Registration Nos.33-83100
811-8716
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No. / /
Pre-Effective Amendment No. 3 /x/
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 3 /x/
(Check appropriate box or boxes)
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THE EVERGREEN VARIABLE TRUST
(Exact name of registrant as specified in charter)
2500 Westchester Avenue
Purchase, N.Y. 10577
(Address of Principal Executive Offices)
(Registrant's Telephone Number, Including Area Code (914) 694-2020)
Joseph J. McBrien, Esq.
Evergreen Asset Management Corp.
2500 Westchester Avenue, Purchase, N.Y. 10577
(Name and address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
/ / Immediately upon filing pursuant to paragraph (b) or
/ / on (date) pursuant to paragraph (b) or
/ / 60 days after filing pursuant to paragraph (a)(i) or
/ / on (date) pursuant to paragraph (a)(i) or
/ / 75 days after filing pursuant to paragraph (a)(ii) or
/ / on (date) pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i)
Registrant has registered an indefinite number of shares under the Securities
Act of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940.
Registrant's has not yet filed a Rule 24f-2 notice since it has not yet
commenced operations.
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CROSS REFERENCE SHEET
(as required by Rule 481(a))
N-1A Item No.
Part A Location in Prospectus
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Item 1. Cover Page Cover Page
Item 2. Synopsis and Fee Table Overview of the Funds
Item 3. Condensed Financial Information Not Applicable
Item 4. General Description of Registrant Cover Page; Description of
the Funds; General
Information
Item 5. Management of the Fund Management of the Funds;
General Information
Item 5A. Management's Discussion Not Applicable
Item 6. Capital Stock and Other Securities Dividends, Distributions and
Taxes; General
Information
Item 7. Purchase of Securities Being Offered Purchase and Redemption of
Shares; Participating
Insurance Companies
Item 8. Redemption or Repurchase Purchase and Redemption of
Shares; Participating
Insurance Companies
Item 9. Pending Legal Proceedings Not Applicable
Location in Statement of
Part B Additional Information
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Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History Not Applicable
Item 13. Investment Objectives and Policies Investment Objectives and
Policies;Investment
Restrictions
Item 14. Management of the Fund Management
Item 15. Control Persons and Principal Management
Holders of Securities
Item 16. Investment Advisory and Other Services Investment Adviser;
Additional Purchase and
Redemption Information
Item 17. Brokerage Allocation Allocation of Brokerage
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Item 18. Capital Stock and Other Securities Additional Purchase and
Redemption Information
Item 19. Purchase, Redemption and Pricing of Additional Purchase and
Securities Being Offered Redemption Information;
Net Asset Value
Item 20. Tax Status Additional Tax Information
Item 21. Underwriters Additional Purchase and
Redemption Information;
Item 22. Calculation of Performance Data Performance Information
Item 23. Financial Statements Financial Statements
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
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PROSPECTUS February 8, 1996
Evergreen Variable Trust
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EVERGREEN VA FUND
EVERGREEN VA GROWTH AND INCOME FUND
EVERGREEN VA FOUNDATION FUND
The Evergreen Variable Trust (the "Trust") is designed to provide investors
with a selection of investment alternatives which seek to provide capital
growth, income and diversification through its three investment series (the
"Funds"). The Trust is an open-end management investment company. This
Prospectus sets forth concise information about the Trust and the Funds that a
prospective investor should know before investing. Shares of the Funds are only
sold to (a) separate accounts funding variable annuity and variable life
insurance contracts issued by life insurance companies; and (b) qualified
pension and retirement plans. The address of the Trust is 2500 Westchester
Avenue, Purchase, New York.
A "Statement of Additional Information" for the Trust dated February 8,
1996 has been filed with the Securities and Exchange Commission and is
incorporated by reference herein. The Statement of Additional Information
provides information regarding certain matters discussed in this Prospectus and
other matters which may be of interest to investors, and may be obtained without
charge by calling the Trust at (xxx) xxx-xxxx. There can be no assurance that
the investment objective of any Fund will be achieved. Investors are advised to
read this Prospectus carefully.
The shares offered by this Prospectus are not deposits or obligations of
any bank or any subsidiaries of a bank, are not endorsed or guaranteed by any
bank, and are not insured or otherwise protected by the U.S. Government, the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency and involve risk, including the possible loss of principal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Keep This Prospectus for Future Reference
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TABLE OF CONTENTS
OVERVIEW OF THE FUNDS
FINANCIAL HIGHLIGHTS
DESCRIPTION OF THE FUNDS
Investment Objectives And Policies
Investment Practices and Restrictions
MANAGEMENT OF THE FUNDS
Investment Adviser
Sub-Adviser
SALE AND REDEMPTION OF SHARES
Participating Insurance Companies
Purchases
Redemptions
Dividends
Tax Status
Effect of Banking Laws
GENERAL INFORMATION
Custodian, and Transfer and
Dividend Paying Agent
Expenses of the Trust
Shareholder Rights
Description of Shares
Performance
General
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OVERVIEW OF THE FUNDS
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The following summary is qualified in its entirety by the more detailed
information contained elsewhere in this Prospectus. See "Description of the
Funds" and "Management of the Funds".
The Investment Adviser to the Evergreen VA Fund, Evergreen VA Foundation
Fund and Evergreen VA Growth and Income Fund is Evergreen Asset Management Corp.
("Evergreen Asset" or the "Adviser") which, with its predecessors, has served as
investment adviser to the Evergreen group of mutual funds since 1971. Evergreen
Asset is a wholly-owned subsidiary of First Union National Bank of North
Carolina ("FUNB"), which in turn is a subsidiary of First Union Corporation, the
sixth largest bank holding company in the United States. Lieber & Company, which
is also a wholly-owned subsidiary of FUNB, furnishes Evergreen Asset with
information, investment recommendations, advice and assistance to augment its
investment advisory services.
Evergreen VA Fund seeks to achieve capital appreciation by investing in the
securities of little-known or relatively small companies, or companies
undergoing changes which the Adviser believes will have favorable consequences.
Income will not be a factor in the selection of portfolio investments.
Evergreen VA Growth and Income Fund seeks to achieve a return composed of
capital appreciation in the value of its shares and current income. The Fund
will attempt to meet its objective by investing in the securities of companies
which are undervalued in the marketplace relative to those companies' assets,
breakup value, earnings, or potential earnings growth.
Evergreen VA Foundation Fund seeks, in order of priority, reasonable
income, conservation of capital and capital appreciation. The Fund invests
principally in income-producing common and preferred stocks, securities
convertible into or exchangeable for common stocks and fixed income securities.
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FINANCIAL HIGHLIGHTS
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The Evergreen Variable Investment Trust commenced operations on February 8,
1996 and has not yet completed an accounting period for which per share data and
ratios are calculated. Accordingly, no per share data and ratios are available
for any of its three investment series.
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DESCRIPTION OF THE FUNDS
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INVESTMENT OBJECTIVES AND POLICIES
Each Fund's investment objective is fundamental and cannot be changed
without shareholder approval. In addition to the investment policies detailed
below, each Fund may employ certain additional investment strategies which are
discussed in "Investment Practices and Restrictions". There can be no assurance
that the Fund's investment objective will be achieved.
Evergreen VA Fund
The Evergreen VA Fund seeks to achieve its investment objective of capital
appreciation principally through investments in common stock and securities
convertible into or exchangeable for common stock of companies which are
little-known, relatively small or represent special situations which, in the
Adviser's opinion, offer potential for capital appreciation. A "little-known"
company means one whose business is limited to a regional market or whose
securities are closely held with only a small proportion traded publicly. A
"relatively small" company means one which has a small share of the market for
its products or services in comparison with other companies in its field, or
which provides goods or services for a limited market. A "special situation"
company is one which offers potential for capital appreciation because of a
recent or anticipated change in structure, management, products or services. In
addition to the securities described above, the Evergreen VA Fund may invest in
securities of relatively well-known and large companies with potential for
capital appreciation. Investments may also be made to a limited degree in
non-convertible debt securities and preferred stocks which offer an opportunity
for capital appreciation. If in the Adviser's judgment a defensive position is
appropriate, the Fund may take such a position and invest without limit in
non-convertible investment grade debt securities, government securities or
preferred stocks, or hold its assets in cash. Short-term investments may also be
made if the Adviser believes that such action will benefit the Fund. See
"Investment Practices and Restrictions" and "Special Risk Considerations",
below.
Evergreen VA Growth and Income Fund
The investment objective of the Evergreen VA Growth and Income Fund is
to achieve a return composed of capital appreciation in the value of its shares
and current income.
The Fund seeks to achieve its investment objective by investing in the
securities of companies which are undervalued in the marketplace relative to
those companies' assets, breakup value, earnings or potential earnings growth.
These companies are often found among those which have had a record of financial
success but are currently in disfavor in the marketplace for reasons the Adviser
perceives as temporary or erroneous. Such investments when successfully timed
are expected to be the means for achieving the Fund's investment objective. This
inherently contrarian approach may require greater reliance upon the Adviser's
analytical and research capabilities than an investment in certain other equity
funds. Consequently, an investment in the Fund may involve more risk than other
equity funds.
The Fund will use the "value timing" approach as a process for
purchasing securities when events indicate that fundamental investment values
are being ignored in the marketplace. Fundamental investment value is based on
one or more of the following: assets -- tangible and intangible (examples of the
latter include brand names or licenses), capitalization of earnings, cash flow
or potential earnings growth. A discrepancy between market valuation and
fundamental value often arises due to the presence of unrecognized assets or
business opportunities, or as a result of incorrectly perceived or short-term
negative factors. Changes in regulations, basic economic or monetary shifts and
legal action (including the initiation of bankruptcy proceedings) are some of
the factors that create these capital appreciation opportunities. If the
securities in which the Fund invests never reach their perceived potential or
the valuation of such securities in the marketplace does not in fact reflect
significant undervaluation, there may be little or no appreciation or a
depreciation in the value of such securities.
The Fund will invest primarily in common stocks and securities
convertible into or exchangeable for common stock. It is anticipated that the
Fund's investments in these securities will contribute to the Fund's return
primarily through capital appreciation. In addition, the Fund will invest in
nonconvertible preferred stocks and debt securities. It is anticipated that the
Fund's investments in these securities will also produce capital appreciation
but the current
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income component of return will be a more significant factor in their selection.
However, the Fund will invest in nonconvertible preferred stock and debt
securities only if the anticipated capital appreciation plus income from such
investments is equivalent to that anticipated from investments in equity or
equity-related securities. The Fund may invest up to 5% of its total assets in
debt securities which are rated below investment grade, commonly known as "junk
bonds". Investments of this type are subject to greater risk of loss of
principal and interest. The Fund may invest up to 25% of its assets in foreign
securities (See "Special Risk Considerations"). Additional information regarding
"junk bonds" is contained in the Statement of Additional Information. See
"Investment Practices and Restrictions" and "Special Risk Considerations",
below.
Evergreen VA Foundation Fund
The investment objectives of the Evergreen VA Foundation Fund, in order
of priority, are reasonable income, conservation of capital and capital
appreciation. The Fund seeks to achieve these objectives by investing in a
combination of common stocks, preferred stocks, securities convertible into or
exchangeable for common stocks, corporate and U.S. Government debt obligations,
and short-term debt instruments, such as commercial paper. The Fund's common
stock investments will include those which (at the time of purchase) pay
dividends and in the view of the Adviser have potential for capital enhancement.
The Fund may also invest up to 25% of its assets in foreign securities (See
"Special Risk Considerations").
The Fund may make investments in securities regardless of whether or not
such securities are traded on a national securities exchange. Securities not
traded on a national securities exchange are generally traded on a "net" basis
with dealers acting as principals for their own accounts without stated
commissions, although the price of the securities usually includes profits to
the dealers. While the Adviser generally seeks reasonably competitive spreads or
commissions, the Fund will not necessarily be paying the lowest spread or
commission available. Also the market for such securities may not be as liquid
as those traded on a national securities exchange.
While income will be a factor in the selection of equity securities, the
Adviser will attempt to identify securities that offer potential for long term
capital appreciation, but that do not exhibit any speculative characteristics.
The Fund will not make equity investments with a view toward realizing
short-term gains. The value of portfolio securities and their yields are
expected to fluctuate over time because of varying general economic and market
conditions. Accordingly, there can be no assurance that the Fund's investment
objectives will be achieved.
The Fund's asset allocation will vary from time to time in accordance with
changing economic and market conditions, including: inflation rates, business
cycle trends, business regulations and tax law impacts on the investment
markets. The composition of its portfolio will be largely unrestricted and
subject to the discretion of the Adviser. Under normal circumstances, the Fund
anticipates that at least 25% of its net assets will consist of fixed income
securities. The balance will be invested in equity securities (including
securities convertible into equity securities).
In selecting fixed income securities for the Fund's portfolio, emphasis
will be placed on issues expected to fluctuate little in value other than as a
result of changes in prevailing interest rates. The market value of the debt
obligations in the Fund's portfolio can be expected to vary inversely to changes
in prevailing interest rates. The Fund may at times emphasize the generation of
interest income by investing in high-yielding debt securities, with short,
medium or long-term maturities. While fixed income investments will generally be
made for the purpose of generating interest income, investments in medium to
long-term debt securities (i.e., those with maturities from five to ten years
and those with maturities over ten years, respectively) may be made with a view
to realizing capital appreciation when the Adviser believes changes in interest
rates will lead to an increase in the value of such securities. The fixed income
portion of the Fund's portfolio may include:
1. Marketable obligations of, or guaranteed by, the United States
Government, its agencies or instrumentalities, including issues of the United
States Treasury, such as bills, certificates of indebtedness, notes and bonds,
and issues of agencies and instrumentalities established under the authority of
an act of Congress. Some of these securities are supported by the full faith and
credit of the United States Government, and others are supported only by the
credit of the agency or instrumentality. Agencies or instrumentalities whose
securities are supported by the full faith and credit of the United States
include, but are not limited to, the Federal Housing Administration Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration and Government National Mortgage Association. Agencies or
instrumentalities whose securities are supported only by the credit of the
agency or instrumentality include the Interamerican Development Bank and the
International Bank for Reconstruction and Development. These obligations are
supported by appropriated but unpaid commitments of their member countries.
There are no assurances that the commitments will be fulfilled in the future.
2. Corporate obligations rated no lower than A by by Moody's Investors
Service, Inc. ("Moody's") or A-2 by Standard & Poor's Ratings Group ("S&P");.
3. Obligations of banks or banking institutions having total assets of
more than $2 billion which are members of the Federal Deposit Insurance
Corporation.
4. Commercial paper of high quality (rated no lower than A-2 by S&P or
Prime-2 by Moody's or, if not rated, issued by companies which have an
outstanding long-term debt issue rated AAA or AA by S&P or Aaa or Aa by
Moody's).
Certain obligations may be entitled to the benefit of standby letters
of credit or similar commitments issued by banks and, in such instances, the
Adviser will take into account the obligation of the bank in assessing the
quality of such security. For a description of the ratings set forth above see
the Statement of Additional Information. See "Investment Practices and
Restrictions" and "Special Risk Considerations", below.
INVESTMENT PRACTICES AND RESTRICTIONS
The Funds may invest without limitation in cash and cash equivalents and
short-term corporate debt securities for defensive purposes, and may also write
covered call options, lend portfolio securities, invest in repurchase
agreements, enter into transactions on a "when issued" or delayed settlement
basis, and invest in the securities of other investment companies, all in the
manner described below.
Defensive Investments. The Funds may invest without limitation in high quality
money market instruments, such as notes, certificates of deposit or bankers'
acceptances, or U.S. Government securities if, in the opinion of the Adviser,
market conditions warrant a temporary defensive investment strategy.
Portfolio Turnover and Brokerage. It is anticipated that the annual portfolio
turnover rate for EVERGREEN VA FUND and EVERGREEN VA GROWTH & INCOME FUND may
exceed 100%. A portfolio turnover rate of 100% would occur if all of a Fund's
portfolio securities were replaced in one year. The annual turnover rate for the
fixed income portion of the EVERGREEN VA FOUNDATION FUND generally will not
exceed 200%. A 200% turnover rate is greater than that of most other investment
companies. The portfolio turnover rate experienced by a Fund directly affects
brokerage commissions and other transaction costs which the Fund bears directly.
A high rate of portfolio turnover will increase such costs. It is contemplated
that Lieber & Company, an affiliate of Evergreen Asset and a member of the New
York and American Stock Exchanges, will to the extent practicable effect
substantially all of the portfolio transactions for the Funds effected on those
exchanges. See the Statement of Additional Information for further information
regarding the brokerage allocation practices of the Funds.
Borrowing. As a matter of fundamental policy, the Funds may not borrow money
except from banks as a temporary measure for extraordinary or emergency
purposes. The proceeds from borrowings may be used to facilitate redemption
requests which might otherwise require the untimely disposition of portfolio
securities. The specific limits and other terms applicable to borrowing by each
Fund are set forth in the Statement of Additional Information.
Lending of Portfolio Securities. In order to generate income and to offset
expenses, the Funds may lend portfolio securities to brokers, dealers and other
financial institutions. The Adviser will monitor the creditworthiness of such
borrowers. Loans of securities by the Funds, if and when made, may not exceed
30% of the value of a Fund's total assets and must be collateralized by cash or
U.S. Government securities that are maintained at all times in an amount equal
to at least 100% of the current market value of the securities loaned, including
accrued interest. While such securities are on loan, the borrower will pay a
Fund any income accruing thereon, and the Fund may invest the cash collateral in
portfolio securities, thereby increasing its return. Any gain or loss in the
market price of the loaned securities which occurs during the term of the loan
would affect a Fund and its investors. A Fund has the right to call a loan and
obtain the securities loaned at any time on notice of not more than five
business days. A Fund may pay reasonable fees in connection with such loans.
Illiquid Securities. The Funds may invest up to 15% of their net assets in
illiquid securities and other securities which are not readily marketable,
including repurchase agreements with maturities longer than seven days.
Securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, which have been determined to be liquid, will not be considered by the
Adviser to be illiquid or not readily marketable and, therefore, are not subject
to the aforementioned 15% limit. The inability of a Fund to dispose of illiquid
or not readily marketable investments readily or at a reasonable price could
impair the Fund's ability to raise cash for redemptions or other purposes. The
liquidity of securities purchased by a Fund which are eligible for resale
pursuant to Rule 144A will be monitored by the each Adviser, on an ongoing
basis, subject to the oversight of the Trustees. In the event that such a
security is deemed to be no longer liquid, a Fund's holdings will be reviewed to
determine what action, if any, is required to ensure that the retention of such
security does not result in a Fund having more than 15% of its assets invested
in illiquid or not readily marketable securities.
Repurchase Agreements. Repurchase agreements may be entered into with member
banks of the Federal Reserve System, including a Fund's custodian or primary
dealers in U.S. Government securities. A repurchase agreement is an
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arrangement pursuant to which a buyer purchases a security and simultaneously
agrees to resell it to the vendor at a price that results in an agreed-upon
market rate of return which is effective for the period of time (which is
normally one to seven days, but may be longer) the buyer's money is invested in
the security. The arrangement results in a fixed rate of return that is not
subject to market fluctuations during the holding period. A Fund requires
continued maintenance of collateral with its Custodian in an amount at least
equal to the repurchase price (including accrued interest). In the event a
vendor defaults on its repurchase obligation, a Fund might suffer a loss to the
extent that the proceeds from the sale of the collateral were less than the
repurchase price. If the vendor becomes the subject of bankruptcy proceedings, a
Fund might be delayed in selling the collateral. The Adviser will review and
continually monitor the creditworthiness of each institution with which a Fund
enters into a repurchase agreement to evaluate these risks.
When-Issued Securities. In the event securities are purchased on a "when-issued"
basis (i.e., for delivery beyond the normal settlement date at a stated price
and yield), a Fund generally would not pay for such securities or start earning
interest on them until they are received. However, when a Fund purchases
securities on a when-issued basis, it assumes the risks of ownership at the time
of purchase, not at the time of receipt. Failure of the issuer to deliver a
security purchased on a when-issued basis may result in the Fund's incurring a
loss or missing an opportunity to make an alternative investment. Commitments to
purchase when-issued securities will not exceed 25% of a Fund's total assets. A
Fund will maintain cash or liquid high grade debt obligations in a segregated
account with its Custodian in an amount equal to such commitments. No Fund will
purchase when-issued securities for speculative purposes, but only in
furtherance of its investment objectives.
Securities of Other Investment Companies. Each Fund may invest in the securities
of other open-end investment companies that have investment objectives and
policies similar to its own or which are, in the opinion of the Adviser,
suitable short-term investment vehicles. The Adviser will waive its investment
advisory fee on assets invested by a Fund in securities of other open-end
investment companies. Any investment by a Fund in the securities of other
investment companies will be subject to the limitations on such investments
contained in the Investment Company Act of 1940.
Fixed Income Investments. Investments by the Funds in fixed income securities
are subject to a number of risks. For example, changes in economic conditions
could result in the weakening of the capacity of the issuers of such securities
to make principal and interest payments, particularly in the case of issuers of
non-investment grade fixed income securities. In addition, the market value of
fixed-income securities in a Fund's portfolio can be expected to vary inversely
to changes in prevailing interest rates. In the event there is a downgrading in
the rating of a fixed income security held in a Fund's portfolio, the Fund may
continue to hold the security if such action is deemed to be in the best
interests of the Fund and its shareholders.
Hedging Techniques
Writing Options. Each Fund may write covered call options on certain portfolio
securities in an attempt to earn income and realize a higher return on their
portfolios. A call option gives the purchaser of the option the right to buy a
security from the writer at the exercise price at any time during the option
period. A call option may not be written if, afterwards, securities comprising
more than 5% of the market value of a Fund's equity securities would be subject
to call options. A Fund realizes income from the premium paid to it in exchange
for writing the call option. Once it has written a call option on a portfolio
security and until the expiration of such option, a Fund forgoes the opportunity
to profit from increases in the market price of such security in excess of the
exercise price of the call option. Should the price of the security on which a
call has been written decline, a Fund retains the risk of loss, which would be
offset to the extent the Fund has received premium income. A Fund will only
write "covered" call options traded on recognized securities exchanges. An
option will be deemed covered when a Fund either owns the security (or
securities convertible into such security) on which the option has been written
in an amount sufficient to satisfy the obligations arising under the option; or
(ii) the Fund's custodian maintains cash or high-grade liquid debt securities
belonging to the Fund in an amount not less that the amount needed to satisfy
the Fund's obligations with respect to options written on securities it does not
own. A "closing purchase transaction" may be entered into with respect to a call
option written by a Fund for the purpose of closing its position.
Other Investment Restrictions. Each Fund has adopted additional investment
restrictions that are set forth in the Statement of Additional Information.
Unless otherwise noted, the restrictions and policies set forth above are not
fundamental and may be changed without shareholder approval.
Special Risk Considerations
Investment in Small Companies. Evergreen VA Fund, Evergreen VA Growth and Income
Fund and Evergreen VA Foundation Fund may invest from time to time, in
securities of little-known, relatively small and special situation companies.
Investments in such companies may tend to be speculative and volatile. A lack of
management depth in such companies could increase the risks associated with the
loss of key personnel. Also, the material and financial resources of such
companies may be limited, with the consequence that funds or external financing
necessary for growth may be unavailable. Such companies may also be involved in
the development or marketing of new products
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or services for which there are no established markets. If projected markets do
not materialize or only regional markets develop, such companies may be
adversely affected or be subject to the consequences of local events. Moreover,
such companies may be insignificant factors in their industries and may become
subject to intense competition from larger companies. Securities of small and
special situation companies in which the Funds may invest will frequently be
traded only in the over-the-counter market or on regional stock exchanges and
will often be closely held. Securities of this type may have limited liquidity
and be subject to wide price fluctuations. As a result of the risk factors
described above, the net asset value of each Fund's shares can be expected to
vary significantly.
Investment in Foreign Securities. The Funds may invest in foreign securities.
Investments in foreign securities require consideration of certain factors not
normally associated with investments in securities of U.S. issuers. For example,
a change in the value of any foreign currency relative to the U.S. dollar will
result in a corresponding change in the U.S. dollar value of securities
denominated in that currency. Accordingly, a change in the value of any foreign
currency relative to the U.S. dollar will result in a corresponding change in
the U.S. dollar value of the assets of the Fund denominated or traded in that
currency. If the value of a particular foreign currency falls relative to the
U.S. dollar, the U.S. dollar value of the assets of a Fund denominated in such
currency will also fall. The performance of a Fund will be measured in U.S.
dollars.
Securities markets of foreign countries generally are not subject to the
same degree of regulation as the U.S. markets and may be more volatile and less
liquid. Lack of liquidity may affect a Fund's ability to purchase or sell large
blocks of securities and thus obtain the best price. The lack of uniform
accounting standards and practices among countries impairs the validity of
direct comparisons of valuation measures (such as price/earnings ratios) for
securities in different countries.
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MANAGEMENT OF THE FUNDS
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INVESTMENT ADVISER
The management of each Fund is supervised by the Trustees of Evergreen
Variable Trust. Evergreen Asset has been retained by the Trust to serve as
investment adviser to Evergreen VA Fund, Evergreen VA Growth and Income Fund,
and Evergreen VA Foundation Fund. Evergreen Asset succeeded on June 30, 1994 to
the advisory business of a corporation with the same name, but under different
ownership, which was organized in 1971. Evergreen Asset, with its predecessors,
has served as investment adviser to the Evergreen mutual funds since 1971.
Evergreen Asset is a wholly-owned subsidiary of First Union National Bank of
North Carolina ("FUNB"). The address of Evergreen Asset is 2500 Westchester
Avenue, Purchase, New York 10577. FUNB is a subsidiary of First Union
Corporation ("First Union"), the sixth largest bank holding company in the
United States. Stephen A. Lieber and Nola Maddox Falcone serve as the chief
investment officers of Evergreen Asset and, along with Theodore J. Israel, Jr.,
were the owners of Evergreen Asset's predecessor and the former general partners
of Lieber & Company, which, as described below, provides certain subadvisory
services to Evergreen Asset in connection with its duties as investment adviser
to the Funds.
First Union is headquartered in Charlotte, North Carolina, and had $94.6
billion in consolidated assets as of December 31, 1996. First Union and its
subsidiaries provide a broad range of financial services to individuals and
businesses throughout the United States. The Capital Management Group of FUNB
("CMG") manages or otherwise oversees the investment of over $36 billion in
assets belonging to a wide range of clients, including all the series of
Evergreen Investment Trust (formerly known as First Union Funds) and certain of
the other Evergreen mutual funds. First Union Brokerage Services, Inc., a
wholly-owned subsidiary of FUNB, is a registered broker-dealer that is
principally engaged in providing retail brokerage services consistent with its
federal banking authorizations. First Union Capital Markets Corp., a
wholly-owned subsidiary of First Union, is a registered broker-dealer
principally engaged in providing, consistent with its federal banking
authorizations, private placement, securities dealing, and underwriting
services.
Evergreen Asset manages each Fund's investments, provides various
administrative services, and supervises each Fund's daily business affairs,
subject to the authority of the Trustees. Evergreen Asset, as investment adviser
to Evergreen VA Fund and Evergreen VA Growth and Income Fund and is entitled to
receive from such Funds an annual fee equal to .95 of 1% of average daily net
assets thereof. As compensation for its services as investment adviser to
Evergreen VA Foundation Fund, Evergreen Asset is entitled to receive an annual
fee equal to .825 of 1% of average daily net assets of such Fund. These fees are
higher than the rates paid by most other investment companies.
Evergreen Asset also serves as administrator to each Fund and is entitled
to receive a fee based on the average daily net assets of the Fund at a rate
based on the total assets of the mutual funds administered by Evergreen Asset
for which CMG or Evergreen Asset also serve as investment adviser, calculated in
accordance with the following schedule: .050% of the first $7 billion; .035% on
the next $3 billion; .030% on the next $5 billion; .020% on the next $10
billion; .015% on the next $5 billion; and .010% on assets in excess of $30
billion. Furman Selz LLC, an affiliate of Evergreen Funds Distributor, Inc.,
distributor for the Evergreen group of mutual funds, serves as sub-administrator
to the Funds and is entitled to receive a fee from each Fund calculated on the
average daily net assets of the Fund at a rate based on the total assets of the
mutual funds administered by Evergreen Asset for which CMG or Evergreen Asset
also serve as investment adviser, calculated in accordance with the following
schedule: .0100% of the first $7 billion; .0075% on the next $3 billion; .0050%
on the next $15 billion; and .0040% on assets in excess of $25 billion. The
total assets of the mutual funds administered by Evergreen Asset for which CMG
or Evergreen Asset serve as investment adviser as of December 31, 1995 were
approximately $10.4 billion.
The portfolio manager for Evergreen VA Fund and Evergreen VA Foundation
Fund is Stephen A. Lieber, who is Chairman and Co-Chief Executive Officer of
Evergreen Asset and has been associated with Evergreen Asset and its predecessor
since 1969. Mr. Lieber has served as the portfolio manager of Evergreen
Foundation Fund since its inception in January, 1990 and as the portfolio
manager of Evergreen Fund since its inception in 1970. The portfolio manager for
Evergreen VA Growth and Income Fund is Edmund H. Nicklin, Jr. C.F.A. Mr. Nicklin
has been associated with Evergreen Asset as the manager of Evergreen Growth and
Income Fund since the Fund's inception in October, 1986.
SUB-ADVISER
Evergreen Asset has entered into sub-advisory agreements with Lieber &
Company with respect to Evergreen VA Fund, Evergreen VA Growth and Income Fund
and Evergreen VA Foundation Fund which provide that Lieber & Company's research
department and staff will furnish Evergreen Asset with information, investment
recommendations, advice and assistance, and will be generally available for
consultation on each such Fund's portfolio. Lieber & Company will be reimbursed
by Evergreen Asset in connection with the rendering of services on the basis of
the direct and indirect costs of performing such services. There is no
additional charge to the Funds for the services provided by Lieber & Company. It
is contemplated that Lieber & Company will, to the extent practicable, effect
substantially all of the portfolio transactions for these Funds on the New York
and American Stock Exchanges. The address of Lieber & Company is 2500
Westchester Avenue, Purchase, New York 10577. Lieber & Company is an indirect,
wholly-owned, subsidiary of First Union.
