Inc. since 1987;
Previously, Securities
Analyst, Economist, Vice
President and Fixed
Income Manager, Trust
Department, Philadelphia
National Bank.
J.P. Weaver (40) Director of Fixed Income 4,500(4) 3,300
Vice President since 1999. Research and Portfolio
Manager, First Capital
Group; Senior Vice
President of FUNB.
Karen G. Bater (41) Portfolio Manager of 2,750 5,203
Vice President and FUNB; formerly Assistant
Secretary since 1999. Vice President of the
Fund (1992-1999). Senior
Vice President of FUNB;
formerly, Vice President
and Assistant Vice
President, CoreStates
Investment Advisers,
Inc. since 1986.
Carol Kosel (36) Senior Vice President, 1,080 2,500
Treasurer since 1999. Director of Fund
Administration,
Evergreen Investment
Services, Inc.
</TABLE>
- ------------------
(1) First Union has approximately 988.3 million shares of Common Stock
outstanding.
(2) Mr. Insley has shared voting power with respect to 1,020 shares.
5
<PAGE>
(3) Mr. Vukhac has shared voting power with respect to these shares.
(4) Mr. Weaver has shared voting power with respect to these shares.
All officers are elected to one-year terms. All officers and directors may be
reached through the principal offices of the Fund at 123 South Broad Street,
Philadelphia, Pennsylvania 19109. The Fund had no Nominating or Compensation
Committees during fiscal year 1999. The Board of Directors held four regular
meetings in fiscal year 1999.
Unless instructed by the stockholders to refrain from so voting, it is the
intention of the persons named as proxies to vote for election of the nine
nominees listed above as Directors. Provided that a quorum is present, a
plurality of the votes validly cast at the meeting is required to elect each of
the Directors.
OTHER REMUNERATION AND AFFILIATIONS OF OFFICERS AND DIRECTORS
Each of the eight directors of the Fund who are not affiliated persons (as
defined in the 1940 Act) of the Adviser, or of First Union, its parent,
receives an annual fee of $7,000, and $200 for each Board meeting attended, as
compensation for services. The Fund also pays such Board members $100 for each
Executive Committee Meeting attended and $150 for each Audit Committee Meeting
attended. The Fund also reimburses all Directors who are not affiliated persons
for expenses incurred in connection with attending meetings of the Board of
Directors. For the year ended November 30, 1999 aggregate Directors fees paid
were $59,200 and expenses paid were $12,184 (see table below). Fees, salaries
or other remuneration of officers of the Fund who also serve as directors,
officers, employees or special consultants to the Adviser or any of their
affiliated companies are borne by the Adviser or First Union affiliate for whom
the individual serves. All present officers are covered by this provision, and
did not receive any compensation or expense reimbursement from the Fund.
<TABLE>
<CAPTION>
Total Compensation
From Registrant and
Aggregate Fund Complex
Compensation from Paid to Directors
Name of Person Registrant for Fiscal For Fiscal Year
and Position Year Ended 11-30-99 Ended 11-30-99
- -------------- --------------------- -------------------
<S> <C> <C>
Steven S. Elbaum, Director $5,850.00 $5,850.00
Paul B. Fay, Jr., Director $7,800.00 $7,800.00
Robert F. Gurnee, Director $8,100.00 $8,100.00
Glen T. Insley, Director -0- -0-
John C. Jansing, Sr., Director $8,100.00 $8,100.00
Charles P. Pizzi, Director $7,800.00 $7,800.00
Philip R. Reynolds, Director $7,900.00 $7,900.00
Marciarose Shestack, Director $7,800.00 $7,800.00
Robert E. Shultz, Director $5,850.00 $5,850.00
</TABLE>
II. RATIFICATION OF APPOINTMENT OF AUDITORS (Proposal 2)
At a meeting held on December 8, 1999, the Board of Directors, including a
majority of those Directors who are not interested persons of the Fund,
selected Deloitte & Touche, LLP, the current auditors for the
6
<PAGE>
Fund, as auditors to examine the Fund's books and securities and to certify
from time to time the Fund's financial statements for the period December 1,
1999 to November 30, 2000, subject to ratification by the stockholders of the
Fund. The firm has no direct or indirect material interest in the Fund.