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SALE AND REDEMPTION OF SHARES
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PARTICIPATING INSURANCE COMPANIES
The Funds were organized to serve as investment vehicles for (a) separate
accounts funding variable annuity("VA") and variable life insurance ("VLI")
contracts issued by certain life insurance companies ("Participating Insurance
Companies"); and (b) qualified pension and retirement plans. The Trust does not
currently forsee any disadvantages to the holders of VA and VLI contracts
arising from the fact that the interests of holders of VA and VLI contracts may
differ due to the difference of tax treatment and other consideations.
Nevertheless, the Trustees will establish procedures for the purpose of
identifying any irreconcilable material conflicts that may arise and to
determine what action, if any, would be taken in response thereto. The VA and
VLI contracts are described in the separate Prospectuses issued by the
Participating Insurance Companies. The Trust assumes no responsibility for such
Prospectuses.
PURCHASES
Shares of the Trust are sold at net asset value to the separate accounts of
Participating Insurance Companies and to qualified pension and retirement plans.
All investments in the Trust are credited to the shareholder's account in the
form of full or fractional shares of the designated Fund (rounded to the nearest
1/1000 of a share). The Trust does not issue share certificates. Initial and
subsequent purchase payments allocated to a specific Fund are subject to the
limits described in the separate Prospectuses issued by the Participating
Insurance Companies or in pension and retirement plan documents.
How the Funds Value Their Shares. The net asset value of shares of a Fund is
calculated by dividing the value of the amount of the Fund's net assets by the
number of outstanding shares. Shares are valued each day the New York Stock
Exchange (the "Exchange") is open as of the close of regular trading (currently
4:00 p.m. Eastern time). The securities in a Fund are valued at their current
market value determined on the basis of market quotations or, if such quotations
are not readily available, such other methods as the Trustees believe would
accurately reflect fair value. Non-dollar denominated securities will be valued
as of the close of the Exchange at the closing price of such securities in their
principal trading market.
REDEMPTION
The separate accounts of Participating Insurance Companies redeems shares
to make benefit or surrender payments under the terms of the VA or VLI contract
and qualified pension and retirement plans may redeem shares pursuant to the
provisions of the plan documents. Redemptions are processed on any day on which
the Trust is open for business and are effected at net asset value next
determined after the redemption order, in proper form, is received by the Trust
or it's agent. The net asset value per share of each Fund is determined once
daily, as of 4:00 PM. on each business day the Exchange is open and on such
other days as the Trustees determine and on any other day during which there is
a sufficient degree of trading in the Fund's portfolio securities that the net
asset value of the Fund is materially affected by changes in the value of
portfolio securities.
The Trust may suspend the right of redemption only under the following
unusual circumstances: (1) when the Exchange is closed (other than weekends and
holidays) or trading is restricted; (2) when an emergency exists, making
disposal of portfolio securities or the valuation of net assets not reasonably
practicable; or (3) during any period when the Securities and Exchange Com-
mission has by order permitted a suspension of redemption for the protection of
shareholders.
DIVIDENDS
Dividends. All dividends payable by a Fund are distributed at least annually to
the separate accounts of Participating Insurance Companies and will be
automatically reinvested in additional shares of such Fund. Dividends and other
distributions made by the Funds to such separate account are taxable, if at all,
to the Participating Insurance Companies; they are not currently taxable to the
VA or VLI owners.
TAX STATUS
Each Fund is treated as a separate entity for Federal income tax
purposes and is not combined with the Trust's other Funds. It is the intention
of each Fund to qualify as a "regulated investment company" under Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"), and meet all
other requirements necessary for it to be relieved of Federal taxes on that part
of its net investment income and net capital gains distributed to its
shareholders. Each Fund intends to distribute all of its net investment income
and net capital gains to its shareholders.
For a discussion of the tax consequences of VA or VLI contracts, refer to
the prospectus of the VLI or VA offered by the Participating Insurance Company.
VA or VLI contracts purchased through insurance company separate accounts
provide for the accumulation of all earnings from interest, dividends, and
capital appreciation without current federal income tax liability for the owner,
Depending on the VA or VLI contract, distributions from the contract may be
subject to ordinary income tax and, in addition, on distributions before age
59-1/2, a 10% penalty tax. Only the portion of a distribution attributable to
income on the investment in the contract is subject to Federal income tax.
Investors should consult with competent tax advisers for a more complete
discussion of possible tax consequences in a particular situation.
Section 817(h) of the Code provides that investments of a separate account
underlying a VA or VLI contract (or the investments of a mutual fund, the shares
of which are owned by the VA or VLI separate account) must be "adequately
diversified" in order for the VA or VLI contract to be treated as an annuity for
tax purposes. The Treasury Department has issued regulations prescribing these
diversification requirements. Each Fund intends to comply with these
requirements. If a separate account underlying a VA or VLI contract were not
adequately diversified, the owner of such VA or VLI contract would be
immediately subject to tax on the earnings allocable to the contract. Additional
information about the tax status of the Funds is provided in the Statement of
Additional Information.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit member banks of the Federal Reserve System ("Member Banks") or their
non-bank affiliates from sponsoring, organizing, controlling, or distributing
the shares of registered open-end investment companies such as the Funds. Such
laws and regulations also prohibit banks from issuing, underwriting or
distributing securities in general. However, under the Glass-Steagall Act and
such other laws and regulations, a Member Bank or an affiliate thereof may act
as investment adviser, transfer agent or custodian to a registered open-end
investment company and may also act as agent in connection with the purchase of
shares of such an investment company upon the order of their customer. Evergreen
Asset, since it is a subsidiary of FUNB is subject to and in compliance with the
aforementioned laws and regulations.
Changes to applicable laws and regulations or future judicial or
administrative decisions could result in Evergreen Asset being prevented from
continuing to perform the services required under the investment advisory
contract or from acting as agent in connection with the purchase of shares of a
Fund by its customers. If Evergreen Asset were prevented from continuing to
provide the services called for under the investment advisory agreement, it is
expected that the Trustees would identify, and call upon each Fund's
shareholders to approve, a new investment adviser. If this were to occur, it is
not anticipated that the shareholders of any Fund would suffer any adverse
financial consequences.
<PAGE>
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GENERAL INFORMATION
- -------------------------------------------------------------------------------
CUSTODIAN, AND TRANSFER AND DIVIDEND PAYING AGENT
State Street Bank and Trust Company (the "Custodian") acts as Custodian
of the assets ot the Trust. Boston Financial Data Services, Inc. ("BFDS"), acts
as the transfer agent and dividend disbursing agent for the Trust and in doing
so performs certain bookkeeping, data processing and administrative services for
the Trust and each Fund.
EXPENSES OF THE TRUST
Each Fund bears all expenses of its operations other than those incurred by
Evergreen Asset under its respective Advisory Agreement and Administration
Agreement with the Trust. In particular, the Funds pay investment advisory fees,
administrative fees, custodian fees and expenses, legal, accounting and auditing
fees, brokerage fees, interest and taxes, registration fees and expenses,
expenses of the transfer and dividend disbursing agent, the compensation and
expenses of Trustees who are not otherwise affiliated with the Trust, Evergreen
Asset or any of its affiliates, expenses of printing and mailing reports and
notices and proxy material to beneficial shareholders of the Trust, and any
extraordinary expenses. Expenses incurred jointly by the Funds are allocated
among the Funds in a manner determined by the Trustees to be fair and equitable.
The organizational expenses of each of the Funds have been capitalized and
will be amortized during the first five years of the Funds' operations. Such
amortization will reduce the amount of income available for payment as
dividends.
SHAREHOLDER RIGHTS
Pursuant to current interpretations of the Investment Company Act of 1940,
as amended (`"1940 Act"), each Participating Insurance Company will solicit
voting instructions from VA or VLI contract owners with respect to any matters
that are presented to a vote of shareholders. On any matter submitted to a vote
of shareholders, all the shares of the Trust then issued and outstanding and
entitled to vote shall be voted in the aggregate and not by Fund except for
matters concerning only a specific Fund. Certain matters approved by a vote of
shareholders of one Fund of the Trust may not be binding on a Fund whose
shareholders have not approved such matters. The holder of each share of the
Trust shall be entitled to one vote for each full share and a fractional vote
for each fractional share. Shares of one Fund may not bear the same economic
relationship to the Trust as shares of another Fund.
The Trust is not required to hold annual meetings of shareholders and does
not plan to do so. The Trustees may call special meetings of shareholders for
action by shareholder vote as may be required by the 1940 Act or the Trust's
Declaration of Trust. The Declaration of Trust provides that shareholders can
remove Trustees by a vote of two-thirds of the vote of the outstanding shares
and the Declaration sets out the procedures to be followed. The Trustees will be
a self-perpetuating body until fewer than 50% of the Trustees, then serving as
Trustees, are Trustees who were elected by shareholders. At that time a meeting
of shareholders will be called to elect additional Trustees.
The Declaration of Trust may be amended by a vote of a majority of the
Trustees; provided, if any such amendment materially adversely affects the
rights of any shares of any series or any class with respect to matters to which
such amendment is applicable, such amendment shall be subject to approval by
holders of a majority of the outstanding voting securities, as that term is
defined in the Investment Company Act of 1940, of such series or class. Shares
have no pre-emptive or conversion rights and are fully paid and nonassessable.
When a majority is required, it means the lesser of 67% or more of the shares
present at a meeting when the holders of more than 50% of the outstanding shares
are present or represented by proxy, or more than 50% of the outstanding shares.
DESCRIPTION OF SHARES
The Declaration of Trust permits the Trustees to establish and designate
series or classes in addition to the Funds. Each share of any series or class
represents an equal proportionate share in the net assets of that series or
class with each other share of that series or class. The Trustees may divide or
combine the shares of any series or class into a greater or lesser number of
shares of that series or class without thereby changing the proportionate
interests in the assets of that series or class. Upon liquidation of a
particular series or class, the shareholders of that series or class shall be
entitled to share pro rata in the net assets of such series or class available
for distribution to shareholders inquiries
Any inquiries regarding the Trust should be directed to the Trust at
the telephone number or address shown on the cover page of this Prospectus.
All inquiries regarding the VA or VLI contracts should be directed to the
Participating Insurance Company, as indicated in the VA or VLI prospectus
accompanying this Prospectus.
PERFORMANCE
From time to time, the Trust may advertise the "average annual or
cumulative total return" of the Funds and may compare the performance of the
Funds with that of other mutual funds with similar investment objectives as
listed in rankings prepared by Lipper Analytical Services, Inc., or similar
independent services monitoring mutual fund performance, and with appropriate
securities or other relevant indices. The "average annual total return" of a
Fund refers to the average annual compounded rate of return over the stated
period that would equate an initial investment in that Fund at the beginning of
the period to its ending redeemable value, assuming reinvestment of all
dividends and distributions and deduction of all recurring charges. Figures will
be given for the recent one, five and ten year periods and for the life of the
Fund if it has not been in existence for any such periods. When considering
"average annual total return" figures for periods longer than one year. it is
important to note that a Fund's annual total return for any given year might
have been greater or less than its average for the entire period. "Cumulative
total return" represents the total change in value of an investment in a Fund
for a specified period (again reflecting changes in Fund share prices and
assuming reinvestment of Fund distributions).
The performance of each Fund will vary from time to time in response to
fluctuations in market conditions, interest rates, the composition of the Fund's
investments and expenses. Consequently, a Fund's performance figures are
historical and should not be considered representative of the performance of the
Fund for any future period.
Evergreen Asset is the investment adviser of the Funds and to Evergreen
Fund, Evergreen Foundation Fund and Evergreen Growth and Income Fund. Each of
the Evergreen Fund, Evergreen Foundation Fund and Evergreen Growth and Income
Fund is substantially similar to the Trust's Evergreen VA Fund, Evergreen VA
Foundation Fund and Evergreen VA Growth and Income Fund, respectively, in that
each has the same investment objective and each is managed using substantially
the same investment strategies and techniques. See "Investment Objectives and
Policies."
As of the date of this Prospectus, the Funds had not commenced operations.
Set forth below is certain performance information regarding the Evergreen Fund,
Evergreen Foundation Fund and Evergreen Growth and Income Fund which has been
obtained from Evergreen Asset and is set forth in the current prospectuses and
statements of additional information of the Evergreen Fund, Evergreen Foundation
Fund and Evergreen Growth and Income Fund. Investors should not rely on the
following financial information as an indication of the future performance of
the Funds.
Average Annual Total Return of Comparable Funds
The average annual compounded total return for Class Y shares offered
by Evergreen Fund, Evergreen Foundation Fund and Evergreen Growth and Income
Fund for the most recently completed one, five and ten year fiscal periods is
set forth in the table below.
Evergreen Fund
1 Year 5 Years 10 Years
Ended Ended Ended
9/30/95 9/30/95 9/30/95
Class Y 26.79% 18.71% 12.75%
Evergreen Growth 1 Year 5 Years 10/15/86
and Income Fund Ended Ended (inception)
12/31/95 12/31/95 to 12/31/95
Class Y 32.94% 17.25% 13.37%
<PAGE>
Evergreen 1 Year 5 Years From 1/2/90
Foundation Fund Ended Ended (inception)
12/31/95 12/31/95 to 12/31/95 (1)
Class Y 29.69% 19.41% 17.17%
- -----------------------
(1) Reflects waiver of advisory fees and reimbursement of other expenses.
Without such waivers and reimbursements, the average annual total return during
this period would have been lower.
The calculations of total return assume the reinvestment of all
dividends and capital gains distributions on the reinvestment dates during the
period and the deduction of all recurring expenses that were charged to
shareholders' accounts. The above tables do not reflect charges and deductions
which are, or may be, imposed under the VA or VLI contracts.
GENERAL
Independent Accountants. KPMG Peat Marwick LLP, One Mellon Bank Center,
Pittsburgh, Pennsylvania 15219, serves as the independent public accountants of
the Trust.
Counsel. Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington,
D.C. 20036, acts as counsel for the Trust.
Liability Under Massachusetts Law. Under Massachusetts law, Trustees and
shareholders of a business trust may, in certain circumstances, be held
personally liable for its obligations. The Declarations of Trust under which the
Funds operate provide that no Trustee or shareholder will be personally liable
for the obligations of the Trust and that every written contract made by the
Trust contain a provision to that effect. If any Trustee or shareholder were
required to pay any liability of the Trust, that person would be entitled to
reimbursement from the general assets of the Trust.
Additional Information. This Prospectus and the Statement of Additional
Information, which has been incorporated by reference herein, do not contain all
the information set forth in the Registration Statements filed by the Trust with
the Commission under the Securities Act. Copies of the Registration Statements
may be obtained at a reasonable charge from the Commission or may be examined,
without charge, at the offices of the Commission in Washington, D.C.
<PAGE>
INVESTMENT ADVISER
Evergreen Asset Management Corp., 2500 Westchester Avenue, Purchase, New York
10577
CUSTODIAN & TRANSFER AGENT
State Street Bank & Trust Company, Box 9021, Boston, Massachusetts 02205-9827
LEGAL COUNSEL
Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W., Washington, D.C. 20036
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, One Mellon Bank Center, Pittsburgh, Pennsylvania 15219
*******************************************************************************
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
February 8, 1996
EVERGREEN VARIABLE TRUST
2500 Westchester Avenue, Purchase, New York 10577
800-807-2940
Evergreen VA Fund ("Evergreen")
Evergreen VA Growth and Income Fund ("Growth and Income")
Evergreen VA Foundation Fund ("Foundation")
This Statement of Additional Information pertains to the Funds listed
above. It is not a prospectus and should be read in conjunction with the
Prospectus dated February 8, 1996 for the Fund in which you are making or
contemplating an investment. The Funds are offered to (a) separate accounts
funding variable annuity and variable life insurance contracts issued by life
insurance companies ("Participating Insurance Companies"); and (b) qualified
pension and retirement plans. Copies of the Prospectus may be obtained without
charge by calling the number listed above.
TABLE OF CONTENTS
Page
Investment Objectives and Policies................................
Investment Restrictions...........................................
Certain Risk Considerations.......................................
Management........................................................
Investment Adviser................................................
Allocation of Brokerage...........................................
Additional Tax Information........................................
Net Asset Value...................................................
Additional Sale and Redemption Information....................
Glass-Steagall Act................................................
General Information...............................................
Performance Information...........................................
Financial Statements..............................................
INVESTMENT OBJECTIVES AND POLICIES
(See also "Description of the Funds - Investment Objectives
and Policies" in the Funds' Prospectus)
The investment objective of each Fund and a description of the securities
in which each Fund may invest is set forth under "Description of the Funds -
"Investment Objectives and Policies" in the Prospectus. The investment
objectives of Evergreen, Growth and Income and Foundation are fundamental and
cannot be changed without the approval of shareholders. The following expands
upon the discussion in the Prospectus regarding certain investments of each
Fund.
U.S. Government Securities
The types of U.S. government securities in which the Funds may invest
generally include direct obligations of the U.S. Treasury such as U. S. Treasury
bills, notes and bonds and obligations issued or guaranteed by U.S. government
agencies or instrumentalities. These securities are backed by:
(i) the full faith and credit of the U.S. Treasury;
(ii) the issuer's right to borrow from the U.S. Treasury;
(iii) the discretionary authority of the U.S. government to purchase
certain obligations of agencies or instrumentalities; or
(iv) the credit of the agency or instrumentality issuing the obligations.
<PAGE>
Examples of agencies and instrumentalities that may not always receive
financial support from the U.S. government are:
(i) Farm Credit System, including the National Bank for Cooperatives,
Farm Credit Banks and Banks for Cooperatives;
(ii) Farmers Home Administration;
(iii) Federal Home Loan Banks;
(iv) Federal Home Loan Mortgage Corporation;
(v) Federal National Mortgage Association;
(vi) Government National Mortgage Association; and
(vii) Student Loan Marketing Association
Restricted and Illiquid Securities
Each Fund may invest in restricted and illiquid securities. The ability of
the Board of Trustees ("Trustees") to determine the liquidity of certain
restricted securities is permitted under a Securities and Exchange Commission
("SEC") Staff position set forth in the adopting release for Rule 144A under the
Securities Act of 1933 (the "Rule"). The Rule is a non-exclusive, safe-harbor
for certain secondary market transactions involving securities subject to
restrictions on resale under federal securities laws. The Rule provides an
exemption from registration for resales of otherwise restricted securities to
qualified institutional buyers. The Rule was expected to further enhance the
liquidity of the secondary market for securities eligible for sale under the
Rule. The Funds which invest in Rule 144A securities believe that the Staff of
the SEC has left the question of determining the liquidity of all restricted
securities (eligible for resale under the Rule) for determination by the
Trustees. The Trustees consider the following criteria in determining the
liquidity of certain restricted securities:
(i) the frequency of trades and quotes for the security;
(ii) the number of dealers willing to purchase or sell the security and
the number of other potential buyers;
(iii) dealer undertakings to make a market in the security; and
(iv) the nature of the security and the nature of the marketplace trades.
Restricted securities would generally be acquired either from institutional
investors who originally acquired the securities in private placements or
directly from the issuers of the securities in private placements. Restricted
securities and securities that are not readily marketable may sell at a discount
from the price they would bring if freely marketable.
Lending of Portfolio Securities
Each Fund may lend its portfolio securities to generate income and to
offset expenses. The collateral received when a Fund lends portfolio securities
must be valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the lending Fund.
During the time portfolio securities are on loan, the borrower pays the Fund any
dividends or interest paid on such securities. Loans are subject to termination
at the option of the Fund or the borrower. A Fund may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or equivalent collateral
to the borrower or placing broker. A Fund does not have the right to vote
securities on loan, but would terminate the loan and regain the right to vote if
that were considered important with respect to the investment.
<PAGE>
Reverse Repurchase Agreements
The Funds may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase agreement, a
Fund transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in the
future the Fund will repurchase the portfolio instrument by remitting the
original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable a Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous,
but the ability to enter into reverse repurchase agreements does not ensure that
the Fund will be able to avoid selling portfolio instruments at a
disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of a Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and maintained until the transaction is settled.
OPTIONS
Each Fund may write covered call options to a limited extent on their portfolio
securities ("covered options") in an attempt to earn additional income. The Fund
will write only covered call option contracts and will receive premium income
from the writing of such contracts. Each Fund may purchase call options to close
out a previously written call option. In order to do so, the Fund will make a
"closing purchase transaction" -- the purchase of a call option on the same
security with the same exercise price and expiration date as the call option
which it has previously written. A Fund will realize a profit or loss from a
closing purchase transaction if the cost of the transaction is less or more than
the premium received from the writing of the option. If an option is exercised,
a Fund realizes a long-term or short-term gain or loss from the sale of the
underlying security and the proceeds of the sale are increased by the premium
originally received.
Junk Bonds
Consistent with its strategy of investing in "undervalued" securities, Growth
and Income may invest in lower medium and low-quality bonds also known as "junk
bonds" and may also purchase bonds in default if, in the opinion of the Adviser,
there is significant potential for capital appreciation. Growth and Income,
however, will not invest more than 5% of its total assets in debt securities
which are rated below investment grade. These bonds are regarded as speculative
with respect to the issuer's continuing ability to meet principal and interest
payments. High yield bonds may be more susceptible to real or perceived adverse
economic and competitive industry conditions than investment grade bonds. A
projection of an economic downturn, or higher interest rates, for example, could
cause a decline in high yield bond prices because such events could lessen the
ability of highly leveraged companies to make principal and interest payments on
their debt securities. In addition, the secondary trading market for high yield
bonds may be less liquid than the market for higher grade bonds, which can
adversely affect the ability to dispose of such securities.
Variable and Floating Rate Securities
Foundation may invest no more than 5% of its total assets, at the time of the
investment in question, in variable and floating rate securities. The terms of
variable and floating rate instruments provide for the interest rate to be
adjusted according to a formula on certain predetermined dates. Variable and
floating rate instruments that are repayable on demand at a future date are
deemed to have a maturity equal to the time remaining until the principal will
be received on the assumption that the demand feature is exercised on the
earliest possible date. For the purposes of evaluating the interest-rate
sensitivity of the Fund, variable and floating rate instruments are deemed to
have a maturity equal to the period remaining until the next interest-rate
readjustment. For the purposes of evaluating the credit risks of variable and
floating rate instruments, these instruments are deemed to have a maturity equal
to the time remaining until the earliest date the Fund is entitled to demand
repayment of principal.
<PAGE>
INVESTMENT RESTRICTIONS
.........Except as noted, the investment restrictions set forth below are
fundamental and may not be changed with respect to each Fund without the
affirmative vote of a majority of the outstanding voting securities of the Fund.
Where an asterisk (*) appears, the relevant policy is non-fundamental with
respect to that Fund and may be changed by the Fund's investment adviser without
shareholder approval, subject to review and approval by the Trustees. As used in
this Statement of Additional Information and in the Prospectus, "a majority of
the outstanding voting securities of the Fund" means the lesser of (1) the
holders of more than 50% of the outstanding shares of beneficial interest of the
Fund or (2) 67% of the shares present if more than 50% of the shares are present
at a meeting in person or by proxy.
1.........No Fund may invest more than 5% of its total assets, at the time of
the investment in question, in the securities of any one issuer other than the
U.S. government and its agencies or instrumentalities, except that up to 25% of
the value of a Fund's total assets may be invested without regard to such 5%
limitation.
2.........No Fund may purchase more than 10% of the voting securities of any one
issuer other than the U.S. government and its agencies or instrumentalities.
3.........No Fund may invest in companies for the purpose of exercising control
or management.
4.........No Fund* may purchase securities on margin, except that each Fund may
obtain such short-term credits as may be necessary for the clearance of
transactions. A deposit or payment by a Fund of initial or variation margin in
connection with financial futures contracts or related options transactions is
not considered the purchase of a security on margin.
5.........No Fund* may invest more than 15% of its total assets (10% of total
assets in the case of Growth and Income) in securities of unseasoned issuers
that have been in continuous operation for less than three years, including
operating periods of their predecessors.
6.........No Fund* will underwrite any issue of securities except as they may be
deemed an underwriter under the Securities Act of 1933 in connection with the
sale of securities in accordance with their investment objectives, policies and
limitations.
7.........No Fund* may purchase, sell or invest in interests in oil, gas or
other mineral exploration or development programs.
8.........No Fund may invest 25% or more of its total assets in the securities
of issuers conducting their principal business activities in any one industry;
provided, that this limitation shall not apply (i) with respect to each Fund, to
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities, or municipal securities. For purposes of this restriction,
utility companies, gas, electric, water and telephone companies will be
considered separate industries.
9.........No Fund* may invest more than 5% of its net assets in warrants, and of
this amount, no more than 2% of each Fund's net assets may be invested in
warrants that are listed on neither the New York nor the American Stock
Exchanges.
10.........No Fund* may purchase or retain the securities of any issuer if (i)
one or more officers or Trustees of a Fund or its investment adviser
individually owns or would own, directly or beneficially, more than 1/2 of 1% of
the securities of such issuer, and (ii) in the aggregate, such persons own or
would own, directly or beneficially, more than 5% of such securities.
11.........No Fund* may make short sales of securities unless, at the time of
each such sale and thereafter while a short position exists, each Fund owns an
equal amount of securities of the same issue or owns securities which, without
payment by the Fund of any consideration, are convertible into, or are
exchangeable for, an equal amount of securities of the same issue.
<PAGE>
12..............No Fund may lend its portfolio securities, unless the borrower
is a broker, dealer or financial institution that pledges and maintains
collateral with the Fund consisting of cash or securities issued or guaranteed
by the U.S. government having a value at all times not less than 100% of the
current market value of the loaned securities, including accrued interest,
provided that the aggregate amount of such loans shall not exceed 30% of the
Fund's total assets.
13.........No Fund* may purchase, sell or invest in commodities or commodity
contracts.
14.............No Fund* may purchase, sell or invest in real estate or interests
in real estate, except that (i) each Fund may purchase, sell or invest in
marketable securities of companies holding real estate or interests in real
estate, including real estate investment trusts.
15.........No Fund may borrow money, issue senior securities or enter into
reverse repurchase agreements, except for temporary or emergency purposes, and
not for leveraging, and then in amounts not in excess of 10% of the value of
each Fund's total assets at the time of such borrowing; or mortgage, pledge or
hypothecate any assets except in connection with any such borrowing and in
amounts not in excess of the lesser of the dollar amounts borrowed or 10% of the
value of each Fund's total assets at the time of such borrowing, including
reverse repurchase agreements, exceed 5% of the value of its total assets. No
Fund will enter into reverse repurchase agreements exceeding 5% of the value of
its total assets.
16.........No Fund* may participate on a joint or joint and several basis in any
trading account in any securities. (The "bunching of orders for the purchase or
sale of portfolio securities with its investment adviser or accounts under its
management to reduce brokerage commissions, to average prices among them or to
facilitate such transactions is not considered a trading account in securities
for purposes of this restriction).
17.........No Fund* may write, purchase or sell put or call options, or
combinations thereof, except that each Fund is authorized to write covered call
options on portfolio securities and to purchase call options in closing purchase
transactions, provided that (i) such options are listed on a national securities
exchange, (ii) the aggregate market value of the underlying securities does not
exceed 25% of the Fund's net assets, taken at current market value on the date
of any such writing, and (iii) the Fund retains the underlying securities for so
long as call options written against them make the shares subject to transfer
upon the exercise of any options.
19.........Each Fund* will purchase securities of investment companies only in
open-market transactions involving customary broker's commissions. However,
these limitations are not applicable if the securities are acquired in a merger,
consolidation or acquisition of assets. It should be noted that investment
companies incur certain expenses such as management fees and therefore any
investment by a Fund in shares of another investment company would be subject to
such duplicate expenses.
20.........No Fund* may invest more than 15% of its net assets in illiquid
securities and other securities which are not readily marketable, including
repurchase agreements which have a maturity of longer than seven days, but
excluding securities eligible for resale under Rule 144A of the Securities Act
of 1933, as amended, which the Trustees have determined to be liquid.
CERTAIN RISK CONSIDERATIONS
There can be no assurance that a Fund will achieve its investment objective
and an investment in the Fund involves certain risks which are described under
"Description of the Funds - Investment Objectives and Policies" and "Investment
Practices and Restrictions" in the Prospectus.
<PAGE>
MANAGEMENT
Trustees & Officers
Overall responsibility for management of the Trust rests with the Trustees.
who are elected by the Shareholders of the Trust. The Trustees, in turn, elect
the officers of the Trust to supervise actively its day-to-day operations.
The current Trustees and officers of the Trust, their ages, addresses, and
principal occupations during the past five years are set forth below.
<PAGE>
Position(s) Held Principal Occupation
Name and Address With the Trust During Past 5 Years
Mark B. Koogler Trustee and President Associate General
One Nationwide Plaza Counsel, Office of
Columbus, Ohio 43216 General Counsel of
the Nationwide Insurance
Enterprise, since February
1994. Formerly served in
various capacities as an
attorney in the Office of
General Counsel of the
Nationwide Insurance
Enterprise.
Steven R. Savini' Trustee Counsel, Office of General
One Nationwide Plaza Counsel, Nationwide Insur-
Columbus, Ohio 43216 ance Enterprise since June,
1994. Formerly served as
Compliance Specialist for
Nationwide Life Insurance
Company.
David E. Simaitis Trustee and Secretary Counsel, Office
One Nationwide Plaza of General Counsel
Columbus, Ohio 43216 of the Nationwide
Insurance Enterprise,
since January, 1994.
Formerly served in
various capacities
as an attorney in
the Office of General
Counsel of the
Nationwide Insurance
Enterprise.
James P Laird, Jr. Vice President Treasurer of Nationwide One
Nationwide Plaza and Treasurer Financial Services, Inc.