Representatives of Deloitte & Touche, LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do
so, and they will be available to respond to appropriate questions. A majority
vote of the shares represented in person and by proxy at the meeting is
necessary to ratify the selection of the auditors.
The Board of Directors has appointed an Audit Committee consisting of Philip
Reynolds, John C. Jansing, Sr. and Robert F. Gurnee. The purpose of this
Committee is to evaluate financial management, meet with the auditors and deal
with other matters of a financial nature that they deem appropriate. The
Committee met twice during fiscal year 1999.
III. PROPOSAL TO AMEND THE FUND'S INVESTMENT OBJECTIVE
At a meeting of the Fund's Board of Directors on March 8, 2000, the directors
approved a proposed amendment to the Statement of the Fund's fundamental
investment objective to clarify the securities available for investment by the
Fund and changes to the Fund's non-fundamental investment policies, including
changes to permit investment in U.S. dollar-denominated securities of foreign
issuers and to permit an increased percentage of the Fund's assets to be
invested in preferred securities. The Board of Directors recommended that the
restatement of the Fund's investment objective be submitted to the Fund's
Stockholders for approval at the Annual Meeting of Stockholders on May 10,
2000.
A "fundamental" investment objective or policy is one that may be changed
only with the approval of stockholders. The primary purpose of the proposed
change is to increase the opportunity to provide attractive returns by
clarifying the range of the income-producing securities eligible for investment
by the Fund. The proposed revision does not reflect a change in the investment
approach of the investment adviser and is not intended to change significantly
the Fund's investment operations.
Certain investment policies and limitations of the Fund are matters of
fundamental policy and may not be changed without the approval of its
Stockholders. Proposed changes to the language of the Fund's investment
objective and policies are set forth below.
<TABLE>
<CAPTION>
Current Investment Objective New Investment Objective
- ---------------------------- ------------------------
<S> <C>
(Fundamental Objective) (Fundamental Objective)
As its primary investment objective, As its primary investment objective,
the Company will seek for its the Company will seek for its
shareholders a high level of current shareholders a high level of current
income through investment in a income through investment in a
diversified portfolio of debt diversified portfolio of fixed-income
securities which management considers securities which management considers
to be of high quality, of which some to be of high quality. Capital
may be privately placed and some may appreciation will be a secondary
have equity features. Capital investment objective.
appreciation will be a secondary
investment objective.
</TABLE>
Explanation of Proposed Change: The proposal would provide greater
flexibility to manage investments and broaden the number of income-producing
securities that are eligible for investment by the Fund, enabling
7
<PAGE>
the Fund to take better advantage of investment opportunities, while
maintaining the high quality of the portfolios. The proposal would not change
the Fund's primary emphasis on seeking a high level of current income for
Stockholders. The Fund's objective, as restated, would continue to be a
fundamental policy.
B. Non-fundamental Investment Policies.
The Board of Directors also decided to expand the non-fundamental primary
investment policies followed by the Fund to pursue its objective by deleting
current investment policy A(3) stated below, adding in its place new investment
policy A(3) described below, and adding new investment policy A(6). The Board
believes that the effect of the changes to the characterization of the
investment objective and the expanded investment policies will be to increase
the high quality income-producing securities available for investment by the
Fund and, consequently, to increase the possibility of higher returns for
stockholders.