Columbus, Ohio 43216 the Administrator of First
Union Investment Trust
since November, 1987.
[THE FOLLOWING TRUSTEES AND OFFICERS WILL BE ELECTED PRIOR TO EFFECTIVENESS]
James S. Howell (70), 4124 Crossgate Road, Charlotte, NC-Chairman and Trustee.
Retired Vice President of Lance Inc. (food manufacturing); Chairman of the
Distribution Comm. Foundation for the Carolinas from 1989 to 1993.
Russell A. Salton, III, M.D. (47), Primary Physician Care, 1515 Mockingbird
Lane, Charlotte, NC-Trustee. President, Primary Physician Care since 1990.
Michael S. Scofield (52), 212 S. Tryon Street Suite 980, Charlotte, NC-Trustee.
Attorney, Law Offices of Michael S. Scofield since prior to 1989.
John J. Pileggi (35), 237 Park Avenue, Suite 910, New York, NY-President and
Treasurer. Senior Managing Director, Furman Selz Incorporated since 1992,
Managing Director from 1984 to 1992.
Joan V. Fiore (39), 237 Park Avenue, Suite 910, New York, NY-Secretary. Managing
Director and Counsel, Furman Selz Incorporated since 1991; Staff Attorney,
Securities and Exchange Commission from 1986 to 1991.
- --------
* Mr. Bam and Mr.Pettit may each be deemed to be an "interested person"
within the meaning of the Investment Company Act of 1940, as amended (the "1940
Act"). The officers of the Trust are all officers and/or employees of Furman
Selz LLC. The Trustees and officers listed above hold the same positions with a
total of twelve registered investment companies offering a total of thirty-four
investment funds within the Evergreen mutual fund complex. The officers of the
Trust receive no direct compensation from the Trust for performing their duties.
Furman Selz LLC act as the distributor for shares of the Evergreen mutual funds
that are offered to the general public.
The Funds do not pay any direct remuneration to any officer or Trustee who
is an "affiliated person" of either First Union National Bank of North Carolina
or Evergreen Asset Management Corp. or their affiliates. See "Investment
Adviser." Currently, none of the Trustees is an "affiliated person" as defined
in the 1940 Act. The Trust pays each Trustee who is not an "affiliated person"
an annual retainer of $XXXXXX and a fee of $XXXX per meeting attended, plus
expenses.
INVESTMENT ADVISER
(See also "Management of the Funds" in the Funds' Prospectus)
The investment adviser to the Funds is Evergreen Asset Management Corp., a
New York corporation, with offices at 2500 Westchester Avenue, Purchase, New
York or ("Evergreen Asset" or the "Adviser."). Evergreen Asset is owned by First
Union National Bank of North Carolina ("FUNB") which, in turn, is a subsidiary
of First Union Corporation ("First Union"), a bank holding company headquartered
in Charlotte, North Carolina. The Directors of Evergreen Asset are Richard K.
Wagoner and Barbara I. Colvin. The executive officers of Evergreen Asset are
Stephen A. Lieber, Chairman and Co-Chief Executive Officer, Nola Maddox Falcone,
President and Co-Chief Executive Officer, Theodore J. Israel, Jr., Executive
Vice President, Joseph J. McBrien, Senior Vice President and General Counsel,
and George R. Gaspari, Senior Vice President and Chief Financial Officer.
On June 30, 1994, Evergreen Asset and Lieber and Company ("Lieber") were
acquired by First Union through certain of its subsidiaries. Evergreen Asset was
acquired by FUNB, a wholly-owned subsidiary (except for directors' qualifying
shares) of First Union, by merger into EAMC Corporation ("EAMC") a wholly-owned
subsidiary of FUNB. EAMC then assumed the name "Evergreen Asset Management
Corp." and succeeded to the business of Evergreen Asset. At that time, EAMC also
entered into a new sub-advisory agreement with Lieber pursuant to which Lieber
provides certain services to Evergreen Asset in connection with its duties as
investment adviser. The partnership interests in Lieber, a New York general
partnership, were acquired by Lieber I Corp. and Lieber II Corp., which are both
wholly-owned subsidiaries of FUNB. The business of Lieber is being continued.
Under its Investment Advisory Agreement with the Trust, the Adviser has
agreed to furnish each Fund with reports, statistical and research services and
recommendations with respect to each Fund's portfolio of investments. Each Fund
pays the cost of all of its other expenses and liabilities, including expenses
and liabilities incurred in connection with maintaining their registration under
the Securities Act of 1933, as amended, and the 1940 Act, printing prospectuses
(for existing shareholders) as they are updated, state qualifications, share
certificates, mailings, brokerage, custodian and stock transfer charges,
printing, legal and auditing expenses, expenses of shareholder meetings and
reports to shareholders. Notwithstanding the foregoing, the Adviser will pay the
costs of printing and distributing prospectuses used for prospective
shareholders unless such costs are paid by Participating Insurance Companies.
The method of computing the investment advisory fee for each Fund is
described in the Fund's Prospectus.
The Investment Advisory Agreement is terminable with respect to a Fund,
without the payment of any penalty, on sixty days' written notice, by a vote of
the holders of a majority of the Fund's outstanding shares, or by a vote of a
majority of the Trust's Trustees or by the Adviser. The Investment Advisory
Agreement will automatically terminate in the event of its assignment. The
Investment Advisory Agreement provides in substance that the Adviser shall not
be liable for any action or failure to act in accordance with its duties
thereunder in the absence of willful misfeasance, bad faith or gross negligence
on the part of the Adviser or of reckless disregard of its obligations
thereunder. The Investment Advisory Agreement was approved by the sole
shareholder of each Fund by written consent on February 8, 1996 and was also
approved by the Trustees, including a majority of the "disinterested Trustees,
on that date. The Investment Advisory Agreement became effective on February 8,
1996 and will continue in effect until June 30, 1997, and thereafter from year
to year provided that their continuance is approved annually by a vote of a
majority of the Trustees of the Trust including a majority of those Trustees who
are not parties thereto or "interested persons" (as defined in the 1940 Act) of
any such party, cast in person at a meeting duly called for the purpose of
voting on such approval or a majority of the outstanding voting shares of each
Fund.
The Sub-Advisory Agreement was approved by the sole shareholder of each
Fund by written consent on February 8, 1996 and was also approved by the
Trustees, including a majority of the "disinterested Trustees, on that date. The
Sub-Advisory Agreement became effective on February 8, 1996 and will continue in
effect until June 30, 1997, and thereafter from year to year provided that their
continuance is approved annually by a vote of a majority of the Trustees of the
Trust including a majority of those Trustees who are not parties thereto or
"interested persons" (as defined in the 1940 Act) of any such party, cast in
person at a meeting duly called for the purpose of voting on such approval or a
majority of the outstanding voting shares of each Fund.
Certain other clients of the Adviser may have investment objectives and
policies similar to those of the Funds. The Adviser (including the sub-adviser)
may, from time to time, make recommendations which result in the purchase or
sale of a particular security by its other clients simultaneously with a Fund.
If transactions on behalf of more than one client during the same period
increase the demand for securities being purchased or the supply of securities
being sold, there may be an adverse effect on price or quantity. It is the
policy of the Adviser to allocate advisory recommendations and the placing of
orders in a manner which is deemed equitable by the Adviser to the accounts
involved, including the Funds. When two or more of the clients of the Adviser
(including one or more of the Funds) are purchasing or selling the same security
on a given day from the same broker-dealer, such transactions may be averaged as
to price.
Although the investment objectives of the Funds are not the same, and
their investment decisions are made independently of each other, they rely upon
the same resources for investment advice and recommendations. Therefore, on
occasion, when a
<PAGE>
particular security meets the different investment objectives of the various
Funds, they may simultaneously purchase or sell the same security. This could
have a detrimental effect on the price and quantity of the security available to
each Fund. If simultaneous transactions occur, the Adviser attempts to allocate
the securities, both as to price and quantity, in accordance with a method
deemed equitable to each Fund and consistent with their different investment
objectives. In some cases, simultaneous purchases or sales could have a
beneficial effect, in that the ability of one Fund to participate in volume
transactions may produce better executions for that Fund.
Each Fund has adopted procedures under Rule 17a-7 of the 1940 Act to permit
purchase and sales transactions to be effected between each Fund and the other
registered investment companies for which either Evergreen Asset or FUNB acts as
investment adviser or between the Fund and any advisory clients of Evergreen
Asset, FUNB or Lieber. Each Fund may from time to time engage in such
transactions but only in accordance with these procedures and if they are
equitable to each participant and consistent with each participant's investment
objectives.
Evergreen Asset will provide administrative services to each of the Funds
for a fee based on the average daily net assets of each fund administered by
Evergreen Asset for which Evergreen Asset or FUNB also serves as investment
adviser, calculated daily and payable monthly at the following annual rates:
.050% on the first $7 billion; .035% on the next $3 billion; .030% on the next
$5 billion; .020% on the next $10 billion; .015% on the next $5 billion; and
.010% on assets in excess of $30 billion. Furman Selz LLC, serves as
sub-administrator to the Funds and is entitled to receive a fee from each Fund
calculated on the average daily net assets of each Fund at a rate based on the
total assets of the mutual funds administered by Evergreen Asset for which FUNB
or Evergreen Asset also serve as investment adviser, calculated in accordance
with the following schedule: .0100% of the first $7 billion; .0075% on the next
$3 billion; .0050% on the next $15 billion; and .0040% on assets in excess of
$25 billion. The total assets of mutual funds administered by Evergreen Asset
for which Evergreen Asset or FUNB served as investment adviser as of December
31, 1995 were approximately $10.4 billion.
ALLOCATION OF BROKERAGE
Decisions regarding each Fund's portfolio are made by the Adviser, subject
to the supervision and control of the Trustees. Orders for the purchase and sale
of securities and other investments are placed by employees of the Adviser, all
of whom are associated with Lieber. In general, the same individuals perform the
same functions for the other funds managed by the Adviser. A Fund will not
effect any brokerage transactions with any broker or dealer affiliated directly
or indirectly with the Adviser unless such transactions are fair and reasonable,
under the circumstances, to the Fund's shareholders. Circumstances that may
indicate that such transactions are fair or reasonable include the frequency of
such transactions, the selection process and the commissions payable in
connection with such transactions.
A substantial portion of the transactions in equity securities for each
Fund will occur on domestic stock exchanges. Transactions on stock exchanges
involve the payment of brokerage commissions. In transactions on stock exchanges
in the United States, these commissions are negotiated, whereas on many foreign
stock exchanges these commissions are fixed. In the case of securities traded in
the foreign and domestic over-the-counter markets, there is generally no stated
commission, but the price usually includes an undisclosed commission or markup.
Over-the-counter transactions will generally be placed directly with a principal
market maker, although the Fund may place an over-the-counter order with a
broker-dealer if a better price (including commission) and execution are
available.
It is anticipated that most purchase and sale transactions involving
fixed income securities will be with the issuer or an underwriter or with major
dealers in such securities acting as principals. Such transactions are normally
on a net basis and generally do not involve payment of brokerage commissions.
However, the cost of securities purchased from an underwriter usually includes a
<PAGE>
commission paid by the issuer to the underwriter. Purchases or sales from
dealers will normally reflect the spread between bid and ask prices.
In selecting firms to effect securities transactions, the primary
consideration of each Fund shall be prompt execution at the most favorable
price. A Fund will also consider such factors as the price of the securities and
the size and difficulty of execution of the order. If these objectives may be
met with more than one firm, the Fund will also consider the availability of
statistical and investment data and economic facts and opinions helpful to the
Fund. To the extent that receipt of these services for which the Adviser or its
affiliates might otherwise have paid, it would tend to reduce their expenses.
Under Section 11(a) of the Securities Exchange Act of 1934, as amended, and
the rules adopted thereunder by the SEC, Lieber may be compensated for effecting
transactions in portfolio securities for a Fund on a national securities
exchange provided the conditions of the rules are met. Each Fund advised by
Evergreen Asset has entered into an agreement with Lieber authorizing Lieber to
retain compensation for brokerage services. In accordance with such agreement,
it is contemplated that Lieber, a member of the New York and American Stock
Exchanges, will, to the extent practicable, provide brokerage services to the
Fund with respect to substantially all securities transactions effected on the
New York and American Stock Exchanges. In such transactions, a Fund will seek
the best execution at the most favorable price while paying a commission rate no
higher than that offered to other clients of Lieber or that which can be
reasonably expected to be offered by an unaffiliated broker-dealer having
comparable execution capability in a similar transaction. However, no Fund will
engage in transactions in which Lieber would be a principal. While no Fund
contemplates any ongoing arrangements with other brokerage firms, brokerage
business may be given from time to time to other firms. In addition, the
Trustees have adopted procedures pursuant to Rule 17e-1 under the 1940 Act to
ensure that all brokerage transactions with Lieber, as an affiliated
broker-dealer, are fair and reasonable.
Any profits from brokerage commissions accruing to Lieber as a result of
portfolio transactions for the Fund will accrue to FUNB and to its ultimate
parent, First Union. The Investment Advisory Agreements does not provide for a
reduction of the Adviser's fee with respect to any Fund by the amount of any
profits earned by Lieber from brokerage commissions generated by portfolio
transactions of the Fund.
ADDITIONAL TAX INFORMATION
(See also "Sale and Redemption of Shares - Tax Status" in the Funds'Prospectus)
It is the policy of each Fund of the Trust to meet the requirements
necessary to qualify as a "regulated investment company" under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). By following such
policy, each Fund expects to eliminate or reduce to a nominal amount the federal
income taxes to which it may be subject.
In order to qualify as a regulated investment company, each Fund must,
among other things, (1) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities, foreign currencies or other income
(including gains from options, futures or forward contracts) derived with
respect to its business of investing in stock, securities or currencies, (2)
derive less than 30% of its gross income from the sale or other disposition of
stock, securities, options, futures, forward contracts, and certain foreign
currencies (or options, futures, or forward contracts on foreign currencies)
held for less than three months, and (3) diversify its holdings so that at the
end of each quarter of its taxable year (i) at least 50% of the market value of
the Fund's assets is represented by cash or cash items, U.S. government
securities, securities of other regulated investment companies, and other
securities limited, in respect of any one issuer, to an amount not greater than
5% of the value of the Fund's assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its assets
is invested in the securities of any one issuer (other than U.S. government
securities or the securities of other regulated investment companies) or of two
or more issuers that the Fund controls and that are engaged in the same,
similar, or related trades or businesses. These requirements may restrict the
degree to which a Fund may engage in short-term trading and limit the range of
the Fund's investments. If a Fund qualifies as a regulated investment company,
it will not be subject to federal income tax on the part of its income
distributed to shareholders, provided the Fund distributes during its taxable
year at least (a) 90% of its taxable net investment income (generally,
dividends, interest, certain other income, and the excess, if any, of net
short-term capital gain over net long-term loss), and (b) 90% of the excess of
(i) its tax-exempt interest income less (ii) certain deductions attributable to
that income. Each Fund intends to make sufficient distributions to shareholders
to meet this requirement. For a discussion of the tax consequences of variable
annuity contracts, refer to the prospectus of the variable annuity or variable
life insurance contracts offered by the Participating Insurance Company.
Variable annuity contracts purchased through insurance company separate accounts
provide for the accumulation of all earnings from interest, dividends, and
capital appreciation without current federal income tax liability for the owner.
Depending on the variable annuity contract, distributions from the contract may
be subject to ordinary income tax and, in addition, on distributions before age
59-1/2, a 10% penalty tax. Only the portion of a distribution attributable to
income on the investment in the contract is subject to federal income tax.
Investors should consult with competent tax advisers for a more complete
discussion of possible tax consequences in a particular situation.
The Code imposes a non-deductible excise tax on regulated investment
companies that do not distribute in each calendar year (regardless of whether
they otherwise have a non-calendar taxable year) an amount equal to 98% of their
"ordinary income" (as defined) for the calendar year plus 98% of their capital
gain net income (as defined) for the 1-year period ending on October31 of such
calendar year. The balance, if any, of such income must be distributed during
the next calendar year. For the foregoing purposes, a Fund is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year. If distributions during a calendar year were less
than the required amount, a particular Fund would be subject to a non-deductible
excise tax equal to 4% of the deficiency.
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable life insurance and variable annuity contracts
("variable insurance contracts") held in the Funds. The Code provides that a
variable insurance contract shall not be treated as an annuity contract or life
insurance contract for the current or any prior period for which the investments
are not, in accordance with regulations prescribed by the U.S. Treasury
Department, adequately diversified. Disqualification of the variable insurance
contract as an annuity contract or life insurance contract would result in
immediate imposition of federal income tax on variable insurance contract owners
with respect to earnings allocable to the contract (including, upon
disqualification, accumulated earnings), while the liability would generally
arise prior to the receipt of payments under the contract. Section 817(h)(2) of
the Code is a safe harbor provision which provides that variable insurance
contracts meet the diversification requirements if, as of the close of each
quarter, the underlying assets meet the diversification standards for a
regulated investment company and no more than 55% of the total assets consists
of cash, cash items, U.S. government securities and securities of other
regulated investment companies. The U.S. Treasury Department has issued
Regulations (Treas. Reg. 1.817-5), that establish diversification requirements
for the investment portfolios underlying variable insurance contracts. The
Regulations amplify the diversification requirements for variable annuity
contracts set forth in Section 817(h) of the Code and provide an alternative to
the safe harbor provision described above. Under the Regulations, an investment
portfolio will be deemed adequately diversified if: (1) no more than 55% of the
value of the total assets of the portfolio is represented by any one investment;
(2) no more than 70% of such value is represented by any two investments; (3) no
more than 80% of such value is represented by any three investments; and (4) no
more than 90% of such value is represented by any four investments. For purposes
of these Regulations all securities of the same issuer are treated as a single
investment. The Regulations provide that, in the case of a regulated investment
company whose shares are available to the public only through variable insurance
contracts which meet certain other requirements, the diversification tests are
applied by reference to the underlying assets owned by the regulated investment
company rather than by reference to the shares of the regulated investment
company owned under the annuity contract. Each Fund intends to meet the
reguirements for application df the diversification tests on this look-through
basis. The Code provides that for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable insurance
contracts by Section 817(h) of the Code have been met, "each United States
government agency or instrumentality shall be treated as a separate issuer.
Each Fund will be managed in such a manner as to comply with the
diversification requirements. It is possible that in order to comply with the
diversification requirements, less desirable investment decisions may be made
which would affect the investment performance of such Fund.
NET ASSET VALUE
The following information supplements that set forth in the Fund's
Prospectus under the the Section entitled "Sale and Redemption of Shares".
On each Fund business day on which a purchase or redemption order is
received by a Fund and trading in the types of securities in which a Fund
invests might materially affect the value of Fund shares, the per share net
asset value of each such Fund is computed in accordance with the Declaration of
Trust and By-Laws governing each Fund as of the next close of regular trading on
the New York Stock Exchange (the "Exchange") (currently 4:00 p.m. Eastern time)
by dividing the value of the Fund's total assets, less its liabilities, by the
total number of its shares then outstanding. A Fund business day is any weekday,
exclusive of national holidays on which the Exchange is closed and Good Friday.
For each Fund, securities for which the primary market is on a domestic or
foreign exchange and over-the-counter securities admitted to trading on the
NASDAQ National List are valued at the last quoted sale or, if no sale, at the
mean of closing bid and asked prices and portfolio bonds are presently valued by
a recognized pricing service when such prices are believed to reflect the fair
value of the security. Over-the-counter securities not included in the NASDAQ
National List for which market quotations are readily available are valued at a
price quoted by one or more brokers. If accurate quotations are not available,
securities will be valued at fair value determined in good faith by the Board of
Trustees.
To the extent that any Fund invests in non-U.S. dollar denominated
securities, the value of all assets and liabilities will be translated into
United States dollars at the mean between the buying and selling rates of the
currency in which such a security is denominated against United States dollars
last quoted by any major bank. If such quotations are not available, the rate of
exchange will be determined in accordance with policies established by the Fund.
The Trustees will monitor, on an ongoing basis, a Fund's method of valuation.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York. In addition, European or Far Eastern
securities trading generally or in a particular country or countries may not
take place on all business days in New York. Furthermore, trading takes place in
various foreign markets on days which are not business days in New York and on
which the Fund's net asset value is not calculated. Such calculation does not
take place contemporaneously with the determination of the prices of the
majority of the portfolio securities used in such calculation. Events affecting
the values of portfolio securities that occur between the time their prices are
determined and the close of the Exchange will not be reflected in a Fund's
calculation of net asset value unless the Trustees deem that the particular
event would materially affect net asset value, in which case an adjustment will
be made. Securities transactions are accounted for on the trade date, the date
the order to buy or sell is executed. Dividend income and other distributions
are recorded on the ex-dividend date, except certain dividends and distributions
from foreign securities which are recorded as soon as the Fund is informed after
the ex-dividend date.
ADDITIONAL SALE AND REDEMPTION INFORMATION
Shares of the Trust are sold continuously to VA and VLI accounts of
Participating Insurance Companies and to qualified pension and retirement plans.
The Trust may suspend the right of redemption or postpone the date of payment
for shares during any period when (1) trading on the Exchange is restricted by
applicable rules and regulations of the SEC, (2) the Exchange is closed for
other than customary weekend and holiday closings, (3) the SEC has by order
permitted such suspension, or (4) an emergency exists as determined by the SEC.
The Trust may redeem shares involuntarily if redemption appears appropriate
in light of the Trust's responsibilities under the 1940 Act.
GLASS STEAGALL ACT
The Glass-Steagall Act and other banking laws and regulations presently
prohibit banks or non-bank affiliates of member banks of the Federal Reserve
System from sponsoring, organizing or controlling or acting as the principal
underwriter of the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares. Further, they prohibit banks
from issuing, underwriting, or distributing securities in general. Such laws and
regulations do not prohibit such a holding company or affiliate from acting as
investment adviser, administrator, transfer agent or custodian to such an
investment company or from purchasing shares of such a company as agent for and
upon the order of their customer. The Adviser is subject to and in compliance
with such banking laws and regulations. Changes in federal statutes and
regulations relating to the permissible activities of banks, as well as further
judicial or administrative decisions or interpretations of such statutes and
regulations, could prevent the Adviser from continuing to perform such services
for the Trust. If the Adviser was prohibited from acting as investment advisers
to the Funds, it is expected that the Trustees would recommend to the
shareholders that they approve a new investment adviser selected by the
Trustees. It is not expected that the shareholders would suffer any adverse
financial consequences (if another adviser with equivalent abilities to the
Adviser is found) as a result of any of these occurrences.
GENERAL INFORMATION ABOUT THE FUNDS
(See also "General Information" in the Funds' Prospectus)
Custodian and Transfer Agent
Cash and securities owned by the Funds of the Trust are held by State
Street Bank and Trust Company, Box 9021, Boston, Massachusetts 02205-9827
("State Street" or the "Custodian") pursuant to a Custodian Agreement with the
Trust (the "Custodian Agreement"), Under the Custodian Agreement, State Street
(1) maintains a separate account or accounts in the name of each Fund; (2) makes
receipts and disbursements of money on behalf of each Fund; (3) collects and
receives all income and other payments and distributions on account of the
Funds' portfolio securities; (4) responds to correspondence from security
brokers and others relating to its duties; and (5) makes periodic reports to the
Trustees concerning the Trust's operations. State Street may, at its own
expense, open and maintain a sub-custody account or accounts on behalf of the
Trust, provided that State Street shall remain liable for the performance of all
of its duties under the Custodian Agreement. Rules adopted under the 1940 Act
permit the Trust to maintain its securities and cash in the custody of certain
eligible banks and securities depositories. Boston Financial Data Services, Inc.
("BFDS"), One Heritage Drive, North Quincy, Massachusetts, a subsidiary of State
Street, serves as transfer agent and dividend disbursing agent for each Fund
pursuant to a transfer agency agreement with the Trust (the "Transfer Agency
Agreement. Under the Transfer Agency Agreement, BFDS has agreed (1) to issue and
redeem shares of the Trust; (2) to address and mail all communications by the
Trust to its shareholders, including reports to shareholders, dividend and
distribution notices, and proxy material for its meetings of shareholders; (3)
to respond to correspondence or inquiries by shareholders and others relating to
its duties; (4) to maintain shareholder accounts and certain sub-accounts; and
(5) to make periodic reports to the Trustees concerning the Trust's operations.
Capitalization and Organization
The Trust is a Massachusetts business trust organized in 1994. The Trust is
governed by a board of trustees. References to the "Board of Trustees" or
"Trustees" in this Statement of Additional Information refer to the Trustees of
the Trust. Each Fund may issue an unlimited number of shares of beneficial
interest with a $0.001 par value. Shares of these Funds are fully paid,
nonassessable and fully transferable when issued and have no pre-emptive,
conversion or exchange rights. Fractional shares have proportionally the same
rights, including voting rights, as are provided for a full share.
Under the Trust's Declaration of Trust, each Trustee will continue in
office until the termination of the Fund or his or her earlier death,
incapacity, resignation or removal. Shareholders can remove a Trustee upon a
vote of two-thirds of the outstanding shares of beneficial interest of the
Trust. Vacancies will be filled by a majority of the remaining Trustees, subject
to the 1940 Act. As a result, normally no annual or regular meetings of
shareholders will be held, unless otherwise required by the Declaration of Trust
of each Trust or the 1940 Act.
Shares have noncumulative voting rights, which means that the holders of
more than 50% of the shares voting for the election of Trustees can elect 100%
of the Trustees if they choose to do so and in such event the holders of the
remaining shares so voting will not be able to elect any Trustees. The Trustees
are authorized to reclassify and issue any unissued shares to any number of
additional series without shareholder approval. Accordingly, in the
<PAGE>
future, for reasons such as the desire to establish one or more additional
portfolios of the Trust with different investment objectives, policies or
restrictions, additional series of shares may be created by one or more Funds.
Any issuance of shares of another series or class would be governed by the 1940
Act and the law of the State of Massachusetts. If shares of another series of
the Trust were issued in connection with the creation of additional investment
portfolios, each share of the newly created portfolio would normally be entitled
to one vote for all purposes. Generally, shares of all portfolios would vote as
a single series on matters, such as the election of Trustees, that affected all
portfolios in substantially the same manner. As to matters affecting each
portfolio differently, such as approval of the Investment Advisory Agreement and
changes in investment policy, shares of each portfolio would vote separately.
In addition any Fund may, in the future, create additional classes of
shares which represent an interest in the same investment portfolio. Except for
the different distribution related an other specific costs borne by such
additional classes, they will have the same voting and other rights described
for the existing classes of each Fund.
Procedures for calling a shareholders' meeting for the removal of the
Trustees of each Trust, similar to those set forth in Section 16(c) of the 1940
Act will be available to shareholders of each Fund. The rights of the holders of
shares of a series of a Fund may not be modified except by the vote of a
majority of the outstanding shares of such series.
An order has been received from the SEC permitting the issuance and sale of
multiple classes of shares representing interests in each Fund. In the event a
Fund were to issue additional classes of shares other than that described
herein, no further relief from the SEC would be required.
PERFORMANCE INFORMATION
From time to time a Fund may advertise its "total return." Computed
separately for each class, the Fund's "total return" is its average annual
compounded total return for recent one, five, and ten-year periods (or the
period since the Fund's inception). The Fund's total return for such a period is
computed by finding, through the use of a formula prescribed by the SEC, the
average annual compounded rate of return over the period that would equate an
assumed initial amount invested to the value of such investment at the end of
the period. For purposes of computing total return, income dividends and capital
gains distributions paid on shares of the Fund are assumed to have been
reinvested when paid and the maximum sales charge applicable to purchases of
Fund shares is assumed to have been paid.
Yield Calculations
From time to time, a Fund may quote its yield in advertisements or in
reports or other communications to shareholders. Yield quotations are expressed
in annualized terms and may be quoted on a compounded basis. Yields are computed
by dividing the Fund's interest income (as defined in the SEC yield formula) for
a given 30-day period, net of expenses, by the average number of shares entitled
to receive distributions during the period, dividing this figure by the Fund's
net asset value per share at the end of the period and annualizing the result
(assuming compounding of income) in order to arrive at an annual percentage
rate. The formula for calculating yield is as follows:
YIELD = 2[(a-b+1)6-1]
cd
Where a = Interest earned during the period
b = Expenses accrued for the period (net of reimbursements)
c = The average daily number of shares outstanding during the period
that were entitled to receive dividends
d = The maximum offering price per share on the last day of the period
Income is calculated for purposes of yield quotations in accordance with
standardized methods applicable to all stock and bond funds.
Gains and losses generally are excluded from the calculation. Income
calculated for purposes of determining a Fund's yield differs from income as
determined for other accounting purposes. Because of the different accounting
methods used, and because of the compounding assumed in yield calculations, the
yields quoted for a Fund may differ from the rate of distributions a Fund paid
over the same period, or the net investment income reported in a Fund's
financial statements.
<PAGE>
Yield information is useful in reviewing a Fund's performance, but
because yields fluctuate, such information cannot necessarily be used to compare
an investment in a Fund's shares with bank deposits, savings accounts and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that yield
is a function of the kind and quality of the instruments in the Funds'
investment portfolios, portfolio maturity, operating expenses and market
conditions.
It should be recognized that in periods of declining interest rates the
yields will tend to be somewhat higher than prevailing market rates, and in
periods of rising interest rates the yields will tend to be somewhat lower.
Also, when interest rates are falling, the inflow of net new money to a Fund
from the continuous sale of its shares will likely be invested in instruments
producing lower yields than the balance of the Fund's investments, thereby
reducing the current yield of the Fund. In periods of rising interest rates, the
opposite can be expected to occur.
Non-Standardized Performance
In addition to the performance information described above, a Fund may
provide total return information for designated periods, such as for the most
recent six months or most recent twelve months. This total return information is
computed as described under "Total Return" above except that no annualization is
made.
From time to time, a Fund may quote its performance in advertising and
other types of literature as compared to the performance of the Standard &
Poor's 500 Composite Stock Price Index, the Dow Jones Industrial Average,
Russell 2000 Index, or any other commonly quoted index of common stock prices.
The Standard & Poor's 500 Composite Stock Price Index, the Dow Jones Industrial
Average and the Russell 2000 Index are unmanaged indices of selected common
stock prices. A Fund's performance may also be compared
<PAGE>
to those of other mutual funds having similar objectives. This comparative
performance would be expressed as a ranking prepared by Lipper Analytical
Services, Inc. or similar independent services monitoring mutual fund
performance. A Fund's performance will be calculated by assuming, to the extent
applicable, reinvestment of all capital gains distributions and income dividends
paid. Any such comparisons may be useful to investors who wish to compare a
Fund's past performance with that of its competitors. Of course, past
performance cannot be a guarantee of future results.
Additional Information
Any shareholder inquiries may be directed to the shareholder's broker or to
the Adviser at the address or telephone number shown on the front cover of this
Statement of Additional Information. This Statement of Additional Information
does not contain all the information set forth in the Registration Statement
filed by the Trusts with the SEC under the Securities Act of 1933. Copies of the
Registration Statement may be obtained at a reasonable charge from the SEC or
may be examined, without charge, at the offices of the SEC in Washington, D.C.
Independent Accountants
KPMG Peat Marwick LLP, One Mellon Bank Center, Pittsburgh, Pennsylvania
15219, serves as the independent public accountants ot the Trust.
Legal Counsel
The law firm of Sullivan & Worcester LLP, 1025 Connecticut Avenue, N.W.,
Washington, D.C. 20036 is counsel to the Trust.
FINANCIAL STATEMENTS
The initial audited balance sheet and Report of Independent Auditors of the
Trust is set forth below.
<PAGE>
<TABLE>
EVERGREEN VARIABLE TRUST
STATEMENT OF ASSETS AND LIABILITIES
January 24, 1996
<CAPTION>
<S> <C> <C> <C>
Assets:
Evergreen VA Evergreen VA
Evergreen Growth and Foundation
VA Fund Income Fund Fund
Cash $ 33,333 33,333 33,334
Deferred organizational expenses 21,667 21,667 21,666
Total assets 55,000 55,000 55,000
Liabilities:
Organizational expenses payable 21,667 21,667 21,666
Net assets:
Paid-in Capital 33,333 33,333 33,334
Net assets $ 33,333 33,333 33,334
Net asset value per share (3,333, 3,333
and 3,334 shares of beneficial interest
issued and outstanding, respectively) $10.00 $10.00 $10.00
</TABLE>
See accompanying notes to financial statements.
<PAGE>
EVERGREEN VARIABLE TRUST
NOTES TO FINANCIAL STATEMENTS
January 24, 1996
Note 1 - Organization
Evergreen Variable Trust (the "Trust") is a newly organized Massachusetts
business trust with three separate investment series,Evergreen VA Fund
"Evergreen"), Evergreen VA Growth and Income Fund ("Growth and Income") and
Evergreen VA Foundation Fund("Foundation"), collectively known as the "Funds".
The Trust is registered under the Investment Company Act of 1940, as amended
(the"Act"), as an open-end, diversified management investment company. The Funds
have had no operations other than the sale of 3,333, 3,333 and 3,334 shares of
beneficial interest of Evergreen, Growth and Income and Foundation,
respectively, to Nationwide Variable Account-6.
Note 2 - Investment Advisory and Administration Agreements
Each Fund has agreed to enter into an investment advisory agreement with
Evergreen Asset Management Corp. ("Evergreen Asset"), a wholly owned subsidiary
of First Union Bank of North Carolina ("First Union"), pursuant to which
Evergreen Asset will manage each Fund's investments. In consideration of
Evergreen Asset performing its obligations, Evergreen and Growth and Income will
pay to Evergreen Asset an investment advisory fee accrued daily and payable
monthly, at an annual rate of .95 of 1% of their daily net assets. Foundation
will pay an investment advisory fee of .825 of 1% of its daily net assets.
Each Fund has agreed to enter into an administrative services agreement
with Evergreen Asset to provide administrative services and to supervise each
Fund's daily business affairs. Each Fund will pay Evergreen Asset an
administration fee accrued daily and payable monthly, at a rate based on the
average daily net assets of all of the Funds administered by Evergreen Asset for
which either Evergreen Asset or First Union serves as investment adviser. The
fee is calculated daily and payable monthly at the following annual rates: .050%
on the first $7 billion, .035% on the next $3 billion, .030% on the next $5
billion, .020% on the next $10 billion, .015% on the next $5 billion, .010% on
assets in excess of $30 billion. As of January 24, 1996, the net assets for
which either Evergreen Asset or First Union served as investment adviser totaled
approximately $13.7 billion.
Furman Selz LLC, will serve as sub-administrator and will pay the cost of
compensation of the officers of the Funds. Each Fund will pay Furman Selz LLC a
fee based on the average daily net assets of all of the Funds administered by
Evergreen Asset for which either Evergreen Asset or First Union serves as
investment adviser. The fee is calculated daily and payable monthly at the
following annual rates: .010% on the first $7 billion, .0075% on the next $3
billion, .005% on the next $15 billion, .004% on assets in excess of $25
billion.
<PAGE>
EVERGREEN VARIABLE TRUST
NOTES TO FINANCIAL STATEMENTS
January 24, 1996
Note 3 - Organizational Costs
First Union has agreed to advance all of the costs incurred and to be
incurred in connection with the organization and initial registration of the
Funds and the Funds have agreed to reimburse First Union for such costs. These
costs have been deferred and will be amortized by each Fund over a period of
benefit not to exceed 60 months from the date each Fund commences operations.
<PAGE>
KPMG PEAT MARWICK LLP
0ne Mellon Bank Center Telephone 412391 9710 Telefax 412391 9963
Pittsburgh. PA 15219 Telex 7106642199 PMM & CO PGM
Independent Auditors' Report
The Board of Trustees and Shareholders
Evergreen Variable Trust:
We have audited the accompanying statement of assets and liabilities of the
Evegreen Variable Trust (comprising, respectively, the Evergreen VA Fund, the
Evergreen VA Growth and Income Fund and the Evergreen VA Foundation Fund) as of
January 24, 1996. This statement of assets and liabilities is the responsibility
of the Funds' management. Our responsibility is to express an opinion on the
statement of assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of assets and liabilities is
free of material misstatement. An audit of a statement of assets and liabilities
includes examining on a test basis, evidence supporting the amounts and
disclosures in that statement of assets and liabilities. An audit of a statement
of assets and liabilities also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. We believe that our audit of
the statement of assets and liabilities provides a reasonable basis for our
opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of each of thc
Funds constituting the Evergreen Variable Trust, as of January 24, 1996, in
conformity with generally accepted accounting principles.
/s/KPMG PEAT MARWICK LLP
Pittsburgh. Pennsylvania
Janutry 26, 1996
46
<PAGE>
APPENDIX A - NOTE, BOND AND COMMERCIAL PAPER RATINGS
NOTE RATINGS
Moody's Investors Service, Inc.: MIG-1 -- the best quality. MIG-2 --
high quality, with margins of protection ample though not so large as in the
preceding group. MIG-3 -- favorable quality, with all security elements
accounted for, but lacking the undeniable strength of the preceding grades.
Market access for refinancing, in particular, is likely to be less well
established.
Standard & Poor's Ratings Group, Inc.: SP-1 -- Very strong or strong
capacity to pay principal and interest. SP-2 -- Satisfactory capacity to pay
principal and interest.
BOND RATINGS
Moody's Investors Service, Inc.: Aaa -- judged to be the best quality,
carry the smallest degree of investment risk; Aa -- judged to be of high quality
by all standards; A -- possess many favorable investment attributes and are to
be considered as higher medium grade obligations; Baa -- considered as medium
grade obligations which are neither highly protected nor poorly secured. Moody's
Investors Service also applies numerical indicators, 1, 2 and 3, to rating
categories Aa through Baa. The modifier 1 indicates that the security is in the
higher end of its rating category; the modifier 2 indicates a mid-range ranking;
and 3 indicates a ranking toward the lower end of the category.
Standard & Poor's Ratings Group: AAA -- highest grade obligations,
possesses the ultimate degree of protection as to principal and interest; AA --
also qualify as high grade obligations, and in the majority of instances differ
from AAA issues only in small degree; A -- regarded as upper medium grade, have
considerable investment strength but
<PAGE>
are not entirely free from adverse effects of changes in economic and trade
conditions, interest and principal are regarded as safe; BBB -- regarded as
having adequate capacity to pay interest and repay principal but are more
susceptible than higher rated obligations to the adverse effects of changes in
economic and trade conditions. Standard & Poor's Ratings Group applies
indicators "+", no character, and "-" to the above rating categories AA through
BBB. The indicators show relative standing within the major rating categories.
Duff & Phelps, Inc.: AAA - highest credit quality, with negligible risk
factors; AA -- high credit quality, with strong protection factors and modest
risk, which may vary very slightly from time to time because of economic
conditions; A -- average credit quality with adequate protection factors, but
with greater and more variable risk factors in periods of economic stress. The
indicators "+" and "-" to the AA and A categories indicate the relative position
of a credit within those rating categories.
Fitch Investors Service, Inc.: AAA -- highest credit quality, with an
exceptionally strong ability to pay interest and repay principal; AA -- very
high credit quality, with a very strong ability to pay interest and repay
principal; A -- high credit quality, considered strong as regards principal and
interest protection, but may be more vulnerable to adverse changes in economic
conditions; and BBB -- satisfactory credit quality with adequate ability with
regard to interest and principal, and likely to be affected by adverse changes
in economic conditions and circumstances. The indicators "+" and "-" to the AA,
A and BBB categories indicate the relative position of a credit within those
rating categories.
COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc.: Commercial paper rated "Prime" carries
the smallest degree of investment risk. The modifiers 1, 2 and 3 are used to
denote relative strength within this highest classification.
Standard & Poor's Ratings Group: "A" is the highest commercial paper
rating category utilized by Standard & Poor's Ratings Group which uses the
numbers 1+, 1, 2 and 3 to denote relative strength within its "A"
classification.
Duff & Phelps, Inc.: Duff 1 is the highest commercial paper rating category
utilized by Duff & Phelps which uses + or - to denote relative strength within
this classification. Duff 2 represents good certainty of timely payment, with
minimal risk factors. Duff 3 represents satisfactory protection factors, with
risk factors larger and subject to more variation.
Fitch Investors Service, Inc.: F-1+ -- denotes exceptionally strong credit
quality given to issues regarded as having strongest degree of assurance for
timely payment; F-1 -- very strong credit quality, with only slightly less
degree of assurance for timely payment than F-1+; F-2 -- good credit quality,
carrying a satisfactory degree of assurance for timely payment.
<PAGE>
*******************************************************************************
PART C
OTHER INFORMATION
item 24. Financial Statement and Exhibits
(a)Financial Statements
Balance Sheet of Evergreen VA Fund,
Evergreen VA Growth and Income Fund
and the Evergreen VA Foundation Fund
dated January 26, 1996
Notes to Financial Statement
Report of Independent Auditors
(b) Exhibits
(1) Registrant's Declaration of Trust Dated June 28, 1994*
(1.1) Amendment to Declaration of Trust Dated January 10, 1995
(1.2) Amendment to Declaration of Trust Dated July 7, 1995
(2) Registrant's Bylaws Dated June 28, 1994*
(3) None
(4) None
(5.1) Form of Investment Advisory Agreement to be between
Registrant and Evergreen Asset Management Corp.
(5.2) Sub-Investment Advisory Agreement between Evergreen Asset
Management Corp. and Lieber & Company.
(5) None
(6.1) Form of Fund Participation Agreement between Registrant and
Nationwide Life Insurance Company
(6.2) Form of Fund Participation Agreement between Registrant and
Great American Reserve Insurance Company
(7) None
(8) Form of Custodian Agreement
(9.1) Form of Transfer and Dividend Disbursing Agent Agreement to be
between Registrant and Boston Financial Data Services, Inc.
(9.2) Form of Administrative Services Agreement between
Registrant and Evergreen Asset Management Corp.
(9.3) Form of Sub-Administrative Services Agreement between
Registrant and Evergreen Asset Management Corp.
(10) Opinion of James P. Wallin, Esq., counsel for Registrant
(11) Consent of KPMG Peat Marwick LLP, Independent Accountants
(12) None
(13) None
(14) None
(15) None
(16) None
(17) None
- ---------------
* Previously filed as an Exhibit to Registrant's Registraion Statement on Form
N-1A.
Item 25. Persons Controlled by or under Common Control with Registrant
After commencement of the public offering of the Registrant's shares, the
Registrant expects that no person will be directly or indirectly controlled by
or under common control with the Registrant. On the effective date hereof, it is
expected that Nationwide Life Insurance Company will hold all the outstanding
shares of the Registrant.
<PAGE>
Item 26. Number of Holders of Securities
Evergreen VA Fund 1
Evergreen VA Growth and Income Fund 1
Evergreen VA Foundation Fund 1
Item 27. Indemnification
Limitation of Liability and Indemnification provisions for Trustees,
Shareholders, officers, employees and agents of Registrant are set forth in
Article V, Sections 5.1 through 5.3 of the Declaration of Trust. No Trustee,
officer, employee or agent of the Trust shall be subject to any personal
liability whatsoever to any Person other than the Trust or its Shareholders, in
connection with Trust Property or the affairs of the Trust, save only that
arising from bad faith, willful misfeasance, gross negligence or reckless
disregard for his duty to such Person; and all such Persons shall look solely to
the Trust Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any Shareholder, Trustee, officer,
employee or agent, as such, of the Trust is made a party to any suit or
proceeding to enforce any such liability, he shall not, on account thereof, be
held to any personal liability. The Trust shall indemnity and hold each
Shareholder harmless from and against all claims and liabilities, to which such
Shareholder may become subject by reason of his being or having been a
Shareholder, and shall reimburse such Shareholder for all legal and other
expenses reasonably incurred by him in connection with any such claim or
liability. The rights accruing to a Shareholder under Section 5.1 of the
Declaration of Trust shall not exclude any other right to which such Shareholder
may be lawfully entitled, nor shall anything herein contained restrict the right
of the Trust to indemnify or reimburse a Shareholder in any appropriate
situation even though not specifically provided herein.
No Trustee, officer, employee or agent of the Trust shall be liable to
the Trust, its Shareholders, or to any Shareholder, Trustee, officer, employee
or agent thereof for any action or failure to act (including without limitation
the failure to compel in any way any former or acting Trustee to redress any
breach of trust) except for his own bad faith, willful misfeasance, gross
negligence or reckless disregard of his duties.
(a) Subject to the exceptions and limitations contained in paragraph (b) below:
(i) every person who is or has been a Trustee or officer of the Trust
shall be indemnified by the Trust against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or otherwise by virtue of his
being or having been a Trustee or officer and against amounts paid or incurred
by him in the settlement thereof:
(ii) the words "claim," "suit" or "proceeding" shall apply to all
claims, actions, suits or proceedings (civil, criminal, or other, including
appeals), actual or threatened; and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee or officer:
(i) against any liability to the Trust or the Shareholders by reason of
a final adjudication by the court or other body before which the proceeding was
brought that he engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust:
(iii) in the event of a settlement or other disposition not involving a
final adjudication as provided in paragraphs (b) (i) or (b) (ii) resulting in a
payment by
<PAGE>
a Trustee or officer, unless there has been either a determination that such
Trustee or officer did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office by the court or other body approving the settlement or other disposition
or a reasonable determination. based upon a review of readily available facts
(as opposed to a full trial-type inquiry) that he did not engage in such
conduct:
(A) by vote of a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees then in office
act on the matter); or
(B) by written opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Trustee or officer may now or hereafter be entitled, shall
continue as to a Person who has ceased to be such Trustee or officer and shall
inure to the benefit of the heirs, executors and administrators of such Person.
Nothing contained herein shall affect any rights to indemnification to which
personnel other than Trustees and officers may be entitled by contract or
otherwise under law.
(d) Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding of the character described in paragraph (a) of Section 5.3 of
the Declaration of Trust shall be advanced by the Trust prior to final
disposition thereof upon receipt of an undertaking by or on behaif of the
recipient to repay such amount if it is ultimately determined that he is not
entitled to indemnification under Section 5.3 of the Declaration of Trust,
provided that either:
(i) such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of any such
advances; or
(ii) a majority of the Disinterested Trustees acting on the matter (provided
that a majority of the Disinterested Trustees then in office act on the matter)
or an independent legal counsel in a written opinion, shall determine. based
upon a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipient ultimately will be
found entitled to indemnification.
As used in Section 5.3 of the Declaration of Trust, a "Disinterested
Trustee" is one (i) who is not an "interested person" by any rule, regulation or
order of the Commission, and (ii) against whom none of such actions, suits or
other proceedings or another action, suit or other proceeding on the same or
similar grounds is then or had been pending. See Item 24(b)(1) (Exhibit 1)
above. whose terms and conditions as summarized herein are hereby incorporated
by reference.
Limitation of liability provisions for the Adviser are set forth in the
Investment Advisory Agreement. The Adviser shall not be liable for any
instructions, action or failure to act, or for any loss sustained by reason of
the adoption of any investment policy or the purchase, sale or retention of any
security on the recommendation of the Adviser, whether or not such
recommendation shall have been based upon its own investigation and research
made by any other individual, firm or corporation, if such recommendation shall
have been made, and such other individual, firm or corporation shall have been
selected, with due care and in good faith; but nothing herein contained shall be
construed to protect the Adviser against any liability to the Trust or its
security holders by reason of willful misfeasance. bad faith or gross negligence
in the penformance of its duties or by reason of its reckless disregard of its
obligations and duties under the Investment Advisory Agreement.
Registrant undertakes that it will comply with the indemnification
provisions of its Declaration of Trust, Investment Advisory Agreement, and any
other agreement to which the Registrant is a party containing indemnification
provisions in accordance with the provisions of Investment Company Act of 1940
Release No.11330, as modified from time to time.
<PAGE>
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling persons of
the Registrant pursuant to the Registrant's Bylaws. or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered. the Reg- istrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business or Other Connections of Investment Adviser
(a) For a description of the other business of the investment adviser, see
the section entitled "Management of the Funds-Investment Adviser" in Part A.
Evergreen Asset Management Corp., the Registrant's investment adviser, and
Lieber and Company, the Registrant's sub-adviser also act as such to the
Evergreen Trust, The Evergreen Total Return Fund, The Evergreen Limited Market
Fund, Inc., Evergreen Growth and Income Fund, The Evergreen Money Market Trust,
The Evergreen American Retirement Trust, The Evergreen Municipal Trust and
Evergreen Equity Trust, all registered investment companies. Stephen A. Lieber,
Theodore J. Israel, Jr., Nola Maddox Falcone, George R. Gaspari and Joseph J.
McBrien, officers of the Adviser and Lieber and Company, were, prior to June 30,
1994 officers and/or directors or trustees of the Registrant and the other funds
for which the Adviser acts as investment adviser. Evergreen Asset Management
Corp. and Lieber and Company are wholly-owned subsidiaries of First Union
National Bank Of North Carolina.
The Trustees and principal executive officers of First Union National Bank
of North Carolina, parent of the Registrants's investment adviser and
sub-adviser, and the Directors of First Union National Bank of North Carolina,
are set forth in the following tables:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
BOARD OF DIRECTORS
Ben Mayo Boddie Raymond A. Bryan, Jr.
Chairman & CEO Chairman & CEO
Boddie-Noell Enterprises, Inc. T.A. Loving Company
P.O. Box 1908 P.O. Drawer 919
Rocky Mount, NC 27802 Goldsboro, NC 27530
John F.A.V. Cecil John W. Copeland
President President
Biltmore Dairy Farms, Inc. Ruddick Corporation
P.O. Box 5355 2000 Two First Union Center
Asheville, NC 28813 Charlotte, NC 28282
John Crosland, Jr. J. William Disher
Chairman of the Board Chairman & President
The Crosland Group, Inc. Lance Incorporated
135 Scaleybark Road P.O. Box 32368
Charlotte, NC 28209 Charlotte, NC 28232
<PAGE>
Frank H. Dunn Malcolm E. Everett, III
Chairman and CEO President
First Union National Bank First Union National Bank
of North Carolina of North Carolina
One First Union Center 310 S. Tryon Street
Charlotte, NC 28288-0006 Charlotte, NC 28288-0156
James F. Goodmon Shelton Gorelick
President & Chief President
Executive Officer SGIC, Inc.
Capitol Broadcasting 741 Kenilworth Ave., Suite 200
Company, Inc. Charlotte, NC 28204
2619 Western Blvd.
Raleigh, NC 27605
Charles L. Grace James E. S. Hynes
President Chairman
Cummins Atlantic, Inc. Hynes Sales Company, Inc.
P.O. Box 240729 P.O. Box 220948
Charlotte, NC 28224-0729 Charlotte, NC 28222
Daniel W. Mathis Earl N. Phillips, Jr.
Vice Chairman President
First Union National Bank First Factors Corporation
of North Carolina P.O. Box 2730
One First Union Center High Point, NC 27261
Charlotte, NC 28288-0009
J. Gregory Poole, Jr. John P. Rostan, III
Chairman & President Senior Vice President
Gregory Poole Equipment Company Waldensian Bakeries, Inc.
P.O. Box 469 P.O. Box 220
Raleigh, NC 27602 Valdese, NC 28690
Nelson Schwab, III Charles M. Shelton, Sr.
Chairman & CEO Chairman & CEO
Paramount Parks The Shelton Companies, Inc
8720 Red Oak Boulevard, Suite 315 3600 One First Union Center
Charlotte, NC 28217 Charlotte, NC 28202
George Shinn Harley F. Shuford, Jr.
Owner and Chairman President and CEO
Shinn Enterprises, Inc. Shuford Industries
One Hive Drive P.O. Box 608
Charlotte, NC 28217 Hickory, NC 28603
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
EXECUTIVE OFFICERS
James Maynor, President, First Union Mortgage Corporation; Austin
A. Adams, Executive Vice President; Howard L. Arthur, Senior Vice
President; Robert T. Atwood, Executive Vice President and Chief
Financial Officer; Marion A. Cowell, Jr., Executive Vice
President, Secretary and General Counsel; Edward E. Crutchfield,
Jr., Chairman, CEO, First Union Corporation; Frank H. Dunn, Jr.,
Chairman and CEO; Malcolm E. Everett, III, President; John R.
Georgius, President, First Union Corporation; James Hatch, Senior
Vice President and Corporate Controller; Don R. Johnson,
Executive Vice President; Mark Mahoney, Senior Vice President;
Barbara K. Massa, Senior Vice President; Daniel W. Mathis, Vice
Chairman; H. Burt Melton, Executive Vice President; Malcolm T.
Murray, Jr., Executive Vice President; Alvin T. Sale, Executive
Vice President; Louis A. Schmitt, Jr., Executive Vice President;
Ken Stancliff, Senior Vice President and Corporate Treasurer;
Richard K. Wagoner, Executive Vice President and General Fund
<PAGE>
Offices.
All of the Executive Officers are located at the following
address: First Union National Bank of North Carolina, One First
Union Center, Charlotte, NC 28288.
Item 29. Principal Underwriter
Not applicable.
Item 30. Location of Accounts and Records
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained at the offices of the Registrant's Custodian, State
Street Bank and Trust Company, 2 Heritage Drive, North Quincy, Massachusetts
02171 or the offices of Evergreen Asset Management Corp., 2500 Westchester
Avenue, Purchase, New York 10577.
Item 31. Management Services
All management-related service contracts entered into by Registrant are
discussed in Parts A and B of this Registration Statement.
Item 32. Undertakings
Registrant undertakes to tile a post-effective amendment to this
Registration Statement within four to six months of the effective date of this
Registration Statement which will contain financial statements (which need not
be certified) as of and tor the time period reasonably close or as soon as
practicable to the date of such post-effective amendment.
Registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of Registrant's latest annual report to shareholders upon
request and without charge.
Registrant undertakes to call a meeting of shareholders, at the request of
at least 10% of the Registrant's outstanding shares, for the purpose of voting
upon the question of removal of a trustee or trustees and to assist in
communications with other shareholders as required by Section 16(c) of the
Investment Company Act of 1940.
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust for the Evergreen Variable
Trust is on file with the Secretary of State of the Commonwealth of
Massachusetts and notice is hereby given that this Registration Statement has
been executed on behalf of the Trust by an officer of the Trust as an officer
and by its Trustees as trustees and not individually and the obligations of or
arising out of this Registration Statement are not binding upon any of the
Trustees, officers, or shareholders individually but are binding only upon the
assets and property of the Trust.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Pre-Effective Amendment No. 3 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 26th day of
January, 1996.
EVERGREEN VARIABLE TRUST (Registrant)
By: /s/ David E. Simaitis
------------------------------
David E. Simaitis,
Secretary and Trustee
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Pre-Effective Amendment No. 3 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
Signatures Title Date
- ----------- ----- ----
- ------------------------------- President and January 26, 1996
Mark B. Koogler Trustee
/s/James P Laird
- ------------------------------- Vice President and January 26, 1996
James P Laird Treasurer
/s/David E. Simaitis
- ------------------------------- Secretary and January 26, 1996
David E. Simaitis Trustee
/s/ Steven R. Savini
- ------------------------------- Trustee January 26, 1996
Steven R. Savini
EXHIBIT INDEX
Sequentially
Numbered
Name Exhibit
Page
Amendment to Declaration of Trust Dated January 10, 1995 (1.1)
Amendment to Declaration of Trust Dated July 7, 1995 (1.2)
Form of Investment Advisory Agreement to be between (5.1)
Registrant and Evergreen Asset Management Corp.
Sub-Investment Advisory Agreement between Evergreen Asset (5.2)
Management Corp. and Lieber & Company.
Form of Fund Participation Agreement between Registrant and (6.1)
Nationwide Life Insurance Company
Form of Fund Participation Agreement between Registrant and (6.2)
Great American Reserve Insurance Company
Form of Custodian Agreement (8)
Form of Transfer and Dividend Disbursing Agent Agreement to be (9.1)
between Registrant and Boston Financial Data Services, Inc.
Form of Administrative Services Agreement between (9.2)
Registrant and Evergreen Asset Management Corp.
Form of Sub-Administrative Services Agreement between (9.3)
Registrant and Evergreen Asset Management Corp.
Opinion of James P. Wallin, Esq., counsel for Registrant (10)
Consent of KPMG Peat Marwick LLP, Independent Accountants (11)
As filed with the Office of the Clerk, City Hall, Boston MA on June 12, 1995:
First Union Investment Trust
Certificate of Amendment
The undersigned, being the Secretary of the First Union Investment Trust
(hereinafter referred to as the "Trust"), a trust with transferable shares of
the type commonly called a Massachusetts business trust, DOES HEREBY CERTIFY
that, pursuant to the authority conferred upon the Trustees of the Trust by
Section 9.3 of the Agreement and Declaration of Trust, dated June 28, 1994, (as
so amended, referred to as the "Declaration of Trust"), and by the affirmative
vote through written consents of all of the Trustees the Declaration of Trust is
hereby amended as follows:
Article I, Section 1.1 of the Declaration of Trust is hereby amended
to change the name of the Trust to be "Evergreen(sm) Investment Trust."
IN WITNESS WHEREOF, the undersigned has set his/her hand and seal this
10th day of January, 1995.
/s/Mark B. Koogler
-------------------
Secretary
ACKNOWLEDGMENT
STATE OF Ohio )
) ss.
COUNTY OF Franklin ) January 10, 1995
Then personally appeared the above-named Mark B. Koogler, Secretary and
acknowledged the foregoing instrument to be his/her free act and deed.
Before me
/s/Randall W. May
--------------------------
Notary Public
Randall W. May, Attorney at Law
Notary Public, State of Ohio
My Commission Has No Expiration Date
Sec. 147.03 R.C.
Evergreen(sm) is a Service Mark of Evergreen Asset Management Corp.
Copyright 1995, Evergreen Asset Management Corp.
THE EVERGREEN INVESTMENT TRUST
Certificate of Amendment
The undersigned, being the Secretary of The Evergreen Investment Trust
(hereinafter referred to as the "Trust"), a trust with transferable shares of
the type commonly called a Massachusetts business trust, DOES HEREBY CERTIFY
that, pursuant to the authority conferred upon the Trustees of the Trust by
Section 9.3 of the Agreement and Declaration of Trust, dated June 28, 1994 (as
so amended, referred to as the "Declaration of Trust"), and by the affirmative
vote through written consents of all the Trustees the Declaration of Trust is
hereby amended as follows:
1. Effective July 7, 1995, Article 1, Section 1 of the Declaration of Trust
is hereby amended to change the name of the Trust to be "Evergreen Variable
Trust".
IN WITNESS WHEREOF, the undersigned has set his hand and seal this 7th day
of July, 1995.
/s/ David Simaitis
Secretary
<PAGE>
[Form of Investment Advisory Agreement]
February 8, 1996
Evergreen Asset Management Corp.
2500 Westchester Avenue
Purchase N.Y. 10577
Ladies and Gentlemen:
The undersigned, The Evergreen Variable Trust (the "Trust") on behalf of
its series portfolios the Evergreen VA Fund, the Evergreen VA Growth and Income
Fund and the Evergreen VA Foundation Fund (each a "Fund" and collectively the
"Funds"), is an investment company which desires to employ its capital by
investing and reinvesting the same in securities in accordance with the
limitations specified in its Declaration of Trust and in its Prospectus as from
time to time in effect, copies of which have been, or will be, submitted to you,
and in such manner and to such extent as may from time to time be approved by
the Trustees of the Trust. Subject to the terms and conditions of this
Agreement, the Trust on behalf of the Fund, desires to employ Evergreen Asset
Management Corp. (the "Adviser") and the Adviser desires to be so employed, to
supervise and assist in the management of the business of the Fund. Accordingly,
this will confirm our agreement as follows:
1. The Adviser shall, on a continuous basis, furnish reports, statistical
and research services, and make investment decisions with respect to the Fund's
portfolio of investments. The Adviser shall use its best judgment in rendering
these services to the Fund, and the Fund agrees as an inducement to the Adviser
undertaking such services that the Adviser shall not be liable for any mistake
of judgment or in any other event whatsoever, except for lack of good faith,
provided that nothing herein shall be deemed to protect the Adviser against any
liability to the Fund or to the shareholders of the Fund to which it would
otherwise be subject by reason of wilful misfeasance, bad faith or gross
negligence in the performance of the Adviser's duties hereunder or by reason of
the Adviser's reckless disregard of its obligations and duties hereunder.