Current Investment Policy
A. At least 75% of the Company's total assets will be invested in the
following types of interest-bearing debt securities:
(1) marketable and privately placed straight debt securities which are
rated at the time of purchase within the four highest grades assigned by
Moody's Investors Services, Inc. (Aaa, Aa, A or Baa) or Standard & Poor's
Corporation (AAA, AA, A or BBB);
(2) marketable securities of, or guaranteed by, the United States
Government, its agencies or instrumentalities;
(3) marketable securities (payable in U.S. dollars) of or guaranteed by,
the Government of Canada or of a Province of Canada or any instrumentality
or political subdivision thereof, acquired under circumstances that would
not subject the Company to payment of U.S. Interest Equalization Tax, such
securities not to exceed 25% of the Registrant's total assets;
(4) obligations of, or guaranteed by, U.S. banks or U.S. bank holding
companies, (i.e., companies whose primary assets are U.S. banks) which
obligations, although not rated as a matter of policy by either Moody's
Investors Service, Inc. or Standard & Poor's Corporation, are considered by
management to have investment quality comparable to securities which may be
purchased under Item (1) above; and
(5) commercial paper.
B. Up to 25% of the Registrant's total assets may consist of:
(1) debt securities not included in Items (1) through (5) above;
(2) securities which may be convertible into or exchangeable for, or
carry warrants to purchase, common stock or other equity interests; and
(3) preferred stocks.
New Investment Policy
A. At least 75% of the Company's total assets will be invested in the
following types of income-producing securities:
8
<PAGE>
(1) marketable and privately placed straight debt securities which are
rated at the time of purchase within the four highest grades assigned by
Moody's Investors Services, Inc. (Aaa, Aa, A or Baa) or Standard & Poor's
Corporation (AAA, AA, A or BBB);
(2) marketable securities of, or guaranteed by, the United States
Government, its agencies or instrumentalities;
(3) U.S. dollar denominated securities of a foreign issuer;
(4) obligations of, or guaranteed by, U.S. banks or U.S. bank holding
companies, (i.e., companies whose primary assets are U.S. banks) which
obligations, although not rated as a matter of policy by either Moody's
Investors Service, Inc. or Standard & Poor's Corporation, are considered by
management to have investment quality comparable to securities which may be
purchased under Item (1) above;
(5) commercial paper; and
(6) preferred securities with attributes of debt securities.
B. Up to 25% of the Company's total assets may consist of:
(1) debt securities not included in Items (1) through (5) above; and
(2) securities which may be convertible into or exchangeable for, or
carry warrants to purchase, common stock or other equity interests; and
(3) preferred stocks.
U.S. dollar denominated securities of foreign issuers that are traded in the
United States are often referred to as "Yankee debt securities" or "Yankee
bonds."
Certain preferred securities, such as "trust preferred" or "capital
securities," have characteristics of debt securities, and are generally
considered bonds with preferred features. The preferred features are that
payment of interest can be deferred for a specified period without initiating a
default event. The securities are generally senior in claim to standard
preferred stock but junior to other bondholders.
THE INVESTMENT ADVISER
FUNB is a wholly-owned subsidiary of First Union, a North Carolina-based,
multi-bank financial holding company subject to the Bank Holding Company Act of
1956, as amended, and the rules and regulations promulgated thereunder (the
"BHCA"). The principal business address of the Adviser is One First Union
Center, Charlotte, North Carolina 28288. The Adviser provides investment
advisory services to individuals, investment companies, pension and profit
sharing plans and corporations or other business entities.
The names and principal occupations of the Directors and principal executive
officers of First Union National Bank are as follows:
<TABLE>
<C> <S>
G. Kennedy Thompson Chief Executive Officer and President, First
Union Corporation; Chief Executive Officer and
President, First Union National Bank
Edward E. Crutchfield, Jr. Chairman, First Union Corporation; Chairman,
First Union National Bank
</TABLE>
9
<PAGE>
<TABLE>
<C> <S>
Mark Treanor Executive Vice President, Secretary and General Counsel,
First Union Corporation; Secretary and Executive Vice
President, First Union National Bank
Robert T. Atwood Executive Vice President and Executive Financial Officer,
First Union Corporation; Executive Vice President and Chief
Financial Officer, First Union National Bank
</TABLE>
None of the foregoing persons owns as much as 1% of the outstanding stock of
First Union and all of them own less than 5%.