2. The Adviser agrees that it will not make short sales of the Fund's
shares of beneficial interest.
<PAGE>
3. The Adviser agrees that in any case where an officer or director of the
Adviser is also an officer or director of another corporation, and the purchase
or sale of securities issued by such other corporation is under consideration,
such officer or director shall abstain from participation in any decision made
on behalf of the Fund to purchase or sell any securities issued by such other
corporation.
4. Each Fund will pay the costs of all of its expenses and liabilities,
including expenses and liabilities incurred in connection with maintaining its
registration under the Investment Company Act of 1940 (the "Act") and the
Securities Act of 1933, as amended, and maintaining any registrations or
qualifications under the securities laws of the states in which the Fund's
shares are registered or qualified for sale, subsequent registrations and
qualifications share certificates, mailing, brokerage, issue and transfer taxes
on sales of the Fund's portfolio securities, custodian and stock transfer
charges, printing, legal and auditing expenses, expenses of shareholders'
meetings, and reports to shareholders.
5. In consideration of the Adviser performing its obligations hereunder,
each Fund will pay to the Adviser an advisory fee, payable monthly, at an annual
rate as follows: of 0.95% of the average daily net assets of the Evergreen VA
Fund; 0.95% of the average daily net assets of the Evergreen VA Growth and
Income Fund; and 0.825% of the average daily net assets of the Evergreen VA
Foundation Fund.
6. The Trust understands that the Adviser acts as investment adviser to
other investment companies, and that affiliates of the Adviser act as investment
advisers to individuals, partnerships, corporations, pension funds and other
entities, and the Trust confirms that it has no objection to the Adviser or its
affiliates so acting.
7. This Agreement shall be in effect for a period of two years from the
date hereof. This Agreement shall continue in effect from year to year
thereafter, provided it is approved, at least annually, in the manner required
by the Act. The Act requires that, with respect to each Fund, this Agreement and
any renewal thereof be approved by a vote of a majority of Trustees of the Trust
who are not parties thereto or interested persons (as defined in the Act) of any
such party, cast in person at a meeting duly called for the purpose of voting on
such approval, and by a vote of the Trustees of the Trust or a majority of the
outstanding voting securities of the Fund. A vote of a majority of the
outstanding voting securities of the Fund is defined in the Act to mean a vote
of the lesser of (i) more than 50% of the outstanding voting securities of the
Fund or (ii) 67% or more of the voting securities present at the meeting if more
than 50% of the outstanding voting securities are present or represented by
proxy.
<PAGE>
This Agreement may be terminated at any time, without payment of any
penalty, on sixty (60) days' prior written notice by a vote of a majority of a
Fund's outstanding voting securities, by a vote of a majority of the Trustees of
the Trust, or by the Adviser. This Agreement shall be automatically terminated
in the event of its assignment (as such term is defined in the Act).
8. This Agreement is made by the Trust, on behalf of each Fund, pursuant to
authority granted by the Trustees, and the obligations created hereby are not
binding on any of the Trustees or shareholders of the Fund individually, but
bind only the property of the Fund.
If the foregoing is in accordance with your understanding, please so
indicate by signing and returning to the undersigned the enclosed copy hereof.
Very truly yours,
EVERGREEN VARIABLE TRUST
on behalf of
Evergreen VA Fund, the Evergreen VA Growth and Income
Fund and the Evergreen VA Foundation Fund
By:
ACCEPTED:
EVERGREEN ASSET MANAGEMENT CORP.
By:
Evergreen Asset Management Corp.
2500 Westchester Avenue
Purchase, New York 10577
February 8, 1996
Lieber & Company
2500 Westchester Avenue
Purchase, New York 10577
Dear Sirs:
We have entered into an agreement with the Evergreen Variable Trust (the
"Trust"), an investment company organized as a series company, pursuant to which
we act as investment adviser to the Evergreen VA Fund, the Evergreen VA Growth
and Income Fund and the Evergreen VA Foundation Fund series of the Trust (each a
"Fund" and collectively the "Funds"). Accordingly, this will confirm our
agreement as follows:
1. You agree for the duration of this Agreement that you will provide us,
through your research personnel, furnish us with all such factual information
and investment recommendations and such other services as we shall reasonably
request. We shall expect of you, and you shall give us the benefit of, your best
judgement and efforts in rendering these services to us, and we agree as an
inducement to your undertaking such services that you shall not be liable for
any mistake of judgment or in any other event whatsoever, except for lack of
good faith, provided that nothing herein shall be deemed to protect you against
any liability to each Fund or to the shareholders of each Fund to which you
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties hereunder or by reason of your
reckless disregard of your obligations and duties hereunder.
2. We agree to reimburse you on the basis of your direct and indirect
costs of performing the services set forth in paragraph 1 above. Indirect costs
shall be allocated on a basis mutually satisfactory to you and us.
3. As used in this Agreement, the terms "assignment" and "vote of a
majority of the outstanding voting securities" shall have the meanings given to
them by Sections 2(a)(4) and 2(a)(42), respectively, of the Investment Company
Act of 1940, as amended (the "Act").
This Agreement shall be automatically terminated in the event of its
assignment (as such term is defined in the Act), or upon termination of the
above-mentioned agreement between the Trust and the undersigned.
This Agreement may be terminated at any time, with respect to each Fund,
without payment of any penalty, (a) by the Trustees of the Trust or by vote of a
majority of a Fund's outstanding voting securities, or by the undersigned, on
sixty (60) days'
<PAGE>
written notice addressed to you at your principal place of business; and (b) by
you, without payment of any penalty, on sixty (60) days' written notice
addressed to the Trust at the Trust's principal place of business.
This Agreement shall be in effect until June 30, 1997. This Agreement shall
continue in effect from year to year thereafter with respect to each Fund, so
long as such continuance is specifically approved at least annually by a vote of
a majority of Trustees who are not interested persons (as such term is defined
in the Act) of any party to this Agreement, voting in person at a meeting duly
called for the purpose of voting on such approval, and by a vote of the Trustees
of the Trust or a majority of the outstanding voting securities of a Fund. A
vote of a majority of the outstanding voting securities of a Fund is defined in
the Act to mean a vote of the lesser of (i) more than 50% of the outstanding
voting securities of the Fund or (ii) 67% or more of the voting securities
present at the meeting if more than 50% of the outstanding voting securities are
present or represented by proxy.
You agree to advise us of any change in your partnership within a
reasonable time after such a change.
4. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you.
5. It is expected that you will provide brokerage services to the Fund.
Accordingly, you agree to comply with Section 11(a)(1) of the Securities
Exchange Act of 1934 and any rules prescribed by the Securities and Exchange
Commission thereunder, as amended from time to time, with respect to brokerage
transactions effected and/or executed by you on behalf of the Fund. In addition,
you shall furnish at least annually to us a statement setting forth the total
amount of all compensation retained by you in connection with effecting and/or
executing transactions for the account during the period covered by the
statement, as required by Section 11(a)(1).
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart hereof and return the same to us.
Very truly yours,
Evergreen Asset Management Corp.
By:_________________
The foregoing Agreement is
hereby accepted as of the
date first above written
LIEBER & COMPANY
By:_________________
<PAGE>
EVERGREEN VARIABLE TRUST
FORM OF MODEL
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this day of , 1996, between EVERGREEN VARIABLE
TRUST, an open-end management investment company organized as a Massachusetts
business trust (the "Trust"), and Nationwide Life Insurance Company, a life
insurance company organized under the laws of the State of XXXXXXXXX (the
"Company"), on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A, as may be amended from time to time (the
"Accounts").
W I T N E S S E T H:
WHEREAS, the Trust has filed a registration statement with the
Securities and Exchange Commission to register itself as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and to register the offer and sale of its shares under the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Trust desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Trust (the "Participating Insurance
Companies"); and
WHEREAS, the beneficial interest in the Trust is divided into several
series of shares, each series representing an interest in a particular managed
portfolio of securities and other assets (the "Portfolios"); and
WHEREAS, the Trust has applied for an order from the Securities and
Exchange Commission granting Participating Insurance Companies and their
separate account exemptions from the provisions of sections 9(a), 13(a), 15(a)
and 15(b) of the 1940 Act and rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder,
to the extent necessary to permit shares of the Trust to be sold to and held by
variable annuity and variable life insurance separate accounts of both
affiliated and unaffiliated life insurance companies and certain qualified
pension and retirement plans (the "Shared Trust Exemptive Order"); and
WHEREAS, the Company has registered or will register certain variable
life insurance policies and/or variable annuity contracts under the 1933 Act
(the "Contracts"); and
WHEREAS, the Company has registered or will register each Account as a
unit investment trust under the 1940 Act; and
-1-
<PAGE>
WHEREAS, the Company desires to utilize shares of one or
more Portfolios as an investment vehicle of the Accounts;
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
ARTICLE I.
Sale of Trust Shares
1.1. The Trust shall make shares of its Portfolios available to the
Accounts at the net asset value next computed after receipt of such purchase
order by the Trust (or its agent), as established in accordance with the
provisions of the then current prospectus of the Trust. Shares of a particular
Portfolio of the Trust shall be ordered in such quantities and at such times as
determined by the Company to be necessary to meet the requirements of the
Contracts. The Trustees of the Trust (the "Trustees") may refuse to sell shares
of any Portfolio to any person, or suspend or terminate the offering of shares
of any Portfolio if such action is required by law or by regulatory authorities
having jurisdiction or is, in the sole discretion of the Trustees acting in good
faith and in light of their fiduciary duties under federal and any applicable
state laws, necessary in the best interest of the shareholders of such
Portfolio.
1.2. The Trust will redeem any full or fractional shares of any
Portfolio when requested by the Company on behalf of an Account at the net asset
value next computed after receipt by the Trust (or its agent) of the request for
redemption, as established in accordance with the provisions of the then current
prospectus of the Trust. The Trust shall make payment for such shares in the
manner established from time to time by the Trust, but in no event shall payment
be delayed for a greater period than is permitted by the 1940 Act.
1.3. For the purposes of Sections 1.1 and 1.2, the Trust hereby
appoints the Company as its agent for the limited purpose of receiving and
accepting purchase and redemption orders resulting from investment in and
payments under the Contracts. Receipt by the Company shall constitute receipt by
the Trust provided that i) such orders are received by the Company in good order
prior to the close of the regular trading session of the New York Stock Exchange
and ii) the Trust receives notice of such orders by 9:30 a.m. New York time on
the next following Business Day. "Business Day" shall mean any day on which the
New York Stock Exchange is open for trading and on which the Trust calculates
its net asset value pursuant to the rules of the Securities and Exchange
Commission.
1.4. Purchase orders that are transmitted to the Trust in
accordance with Section 1.3 shall be paid for on the same
-2-
<PAGE>
Business Day that the Trust receives notice of the order. Payments shall be made
in federal funds transmitted by wire.
1.5. The Trust shall furnish prompt notice to the Company of any income
dividends or capital gain distributions payable on the Trust's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. The Trust shall notify the Company of the number of share so
issued as payment of such dividends and distributions.
1.6. The Trust shall make the net asset value per share for each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 6 p.m. New York
time.
1.7. The Trust agrees that its shares will be sold only to
Participating Insurance Companies and their separate accounts and to certain
qualified pension and retirement plans to the extent permitted by the Shared
Trust Exemptive Order. No shares of any Portfolio will be sold directly to the
general public. The Company agrees that the Trust shares will be used only for
the purposes of funding the Contracts and Accounts listed in Schedule A, as
amended from time to time.
1.8. The Trust agrees that all Participating Insurance Companies shall
have the obligations and responsibilities regarding pass-through voting and
conflicts of interest corresponding to those contained in Section 2.8 and
Article IV of this Agreement.
ARTICLE II.
Obligations of the Parties
2.1. The Trust shall prepare and be responsible for filing with the
Securities and Exchange Commission and any state regulators requiring such
filing all shareholder reports, notices, proxy materials (or similar materials
such as voting instruction solicitation materials), prospectuses and statements
of additional information of the Trust. The Trust shall bear the costs of
registration and qualification of its shares, preparation and filing of the
documents listed in this Section 2.1. and all taxes to which an issuer is
subject on the issuance and transfer of its shares.
2.2. The Trust will bear or cause to be borne the printing costs (or
duplicating costs with respect to the statement of additional information) and
mailing costs associated with the delivery of the Trust's current prospectus,
statement of additional information, annual report, semi-annual report, Trust-
sponsored proxy material or other shareholder communications, including any
amendments or supplements to any of the foregoing.
2.3. The Company will bear the printing costs (or duplicating costs
with respect to the statement of additional information) and mailing costs
associated with the delivery of the Accounts' current prospectuses and
statements of additional information, annual reports, Contracts, Contract
applications, Account-sponsored proxy materials and voting solicitation
instructions.
2.4. The Company agrees and acknowledges that the Trust's adviser,
Evergreen Asset Management Corp. ("Evergreen Asset"), is the sole owner of the
name and mark "Evergreen" and that all use of any designation comprised in whole
or part of Evergreen (an "Evergreen Mark") under this Agreement shall inure to
the benefit of Evergreen Asset. Except as provided in Section 2.5., the Company
shall not use any Evergreen Mark on its own behalf or on behalf of the Accounts
or Contracts in any registration statement, advertisement, sales literature or
other materials relating to the Accounts or Contracts without the prior written
consent of Evergreen Asset. Upon termination of this Agreement for any reason,
the Company shall cease all use of any Evergreen Asset Mark(s) as soon as
reasonably practicable.
2.5. The Company shall furnish, or cause to be furnished, to the Trust
or its designee, a copy of each Contract prospectus or statement of additional
information in which the Trust or its investment adviser is named prior to the
filing of such document with the Securities and Exchange Commission. The Company
shall furnish, or shall cause to be furnished, to the Trust or its designee,
each piece of sales literature or other promotional material in which the Trust
or its investment adviser is named, at least ten Business Days prior to its use.
No such material shall be used if the Trust or its designee reasonably objects
to such use within ten Business Days after receipt of such material.
2.6. The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust or
its investment adviser in connection with the sale of the Contracts other than
information or representations contained in and accurately derived from the
registration statement or prospectus for the Trust shares (as such registration
statement and prospectus may be amended or supplemented from time to time),
reports of the Trust, Trust- sponsored proxy statements, or in sales literature
or other promotional material approved by the Trust or its designee, except as
required by legal process or regulatory authorities or with the written
permission of the Trust or its designee.
2.7. The Trust shall furnish or cause to be furnished, to
the Company or its designee, a copy of each Trust prospectus or
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statement of additional information in which the Company or the Accounts are
named prior to the filing of such document with the Securities and Exchange
Commission. The Trust shall furnish, or shall cause to be furnished, to the
Company or its designee, each piece of sales literature or other promotional
material in which the Company or the Accounts are named, at least ten Business
Days prior to its use. No such material shall be used if the Company or its
designee reasonably objects to such use within ten Business Days after receipt
of such material.
2.8. The Trust shall not give any information or make any
representations or statements on behalf of the Company or concerning the
Company, the Accounts or the Contracts other than information or representations
contained in and accurately derived from the registration statement or
prospectus for the Contracts (as such registration statement and prospectus may
be amended or supplemented from time to time), or in materials approved by the
Company for distribution including sales literature or other promotional
materials, except as required by legal process or regulatory authorities or with
the written permission of the Company.
2.9. So long as, and to the extent that the Securities and Exchange
Commission interprets the 1940 Act to require pass-through voting privileges for
variable policy owners, the Company will provide pass-through voting privileges
to owners of policies whose cash values are invested, through the Accounts, in
shares of the Trust. The Trust shall require all Participating Insurance
Companies to calculate voting privileges in the same manner and the Company
shall be responsible for assuring that the Accounts calculate voting privileges
in the manner established by the Trust. With respect to each Account, the
Company will vote shares of the Trust held by the Account and for which no
timely voting instructions from policy owners are received as well as shares it
owns that are held by that Account, in the same proportion as those shares for
which voting instructions are received. The Company and its agents will in no
way recommend or oppose or interfere with the solicitation of proxies for Trust
shares held by Contract owners without the prior written consent of the Trust,
which consent may be withheld in the Trust's sole discretion.
ARTICLE III.
Representations and Warranties
3.1. The Company represents and warrants that it is an insurance
company duly organized and in good standing under the laws of the State of and
that it has legally and validly established each Account as a segregated asset
account under such law on the date set forth in Schedule A.
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3.2. The Company represents and warrants that it has registered or,
prior to any issuance or sale of the Contracts, will register each Account as a
unit investment trust in accordance with the provisions of the 1940 Act to serve
as a segregated investment account for the Contracts.
3.3. The Company represents and warrants that the Contracts will be
registered under the 1933 Act prior to any issuance or sale of the Contracts;
the Contracts will be issued and sold in compliance in all material respects
with all applicable federal and state laws; and the sale of the Contracts shall
comply in all material respects with state insurance suitability requirements.
3.4. The Trust represents and warrants that it is duly
organized and validly existing under the laws of the State of
Massachusetts.
3.5. The Trust represents and warrants that the Trust shares offered
and sold pursuant to this Agreement will be registered under the 1933 Act and
the Trust shall be registered under the 1940 Act prior to any issuance or sale
of such shares. The Trust shall amend its registration statement under the 1933
Act and the 1940 Act from time to time as required in order to effect the
continuous offering of its shares. The Trust shall register and qualify its
shares for sale in accordance with the laws of the various states only if and to
the extent deemed advisable by the Trust.
3.6. The Trust represents and warrants that the investments of each
Portfolio will comply with the diversification requirements set forth in Section
817(h) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations thereunder.
ARTICLE IV.
Potential Conflicts
4.1. The parties acknowledge that the Trust's shares may be made
available for investment to other Participating Insurance Companies. In such
event, the Trustees will monitor the Trust for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
Participating Insurance Companies. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e)
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a difference in voting instructions given by variable annuity contract and
variable life insurance contract owners; or (f) a decision by an insurer to
disregard the voting instructions of contract owners. The Trustees shall
promptly inform the Company if they determine that an irreconcilable material
conflict exists and the implications thereof.
4.2. The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Trustees. The Company will assist the
Trustees in carrying out their responsibilities under the Shared Trust Exemptive
Order by providing the Trustees with all information reasonably necessary for
the Trustees to consider any issues raised including, but not limited to,
information as to a decision by the Company to disregard Contract owner voting
instructions.
4.3. If it is determined by a majority of the Trustees, or a majority
of its disinterested Trustees, that a material irreconcilable conflict exists
that affects the interests of Contract owners, the Company shall, in cooperation
with other Participating Insurance Companies whose contract owners are also
affected, at its expense and to the extent reasonably practicable (as determined
by the Trustees) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (a) withdrawing the
assets allocable to some or all of the Accounts from the Trust or any Portfolio
and reinvesting such assets in a different investment medium, including (but not
limited to) another Portfolio of the Trust, or submitting the question of
whether or not such segregation should be implemented to a vote of all affected
Contract owners and, as appropriate, segregating the assets of any appropriate
group (i.e., annuity contract owners, life insurance contract owners, or
variable contract owners of one or more Participating Insurance Companies) that
votes in favor of such segregation, or offering to the affected Contract owners
the option of making such a change; and (b) establishing a new registered
management investment company or managed separate account.
4.4. If a material irreconcilable conflict arises because of a decision
by the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Trust's election, to withdraw the affected Account's
investment in the Trust and terminate this Agreement with respect to such
Account; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested Trustees. Any such withdrawal
and termination must take place within six (6) months after the Trust gives
written notice that this provision is being implemented. Until the end of such
six (6) month period, the Trust shall
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continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Trust.
4.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Trust and terminate this Agreement with
respect to such Account within six (6) months after the Trustees inform the
Company in writing that it has determined that such decision has created an
irreconcilable material conflict; provided, however, that such withdrawal and
termination shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the disinterested
Trustees. Until the end of such six (6) month period, the Trust shall continue
to accept and implement orders by the Company for the purchase and redemption of
shares of the Trust.
4.6. For purposes of Section 4.3 through 4.6 of this Agreement, a
majority of the disinterested Trustees shall determine whether any proposed
action adequately remedies any irreconcilable material conflict, but in no event
will the Company be required to establish a new funding medium for the Contracts
if an offer to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Trustees determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Trust and terminate this Agreement within six (6)
months after the Trustees inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested Trustees.
4.7. The Company shall at least annually submit to the Trustees such
reports, materials or data as the Trustees may reasonably request so that the
Trustees may fully carry out the duties imposed upon them by the Shared Trust
Exemptive Order, and said reports, materials and data shall be submitted more
frequently if deemed appropriate by the Trustees.
4.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Trust Exemptive Order) on terms and conditions
materially different from those contained in the Shared Trust Exemptive Order,
then the Trust and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T),
as amended,
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and Rule 6e-3, as adopted, to the extent such rules are applicable.
ARTICLE V.
Indemnification
5.1. Indemnification By the Company. The Company agrees to indemnify
and hold harmless the Trust and each of its Trustees, officers, employees and
agents and each person, if any, who controls the Trust within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes
of this Article V) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Company)
or expenses (including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal counsel
free incurred in connection therewith)(collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or regulation, or at
common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in a
registration statement or prospectus for the Contracts or in the
Contracts themselves or in sales literature generated or approved by
the Company on behalf of the Contracts or Accounts (or any amendment or
supplement to any of the foregoing) (collectively, "Company Documents"
for the purposes of this Article V), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, provided that this indemnity shall not apply as
to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was accurately
derived from written information furnished to the Company by or on
behalf of the Trust for use in Company Documents or otherwise for use
in connection with the sale of the Contracts or Trust shares; or
(b) arise out of or result from statements or
representations (other than statements or representations contained in
and accurately derived from Trust Documents as defined in Section
5.2(a)) or wrongful conduct of the Company or persons under its
control, with respect to the sale or acquisition of the Contracts or
Trust shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Trust
Documents as defined in Section 5.2(a) or the omission or alleged
omission to state therein a material fact
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<PAGE>
required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in
reliance upon and accurately derived from written information furnished
to the Trust by or on behalf of the Company; or
(d) arise out of or result from any failure by the Company
to provide the services or furnish the materials required under the
terms of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Company.
5.2. Indemnification By the Trust. The Trust agrees to indemnify and
hold harmless the Company and each of its directors, officers, employees and
agents and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes
of this Article V) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Trust) or
expenses (including the reasonable costs of investigating or defending any
alleged loss, claim, damage, liability or expense and reasonable legal counsel
fees incurred in connection therewith) (collectively, "Losses"), to which the
Indemnified Parties may become subject under any statute or regulation, or at
common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus for the Trust (or any amendment or
supplement thereto), (collectively, "Trust Documents" for the purposes
of this Article V), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, provided that this indemnity shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and was accurately
derived from written information furnished to the Trust by or on behalf
of the Company for use in Trust Documents or otherwise for use in
connection with the sale of the Contracts or Trust shares; or
(b) arise out of or result from statements or
representations (other than statements or representations contained in
and accurately derived from Company Documents) or wrongful conduct of
the Trust or persons under its
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control, with respect to the sale or acquisition of the
Contracts or Trust shares; or
(c) arise out of or result from any untrue statement or
alleged untrue statement of a material fact contained in Company
Documents or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was
made in reliance upon and accurately derived from written information
furnished to the Company by or on behalf of the Trust; or
(d) arise out of or result from any failure by the Trust to
provide the services or furnish the materials required under the terms
of this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this Agreement or
arise out of or result from any other material breach of this Agreement
by the Trust.
5.3. Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any Losses incurred or assessed against an Indemnified Party that arise from
such Indemnified Party's willful misfeasance, bad faith or gross negligence in
the performance of such Indemnified Party's duties or by reason of such
Indemnified Party's reckless disregard of obligations or duties under this
Agreement.
5.4. Neither the Company nor the Trust shall be liable under the
indemnification provisions of Sections 5.1 or 5.2, as applicable, with respect
to any claim made against an Indemnified Party unless such Indemnified Party
shall have notified the other party in writing within a reasonable time after
the summons, or other first written notification, giving information of the
nature of the claim which shall have been served upon or otherwise received by
such Indemnified Party (or after such Indemnified Party shall have received
notice of service upon or other notification to any designated agent), but
failure to notify the party against whom indemnification is sought of any such
claim or shall not relieve that party from any liability which it may have to
the Indemnified Party in the absence of Sections 5.1 and 5.2.
5.5. In case any such action is brought against the Indemnified
Parties, the indemnifying party shall be entitled to participate, at its own
expense, in the defense of such action. The indemnifying party also shall be
entitled to assume the defense thereof, with counsel reasonably satisfactory to
the party named in the action. After notice from the indemnifying party to the
Indemnified Party of an election to assume such
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defense, the Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it, and the indemnifying party will not be liable
to the Indemnified Party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
ARTICLE VI.
Termination
6.1. This Agreement may be terminated by either party for
any reason by ninety (90) days advance written notice delivered
to the other party.
6.2. Notwithstanding any termination of this Agreement, the Trust
shall, at the option of the Company, continue to make available additional
shares of the Trust (or any Portfolio) pursuant to the terms and conditions of
this Agreement for all Contracts in effect on the effective date of termination
of this Agreement, provided that the Company continues to pay the costs set
forth in Section 2.3.
6.3. The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.8 shall survive the
termination of this Agreement as long as shares of the Trust are held on behalf
of Contract owners in accordance with Section 6.2.
ARTICLE VII.
Notices
Any notice shall be sufficiently given when sent by registered or
certified mail to the other party at the address of such party set forth below
or at such other address as such party may from time to time specify in writing
to the other party.
If to the Trust:
2500 Westchester Avenue
Purchase, New York 10577
Attention: Joseph J. McBrien, Esq.
If to the Company:
One Nationwide Plaza
Columbus, Ohio 43216
Attention:
ARTICLE VIII.
Miscellaneous
8.1. The captions in this Agreement are included for convenience
of reference only and in no way define or delineate
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any of the provisions hereof or otherwise affect their
construction or effect.
8.2. This Agreement may be executed simultaneously in two
or more counterparts, each of which taken together shall
constitute one and the same instrument.
8.3. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of the Agreement
shall not be affected thereby.
8.4. This Agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of the
State of New York.
8.5. The parties to this Agreement acknowledge and agree that all
liabilities of the Trust arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Trust and that no Trustee, officer, agent or holder of shares of
beneficial interest of the Trust shall be personally liable for any such
liabilities.
8.6. Each party shall cooperate with each other party and all
appropriate governmental authorities (including without limitation the SEC, the
NASD and state insurance regulators) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this Agreement or the transactions contemplated hereby.
8.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations, at law or in equity, which the parties hereto are entitled to under
state and federal laws.
8.8. The parties to this Agreement acknowledge and agree that
this Agreement shall not be exclusive in any respect.
8.9. Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the prior written approval of
the other party.
8.10. No provisions of this Agreement may be amended or modified
in any manner except by a written agreement properly authorized and executed by
both paries.
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IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Participation Agreement as of the date and year first
above written.
NATIONWIDE LIFE INSURANCE COMPANY
By:
Name:
Title:
EVERGREEN VARIABLE TRUST
By:
Name:
Title:
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Schedule A
Separate Accounts and Associated Contracts
Name of Separate Account and Contracts Funded
Date Established by Board of Directors By Separate Account
Nationwide Variable Account - 6
Date:
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<PAGE>
FUND PARTICIPATION AGREEMENT
THIS AGREEMENT made as of the day of , 96, by and between EVERGREEN
VARIABLE TRUST ("TRUST"), a Massachusetts business trust, and GREAT AMERICAN
RESERVE INSURANCE COMPANY (the "COMPANY"), a life insurance company organized
under the laws of the State of Indiana.
WHEREAS, TRUST is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the "'40 Act"), as
an open-end, diversified management investment company; and
WHEREAS, TRUST is organized as a series fund comprised of several Funds
("Funds"), those currently available are listed on Appendix A hereto as such
Appendix may be amended from time to time; and
WHEREAS, TRUST was organized to act as the funding vehicle for certain
variable life insurance and/or variable annuity contracts ("Variable Contracts")
offered by life insurance companies through separate accounts ("Separate
Accounts") of such life insurance companies ("Participating Insurance
Companies") and also offers its shares to certain qualified pension and
retirement plans ("Qualified Plans"); and
WHEREAS, TRUST has applied for an order from the SEC, granting
Participating Insurance Companies and their separate accounts exemptions from
the provisions of Sections 9(a), 13(a), 15(a) and 15(b) of the '40 Act, and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Funds of the TRUST to be sold to and held by variable
annuity and variable life insurance separate accounts of both affiliated and
unaffiliated Participating Insurance Companies and Qualified Plans ("Exemptive
Order"); and
WHEREAS, the COMPANY has established or will establish one or more separate
accounts ("Separate Accounts") to offer Variable Contracts and is desirous of
having TRUST as one of the underlying funding vehicles for such Variable
Contracts; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the COMPANY intends to purchase shares of TRUST to fund the
aforementioned Variable Contracts and TRUST is authorized to sell such shares to
the COMPANY at net asset value;
NOW, THEREFORE, in consideration of their mutual promises, the COMPANY and
TRUST agree as follows:
Article I. sale of trust shares
1.1 TRUST agrees to make available to the Separate Accounts of the COMPANY
shares of the selected Funds as listed on Appendix B (as such Appendix may be
amended from time to time) for investment of purchase payments of Variable
Contracts allocated to the designated Separate Accounts as provided in TRUST's
Registration Statement.
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1.2 TRUST agrees to sell to the COMPANY those shares of the selected Funds
of TRUST which the COMPANY orders, executing such orders on a daily basis at the
net asset value next computed after receipt by TRUST or its designee of the
order for the shares of TRUST. For purposes of this Section 1.2, the COMPANY
shall be the designee of TRUST for receipt of such orders from the designated
Separate Account and receipt by such designee shall constitute receipt by TRUST;
provided that the COMPANY receives the order by 4:00 p.m. New York time and
TRUST receives notice from the COMPANY by telephone or facsimile (or by such
other means as TRUST and the COMPANY may agree in writing) of such order by 9:00
a.m. New York time on the next following Business Day. "Business Day" shall mean
any day on which the New York Stock Exchange is open for trading and on which
TRUST calculates its net asset value pursuant to the rules of the SEC.
1.3 TRUST agrees to redeem on the COMPANY's request, any full or fractional
shares of TRUST held by the COMPANY, executing such requests on a daily basis at
the net asset value next computed after receipt by TRUST or its designee of the
request for redemption, in accordance with the provisions of this Agreement and
TRUST's Registration Statement. For purposes of this Section 1.3, the COMPANY
shall be the designee of TRUST for receipt of requests for redemption from the
designated Separate Account and receipt by such designee shall constitute
receipt by TRUST; provided that the COMPANY receives the request for redemption
by 4:00 p.m. New York time and TRUST receives notice from the COMPANY by
telephone or facsimile (or by such other means as TRUST and the COMPANY may
agree in writing) of such request for redemption by 9:00 a.m. New York time on
the next following Business Day.
1.4 TRUST shall furnish, on or before the ex-dividend date, notice to the
COMPANY of any income dividends or capital gain distributions payable on the
shares of any Fund of TRUST. The COMPANY hereby elects to receive all such
income dividends and capital gain distributions as are payable on a Fund's
shares in additional shares of the Fund. TRUST shall notify the COMPANY or its
designee of the number of shares so issued as payment of such dividends and
distributions.
1.5 TRUST shall make the net asset value per share for the selected Fund(s)
available to the COMPANY on a daily basis as soon as reasonably practicable
after the net asset value per share is calculated but shall use its best efforts
to make such net asset value available by 6:30 p.m. New York time. In the event
that TRUST is unable to meet the 6:30 p.m. time stated herein, it shall provide
additional time for the COMPANY to place orders for the purchase and redemption
of shares. Such additional time shall be equal to the additional time which
TRUST takes to make the net asset value available to the COMPANY. If TRUST
provides the COMPANY with materially incorrect share net asset value information
through no fault of the COMPANY, the COMPANY on behalf of the Separate Accounts,
shall be entitled to an adjustment to the number of shares purchased or redeemed
to reflect the correct share net asset value. Any material error in the
calculation of net asset value per share, dividend or capital gain information
shall be reported promptly upon discovery to the COMPANY. Neither the Trust, the
Funds, the Funds' investment adviser, nor any of their affiliates shall be
liable for any information provided to COMPANY pursuant to this Agreement which
information is based on incorrect information furnished by COMPANY or any other
Participating Insurance Company to TRUST or the Funds' investment adviser.
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1.6 At the end of each Business Day, the COMPANY shall use the information
described in Section 1.5 to calculate Separate Account unit values for the day.
Using these unit values, the COMPANY shall process each such Business Day's
Separate Account transactions based on requests and premiums received by it by
the close of trading on the floor of the New York Stock Exchange (currently 4:00
p.m. New York time) to determine the net dollar amount of TRUST shares which
shall be purchased or redeemed at that day's closing net asset value per share.
The net purchase or redemption orders so determined shall be transmitted to
TRUST by the COMPANY by 9:00 a.m. New York time on the Business Day next
following the COMPANY's receipt of such requests and premiums in accordance with
the terms of Sections 1.2 and 1.3 hereof.
1.7 If the COMPANY's order requests the purchase of TRUST shares, the
COMPANY shall pay for such purchase by wiring federal funds to TRUST or its
designated custodial account on the day the order is transmitted by the COMPANY.
If the COMPANY's order requests a net redemption resulting in a payment of
redemption proceeds to the COMPANY, TRUST shall use its best efforts to wire the
redemption proceeds to the COMPANY by the next Business Day, unless doing so
would require TRUST to dispose of Fund securities or otherwise incur additional
costs. In any event, proceeds shall be wired to the COMPANY within three
Business Days or such longer period permitted by the '40 Act or the rules,
orders or regulations thereunder and TRUST shall notify the person designated in
writing by the COMPANY as the recipient for such notice of such delay by 3:00
p.m. New York time the same Business Day that the COMPANY transmits the
redemption order to TRUST. If the COMPANY's order requests the application of
redemption proceeds from the redemption of shares to the purchase of shares of
another Fund set forth on Appendix B hereto, TRUST shall so apply such proceeds
the same Business Day that the COMPANY transmits such orders to TRUST.
1.8 TRUST agrees that all shares of the Funds of TRUST will be sold only to
Participating Insurance Companies which have agreed to participate in TRUST to
fund their Separate Accounts and/or to Qualified Plans, all in accordance with
the requirements of Section 817(h) of the Internal Revenue Code of 1986, as
amended ("Code") and Treasury Regulation 1.817-5. Shares of the Funds of TRUST
will not be sold directly to the general public.
1.9 TRUST may refuse to sell shares of any Fund to any person, or suspend
or terminate the offering of the shares of any Fund if such action is required
by law or by regulatory authorities having jurisdiction or is, in the sole
discretion of the Board of Trustees of the TRUST (the "Board"), acting in good
faith and in light of its duties under federal and any applicable state laws,
deemed necessary, desirable or appropriate and in the best interests of the
shareholders of such Funds.
1.10 Issuance and transfer of Fund shares will be by book entry only. Stock
certificates will not be issued to the COMPANY or the Separate Accounts. Shares
ordered from Fund will be recorded in appropriate book entry titles for the
Separate Accounts.
1.11 The COMPANY agrees and acknowledges that the TRUST's adviser,
Evergreen Asset Management Corp. ("Evergreen Asset"), is the sole owner of the
name and mark "Evergreen" and that all use of any designation comprised in whole
or part of Evergreen (an "Evergreen Mark") under this Agreement shall inure to
the benefit of Evergreen Asset. Except as provided in Sections 3.4 and 4.1,
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the COMPANY shall not use any Evergreen Mark on its own behalf or on behalf of
the Separate Accounts or Variable Contracts in any registration statement,
advertisement, sales literature or other materials relating to the Separate
Accounts or Variable Contracts without the prior written consent of Evergreen
Asset. Upon termination of this Agreement for any reason, the Company shall
cease all use of any Evergreen Mark as soon as reasonably practicable.
Article II. representations and warranties
2.1 The COMPANY represents and warrants that it is an insurance company
duly organized and in good standing under the laws of Indiana and that it has
legally and validly established each Separate Account as a segregated asset
account under such laws.
2.2 The COMPANY represents and warrants that it has registered or, prior to
any issuance or sale of the Variable Contracts, will register each Separate
Account as a unit investment trust ("UIT") in accordance with the provisions of
the '40 Act and cause each Separate Account to remain so registered to serve as
a segregated asset account for the Variable Contracts, unless an exemption from
registration is available.
2.3 The COMPANY represents and warrants that the Variable Contracts will be
registered under the Securities Act of 1933 (the "'33 Act") unless an exemption
from registration is available prior to any issuance or sale of the Variable
Contracts and that the Variable Contracts will be issued and sold in compliance
in all material respects with all applicable federal and state laws and further
that the sale of the Variable Contracts shall comply in all material respects
with state insurance law suitability requirements.
2.4 The COMPANY represents and warrants that the Variable Contracts are
currently and at the time of issuance will be treated as life insurance,
endowment or annuity contracts under applicable provisions of the Code, that it
will maintain such treatment and that it will notify TRUST immediately upon
having a reasonable basis for believing that the Variable Contracts have ceased
to be so treated or that they might not be so treated in the future.
2.5 TRUST represents and warrants that the Fund shares offered and sold
pursuant to this Agreement will be registered under the '33 Act and sold in
accordance with all applicable federal and state laws, and TRUST shall be
registered under the '40 Act prior to and at the time of any issuance or sale of
such shares. TRUST, subject to Section 1.9 above, shall amend its registration
statement under the '33 Act and the '40 Act from time to time as required in
order to effect the continuous offering of its shares. TRUST shall register and
qualify its shares for sale in accordance with the laws of the various states
only if and to the extent deemed advisable by TRUST.
2.6 TRUST represents and warrants that each Fund will comply with the
diversification requirements set forth in Section 817(h) of the Code, and the
rules and regulations thereunder, including without limitation Treasury
Regulation 1.817-5, and will notify the COMPANY immediately upon having a
reasonable basis for believing any Fund has ceased to comply or might not so
comply and will immediately take all reasonable steps to adequately diversify
the Fund to achieve compliance.
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2.7 TRUST represents and warrants that each Fund invested in by the
Separate Account intends to elect to be treated as a "regulated investment
company" under Subchapter M of the Code, and to qualify for such treatment for
each taxable year and will notify the COMPANY immediately upon having a
reasonable basis for believing it has ceased to so qualify or might not so
qualify in the future.
Article III. prospectus and proxy statements
3.1 TRUST shall prepare and be responsible for filing with the SEC and any
state regulators requiring such filing all shareholder reports, notices, proxy
materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of TRUST.
TRUST shall bear the costs of registration and qualification of shares of the
Funds, preparation and filing of the documents listed in this Section 3.1 and
all taxes and filing fees to which an issuer is subject on the issuance and
transfer of its shares.
3.2 At least annually, TRUST or its designee shall provide the COMPANY,
free of charge, with as many copies of the current prospectus for the shares of
the Funds as the COMPANY may reasonably request for distribution to existing
Variable Contract owners whose Variable Contracts are funded by such shares.
TRUST or its designee shall provide the COMPANY, at the COMPANY's expense, with
as many copies of the current prospectus for the shares as the COMPANY may
reasonably request for distribution to prospective purchasers of Variable
Contracts. If requested by the COMPANY in lieu thereof, TRUST or its designee
shall provide such documentation (including a "camera ready" copy of the new
prospectus as set in type or, at the request of the COMPANY, as a diskette in
the form sent to the financial printer) and other assistance as is reasonably
necessary in order for the parties hereto once a year (or more frequently if the
prospectus for the shares is supplemented or amended) to have the prospectus for
the Variable Contracts and the prospectus for the TRUST shares printed together
in one document. The expenses of such printing will be apportioned between (a)
the COMPANY and (b) TRUST in proportion to the number of pages of the Variable
Contract and shares' prospectus, taking account of other relevant factors
affecting the expense of printing, such as covers, columns, graphs and charts;
TRUST to bear the cost of printing the shares' prospectus portion of such
document for distribution only to owners of existing Variable Contracts funded
by the TRUST shares and the COMPANY to bear the expense of printing the portion
of such documents relating to the Separate Account; provided, however, the
COMPANY shall bear all printing expenses of such combined documents where used
for distribution to prospective purchasers or to owners of existing Variable
Contracts not funded by the shares. In the event that the COMPANY requests that
TRUST or its designee provide TRUST's prospectus in a "camera ready" or diskette
format, TRUST shall be responsible for providing the prospectus in the format in
which it is accustomed to formatting prospectuses and shall bear the expense of
providing the prospectus in such format (e.g. typesetting expenses), and COMPANY
shall bear the expense of adjusting or changing the format to conform with any
of its prospectuses.
3.3 The obligations of TRUST and COMPANY with respect to the TRUST's and
Variable Contracts' prospectuses set forth in Section 3.2 shall apply in the
same manner to the TRUST's and Variable Contracts' statements of additional
information; provided, that such statements
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of additional information need only be duplicated unless TRUST and COMPANY
agree that such documents should be printed.
3.4 TRUST will provide COMPANY with at least one complete copy of all
prospectuses, statements of additional information, annual and semi-annual
reports, proxy statements, exemptive applications and all amendments or
supplements to any of the above that relate to the Funds promptly after the
filing of each such document with the SEC or other regulatory authority. The
COMPANY will provide TRUST with at least one complete copy of all prospectuses,
statements of additional information, annual and semi-annual reports, proxy
statements, exemptive applications and all amendments or supplements to any of
the above that relate to a Separate Account promptly after the filing of each
such document with the SEC or other regulatory authority.
Article IV. sales materials
4.1 The COMPANY will furnish, or will cause to be furnished, to TRUST, each
piece of sales literature or other promotional material in which TRUST or its
investment adviser is named, at least fifteen (15) Business Days prior to its
intended use. No such material will be used if TRUST objects to its use in
writing within ten (10) Business Days after receipt of such material.
4.2 TRUST will furnish, or will cause to be furnished, to the COMPANY, each
piece of sales literature or other promotional material in which the COMPANY or
its Separate Accounts are named, at least fifteen (15) Business Days prior to
its intended use. No such material will be used if the COMPANY objects to is use
in writing within ten (10) Business Days after receipt of such material.
4.3 TRUST and its affiliates and agents shall not give any information or
make any representations on behalf of the COMPANY or concerning the COMPANY, the
Separate Accounts, or the Variable Contracts issued by the COMPANY, other than
the information or representations contained in a registration statement or
prospectus for such Variable Contracts, as such registration statement and
prospectus may be amended or supplemented from time to time, or in reports of
the Separate Accounts or reports prepared for distribution to owners of such
Variable Contracts, or in sales literature or other promotional material
approved by the COMPANY or its designee, except with the written permission of
the COMPANY.
4.4 The COMPANY and its affiliates and agents shall not give any
information or make any representations on behalf of TRUST or concerning TRUST
other than the information or representations contained in a registration
statement or prospectus for TRUST, as such registration statement and prospectus
may be amended or supplemented from time to time, or in sales literature or
other promotional material approved by TRUST or its designee, except with the
written permission of TRUST.
4.5 For purposes of this Agreement, the phrase "sales literature or other
promotional material" or words of similar import include, without limitation,
advertisements (such as material published, or designed for use, in a newspaper,
magazine or other periodical, radio, television, telephone or tape recording,
videotape display, signs or billboards, motion pictures or other public
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media), sales literature (such as any written communication distributed or made
generally available to customers or the public, including brochures, circulars,
research reports, market letters, form letters, seminar texts, or reprints or
excerpts of any other advertisement, sales literature, or published article),
educational or training materials or other communications distributed or made
generally available to some or all agents or employees, registration statements,
prospectuses, statements of additional information, shareholder reports and
proxy materials, and any other material constituting sales literature or
advertising under National Association of Securities Dealers, Inc. rules, the
'40 Act or the '33 Act.
Article V. potential conflicts
5.1 The parties acknowledge that TRUST has filed an application with the
SEC to request an order granting relief from various provisions of the '40 Act
and the rules thereunder to the extent necessary to permit TRUST shares to be
sold to and held by variable annuity and variable life insurance separate
accounts of both affiliated and unaffiliated Participating Insurance Companies
and Qualified Plans. It is anticipated that the Exemptive Order, when and if
issued, shall require TRUST and each Participating Insurance Company to comply
with conditions and undertakings substantially as provided in this Section 5. If
the Exemptive Order imposes conditions materially different from those provided
for in this Section 5, the conditions and undertakings imposed by the Exemptive
Order shall govern this Agreement and the parties hereto agree to amend this
Agreement consistent with the Exemptive Order. The Fund will not enter into a
participation agreement with any other Participating Insurance Company unless it
imposes the same conditions and undertakings as are imposed on the COMPANY
hereby.
5.2 The Board will monitor TRUST for the existence of any irreconcilable
material conflict between and among the interests of Variable Contract owners of
all separate accounts and of plan participants of Qualified Plans investing in
TRUST, and determine what action, if any, should be taken in response to such
conflicts. An irreconcilable material conflict may arise for a variety of
reasons, which may include: (a) an action by any state insurance regulatory
authority; (b) a change in applicable federal or state insurance, tax, or
securities laws or regulations, or a public ruling, private letter ruling or any
similar action by insurance, tax or securities regulatory authorities; (c) an
administrative or judicial decision in any relevant proceeding; (d) the manner
in which the investments of TRUST are being managed; (e) a difference in voting
instructions given by variable annuity and variable life insurance Contract
owners; (f) a decision by a Participating Insurance Company to disregard the
voting instructions of Variable Contract owners and (g) if applicable, a
decision by a Qualified Plan to disregard the voting instructions of plan
participants.
5.3 The COMPANY will report any potential or existing conflicts to the
Board. The COMPANY will be responsible for assisting the Board in carrying out
its duties in this regard by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. The responsibility
includes, but is not limited to, an obligation by the COMPANY to inform the
Board whenever it has determined to disregard Variable Contract owner voting
instructions. These responsibilities of the COMPANY will be carried out with a
view only to the interests of the Variable Contract owners.
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5.4 If a majority of the Board or majority of its disinterested trustees,
determines that a material irreconcilable conflict exists, affecting the
COMPANY, the COMPANY, at its expense and to the extent reasonably practicable
(as determined by a majority of the Board's disinterested trustees), will take
any steps necessary to remedy or eliminate the irreconcilable material conflict,
including: (a) withdrawing the assets allocable to some or all of the Separate
Accounts from TRUST or any Fund thereof and reinvesting those assets in a
different investment medium, which may include another Fund of TRUST, or another
investment company; (b) submitting the question as to whether such segregation
should be implemented to a vote of all affected Variable Contract owners and, as
appropriate, segregating the assets of any appropriate group (i.e., variable
annuity or variable life insurance Contract owners of one or more Participating
Insurance Companies) that votes in favor of such segregation, or offering to the
affected Variable Contract owners the option of making such a change; and (c)
establishing a new registered management investment company or managed separate
account. If an irreconcilable material conflict arises because of the COMPANY's
decision to disregard Variable Contract owner voting instructions, and that
decision represents a minority position or would preclude a majority vote, the
COMPANY may be required, at the election of TRUST to withdraw the Separate
Account's investment in TRUST, and no charge or penalty will be imposed as a
result of such withdrawal. The responsibility to take such remedial action shall
be carried out with a view only to the interests of the Variable Contract
owners.
For purposes of this Section 5.4, a majority of the disinterested members
of the Board shall determine whether or not any proposed action adequately
remedies any irreconcilable material conflict but in no event will TRUST or its
investment adviser (or any other investment adviser of TRUST) be required to
establish a new funding medium for any Variable Contract. Further, the COMPANY
shall not be required by this Section 5.4 to establish a new funding medium for
any Variable Contracts if any offer to do so has been declined by a vote of a
majority of Variable Contract owners materially and adversely affected by the
irreconcilable conflict.
5.5 The Board's determination of the existence of an irreconcilable
material conflict and its implications shall be made known promptly and in
writing to the COMPANY.
5.6 No less than annually, the COMPANY shall submit to the Board such
reports, materials or data as the Board may reasonably request so that the Board
may fully carry out its obligations. Such reports, materials and data shall be
submitted more frequently if deemed appropriate by the Board.
Article VI. voting
6.1 The COMPANY will provide pass-through voting privileges to all Variable
Contract owners so long as the SEC continues to interpret the '40 Act as
requiring pass-through voting privileges for Variable Contract owners.
Accordingly, the COMPANY, where applicable, will vote shares of the Fund held in
its Separate Accounts in a manner consistent with voting instructions timely
received from its Variable Contract owners. The COMPANY will be responsible for
assuring that each of its Separate Accounts that participates in TRUST
calculates voting privileges in a manner consistent with other Participating
Insurance Companies. The COMPANY will vote shares for which
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<PAGE>
it has not received timely voting instructions, as well as shares it owns, in
the same proportion as its votes those shares for which it has received voting
instructions.
6.2 If and to the extent Rule 6e-2 and Rule 6e-3(T) are amended, or if Rule
6e-3 is adopted, to provide exemptive relief from any provision of the '40 Act
or the rules thereunder with respect to mixed and shared funding on terms and
conditions materially different from any exemptions granted in the Exemptive
Order, then TRUST, and/or the Participating Insurance Companies, as appropriate,
shall take such steps as may be necessary to comply with Rule 6e-2 and Rule
6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such Rules are
applicable.
Article VII. indemnification
7.1 Indemnification by the COMPANY. The COMPANY agrees to indemnify and
hold harmless TRUST, and each of its Trustees, principals, officers, employees
and agents and each person, if any, who controls TRUST within the meaning of
Section 15 of the '33 Act (collectively, the "Indemnified Parties" for purposes
of this Article VII) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the COMPANY,
which consent shall not be unreasonably withheld) or litigation (including legal
and other expenses), to which the Indemnified Parties may become subject under
any statute, regulation, at common law or otherwise, insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof) or
settlements are related to the sale or acquisition of TRUST's shares or the
Variable Contracts and:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a registration
statement or prospectus for the Variable Contracts or contained in the
Variable Contracts or in sales literature generated or approved by COMPANY
on behalf of the Variable Contracts or Separate Accounts (or any amendment
or supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, provided that this agreement to indemnify shall not apply
as to any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to the COMPANY by or on behalf of TRUST for use in
the registration statement or prospectus for the Variable Contracts or in
the Variable Contracts or sales literature (or any amendment or supplement)
or otherwise for use in connection with the sale of the Variable Contracts
or TRUST shares; or
(b) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration statement,
prospectus or sales literature of TRUST not supplied by the COMPANY, or
persons under its control) or wrongful conduct of the COMPANY or persons
under its control, with respect to the sale or distribution of the Variable
Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature of TRUST or any
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amendment thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading if such statement
or omission or such alleged statement or omission was made in reliance upon
and in conformity with information furnished to TRUST by or on behalf of
the COMPANY; or
(d) arise as a result of any failure by the COMPANY to provide
substantially the services and furnish the materials under the terms of
this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the COMPANY in this Agreement or
arise out of or result from any other material breach of this Agreement by
the COMPANY.
7.2 The COMPANY shall not be liable under this indemnification provision
with respect to any losses, claims, damages, liabilities or litigation incurred
or assessed against an Indemnified Party as such may arise from such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations or duties under this Agreement.
7.3 The COMPANY shall not be liable under this indemnification provision
with respect to any claim made against an Indemnified Party unless such
Indemnified Party shall have notified the COMPANY in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon such Indemnified Party (or after
such Indemnified Party shall have received notice of such service on any
designated agent), but failure to notify the COMPANY of any such claim shall not
relieve the COMPANY from any liability which it may have to the Indemnified
Party against whom such action is brought otherwise than on account of this
indemnification provision. In case any such action is brought against an
Indemnified Party, the COMPANY shall be entitled to participate at its own
expense in the defense of such action. The COMPANY also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the COMPANY to such party of the COMPANY's election to
assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the COMPANY will not be
liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
7.4 Indemnification by TRUST. TRUST agrees to indemnify and hold harmless
the COMPANY and each of its directors, officers, employees, and agents and each
person, if any, who controls the COMPANY within the meaning of Section 15 of the
'33 Act (collectively, the "Indemnified Parties" for the purposes of this
Article VII) against any and all losses, claims, damages, liabilities (including
amounts paid in settlement with the written consent of TRUST which consent shall
not be unreasonably withheld) or litigation (including legal and other expenses)
to which the Indemnified Parties may become subject under any statute, or
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) or settlements are
related to the sale or acquisition of TRUST's shares or the Variable Contracts
and:
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<PAGE>
(a) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or sales literature of TRUST (or any amendment or
supplement to any of the foregoing), or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, provided that this Agreement to indemnify shall not apply as to
any Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity with
information furnished to TRUST by or on behalf of the COMPANY for use in
the registration statement or prospectus for TRUST or in sales literature
(or any amendment or supplement) or otherwise for use in connection with
the sale of the Variable Contracts or TRUST shares; or
(b) arise out of or as a result of statements or representations (other
than statements or representations contained in the registration statement,
prospectus or sales literature for the Variable Contracts not supplied by
TRUST or persons under its control) or wrongful conduct of TRUST or persons
under its control, with respect to the sale or distribution of the Variable
Contracts or TRUST shares; or
(c) arise out of any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, or sales
literature covering the Variable Contracts, or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, if such statement or omission or such
alleged statement or omission was made in reliance upon and in conformity
with information furnished to the COMPANY for inclusion therein by or on
behalf of TRUST; or
(d) arise as a result of (i) a failure by TRUST to provide
substantially the services and furnish the materials under the terms of
this Agreement; or (ii) a failure by a Fund(s) invested in by the Separate
Account to comply with the diversification requirements of Section 817(h)
of the Code; or (iii) a failure by a Fund(s) invested in by the Separate
Account to qualify as a "regulated investment company" under Subchapter M
of the Code; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by TRUST in this Agreement or arise out
of or result from any other material breach of this Agreement by TRUST.
7.5 TRUST shall not be liable under this indemnification provision with
respect to any losses, claims, damages, liabilities or litigation to which an
Indemnified Party would otherwise be subject by reason of such Indemnified
Party's willful misfeasance, bad faith, or gross negligence in the performance
of such Indemnified Party's duties or by reason of such Indemnified Party's
reckless disregard of obligations and duties under this Agreement.
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7.6 TRUST shall not be liable under this indemnification provision with
respect to any claim made against an Indemnified Party unless such Indemnified
Party shall have notified TRUST in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Indemnified Party (or after such
Indemnified Party shall have received notice of such service on any designated
agent), but failure to notify TRUST of any such claim shall not relieve TRUST
from any liability which it may have to the Indemnified Party against whom such
action is brought otherwise than on account of this indemnification provision.
In case any such action is brought against the Indemnified Parties, TRUST shall
be entitled to participate at its own expense in the defense thereof. TRUST also
shall be entitled to assume the defense thereof, with counsel satisfactory to
the party named in the action. After notice from TRUST to such party of TRUST
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and TRUST will not
be liable to such party under this Agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation.
Article VIII. term; termination
8.1 This Agreement shall be effective as of the date hereof and shall
continue in force until terminated in accordance with the provisions herein.
8.2 This Agreement shall terminate in accordance with the following
provisions:
(a) At the option of the COMPANY or TRUST at any time from the date
hereof upon 180 days' notice, unless a shorter time is agreed to by the
parties;
(b) At the option of the COMPANY, if TRUST shares are not reasonably
available to meet the requirements of the Variable Contracts as determined
by the COMPANY. Prompt notice of election to terminate shall be furnished
by the COMPANY, said termination to be effective ten days after receipt of
notice unless TRUST makes available a sufficient number of shares to
reasonably meet the requirements of the Variable Contracts within said
ten-day period;
(c) At the option of the COMPANY, upon the institution of formal
proceedings against TRUST by the SEC, the National Association of
Securities Dealers, Inc., or any other regulatory body, the expected or
anticipated ruling, judgment or outcome of which would, in the COMPANY's
reasonable judgment, materially impair TRUST's ability to meet and perform
TRUST's obligations and duties hereunder. Prompt notice of election to
terminate shall be furnished by the COMPANY with said termination to be
effective upon receipt of notice;
(d) At the option of TRUST, upon the institution of formal proceedings
against the COMPANY by the SEC, the National Association of Securities
Dealers, Inc. or any other regulatory body, the expected or anticipated
ruling, judgment or outcome of which would, in TRUST's reasonable judgment,
materially impair the COMPANY's ability to meet and perform its obligations
and duties hereunder. Prompt notice of
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election to terminate shall be furnished by TRUST with said termination
to be effective upon receipt of notice;
(e) In the event TRUST's shares are not registered, issued or sold in
accordance with applicable state or federal law, or such law precludes the
use of such shares as the underlying investment medium of Variable
Contracts issued or to be issued by the COMPANY. Termination shall be
effective upon such occurrence without notice;
(f) At the option of TRUST if the Variable Contracts cease to qualify
as annuity contracts or life insurance contracts, as applicable, under the
Code, or if TRUST reasonably believes that the Variable Contracts may fail
to so qualify. Termination shall be effective upon receipt of notice by the
COMPANY;
(g) At the option of the COMPANY, upon TRUST's breach of any material
provision of this Agreement, which breach has not been cured to the
satisfaction of the COMPANY within ten days after written notice of such
breach is delivered to TRUST;
(h) At the option of TRUST, upon the COMPANY's breach of any material
provision of this Agreement, which breach has not been cured to the
satisfaction of TRUST within ten days after written notice of such breach
is delivered to the COMPANY;
(i) At the option of TRUST, if the Variable Contracts are not
registered, issued or sold in accordance with applicable federal and/or
state law. Termination shall be effective immediately upon such occurrence
without notice;
(j) In the event this Agreement is assigned without the prior written
consent of the COMPANY and TRUST, termination shall be effective
immediately upon such occurrence without notice.
8.3 Notwithstanding any termination of this Agreement pursuant to Section
8.2 hereof, TRUST at the option of the COMPANY will continue to make available
additional TRUST shares, as provided below, pursuant to the terms and conditions
of this Agreement, for all Variable Contracts in effect on the effective date of
termination of this Agreement (hereinafter referred to as "Existing Contracts").
Specifically, without limitation, the owners of the Existing Contracts or the
COMPANY, whichever shall have legal authority to do so, shall be permitted to
reallocate investments in TRUST, redeem investments in TRUST and/or invest in
TRUST upon the payment of additional premiums under the Existing Contracts.
Article IX. notices
Any notice hereunder shall be given by registered or certified mail return
receipt requested to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to TRUST:
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Evergreen Variable Trust
2500 Westchester Avenue
Purchase, New York 10577
Attn: Joseph J. McBrien, Esq.
If to the COMPANY:
Great American Reserve Insurance Company
11815 N. Pennsylvania Street
Carmel, Indiana 46032-4572
Attention:
Notice shall be deemed given on the date of receipt by the addresses as
evidenced by the return receipt.
Article X. miscellaneous
10.1 The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
10.2 This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
10.3 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
10.4 This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Indiana. It
shall also be subject to the provisions of the federal securities laws and the
rules and regulations thereunder and to any orders of the SEC granting exemptive
relief therefrom and the conditions of such orders.