Glen T. Insley, Chairman of the Fund, is Managing Director, Fixed Income, of
the First Capital Group of the Adviser, with direct responsibility for the
Fund's investment activities. J.P. Weaver, Vice President of the Fund, and
Karen G. Bater, Vice President and Secretary of the Fund, are portfolio
managers of the Adviser, with responsibility for fixed income investments.
Carol Kosel, Treasurer of the Fund, is an employee of Evergreen Investment
Services ("EIS"), an affiliate of First Union. Dung Vukhac, President of the
Fund, is a member of the Adviser's fixed income division and oversees
investment management activities of the Fund.
Mr. Insley is responsible for management of the Fund. Ms. Bater is primarily
responsible for management of the Fund's portfolio. Ms. Kosel is responsible
for the Fund's compliance with governing law and maintaining the books and
records of the Fund and for working with the portfolio manager on a continuous
basis to assure that accounting records are properly maintained and that monies
of the Fund are fully invested at all times.
Administrative services provided by FUNB are provided by EIS, an affiliated
company of FUNB. EIS's address is 200 Berkeley Street, Boston, MA 02116.
State Street Bank and Trust Company ("State Street") serves as custodian of
the Fund's assets. Prior to April 1, 1998, CoreStates Bank, N.A. ("CoreStates
Bank") the parent company of the Fund's former adviser, served as custodian of
the Fund's assets. For the fiscal year ended November 30, 1999, the Fund paid
custodian fees of $19,782 to State Street.
THE ADVISORY AGREEMENT
Pursuant to the terms of the Advisory Agreement, the Adviser provides the
Fund with an investment program complying with the investment objectives,
policies and restrictions of the Fund. The Adviser is responsible for the
investment and reinvestment of the Fund's assets in accordance with this
program. The Adviser performs and absorbs the cost of research, statistical
analysis and continuous complete supervision of the Fund's investment
portfolio. The Adviser also causes the Fund to be furnished office space and
all ordinary and necessary office facilities, equipment and personnel for
managing the affairs of the Fund. The Adviser or its affiliates paid the fees,
salaries or other remuneration of directors and officers of the Fund who also
served as directors, officers or employees of or special consultants to First
Union, FUNB or any of their affiliated companies. In addition, the Adviser
absorbed the costs and expenses of the Fund's Transfer Agent, Dividend
Disbursing Agent, Agent under the Automatic Dividend Investment Plan and the
Fund's Registrar. In return for its advisory and other services and the
expenses it assumed, under the terms of the Advisory Agreement, the Adviser is
entitled to receive a monthly fee at an annual rate of 0.5% of the average
monthly net asset value of the Fund plus 2.5% of the net amount of interest and
dividend income after deducting interest on
10
<PAGE>
borrowed funds. Amortization of debt discount is not considered interest income
for the purpose of calculating such fee. For the fiscal year ended November 30,
1999, the Adviser received $681,901 (.71% of average net assets) from the Fund
in fees.
The Fund is responsible under the Advisory Agreement for all other costs and
expenses of its operations, including fees of the Directors who were not
"affiliated persons" (as defined in the 1940 Act) of First Union, FUNB or any
of their affiliated companies, custodian expenses, legal fees, expenses of
independent accountants, costs of acquiring and disposing of portfolio
securities, brokerage fees, taxes, stock exchange listing expenses, reports to
stockholders, proxy materials, and the cost of printing share certificates and
other expenses. The Advisory Agreement provides that the Adviser will not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the matters to which this Agreement relates, except
a loss resulting from willful misfeasance, bad faith or gross negligence on the
Adviser's part in the performance of its duties under this Agreement.
The Advisory Agreement was approved by the stockholders of the Fund on April
28, 1998 for a two year term. The Advisory Agreement provides that it will
continue from year to year so long as such continuance is specifically approved
at least annually by (1) the Board of Directors of the Fund or (2) the vote of
a majority of the outstanding voting securities of the Fund; provided, however,
that in either event the continuance also is required to be approved by the
vote of a majority of the Directors of the Fund who are not "interested
persons" (as defined in the 1940 Act) of the Fund or the Adviser cast in person
at a meeting called for the purpose of voting upon such approval. The Advisory
Agreement provides for its automatic termination in the event of its
assignment. In addition, the Agreement is terminable at any time, without
penalty, by the Board of Directors of the Fund or by the vote of a majority of
the outstanding voting securities of the Fund on 60 days' written notice to the
Adviser or by the Adviser on 60 days' written notice to the Fund.