10.5 It is understood and expressly stipulated that neither the
shareholders of shares of any Fund nor the Trustees or officers of TRUST or any
Fund shall be personally liable hereunder. No Fund shall be liable for the
liabilities of any other Fund. All persons dealing with TRUST or a Fund must
look solely to the property of TRUST or that Fund, respectively, for enforcement
of any claims against TRUST or that Fund. It is also understood that each of the
Funds shall be deemed to be entering into a separate Agreement with the COMPANY
so that it is as if each of the Funds had signed a separate Agreement with the
COMPANY and that a single document is being signed simply to facilitate the
execution and administration of the Agreement.
10.6 Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the National
Association of Securities Dealers, Inc. and state insurance regulators) and
shall permit such authorities reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or the
transactions contemplated hereby.
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10.7 The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
10.8 No provision of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by TRUST
and the COMPANY.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Fund Participation Agreement as of the date and year first above
written.
EVERGREEN VARIABLE TRUST
By:
Name:
Title:
GREAT AMERICAN RESERVE INSURANCE
COMPANY
By:
Name:
Title:
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APPENDIX A
Trust and its Funds
Evergreen Variable Trust
Evergreen VA Fund
Evergreen VA Growth and Income Fund
Evergreen VA Foundation Fund
<PAGE>
APPENDIX B
Separate Accounts Selected Funds
CUSTODIAN CONTRACT
Between
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
<PAGE>
1. Employment of Custodian and Property
to be Held By It..............................................l
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian..............................2
2.1 Holding Securities.........................................2
2.2 Delivery of Securities.....................................3
2.3 Registration of Securities.................................8
2.4 Bank Accounts..............................................9
2.5 Payments for Shares........................................9
2.6 Availability of Federal Funds.............................10
2.7 Collection of Income......................................10
2.8 Payment of Fund Monies....................................ll
2.9 Liability for Payment in Advance of
Receipt of Securities Purchased...................14
2.10 Payments for Repurchases or Redemptions
of Shares of the Fund.............................14
<PAGE>
2.11 Appointment of Agents.............................................15
2.12 Deposit of Fund Assets in Securities System.......................15
2.12A Fund Assets Held in the Custodian's Direct
Paper System....................................................l9
2.13 Segregated Account................................................20
2.14 Ownership Certificates for Tax Purposes...........................22
2.15 Proxies...........................................................22
2.16 Communications Relating to Portfolio
Securities......................................................22
2.17 Proper Instructions...............................................23
2.18 Actions Permitted Without Express Authority.......................24
2.19 Evidence of Authority.............................................25
3. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income...............25
4. Records.............................................................26
5. Opinion of Fund's Independent Accountants...........................27
6. Reports to Fund by Independent Public Accountants...................27
7. Compensation of Custodian...........................................28
8. Responsibility of Custodian.........................................28
9. Effective Period, Termination and Amendment.........................29
10.Successor Custodian.................................................31
11.Interpretive and Additional Provisions..............................32
12.Additional Funds....................................................33
13.Massachusetts Law to Apply..........................................33
14.Prior Contracts.....................................................33
<PAGE>
CUSTODIAN CQNTRACT
This Contract between The Evergreen XXXXXXXXX Trust, a business trust
organized and existing under the laws of Massachusetts, having its principal
place of business at 2500 Westchester Avenue, Purchase, New York 10528
hereinafter called the "Fund", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and WHEREAS, the Fund intends to initially offer shares in XXXX
series, the XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX (such series
together with all other series subsequently established by the Fund and made
subject to this Contract in accordance with paragraph 12, being herein referred
to as the "Portfolio(s)"); NOW THEREFOR, in consideration of the mutual
covenants and agreements hereinafter contained, the parties hereto agree as
follows: 1. Employment of Custodian and Property to be Held by It The Fund
hereby employs the Custodian as the custodian of the assets of the Portfolios of
the Fund pursuant to the provlsions of the Declaration of Trust. The Fund on
behalf of the Portfolio(s) agrees to deliver to the Custodian all
<PAGE>
securities and cash cf the Portfolios, and all payments of incnme, payments of
principal or capital distributions received by lt with respect to a11
securities owned by the Pcrtfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of beneficial
interest of the Fund representing interests in the Portfolios, ("Shares") as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian. Upon receipt of "Proper Instructions" (within the meaning of
Section 2.17), the Custodian shall on behalf of the applicable Portfolio(s) from
time to time employ one or more sub-custodians, but only in accordance with an
applicable vote by the Board of Trustees of the Fund on behalf of the applicable
Portfolio(s), and provided that the Custodian shall have no more or less
responsibility or liability to the Fund on account of any actions or omissions
of any sub-custodian so employed than any such sub-custodian has to the
Custodian.
2. Duties of the Custodian with Respect to Property of the Fund Held
By the Custodian
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Portfolio all non-cash property, including all securities
owned by such Portfolio, other than (a) securities which are maintained pursuant
to Section 2.12 in a clearing agency which acts as a securities depository or in
a book-entry system authorized by the U.S. Department of the Treasury,
collectively rererred to herein as "Securities System" and (b) commercial paper
of an issuer for which State Street and and Trust Company acts as issuing and
paying agent ("Direct Paper ) which is deposited andJor maintained in the Direct
Paper System of the Custodian pursuant to Section 2.12A.
<PAGE>
2.2 Delivery of Securities. The Custodian shall release and deliver securities
owned by a Portfolio held by the Custodian or in a Securities System account of
the Custodian or in the Custodian's Direct Paper book entry system account
("Direct Paper System Account") only upon receipt of Proper Instructions from
the Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, and only in the following
cases:
1) Upon sale of such securities for the account of the Portfolio and receipt
of payment therefor;
2) Upon the receipt of payment in connection with any repurchase agreement
related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a Securities System, in accordance
with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender or other similar offers for
securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration 1s to be delivered to the
Custodian;
<PAGE>
6) To the issuer thereof, or its agent, for transfer into the name of the
Portfolio or into the name of any nominee or nominees of the Custodian or
into the name or nominee name of any agent appointed pursuant to Section
2.11 or into the name or nominee name of any sub-custodian appointed
pursuant to Article l; or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate face amount
or number of units; provided that, in any such case, the new securities are
to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such case,
the Custodian shall have no responsibility or liability for any loss
arising from the delivery of such security prior to receiving payment for
such securities except as may arise from the Custodian's own negligence or
willful misconduct;
<PAGE>
8) For exchange or conversion pursuant to any plan of merger, consolidation,
recapitalization, reorganization or readjustment of the securities of the
issuer of such securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash, if any, are
to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities or
the surrender of interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, but only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and the Fund on behalf of the Portfolio,
which may be in the form of cash or obligations issued by the United States
government, its agencies or instrumental ities, except that in connection
with any loans for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S. Department of the
Treasury, the Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the receipt of such
collateral;
11) For delivery as security in connection with any borrowings by the Fund on
behalf of the Portfolio requiring a pledge of assets by the Fund on behalf
of the Portfolio, but only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among the
Fund on behalf of the Portfolio, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the "Exchange Act")
and a member of The National Association of Securities Dealers, Inc.
("NASD"), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Portfolio of the Fund;
<PAGE>
13) For delivery in accordance with the provisions of any agreement among the
Fund on behalf of the Portfolio, the Custodian, and a Futures Commission
Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading Commission
and/or any Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by the Portfolio
of the Fund;
<PAGE>
14) Upon receipt of instructions from the transfer agent ("Transfer Agent") for
the Fund, for delivery to such Transfer Agent or to the holders of shares
in connection with distributions in kind, as may be described from time to
time in the currently effective prospectus and statement of additional
information of the Fund, related to the Portfolio ("Prospectus"), in
satisfaction of requests by holders of Sharcs for repurchase or redemption;
and
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a certified copy of a resolution of the Board of Trustees or of
the Executive Committee signed by an officer cf the Fund and certified by
the Secretary or an Assistant Secretary, specifying the securities of the
Portfolio to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such
securities shall be made.
<PAGE>
2.3 Registration of Securities. Securities held by the Custodian (other than
bearer securities) shall be registered in the name of the Portfolio or in the
name of any nominee of the Fund on behalf of the Portfolio or of any nominee of
the Custodian which nominee shall be assigned exclusively to the Portfolio,
unless the Fund has authorized in writing the appointment of a nominee to be
used in common with other registered investment companies having the same
investment adviser as the Portfolio, or in the name or nominee name of any agent
appointed pursuant to Section 2.11 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted by the
Custodian on behalf of the Portfolio under the terms of this Contract shall be
in "street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of each Portfolio of the Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of this Contract,
and shall hold in such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the Portfolio, other than
cash maintained by the Portfolio in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of 1940. Funds held
by the Custodian for a Portfolio may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other banks or
trust companies as it may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company shall be qualified to
act as a custodian under the Investment Company Act of 1940 and that each such
bank or trust company and the furds to be deposited with each such bank or trust
company shall on behalf of each applicable Portfolio be approved by vote of a
majority of the Board of Trustees of the Fund. Such funds shall be deposited by
the Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the distributor for
the Shares or from the Transfer Agent of the Fund and deposit into the account
of the appropriate Portfolio such payments as are received for Shares of that
Portfolio issued or sold from time to time by the Fund. The Custodian will
provide timely notification to the Fund on behalf of each such Portfolio and the
Transfer Agent of any receipt by it of payments for Shares of such Portfolio.
2.6 Availability of Federal Funds. The Custodian shall, upon the receipt of
Proper Instructions from the Fund on behalf of a Portfolio, make federal funds
available to such Portfolio as of specified times agreed upon from time to time
by the Fund and the Custodian in the amount of checks received in payment for
Shares of such Portfolio which are deposited into the Portfolio's account.
2.7 Collection of Income. The Custodian shall collect on a timely basis all
income and other payments with respect to registered securities held hereunder
to which each Portfolio shall be entitled either by law or pursuant to custom in
the securities business, and shall collect on a timely basis all income and
other payments with respect to bearer securities if, on the date of payment by
the issuer, such securities are held by the Custodian or its agent thereof and
shall credit such income, as collected, to such Portfolio's custodian account.
Without limiting the generality of the foregoing, the Custodian shall detach and
present for payment all coupons and other income items requiring presentation as
and when they become due and shall collect interest when due on securities held
hereunder. Income due each rortfolio on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the Fund. rhe
Custodian will have no duty or responsibility in connection therewith, other
than to provide the Fund with such information or data as may be necessary to
assist the Fund in arranging for the timely delivery to the Custodian of the
income to which the Portfolio is properly entitled.
<PAGE>
2.8 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund on
behalf of the applicable Portfolio, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay out monies of a
Portfolio in the following cases only:
1) Upon the purchase of securities, options, futures contracts or options
on futures contracts for the account of the Portfolio but only (a) against the
delivery of such securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or any bank, banking
firm or trust company doing business in the United States or abroad which is
qualified under the Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its agent for this
purpose) regisiered in the name of the Portfolio or in the name of a nominee of
the Custodian referred to in Section 2.3 hereof or in proper form for transfer;
(b) in the case of a purchase effected through a Securities System, in
accordance with the conditions set forth in Section 2.12 hereof; (c) in the case
of a purchase involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.12A; (d) in the case of repurchase agreements
entered into between the Fund on behalf of the Portfolio and the Custodian, or
another bank, or a broker-dealer which is a member of NASD, (i) against delivery
of the securities either in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase by the Portfolio of
securities owned by the Custodian along with written evidence of the agreement
by the Custodian to repurchase such securities from the Portfolio or (e) for
transfer to a time deposit account of the Fund in any bank, whether domestic or
foreign; such transfer may be effected prior to receipt of a cocfirmation frcm a
broker and/or the applicable bank pursuant to PropeL rnstructions from the Fund
as defined in Section 2.:17;
2) In connection with conversion, exchange or surrender of securities owned
by the Portfolio as set forth in Section 2.2 hereof; 3) For the redemption or
repurchase of Shares issued by the Portfolio as set forth in Section 2.10
hereof;
4) For the payment of any expense or liability incurred by the Portfolio,
including but not limited to the following payments for the account of the
Portfolio: interest, taxes, management, accounting, transfer agent and legal
fees, and operating expenses of the Fund whether or not such expenses are to be
in whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio declared
pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of securities
sold short;
<PAGE>
7) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions from the Fund on behalf of the Portfolio, a certified copy
of a resolution of the Board of Trustees or of the Executive Committee of the
Fund signed by an officer of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose to be a
proper purpose, and naming the person or persons to whom such payment is to be
made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and every case
where payment for purchase of securities for the account of a Portfolio is made
by the Custodian in advance of receipt of the securities purchased in the
absence of specific written instructions from the Fund on behalf of such
Portfolio to so pay in advance, the Custodian shall be absolutely liable to the
Fund for such securities to the same extent as if the securities had been
received by the Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of the Fund. From
such funds as may be available for the purpose but subject to the limitations of
the Declaration of Trust and any applicable votes of the Board of Trustees of
the Fund pursuant thereto, the Custodian shall, upon receipt of instructions
from the Transfer Agent, make funds available for payment to holders of Shares
who have delivered to the Transfer Agent 2 request for redemption or repurchase
of their Shares. In connection with the redemption or repurchase of Shares of a
Portfolio, the Custodian is authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a commercial bank designated by the
redeeming shareholders. In connection with the redemption or repurchase of
Shares of the Fund, the Custodian shall honor checks drawn on the Custodian by a
holder of Shares, which checks have been furnished by the Fund to the holder of
Shares, when preqented to the Custodian in accordance with such procedures and
controls as are mutually agreed upon from time to time between the Fund and the
Custodian.
<PAGE>
2.11 Appointment of Agents. Subject to prior approval, the Custodian may at
any time or times in its discretion appoint (and may at any time remove) any
other bank or trust company which is itself qualified under the Investment
Company Act of 1940, as amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the Custodian may from time to
time direct; provided, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities hereunder.
<PAGE>
2.12 Deposit of Fund Assets in Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
Securities Exchange Act of 1934, which acts as a securities depository, or in
the book-entry system authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein as "Securities System"
in accordance with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
1) The Custodian may keep securities of the Portfolio in a Securities
System provided that such securities are represented in an account ("Account")
of the Custodian in the Securities System which shall not include any assets of
the Custodian other than assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities of the Portfolio
which are maintained in a Securities System shall identify by book-entry those
securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account of the
Portfolio upon (i) receipt of advice from the Securities System that such
securities have been transferred to the Account, and (i ) the making of an entry
on the records of the Custodian to reflect such payment and transfer for the
account of the Portroliou The Custodian shall t ansfer securities sold for the
account of the Portfolio upon (i) receipt of advice from the Securities System
that payment for such securities has been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to reflect such transfer
and payment for the account of the Portfolio. Copies of all advices from the
Securities System of transfers of securities for the account of the Portfolio
shall identify the Portfolio, be maintained for the Portfolio by the Custodian
and be provided to the Fund at its request. Upon request, the Custodian shall
furnish the Fund on behalf of the Portfolio confirmation of each transfer to or
from the account of the Portfolio in the form of a written advice or notice and
shall furnish to the Fund on behalf of the Portfolio copies of daily transaction
sheets reflecting each day's transactions in the Securities System for the
account of the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio uith any report
obtained by the Custodian Qll the Securities System's accounting system,
internal accountir.g control and procedures for safeguarding securities
deposited in the Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be, required by
Article 9 hereof; 6) Anything to the contrary in this Contract notwithstanding,
the Custodian shall be liable to the Fund for the benefit of the Portfolio for
any loss or damage to the Portfolio resulting from use of the Securities System
by reason of any negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as it may have
against the Securities System; at the election of the Fund, it shall be entitled
to be subrogated to the rights of the Custodian with respect to any claim
against the Securities System or any other person which the Custodian may have
as a consequence of any such loss or damage if and to the extent that the
Portfolio hac not been made whole for any such loss or damage.
2.12A Fund Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will be
effected in the absence of Proper Instructions from the Fund on behalf of the
Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct Paper
System only if such securities are represented in an account ("Account") of the
Custodian in the Direct Paper System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or otherwise for
customers;
3) The records of the Custodian with respect to securities of the Portfolio
which are maintained in the Direct Paper System shall identify by book-entry
those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of the
Portfolio upon the making of an entry on the records of the Custodian to reflect
such payment and transfer of securities to the account of the Portfolio. The
Custodian shall transfer securities sold for the account of the Portfolio upon
the making of an entry on the records of the Custodian to reflect such transfer
and receipt of payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the Portfolio, in the
form of a written advice or notice, of Direct Paper on the next business day
following such transfer and shall furnish to the Fund on behalf of the Portfolio
copies of daily transaction sheets reflecting each day's transaction in the
Securities System for the account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio with any
report on its system of internal accounting control as the Fund may reasonably
request from time to time.
2.13 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio establish and
maintain a segregated account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by the Cuctodian
pursuant to Section 2.12 hereof, (i) in accordance with tbe provisions of any
agreement among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Portfolio, (ii) for purposes of segregating cash or
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon purchased or sold by
the Portfolio, (iii) for the purposes of compliance by the Portfolio with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in the case of
clause (iv), upon receipt of, in addition to Proper Instructions from the Fund
on behalf of the applicable Portfolio, a certified copy of a resolution of the
Board of Trustees or of the Executive Committee sig!led by an officer of the
Fund and certified by the Secretary or an Assistant Secretary, setting forth the
purpose or purposes cf such segregated account and declaring such purposes to be
proper corporate purposes.
<PAGE>
2.14 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state tax
purposes in connection with receipt of income or other payments with respect to
securities of each Portfolio held by it and in connection with transfers of
securities.
2.15 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of the
Portfolio or a nominee of the Portfolio, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to the
Portfolio such proxies, all proxy soliciting materials and all notices relating
to such securities. 2.16 Communications Relating to Portfolio Securities. The
Custodian shall transmit promptly to the Fund for each portfolio all written
information 'including, without limitation, pendency of calls and maturities of
securities and expirations of rights in connection therewith and notices of
exercise of call and put options written by the Fund on behalf of the Portfolio
and the maturity of futures contracts purchased or sold by the Portfolio)
received by the Custodian from issuers of the securities being held for the
Yortfolio. With res?ect to tender or exchange offers, the Custodian shall
transmit promptly to the Portfolio all written information received by the
Custodian from issuers of the securities whose tender or exchange is sought and
from the party (or his agents) making the tender or exchange offer. If the
Portfolio desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, the Portfolio shall notify the Custodian
at least three business days prior to the date on which the Custodian is to take
such action.
2.17 Proper Instructions. Proper Instructions as used throughout this
Article 2 means a writing signed or initialled by one or more person or persons
as the Board of Trustees shall have from time to time authorized. Each such
writing shall set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The Fund shall
cause all oral instructions to be confirmed in writing. Upon receipt of a
certificate of the Secretary or an Assistant Secretary as to the authorization
by the Board of Trustees of the Fund accompanied by a detailed description of
procedures approved by the Board of Trustees, Proper Instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board of Trustees and the Custodian are satisfied that
such procedures afford adequate safeguards for the Portfolios' assets. For
purposes of this Section, Proper Instructions shall include instructions
received by the Custodian pursuant to any three-party agreement which requires a
segregated asset account in accordance with Section 2.13.
<PAGE>
2.18 Actions Permitted without Express Authority. The Custodian may in its
discretion, without express authority from the Fund on behalf of each applicable
Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fortfolio, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Portfolio
except as otherwise directed by the Board of Trustees of the
Fund.
2.19 Evidence of Authority. The Custodian shall be protected in acting upon
any instructions, notice, request, consent, certificate or other instrument or
paper believed by it to be genuine and to have been properly executed by or on
behalf of the Fund. The Custodian may receive and accept a certified copy of a
vote of the Board of Trustees of the Fund as conclusive evidence (a) of the
authority of any person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Trustees pursuant to the
Declaration of Trust as described in such vote, and such vote may be considered
as in full force and effect until receipt by the Custodian of written notice to
the contrary.
<PAGE>
3. Duties of Custodian with Respect to the Books of Account and Calculation
of Net Asset Value and Net Income. The Custodian shall keep the books of account
of each Portfolio and compute the net asset value per share of the outstanding
shares of each Portfolio. The Custodian shall also calculate daily the net
income of the Portfolio as described in the Fund's currently effective
prospectus related to such Portfolio and shall advise the Fund and the Transfer
Agent daily of the total amounts of such net income and shall advise the
Transfer Agent periodically of the division of such net income among its various
components. The calculations of the net asset value per share and the daily
income of each Portfolio shall be made at the time or times described from time
to time in the Fund's currently effective prospectus related to such Portfolio.
4. Records The Custodian. shall with respect to each Portfolio create and
maintain all records relating to its activities and obligations under this
Contract in such manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, with particular attention to Section 31 thereof
and Rules 31a-1 and 31a-2 thereunder, applicable federal and state tax laws and
any other law or administrative rules or procedures which may be applicable to
the Fund. All such records shall be the property of the Fund and shall at all
times during the regular business hours of the Custodian be open for inspection
by duly authorized officers, employees or agents of the Fund and employees and
agents of the Securities and Exchange Commission. The Custodian shall, at the
Fund's request, supply the Fund with a tabulation of securities owned by each
Portfolio and held by the Custodian and shall, when requested to do so by the
Fund and for such compensation as shall be agreed upon between the Fund and the
Custodian, include certificate numbers in such tabulations.
5. Opinion of Fund's Independent Accountant. The Custodian shall take all
reasonable action, as the Fund on behalf of each applicable Portfolio may from
time to time request, to obtain from year to year favorable Gpinions from the
Fund's independent accountanLs with respect to its activities hereunder in
connection with the preparation of the Fund's Form N-lA, and Form N-SAR or other
annual reports to the Securities and Exchange Commission and with respect to any
other requirements of such Commission.
6. Reports to Fund by Independent Public Accountants. The Custodian shall
provide the Fund, on behalf of each of the Portfolios at such times as the Fund
may reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports, shall be
of sufficient scope and in sufficient detail, as may reasonably be required by
the Fund to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
7. Compensation of Custodian The Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian, as agreed upon from
time to time between the Fund on behalf of each applicable Portfolio and the
Custodian.
<PAGE>
8. Responsibility of Custodian. So long as and to the extent that it is in
the exercise of reasonable care, the Custodian sha]l not be responsible for the
title9 validity or genuineness of any property or evidence of title thereto
received by it or delivered by it pursuant to this Contract and shall be held
harmless in acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed by the
proper party or parties, including any futures commission merchant acting
pursuant to the terms of a three-party futures or options agreement. The
Custodian shall be held to the exercise of reasonable care in carrying out the
provisions of this Contract, but shall be kept indemnified by and shall be
without liability to the Fund for any action taken or omitted by it in good
faith without negligence. It shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Fund) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice. Notwithstanding the foregoing, the responsibility of the Custodian with
respect to redemptions effected by check shall be in accordance with a separate
Agreement entered into between the Custodian and the Fund. If the Fund on behalf
of a Portfolio requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund or the Portfolio being liable for the payment of the Custodian's money
or the Custodian incurring liability of some other form, the Fund on behalf of
the Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian Ln an amount and form satisfactory to
it. If the Fund requires the Custodian to advance the Custodian's cash or
securities for any purpose for the benefit of a Portfolio or in the event that
the Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any property
at any time held for the account of the applicable Portfolio shall be security
therefor and should the Fund fail to repay the Custodian promptly, the Custodian
shall be entitled to utilize available cash and to dispose of such Portfolio's
assets to the extent necessary to obtain reimbursement.
9. Effective Period, Termination and Amendment. This Contract shall become
effective as of its execution, shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than ninety (90) days after the date
of such delivery or mailing; provided, however that the Custodian shall not with
respect to a Portfolio act under Section 2.12 hereof in the absence of receipt
of an initial certificate of the Secretary or an Assistant Secretary that the
Board of Trustees of the Fund llas approved the initial use of a particular
Securities System by such Portfolio and the receipt of an annual certificate of
the Secretary or an Assistant Secretary that the Board of Trustees has reviewed
the use by such Portfolio of such Securities System, as required in each case by
Rule 17f-4 under the Investment Company Act of 1940, as amended and that the
Custodian shall not with respect to a Portfolio act under Section 2.12A hereof
in the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees has approved the initial use of
the Direct Paper System by such Portfolio and the receipt of an annual
certificate of the Secretary or an Assistant Secretary that the Board of
Trustees has reviewed the use by such Portfolio of the Direct Paper System;
provided further, however, that neither party shall amend or terminate this
Contract in contravention of any applicable federal or state regulations, or any
provision of the Declaration of Trust, and further provided, that the Fund on
behalf of one or more of the Portfolios may at any time by action of its Board
of Trustees (i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii) immediately terminate
this Contract in the event of the appointment of a conservator or receiver for
the Custodian by the Comptroller of the Currency or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction. Upon termination of the Contract, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
10. Successor Custodian. If a successor custodian for the Fund, of one or
more of the Portfolios shall be appointed by the Board of Trustees of the Fund,
the Custodian shall, upon termination, deliver to such successor custodian at
the office of the Custodian, duly endorsed and in the form for transfer, all
securities of each applicable Portfolio then held by it hereunder and shall
transfer to an account of the successor custodian all of the securities, funds
or other property of each such Portfolio held in a Securities System. If no such
successor custodian shall be appointed, the Custodian shall, in like manner,
upon receipt of a certified copy of a vote of the Board of Trustees of the Fund,
deliver at the office of the Custodian and transfer such securities, funds and
other properties in accordance with such vote. In the event that no written
order designating a successor custodian or certified copy of a vote of the Board
of Trustees shall have been delivered to the Custodian on or before the date
when such termination shall become effective, then the Custodian shall have the
right to deliver to a bank or trust company, which is a "bank" as defined in the
Investment Company Act of 1940, doing business in Boston, Massachusetts, of its
own selection, having an aggregate capital, surplus, and undivided profits, as
shown by its last published report, of not less than $100,000,00; all
securities, funds and Gther properties held by the C-Jstodian of behalf of each
applicable Portfolio and ail instruments held by the Custodian relative thereto
and all other property held by it under this Contract on behalf of each
applicable Portfolio and to transfer to an account of such successor custodian
all of the securities of each such Portfolio held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Contract. In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of termination hereof
owing to failure of the Fund to procure the certified copy of the vote referred
to or of the Board of Trustees to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services during such period as
the Custodian retains possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties and obligations of
the Custodian shall remain in full force and effect.
11. Interpretive and Additional Provisions In connection with the operation
of this Contract, the Custodian anc the Fund on behalf of each of the
Portfolios, may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contrevene any applicable federal or state regulations or any provision of
the Declaration of Trust of the Fund. No interpret;ve or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
l2. Additional Funds. In the event that the Fund establishes one or more
series of Shares in addition to XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX with respect to which it desires to have
the Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.
13. Massachusetts Law to Apply This Contract. shall be construed and the
provisions thereof interpreted under and in accordance with laws of The
Commonwealth of Massachusetts.
14. Prior Contracts This Contract supersedes and terminates, as of the date
hereof, all prior contracts between the Fund on behalf of each of the Portfolios
and the Custodian relating to the custody of the Fund's assets.
RIDER A
15. Trustees Not Bound.
The obligations of the Funds hereunder are not personally binding upon, nor
shall resort be had to the private property of, any of the Trustees,
shareholders, officers, employees or agents of the Fund and only the Fund's
property shall be bound.
See Rider A attached
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed as of the XX day of XXXXXXX,
19XX.
<PAGE>
ATTEST XXXXXXXXXXXXXXXXXXXXX
By
ATTEST STATE STREET BANK AND TRUST
COMPANY
By
*******************************************************************************
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 8th day of February, 1996, by and between Evergreen
Variable Trust, a business trust, having its principal office and place of
business at (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company having its principal office and place of business at
225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in series, the (Evergreen VA
Fund, Evergreen VA Growth And Income Fund and Evergreen VA Foundation Fund)
(each such series, together with all other series subsequently established by
the Fund and made subject to this Agreement in accordance with Article 10, being
herein referred to as a "Portfolio", and collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank as its
transfer agent, dividend disbursing agent, custodian of certain retirement plans
and agent in connection with certain other activities, and the Bank desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
l. Terms of Appointment; Duties of the Bank
1.1 Subject to the terms and conditions set forth in this Agreement,
the Fund, on behalf of the Portfolios, hereby employs and appoints
the Bank to act as, and the Bank agrees to act as its transfer agent
for the Fund's authorized and issued shares of its common stock, $
par value, ("Shares"), dividend disbursing agent, custodian of
certain retirement plans and agent in connection with any
accumulation, open-account or similar plans provided to the
shareholders of each of the respective Portfolios of the Fund
("Shareholders") and set out in the currently effective prospectus
and statement of additional information ("prospectus") of the Fund on
behalf of the applicable Portfolio, including without limitation any
periodic investment plan or periodic withdrawal program.
<PAGE>
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from
time to time by agreement between the Fund on behalf of each
of the Portfolios, as applicable and the Bank, the Bank
shall:
(i) Receive for acceptance, orders
for the purchase of Shares, and promptly deliver
payment and appropriate documentation thereof to
the Custodian of the Fund authorized pursuant to
the Declaration of Trust of the Fund (the
"Custodian");
(ii) Pursuant to purchase orders,
issue the appropriate number of Shares and hold
such Shares in the appropriate Shareholder account;
(iii) Receive for acceptance
redemption requests and redemption directions and
deliver the appropriate documentation thereof to
the Custodian;
(iv) In respect to the
transactions in items (i), (ii) and (iii) above,
the Bank shall execute transactions directly with
broker-dealers authorized by the Fund who shall
thereby be deemed to be acting on behalf of the
Fund;
(v) At the appropriate time as and
when it receives monies paid to it by the Custodian
with respect to any redemption, pay over or cause
to be paid over in the appropriate manner such
monies as instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by
the registered owners thereof upon receipt of
appropriate instructions;
(vii) Prepare and transmit
payments for dividends and distributions declared
by the Fund on behalf of the applicable Portfolio;
(viii) Issue replacement
certificates for those certificates alleged to have
been lost, stolen or destroyed upon receipt by the
Bank of indemnification satisfactory to the Bank
and protecting the Bank and the Fund, and the Bank
at its option, may issue replacement certificates
in place of mutilated stock certificates upon
presentation thereof and without such indemnity;
(ix) Maintain records of account
for and advise the Fund and its Shareholders as to
the foregoing; and
<PAGE>
(x) Record the issuance of shares
of the Fund and maintain pursuant to SEC Rule
17Ad-10(e) a record of the total number of shares
of the Fund which are authorized, based upon data
provided to it by the Fund, and issued and
outstanding. The Bank shall also provide the Fund
on a regular basis with the total number of shares
which are authorized and issued and outstanding and
shall have no obligation, when recording the
issuance of shares, to monitor the issuance of such
shares or to take cognizance of any laws relating
to the issue or sale of such Shares, which
functions shall be the sole responsibility of the
Fund.
(b) In addition to and neither in lieu nor in
contravention of the services set forth in the above
paragraph (a), the Bank shall: (i) perform the customary
services of a transfer agent, dividend disbursing agent,
custodian of certain retirement plans and, as relevant,
agent in connection with accumulation, open-account or
similar plans (including without limitation any periodic
investment plan or periodic withdrawal program), including
but not limited to: maintaining all Shareholder accounts,
preparing Shareholder meeting lists, mailing proxies,
mailing Shareholder reports and prospectuses to current
Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate forms
required with respect to dividends and distributions by
federal authorities for all Shareholders, preparing and
mailing confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and
other confirmable transactions in Shareholder accounts,
preparing and mailing activity statements for Shareholders,
and providing Shareholder account information and (ii)
provide a system which will enable the Fund to monitor the
total number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to the
Bank in writing those transactions and assets to be treated
as exempt from blue sky reporting for each State and (ii)
verify the establishment of transactions for each State on
the system prior to activation and thereafter monitor the
daily activity for each State. The responsibility of the
Bank for the Fund's blue sky State registration status is
solely limited to the initial establishment of transactions
subject to blue sky compliance by the Fund and the reporting
of such transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of
these services in Section 1 may be established from time to
time by agreement between the Fund on behalf of each
Portfolio and the Bank per the attached service
responsibility schedule. The Bank may at times perform only
a portion of these services and the Fund or its agent may
perform these services on the Fund's behalf.
(e) The Bank shall provide additional services on
behalf of the Fund (i.e., escheatment services) which may be
agreed upon in writing between the Fund and the Bank.
<PAGE>
2. Fees and Expenses
2.1 For the performance by the Bank pursuant to this Agreement, the
Fund agrees on behalf of each of the Portfolios to pay the Bank an
annual maintenance fee for each Shareholder account as set out in the
initial fee schedule attached hereto. Such fees and out-of-pocket
expenses and advances identified under Section 2.2 below may be
changed from time to time subject to mutual written agreement between
the Fund and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Fund
agrees on behalf of each of the Portfolios to reimburse the Bank for
out-of-pocket expenses, including but not limited to confirmation
production, postage, forms, telephone, microfilm, microfiche,
tabulating proxies, records storage, or advances incurred by the Bank
for the items set out in the fee schedule attached hereto. In
addition, any other expenses incurred by the Bank at the request or
with the consent of the Fund, will be reimbursed by the Fund on
behalf of the applicable Portfolio.
2.3 The Fund agrees on behalf of each of the Portfolios to pay all
fees and reimbursable expenses within five days following the receipt
of the respective billing notice. Postage for mailing of dividends,
proxies, Fund reports and other mailings to all shareholder accounts
shall be advanced to the Bank by the Fund at least seven (7) days
prior to the mailing date of such materials.
3. Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.1 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in the Commonwealth
of Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
<PAGE>
4. Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.1 It is a business trust duly organized and existing and in good
standing under the laws of Massachusetts.
4.2 It is empowered under applicable laws and by its Declaration of
Trust and By-Laws to enter into and perform this Agreement.
4.3 All corporate proceedings required by said Declaration of Trust
and By-Laws have been taken to authorize it to enter into and perform
this Agreement.
4.4 It is an open-end and diversified management investment company
registered under the Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as
amended on behalf of each of the Portfolios is currently effective
and will remain effective, and appropriate state securities law
filings have been made and will continue to be made, with respect to
all Shares of the Fund being offered for sale.
5. Data Access and Proprietary Information
5.1 The Fund acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and
documentation manuals furnished to the Fund by the Bank as part of
the Fund's ability to access certain Fund-related data ("Customer
Data") maintained by the Bank on data bases under the control and
ownership of the Bank or other third party ("Data Access Services")
constitute copyrighted, trade secret, or other proprietary
information (collectively, "Proprietary Information") of substantial
value to the Bank or other third party. In no event shall Proprietary
Information be deemed Customer Data. The Fund agrees to treat all
Proprietary Information as proprietary to the Bank and further agrees
that it shall not divulge any Proprietary Information to any person
or organization except as may be provided hereunder. Without limiting
the foregoing, the Fund agrees for itself and its employees and
agents:
(a) to access Customer Data solely from locations
as may be designated in writing by the Bank and solely in
accordance with the Bank's applicable user documentation;
(b) to refrain from copying or duplicating in any
way the Proprietary Information;
(c) to refrain from obtaining unauthorized access
to any portion of the Proprietary Information, and if such
access is inadvertently obtained, to inform in a timely
manner of such fact and dispose of such information in
accordance with the Bank's instructions;
<PAGE>
(d) to refrain from causing or allowing the data
acquired hereunder from being retransmitted to any other
computer facility or other location, except with the prior
written consent of the Bank;
(e) that the Fund shall have access only to those
authorized transactions agreed upon by the parties;
(f) to honor all reasonable written requests made
by the Bank to protect at the Bank's expense the rights of
the Bank in Proprietary Information at common law, under
federal copyright law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section shall
survive any earlier termination of this Agreement.
5.2 If the Fund notifies the Bank that any of the Data Access
Services do not operate in material compliance with the most recently
issued user documentation for such services, the Bank shall endeavor
in a timely manner to correct such failure. Organizations from which
the Bank may obtain certain data included in the Data Access Services
are solely responsible for the contents of such data and the Fund
agrees to make no claim against the Bank arising out of the contents
of such third-party data, including, but not limited to, the accuracy
thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS,
AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES
EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO,
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
5.3 If the transactions available to the Fund include the ability to
originate electronic instructions to the Bank in order to (i) effect
the transfer or movement of cash or Shares or (ii) transmit
Shareholder information or other information, then in such event the
Bank shall be entitled to rely on the validity and authenticity of
such instruction without undertaking any further inquiry as long as
such instruction is undertaken in conformity with security procedures
established by the Bank from time to time.
6. Indemnification
6.1 The Bank shall not be responsible for, and the Fund shall on
behalf of the applicable Portfolio indemnify and hold the Bank
harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out
of or attributable to:
<PAGE>
(a) All actions of the Bank or its agents or
subcontractors required to be taken pursuant to this
Agreement, provided that such actions are taken in good
faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or
willful misconduct which arise out of the breach of any
representation or warranty of the Fund hereunder.
(c) The reliance on or use by the Bank or its
agents or subcontractors of information, records, documents
or services which (i) are received by the Bank or its agents
or subcontractors, and (ii) have been prepared, maintained
or performed by the Fund or any other person or firm on
behalf of the Fund including but not limited to any previous
transfer agent or registrar.
(d) The reliance on, or the carrying out by the
Bank or its agents or subcontractors of any instructions or
requests of the Fund on behalf of the applicable Portfolio.
(e) The offer or sale of Shares in violation of any
requirement under the federal securities laws or regulations
or the securities laws or regulations of any state that such
Shares be registered in such state or in violation of any
stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of
such Shares in such state.
6.2 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the
Bank under this Agreement, and the Bank and its agents or
subcontractors shall not be liable and shall be indemnified by the
Fund on behalf of the applicable Portfolio for any action taken or
omitted by it in reliance upon such instructions or upon the opinion
of such counsel. The Bank, its agents and subcontractors shall be
protected and indemnified in acting upon any paper or document
furnished by or on behalf of the Fund, reasonably believed to be
genuine and to have been signed by the proper person or persons, or
upon any instruction, information, data, records or documents
provided the Bank or its agents or subcontractors by machine readable
input, telex, CRT data entry or other similar means authorized by the
Fund, and shall not be held to have notice of any change of authority
of any person, until receipt of written notice thereof from the Fund.
The Bank, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the
officers of the Fund, and the proper countersignature of any former
transfer agent or former registrar, or of a co-transfer agent or
co-registrar.
6.3 In order that the indemnification provisions contained in this
Section 6 shall apply, upon the assertion of a claim for which the
Fund may be required to indemnify the Bank, the Bank shall promptly
notify the Fund of such assertion, and shall keep the Fund advised
with respect to all
<PAGE>
developments concerning such claim. The Fund shall have the option to
participate with the Bank in the defense of such claim or to defend
against said claim in its own name or in the name of the Bank. The
Bank shall in no case confess any claim or make any compromise in any
case in which the Fund may be required to indemnify the Bank except
with the Fund's prior written consent.
7. Standard of Care
The Bank shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy
of all services performed under this Agreement, but assumes no
responsibility and shall not be liable for loss or damage due to
errors unless said errors are caused by its negligence, bad faith, or
willful misconduct or that of its employees.
8. Covenants of the Fund and the Bank
8.1 The Fund shall on behalf of each of the Portfolios promptly
furnish to the Bank the following:
(a) A certified copy of the resolution of the Board
of Trustees of the Fund authorizing the appointment of the
Bank and the execution and delivery of this Agreement.
(b) A copy of the Declaration of Trust and By-Laws
of the Fund and all amendments thereto.
8.2 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices,
if any; and for the preparation or use, and for keeping account of,
such certificates, forms and devices.
8.3 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable.
To the extent required by Section 31 of the Investment Company Act of
1940, as amended, and the Rules thereunder, the Bank agrees that all
such records prepared or maintained by the Bank relating to the
services to be performed by the Bank hereunder are the property of
the Fund and will be preserved, maintained and made available in
accordance with such Section and Rules, and will be surrendered
promptly to the Fund on and in accordance with its request.
8.4 The Bank and the Fund agree that all books, records, information
and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out
of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be required
by law.
<PAGE>
8.5 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify the
Fund and to secure instructions from an authorized officer of the
Fund as to such inspection. The Bank reserves the right, however, to
exhibit the Shareholder records to any person whenever it is advised
by its counsel that it may be held liable for the failure to exhibit
the Shareholder records to such person.
9. Termination of Agreement
9.1 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
9.2 Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and
material will be borne by the Fund on behalf of the applicable
Portfolio(s). Additionally, the Bank reserves the right to charge for
any other reasonable expenses associated with such termination and/or
a charge equivalent to the average of three (3) months' fees.
10. Additional Funds
In the event that the Fund establishes one or more series of
Shares in addition to (LIST FUNDS) with respect to which it desires
to have the Bank render services as transfer agent under the terms
hereof, it shall so notify the Bank in writing, and if the Bank
agrees in writing to provide such services, such series of Shares
shall become a Portfolio hereunder.
11. Assignment
11.1 Except as provided in Section 10.3 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
11.2 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
11.3 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly
registered as a transfer agent pursuant to Section 17A(c)(1) of the
Securities Exchange Act of 1934, as amended ("Section 17A(c)(1)"),
(ii) a BFDS subsidiary duly registered as a transfer agent pursuant
to Section 17A(c)(1) or (iii) a BFDS affiliate; provided, however,
that the Bank shall be as fully responsible to the Fund for the acts
and omissions of any subcontractor as it is for its own acts and
omissions.
<PAGE>
12. Amendment
This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a
resolution of the Board of Trustees of the Fund.
13. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth
of Massachusetts.
14. Force Majeure
In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God,
strikes, equipment or transmission failure or damage reasonably
beyond its control, or other causes reasonably beyond its control,
such party shall not be liable for damages to the other for any
damages resulting from such failure to perform or otherwise from such
causes.
15. Consequential Damages
Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement
or for any consequential damages arising out of any act or failure to
act hereunder.
16. Merger of Agreement
This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the
subject matter hereof whether oral or written.
17. Limitations of Liability of the Trustees and Shareholders
A copy of the Declaration of Trust of the Trust is on file
with the Secretary of the Commonwealth of Massachusetts, and notice
is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the
Trustees or Shareholders individually but are binding only upon the
assets and property of the Fund.
18. Counterparts
This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
BY:
ATTEST:
STATE STREET BANK AND TRUST COMPANY
BY:
Executive Vice President
ATTEST:
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
Service Performed Responsibility
Bank Fund
1. Receives orders for the purchase
of Shares.
2. Issue Shares and hold Shares in
Shareholders accounts.
3. Receive redemption requests.
4. Effect transactions 1-3 above
directly with broker-dealers.
5. Pay over monies to redeeming
Shareholders.
6. Effect transfers of Shares.
7. Prepare and transmit dividends
and distributions.
8. Issue Replacement Certificates.
9. Reporting of abandoned property.
10. Maintain records of account.
11. Maintain and keep a current and
accurate control book for each
issue of securities.
12. Mail proxies.
13. Mail Shareholder reports.
<PAGE>
Service Performed Responsibility
Bank Fund
14. Mail prospectuses to current
Shareholders.
15. Withhold taxes on U.S. resident
and non-resident alien accounts.
16. Prepare and file U.S. Treasury
Department forms.
17. Prepare and mail account and
confirmation statements for
Shareholders.
18. Provide Shareholder account
information.
19. Blue sky reporting.
- ---------------
* Such services are more fully described in Section 1.2 (a),
(b) and (c) of the Agreement.
BY:
ATTEST:
STATE STREET BANK AND TRUST COMPANY
BY:
Executive Vice President
ATTEST:
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement is made as of this __th day of _____
1995 between Evergreen Variable Trust, a Massachusetts business trust (herein
called the "Trust"), and Evergreen Asset Management Corp., a New York
corporation (herein called "EAMC").
WHEREAS, the Trust is a Massachusetts business trust
consisting of one or more portfolios which operates as an open-end management
investment company and is so registered under the Investment Company Act of
1940; and
WHEREAS, the Trust desires to retain EAMC as its Administrator
to provide it with administrative services, and EAMC is willing to render such
services.
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth herein, the parties hereto agree as follows:
1. Appointment of Administrator. The Trust hereby appoints EAMC as
Administrator of the Trust and each of its portfolios on the terms and
conditions set forth in this Agreement; and EAMC hereby accepts such appointment
and agrees to perform the services and duties set forth in Section 2 of this
Agreement in consideration of the compensation provided for in Section 4 hereof.
2. Services and Duties. As Administrator, and subject to the
supervision and control of the Trustees of the Trust, EAMC will hereafter
provide facilities, equipment and personnel to carry out the following
administrative services for operation of the business and affairs of the Trust
and each of its portfolios:
(a) prepare, file and maintain the Trust's governing documents,
including the Declaration of Trust (which has previously been prepared and
filed), the By- laws, minutes of meetings of Trustees and shareholders, and
proxy statements for meetings of shareholders;
(b) prepare and file with the Securities and Exchange Commission and
the appropriate state securities authorities the registration statements for the
Trust and the Trust's shares and all amendments thereto, reports to regulatory
authorities and shareholders, prospectuses, proxy statements, and such other
documents as may be necessary or convenient to enable the Trust to make a
continuous offering of its shares;
(c) prepare, negotiate and administer contracts on behalf of the Trust
<PAGE>
with, among others, the Trust's distributor, custodian and transfer agent;
(d) supervise the Trust's fund accounting agent in the maintenance of
the Trust's general ledger and in the preparation of the Trust's financial
statements, including oversight of expense accruals and payments and the
determination of the net asset value of the Trust's assets and of the Trust's
shares, and of the declaration and payment of dividends and other distributions
to shareholders;
(e) calculate performance data of the Trust for dissemination to
information services covering the investment company industry;
(f) prepare and file the Trust's tax returns;
(g) examine and review the operations of the Trust's custodian and
transfer agent;
(h) coordinate the layout and printing of publicly disseminated
prospectuses and reports;
(i) prepare various shareholder reports;
(j) assist with the design, development and operation of new portfolios
of the Trust;
(k) coordinate shareholder meetings;
(l) provide general compliance services; and
(m) advise the Trust and its Trustees on matters concerning the Trust
and its affairs.
The foregoing, along with any additional services that EAMC shall agree
in writing to perform for the Trust hereunder, shall hereafter be referred to as
"Administrative Services." Administrative Services shall not include any duties,
functions, or services to be performed for the Trust by the Trust's investment
adviser, distributor, custodian or transfer agent pursuant to their agreements
with the Trust.
3. Expenses. EAMC shall be responsible for expenses incurred in
providing office space, equipment and personnel as may be necessary or
convenient to provide the Administrative Services to the Trust. The Trust shall
be responsible for all other expenses incurred by EAMC on behalf of the Trust,
including without limitation postage and courier expenses, printing expenses,
<PAGE>
registration fees, filing fees, fees of outside counsel and independent
auditors, insurance premiums, fees payable to Trustees who are not EAMC
employees, and trade association dues.
4. Compensation. For the Administrative Services provided, the Trust
hereby agrees to pay and EAMC hereby agrees to accept as full compensation for
its services rendered hereunder an administrative fee, calculated daily and
payable monthly, at an annual rate determined in accordance with the table
below.
Aggregate Daily Net Assets of
Funds Administered by EAMC
For Which EAMC or First Union
Administrative National Bank of North Carolina
Fee Serve as Investment Adviser
.050% on the first $7 billion
.035% on the next $3 billion
.030% on the next $5 billion
.020% on the next $10 billion
.015% on the next $5 billion
.010% on assets in excess of $30 billion
Each portfolio of the Trust shall pay a portion of the administrative fee equal
to the rate determined above times that portfolios average annual daily net
assets.
5. Responsibility of Administrator. EAMC shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates, except a loss
resulting from wilful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. EAMC shall be entitled to rely on
and may act upon advice of counsel (who may be counsel for the Trust) on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. Any person, even though also an officer,
director, partner, employee or agent of EAMC, who may be or become an officer,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with the duties of EAMC hereunder) to be
rendering such services to or acting solely for the Trust and not as an officer,
director, partner, employee or agent or one under the control or direction of
EAMC even though paid by EAMC.
<PAGE>
6. Duration and Termination.
(a) This Agreement shall be in effect until July 1, 1997, and shall
continue in effect from year to year thereafter, provided it is approved, at
least annually, by a vote of a majority of Trustees of the Trust including a
majority of the disinterested Trustees.
(b) This Agreement may be terminated at any time, without payment of
any penalty, on sixty (60) day's prior written notice by a vote of a majority of
the Trust's Trustees or by EAMC.
7. Amendment. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which an enforcement of the change, waiver, discharge or
termination is sought.
8. Notices. Notices of any kind to be given to the Trust hereunder by
EAMC shall be in writing and shall be duly given if delivered to the Trust and
to its investment adviser at the following address: First Union National Bank of
North Carolina, One First Union Center, Charlotte, NC 28288. Notices of any kind
to be given to EAMC hereunder by the Trust shall be in writing and shall be duly
given if delivered to EAMC at 2500 Westchester Avenue, Purchase, New York 10577,
Attention: General Counsel.
9. Limitation of Liability. EAMC is hereby expressly put on notice of
the limitation of liability as set forth in Article IX of the Declaration of
Trust and agrees that the obligations pursuant to this Agreement of a particular
portfolio and of the Trust with respect to that particular portfolio be limited
solely to the assets of that particular portfolio, and EAMC shall not seek
satisfaction of any such obligation from the assets of any other portfolio, the
shareholders of any portfolio, the Trustees, officers, employees or agents of
the Trust, or any of them.
10. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provison of this Agreement shall be held or made invalid by a court or
regulatory agency decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. Subject to the provisions of Section 5
hereof, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by New
York law; provided, however, that nothing herein shall be construed in a manner
inconsistent with the Investment Company Act of 1940 or any rule or regulation
promulgated by the Securities and Exchange Commission thereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
EVERGREEN VARIABLE TRUST
By____________________
Its:__________________
Attest:_________________
Its:_______________________
EVERGREEN ASSET MANAGEMENT CORP.
By_________________________________
Its:_______________________________
Attest:________________________
Its:___________________________
<PAGE>
SUB-ADMINISTRATOR AGREEMENT
This Sub-Administrator Agreement is made as of this 8th day of February,
1996 between Evergreen Variable Trust, a Massachusetts business trust (herein
called the "Trust"), and Furman Selz LLC, a New York limited liability company
(herein called "Furman").
WHEREAS, the Trust is a Massachusetts business trust consisting of one or
more portfolios which operates as an open-end management investment company and
is so registered under the Investment Company Act of 1940; and
WHEREAS, the Trust has appointed Evergreen Asset Management Corp. ("EAMC")
as administrator to the Trust and desires to retain Furman as its
Sub-Administrator to provide it with certain additional administrative services
not provided for under its arrangement with EAMC ("Sub-Administrative
Services"), and Furman is willing to render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties hereto agree as follows:
1. Appointment of Sub-Administrator. The Trust hereby appoints Furman as
Sub-Administrator of the Trust and each of its portfolios on the terms and
conditions set forth in this Agreement; and Furman hereby accepts such
appointment and agrees to perform the services and duties set forth in Section 2
of this Agreement in consideration of the compensation provided for in Section 4
hereof.
2. Services and Duties. As Sub-Administrator, and subject to the
supervision and control of the Trustees of the Trust, Furman will hereafter
provide facilities, equipment and personnel to carry out the following
Sub-Administrative services to assist in the operation of the business and
affairs of the Trust and each of its portfolios:
(a) provide individuals reasonably acceptable to the Trustees of the
Trust for nomination, appointment or election as officers of the Trust
and who will be responsible for the management of certain of the
Trust's affairs as determined from time to time by the Trustees;
(b) review filings with the Securities and Exchange Commission and
state securities authorities that have been prepared on behalf of the
Trust by the administrator and take such actions as may be reasonably
requested by the administrator to effect such filings;
1
<PAGE>
(c) verify, authorize and transmit to the Trust's Custodian, Transfer
Agent and Dividend Disbursing Agent all necessary instructions for the
disbursement of cash, issuance of shares, tender and receipt of
portfolio securities, payment of expenses and payment of dividends; and
(d) advise the Trust and its Trustees on matters concerning the Trust
and its affairs.
Furman may, in addition, agree in writing to perform additional
Sub-Administrative Services for the Trust. Sub-Administrative Services shall not
include any duties, functions, or services to be performed for the Trust by the
Trust's investment adviser, administrator, distributor, custodian or transfer
agent pursuant to their agreements with the Trust.
3. Expenses. Furman shall be responsible for expenses incurred in providing
office space, equipment and personnel as may be necessary or convenient to
provide the Sub-Administrative Services to the Trust. The Trust shall be
responsible for all other expenses incurred by Furman on behalf of the Trust,
including without limitation postage and courier expenses, printing expenses,
registration fees, filing fees, fees of outside counsel and independent
auditors, insurance premiums, fees payable to Trustees who are not Furman
employees, and trade association dues.
4. Compensation. For the Sub-Administrative Services provided, the Trust
hereby agrees to pay and Furman hereby agrees to accept as full compensation for
its services rendered hereunder a sub-administrative fee, calculated daily and
payable monthly at an annual rate determined in accordance with the table below.
Aggregate Daily Net Assets of
Sub-Administrative Funds Administered by EAMC
Fee as a % of For Which EAMC or First Union
Average Annual National Bank of North Carolina
Daily Net Assets Serve as Investment Adviser
.0100% on the first $7 billion
.0075% on the next $3 billion
.0050% on the next $15 billion
.0040% on assets in excess of $25 billion
Each portfolio of the Trust shall pay a portion of the sub-administrative fee
equal to the rate determined above times that portfolio's average annual daily
net assets.
5. Responsibility of Sub-Administrator. Furman shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates, except a loss
resulting from wilful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Furman shall be entitled to rely on
2
<PAGE>
and may act upon advice of counsel (who may be counsel for the Trust) on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. Any person, even though also an officer,
director, partner, employee or agent of Furman, who may be or become an officer,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust (other than
services or business in connection with the duties of Furman hereunder) to be
rendering such services to or acting solely for the Trust and not as an officer,
director, partner, employee or agent or one under the control or direction of
Furman even though paid by Furman.
6. Duration and Termination.
(a) This Agreement shall be in effect until July____, 1997, and shall
continue in effect from year to year thereafter, provided it is approved, at
least annually, by a vote of a majority of Trustees of the Trust, including a
majority of the disinterested Trustees.
(b) This Agreement may be terminated at any time, without payment of any
penalty, on sixty (60) day's prior written notice by a vote of a majority of the
Trust's Trustees or by Furman.
7. Amendment. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which an enforcement of the change, waiver, discharge or
termination is sought.
8. Notices. Notices of any kind to be given to the Trust hereunder by
Furman shall be in writing and shall be duly given if delivered to the Trust and
to its investment adviser at the following address: 2500 Westchester Avenue
Purchase N.Y. 10577. Notices of any kind to be given to Furman hereunder by the
Trust shall be in writing and shall be duly given if delivered to Furman at 237
Park Avenue, New York, New York 10022, Attention: General Counsel.
9. Limitation of Liability. Furman is hereby expressly put on notice of the
limitation of liability as set forth in Article IX of the Declaration of Trust
and agrees that the obligations pursuant to this Agreement of a particular
portfolio and of the Trust with respect to that particular portfolio be limited
solely to the assets of that particular portfolio, and Furman shall not seek
satisfaction of any such obligation from the assets of any other portfolio, the
shareholders of any portfolio, the Trustees, officers, employees or agents of
the Trust, or any of them.
10. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect
3
<PAGE>
their construction or effect. If any provison of this Agreement shall be held or
made invalid by a court or regulatory agency decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby.
Subject to the provisions of Section 5 hereof, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by New York law; provided, however, that
nothing herein shall be construed in a manner inconsistent with the Investment
Company Act of 1940 or any rule or regulation promulgated by the Securities and
Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
EVERGREEN VARIABLE TRUST
By________________________
Its:______________________
Attest:________________________
Its:___________________________
FURMAN SELZ LLC
By_________________________________________
Its:_______________________________________
Attest:________________________
Its:___________________________
4
<PAGE>
JAMES P. WALLIN, ESQ.
2500 WESTCHESTER AVENUE
Purchase, New York 10577
January 29, 1996
Evergreen Variable Trust
2500 Westchester Avenue
Purchase, New York 10577
Dear Sirs:
Evergreen Variable Trust, a Massachusetts business trust (the "Trust"), is
filing with the Securities and Exchange Commission Pre-Effective Amendment No. 3
to its Registration Statement on Form N-1A for the purpose of registering the
Trust and its separate investment series Evergreen VA Fund, Evergreen VA Growth
And Income Fund and Evergreen VA Foundation Fund (each a "Series" and
collectively, the "Series"), under the Investment Company Act of 1940 (the
"Act"), and the shares offered by each such Series under the Securities Act of
1933 (the "1933 Act"). In connection therewith, I have been advised that s the
Fund has previously filed, in its initial Registration Statement, the
declaration authorized by paragraph (a)(1) of Rule 24f-2 promulgated under the
1933 Act (the "Rule") for the purpose of registering an indefinite number of
shares of beneficial interest of each Series (the "Shares") and, in connection
therewith, has paid the required fee of $500.
I have, as counsel, participated in various proceedings relating to the
formation of the Trust, the Series and the preparation of its Registration
Statement on Form N-1A and the Pre-Effective Amendments filed thereto. I have
examined copies, either certified or otherwise proved to our satisfaction to be
genuine, of the Trust's Declaration of Trust, as now in effect, the minutes of
meetings of the Trustees of the Trust and other documents relating to the
organization and operation of the Trust. I am generally familiar with the
business affairs of the Trust.
The Trust has advised me that the Shares will be sold in the manner
contemplated by the prospectus of the each Series current at the time of sale,
and that the Shares will be sold for a consideration not less than the net asset
value thereof as required by the Investment Company Act of 1940 and not less
than the par value thereof.
Based upon the foregoing, it is my opinion that the Shares to be offered by
each Series of the Trust pursuant to the Registration Statement on Form N-1A of
the Trust will be legally issued and are fully paid and non-assessable. However,
I note that as set forth in the Registration Statement, the Fund's shareholders
might, under certain circumstances, be liable for transactions effected by the
Fund.
I hereby consent to the filing of this Opinion with the Securities and
Exchange Commission together with Pre-Effective Amendment No. 3 to the Trust's
Registration Statement on Form N-1A, and to the filing of this Opinion under the
securities laws of any state.
I am a member of the Bar of the State of New York and do not hold myself
out as being conversant with the laws of any jurisdiction other than
<PAGE>
those of the United States of America and the State of New York. I note that I
am not licensed to practice law in The Commonwealth of Massachusetts, and to the
extent that any opinion expressed herein involves the law of Massachusetts, such
opinion should be understood to be based solely upon my review of the documents
referred to above, the published statutes of that Commonwealth and, where
applicable, published cases, rules or regulations of regulatory bodies of that
Commonwealth.
Very truly yours,
/s/James P. Wallin
---------------------
James P. Wallin
<PAGE>
KPMG PEAT MARWICK LLP
0ne Mellon Bank Center Telephone 412391 9710 Telefax 412 391 9963
Pittsburgh. PA 15219 Telex 7106642199 PMM & CO PGM
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees
Evergreen Variable Trust:
We consent to the use of our report on the Evergreen Variable Trust
(comprising, respectively, the Evergreen VA Fund, and Evergreen VA Growth and
Income Fund and Evergreen VA Foundation Fund) included herein and to the
references to our firm under the captions "General" in the Prospectuse and
"Independent Accountants" in the Statement of Additional Information.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Pittsburgh, PA
January 26, 1996