STOCKHOLDER PROPOSALS
Any stockholder desiring to present a proposal for consideration at the 2001
Annual Meeting of Stockholders of the Fund should submit such proposal in
writing so that it is received by the Fund at 123 South Broad Street,
Philadelphia, Pennsylvania 19109, by not later than December 11, 2000. Proxies
submitted by stockholders confer discretionary authority on the individually
named proxies to vote on all matters presented at the meeting, including any
matter presented as to which the Fund did not have notice at least 45 days
before the date on which the Fund mailed its proxy material for the prior
year's Annual Meeting of Stockholders. Mere submission of a stockholder
proposal does not guarantee inclusion of the proposal in the proxy statement or
presentation of the proposal at the 2001 Annual Meeting since such inclusion
and presentation are subject to compliance with certain federal regulations.
Karen G. Bater, Secretary
April 9, 2000
11
<PAGE>
PROXY
VESTAUR SECURITIES, INC.
This Proxy is solicited on Behalf of the Board of Directors of the
Corporation for the Annual Meeting of Stockholders, May 10, 2000
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby
constitutes and appoints Carol Kosel and Karen G. Bater or either of them, with
full power of substitution, as attorneys and proxies to appear and vote all of
the shares of stock standing in the name of the undersigned at the annual
meeting of stockholders of Vestaur Securities, Inc. to be held at Greater
Philadelphia Chamber of Commerce, 7th Floor, 200 S. Broad Street, Philadelphia,
PA 19102 on May 10, 2000 at 11:00 o'clock a.m., local time, and at any and all
adjournments thereof, and the undersigned hereby instructs said attorneys to
vote:
(Continued, and to be signed on other side)
<PAGE>
X Please mark your votes as in this example.
The shares represented by this proxy will be voted as specified in the following
Items 1, 2 and 3, but if no choice is specified, they will be voted FOR the
election of the 9 persons named in the proxy statement as Directors, FOR
ratification of the appointment of the auditors named and FOR approval of the
change to the investment objective of the Corporation.
1. ELECTION OF DIRECTORS
FOR all nominees (except as marked to the contrary below*) nominees
[ ] WITHHOLD AUTHORITY to [ ] Nominees: Steven S. Elbaum
vote for all Paul B. Fay, Jr.
Robert F. Gurnee
Glen T. Insley
John C. Jansing, Sr.
Charles P. Pizzi
Phillip R. Reynolds
Maricarose Shestack
Robert E. Shultz
2. The ratification of the selection of FOR AGAINST ABSTAIN
Deloitte & Touche, LLP as auditors for [ ] [ ] [ ]
the period December 1, 1999 through
November 30, 2000.
3. AMEND INVESTMENT OBJECTIVE to clarify FOR AGAINST ABSTAIN
securities eligible for acquisition by [ ] [ ] [ ]
the Corporation.
(*INSTRUCTION: To withhold authority to vote for any individual nominee,
write the name of the nominee(s) below.)
4. In their discretion, the proxies are authorized to vote upon any other
business which may properly come before the meeting or any adjournment
thereof.
SIGNATURE(S) DATE , 2000.
------------------------------------------- -------------
(Signature of all joint owners is required. Fiduciaries please indicate your
full title. Sign exactly as name appears hereon.)
If any other matters properly come before the meeting about which the proxy
holders were not aware prior to the time of the solicitation, authorization is
given the proxy holders to vote in accordance with the views of the management
thereto. The management is not aware of any such matters.
-----------------------
PLEASE SIGN AND RETURN
THIS PROXY CARD IN THE
ENCLOSED ENVELOPE.
-----------------------
